Tina Siddharth Jain vs N.K. Proteins Limited

S.G. Shah, J.

Heard learned counsel for the parties.

Appellants are original defendant nos. 2/1 and 2/2, whereas, respondent no. 1 is plaintiff and respondent nos. 2 to 4 are respectively defendant no. 1, 3 and 4 in Summary Civil Suit No. 413 of 2006 preferred by the plaintiff before the City Civil Court, Ahmedabad on 15.2.2006. In prayer clause of the plaint, paragraph 9[A], plaintiff has prayed as under:-

While claiming such amount under summary proceeding for decree with interest of 24%, plaintiff has also prayed to restrain the defendants from transferring their properties and alternatively to attach their properties or direction to furnish surety of the suit amount being Rs. 2,37,82,267/-.

Therefore, so far as interim relief is concerned, it is an alternative form of either attachment or prohibitory order or security to the tune of suit amount. Plaintiff has also filed a separate application for such interim reliefs, however, in such an application being Notice of Motion at Exh. 7 with a prayer to restrain the defendants from transferring or assigning their properties or to sale or to create any lien on it in any manner till the suit amount is recovered, there is no clarity that as alternate relief security may be ordered. Therefore, practically being a summary suit for recovery of fixed amount, the plaintiff wants to secure the recovery from the properties of the defendants. Both in the suit as well as in the Notice of Motion, it is also prayed that Court may grant any other appropriate relief.

By impugned judgment and order dated 11.7.2013, City Civil Court No. 9 has confirmed the ex-parte injunction order dated 15.2.2006 till final disposal of the suit. The order dated 15.2.2006 is to the effect that ad-interim relief in terms of Paragraph 9(1) of the notice of motion against all the defendants is granted till the next date. By impugned judgment, when such order is made absolute, reference to paragraph no. 9(A) is relevant, which is referred hereinabove, whereby, practically, plaintiff seeks to restrain the defendants from transferring, alienating or selling the properties as per list attached with such application. Thereby, all such properties which are listed in a schedule with such notice of motion are under the prohibitory order as aforesaid.

Though appellants have challenged such order in this appeal on its merits pending the appeal which is admitted by an order dated 31.7.2014, appellants have come forward to furnish an alternative security as per satisfaction of the Court for confirming the execution of the decree if ultimately passed in favour of the respondent-original plaintiff in the suit. Therefore, at present, minute details of the controversy between the parties are not much material and it is avoided to be discussed and disclosed herein, so as to avoid prejudice on trial.

Pursuant to their attempt to furnish appropriate security, appellant no. 2 has filed an affidavit on 24.10.2013 contending that without prejudice to the various grounds of challenge set out in the Appeal from Order, they are ready and willing to furnish a security to the extent that may be decided by this Hon''ble Court and for the purpose, it is disclosed that they are owners of several properties including residential bungalow in Manekbaug Housing Society of the Ambavadi area of the city and produce relevant documents like share certificate, copy of sale deed and valuation report by government registered valuer confirming that the value of the said property is Rs. 3,23,80,000/-. Thereby, appellants have prayed to modify the interim reliefs by accepting such property towards security against proposed decree against them. It seems that similar attempt probably was made before the trial Court also by producing all details of several properties but it could not be materialized in compromise so as to accept the security instead of prohibitory order by the plaintiff. As back as on 15.4.2013, appellant no. 2 herein has already disclosed before the trial Court, the list of their property worth between five to seven crores with copies regarding its title, confirming that they will not transfer such property without prior permission of the Court. However, herein also, when original plaintiff has endure some reservation regarding the title and valuation of the residential bungalow referred hereinabove as security. Therefore, appellant no. 2 has filed another affidavit on 16.1.2014 producing title clearance certificate of the suit property. However, original plaintiff finds fault with the title of the property referred hereinabove, since at the said bungalow several companies are registered further contending that there are several other litigation pending against the appellant and, therefore, such property cannot be accepted as security. Plaintiff has also produced certain documents to support its objection.

Pursuant to such objection, appellant has filed another affidavit on 26.7.2014 submitting that if any property is not considered as suitable security against the proposed decree, appellants are ready and willing, but without prejudice to their rights and contentions to offer and agree to place certain Fixed Deposit Receipts having maturity value of Rs. 3,03,53,588/- confirming that such original FDRs are available with them and are unencumbered and thereby ready to keep such FDRs as per Court''s order towards security for the suit amount. The amount in FDRs are invested only on 24.7.2014 which is to the tune of Rs. 2,59,37,078/- and its maturity date is 13.4.2016 with maturity value of Rs. 3,03,53,588/-. Details of such FDRs are listed in annexures with such affidavit.

During arguments, learned advocate for the appellant has confirmed that if necessary they may increase the amount but considering the value of the properties in question, since they have to deal with certain properties and since dispute is not pertaining to such properties and when plaintiffs are entitled to recover the amount, there is no reason for respondent to challenge and oppose the modification of impugned order by selecting appropriate security as may deem fit and proper to the Court.

As against that, learned Senior counsel Mr. Mihir Joshi appearing with M/s. Nanavati Associates for respondent no. 1 has vehemently argued against the appeal from order contending that pursuant to the decision in Dovar Park Builders Pvt. Ltd. v. Smt. Madhuri Jalan, reported in AIR 2003 Calcutta 55, the Appellate Court cannot and should not modify the impugned order since it is permissible by the same Court, which has granted the impugned order pursuant to proviso of Order 39 Rule 4 of the Code of Civil Procedure. It is true that in such reported judgment, the learned Single judge of the Calcutta High Court, has while dealing with the provisions of Order 39 Rule 4 of the Code of Civil Procedure observed that variations, discharge and vacating of initial order can only be made by the Court which has granted such order. However, if we peruse the entire judgment, it seems that facts are somewhat different inasmuch as in the reported case, probably interim relief was granted by the Appellate Court on refusal to grant the same by trial Court and, therefore, question arose was that application for modification can be entertained by which Court, the trial Court or the first Appellate Court. However, it is also observed that while granting the interim relief, the appellate Court in such reported case has reserved the leave in its order that defendant should approach the trial Court for modification etc. if so require. Needless to say that irrespective of such diverse factual details, the ultimate goal of judicial process is to resolve the dispute. Though judicial process is to be strictly continued as per applicable law including procedural law, the arguments of respondent if accepted as such, then to somewhat extent it would amount to a stigma for all Appellate Courts to modify the impugned order if it is so desirable or require in accordance with law, facts and circumstances.

In any case, in general, the Appellate Court has inherent powers to modify the impugned order if facts, circumstances and material on record requires such modification. The only limitation would be that such modification must be in accordance with evidence on record and applicable law.

In view of above factual facts and legal position, when plaintiff itself has prayed in the suit the interim relief in alternative mode of either attachment or prohibitory order against properties or for security of the suit amount by appropriate mode, only because plaintiff has prayed for only prohibitory relief in Notice of Motion, it cannot be said that Court is not empowered to pass appropriate order to secure the execution of the decree instead of restraining the defendants from dealing with their entire properties irrespective of consideration of suit amount. It can also not be ignored that the original suit is simple money suit to recover fixed amount, wherein, plaintiff has claimed interest @ 24% probably without contract to that effect and therefore except confirming the recovery of the suit amount, no further prohibitory orders are required. Therefore, when appellants are ready and willing to pledge FDRs of more than suit amount, then, it is inappropriate on the part of the respondents, a public limited company, to continue their agitation and pressing for prohibitory order against all the properties of the appellants. It is also required to be considered that the ultimate decree in the suit is to recover the fixed amount which may even less than the suit amount in absence of specific contract for rate of interest and therefore, when appellants are offering security in the form of FDRs of Nationalized Bank, which can be easily liquidated and whereby decreetal amount can easily be recovered, there is nothing better than such security rather than prohibiting the defendants from alienating their properties in any manner.

Unfortunately, the defendants have taken objections against the particular property, which is offered as security claiming that its titles are not clear, then in that case, defendants have forgotten that the interlocutory impugned order is prohibiting the parties, in general for dealing with any such property, title of which are neither verified nor confirmed by the plaintiff. It is also obvious that when appellant is objecting to accept such FDRs as a security on the ground that properties may not be cleared and, therefore, it would be difficult to recover the decreetal amount, then same position would certainly remain even after decree in the suit, inasmuch as if titles are not clear or if there is other lien on the properties, then irrespective of prohibitory order, though plaintiff can file an Execution Petition which may follow the order of attachment with all probable objections and then auction and then and then recovery of the amount. It cannot be ignored even at that stage, defendant can seek permission to sold out particular property directly on their own with a condition that sale proceed be directly deposited before the Court to satisfy the decree which is yet not passed. Therefore, the stand taken by the respondent no. 1-plaintiff is certainly not tenable whereby they do not want to accept the FDR as security against the interim relief in the form of impugned order and seek reason order in this appeal.

Plaintiff has also raised an issue regarding total amount that may be recovered from such FDR''s after the proposed decree and submitted that it may be more than seven crores at present. However, if we peruse the suit, the pleading does not confirm any contractual rate of interest and, therefore, it is not certain that what would be the final decreetal amount. In any case, when appellants are ready to furnish some more FDRs to put an end to such controversy, I do not see any reason to examine the issue regarding proposed decreetal amount in future except directing the appellants to furnish proper security. Thereby, it seems that the appellants are right in their submission that plaintiff simply wants to harass them under the guise of such proceeding.

Considering the over all facts and circumstances, it would be appropriate to modify the impugned order by directing the appellants to furnish FDRs with maturity value of Rs. 4 crores in all which may include the FDRs disclosed in Annexure "A" with an affidavit dated 24.7.2014 on record. However, it is made clear that while deciding the suit, this amount is not to be taken into consideration that why security of Rs. 4 crores is sought for. The trial Court has to decide the suit purely in accordance with law. Thereby, parties are free to take all the legal defenses and such security would be certainly without prejudice to the rights and contentions of both the parties. The appellants are further directed to produce original FDRs before the trial Court with clear endorsement of pledge upon such FDRs in favour of the Registrar of the trial Court and to get such FDRs renewed till period of appeal is over after disposal of the suit.

Once such FDRs are produced before the trial Court, the trial Court shall issue a direction to the concerned bank who has issued such FDR Receipts conveying that nobody should be allowed to raise any loan or to create any lien on such FDRs and that such FDRs shall be automatically renewed till further order of the Court so as to earn maximum interest on it.

The amount of such FDR with accrued interest shall be subject to final judgment in a suit.

The appeal is partly allowed to the aforesaid extent.

In view of above disposal of main petition i.e. Appeal From Order no. 398 of 2013, the Civil Application no. 11039 of 2013 does not survive and hence the same stands disposed of accordingly.

FURTHER ORDER

Learned advocate Mr. Nandish Chudgar appearing for Nanavati Associates for respondent no. 1 is requesting to stay the operation of this judgment for couple of weeks so as to enable the respondent to challenge it before the appropriate Court. Considering the facts and circumstances, no such relief can be granted at this stage though it is submitted that interim relief was there in their favour since the year 2006, for the simple reason, which is already recorded in the above judgment that in the suit itself there is an alternative relief seeking security to the tune of Rs. 2,59,37,078/- being the suit amount. Thereafter, in application for interim relief, it is prayed to restrain the defendants to deal with all of their properties till pendency of the suit. The fact remains that the suit is simply a money suit, which is only to recover an amount to the tune of Rs. 2,59,37,078/-, which is in fact with 15% interest even till the date of suit as against the suit amount being only Rs. 1,80,12,370/-. Whereas, by this judgment, an amount of Rs. 4 Crores is directed to be kept in FDR by the appellant-defendant so as to secure the execution of decree if at all it is passed in favour of the plaintiff. Such FDR would certainly satisfy the decree. Therefore, now there is no reason to continue the interim relief granted by the trial Court any further. Hence, such request is rejected.