Simratmal vs Kedarnath on 1 August, 2011

Bombay High Court
Simratmal vs Kedarnath on 1 August, 2011
Bench: Shrihari P. Davare
                                              (1)


           IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
               AURANGABAD BENCH, AT AURANGABAD.




                                                                                       
                     Criminal Application No. 25 of 2010




                                                               
    Simratmal s/o. Hiralal Gandhi,
    Age : 82 years,




                                                              
    Occupation : Nil,                                             .. Applicant
    R/o. Telikhunt, Ahmednagar.                                      (Original accused)




                                            
                  versus
                           
    1. Kedarnath s/o. Badrinarayan Bang,
       Age : 75 years,
                          
       Occupation : Business,
       R/o. 137/2A, Mohan Baug,
       Delhi Gate, Ahmednagar.
      

    2. Hiralal Simratmal & Company,
       Telikhunt, Ahmednagar.
   



    3. Ramlabai Subhash Gandhi,
       Age : 52 years,
       Occupation : Household,





       R/o. Ashish Bungalow,
       Maniknagar, Ahmednagar,

    4. Rajendra s/o. Simratmal Gandhi,                            .. Respondents
       Age : 51 years,                                               (Original complainant





       Occupation : Business,                                         & other co-accused)
       R/o. Surabhi Apartment,
       Opp. I.T.I., Burudgaon Road,
       Ahmednagar.

                                     .......................




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                                            (2)


               Mr. V.S. Bedre, Advocate, for the applicant.




                                                                                    
               Mr. L.B. Pallod, Advocate, for respondent no.1.




                                                            
               Respondent nos.2 and 4 served (Absent).

               Mr. V.S. Badakh, Advocate, for respondent no.3.




                                                           
                                 ........................


                                  CORAM : SHRIHARI P. DAVARE, J.
                        ig            DATE : 1ST AUGUST 2011
                      
    ORAL JUDGMENT :

1. Heard Adv. Mr. V.S. Bedre, for the applicant; Adv. Mr.
L.B. Pallod, for respondent no.1, and Adv. Mr. V.S. Badakh, for

respondent no.3.

2. None for respondent nos.2 and 4, although served.

3. Rule. Rule made returnable forthwith. With the
consent of learned Counsel for parties, taken up for final hearing.

4. By the present application preferred by the applicant
(original accused) under Section 482 of the Code of Criminal
Procedure, 1973, prayed that the order passed by the learned 6th

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(3)

Joint Civil Judge (Senior Division) & Judicial Magistrate (F.C.),
Ahmednagar, on Exhibit 48, in Summary Trial Case No.

5065/2007, dated 31st October 2009, be quashed and set aside.

5. The applicant herein is the original accused no.2 and
the respondent no.1 herein is the original complainant. It is

contended that as there were close friendly relations between the
applicant and respondent no.1, and since the applicant was in

need of amount, the complainant i.e. respondent no.1 herein paid

the amount of Rs. 50,000/- by way of hand loan. It is further
contended that the accused had given cheque of Rs. 50,000/- on

20-5-2007 to the complainant. The complainant presented the
said cheque for encashment purpose. However, same was

dishonoured and returned unpaid with the endorsement of closure
of account. Hence, the complainant issued notice to the accused

persons on 30-8-2007 which was received by them on or about
5-9-2007 and 7-9-2007. However, inspite of the receipt of the

said notice, accused failed to pay the cheque amount to the
complainant. Hence, the complainant filed complaint under
Section 138 of the Negotiable Instruments Act, 1881, against the

accused.

6. It is the contention of the accused that the complainant
misused the cheque which was misplaced and contended that

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(4)

there are material alterations in the cheque. Hence, the accused
preferred an application Exhibit 48 before the learned trial court

on 26-10-2009 stating therein that he has grievance about

handwriting of the cheque, and therefore, requested the learned
trial court to send the said cheque to the handwriting expert and
call for the report in respect of name and date on the said cheque.

The complainant opposed the said application by filing his say,
and submitted that there is no suggestion in the cross examination

conducted by the accused in respect of the prayer in the said

application. It is also contended in the said reply by the
complainant, that the said application was preferred by the

accused at the belated stage and after recording statement of the
accused under Section 313 of the Code of Criminal Procedure,

1973. It is pointed out in the said say, that there is no reasonable
cause to allow the said application and there are no bona fides of

the accused reflected in the said application, and the said
application was preferred by the accused just to protract the

proceeding. Considering the contents of the said application
preferred by the accused, as well as, contents of the reply filed by
the complainant, and also considering rival submissions

advanced by the learned Counsel for the parties, learned trial
court rejected the said application by order dated 31st October
2009. Being aggrieved and dissatisfied by the said order, the
accused i.e. applicant herein has preferred the present Application

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(5)

for the prayers as set out herein above.

7. On perusal of the copy of the application dated 26th

October 2009, preferred by the applicant herein i.e. original
accused before the learned trial court, it is apparent that the
grievance of the accused was in respect of the handwriting on the

said cheque, more particularly, as regards, the name and date on
the said cheque and not beyond that. At this juncture, it is

significant to note that there is no grievance of the accused in

respect of the signature on the said cheque. The complainant
rightly objected to the said application stating that there was no

suggestion in the cross examination of the complainant
conducted by the accused in respect of the grievance made in the

said application and the said application was preferred by the
accused at the belated stage i.e. after recording statement of the

accused under Section 313 of the Code of Criminal Procedure.

8. In the said context, the learned trial court has rightly
observed thus:

” Section 20 of the Negogiable Instruments Act,
1881, states that when a person signs and delivers
blank cheque to another, he thereby gives prima
facie authority to holder thereof to make or

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(6)

complete it for any amount specified therein and
not exceeding the amount covered by stamp. After

perusal of said section 20, it appears that the

drawer of a cheque can issue blank cheque to other
person and by his said act he gives an authority to
said concern person to fill up its contents. After

combine reading of said section 20 and 138 of the
“Act” it appears that to made out an offence in

question against the accused, the necessary

ingredient is that the cheque should be drawn on
the account of drawer and it is immaterial the

contents therein are in whose handwriting as per
section 20 of the “Act””.

Accordingly, learned trial court has rightly rejected the said

application, after making the above observations.

9. In the circumstances, considering factual, as well as,
legal position, it is amply clear that there is no substance in the
present application and the prayers made by the applicant /

accused therein, and there is no glaring defect in the impugned
order passed by the learned trial court, and hence, no interference
is called for therein, by exercising inherent powers of this Court
under Section 482 of the Code of Criminal Procedure, and

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(7)

therefore, present Criminal Application deserves to be rejected.

10. In the result, present Criminal Application stands

dismissed, and Rule is discharged accordingly.

( SHRIHARI P. DAVARE )
JUDGE

…………………….

bgp/ka25

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Age : 44 Years vs Kailash on 29 July, 2011

Bombay High Court
Age : 44 Years vs Kailash on 29 July, 2011
Bench: A.P. Bhangale
                                                             1
                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                          NAGPUR BENCH, NAGPUR.




                                                                                                       
                                                                           
                               Criminal Writ Petition No. 153/2011



     Mansingh s/o. Gopusingh Pawar




                                                                          
     Age : 44 years, Occupation : Service,
     Janta Vidyalaya, Singaon Jahagir,
     Tahsil - Deulgaonraja, District : Buldhana.                                              ...PETITIONER..




                                                        
                 VERSUS



     Kailash s/o Alasingh Chavan,
                                
     Age : 35 years, Occupation : Service,
                               
     R/o. Gotmara, Post : Karhala,
     Taluka : Motala, District : Buldhana.                                                  ...RESPONDENT..

     --------------------------------------------------------------------------------------------------------------------

Mr. Aniruddha C. Jaltare, Advocate for Petitioner
Mr. S. S. Shingne, Advocate for Respondent-Sole

——————————————————————————————————————–

                                                                     Coram:            A.P. Bhangale, J
                                                                      Dated :         29th July 2011





     ORAL JUDGMENT:



1. Heard Mr. Aniruddha C. Jaltare, learned counsel for the

Petitioner and Mr. S. S. Shingne, learned counsel for Respondent-sole.

2. Rule, made returnable forthwith. Heard by consent of the

parties.

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2

3. The petitioner questions the order dated 01/01/2011 passed

below Exh. 64 in Summary Criminal Case No. 803/2001, whereby the

learned trial Magistrate had rejected the application for sending the

cheque in question for expert opinion regarding the age of ink on the

said cheque. It is noted by the learned Magistrate that the technology to

determine the age of ink is not available, while according to learned

Advocate for the petitioner, such technology is available with CBI at

Delhi and, he will furnish address of the Forensic Laboratory where such

examination is done for determining the age of ink on the document in

question.

Be that as it may, learned advocate for the petitioner is

aware of availability of such technology. He is at liberty to apply afresh

before the learned trial Magistrate. During the pendency of the trial,

when interim orders are passed which are of interlocutory nature or such

orders which are passed during progress of the trial can not be termed

as “final order disposing of case” and, therefore, there will be no

prohibition for the Court to pass such interim or interlocutory orders

which are in aid or for progress of the trial or proceeding pending.

Hence the bar under Section 362 is not attracted when such

interlocutory orders are passed, modified or altered to ensure progress

of the trial or in aid thereof.

4. To that extent, the impugned order is not sustainable. The

learned trial Magistrate may pass an order if a fresh application is

moved by the petitioner to get the document in question examined by

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the expert for to determine the age of ink as desired by the petitioner.

Provided that, the petitioner shall take urgent steps to seek such an

opinion as early as possible and gives full address particulars of Forensic

Laboratory or technical institution where such examination is possible.

5. Petition is disposed of accordingly.

JUDGE

Punde

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Second Appeal No.229/1999 vs Unknown on 28 July, 2011

Bombay High Court
Second Appeal No.229/1999 vs Unknown on 28 July, 2011
Bench: A. B. Chaudhari
     sa229.99.odt                             1




                                                                          
            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                      NAGPUR BENCH, NAGPUR




                                                  
                          SECOND APPEAL NO.229/1999


     APPELLANT :-         Madhukar alias Babanrao s/o Ganpat
                          Sabnis, aged about 67 years,




                                                 
     Original
     Defendant            Occupation Landlord, resident of
                          Khaparde Bagicha, Amravati, Taluka
                          and District Amravati.




                                   
                                ...Versus...

     RESPONDENT :-
     Original
     Plaintiff
                       ig Smt. Kantabai wd/o Shankarrao Sangole,
                          aged about 50 years, Occupation
                          Household, resident of Ravi Nagar,
                          Amravati, Taluka and District Amravati.
                     
     ------------------------------------------------------
                     [Shri Rahul Dhande, Adv. for appellant]
                     [None for respondent]
     ------------------------------------------------------
      


                                    CORAM : A.B. CHAUDHARI J.
   



     Date of reserving the judgment   :                   08.07.2011
     Date of pronouncing the judgment :                   28.07.2011





     J U D G M E N T

1. Feeling aggrieved by the judgment and decree

dated 13.9.1993, passed by the 10th Jt. Civil Judge

(J.D.), Amravati in Regular Civil Suit No.30/1991,

decreeing the suit of the respondent/plaintiff in the

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sum of Rs.23,400/- with future interest @ 18% per

annum from the date of suit till its realization and

confirmed in appeal by the Extra Joint District Judge,

Amravati on 3.2.1999 in Regular Civil Appeal

No.4/1994, the present appeal was filed by the

appellant/defendant.

2. In support of the appeal, Shri Rahul Dhande,

the learned ig Counsel for the appellant vehemently

argued that though there is concurrent finding of fact

recorded by both the Courts below while decreeing the

suit of the respondent/plaintiff, the findings of

facts are utterly perverse and thus would constitute

substantial question of law. The findings are not

based on evidence on record documentary as well as

oral. According to the learned Counsel for the

appellant, the suit was clearly barred by limitation

but the Courts below have relied on the documents Exh.

81 and 82 dated 14.1.1988 and 24.2.1988, showing the

payment of Rs.200/- each allegedly made by the present

appellant/defendant in order to bring the suit within

limitation. The learned Counsel for the appellant

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vehemently argued that these documents Exh.81 and 82

if carefully perused, would show that they had never

been signed by the appellant/defendant and have been

stoutly denied by him. According to the learned

Counsel for the appellant when the documents Exh.81

and 82 were never signed by the appellant, the Courts

below could not have taken them into consideration as

acknowledgments within the meaning of the provisions

of the Limitation Act in order to extend the

limitation. The learned Counsel then went on to argue

that the documents Exh.81 and 82 show that the alleged

payment of Rs.200/- was received by one Shri Rambhau

Loney allegedly from the appellant and that the said

Shri Loney had thereafter made the payment to one

Shri Pattalwar Advocate and further that the said

Advocate Shri Pattalwar had made the said payment to

the respondent/plaintiff. The Courts below ought to

have rejected this theory propounded by the

respondent/plaintiff in order to sustain the money

claim in question. The learned Counsel thus submitted

that the suit having been thus filed on 10.1.1999 was

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sa229.99.odt 4

clearly barred by law of limitation and was required

to be dismissed as such, rejecting the evidence of

said Rambhau Loney also. The said Advocate

Shri Pattalwar was never examined by the plaintiff

before the Court to prove the receipt of payment by

him or onward payment to the plaintiff by him. The

learned Counsel then went on to argue that the

transaction in question was money lending transaction

and that would certainly be in contravention of the

provisions of the Money Lending Act, which cannot be

enforced by a Court of law. Invoking Section 103 of

the Code of Civil Procedure, he argued that High Court

has powers to determine even questions of facts while

hearing a second appeal. Therefore, though no issue

was framed by the trial Court on the question of

money-lending nature of transaction, this Court can

decide the said question. He also argued that the

documents relied upon by the plaintiff were

insufficiently stamped and hence could not be made

admissible in evidence.

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3. None appeared for the respondent despite

several opportunities. Finally, on 2.7.2011, Advocate

Shri R.R. Vyas for the respondent filed pursis,

stating that the respondent had taken all his papers

and is not in a position to defend the present appeal.

Pursis is accepted.

4. I have heard learned Counsel for the

appellant on several dates, who argued the appeal with

good preparation. I have gone through the impugned

judgment and decree passed by the Courts below. I have

also gone through the entire evidence documentary as

well as oral. Upon hearing the learned Counsel for the

appellant, I find that following substantial question

of law arises in the present appeal.

(i) Whether the Courts below could
have taken into consideration the documents
Exh.81 and 82 as the documents of

acknowledgments in order to bring the suit
within limitation and whether consequently,
the suit was barred by law of limitation ?

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5. The submissions made by the learned Counsel

for the appellant on Section 103 of the Code of Civil

Procedure with reference to money lending nature of

transaction and insufficient stamped documents will

have to be rejected for the following reasons.

Section 103 of the Code of Civil Procedure

reads thus :

                                          Power       of    High      Court       to
                       ig   1
                            " 03.

determine issues of fact. – In any second
appeal, the High Court may, if the evidence

on the record is sufficient, determine any
issue necessary for the disposal of the
appeal, –

(a) which has not been determined

by the lower Appellate Court or both by
the Court of first instance and the lower
Appellate court, or

(b) which has been wrongly
determined by such such Court or Courts
by reason of a decision on such question
of law as is referred to in section 100.”

6. Perusal of the provisions brought into force

w.e.f. 1.2.1977 shows first contingency namely that

the issue of fact not determined by lower Courts

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sa229.99.odt 7

should be ‘necessary’ for disposal of the appeal; and

if the same is wrongly determined. In the case at

hand, on these two questions issues were never framed

nor tried and therefore, respondent had no notice

thereof to contest. The said provision cannot read in

violation of principles of natural justice; else it

would be destructive of the rule of audi alteram

partem. No provisions should be read de hors these

principles.

7. It is not in dispute that the suit was filed

on 10.1.1991 by the respondent/plaintiff for recovery

of money. The documents Exh.81 and 82 are dated

14.1.1988 and 24.2.1988 respectively. These two

documents have been treated as acknowledgments within

the meaning of Section 18 of the Limitation Act for

the purposes of examining whether the suit was filed

within limitation or not. It was the case of the

respondent/plaintiff that she had paid Rs.20,000/- by

way of loan and the appellant had signed hand loan

receipt Exh.22 on 22.2.1986. According to the

respondent, the appellant used to pay amount in small

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installments through one Rambhau Loney and Advocate

Shri Pattalwar. The plaintiff relied on the last

receipts Exh.81 and 82 dated 14.1.1988 and 24.2.1988

to contend that these two receipts clearly brought the

suit within limitation and they were acknowledgments

for that purpose. The question that arises for

consideration before this Court is interpretation of

the documentsig Exh.81 and 82 since all earlier

documents are of no relevance for determining the

issue in question. Section 18 of the Limitation Act

reads thus.

” 18. Effect of acknowledgment in

writing. – (1) Where, before the expiration of
the prescribed period for a suit or

application in respect of any property or
right, an acknowledgment of liability in
respect of such property or right has been
made in writing signed by the party against

whom such property or right is claimed, or by
any person through whom he derives his title
or liability, a fresh period of limitation
shall be computed from the time when the
acknowledgment was so signed.

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(2) Where the writing containing
the acknowledgment is undated, oral evidence

may be given of the time when it was signed;
but subject to the provisions of the Indian
Evidence Act, 1872 (I of 1872), oral evidence

of its contents shall not be received.

Explanation.- For the purposes of this

section. –

(a) an acknowledgment may be sufficient
though it omits to specify the exact nature

of the property or right, or averse that the
time for payment, delivery, performance or
enjoyment has not yet come or is accompanied

by refusal to pay, deliver, perform or permit
to enjoy, or is coupled with a claim to

set-off, or is addressed to a person other
than a person entitled to the property or

right;

                    (b)    the        word     s
                                               " igned"       means         signed
           either         personally          or     by      an      agent         duly
           authorised in this behalf; and





                    (c)    an application for the execution of

a decree or order shall not be deemed to be an
application in respect of any property or
right.”

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Perusal of the above provision shows that

the ‘acknowledgment’ spoken of must be in ‘writing’

and ‘signed’ by a party or its duly authorised agent.

The burden of proof about it is surely on the

plaintiff. There is no doubt that it can be express or

implied. The plaint is silent about the agent Rambhau

Loney having any express or implied authority. Rambhau

stated in his
ig cross-examination that he had no

authority whatsoever from the appellant to make

payment under Exh.81 and 82. Hence, there is no

‘acknowledgment’ for extending the limitation.

8. I have perused the documents Exh.81 and 82

and the relevant oral evidence of the parties. The

documents Exh.81 and 82 both do not bear the signature

of the appellant/defendant. Both these

documents/receipts show that Rambhau Loney had

collected Rs.200/- each on both occasions from the

appellant and paid Rs.200/- on each occasion to

Advocate Shri Pattalwar and then Advocate

Shri Pattalwar paid the said amount to

respondent/plaintiff. Plaintiff and Advocate

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Shri Pattalwar had signed Exh.81 and 82 in token of

receipt. Neither Advocate Shri Pattalwar was examined

nor Exh.81 and 82 were got proved from Rambhau Loney.

In other words, documents Exh.81 and 82 in the first

place have not been proved according to law so that

they could be read in evidence as they are. To sum up,

if these two documents Exh.81 and 82 are ignored from

consideration and looking at the last acknowledgment,

namely Exh.70, dated 27.10.1987, signed by the

appellant/defendant for Rs.500/-, the suit ought to

have been filed on or before 26.10.1990 but the suit

in the instant case was filed on 10.1.1991 i.e. beyond

the period of limitation of three years. As a sequel

to the above discussion, it will have to be held that

Exh.81 and 82 cannot be treated as valid

acknowledgments within the meaning of Section 18 of

the Limitation Act for the purposes of treating the

suit as the one within limitation. The substantial

question of law, therefore, will have to be answered

holding that the suit filed by respondent/plaintiff

was clearly barred by limitation and the documents

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Exh.81 and 82 were not proved in accordance with law

and were not the acknowledgments, contemplated by

Section 18 of the Limitation Act. In the result, the

second appeal must succeed. As a sequel, I make the

following order.

O R D E R

(i)
ig Second Appeal No.229/1999 is allowed

with costs throughout.

(ii) The judgment and decree passed by the

10th Jt. Civil Judge (J.D.), Amravati in Regular Civil

Suit No.30/1991 on 13.9.1993 and the judgment and

decree passed by the Extra Joint District Judge,

Amravati in Regular Civil Appeal No.4/1994 on 3.2.1999

are set aside.

                    (iii)         The     suit        of     the      plaintiff           is

     dismissed with costs.





                    Decree be drawn up accordingly.



                                            JUDGE


     ssw




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Severn Trent Water Purification … vs Chloro Controls (India) Pvt.Ltd. … on 28 July, 2011

Bombay High Court
Severn Trent Water Purification … vs Chloro Controls (India) Pvt.Ltd. … on 28 July, 2011
Bench: D.K. Deshmukh, Rajesh G. Ketkar
                                       1




         IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                            
            ORDINARY ORIGINAL CIVIL JURISDICTION




                                                    
                       APPEAL NO.24 OF 2005
                                IN
                  NOTICE OF MOTION NO.553 OF 2004




                                                   
                                IN
                        SUIT NO.233 OF 2004


    Severn Trent Water Purification Inc                     .. Appellants




                                             
          V/s
    Chloro Controls (India) Pvt.Ltd. & Ors.
                             ig                             .. Respondents
                           
                               WITH
                       APPEAL NO.528 OF 2005
                                IN
                  NOTICE OF MOTION NO.553 OF 2004
                                IN
        


                        SUIT NO.233 OF 2004
     



    Hi Point Services Pvt.Ltd.                              .. Appellants
          V/s





    Chloro Controls (India) Pvt.Ltd. & Ors.                 .. Respondents


    Mr.Rohit Kapadia, Senior Advocate with Mr.J.P.Sen, Mr.Yash
    R.Kapadia, Mr.Simil Purohit, Mr.Pranav Desai, Mr.H.K.Sudhakara and





    Ms.Arundhati Iyer i/by Khaitan & Co.for the Appellants in Appeal No.
    24/2005 and for Respondent No.2 in Appeal No.528/2005.

    Mr.Pradip Sancheti, Senior Advocate i/by M/s.Legal Associates for the
    Appellants in Appeal No.528/2005 and for Respondent No.4 in Appeal
    No.24/2005.




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                                        2

    Mr.S.H.Doctor, Senior Advocate with Mr.Naval Agarwal and Ms.Ankita
    Singhania i/by Bachubbai Munim & Co.for Respondent No.1 in both
    appeals.




                                                                              
                                                      
                         CORAM: D.K.DESHMUKH &
                                R.G.KETKAR, JJ.

DATE: 28th July, 2011.

JUDGMENT: (Per R.G.Ketkar, J.)

1. Both these appeals are instituted against the common judgment

and order dated 23.12.2004 passed by the learned Single Judge in

the Notice of Motion No.553 of 2004 and the Notice of Motion

No.2382 of 2004 in Suit No.233 of 2004. By the impugned order,

the learned Single Judge made the Notice of Motion No.553 of

2004 absolute in terms of prayer clauses (a) to (c)(i), (ii) & (iii)

with clarification that the order will not affect the Defendant No.

3’s rights vis-a-vis Seaclor Mac regarding the manufacturing and

distributing. In view of granting of prayer clauses (c)(i), (ii) &

(iii) of the Notice of Motion No.553 of 2004, the learned Single

Judge disposed of the Notice of Motion No.2382 of 2004 as not

surviving.

2. The facts giving rise to the present appeals, briefly stated are as

under:-

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Appeal No.24 of 2005 is preferred by Severn Trent Water

Purification Inc, Defendant No.1. Respondent No.1 is the plaintiff

and Respondent Nos.2 to 11 are the Defendant Nos.2 to 11.

Appeal No.528 of 2005 is preferred by Hi Point Services Pvt.Ltd.,

Defendant No.4, wherein the Respondent No.1 is the plaintiff and

Respondent No.2 to 11 are the Defendant Nos.1 to 3 and 5 to 11

respectively. The parties shall hereinafter be referred as per their

status in the suit.

3. Plaintiff is a private limited company incorporated under the

Indian Companies Act, 1956 and is a holding company

incorporated to hold 50% share holdings in the Capital Controls

India Private Limited (Defendant No.5), which is the Joint

Venture Company. The plaintiff is registered and beneficial

holder of 375000 equity shares (being 50% of the equity share

capital) of and in the 5th Defendant Company. Defendant No.1 is a

Corporation organised and existing under the laws of the State of

Pennsylvania, Unites States of America (for short U.S.A.).

Defendant No.2, Capital Controls (Delaware) Company Inc is the

Corporation organised and existing under the laws of the state of

Delaware, U.S.A. Defendant Nos.1 & 2 carry on business of

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4

manufacture, supply, sale and distribution of Chlorination

equipments including gas and electro chlorination equipments.

Defendant Nos.1 & 2 are group companies and were earlier part

of Capital Controls group not being Defendant No.5 herein.

4. Defendant No.3 is the company incorporated under the Indian

Companies Act, 1956 and carries on business of manufacture and

marketing of electro Chlorination equipments. In or about in the

year 1989-90, Defendant No.3 was floated as Joint Venture in

technical and financial collaboration with De Nora group of Italy

who hold 51% of equity share capital of the Defendant No.3. Hi

Point Services Pvt.Ltd., Defendant No.4 is a private limited

company incorporated under the Indian Companies Act, 1956 and

interalia carries on business in electro chlorination equipments.

Defendant No.4 had a tie up with American Company called

Exceltec Inc who were engaged in the business of electrolytic

disinfection equipment.

5. Defendant No.5 viz.Capital Controls India Pvt.Ltd., is a private

limited company incorporated under the Indian Companies Act,

1956 in implementation of the Joint Venture Agreement dated

16.11.1995 executed between the plaintiff and Madhusudan

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B.Kocha (Defendant No.9) on one hand and Defendant Nos.1 &

2 on the other. 50% share capital of Defendant No.5 is held by

the plaintiff and the balance 50% share capital is held in the name

of Defendant No.2. Plaintiff and Defendant No.2 are the Joint

Venture partners constituting Defendant No.5. Defendant No.6

(W.A.Stimeling), Defendant No.7 (Marwan Nesicolasi) and

Defendant No.8 (R.Fernandez) are the directors of Defendant No.

5 Company appointed by Defendant No.2 Company for and on

behalf of Defendant No.1 Company. Defendant Nos.6 to 8 are

Directors/officers of various Severn Trent group companies.

Defendant No.6 is also the director of Defendant No.1.

6. Defendant No.9 is the Managing Director of Defendant No.5 and

Defendant Nos.10 (Milin M.Kocha) & 11 (Nilesh M.Kocha) are

whole time directors of Defendant No.5. The entire share holding

of the plaintiff is held by Defendant Nos.9 to 11, who shall

hereinafter be referred as the Kocha family.

7. Plaintiff instituted Suit No.233 of 2004 on 19.01.2004 interalia

praying for (a) a declaration that the Joint Venture Agreements

dated 16.11.1995 at Exhibit ‘B’ and Supplemental Collaboration

Agreement at Exhibit ‘M’ are valid, subsisting and binding and

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that the scope of business of Defendant No.5 includes

manufacture, sale, distribution and services of the entire range of

chlorination equipments, including electro chlorination

equipments of the Defendant Nos.1 & 2, their parents, associates

and affiliated companies as well as of the Kocha family/ Chloro

Controls Equipment Company; (aa) a declaration that the notice

dated 23.01.2004 (Exhibit ‘BBBB’) is illegal, invalid, malafide

and of no effect whatsoever; (aaa) a declaration that the notice

dated 21.07.2004 (Exhibit ‘CCCC’) is wrongful, illegal, invalid,

malafide in breach of the joint venture agreement and of no effect

whatsoever; (b) an order and permanent injunction restraining the

Defendant Nos.1 & 2, their parents, associates and affiliated

companies from committing breach of their obligations under the

joint venture agreements read with the supplementary

collaboration agreement (Exhibits B & M) and/or from

committing breach of their obligations as partners in Defendant

No.5; (c) an order and permanent injunction restraining the

Defendant Nos.1 & 2, their parents, associates and affiliated

companies from directly or indirectly selling, distributing,

manufacturing, dealing in or being financially interested in

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chlorination equipments, parts, accessories and related

equipments, including electro chlorination equipments in India

and the designated territory, save and except through Defendant

No.5 or from conducting any competing business in India or the

designated territory; (d) an order and permanent injunction

restraining Defendant Nos.1 & 2, their parents, associates and

affiliated companies from in any manner interfering with and/or

preventing Defendant No.5 from conducting its business of

chlorination

equipments, including electro chlorination

equipments, of the Kocha family/Chloro Controls Equipment

Company, Proprietary concern of Defendant No.9, among other

prayers. The plaintiff as beneficial and registered owners of

3,75,000 equity shares of th 5th Defendant has instituted this suit,

a derivative action to correct and remedy the illegality and wrong

done to the 5th Defendant and its share holders by Severn Trent

through Defendant Nos.1, 2 and 6 to 8.

8. It is the case of the plaintiff that Defendant No.5 was incorporated

on 14.11.1995 and the main object mentioned in the

Memorandum of Association of Defendant No.5 is to the

following effect:-





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       "A" THE MAIN OBJECT OF THE COMPANY TO BE
       PURSUED    BY   THE   COMPANY   ON    ITS
       INCORPORATION:




                                                                        

1. To design, manufacture, import, export, act as agent,

deal in assembling, testing, erecting, servicing and
marketing of gas and electro chlorination equipments….”

Before formation of 5th Defendant company the Kocha family

carried on business of manufacture and sale of gas chlorination

equipments. On and from 1980 the Kocha family developed and

commenced manufacturing of electro chlorination equipments.

The business of Kocha family was done in the name of Chloro

Controls Equipments Company which is the sole proprietory

concern of Defendant No.9. Prior to formation of Defendant No.

5, the Chloro Controls Equipment Company was the distributor in

India for the products of Capital Controls for more than a decade.

The joint venture agreements between Defendant Nos.1 & 2 and

the plaintiff/ Defendant No.9 were executed on 16.11.1995. The

financial and technical know how licence agreement was entered

into between Defendant No.1 & Defendant No.5, under which

Defendant Nos.1 & 2 (Capital Controls) agreed to furnish

technical know how relating to the manufacture, quality control,

installation, testing and servicing of its products existing on the

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date of the agreement. The International Distributor Agreement

(being Appendix II to the Share Holders Agreement) was entered

into between Defendant No.1 and Defendant No.5 whereunder

Defendant No.1 appointed Defendant No.5 as its exclusive

distributor for the products manufactured and marketed by

Defendant No.1 viz.chlorination and water disinfection

equipments, machineries, parts, accessories and related

equipments and services in the territory of India, Afganisthan,

Nepal and Bhutan. The list of products offered for distribution at

attachment ‘A’ to the said agreement, included “Hypogen

Equipment Series 3300” which is electro chlorination equipment

and which was the only brand of electro chlorination equipment

of Capital Controls (Defendant Nos.1 & 2). However the plaintiff

has specifically asserted in Paragraph 20 of the plaint that the

Defendant No.5 did not deal with “Hypogen” brand in view of its

exorbitant pricing.

9. It is the case of the plaintiff that it was also the intention of the

parties that the business of Defendant No.5 would include the

entire range of chlorination business of Chloro Controls

Equipments Company (Proprietary concern of Defendant No.9)

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including its range of electro chlorination equipments. It was also

intended that the entire range of chlorination equipment of Severn

Trent which was initially divided between the Technical Know

How Agreement and Distributors Agreement, was ultimately to be

manufactured by Defendant No.5 indigenously. The purpose of

formation of Defendant No.5 was to fuse and pull together the

resources and technology and business in the range of

chlorination equipments including electro chlorination equipment

of Severn Trent (which at that time was conducted through

Defendant Nos.1 & 2 only) with that of Kocha family/ Chloro

Controls Equipment Company (Proprietary concern of Defendant

No.9). Plaintiff has set out various circumstances in the plaint to

contend that these circumstances establish that to the knowledge

and with the acquiescence of Defendant Nos.1 & 2, Defendant

No.5 was in fact carrying on business of manufacture, sale and

distribution of electro chlorination equipments.

10. It is the case of the plaintiff that some of the actions of Severn

Trent (including Defendant Nos.1 & 2) on and from December

1998 onwards were in breach of joint venture agreement, the

negative covenants contained therein and to the detriment of

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Defendant No.5. Some of those acts were clear systematic scheme

and design to thwart, scuttle and throttle the business of

Defendant No.5 and to illegally conduct the competing business

through their group, affiliated and associated companies, as

Severn Trent (including Defendant Nos.1 & 2) envisaged

Defendant No.5 becoming a serious competitor on the termination

of joint venture agreements and the Severn Trent did not have the

majority /controlling interest in Defendant No.5.

11.In or about December, 1998, Severn Trent acquired Exceltec Inc

and thereafter Defendant No.1 issued circular which was received

by Defendant No.5 on 01.02.1999 stating that Defendant Nos.1

& 2’s Hypogen brand of electro chlorination equipment was to be

completely replaced by Exceltec’s “Omnipure” and “Sanilec”.

Upon such replacement of Hypogen, Defendant No.5 was

exclusively entitled to conduct business of “Omnipure” and

“Sanilec” in India. As noted earlier, the plaintiff has asserted that

Defendant No.5 did not deal with “Hypogen” brand in view of its

exorbitant pricing.

12.Prior to acquisition of Exceltec by Severn Trent, Exceltec had

existing tie up and arrangement with Defendant No.4 in India.

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Upon such acquisition of Exceltec by Severn Trent and

replacement of Hypogen by Exceltec brand of “Omnipure” and

“Sanilec”, the said brands of electro Chlorination equipments

could only be dealt with in India through Defendant No.5.

However, upon such acquisition, Exceltec was none the less

supplying its products through both Defendant No.4 and

Defendant No.5. Plaintiff through Defendant No.9 repeatedly

protested against this conduct at the Board meeting of Defendant

No.5 of 26.09.2001.

13.While discussion with Exceltec were still pending, in or about

September 2001, Severn Trent Services Inc and one “Gruppo De

Nora” purported to merge their sea water and marine disinfection

business into a single joint venture under the name of “Severn

Trent De Nora LLC to market and service the products

manufactured by Exceltec and De Nora. As electro chlorination

equipment (Omnipure, Sanilec and Seaclor) fell within the range

of Severn Trent’s range of electro chlorination equipment, the

same could not be dealt with in India except through Defendant

No.5.

14.It is the case of the plaintiff that several discussions were held and

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it was pointed out that the failure to honour the joint venture

agreement and lack of support of Severn Trent was leading to

Defendant No.5’s market share in electro chlorination equipment,

being captured by competitor. In order to salvage the situation,

the Defendant No.9 at the Board meeting of 10.12.2001 and in e-

mail dated 12.01.2002 wrongly contended that the plaintiff be

permitted to conduct the business of electro chlorination

equipment of the Kocha family outside the scope of the joint

venture by interpreting the joint venture agreements to be in

respect of gas chlorination equipment only and keeping

Defendant No.5 away from electro chlorination business.

Defendant No.1 through their Advocate’s letter dated 06.09.2002

addressed to Defendant No.5, for the first time, alleged as an

afterthought, that the scope of the joint venture agreement was

restricted to marketing and sale of gas chlorination equipment

only, with the exception of right to distribute the “Hypogen

Equipment Series 3300” product line and that any venture by

Defendant No.5 into electro chlorination business was in violation

of the joint venture agreement. Plaintiff has referred to the

correspondence ensued between the parties. In substance, the case

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of the plaintiff is that having regard to the main object for which

Defendant No.5 was incorporated, as also by virtue of agreement

entered into between the parties, electro chlorination business of

both Severn Trent as well as Kocha family.

15.Chloro Controls Equipments Company (Proprietary concern of

Defendant No.9) clearly fell within the scope of business of

Defendant No.5. Defendant No.2 being the joint venture partner

cannot carry on competing business in gas or electro chlorination

equipments in India and cannot divert such business of Defendant

No.5 to other concerns either through device of acquisitions and

mergers or in any other manner whatsoever. Plaintiff relied upon

clause 4.5 of the Share Holders Agreement and contended that in

view thereof, the plaintiff is entitled to specific enforcement of

the said negative covenant.

16.During the pendency of the suit, Defendant Nos.1 & 2 issued

notice dated 23.01.2004 to be a notice to settle the dispute in

terms of clauses 22.2 (i) and 21.2.(iv) of the Share Holders

Agreement dated 16.11.1995, as also Defendant No.1 terminated

the joint venture agreements contained in (i) Shareholders

Agreement, (ii) International Distributors Agreement, (iii)

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Financial and Technical Know How Agreement, (iv) Export Sales

Agreement, (v) Trademark Registered User Agreement, by a fax

dated 21.07.2004. Plaintiff suitably amended the plaint and has

challenged the notice dated 23.01.2004 and the fax dated

21.07.2004. Plaintiff took out Notice of Motion No.553 of 2004

claiming interim reliefs during the pendency of the suit

substantially in terms of prayer clauses (c), (d), (e) & (k) of the

Plaint.

17.Affidavit in reply was filed by Mr.K.V.Ramesh on behalf of

Defendant No.1 on 27.04.2004. In substance, it was contended

that the Memorandum and Articles of Defendant No.5 cannot be

interpreted to expand the scope of activities as the object clause of

the Memorandum of Association is in general and broad based

terms and includes objects which the company may undertake in

future. The actual scope of activities of Defendant No.5 as well as

terms, rights and obligations of the parties are set out in the Joint

Venture Agreement alone. The Joint Venture Agreement clearly

describe and specifically set out the list of products which the

Defendant No.5 can manufacture, sell or distribute. Clause 4.5 of

the Shareholders Agreement dated 16.11.1995 clearly provides

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that the plaintiff, Defendant No.9 and Kocha family shall not

during the term of agreement, engage directly or indirectly or be

financially interested in the manufacture, sale or distribution of

chlorination equipments and related products which are similar to

those manufactured or sold by Defendant No.5 Joint Venture

Company. There is no such provision under the said clause

restricting the erstwhile Defendant No.2 now Defendant No.1,

and further goes on to say that during the term of this agreement

the erstwhile Defendant No.2 now Defendant No.1, its parents &

associates will not directly or indirectly engage and/or be

financially interested in the manufacture, sale and distribution in

India of the products manufactured or sold by Defendant No.5.

The non-compete obligations of the plaintiff and Defendant No.9

on one hand and that of Defendant No.1 on the other, are

conspicuously different. It is further contended that the specific

products list in the joint venture agreement and in particular

International Distributors Agreement (Appendix II to the

Shareholders Agreement) only lists the Hypogen Equipment

Series 3300″ brand line of electro chlorination equipments. At

the time of joint venture agreement, erstwhile Defendant No.2

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manufactured the Hypogen Equipment Series 3300, the electro

chlorination equipment. The erstwhile Defendant No.2

discontinued the manufacture of hypogen product line in U.S.A.,

and said discontinuation was done before acquisition of Exceltec.

Hypogen brand was not superseded by the brands of Exceltec viz.

“Omnipure” and “Sanilec”. It was further contended that had the

parties actually intended in 1995 to include all present and future

lines of Defendant No.1’s lines of electro chlorination products,

they would have (i) made the non-compete provision identical for

both parties, (ii) drafted the list of products to include all lines of

gas and electro chlorination equipment produced then or to be

produced in future. It was reiterated that the scope of joint

venture agreement can be clearly ascertained from the bare

perusal of these agreements, and by plaintiff’s own admission the

plaintiff has shown clearly that the scope of joint venture did not

extend to electro chlorination business.

18.By the impugned order dated 23.12.2004, the learned Single

Judge partly allowed the Notice of Motion No.553 of 2004 as

mentioned earlier and in view thereof disposed of the Notice of

Motion No.2382 of 2004 as it does not survive. It is against this

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order, Defendant No.1 has preferred Appeal No.24 of 2005 and

Defendant No.4 has preferred Appeal No.528 of 2005.

19.In support of Appeal No.24/2005 we have heard Mr.Rohit

Kapadia, learned Senior Advocate and Mr.J.P.Sen, learned

Advocate. In support of Appeal No.528/2005 we have heard

Mr.Pradip Sancheti, learned Senior Advocate. We have also

heard Mr.S.H.Doctor, learned Senior Advocate and Mr.Naval

Aggarwal, learned Advocate on behalf of Respondent No.1-

original plaintiff in both the appeals.

20.Mr.Kapadia in support of Appeal No.24/2005 submitted that the

learned Single Judge posed the question whether the joint venture

agreement between the parties was only for gas chlorination

equipment or whether it was also for electro chlorination

equipments. He submitted that the scope of business between the

parties has to be ascertained from the joint venture agreement

alone and that the learned Single Judge committed serious error in

issuing the injunction without considering the scope of negative

covenant viz. Clause 4.5 in the Shareholders Agreement. If the

joint venture agreement is carefully perused, it would be clear that

the joint venture agreement between the parties was only for gas

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chlorination equipments. In so far as electro chlorination

equipments are concerned, the only one product viz. Hypogen

Equipment Series 3300 manufactured by Defendant No.1 was to

be distributed by Defendant No.5. The joint venture agreement

did not contemplate manufacture or sale of electro chlorination

equipment by Defendant No.5.

21.On the other hand, Mr.Doctor appearing for Respondent No.1-

plaintiff submitted that having regard to the main object of

Defendant No.5 as mentioned in its Memorandum of Association,

it would be clear that Defendant No.5 was to design, manufacture,

import, export, act as an agent, deal in assembling, testing,

erecting, servicing and marketing of gas and electro chlorination

equipments. Thus manufacture and sale of electro chlorination

equipments was one of the main objects for which Defendant No.

5 was incorporated. This fact is fortified by the conduct of the

parties. At any rate, having regard to the circumstances and the

material on record, Defendant No.5 has a right to manufacture

and sell electro chlorination equipments, and the actions of

Defendant No.1 in acquiring Exceltec, as also merger with De

Nora LLC was with a view to competing with the business of

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Defendant No.5, which was wholly improper in view of clause

4.5 of the Shareholders Agreement. He therefore supported the

impugned order passed by the learned Single Judge.

22.We have considered the rival submissions made by learned

counsel appearing for the parties. In order to properly understand

and appreciate the controversy between the parties it would be

relevant and material to note some of the clauses of various

agreements entered into between the parties. Clauses 1, 4.5, 7,

14, 17, 20, 21, 26 and 28 of the Shareholders Agreement dated

16.11.1995 entered into by and between Defendant No.2 on one

hand and the plaintiff and Defendant No.9 on the other, are

relevant, and which read as under:-

“(1) Registration of the Company – The parties shall, subject

to obtaining all necessary approvals, licenses, and
authorizations from the Government of India, register a
company with the name “Capital Controls India Private

Limited”, or if such name is not available for any reason, then
with such other name as may be mutually agreed upon b y the
parties, (hereinafter called the “Company) having as its main
object the manufacture, sale and service of the Products (as
such terms is defined n the Financial and Technical Know-

How License Agreement between Capital Controls and the
Company referred to in Section 14 of this Agreement. The
company’s registered office shall be located in Bombay.”

“4.5 Mr.Kocha (and also his wife and sons) and Chloro
Controls shall not, during the terms of this Agreement, engage,
directly or indirectly, or be financially interested in the

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manufacture, sale or distribution of chlorination equipment
and related products which is similar to those manufactured or
sold by the Company. During the terms of this Agreement,

Capital controls, its parent and its associates will not directly
or indirectly engage in or be financially interested in the

manufacture, sale or distribution in India of the products
manufactured or sold by the Company.”

“7. Distributor Agreement: Capital Controls agrees to

appoint the Company as a Distributor in India of the Products
manufactured by Capital Controls subject to the terms and
conditions of the Distributor Agreement attached hereto as
Appendix II. This appointment will normally be renewed as
long as Capital Controls holds at least twenty-six (26%) of the

shares in the Company.”

“14. Financial and Technical Know-How License Agreement –
Chloro Controls and Capital Controls shall together cause the

Company to enter into the Financial Technical Know-How
License Agreement with Capital Controls attached hereto
(hereinafter referred to as the License Agreement). Under the
said License Agreement and subject to the terms and
conditions specified therein, Capital Controls agrees to grant

the Company the right and license to manufacture the products
in India in accordance with the Technical Know-How and

other technical information possessed by Capital Controls.”

“17. Sale and Purchase of Chlorination Equipment Assets. –

Chloro Controls and Mr.Kocha agree to transfer such of the
assets as related to the gas chlorination equipment business
presently carried on by Chloro Controls or Mr.Kocha as
per Appendix IV attached hereto.”

“20. Performance by Capital Controls – The subscription of
the equity shares of the Company and the performance of the
other obligations assumed by Capital Controls hereunder shall
be subject to the fulfillment of the following conditions:-

(i) Mr.Kocha and/or the Company shall have obtained
the necessaryh approval of the terms of foreign

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collaboration and the Company shall have received the
licenses, approvals and permissions described n Section
20.1 hereof or Chloro Controls shall have transferred and

assigned to the Company anysuch licenses and approvals, if
any, obtained by it for the manufacture of the products.

(ii) Chloro Controls shall have subscribed and paid for
the equity shares of the Company as provided in Section
4.1(ii) hereof.

(iii) Mr.Kocha/Chloro Controls shall have entered into the
Lease Agreement as provided in Section 2 hereof for
leasing the premises in Andheri to the Company.

(iv) Chloro Controls shall have transferred the assets of
the gas chlorination bus9ness to the Company as provided

in Section 17 hereof.

(v) The Company shall have obtained long-term loans as
provided in Section 12 hereof, on terms and conditions
satisfactory to Capital Controls or it shall have obtained a
commitment letter from the Financial Institutions for the
grant of the said loan or shall have made such other

arrangement, which is deemed adequate by Capital
Controls.

“21.Terms and Condition –

21.1 This agreement shall continue in force and effect for
so long as each party, its parents, associates, permitted
assigns, shall held not less than twenty-six percent (26%)
of the total paid up equity shares of the Company or in the
event that the Company fails to achieve a cumulative sales

valumen of Rupees 120 million over three (3) years and a
cumulative profit of fifteen percent (15%) per year over
three (3) years from the signing of this Agreement by both
parties, then either party may at its option, terminate this
Agreement and dispose of its shares as provided in Section

6.

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21.2 In the event of any of the following:

(i) any material breach of this Agreement (other than the

payment of money) not cured or revolved within ninety
(90) days after the date of written notice thereof;

(ii) Insolvency or bankruptcy of either party;

(iii) if either party is unable to pay its debts as they

become due, passes a binding resolution for winding up,
goes into liquidation or is dissolved, or has a received
appointed over any of its assets and undertakings, or makes
a composition with its creditors;

(iv) if there is a deadlock regarding the management of
the Company which shall remain unresolved for a period of

ninety (90) days following written notice thereof from one
party to the other;

then the party not in default may terminate this Agreement
by notice in writing to the other party.

21.3 In the event of the termination of this Agreement, the

Company will be would up and all obligations undertaken
by Chloro Controls under the Financial and Technical

Know-How Agreement or the Trademark Registered User
Agreement/Trademark License Agreement or Tradename
Agreement regarding the use of the tradename Capital

Controls in the name of the Company shall cease with
immediate effect. The name of the Company shall be
changed so that the word “Capital” either individually or in
combination with any other word or words does not appear
in the name of the Company and the said words shall not be

used by the Company in any manner in connection with its
business.”

“26. Entire Agreement – This Agreement sets forth the entire
agreement and understanding between the parties as to the
subject matter hereof and supersedes all negotiations,
commitments and writings prior to the date hereof pertaining

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to the subject matter of this Agreement.”

“28. Modifications – This Agreement shall not be altered,

modified or supplemented except with the prior written
approval of the parties hereto.”

23.Appendix II to the Shareholders Agreement which is referred in

clause 7 provides for International Distributors Agreement,

whereunder Defendant No.2 appointed the plaintiff as its

exclusive distributor of its products in India. The products offered

for distribution were set out in Attachment ‘A’. Attachment ‘A’

among other products included only one electro chlorination

equipment viz.Hypogen Equipment Series 3300. As noted earlier,

the plaintiff asserted that the Defendant No.5 did not deal with

“Hypogen” brand in view of its exorbitant pricing. It is not in

dispute, that the rest of the products in Attachment ‘A’ are the

equipments other than electro chlorination equipments. The

Financial and Technical Know How Licence Agreement dated

16.11.1995 was entered into by and between Defendant No.2 and

the plaintiff. Clauses 1.1, 1.2, 2.4, 2.5 and 24 thereof are relevant,

which read as under:-

1.1 The term “Products” shall mean Capital Controls
chlorination equipment as more fully described in Appendix I
attached hereto, and parts and components thereof. The

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Appendix forms an integral part of this Agreement.

1.2 The term “Technical Know-How” shall mean Capital

Controls’ secret drawings, designs, formulae and
manufacturing procedures and methods and other technical

information owned by capital controls or in respect of which
Capital Controls has the right to disclose and license
hereunder, relating to the manufacture, quality control,
installation, testing and servicing of the products, existing on

the date of this Agreement, and any improvement thereto, but
shall not include any manufacturing data with respect to
Appendix II.

2.4. Licensee agrees that it shall not during the terms of this

Agreement manufacture or have manufactured for it, sell or
offer for sale or be financially interested in any other venture

for the manufacture and sale of any goods similar to the
products, without the prior written permission of Capital

Controls.

2.5 During the terms of this Agreement, Capital Controls and
its affiliated companies shall sell the products in India only
through the Licensee.

24 Modifications – No modification or amendment of this

Agreement and no waiver of any of the terms or conditions
hereof shall be binding unless made in writing duly executed
by both parties.

24.Appendix-I to this agreement lists the products manufactured by

Defendant No.5 i.e. the Joint Venture, for chlorine service only.

Perusal of this Appendix-I would indicate that it does not include

any electro chlorination equipment. Appendix II to this agreement

specifically deals with the products and parts not manufactured by

Defendant No.5 viz.the Joint Venture and reads thus-

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“All Capital Control products not listed in Exhibit I and the
following series of parts –

All diaphrams,

All Springs.”

25.Thus Appendix II clearly sets out the list of products and parts not

manufactured by the Joint Venture and it further provides all

capital control products not listed in Exhibit I. We have already

noted that Appendix I to this agreement provides for products

manufactured by Defendant No.5 for chlorine service only, and

deals only with gas chlorination equipment and does not include

any electro chlorination equipment.

26.In order to succeed in getting interim reliefs, the plaintiffs will

have to establish first that Defendant No.5 is entitled to

manufacture and sell electro chlorination equipments under the

joint venture agreements, so as to enforce the negative covenants

contained in clause 4.5 of the Shareholders Agreement. We have

already extracted clause 4.5 of the Shareholders Agreement dated

16.11.1995. In our opinion, clause 4.5 is in two parts viz. (i)

Mr.Kocha, Defendant No.9 (including his wife and sons), Chloro

Controls, the Plaintiff shall not, during the term of this

agreement, engage, directly or indirectly, or be financially

interested in the manufacture, sale or distribution of

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chlorination equipments and related products which are

similar to those manufactured or sold by Defendant No.5

Company. In so far as obligation cast on Defendant No.9 and the

plaintiff is that during the term of this agreement, they shall not

deal in any manner, in the manufacture, sale or distribution of

chlorination equipments and related products which are

similar to those manufactured or sold by the Defendant No.5

Company. (ii) During the term of this agreement the Capital

Controls (Defendant Nos.1 & 2), its parents and associates will

not directly or indirectly engage in or be financially interested in

the manufacture, sale or distribution in India of the products

manufactured or sold by Defendant No.5 Company. Thus, in

so far as plaintiff and Defendant No.9 are concerned, the negative

covenant is wide enough to include chlorination equipment and

the related products which are similar to those manufactured or

sold by defendant No.5. Thus , the said negative covenant in so

far as plaintiff and Defendant No.9 are concerned, is widely

worded, whereas in so far as Defendant Nos.1 & 2 are concerned,

it only prohibits them from dealing in any manner with the

products manufactured or sold by Defendant No.5 Company. In

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28

other words, this covenant is not as widely worded as compared

with the wordings of negative covenant qua the plaintiff and

Defendant No.9.

27.With the assistance of learned counsel appearing for the parties,

we have been taken through the material on record. Learned

counsel for the plaintiff however could not point out any material

to substantiate that in fact, Defendant No.5 was manufacturing

and selling electro chlorination equipments. The prohibition

contemplated against Defendant Nos.1 & 2 in clause 4.5 is that

they shall not deal with the products manufactured or sold by

Defendant No.5. In the first place, perusal of the joint venture

agreements together with their annexures would indicate that the

electro chlorination equipments was not part of these agreements.

The only one product viz.Hypogen Equipment Series 3300 was to

be distributed by Defendant No.5. Thus, Defendant No.5 was not

authorised to manufacture and sell electro chlorination products.

Even otherwise, from the material on record, we do not find that

in fact Defendant No.5 was manufacturing or selling electro

chlorination equipments. As noted earlier, in the plaint the

plaintiff has asserted that Defendant No.5 did not deal with

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29

“Hypogen” brand in view of its exorbitant pricing. That apart,

plaintiff has not led any foundation in the plaint for invoking

clause 4.5 of the Shareholders Agreement.

28.Mr.Kapadia invited our attention to Section 27 of Indian Contract

Act, 1872 (for short ‘Act’) to contend that even otherwise Clause

4.5 is void. In support of this submission, he relied upon the

judgment of the Apex Court in the case of Superintendence

Company of India (P) Ltd.V/s.Shri.Krishan Murgai, 1981 (1)

LLJ 121. The appeal before the Apex Court preferred by the

Company-original plaintiff, principally raised two substantial

questions viz.(i) whether a post service restrictive covenant is in

restraint of trade, as contained in clause (10) of the Service

Agreement between the parties is void under section 27 of the

Indian Contract Act, 1872?, (ii) Whether the said restrictive

covenant assuming it to be valid, is on its terms enforceable at the

instance of the Appellant Company against the Respondent? In

that case, the Appellant company which was carrying on business

as valuers and surveyors, undertaking inspection of quality,

weighment, analysis, sampling of merchandise and commodities,

cargoes, industrial products, machinery, textile etc., having its

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30

head office at Calcutta and branch at New Delhi, appointed the

Respondent as Branch Manager of its New Delhi office on

27.03.1971. The letter of appointment contained terms and

conditions and clause (10) thereof placed the respondent under

post service restraint that he shall neither serve any other

competitive firm, nor carry on business on his own in similar lines

as that of the Appellant company for two years at the place of his

last posting. Clause (10) reads as under:-

“10.

That you will not be permitted to join any firm of our
competitors or run a business of your own in similar lines

directly and/or indirectly, for a period of two years at the place
of your last posting after you leave the company.”

On 24.11.1978 Appellant terminated services of the Respondent

w.e.f. 27.12.1978. Respondent started his own business under the

name and style of ‘Superintendence and Surveillance Inspectorate

of India’ in New Delhi on lines identical with or substantially

similar to that of Appellant company. On 19.04.1979, Appellant

company instituted suit in Delhi High Court on its original side

claiming Rs.55,000/- as damages on account of breach of the

negative covenant contained in clause (10) and for permanent

injunction restraining the Respondent, by himself, his servants,

agents or otherwise, from carrying on the said business or any

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31

other business on lines similar to that of Appellant company or

associating or representing any competitors of the Appellant

company before expiry of two years from 27.12.1979. After

filing the suit, the appellant company sought temporary injunction

by way of enforcing the negative covenant. On 29.04.1979 the

learned single Judge granted ad-interim injunction, and after

hearing the Respondent confirmed the ad-interim order on

25.05.1979. Learned Single Judge took a view that the negative

covenant being in partial restraint to trade was reasonable

inasmuch as it was limited both in point of time (two years) as

well as the area of operation (New Delhi which was his last

posting), and therefore was not hit by Section 27 of the Act.

Learned Single Judge was also of the opinion that the negative

covenant was enforceable as the expression “leave” in clause (10)

was not confined to voluntarily leaving of service by the

Respondent but was wide enough to include the termination of his

services by the Appellant company. On appeal by the Respondent,

the Division Bench of the High Court reversed the order of the

learned Single Judge on both the points. In the Apex Court,

Hon’ble Mr.Justice V.D.Tulzapurkar speaking for himself and

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32

Hon’ble Mr.Justice Untwalia disposed of the appeal on the 2nd

point whether the restrictive covenant contained in clause (10),

assuming to be valid, was on its terms enforceable at the instance

of the Appellant company against the Respondent. Hon’ble

Mr.Justice Tulzapurkar came to the conclusion that the expression

“leave” occurring in clause (10) of the agreement was intended

by the parties to refer only to a case where the employee has

voluntarily left the service of the company of his own, and since

the services of the Respondent were terminated by the appellant

company, restrictive covenant contained in clause (10) would be

inapplicable, and therefore, not enforceable against the

Respondent at the instance of the appellant company. In a

separate but concurring judgment Hon’ble Mr.Justice Sen was of

the view that the appeal cannot be decided without deciding the

question as to whether the negative covenant which restricts the

right of the employee after conclusion of the terms of service or

the termination of the employment for the other reasons to engage

in any business similar to or competitive with that of the

employer, is in restraint of trade, and therefore void under section

27 of the Act. Hon’ble Mr.Justice Sen considered various cases

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33

viz.(i) Niranjan Shankar Golikari V/s.Century Spinning and

Mfg.Co.Ltd., 1967 (1) LLJ 698, (ii) Brahmaput Tea

Co.Ltd.V/s.Skarth, ILR (1885) 11 Calcutta 545, (iii) Nordenfelt

V/s.Maxim Nordenfelt Guns and Ammunition Co.Ltd., L.R.

(1894) A.C.535, (iv) Satyavrata Ghosh V/s.Mugnee Ram Bangor,

(1954) SCR 310, (v) Madhub Chunder V/s.Rajcoomar Doss,

(1974) Beng.L.R.76, among others, and considered the english

law on this point in contrast with section 27 of the Indian Contract

Act, and in paragraph Nos.49 and 50 of the judgment, observed

thus:

“49. In Shaikh Kalu v.Ram Saran Bhagat, (1908) 13 C.W.N.
388, Mookerjee and Carnduff, J.J., referred to the history of
the legislation on the subject and observed that the framers of

the Act deliberately reproduced S.883 of Field’s Code, with
the full knowledge that the effect would be to lay down a rule

much narrower than what was recognised at the time by the
common law, while the rules of the common law, on the other
hand, had since been considerably widened and developed, on

entirely new lines. They held that the wider construction put
upon S.27 by Sir Richard Couch in Madhub Chunder
v.Rajcoomar Doss, (supra), is plainly justified by the language
used, and that the section had abolished the distinction
between partial and total restraints of trade and said.

“The result is that the rule as embodied in S.27 of the
Indian Contract Act presents an almost starting
dissimilarity to the most modern phase of the English rule
on the subject.”

They went on to observe:

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34

“As observed, however, by Sir Richard Couch in the case
to which we have referred, we have nothing to do with the

polity of the law, specially as the Legislature has
deliberately left the provision in S.27, in its original form,

though other provisions of the Contract Act have from time
to time been amended. The interference would be almost
irresistible under these circumstances, that the Courts have
rightly ascertained the intention of the Legislature. The

silence of the Legislature in a case of this description is
almost as emphatic as an express recognition of the
construction which has been judicially put upon the statute
during many years past. In this view of the matter, if we
adopt the construction of S.27 of the Indian Contract Act as

first suggested by Sir Richard Couch and subsequently
affirmed in the cases to which we have referred, a

construction which is consistent with the plain language of
the section, the agreement in this case must be pronounced

to be void.”

“50. The law Commission, in its Thirteenth Report, has
recommended that S.27 of the Act should be suitably amended
to allow such restrictions, and all contracts in restraint of trade,

general or partial, as were reasonable, in the interest of the
parties as well as of the public. That, however, involves a

question of policy and that is a matter for Parliament to decide.
The duty of the Court is to interpret the section according to its
plain language.”

29.Section 27 of the Contract Act reads as under:-

“27. Agreement in restraint of trade void – Every agreement by

which any one is restrained from exercising a lawful profession,
trade or business of any kind is to that extent void.

Exception 1: One who sells the goodwill of a business may
agree with the buyer to refrain from carrying on a similar
business within specified local limits, so long as the buyer or
any other person deriving title to the goodwill from him,

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35

carries on a like business therein,; provided that such limits
appear to the Court reasonable, regard being had to the nature
of the business.

30.Section 27 of the Contract Act is general in terms and declares all

agreements in restraint void pro tanto except in the case specified

in the exception. The observations of Sir Richard Couch, the

learned Chief Justice, in Madhub Chunder V/s.Rajcoomar Doss

(supra) which have become the locus class classicus were these :

“The words ‘restraint from exercising a lawful profession,
trade or business do not mean an absolute restriction, and are

intended to apply to a partial restriction, a restriction limited to
some particular place, otherwise the first exception would

have been unnecessary. Moreover, in the following S.28 the
legislative authority when it intends to speak of an absolute
restraint and not a partial one, has introduced the word
‘absolutely’. The use of this word in S.28 supports the view
that in S.27 it was intended to prevent not merely a total

restraint from carrying on trade or business, but a partial one.
We have nothing to do with the policy of such a law. All we

have to do is to take the words of the Contract Act, and put
upon them the meaning which they appear plainly to bear.”

31.Perusal of section 27 of the Indian Contract Act, in our opinion,

casts onus of proving reasonableness under Exception I on the

covenantee. The Plaintiff has not prima-facie established that the

agreements entered into between the parties fall in Exception 1 to

Section 27 of the Act. The view we are taking is also supported

by the decision of the Apex Court in the case of Percept D’Marle

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36

(India) (P) Ltd.V/s.Zaheer Khan, (2006) 4 SCC 227. Prima facie

we are not satisfied on the basis of material on record that the

negative covenant contained in clause 4.5 of the Shareholders

Agreement can be invoked by the plaintiff. As indicated earlier

the plaintiff has not prima-facie established that Defendant No.5

was manufacturing or selling electro chlorination equipments,

having regard to various joint venture agreements. Assuming that

the plaintiff is right in contending that clause 4.5 of the

Shareholders Agreement prohibits Defendant Nos.1 & 2 from

dealing in any manner with the products manufactured or sold by

Defendant No.5 that includes electro chlorination equipments,

none the less, having regard to the judgment of the Hon’ble Mr.

Justice Sen in the case of Superintendence (supra), the said clause

being in restraint of trade is prima facie void. That apart, even in

the minutes of the meeting No.3 of the Board of Directors of the

plaintiff held on 10.12.2001 which was attended by Defendant

Nos.9 to 11 and in particular clause 4.4.5 and 4.4.6 thereof clearly

set out the stand of the plaintiff and Defendant No.9. These

clauses read as under:-

“4.4.5. Mr.M.B.Kocha owns the company wherein the
electro chlorination business was developed since 1972

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onwards as mentioned above, along with Gas Chlorination
business. While the gas chlorination was covered in the said
JV Agreement, the electro chlorination was excluded in the JV

Agreement.”

“4.4.6. The technology is in the hands of Mr.M.M.Kocha.
Seeing the present scenerio between STS, CCI and CCU, it
would be prudent for all to keep JV Company away from the
electro chlorination business and continue the electro

chlorination business in the company owned by
Mr.M.B.Kocha. This will resolve most of the present problems
and no complications will take place at the time of bidding for
the tender and no embarrassing situations will arise at any time
in future between the companies.”

32.Perusal of clause 4.4.5 would indicate that the gas chlorination

was covered in the joint venture agreement and electro

chlorination was excluded in the joint venture agreement. Perusal

of clause 4.4.6 would indicate that it was suggested that it would

be prudent for all to keep the joint venture company away from

electro chlorination business and continue the electro chlorination

business in the company owned by Defendant No.9. This would

resolve the most of the problems and no complications would take

place at the time of bidding for the tender and no embarrassing

situations would arise at any time in future between the

companies. It is relevant to note that only Defendant Nos.9 to 11

attended the said meeting and none of the Directors of Defendant

Nos.1 & 2 attended the said meeting. This aspect has been sought

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38

to be explained in Paragraph No.23 of the plaint, which reads as

under:-

“23. Again the electro chlorination equipments were

initially supplied to both Defendant Nos.4 and the 5th
Defendant in India. Several discussions were held, and it was
pointed out that the failure to honour the Joint Venture
Agreements and the lack of support of Severn Trent was

leading to the 5th Defendant’s market share in electro
chlorination equipments being captured by competitors. In
view of the frustrating predicament in which Severn Trent had
placed the 5th Defendant and in view of its resultant
deteriorating financial position, the 9th Defendant, at the board

meeting of 10th December, 2001 and in e-mail dated 12th
January, 2002, in order to salvage the situation and in a state of

utter helplessness, wrongly contended that the plaintiff be
permitted to conduct the business of electro chlorination

equipments of the Kocha family outside the scope of the joint
venture by interpreting the Joint Venture Agreements to be in
respect of gas chlorination equipments only, and keeping the
5th Defendant away from electro chlorination business. Severn
Trent, however, refused to accept this suggestion.”

33.Prima-facie, at this stage, we are of the opinion that even the

plaintiff and Defendant No.9 accepted that the joint venture

agreements were only in respect of gas chlorination equipments

and did not cover electro chlorination business. Plaintiff strongly

relied upon various circumstances which found favour by the

learned Single Judge. Mr.Doctor strenuously contended that the

Under Secretary to the Government of India, Ministry of Industry,

addressed the letter dated 11.10.1996 to Defendant No.5 (Exhibit

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‘I’ to the plaint) conveying approval of the Government of India

to the proposal for foreign collaboration with Defendant No.2

subject to the terms and conditions set out therein. Defendant No.

5 replied this on 21.12.1996 (Exhibit ‘j’ to the plaint) and in so far

as point No.2 of letter dated 11.10.1996 is concerned, approval

was requested to be amended so as to include manufacture of gas

chlorination and electro chlorination equipments among other

products. This was responded by the Under Secretary to the

Government of India, Ministry of Industry on 21.04.1997 (Exhibit

‘L’ to the plaint) conveying the approval of the Government of

India to the amendment of clauses 2, 3 and 4 of the approval letter

dated 11.10.1996. Pursuant to the approval dated 21.04.1997

Supplementary Collaboration Agreement was executed between

Defendant No.2 and Defendant No.5 wherein parties confirmed

that they shall adhere to the terms and conditions as stipulated by

the Government of India vide letter dated 11.10.1996, amended

on 21.04.1997. The said Supplementary Collaboration Agreement

is at Exhibit ‘M’ to the plaint. Relying upon this correspondence

alongwith the other circumstances, Mr.Doctor contended that the

object of the Joint Venture Agreement was not only to

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manufacture gas chlorination equipments, but also to manufacture

electro chlorination equipments.

34.We do not find any substance in this contention. Clause 26 of the

Shareholders Agreement dated 16.11.1995 provides that the said

agreement sets-forth entire agreement and understanding between

the parties as to the subject matter and superseded all

negotiations, commitments and writings prior to the date of

agreement pertaining to the subject matter of the said Agreement.

Clause 28 thereof further provides that the Shareholders

Agreement shall not be altered, modified or supplemented except

with the prior written approval of the parties thereto. As noted

earlier the Shareholders Agreement was entered into by and

between Defendant No.2 on one hand and the plaintiff &

Defendant No.9 on the other. Similarly, clause 24 of the Financial

& Technical Know How Licence Agreement dated 16.11.1995

provides that no modification or amendment to the said

agreement and no waiver of any of the terms and conditions set

out therein shall be binding, unless made in writing, duly

executed by both the parties. Plaintiff has not brought on record

any material to indicate that various agreements entered into

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41

between the parties were suitably modified pursuant to the

approval dated 21.04.1997 accorded by the Government of India.

Even otherwise, no material is brought on record by the plaintiff

to substantiate that pursuant to the approval dated 21.04.1997,

Defendant No.5, was in fact manufacturing electro chlorination

equipments.

35.Clause 17 of the Shareholders Agreement provides that the

plaintiff and Defendant No.9 agreed to transfer such of the assets

as are related to gas chlorination equipments business presently

carried on by the plaintiff and Defendant No.9 as per the

Appendix IV of the said Agreement. Thus, prima-facie, the

assertions made by the plaintiff that the plaintiff and Defendant

No.9 transferred assets of their electro Chlorination equipment

business to Defendant No.5 Joint Venture Company, is also

factually incorrect, and further having regard to the joint venture

agreement there was inherent possibility of deadlock regarding

the management of the company viz.Defendant No.5. In that

regard clauses 6, 7, 8 and 9 of the Shareholders Agreement

indicate inherent possibility of deadlock in the management of the

Company and consequently, if there is a deadlock, obviously,

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Defendant No.5 would not be in a position to carry on its

business. Having regard to clauses 6, 7, 8 & 9 of the Shareholders

Agreement and having further due regard to the fact that the

disputes and differences arose between the plaintiff & Defendant

No.9 on one hand and Defendant Nos.1 & 2 on the other from

December, 1998 onwards and the said disputes and differences

continued between them even in the year 2001, would prima-facie

indicate that Defendant No.5 was not in a position to carry on

business. It is in these circumstances, we are of the opinion that

the plaintiff has not made out a prima-facie case for issuance of

injunction as prayed for. This is to be appreciated on the backdrop

of the fact that in for as Defendant No.4 is concerned, even in the

plaint the plaintiff has admitted that prior to acquisition of

Exceltec by Severn Trent, the Exceltec had an existing tie up and

arrangement with Defendant No.4 in India.

36.Even otherwise, there is one more reason for denying any interim

relief to the plaintiff and that is the delay in approaching the

Court. The Plaintiff has specifically averred in the plaint itself that

Defendant Nos.1 & 2 started committing breaches since

December 1998 and even in the year 2001 they continued to

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commit breaches. In the meeting of Board of Directors held on

10.12.2001 Defendant No.9 in terms of clauses 4.4.5 and 4.4.6

declared that the joint venture agreements are only in respect of

gas chlorination equipments and the electro chlorination was

excluded. Despite this position, the plaintiff has instituted a suit as

late as on 19.01.2004. This is the additional reason for denying

any interim relief to the plaintiff.

37.In view of the aforesaid discussion, we are of the opinion that the

interim order passed by the learned Single Judge on 23.12.2004 in

the Notice of Motion No.553 of 2004 and Notice of Motion No.

2382 of 2004 is liable to be quashed and set aside and is

accordingly set aside. Notice of Motion No.553 of 2004 and

Notice of Motion No.2382 of 2004 are dismissed. Both the

appeals are allowed, leaving the parties to bear their respective

costs.

38.At the request of learned counsel appearing for the Respondents,

it is directed that though we have dismissed the notices of motion

by our judgment, the interim arrangement which is presently in

force will continue for a period of eight weeks from today.

       (R.G.KETKAR, J.)                        (D.K.DESHMUKH, J.)




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Shri Basant Lall Shaw vs 56 Years on 28 July, 2011

Bombay High Court
Shri Basant Lall Shaw vs 56 Years on 28 July, 2011
Bench: R. M. Savant
                                   1

       IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                  
                   NAGPUR BENCH : NAGPUR




                                          
               WRIT PETITION NO.2438 OF 2011




                                         
    1) Shri Basant Lall Shaw s/o late
       Jagbandhanram Shaw, aged about
       78 years, occupation : business,




                                   
       r/o 264, Usha Sadan, Pandit
       Ravishankar Shukla Marg,
                    
       Civil Lines, Nagpur.

    2) Shri Arbind Kumar Jayaswal s/o
                   
       Shri Basant Lall Shaw, aged
       about 57 years, occupation :
       business, r/o 264, Usha Sadan,
       Pandit Ravishankar Shukla Marg,
      

       Civil Lines, Nagpur.           ...              Petitioners
   



             - Versus -

    Shri Manoj Kumar Jayaswal s/o Shri
    Basant Lall Shaw, aged about





    56 years, occupation : business,
    r/o 264, Usha Sadan, Pandit
    Ravishankar Shukla Marg, Civil
    Lines, Nagpur.                     ...           Respondent





                      -----------------

    Shri A.S. Mardikar, Advocate for the petitioners.

    Shri S.P. Dharmadhikari, Senior Advocate assisted by
    Shri D.V. Chauhan, Advocate for the respondent.

                      ----------------




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                                     2




                                                                        
         Date of reserving the judgment                  :        6/7/2011




                                                
         Date of pronouncing the judgment                : 28/7/2011



                                   CORAM :      R.M. SAVANT, J.




                                               
                                   DATED :      JULY 28, 2011




                                   
    JUDGMENT :        

Rule, with the consent of the learned Counsel

for the parties made returnable forthwith and heard.

2) The above petition filed under Articles 226

and 227 of the Constitution of India takes exception to

the order dated 13/5/2011 passed by the learned 3rd

Joint Civil Judge, Senior Division, Nagpur whereby the

application (Exh. 13) filed by the petitioners herein

under Sections 5 and 8 of the Arbitration and

Conciliation Act, 1996 (for the sake of brevity,

hereinafter referred to as “the said Act”) came to be

rejected.

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3) The issue, which arises for consideration in

the above petition, is as to whether the dispute as

regards implementation of the directions of the Escrow

Agent appointed under the Indenture of Family

Settlement dated 31/7/2008 is arbitrable and has to be

referred to the Arbitrator ?

4)

The factual matrix involved in the above

petition can be stated thus :

The petitioner no.1 is the father of the

petitioner no.2 as well as the respondent. The

petitioner no.1 has established a business empire,

which is popularly known, according to the petitioners,

as ‘NECO Group of Industries”. The petitioner no.1 as

the head of the family commenced business with

incorporation of the Nagpur Engineering Company

(Pvt.) Ltd. and later on with the growth of other

businesses, all connected with iron foundry, a merged

Company came into being, which was known as

Jayaswal Neco Ltd. The said Jayaswal Neco Ltd. was

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subsequently merged into other two Companies, which

amalgamated entity, is known as Jayaswal Neco

Industries Ltd. The said Jayaswal Neco Industries Ltd.

under the leadership of petitioner no.1 set up a

number of manufacturing units, factories and foundries

involved in the business of iron, steel and aluminium

metal, iron scrap processing, road construction and toll

collection and manufacturing of ferro alloys, auto

components, steel valves and steel. The business

empire of the petitioner no.1 is spread throughout

India with major activities being carried on from

Nagpur in Maharashtra, Bhilai, Anjora and Siltara

(Raipur) in Chhattisgarh, Durgapur in West Bengal,

Ranchi in Jharkhand, Bangalore in Karnataka and

Chennai in Tamil Nadu. With passage of time, the

petitioner no.2 and respondent joined business of the

petitioner no.1.

5) It appears that on account of differences and

disputes, which had arisen between petitioners and the

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respondent, the petitioner no.1 with a view to maintain

family peace and harmony and to avoid any future

friction in the family or misunderstandings and to

arrive at an amicable settlement between the brothers,

i.e. petitioner no.2, Rameshkumar Jayaswal and the

respondent, decided to have a family settlement,

which was arrived
ig at with the assistance and

intervention of relatives and well wishers, as a result of

which the business empire of the petitioner no.1 was

divided into two groups, namely, BLS group, which was

to consist of the petitioners and Rameshkumar

Jayaswal and the MKJ Group consisting of the

respondent. The said family settlement was reduced

into writing and accordingly an Indenture of the Family

Settlement (for the sake of brevity, hereinafter

referred to as “IFS”) was executed on 31/7/2008. The

said family settlement was executed by the petitioners

and Rameshkumar Jayaswal forming part of the BLS

Group and the respondent signed the family

settlement for himself and on behalf of his family

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members, who constituted the MKJ Group.

6) The said family settlement resulted in the

separation of the joint interest of the petitioners and

the respondent in the shareholding of the different

business Companies, other family Companies and

assets and properties held jointly or individually in the

name of any family member between BLS Group and

MKJ Group in the ratio of 3:1 wherein each of the four

parties was to get equal and near equal share therein.

The relevant clauses of the said Family Settlement

from the point of view of the above petition are

Clauses 7(l), 19 and 27. The same are, therefore,

reproduced hereunder :

“7. It is hereby agreed by and between the
parties hereto as follows :

(l) Notwithstanding anything herein contained,
it has been expressly agreed and confirmed by
the Parties hereto that all pending loan
agreements and personal guarantees in respect
of the loans already sanctioned/to be sanctioned
by CIAL – Strip Mill (Siltara) and Inertia Rolling

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7

Mill and JNIL – working capital shall be signed by

MKJ. MKJ will also procure and ensure that

additional Term Loans are sanctioned by the
banks to CIAL for the Strip Mill and to INERTIA for
Rolling Mills at Siltara and sanctioned funds are

released for improvising the Strip Mill and
repayment of the advances given by JNIL for the
Strip Mill so that it is commissioned at the

earliest. For this purpose, BLS Group shall

extend its reasonable cooperation to MKJ Group
for release of the funds for the Strip Mill out of

the funds disbursed. MKJ shall deduct a sum of
Rs.593 lacs as stated in Clause 7(d) and any
similar sums paid by CIAL/MKJ Group and

transfer the balance fund to the Units. All these

Units referred above are being run by Jayaswal
Neco Industries Limited under Lease on payment

of monthly rentals and as per the understanding
monthly/quarterly instalments along with
interest thereon payable to respective Bank/
Institutions are being provided by JNIL out of

accrual of monthly lease rentals, barring only for
the Strip Mill acquired by CIAL as the Strip Mill’s
improvisation is still not complete due to lack of
funds and once the additional sanctioned Term
Loan is released by Bankers for completion of

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8

improvisation, the same shall be operated under

lease from CIAL and the accrued lease rent

provided by JNIL shall be paid to the
Bankers/Institutions funding the CIAL – Strip Mill
towards part payment of principal and interest

till the date of merger of the Units with JNIL.
Once all the units are merged with JNIL, the
liability for payment of the balance loans and its

interest shall be on JNIL. Till merger of the units

with JNIL, the system of running the units on
lease rental basis shall continue and out of the

lease rental accruals, instalments and interests
shall continue to be provided for payment to the
Lenders of the Units by JNIL through a

designated account to be operated by the

nominees of both the Groups. It is hereby
clarified and accepted by the Parties that the

system of Lease of Units has been adopted by
BLS Family for commercial convenience and the
lease rentals are no way connected to the actual
repayment of interest and principle of the Units.

BLS Group agrees to pay total interest and
principle payments in priority in accordance with
the Sixth Schedule, including all other incidental
amounts due to the Bankers of the Units on due
dates.”

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9

“19. As per the Settlement recorded herein,

which is to be implemented in stages, the
parties hereto have decided, on their free will
and accord, to appoint Messrs Kanga and

Company, Advocates and Solicitors, Mumbai
hereinafter referred to as “the Escrow Agent” to
be duly assisted by Shri B.K. Agarwal, Chartered

Accountant, Nagpur and Shri Sohan Chaturvedi,

Chartered Accountants, Mumbai and the Escrow
Agreement shall be executed within 7 (seven)

days from the date of execution of these
presents. A photocopy of this executed
Indenture shall be provided to the Escrow Agent

for full and final implementation of the terms of

this Indenture and on completion/non-
completion of this Indenture, the Escrow Agent

shall submit its Report to both the Groups, which
shall be prepared with the assistance of Shri B.K.
Agarwal and Shri Sohan Chaturvedi, on the Final
Date as provided in this Indenture. The

Provisions of the escrow mechanism are
mentioned below :

a. Each Group shall, within 10 (Ten) days from
the date of execution of this Indenture, i.e. the

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10

Effective Date, deposit the following instruments

with the Escrow Agent to be held in Escrow as

provided herein :

(i) Duly filled in, signed and executed share

transfer forms together with the originals of the
share certificates of the companies representing
shareholders of the respective Parties in the

Compan(ies) duly completed in favour of the

parties to whom the concerned shares of the
Companies are being given/allotted under Terms

of this Indenture (hereinafter referred to as the
“Allottee Parties”) to enable the Allottee Parties
to get those shares registered/endorsed in their/

their Nominee’s names. In case of Shares

mortgaged with the Lenders, the transfer forms
along with a request letter for the transfer shall

be submitted and in case of shares in demat
forms the relevant forms shall be executed and
submitted.

(ii) A Power of Attorney executed by each of the
Groups hereto in favour of the Escrow Agent to
do all such acts, deeds, matters are things as
may be necessary for the purpose mentioned in

(i) hereinabove. The Power of Attorney executed

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in favour of the Escrow Agent shall have wide

powers to enable the Escrow Agent to ensure

effective implementation of this Indenture
including powers to consult Advocates,
Chartered Accountants and such other

Consultants, if necessary, and to incur such
expenditure as the Escrow Agent may deem fit.

(iii) Letter of Resignation of a blank date

executed by the members of each of the Groups
hereto and their Nominees on the Boards of

various companies, tendering their resignation
as Directors of the Companies allotted to other
parties/Groups.

(iv) It has also been agreed by and between the
parties that all actions, acts and deeds shall be

performed by both the Groups, viz. BLS Group
and MKJ Group simultaneously and the Escrow
Agent shall permit both Groups to examine all
the documents in his office with prior

appointment and confirm in writing that the
required documents and necessary Board
Resolutions have been adopted and executed in
proper form and order so as to avoid future
disputes. The other compliances/defects pointed

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out by the other Group shall be rectified within 7

(Seven) days.

(b) In the event one of the two Group or both
Groups do not cooperate with each other in the

implementation of this Indenture of Family
Settlement and/or in the event of any of the
party’s default, delay or failure to carry out his

obligation hereunder, the Parties hereby agree

that the Escrow Agent shall have power to take
binding decision on behalf of the non-

cooperating and/or defaulting Group and cause
the same to be implemented, including power to
transfer shares of Business and Other Family

Companies, by such Group and/or to release to

the other Group such of the documents and
papers as the Escrow Agent shall, in his absolute

discretion, deem fit and proper.

(c) The Escrow Agent shall, (i) on such date
prior to the Final Date or (ii) on the Final Date

(failing fixation of mutual date prior to Final
Date), hand over the above documents to the
respective Allottee Parties only after
compliances of the following :

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(i) Fulfillment of all the conditions as specified

under Clause 19(a)(i), (ii), (iii) and (iv),

(ii) On full compliance of the provisions as per
Clause 18 above.

(d) On handing over of the documents to the
respective Allottee Parties along with a

Compliance Certificate for compliance of all the

terms of this Indenture, the Escrow Agent shall
stand fully discharged of his obligations as such

Escrow Agent and neither party shall have any
claim of any nature whatsoever against the
Escrow Agent by virtue of this Indenture or

otherwise.

(e) The parties agree that the obligations of the

Escrow Agent under this Indenture shall not be
affected by any disputes or contentions between
the parties hereto and that the Escrow Agent
shall be entitled to carry out its obligations as

set out herein regardless of any such disputes or
conventions that may be raised.

(f) The Escrow Agent shall not be liable for any
action taken or omitted to be taken pursuant to

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this Indenture, except in the case of gross

negligence or willful misconduct.

(g) In consideration of the Escrow Agent having
agreed to hold the documents in Escrow, as

provided in this Indenture, the Escrow Agent
shall be paid necessary fees to be shared
between the BLS Group and MKJ Group in the

proportion of 3:1 (Three is to One), respectively

and such payment shall be made within Seven
(07) days from the Escrow Agent raising its

invoices on the parties hereto.”

“27. Each party shall fully co-operate with the

others or other of them to implement and give

full effect to the provisions of this Indenture. It
is agreed that in case there is any difference of

opinion between the two groups or any of the
parties hereto in any way relating to or arising
under this Indenture or the separation agreed
hereunder or otherwise relating to any of the

Companies, Businesses or Properties of the BLS
Family, the parties hereby agree to refer, except
the disputes referred under Clause 7(i) and 27,
all such disputes and difference to Arbitration in
accordance with the provisions of the Arbitration

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15

and Conciliation Act, 1996. None of the parties

hereto shall resort to, initiate or threaten to

initiate or cause to be initiated, any legal
proceedings in any Court of Law, to resolve any
dispute, etc. relating to Family Businesses or any

matter covered by this Indenture. The place of
the Arbitration shall be at Mumbai. The
language of the Arbitration shall be English. The

decision of the Arbitrator shall be final and

binding upon the Parties hereto.”

7) Pursuant to the said IFS, a separate Escrow

Agreement dated 26/12/2008 was entered into by the

parties. The parties also executed a Power of Attorney

in favour of the Escrow Agent, one M/s. Sohan

Chaturvedi and Company, Chartered Accountants,

Mumbai. In terms of the IFS, mutual obligations were

cast upon both the groups, i.e. BLS Group and MKJ

Group. It is for the smooth implementation and

execution of the IFS that the Escrow Agent, namely,

M/s. Sohan Chaturvedi and Company came to be

appointed. The Escrow Agent was given powers under

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the said Clause 19, which are reflected in sub-clauses

(b) and (c) thereof. The said powers can also be seen

from the Escrow Agreement as well as from the Power

of Attorney, which the parties executed in favour of

Escrow Agent. The cause of filing the present

proceedings has arisen on account of the alleged non-

fulfillment of the obligations by the petitioners under

Clause 7(l), which is in respect of the demerger of the

Strip Mill. The said Strip Mill was to be demerged from

the Company known as CIAL and to be merged with

the Company known as JNIL, i.e. the group Company of

the petitioners. The same was to be done within 90

days from the date of the execution of the IFS.

Further, in terms of the obligations cast by the IFS, the

petitioners were liable to make payment against the

loan to the Bankers simultaneously on the transfer of

the ownership rights. It is the case of the petitioners

that after execution of the IFS, the respondent

continued to delay the process of demerger and

merger of Strip Mill with JNIL on one pretext or the

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other, whereas it is the case of the respondent that

during the pendency of the procedure of merger of the

Units with JNIL, BLS Group is under an obligation to

continue to pay regular instalments and interest to the

Banker of the Unit through a designated Account to be

operated by the nominees of both the Groups. It is the

case of the respondent that the petitioners have

stopped the payment since August 2010 whereas it is

the case of the petitioners that in spite of making

payment of about Rs.150 crores against the Bank

loans, the ownership has not been transferred from

CIAL to JNIL, resulting into the Strip Mill not being

commissioned as the ownership of the said plant has

remained vested with the respondent and hence,

without having ownership of the plant, the same could

not be commissioned by the petitioners’ Company. It

is the case of the petitioners that the amount of Rs.150

crores approximately, which they have invested in the

said Strip Mill on account of repayment of loan and

renovation is lying idle for more than three years.

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8) As regards the said dispute, the parties

charted different paths. Insofar as the respondent is

concerned, he approached the Escrow Agent against

non-fulfillment of the obligations by the petitioners, as

a consequence of which the Escrow Agent issued

directions on 7/11/2009, in respect of payment of

instalments by the petitioners towards the loan of the

said Strip Mill and the Escrow Agent made observations

about the default being continued by the BLS Group

while issuing the said directions. The Escrow Agent

thereafter issued further directions on 14/4/2011 and

by the said order, directed the BLS Group, i.e.

petitioners to make the payment of the instalments to

the Bankers of the Strip Mill.

9) Insofar as petitioners are concerned, the

petitioners issued a notice to the respondent on

23/2/2011 calling upon him in view of the dispute

between the parties as regards the Strip Mill, to give

consent for appointment of Shri B.V. Bhargava,

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Ex-Vice Chairman and Managing Director of the ICICI

Bank as the sole Arbitrator to adjudicate upon the said

dispute along with other disputes that may be detailed

out once the arbitration commences and modalities as

suggested by the agreement are agreed. The

respondent replied to the said notice by his letter

dated 26/3/2011. The sum and substance of the reply

of the respondent was that the disputes in question as

regards the directions of the Escrow Agent, were not

arbitrable since they were not covered by Clause 27 of

the IFS.

10) The petitioners having received the said reply

and seeing that the respondent was not cooperating in

the resolution of the disputes, filed Miscellaneous Civil

Application No.325/2011 under Section 11(6) of the

said Act in this Court. The case of the petitioners was

that the disputes between the parties more specially

the dispute regarding demerger of the Strip Mill was

arbitrable in terms of Clause 27 of the IFS. The said

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Miscellaneous Civil Application had come up for

hearing before a learned Judge of this Court, who by

order dated 1/4/2011 was pleased to issue notice to

the respondent. The said notice has been served upon

the respondent thereafter.

11) The respondent herein, after the said notice

came to be issued in the said Miscellaneous Civil

Application, on 9/5/2011 filed Special Civil Suit

No. 584/2011, inter alia for the following substantive

reliefs:

“Prayer : It is, therefore, most humbly prayed
that this Hon’ble Court be pleased to –

(a) pass a Decree of Declaration in favour of the
plaintiff and against the defendants, declaring
therein that the act of the defendants in stopping

the payment of the monthly instalments of the
banker of Strip Mill with effect from August 2010,
in the peculiar facts and circumstances of the
case is contrary to the Deed of Family
Settlement executed between the parties and
the directives dated 07.11.2009 and 14.04.2011

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of Escrow Agent interpreting the same;

(b) pass a Decree of Permanent Mandatory
injunction in favour of the plaintiff and against
the defendants, their servants, agents and other

persons claiming through or under them,
directing them to follow the directives of the
Escrow Agent dated 14.4.2011 in relation to the

reimbursement ig of the amount of
Rs.30,82,04,954/- from August 2010 to March
2011, to the plaintiff;

(c) pass a Decree of Permanent Mandatory
injunction directing the defendants their agents,

servants and persons claiming through or under

them to start repayment of the monthly
instalments to the bankers of Strip Mill regularly

on due dates with effect from April 2011 in
compliance of their obligations to do so, under
the Deed of Family Settlement and the directives
dated 14.4.2011, which are in continuation of

directives dated 7.11.2009;

     (d)    cost    of     the    suit   be saddled               on the
     defendants;




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          (e)      And the Hon'ble Court may pass any other




                                                                         

order as this Hon’ble Court deems fit in the

interest of justice;

And for which act of kindness, the plaintiff
shall remain duly bound and ever pray.”

12) It was the case of the respondent that the

petitioners have not complied with the directions

issued by the
ig Escrow Agent on 7/11/2009 and

14/4/2011 in respect of payment of the instalments in

respect of the loan relating to the Strip Mill, which was

to be demerged. It was the further case of the

respondent that the petitioners were under an

obligation to comply with the directions given by the

Escrow Agent by his communication dated 14/4/2011.

13) The petitioners after receipt of the suit

summons, appeared before the trial Court and filed an

application under Sections 5 and 8 of the said Act. In

the said application, the substratum of the case of the

petitioners was that the dispute raised by the

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respondent/plaintiff being arbitrable in view of

Clause 27 of the IFS should be referred to the

Arbitrator. It was further averred by the petitioners

that the issue raised in the suit is the subject matter of

the application made by the petitioners under

Section 11(6) of the said Act, which is pending before

this Court and hence, the suit was not maintainable.

14) To the said application, the respondent filed a

reply, inter alia, contending that the directions of the

Escrow Agent are independent of Clause 27 of the IFS

and are not arbitrable. It was the case of the

respondent that the parties have vested the Escrow

Agent with powers under Clause 19 to see that the IFS

is implemented and executed and the orders dated

7/11/2009 and 14/4/2011 are, therefore, the orders,

which are passed by the Escrow Agent in terms of the

power vested in him. The respondent, therefore,

contended that the application filed by the petitioners

could not be entertained.

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15) The said application was considered by the

learned Civil Judge, Senior Division and by the

impugned order dated 13/5/2011, the said application

came to be rejected. The gist of the finding of the

learned Judge was that the dispute in the said suit is in

respect of the directions given by the Escrow Agent in

terms of the agreement dated 26/12/2008 and in terms

of Clause 19 of the said agreement, it is specifically

mentioned that the parties agreed that the rights

provided in Clause 27 of the IFS are in addition to this

Clause and not by way of dilution or substitution. The

learned Judge further held that since in terms of Clause

5 of the Escrow Agreement dated 26/12/2008, the

parties agreed that the obligation of the Escrow Agent

under the said Family Settlement shall not be affected

by any dispute or difference between the parties to the

said IFS and that the Escrow Agent shall be entitled to

carry out his obligation as set out herein regardless of

any dispute or contention that may be raised as well as

due to unwillingness of the parties to implement the

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Deed in accordance with the interpretation of the

Escrow Agency provided in Clause 4 of the agreement.

The trial Court, therefore held that the subject matter

of the present suit is not a subject matter of the

arbitration agreement since powers of the Escrow

Agent described in the agreement are above all the

disputes between the parties.

ig The learned Judge

further held that if the petitioners herein, who are

defendants, have followed the directions of the Escrow

Agent till July 2010, then the petitioners cannot take

shelter of the arbitration clause in the IFS to overcome

totally separate agreement whereby Escrow Agent is

appointed.

16) As mentioned hereinabove, it is the said

order, which is impugned in the present petition.

SUBMISSIONS ON BEHALF OF THE PETITIONERS :

i) That, since notice of arbitration has already

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26

been given on 23/2/2011 and thereafter the

Miscellaneous Civil Application has already been filed

wherein notice has been issued to the respondent on

1/4/2011 by this Court, the arbitration proceedings are

deemed to have commenced and, therefore, it was not

open for the respondent to file a suit for the reliefs

claimed. For the said purpose, the learned Counsel for

the petitioners relied upon the judgment of the Apex

Court in Milkfood Ltd. vs. M/s. GMC Ice Cream (P) Ltd.

(AIR 2004 SC 3145).

ii) That, the dispute in question as regards

demerger of the Strip Mill is covered by Clause 27 of

the IFS. The appointment of the Escrow Agent is part

of the IFS and, therefore, the Escrow Agreement dated

26/12/2008 cannot be considered independently and

would be governed by Clause 27 of the main

agreement. In support of the said submission, the

learned Counsel for the petitioners relied upon the

judgments of the Apex Court in Olympus

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Superstructures Pvt. Ltd. vs. Meena Vijay Khetan and

others {(1999) 5 SCC 651}, Owners and Parties

interested in the Vessel M.V. Baltic Confidence and

another v. State Trading Corporation of India Ltd. and

another (AIR 2001 SC 3381).

iii) That, the respondent could not have resorted

to filing of the suit. However, if he was claiming any

directions, then it was open for him to file an

appropriate application under the provisions of the said

Act.

SUBMISSIONS ON BEHALF OF THE RESPONDENT :

i) That, reading of Clause 19 of the IFS relating

to the Escrow Agent and the Escrow Agreement dated

26/11/2008 discloses that the parties have provided for

an interim arrangement so that the IFS can be

executed and complied with and for the said purpose

have vested the Escrow Agent with powers, which can

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be seen from Clause 19(b) of the IFS. The said Escrow

Agreement, therefore, stands independently or apart

from the main IFS. In support of the said submission,

the learned Senior Counsel for the respondent relied

upon the judgment of the Apex Court in the matter of

Siddhivinayak Realities (P) Ltd. vs. Tulip Hospitality

Services Ltd. and others {(2007) 4 SCC 612}.

ii) That, the trial Court on a consideration of

Clauses 19 and 27 of the IFS and the relevant Clauses

of the Escrow Agreement having come to a conclusion

that the dispute is not arbitrable under Clause 27 of

the IFS in view of the powers conferred on the Escrow

Agent by Clause 19 of the IFS, this Court should not

exercise its writ jurisdiction. The learned Senior

Counsel referred to the guidelines, which have been

laid down by the Apex Court in the judgment in the

matter of Booz Allen and Hamilton Inc. vs. SBI Home

Finance Limited and others {(2011) 5 SCC 532} and

especially para (19) thereof was relied upon.

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iii) The learned Senior Counsel contended that for

non compliance of the directions of the Escrow Agent,

the respondent was entitled to approach the Civil Court

for a mandatory order directing the petitioners to

comply with the said directions dated 7/11/2009 and

14/4/2011.

CONSIDERATION

17) Having heard the learned Counsel for the

parties, I have given my anxious consideration to the

rival contentions. In the instant case, it is relevant to

note that the petitioners in view of the dispute as

regards the mutual obligations under Clause 7(l) of the

IFS and the dispute as regards fulfillment of obligations

and binding promises as set out in the IFS had issued a

notice dated 23/2/2011 to the respondent for

appointment of an Arbitrator under Section 11 of the

said Act for resolving the said disputes, which had

arisen out of the said IFS dated 31/7/2008. The

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petitioners had called upon the respondent by the said

notice to give consent for appointment of Shri B.V.

Bhargava, Ex-Vice Chairman and Managing Director of

the ICICI Bank as the sole Arbitrator to adjudicate upon

the disputes mentioned in the notice along with others,

which will be detailed out once the arbitration has

commenced. The said notice has been replied to by

the respondent by his letter dated 26/3/2011. The

respondent has denied the claims and contentions of

the petitioners and in fact, has taken a stand that it is

the petitioners, who have not fulfilled the obligations

under the said IFS. The respondent in the concluding

paragraph of the reply has stated that he does not

agree with the petitioners that the matter requires to

be referred to an Arbitrator and more particularly,

Shri B.V. Bhargava, which name was referred to in the

notice. In view of the said stand of the respondent, the

petitioners herein filed a Miscellaneous Civil

Application bearing No.325/2011 under Section 11(6)

of the said Act for appointment of an Arbitrator. This

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Court in the said Miscellaneous Civil Application was

pleased to issue notice to the respondent on 1/4/2011.

The respondent thereafter on 9/5/2011, i.e. after a

period of one month has filed the said Special Civil Suit

No. 584/2011 inter alia for the reliefs, which have been

referred to in the earlier part of this judgment.

18)

In the context of the aforesaid facts, it would

be apposite to refer to the judgment of the Apex Court

in the case of Milkfood Ltd. vs. M/s. GMC Ice Cream (P)

Ltd. (supra). The question before the Apex Court was

as to when the arbitration proceedings can be said to

have commenced. The Apex Court held that service of

notice for appointment of an Arbitrator by one party to

another is the relevant date for commencement of the

arbitral proceedings. Paragraph (73) of the said

judgment is material and is reproduced hereunder :

“73. Keeping in view the fact that in all the
decisions referred to hereinbefore, this Court has
applied the meaning given to the expression
`commencement of the arbitral proceeding’ as

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contained in Section 21 of the 1996 Act for the

purpose of applicability of the 1940 Act having

regard to Section 85(2)(a) thereof, we have no
hesitation in holding that in this case also, service
of a notice for appointment of an arbitrator would

be the relevant date for the purpose of
commencement of the arbitration proceeding.”

In the light of the judgment of the Apex Court, there is

merit in the contention of the learned Counsel for the

petitioners that since in the instant case, apart from

notice, the petitioners have also filed Miscellaneous

Civil Application No.325/2011 wherein a notice came

to be issued by this Court on 1/4/2011, the arbitration

proceedings are deemed to have been commenced

and, therefore, it was not open for the respondent to

file the said Special Civil Suit No.584/2011 and the

parties were, therefore, obliged to refer the disputes to

arbitration.

19) The question is whether in respect of non-

compliance of the directions of the Escrow Agent, a

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33

suit is maintainable for enforcement of the same or

whether the parties have to be relegated to the

Arbitrator in terms of Clause 27 of the IFS ?

20) No doubt, in terms of Clause 19(b) of the IFS,

the parties have vested the Escrow Agent with the

powers to take binding decisions on behalf of non-

cooperating and/or defaulting Group and cause the

same to be implemented, including power to transfer

shares of Business and Other Family Companies, by

such Group and/or to release to the other Group such

of the documents and papers as the Escrow Agent

shall, in his absolute discretion, deem fit and proper.

As rightly contended by the learned Senior Counsel for

the respondent, the Escrow Agent arrangement is by

way of an interim measure to facilitate the compliance

and implementation of the IFS. Insofar as the Escrow

arrangement is concerned, it is now a common

practice to appoint an Escrow Agent to see that the

parties are performing their obligations in terms of the

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agreement that is arrived at between the parties.

21) In the instant case, as mentioned

hereinabove, the issue is as to whether the Escrow

Agreement is to be considered independent of the IFS

and, therefore, for implementation of the directions of

the Escrow Agent, a suit is maintainable. There can be

no dispute as regards the fact that the Escrow Agent

has been appointed to facilitate the implementation of

the IFS and in furtherance thereof, the Escrow

Agreement dated 26/12/2008 has been executed as

well as a Power of Attorney has been executed by the

parties in favour of the Escrow Agent. The present

dispute is mainly on account of alleged non-fulfillment

of the mutual obligations under Clause 7(l) of the IFS,

which is in respect of demerger of the Strip Mill.

Allegations and counter-allegations have been made

by the parties against each other in respect of non-

fulfillment of the obligations. However, there cannot

be any dispute that the directions given by the Escrow

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35

Agent for which the respondent has filed the said suit,

are referable to Clause 7(l), which is part of the IFS.

Hence, though there is a separate Escrow Agreement

as well as a Power of Attorney executed in favour of

the Escrow Agent and though the Escrow Agent has

the power under Clause 19(b) of the IFS, Clause 27 of

the IFS, which provides for arbitration, can be said to

be over imposing itself over the said documents. As

the said Clause unequivocally states that in case there

is any difference of opinion between the two groups or

any of the parties hereto in any way relating to or

arising under this Indenture or the separation agreed

hereunder or otherwise relating to any of the

Companies, Businesses or Properties of the BLS Family,

the parties have agreed to refer, except the disputes

referred under Clause 7(i) and 27, all such disputes

and differences to Arbitration in accordance with the

provisions of the said Act. It was further agreed by

the parties that none of them shall resort to, initiate or

threaten to initiate or cause to be initiated, any legal

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proceedings in any Court of Law, to resolve any

dispute relating to family businesses or matters

covered by the said Indenture. The said Clause 27,

therefore, insofar as the IFS is concerned wherein

Clause 19(b) is a part, is omniscient, omnipresent and

omnipotent and looming large over any dispute that

may arise in respect of the implementation of the IFS.

It is also required to be noted that by way of prayer

clauses (a) to (c) of the suit, what the respondent in

fact is claiming is the compliance of the obligations by

the petitioners imposed upon them by the IFS. In the

light of the above, the impugned order of the trial

Court holding that the Escrow Agreement being a

separate and independent Agreement and, therefore,

Clause 27 of the IFS would not cover the same is,

therefore, unsustainable and is required to be quashed

and set aside.

22) In the said context, the judgment cited on

behalf of the petitioners in the matter of Olympus

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37

Superstructures Pvt. Ltd. (supra) is relevant. The Apex

Court held that where disputes and differences in

connection with the main agreement and also disputes

in respect of any other matter in any way connected

with the subject matter of the main agreement exist,

the situation would be governed by the general

Arbitration Clause in the main agreement under which

disputes connected therewith can be referred to the

Arbitral Tribunal.

23) As observed hereinabove, the dispute being

in respect of the directions issued by the Escrow Agent,

which are referable to Clause 7(l) of the IFS, would,

therefore, be a dispute, which is arbitrable under

Clause 27 of the IFS.

24) Now coming to the judgment of the Apex

Court in the case of Siddhivinayak Realities (P) Ltd.

(supra), the issue before the Apex Court was as

regards the powers conferred on the Escrow Agent in

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38

terms of the agreement in question therein and

whether the Escrow Agent should be entrusted with

deciding the question as to which party is in default,

which the Escrow Agent had undoubtedly the power to

determine in terms of the agreement, as it was the

case of one of the parties to the said Escrow

Agreement that the Escrow Agent is likely to be

biased. Though the Apex Court held that since the

parties have jointly agreed to the appointment of the

Escrow Agent, he should be allowed to determine the

issue in question. In the facts of the said case where

there was likelihood of one of the Escrow Agents being

a Judge in his own cause, the Apex Court declined to

interfere with the order of the High Court upholding the

Arbitral Tribunal’s order restraining the Escrow

proceedings pending the arbitration. However, the

facts in the instant case can be distinguished from

the facts in the case before the Apex Court. The

question in the instant case is as regards enforceability

of the directions issued by the Escrow Agent. The

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39

Escrow Agent in terms of the powers conferred by

Clause 19 of the IFS has already issued directions on

7/11/2009 and 14/4/2011 and, therefore, it is not a

case where the Escrow Agent has not determined the

issue in question. The question is as regards

enforceability of the directions. Hence, the judgment

relied upon by the learned Senior Counsel for the

respondent would not aid the respondent in the facts

of the present case.

25) Insofar as the judgment of the Apex Court in

the case of Booz Allen and Hamilton Inc. (supra) is

concerned, though the said judgment lays down the

guidelines for the Court whilst considering an

application under Section 8 of the said Act filed by a

party, it has also been held in the said judgment that

generally and traditionally all disputes relating to

rights in personam are considered to be amenable to

arbitration. Paragraphs (38) and (39) of the said

judgment are material in the context of the present

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40

controversy and are, therefore, reproduced hereunder :

“38. Generally and traditionally all disputes
relating to rights in personam are considered to

be amenable to arbitration; and all disputes
relating to rights in rem are required to be
adjudicated by courts and public tribunals, being

unsuited for private arbitration. This is not

relating

however a rigid or inflexible rule.

                     to   subordinate    rights    in
                                                            Disputes
                                                          personam
                    

arising from rights in rem have always been
considered to be arbitrable.

39) The Act does not specifically exclude

any category of disputes as being not arbitrable.
Sections 34(2)(b) and 48(2) of the Act however
make it clear that an arbitral award will be set

aside if the court finds that “the subject matter
of the dispute is not capable of settlement by
arbitration under the law for the time being in

force.”

Hence, considering the fact that the two directions of

the Escrow Agent, which are the subject matter of the

suit are referable to Clause 7(l) of the IFS, even on the

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41

application of the above judgment, the same are

arbitrable.

26) As observed hereinabove, in view of the

notice given by the petitioners dated 23/2/2011, the

arbitration proceedings in terms of the law laid down

by the Apex Court in the case of Milkfood Ltd. (supra)

are deemed to have commenced. Since Clause 27 of

the IFS can be said to be an all-encompassing Clause,

the dispute regarding enforceability of the directions of

the Escrow Agent, which are referable to Clause 7(l)

would fall within the ambit of said Clause 27 and

would, therefore, be arbitrable. It would, therefore, be

for the respondent to file proceedings under Section 9

of the said Act seeking appropriate directions against

the petitioners either pre-arbitration or during

pendency of the arbitration. However, the suit filed for

the reliefs sought as mentioned hereinabove, is not

maintainable in the light of Clause 27 of the IFS.

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42

27) In the light of what has been stated

hereinabove, the impugned order of the trial Court is

required to be set aside and is accordingly set aside

and the application filed by the petitioners under

Sections 5 and 8 of the said Act is required to be

allowed.

28)

Rule is accordingly made absolute in terms of

prayer clause (1) of the above petition with parties to

bear their respective costs.

JUDGE

khj

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Ial Logistics India (A Division Of … vs Quantum International on 28 July, 2011

Bombay High Court
Ial Logistics India (A Division Of … vs Quantum International on 28 July, 2011
Bench: Anoop V.Mohta
                                          1                             sj-112-10.sxw


    dgm
               IN THE  HIGH COURT OF JUDICATURE AT BOMBAY




                                                                            
                   ORDINARY ORIGINAL CIVIL JURISDICTION




                                                    
                 SUMMONS FOR JUDGMENT NO.112  OF 2010
                                 IN
                    SUMMARY SUIT NO. 3068  OF 2008




                                                   
    IAL Logistics India (a Division of IAL
    Container Line (India) Ltd.                              ....   Plaintiff s
          vs




                                        
    1 Quantum International 
    2 Mr. Jayant A. Gidwani
    3 East West Freight Carriers Pvt.Ltd.                    ...     Defendants
                          
    Mrs.   Bharati   Narichania   with   Ms.   Vijaya   Bane   i/by   M/s.Vibha 
    Jurisconsult Co. for the Plaintiffs.
    Mr. U. J. Makhija with Mr. Amin Kherada  for Defendants 1 and 2. 
          


                                  CORAM:   ANOOP V. MOHTA, J.
       



                            RESERVED ON :   July  15, 2011
                       PRONOUNCED ON:  July  28, 2011

    JUDGMENT:

The present Summons for Judgment is taken out by the Plaintiffs

in a Summary Suit for recovery of unpaid freight and other incidental

charges by the Defendants in a sum of ` 8,33,656/- with interest at

the rate of 18% per annum from 1 January 2006 upto 25 September

2008.




    2       The Plaintiffs carry on a business as Consolidators and Freight 



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Forwarders. Defendant no.1 is the sole proprietary concern and doing

a business as exporters of garments. Defendant no.2 is also carrying

on business of the same nature. Defendant no.3 is an internationally

approved Freight Forwarding Agents for carriage of goods by Air and

stated to be the authorised agent of the carriers of the consignments in

question. Defendants 1 and 2 were the owner of the consignments

consisting of cotton woven garments which were entrusted to the

Plaintiffs for effecting shipment to New York. No relief is claimed

against Defendant no.3.

3 The Plaintiffs effected the carriage by Air of the four

consignments to New York. The Airway bills (The bills) reflect, apart

from number and date, Defendant no.1- M/s. Quantum International

as the consignees. The bills were signed by the Plaintiffs for and on

behalf of Defendant no.3 as Agents. As per the Plaintiffs, it was

mutually agreed that the bills would be marked as “Freight pre-paid”;

and Defendants 1 and 2 would be allowed thirty days credit to pay the

Plaintiffs dues. The Plaintiffs, therefore, based upon an oral

assurance, as alleged, delivered the goods and expected the payment

from the Defendants to them or to their counter part in Dubai.

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    4      The   Plaintiffs'   case   is   that   Defendant   no.3   had   issued   Master 




                                                                                   

Airway bills on behalf of the Airline i.e. Swiss World Cargo

corresponding to the Airway bills which were also endorsed “Freight

pre-paid” and the Plaintiffs were named as “shippers”. As alleged, the

Plaintiffs had already paid freight payable in respect of the said

consignment in advance to Defendant no.3 as Agents for the carriers

of Airline, therefore, has filed the present recovery Suit for the due

freight charges from Defendants 1 and 2. The Plaintiffs had also

issued four invoices aggregating to ` 5,58,404/- in respect of the said

freight and other charges payable on the four consignments which

were delivered at the destination to the consignee, M/Quantum

International Trade, a sister concern of Defendants 1 and 2.

Defendants 1 and 2, inspite of repeated reminders, oral, as well as, in

writing, failed to make the payment. The Plaintiffs had filed similar

Suits against Defendants 1 and 2 for the other consignments. A legal

notice dated 19 June 2006 was also remained unreplied. Therefore,

this Suit, based upon the four invoices and the bills. Defendant no.2

has filed the reply and resisted the claim on various grounds.

5 Admittedly the Defendants had entrusted the six consignments

for shipment to USA and Dubai along with the relevant documents.

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Five consignments of USA were delivered to the consignee at USA.

One consignment of Quantum International LLC, Dubai was not

delivered. It was accordingly recorded by e-mail dated 25 December

2005. The withholding of goods is a basic objection, as it causes loss

of business, profit and reputation. There is an e-mail on record to

show that the Plaintiffs communicated their inability to release the

consignment for want of non-payment of overdue invoices.

6 The Plaintiffs by notice dated 10 May 2006 called upon the

Defendants to pay the freight charges in respect of all six

consignments though the last consignment valued about US $

9788.60 was not delivered.

7 The Plaintiffs have filed the present Suit for four

consignments/invoices, and Suit No.3069/08 for remaining one.

Suit No.3426/2008 is for the freight and other charges of Dubai

consignment.

8 It is clear that the Plaintiffs by a composite notice demanded

freight charges of six consignments, though they withhold last

consignment of Dubai of US $ 9788.60. The Plaintiffs’ action of non-

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delivery caused loss of business, profit and reputation as Defendants

customers cancelled the orders also. The Plaintiffs’ Agent/Dubai

Office, even otherwise being bailee ought not to have retained the

consignment on the ground of non-payment of freight charges as done

in the present case. The said retention/withholding of the goods by

the Plaintiffs Agent at Dubai, in the present facts and circumstances of

the case, just cannot be overlooked. The right of defence to set off

their loss against the plaintiffs’ claim is also relevant factor.

9 The bills show that the amounts/freight were pre-paid. The case

of the Plaintiffs that it was mutually agreed that the Airway bills

would be marked as freight pre-paid; and Defendants 1 and 2 would

be allowed thirty days credit to pay the Plaintiff’s dues; and the

assurance that they would make the payment after effecting the

carriage and upon the receipt of the Plaintiffs invoices, in Dubai, for

want of written documents, just cannot be accepted at this stage.

Such oral contract, even if any, unless substantiated by the Plaintiffs,

in my view, it is not the case to grant Summons for judgment as

prayed.




    10     11     The scheme and purpose of Order XXXVII of th Code of 



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Civil Procedure (CPC) can be summarised as under :

The purpose & the basic of summary suit:

(a) A Plaintiff, if chooses to invoke the provisions of Order XXXVII

for recovery of amount, the basic obligations and elements as required

need to be fulfilled. The summary suit so filed must fall within the

four corner of Order XXXVII for getting judgment/decree summarily.

(b) As per Rule 227 of the Bombay High Court (Original Side)

Rules, 1980, the Plaintiff must take out an appropriate proceeding

within six months once such Suit is instituted, though it is subject to

condonation of delay, if case is made out.

(c) The object of Order XXXVII is to recover the crystalised dues,

liquidated, admitted, acknowledged debt/monetary claim by a

summary procedure, without long trial, principally based upon a

written document executed in the course of business, in accordance

with law. It is a supportive measure for recovery of unpaid

debt/amount covering all the negotiable instruments as contemplated

under the Negotiable Instrument Act, apart from a valid, written

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contract/receipt/acknowledgment. It may be an express term or an

implied term, based upon facts and circumstances of the case,

considering the practice, trade and usage of the commerce and the

trade. This also covers apart from principal amount, express or

implied terms of the interest.

The Plaintiff’s and Defendant’s respective obligations:

(d) A Plaintiff having once instituted a summary suit is under

obligation firstly, to serve the Defendant, a summons for appearance

by providing copy of plaint and annexures. The Defendant, upon such

service, needs to appear within 10 days from the date of the service

either in person or through an Advocate. If the appearance is made,

either in person or through the Advocate, the Plaintiff is required to

serve the summons for judgment on the given address.

(e) The Defendant is entitled to file a reply and/or an application

for grant of leave to defend the Suit, within 10 days of service of

summons with the averments and the supporting documents entitling

him leave to defend the Suit. Such application or affidavit reply shall

be supported by an affidavit.

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(f) If the Defendant fail to enter appearance inspite of the service,

the Plaintiff’s averments/allegation, if supported by due

documents/material, shall be deemed to be admitted and entitled for

a judgment/decree for the amount so prayed. The Defendant though

filed appearance but failed to file reply or defence or remained absent

inspite of filing of service, the Court may pass judgment/decree as

prayed in accordance with law.

The Court needs to exercise the discretion judicially:

(g) Though basic burden lies upon the Plaintiff to prove and satisfy

the Court that the claim so raised and prayed for decree falls within

the ambit and scope of the summary procedure in question. Once

the Court comes to a conclusion that Plaintiff has made out a case for

summons for judgment or the Defendant has made out a case for

unconditional or conditional leave, after considering the facts and

circumstances of the case, need to exercise discretion in either way

based upon the settled position of law.

(h) The Defendant is able to demonstrate through the affidavit in

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defence and/or averments made in application/affidavit for leave to

defend that the Plaintiff has not made out a bonafide and clear case

and on the contrary the defence so raised is bonafide reasonable and

good defence and raises the plausible /triable issues the Defendant is

entitled to unconditional leave to defend.

(i) But, after the defence so raised by the Defendant and the Court

is satisfied that the Defendant may at the trial able to establish a

defence and/or there is material placed on record, though not fully

supportive, the Court may grant conditional leave, directing the

Defendant to deposit the amount in the Court in full and/or in part

and/or to furnish the security by possible permitted modes pending

the trial.

The grant of Decree or Summons for Judgment with agreed
interest:

(j) The Court, if, comes to a conclusion that there is no defence

and/or it is sham, bogus, illusory and moonshine, the Court may

refuse to grant leave to defend and pass/grant summons for judgment

or decree as prayed by the Plaintiff.

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                                               10                              sj-112-10.sxw


    The Interest:




                                                                                  

(k) The Court needs to consider the aspect of agreed rate of interest

on the principal amount so claimed and the future interest also.

The condition should be reasonable, practicable and not be
onerous or burdensome:

(l) It is also necessary for the Court while exercising a jurisdiction

to see that while granting leave to defend, contention should not be

unduly onerous that results into depriving and/or unable to defend

the defence so raised. The Court, therefore, needs to exercise

discretion cautiously and carefully while passing the conditional or

any such order in summary suits.

11 In the present case though there are invoices/Airway bills are

the foundation for the summary suit, yet, in view of the fact that the

case is also based upon the oral agreement or promise, unless decided

by the evidence cannot be the foundation to grant the decree at this

stage. The Plaintiffs Agent has admittedly retained/withhold the

Dubai consignment worth of US $ 9788.60, which is definitely more

than the amount claimed in the Suit and as demanded through the

composite notice, as referred above.

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    12     There was no question of claim of interest at 18% per annum on 




                                                             

the freight charges so raised as there was no such agreement. On the

contrary, the case of the Defendants is that the payment to be made, if

any, after 90 days and not 30 days as claimed. The claim of interest

at the rate of 18% per annum from 1 January 2006 to 25 September

2008 on the aggregate sum of ` 8,33,656/- based upon four invoices

and further 18% from the date of filing of the Suit till realisation is

also a matter of debate.

13 The Plaintiffs have filed different Suits as recorded above and

thereby separated the claims of freight charges even of non-delivery of

goods/consignment at Dubai. The composite notice/demand so raised

and considering the invoice and the averments made in the present

plaint, in my view, the facts and documents of the Suits are

interlinked and interconnected. All in all triable issues for detail

consideration are raised.

14 The Airway bills were signed by the Plaintiffs for and on behalf

of Defendant no.3 as Agents. Defendant no.3 had issued last Airway

bill on behalf of the Airlines. The same was marked “freight pre-paid”.

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The Plaintiffs were named as shippers. The Suit, at the instance of

Plaintiffs as Agents itself raises issues about the maintainability of the

Suit itself.

15 The4refore, the Plaintiffs claim, even if any, cannot be stated to

be without any security. In my view, apart from other grounds, the

amount is already secured by the Plaintiffs. The defence so raised by

the Defendants therefore cannot be stated to be sham, bogus or false

and/or with an intent to delay the payment or avoid the payment.

The Defendants therefore have made out a case for unconditional

leave to defend.

16 Resultantly, the Defendants are entitled to unconditional leave to

defend the Suit. The Defendants to file written statement within

thirty days from the date of receipt of copy of this order. The

Summons for judgment is disposed of accordingly. There shall be no

order as to costs.

(ANOOP V. MOHTA, J.)

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Vidyapeeth Colony vs Dr. Punjabrao Deshmukh Krishi on 25 July, 2011

Bombay High Court
Vidyapeeth Colony vs Dr. Punjabrao Deshmukh Krishi on 25 July, 2011
Bench: B. P. Dharmadhikari, P. D. Kode
                                        1



            IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                         
                      NAGPUR BENCH, NAGPUR.




                                                 
                WRIT PETITION  No. 2954  & 2505 OF 2011.




                                                
                                     --------


    WRIT PETITION No. 2954/2011.




                                      
    Samadhan s/o Rajaram Umak,
    Aged about 58 years, Occupation 
                       
    Laboratory Attendant, Punjabrao
    Krishi Vidyapeeth, Akola, r/o. Quarter
    No. E/16, Punjabrao Deshmukh Krishi
                      
    Vidyapeeth Colony, Akola.                              ....PETITIONER.


                                   VERSUS
      
   



       1. Dr. Punjabrao Deshmukh Krishi
          Vidyapeeth, Akola through
          Assistant Registrar,
          (Establishment).





       2. Associate Dean,
          Agriculture College Dr. Punjabrao
          Deshmukh Krishi Vidyapeeth,
          Akola.                                       ....RESPONDENTS
                                                                      . 





                                     WITH


    WRIT PETITION No. 2505/2011.

    Maroti s/o Tukaram Dhote Umak,
    Aged about 58 years, Occupation 



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                                               2


    Laboratory Attendant, Punjabrao
    Krishi Vidyapeeth, Akola, r/o. P.K.V.




                                                                                  
    Quarter No. D/31, Krishi Nagar,
    Akola.                                                       ....PETITIONER.




                                                          
                                         VERSUS




                                                         
       1. Dr. Punjabrao Deshmukh Krishi
          Vidyapeeth, Akola through
          Assistant Registrar,




                                            
          (Establishment).

         2.  Head of Department, Soil Science
                           
             and Agricultural Chemistry Dr. Punjabrao
             Deshmukh Krishi Vidyapeeth,
             Akola.                                             ....RESPONDENTS
                                                                               . 
                          

                                  -------------------------- 
      


                        Mr.  A.M. Gordey, Senior Advocate with
                      Mrs. R.D. Raskar, Advocate for PetitionerS.
   



                     Mr.  Abhay Sambre, Advocate for Respondents.
                                   -------------------------





                              CORAM :  B.P. DHARMADHIKARI
                                           & P.D. KODE, JJ.

Date of reserving the Judgment. – 11.07.2011 (W.P.No.2954/2011)
20.11.2011 (W.P.No.2505/2011)

Date of Pronouncement. – 25.07.2011.

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3

JUDGEMENT.

In Writ Petition No. 2954/2011 filed under Article 226 of the

Constitution of India, the petitioner Samadhan Umak – a Laboratory

Attendant working with respondent no.1 Agriculture University has

challenged the notice of retirement dated 14.06.2011 served upon him

by the Secretary of respondent no.1, inter-alia mentioning that as he

completes 58 years of age on 30.06.2011, he would stand retired on

that date as per Rule 10[1] of the Maharashtra Civil Services (Pension)

Rules, 1982 (hereinafter referred to as “1982 Rules” for short). It is not

in dispute that his date of birth is 01.07.1953, however, according to

the petitioner, as he is Class-IV or Group-D employee, age of retirement

in his case is 60 years, as laid down in Rule 10.2 of the 1982 Rules.

This petition was filed on 27.05.2011 and this Court issued

notice in the matter on 28.06.2011 and made it returnable on

30.06.2011. The matter was then adjourned on one or two dates and

was heard on 06.07.2011, when we permitted respondent nos. 1 and 2

time till 11.07.2011 to clarify the issue in relation of status of

petitioner. Accordingly on 11.07.2011, respondent nos. 1 and 2 have

filed additional affidavit stating that, in appointment order of petitioner

he was shown to be in Category -D or Group-D. They further disclosed

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4

that, they have not published any grouping or categorization depending

upon the pay-scales of their own, but were relying on the Government

Resolution dated 02.07.2002.

2. Another Writ Petition No. 2505/2011 also filed under Article

226 of the Constitution of India, the petitioner Maroti Dhote – a

Laboratory Attendant working with respondent no.1 Agriculture

University has challenged the notice of retirement dated 28.04.2011

served upon him by the Secretary of respondent no.1, inter-alia

mentioning that as he completes 58 years of age on 20.05.2011, he

would stand retired on 31.05.2011 as per Rule 10[1] of the

Maharashtra Civil Services (Pension) Rules, 1982. In this case also it is

not in dispute that date of birth of petitioner – Maroti is 21.05.1953,

however, according to the petitioner, as he is Class-IV or Group-D

employee, age of retirement in his case is 60 years, as laid down in Rule

10.2 of the 1982 Rules.

This Writ Petition No.2505/2011 was filed on 30.05.2011

and this Court issued notice in the matter on 31.05.2011 and made it

returnable on 21.06.2011. The matter was then adjourned on one or

two dates and was heard and closed for orders on 20.07.2011. As the

issue involved in both these petitions is identical, with the consent of

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5

parties common judgment is being passed.

3. We have heard both the petitions finally by consent of Shri

A.M. Gordey, learned Senior Counsel with Mrs. R.D. Raskar, learned

Counsel for Petitioners and Shri Abhay Sambre, learned Counsel for

Respondents, by making Rule, returnable forthwith.

4. Shri Gordey, learned Senior Counsel places reliance upon

the appointment orders as issued to petitioners to urge that as per its

Clause 9, petitioners were in Group-D. It is further pointed out that

appointment of petitioner in Writ Petition No. 2954/2011 as laboratory

attendant was on pay scale of Rs. 3050-4590, and appointment of

petitioner in Writ Petition No. 2505/2011 also as laboratory attendant

was in the pay scale of Rs. 200-3-230-5-255-Extn5-280. In this

background, Government Resolutions dated 29.07.1993, 08.06.1995

and 02.07.2002 are relied upon to show that though there could have

been and there was pay revision, State Government had taken

precaution to see that, that wage revision and fixation does not deprive

the Group-D employees like petitioners, of their retirement at 60. He

contends that, though in the process of wage revision, employees like

petitioners may draw salary in pay scale shown in Class-III or Group-C,

then age of retirement remains 60.

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6

5. Shri Sambre, learned Counsel for respondent nos. 1 and 2

has relied upon the government resolution dated 02.07.2002 to urge

that as per categorization there, only those posts whose maximum in

pay scale is below Rs.4400/- qualify to be treated as Group-D. Thus

whose pay scale exceeds Rs.4400/-, but is less then Rs.9000/- fall in

Group-C. As the minimum of pay scale applicable to petitioners is Rs.

4590/-, it is in excess of Rs. 4400/- and hence, the petitioners has been

rightly treated as Group-C employee. He contends that Rule 10.1 of the

1982 Rules prescribe 58 as age of retirement for such Group -C

employee.

6. After hearing the respective Counsel, we find that the

application of 1982 Rules to petitioners is not in dispute. The only

question is, whether case of petitioners need to be regulated by Rule

10.1 thereof or then by its Rule 10.2. Rule 10.1 deals with group-C

employees and prescribes 58 as age of their superannuation. Rule 10.2

deals with group-D employee and prescribes 60 as age for that purpose.

7. Perusal of appointment order dated 04.09.2005 issued to

petitioner in Writ Petition No. 2954/2011 by respondent reveals his

designation as laboratory attendant and appointment in pay scale of Rs.

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7

3050-75-3950-80-4590 on probation for a period of two years.

Similarly appointment order dated 03.07.1980 issued to the petitioner

in Writ Petition No.2505/2011 as laboratory attendant shows pay sale

of Rs. 200-3-230-5-255-Extn5-280. The terms and conditions of

appointment enclosed in Schedule, particularly Condition No.9 show

that post of laboratory attendant is in Group-D and equivalent to post of

Attendant/Watchman etc. This appointment order or its terms and

conditions therein are not in dispute. While removing disparities, at

the time of implementation of 3rd wage revision, the State Government

issued a resolution on 29.07.1993. Its perusal reveals that till then

post having minimum of 1100 or below it, were treated as Group-D

post. This was hiked from 1100 to 1400. But, then its clause [5]

specifically stipulates that after wage revision, some group D posts may

get pay scales which are covered by group-C, and this may create

confusion about their superannuation age or other benefits.

Government therefore, has clarified that this change in wage revision

will not in any way prejudice such group-D employees and their service

conditions, and age of retirement will continue to remain the same.

8th June, 1995 is the another government resolution issued

on account of assured promotion scheme. Perusal of its clause 2[c]

again reveals the same protection to group-D employees. At the time of

implementation of 4th wage revision, State Government has issued

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8

resolution dated 02.07.2002. The respondents have placed reliance

upon this resolution. This resolution shows post having maximum upto

Rs.4400/- are included in Group-D. Post above it and having maximum

upto Rs. 9000/- are treated as group-C post, but its clause 5 again

shows similar protection to employees in Group-D. Hence the employee

appointed in Group-D is entitled to same service conditions and age of

superannuation, even if on account of such wage revision, his pay is

fixed in scale maximum of which exceeds Rs.4400/- and therefore, is

covered by group -C pay scales. Here maximum of pay scale of

petitioners is Rs.4590/- and hence that pay scale is of group-C. In view

of this clarification or protection extended by the State Government

vide Clause 5 of the government resolution dated 02.07.2002, it is

apparent that their age of retirement cannot be changed and they are

entitled be treated as group-D employee for all service conditions

including the age of retirement. We, therefore, find justification being

pressed into service for retiring them at 58, unsustainable. With the

result, it is apparent that their retirement as per notice having no. 856

dated 14.06.2011 and No. 340 dated 28.04.2011, cannot stand and

petitioners are entitled to be continued till they reaches 60 yeas of age.

Accordingly we quash and set aside the order of retirement dated

14.06.2011 (Annexure-V with Writ Petition No.2954/2011) and dated

28.04.2011 (Annexure-V with Writ Petition No.2505/2011) and declare

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9

that the petitioners are entitled to be taken back in service and

continue therein, till they attains the age of 60 years i.e. till 30.06.2013

and 31.05.2013. Respondent nos. 1 and 2 are accordingly directed to

take them back forthwith, to pay salary from 01.07.2011 and

01.06.2011 till they are reinstated and to permit them to work till they

attains age of 60 years.

8. Writ Petitions are thus allowed by making rule absolute in

the aforesaid terms. However, in the circumstances of the case, there

shall be no order as to costs.

                          JUDGE                               JUDGE


    Rgd.






                                                            ::: Downloaded on - 09/06/2013 17:33:16 :::
 

Bhagchand vs Government Of Maharashtra on 25 July, 2011

Bombay High Court
Bhagchand vs Government Of Maharashtra on 25 July, 2011
Bench: Ravi K. Deshpande
                                                  2507wp4154.06.odt




                             1




                                                                
         IN THE HIGH COURT OF JUDICATURE 




                                        
         AT BOMBAY, NAGPUR BENCH, NAGPUR.


                WRIT PETITION NO.4154 OF 2006




                                       
    Bhagchand s/o Kapurchand Garade
    Aged about 37 years,
    Occupation Service,




                                
    R/o at Post Tahsil 
    and District Gondia.          .......... Petitioner.
                   
                           VERSUS
                  
    1) Government of Maharashtra 
    (Through its Secretary), 
    Irrigation Department, 
      

    Mantralaya, 
    Mumbai-32.
   



    2) Superintending Engineer
    Irrigation Department 
    (Local Sector), 
    Vainganga Nagar, 





    Ajni, Nagpur.

    3) Executive Division 
    (Local Sector), 
    Govindpur Colony, 





    Gondia, 
    District Gondia.              .......... Respondents.



            Shri M.P.Jaiswal, Counsel for the petitioner.
            Mrs.Rashi Deshpande, AGP for the respondents.



                                                        .....2/-




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                                                          2507wp4154.06.odt




                                  2




                                                                       
                        CORAM      : R. K.DESHPANDE, J. 
                        DATE       : 25.JULY, 2011.




                                              
    ORAL JUDGMENT.


    01)       This   writ   petition   challenges   the   judgment 




                                    

and order dated 16.7.2005, passed by the Industrial

Court, Bhandara, dismissing the Complaint (ULP) No.85

of 2003, filed by the petitioner/complainant under

Section 28 read with Items 5, 6 and 9 of Schedule-IV

of MRTU and PULP Act, 1971. The claim of the

petitioner/complainant was that from 14.9.1989 to

16.10.1991 he had completed more than 240 days

continuous service and hence, as per the provisions

of Clause 4-C of the Model Standing Orders framed

under the Bombay Industrial Relations Act, 1946, the

complainant is entitled for the status of deemed

permanency.

02) It is not in dispute that on 16.10.1991, the

petitioner/complainant was terminated from service

and he had filed the Complaint (ULP) No.121 of 1991,

…..3/-

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3

the said complaint was dismissed on 21.10.1995 by the

Labour Court, Bhandara. The revision against it, was

allowed by the Industrial Court, Bhandara, on

8.3.2001. The employer preferred Writ Petition

No.2175 of 2001, in which an interim order was passed

by this Court, that the regularization and the status

of the present petitioner/complainant shall be

subject to the outcome of the writ petition.

03) Shri M.P.Jaiswal, the learned Counsel

appearing for the petitioner, informs that the

petition was decided subsequently on 19.8.2009 and

the mater was remanded back to the Labour Court,

Bhandara, for decision afresh. He further submits

that on 28.3.2001 the said complaint was allowed

directing the reinstatement with continuity in

service and full back wages to the

petitioner/complainant. He further submits that the

finding was recorded that the petitioner/complainant

had completed 240 days continuous service preceding

the date of his termination on 16.10.1991 and there

…..4/-

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4

was non-compliance of Sections 25F and 25G of the

Industrial Disputes Act, 1947 and hence, the

complaint was allowed.

04) The Industrial Court, Bhandara, has, by

impugned order, dismissed the complaint only on the

ground, that the Writ Petition No.2175 of 2001 was

admitted by this Court and it was pending for final

hearing. The Industrial Court, Bhandara, has also

noted, that the regularization was subject to the

outcome of the writ petition and hence, the complaint

has been dismissed without considering the other

issues, involved in the complaint. The

petitioner/complainant has been saddled with the

costs of Rs.10,000/- to be recovered from his salary

by the employer.

05) The Industrial Court, Bhandara, has committed

an error in dismissing the complaint on the sole

ground, that the matter was subjudiced in Writ

Petition No.2175 of 2001. No doubt, that this Court

…..5/-

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5

had observed in the order dated 1.8.2001 passed in

the said writ petition, that the regularization and

the status of the petitioner/complainant, shall be

subject to the outcome of the writ petition. In view

of this, the Industrial Court, Bhandara, could not

have dismissed the complaint without entering into

the merits of the matter. The said writ petition has

been decided and the complaint against termination,

has also been decided. The Industrial Court,

Bhandara, has framed issues, however, no findings are

recorded on those issues and the complaint has been

dismissed. Though there is a passing reference in

para-13 of the judgment, that the

petitioner/complainant did not complete five years

continuous service prior to 15.10.1991, the question

of applicability of the Model Standing Orders under

the Bombay Industrial Relations Act, 1946, has not

been considered.

06) In view of this, the order passed by the

Industrial Court, Bhandara, cannot be sustained and

…..6/-

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6

the matter will have to be sent back to the

Industrial Court, Bhandara, to consider it afresh.

07) In result, the petition is allowed. The

judgment and order dated 16.7.2005, passed by the

Industrial Court, Bhandara, in Complaint (ULP) No.85

of 2003, is hereby quashed and set aside. The matter

is remitted back to the Industrial Court, Bhandara,

to decide the said complaint afresh, by recoding the

finding on all the issues. The Industrial Court,

Bhandara, shall make an endeavour to decide the

complaint as expeditiously as possible.

08) Rule is made absolute in this terms. No order

as to costs.

JUDGE

BrWankhede

…../-

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Vidyapeeth Colony vs Dr. Punjabrao Deshmukh Krishi on 25 July, 2011

Bombay High Court
Vidyapeeth Colony vs Dr. Punjabrao Deshmukh Krishi on 25 July, 2011
Bench: B. P. Dharmadhikari, P. D. Kode
                                        1



            IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                         
                      NAGPUR BENCH, NAGPUR.




                                                 
                WRIT PETITION  No. 2954  & 2505 OF 2011.




                                                
                                     --------


    WRIT PETITION No. 2954/2011.




                                      
    Samadhan s/o Rajaram Umak,
    Aged about 58 years, Occupation 
                       
    Laboratory Attendant, Punjabrao
    Krishi Vidyapeeth, Akola, r/o. Quarter
    No. E/16, Punjabrao Deshmukh Krishi
                      
    Vidyapeeth Colony, Akola.                              ....PETITIONER.


                                   VERSUS
      
   



       1. Dr. Punjabrao Deshmukh Krishi
          Vidyapeeth, Akola through
          Assistant Registrar,
          (Establishment).





       2. Associate Dean,
          Agriculture College Dr. Punjabrao
          Deshmukh Krishi Vidyapeeth,
          Akola.                                       ....RESPONDENTS
                                                                      . 





                                     WITH


    WRIT PETITION No. 2505/2011.

    Maroti s/o Tukaram Dhote Umak,
    Aged about 58 years, Occupation 



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                                               2


    Laboratory Attendant, Punjabrao
    Krishi Vidyapeeth, Akola, r/o. P.K.V.




                                                                                  
    Quarter No. D/31, Krishi Nagar,
    Akola.                                                       ....PETITIONER.




                                                          
                                         VERSUS




                                                         
       1. Dr. Punjabrao Deshmukh Krishi
          Vidyapeeth, Akola through
          Assistant Registrar,




                                            
          (Establishment).

         2.  Head of Department, Soil Science
                           
             and Agricultural Chemistry Dr. Punjabrao
             Deshmukh Krishi Vidyapeeth,
             Akola.                                             ....RESPONDENTS
                                                                               . 
                          

                                  -------------------------- 
      


                        Mr.  A.M. Gordey, Senior Advocate with
                      Mrs. R.D. Raskar, Advocate for PetitionerS.
   



                     Mr.  Abhay Sambre, Advocate for Respondents.
                                   -------------------------





                              CORAM :  B.P. DHARMADHIKARI
                                           & P.D. KODE, JJ.

Date of reserving the Judgment. – 11.07.2011 (W.P.No.2954/2011)
20.11.2011 (W.P.No.2505/2011)

Date of Pronouncement. – 25.07.2011.

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3

JUDGEMENT.

In Writ Petition No. 2954/2011 filed under Article 226 of the

Constitution of India, the petitioner Samadhan Umak – a Laboratory

Attendant working with respondent no.1 Agriculture University has

challenged the notice of retirement dated 14.06.2011 served upon him

by the Secretary of respondent no.1, inter-alia mentioning that as he

completes 58 years of age on 30.06.2011, he would stand retired on

that date as per Rule 10[1] of the Maharashtra Civil Services (Pension)

Rules, 1982 (hereinafter referred to as “1982 Rules” for short). It is not

in dispute that his date of birth is 01.07.1953, however, according to

the petitioner, as he is Class-IV or Group-D employee, age of retirement

in his case is 60 years, as laid down in Rule 10.2 of the 1982 Rules.

This petition was filed on 27.05.2011 and this Court issued

notice in the matter on 28.06.2011 and made it returnable on

30.06.2011. The matter was then adjourned on one or two dates and

was heard on 06.07.2011, when we permitted respondent nos. 1 and 2

time till 11.07.2011 to clarify the issue in relation of status of

petitioner. Accordingly on 11.07.2011, respondent nos. 1 and 2 have

filed additional affidavit stating that, in appointment order of petitioner

he was shown to be in Category -D or Group-D. They further disclosed

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4

that, they have not published any grouping or categorization depending

upon the pay-scales of their own, but were relying on the Government

Resolution dated 02.07.2002.

2. Another Writ Petition No. 2505/2011 also filed under Article

226 of the Constitution of India, the petitioner Maroti Dhote – a

Laboratory Attendant working with respondent no.1 Agriculture

University has challenged the notice of retirement dated 28.04.2011

served upon him by the Secretary of respondent no.1, inter-alia

mentioning that as he completes 58 years of age on 20.05.2011, he

would stand retired on 31.05.2011 as per Rule 10[1] of the

Maharashtra Civil Services (Pension) Rules, 1982. In this case also it is

not in dispute that date of birth of petitioner – Maroti is 21.05.1953,

however, according to the petitioner, as he is Class-IV or Group-D

employee, age of retirement in his case is 60 years, as laid down in Rule

10.2 of the 1982 Rules.

This Writ Petition No.2505/2011 was filed on 30.05.2011

and this Court issued notice in the matter on 31.05.2011 and made it

returnable on 21.06.2011. The matter was then adjourned on one or

two dates and was heard and closed for orders on 20.07.2011. As the

issue involved in both these petitions is identical, with the consent of

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5

parties common judgment is being passed.

3. We have heard both the petitions finally by consent of Shri

A.M. Gordey, learned Senior Counsel with Mrs. R.D. Raskar, learned

Counsel for Petitioners and Shri Abhay Sambre, learned Counsel for

Respondents, by making Rule, returnable forthwith.

4. Shri Gordey, learned Senior Counsel places reliance upon

the appointment orders as issued to petitioners to urge that as per its

Clause 9, petitioners were in Group-D. It is further pointed out that

appointment of petitioner in Writ Petition No. 2954/2011 as laboratory

attendant was on pay scale of Rs. 3050-4590, and appointment of

petitioner in Writ Petition No. 2505/2011 also as laboratory attendant

was in the pay scale of Rs. 200-3-230-5-255-Extn5-280. In this

background, Government Resolutions dated 29.07.1993, 08.06.1995

and 02.07.2002 are relied upon to show that though there could have

been and there was pay revision, State Government had taken

precaution to see that, that wage revision and fixation does not deprive

the Group-D employees like petitioners, of their retirement at 60. He

contends that, though in the process of wage revision, employees like

petitioners may draw salary in pay scale shown in Class-III or Group-C,

then age of retirement remains 60.

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6

5. Shri Sambre, learned Counsel for respondent nos. 1 and 2

has relied upon the government resolution dated 02.07.2002 to urge

that as per categorization there, only those posts whose maximum in

pay scale is below Rs.4400/- qualify to be treated as Group-D. Thus

whose pay scale exceeds Rs.4400/-, but is less then Rs.9000/- fall in

Group-C. As the minimum of pay scale applicable to petitioners is Rs.

4590/-, it is in excess of Rs. 4400/- and hence, the petitioners has been

rightly treated as Group-C employee. He contends that Rule 10.1 of the

1982 Rules prescribe 58 as age of retirement for such Group -C

employee.

6. After hearing the respective Counsel, we find that the

application of 1982 Rules to petitioners is not in dispute. The only

question is, whether case of petitioners need to be regulated by Rule

10.1 thereof or then by its Rule 10.2. Rule 10.1 deals with group-C

employees and prescribes 58 as age of their superannuation. Rule 10.2

deals with group-D employee and prescribes 60 as age for that purpose.

7. Perusal of appointment order dated 04.09.2005 issued to

petitioner in Writ Petition No. 2954/2011 by respondent reveals his

designation as laboratory attendant and appointment in pay scale of Rs.

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7

3050-75-3950-80-4590 on probation for a period of two years.

Similarly appointment order dated 03.07.1980 issued to the petitioner

in Writ Petition No.2505/2011 as laboratory attendant shows pay sale

of Rs. 200-3-230-5-255-Extn5-280. The terms and conditions of

appointment enclosed in Schedule, particularly Condition No.9 show

that post of laboratory attendant is in Group-D and equivalent to post of

Attendant/Watchman etc. This appointment order or its terms and

conditions therein are not in dispute. While removing disparities, at

the time of implementation of 3rd wage revision, the State Government

issued a resolution on 29.07.1993. Its perusal reveals that till then

post having minimum of 1100 or below it, were treated as Group-D

post. This was hiked from 1100 to 1400. But, then its clause [5]

specifically stipulates that after wage revision, some group D posts may

get pay scales which are covered by group-C, and this may create

confusion about their superannuation age or other benefits.

Government therefore, has clarified that this change in wage revision

will not in any way prejudice such group-D employees and their service

conditions, and age of retirement will continue to remain the same.

8th June, 1995 is the another government resolution issued

on account of assured promotion scheme. Perusal of its clause 2[c]

again reveals the same protection to group-D employees. At the time of

implementation of 4th wage revision, State Government has issued

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8

resolution dated 02.07.2002. The respondents have placed reliance

upon this resolution. This resolution shows post having maximum upto

Rs.4400/- are included in Group-D. Post above it and having maximum

upto Rs. 9000/- are treated as group-C post, but its clause 5 again

shows similar protection to employees in Group-D. Hence the employee

appointed in Group-D is entitled to same service conditions and age of

superannuation, even if on account of such wage revision, his pay is

fixed in scale maximum of which exceeds Rs.4400/- and therefore, is

covered by group -C pay scales. Here maximum of pay scale of

petitioners is Rs.4590/- and hence that pay scale is of group-C. In view

of this clarification or protection extended by the State Government

vide Clause 5 of the government resolution dated 02.07.2002, it is

apparent that their age of retirement cannot be changed and they are

entitled be treated as group-D employee for all service conditions

including the age of retirement. We, therefore, find justification being

pressed into service for retiring them at 58, unsustainable. With the

result, it is apparent that their retirement as per notice having no. 856

dated 14.06.2011 and No. 340 dated 28.04.2011, cannot stand and

petitioners are entitled to be continued till they reaches 60 yeas of age.

Accordingly we quash and set aside the order of retirement dated

14.06.2011 (Annexure-V with Writ Petition No.2954/2011) and dated

28.04.2011 (Annexure-V with Writ Petition No.2505/2011) and declare

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9

that the petitioners are entitled to be taken back in service and

continue therein, till they attains the age of 60 years i.e. till 30.06.2013

and 31.05.2013. Respondent nos. 1 and 2 are accordingly directed to

take them back forthwith, to pay salary from 01.07.2011 and

01.06.2011 till they are reinstated and to permit them to work till they

attains age of 60 years.

8. Writ Petitions are thus allowed by making rule absolute in

the aforesaid terms. However, in the circumstances of the case, there

shall be no order as to costs.

                          JUDGE                               JUDGE


    Rgd.






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The State Of Maharashtra vs Kishor on 22 July, 2011

Bombay High Court
The State Of Maharashtra vs Kishor on 22 July, 2011
Bench: R. M. Savant
       wp222.11.odt                         1


                   THE HIGH COURT OF JUDICATURE AT BOMBAY
                            NAGPUR BENCH, NAGPUR




                                                                               
                              WRIT PETITION NO.222 OF 2011.




                                                       
       PETITIONERS:      1.  The State of Maharashtra,
                                         Department of Higher and Technical




                                                      
                                         Education, through its Secretary,
                                         Mantralaya Mumbai.

                                    2. The Director,




                                         
                                        Directorate of Technical Education
                                        Maharashtra State, 3,  Mahapalika 
                         
                                        Marg,P.Box No.1967,
                                        Mumbai - 400001.
                        
                                    3. The Joint Director,
                                        Technical Eduction Directorate,
                                        Regional Office, Sadar, Nagpur.
      


                                    4. The Principal,
                                        Government Polytechnic,
   



                                        Indala Parisar, Gadchiroli,
                                       Tq. And Distt.Gadchiroli.





                                       ..VERSUS..

       RESPONDENT:       Kishor s/o Devidas Jambhulkar,
                                  Aged about 29 yeas, Occu: Service,
                                  R/o Govt.Polytechnic Complex,





                                  Quarter No.Prajakta-4, Gadchiroli,
                                  Tq. And Distt.Gadchiroli.

                             WRIT PETITION NO.223 OF 2011.


       PETITIONERS:      1.  The State of Maharashtra,
                                         Department of Higher and Technical
                                         Education, through its Secretary,
                                         Mantralaya Mumbai.


                                                       ::: Downloaded on - 09/06/2013 17:32:44 :::
            wp222.11.odt                         2


                                        2. The Director,
                                            Directorate of Technical Education




                                                                                   
                                            Maharashtra State, 3,  Mahapalika 
                                            Marg,P.Box No.1967,




                                                           
                                            Mumbai - 400001.

                                        3. The Joint Director,
                                            Technical Eduction Directorate,




                                                          
                                            Regional Office, Sadar, Nagpur.

                                        4. The Principal,
                                            Government Polytechnic,




                                             
                                            Indala Parisar, Gadchiroli,
                                           Tq. And Distt.Gadchiroli.
                              ig           ..VERSUS..
                            
           RESPONDENT:        Moreshwar s/o Ghatu Yerewar,
                              Aged about 24 years, Occu: Service,
                              R/o M.I.D.C.Kodgal, Po.Pardi,Tq.
                              and Distt.Gadchiroli.
      
   



                                       WRIT PETITION NO.224 OF 2011.





           PETITIONERS:      1.  The State of Maharashtra,
                                             Department of Higher and Technical
                                             Education, through its Secretary,
                                             Mantralaya Mumbai.





                                        2. The Director,
                                            Directorate of Technical Education
                                            Maharashtra State, 3,  Mahapalika 
                                            Marg,P.Box No.1967,
                                            Mumbai - 400001.

                                        3. The Joint Director,
                                            Technical Eduction Directorate,
                                            Regional Office, Sadar, Nagpur.



                                                           ::: Downloaded on - 09/06/2013 17:32:44 :::
      wp222.11.odt                         3

                                  4. The Principal,
                                      Government Polytechnic,
                                      Indala Parisar, Gadchiroli,




                                                                             
                                     Tq. And Distt.Gadchiroli.




                                                     
                                     ..VERSUS..

     RESPONDENT:       Devidas s/o Keshao Sonule,
                                Aged about 32 years, Occu: Service,




                                                    
                                R/o Ranmudza, Gadchiroli, Tq. and
                                Distt.Gadchiroli.

                      WRIT PETITION NO.225 OF 2011.




                                       
                   
                       
     PETITIONERS:      1.  The State of Maharashtra,
                                       Department of Higher and Technical
                                       Education, through its Secretary,
                      
                                       Mantralaya Mumbai.

                                  2. The Director,
                                      Directorate of Technical Education
      


                                      Maharashtra State, 3,  Mahapalika 
                                      Marg,P.Box No.1967,
   



                                      Mumbai - 400001.

                                  3. The Joint Director,





                                      Technical Eduction Directorate,
                                      Regional Office, Sadar, Nagpur.

                                  4. The Principal,
                                      Government Polytechnic,





                                      Indala Parisar, Gadchiroli,
                                     Tq. And Distt.Gadchiroli.

                                     ..VERSUS..

     RESPONDENT:        Suresh s/o Ganpat Sahare,
                                 Aged about 37 years, Occu: Service,
                                 R/o Govt.Polytechnic Complex,
                                "Prajakta-I,Gadchiroli, Tq. and Distt.
                                 Gadchiroli.


                                                     ::: Downloaded on - 09/06/2013 17:32:44 :::
         wp222.11.odt                         4


                               WRIT PETITION NO.226 OF 2011.




                                                                                
        PETITIONERS:      1.  The State of Maharashtra,




                                                        
                                          Department of Higher and Technical
                                          Education, through its Secretary,
                                          Mantralaya Mumbai.




                                                       
                                     2. The Director,
                                         Directorate of Technical Education
                                         Maharashtra State, 3,  Mahapalika 
                                         Marg,P.Box No.1967,




                                          
                                         Mumbai - 400001.
                           
                                     3. The Joint Director,
                                         Technical Eduction Directorate,
                                         Regional Office, Sadar, Nagpur.
                          
                                     4. The Principal,
                                         Government Polytechnic,
                                         Indala Parisar, Gadchiroli,
      


                                        Tq. And Distt.Gadchiroli.
   



                                        ..VERSUS..

        RESPONDENT:       Rajesh s/o Devaji Govardhan,





                                   Aged about 26 years, Occu: Service,
                                   R/o Govt.Polytechnic College,
                                   Indala Parisar, Gadchiroli, Tq. and
                                   Distt.Gadchiroli.





                           WRIT PETITION NO.227 OF 2011.


        PETITIONERS:      1.  The State of Maharashtra,
                                          Department of Higher and Technical
                                          Education, through its Secretary,
                                          Mantralaya Mumbai.

                                     2. The Director,
                                         Directorate of Technical Education


                                                        ::: Downloaded on - 09/06/2013 17:32:44 :::
         wp222.11.odt                                                 5

                                               Maharashtra State, 3,  Mahapalika 
                                               Marg,P.Box No.1967,
                                               Mumbai - 400001.




                                                                                                                           
                                     3. The Joint Director,




                                                                                        
                                         Technical Eduction Directorate,
                                         Regional Office, Sadar, Nagpur.

                                     4. The Principal,




                                                                                       
                                         Government Polytechnic,
                                         Indala Parisar, Gadchiroli,
                                        Tq. And Distt.Gadchiroli.




                                                                  
                                                          ..VERSUS..
                                     
        RESPONDENT:       Wasudeo s/o Ganpat Gedam,
                                   Aged about 37 yeas, Occu: Service,
                                   R/o C/o Bhagwan Gedam, Govt.
                                    
                                   Polytechnic College, Indala Parisar,
                                   Gadchiroli, Tq. and Distt.Gadchiroli.

        ....................................................................................................................................
      


         Mr.A.D.Sonak, Addl.Govt.Pleader for the petitioners.
         Mr.F.G.Isaac, Advocate for the respondents.
   



        ....................................................................................................................................
          
                                                                          CORAM :  R.M.SAVANT, J.

DATED : 22nd July, 2011.

ORAL JUDGMENT.

1. Rule, made returnable forthwith and heard, with the

consent of the parties.

2. The above petitions involve identical facts and

common issues and are, therefore, heard and disposed of

together.

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3 The above petition and the accompanying Writ

Petitions take exception to the Judgment and Orders passed by

the Industrial Court in the complaint filed by each of the

respondents in the above petitions, who are working with the

petitioners. Though separate judgment is delivered in each of the

complaints filed by the respondent, all the judgment and orders

are dated 16th July, 2010.

4.

Shorn of unnecessary details, a few facts can be stated

thus –

The respondent in each of the above petitions is the

workman working with the petitioners. It is the case of the

respondents that they have been working with the petitioners

since the year 1999 on daily wages. It is further their case that

they have been paid daily wages less than their entitlement.

5. The respondent in Writ Petition No.222 of 2011 was

working as a Filter Operator and he has been working

continuously as such till 16/12/1996. It is his case that though he

has been working for whole of the month, he has been shown

working only for 20 days. The payment was also made to him on

such basis and it was seen to it that the monthly wages do not

exceed Rs.1760/-. It was the case of the respondent that the

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petitioners were showing artificial break in every month with an

ulterior motive so as not to give continuity. It was further the case

of the respondent that the work done by him was of a permanent

nature and the practice of giving a break and also continuing him

on daily wages was adopted so as not to go give him the benefits

of permanency and regularization. The respondent along with the

respondents in companion petitions, filed complaints invoking

Item No.6 and 9 of Schedule IV of the Maharashtra Recognition of

Trade Union and Prevention of Unfair Labour Practices Act, 1971.

6. The said complaints were resisted by the petitioners

and preliminary objections of the petitioners, who are respondents

in the said complaints, were that the respondent no.4 –

Polytechnic in question run by the respondent no.1 was not an

Industry and the complainants i.e. the respondents in the above

petitions were not workmen. It was denied that the respondents

were appointed as a Water Filter Operator. It was further denied

that the respondents were appointed on daily wages. According to

the petitioners, the respondents were appointed as and when work

was available. It was further denied that the respondents have

worked for 240 days in a calendar year. It was lastly denied that

work was of a permanent nature and yet the respondents were

kept on daily wages with a view to deny them the benefits.

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7. The Industrial Court on the basis of the pleadings of the

parties, inter alia, framed the following issues and has answered

them as follows –

ISSUES FINDINGS.

1. Whether the establishment/department
where the complainants work is an Industry ?… Yes.

2. Do the complainants prove that they are
working continuously as claimed ? …. …. Yes.

3. Do the complainants prove that the
respondents have engaged in the unfair
labour practice under Item 6 and 9 as alleged?.. Yes.

4. Whether the complainants are entitled to

the reliefs as prayed for ? …. .. As
per final order.

8. It is pertinent to note that though the issue as regards;

whether the establishment/department wherein the respondents

were working is an Industry, was framed and answered in the

affirmative. Significantly, no findings have been recorded in

support of the said answer. The impugned judgment and order

discloses that the findings have been recorded only in respect of

Issue Nos.2, 3 and 4. However, in so far as Issue no.1 is

concerned, though the issue is answered in the affirmative, one

does not find any findings in support of the said answer. Since the

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said issue goes to the root of the matter and since there have been

no findings recorded in respect of the said issue, though the said

issue is answered in the affirmative, in my view, the impugned

Judgment and Order dated 16/7/2010 is required to be set aside

and the matter is required to be relegated back to the Industrial

Court for a de novo consideration. The learned counsel appearing

for the Respondents in the above petitions does not dispute the

aforesaid position.

9. In the above petitions the petitioners have also sought

to rely upon certain material which was not before the Industrial

Court, which documents are inter alia the following –

i) A Chart showing the sanctioned post in

the Polytechnic,

ii) The Notification showing the sanctioned

Post filled in by the petitioners.

The respondents/workmen have also filed their

affidavit-in-reply. They also seek to rely upon material which was

not produced before the Industrial Court when it decided the said

complaint. The said material is inter alia, the chart showing the

vacancy position at the relevant time.

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10. Both the learned counsel i.e. the learned Additional

Government Pleader appearing for the petitioners and Shri

F.G.Issac, the learned counsel appearing for the respondent-

workman in each of the above petitions are ad idem that the

parties to be given an opportunity to lead further evidence in court

in support of the respective case. Hence, the following directions.

(i) The impugned Judgment and Order dated
16/7/2010 passed by the Industrial Court, which is the

subject-matter in each of the above petitions, is
quashed and set aside and the matter is relegated back

to the Industrial Court for a de novo consideration.

(ii) The complainant i.e. the respondent in each of the

above petitions would be permitted to amend the
complaint, if he so deems fit so as to incorporate any
additional contentions, which he seeks to place on

record. If such amendment application is moved and
allowed, the petitioners herein would be entitled to file
their additional written statement dealing with the said

case of the complainants.

(iii) The parties would be allowed to lead further
evidence in view of the contentious issue involved in
the above complaints as regards the claim of
permanency and regularization claimed by the
respondents in the above petitions.

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(iv) Needless to say that the documents, if any,

which they seek to file, be proved in accordance with
law.

(v) On remand, the Industrial Court to hear and decide

the respective complaints within six months of the first
appearance of the parties before it.

(vi) Parties to appear before the Industrial Court on
17/8/2011.

(vii) In the interregnum and till the decision of the
complaints, no precipitative action by way of removal

should be taken against the respondents unless for

disciplinary reasons.

Rule is accordingly made absolute in the aforesaid

terms with parties to bear their respective costs.

JUDGE

chute

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