IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE : 21.11.2008
CORAM
THE HONOURABLE MR. JUSTICE S.J.MUKHOPADHAYA
AND
THE HONOURABLE MR. JUSTICE V.DHANAPALAN
O.S.A. NO. 309 OF 2008
1. K.C.Palaniswamy
2. Sporting Pastime India Limited
rep. by its Director, Chenniappa Gounder
78, Cheran Towers, Govt. Arts College Road
Coimbatore 641 018. .. Appellants
- Vs -
1. Kasturi & Sons Limited
rep. by its Managing Director N.Murali
859 & 860, Anna Salai
Chennai 600 002.
2. Hindcorp Resorts Pvt. Limited
rep. by its Director R.Ramesh
859 & 860, Anna Salai
Chennai 600 002.
3. The Commissioner of Police
Commissionerate of Chennai
Egmore, Chennai 8. .. Respondents
Appeal filed against the order dated 12th August, 2008, passed by learned single Judge in Application No.2734 of 2008 u/s 9 of the Arbitration & Conciliation Act, 1996.
For Appellants : Mr. Karthik Seshadri for M/s. Iyer & Thomas
For Respondents : Mr. Arvind P.Datar, SC
for M/s.Feroz Ali for R-1 & R-2
Mr. Bhavani Subboroyan, Spl.G.P. For R-3
JUDGMENT
S.J.MUKHOPADHAYA, J.
This appeal is against order dated 12th Aug., 2008, in Application No.2734/08 filed by appellants 1 and 2/respondents, whereby in a petition u/s 9 of the Arbitration and Conciliation Act, learned Judge directed the appellant/1st respondent to bring the title deeds pertaining to the lands to Chennai for the Advocate Commissioner to inspect and deposit the same before the Registrar General of this Court by filing the report before this Court.
2. The main ground taken by the appellants to challenge the order are :-
a) Petitions for grant of similar interim relief having earlier rejected, learned Judge, ought not have granted the same interim relief in absence of any change of situation.
(b) Impugned order infringes upon the constitutional right of the appellants guaranteed under Article 20 of the Constitution of India.
(c) The appellants have privilege to keep the documents and cannot be forced to produce the documents before this Court.
On the other hand, the following plea has been taken by counsel for the 1st respondent :-
(i) The appellant having given undertaking before this Court to bring the documents and deposit the same with the Court, cannot challenge the same order after giving such undertaking.
(ii) If the background of the case is noticed, in view of the activity of the appellant, the Court rightly directed him to deposit the document with the Court.
3. Learned counsel appearing on behalf of the appellant refuted the stand and submitted that no undertaking was given by learned senior counsel for the appellant and by mistake the Court has recorded the same, but the matter would be dealt with by us at appropriate stage.
4. We have heard the learned counsel for the parties and noticed the rival contentions. We have also perused the records and judgment as referred by counsel for the appellant.
5. The 2nd appellant, M/s. Sporting Pastime India Ltd., (SPIL) is incorporated as 100% subsidiary of the 1st respondent, M/s.Kasturi & Sons Ltd., since 2nd May, 1995. The 2nd respondent, M/s.Hindcorp Resorts Pvt. Ltd., is also so incorporated. The 2nd appellant and the 2nd respondent began to acquire lands aggregating to over 435 acres, which are continuous and adjacent to each other for golf course cum beach resort project in 1996. For management of the 2nd appellant, SPIL, the 1st appellant entered into an agreement on 19th July, 2004 with the 1st respondent. It was agreed that the 1st respondent, M/s.Kasturi & Sons Ltd., which was holding 100% of the equity shares of the 2nd appellant, SPIL, would sell 90% of the equity for an aggregate consideration of Rs.2,31,50,000/= to the 1st appellant or his nominee. It was also agreed that :-
(a) the issued, subscribed and paid-up capital of the 2nd appellant, which was Rs.3 Crores, consisting of 30 lakhs equity shares of Rs.10/= each, would be enhanced to Rs.27 Crores consisting of 2,70,00,000 equity shares of Rs.10/= each by allotment of 2,40,00,000 equity shares in favour of the 1st respondent;
(b) subsequent to the allotment, 2,43,00,000 equity shares held by the 1st respondent, M/s.Kasturi & Sons Ltd., would be transferred to the 1st appellant, K.C.Palanisamy or his nominee for a lumpsum consideration of Rs.2,31,50,000/=.
(c) the 1st appellant and/or his nominee would be put in management and control of the affairs of the 2nd appellant;
(d) the 1st appellant undertakes to, within a period of 180 days from being put in management of the 2nd appellant company, discharge the corporate guarantees to the tune of Rs.27 Crores provided by the 1st respondent to the creditors of the 2nd appellant; and
(e) all undisclosed past liabilities would be to the account of the 1st respondent.
6. On 18th Aug., 2004, the 1st respondent received consideration for the shares. The shares of nominees of the 1st appellant were transferred in the manner as shown by them. On 20th Oct., 2004, Cheran Holdings Pvt. Ltd., transferred Rs.25 Crores in the account of the 2nd appellant with intention to use those funds to discharge the guarantee. On 7th Jan., 2005, income tax attached the bank account of the 2nd appellant for alleged tax claim on 2nd appellant and in Feb., 2005, appropriated about Rs.17.8 Crores towards alleged tax liabilities. There being a dispute, the matter was referred to Arbitrator. In Feb., 2005, the 1st respondent approached this court u/s 9 of the Arbitration and Conciliation Act, 1996, in O.A. No.179/05 for an injunction to restrain the 1st appellant from alienating, encumbering of lands belonging to the 2nd appellant to the extent of 343.85 acres and an ex-parte order of injunction was granted on 22nd Feb., 2005, as quoted below :-
“1) That (1) K.C.Palaniswamy (2) Sporting Pastime India Ltd and (3) Cheran Properties Ltd., the respondents herein be and are hereby directed not to transfer, encumber, alineate or sell the properties morefully set out in the schedule hereto without prior permission of this Hon’ble Court.
(2) That notice of this application returnable on or before 22.3.2005 be served on the respondents herein and private notice also be permitted.”
7. It further appears that the 1st respondent, again, approached this Court u/s 9 of the Arbitration and Conciliation Act, 1996, in O.A. No.298/05 for appointment of a party receiver to take charge of the assets, title deeds, share certificates and properties of the 2nd appellant. In the said case, by order dated 1st April, 2005, the Court appointed interim receiver and passed the following order:-
“1) That Shri S.Kuppusamy, the Company Secretary of Kasturi & Sons Ltd., the applicant herein be and is hereby appointed as Interim Receiver for Sporting Pastime India Pvt. Ltd., rep. by Mr. K.C.Palaniswamy for the limited purpose of preserving the 2nd respondent herein and protecting the property alone morefully set out in the schedule hereunder.
(2) That the Interim receiver appointed herein shall not alienate, encumber or deal with the aforesaid property in any manner detrimental to the interest of either of the parties hereto.
(3) That the further hearing of this application do stand adjourned to 16.04.05 for counter and disposal.”
8. The 1st respondent appointed Mr.S.Vijayaraghavan, Advocate as an Arbitrator. The 1st appellant appointed Mr.S.Kamdan as the Arbitrator. The Court appointed Mr. Justice K.Venkatasami, a retired Supreme Court Judge (since deceased) as Presiding Arbitrator in June, 2005. Again, the question was raised before Arbitral Tribunal relating to title deeds and therein the 1st appellant filed an affidavit giving undertaking that the title deeds would be kept in one “Cheran Towers”, which reads as follows :-
“1) I am the 1st respondent in these arbitration proceedings and as such I am well aware of the facts of the case.
2) I state that as per orders of this Hon’ble Tribunal the claimants’ counsel Mr.Feroz Ali and representative Mr.S.Kuppuswamy have on 03.11.2005 inspected the title documents relating to the immovable property of the 2nd respondent company and share certificate. As per directions of this Hon’ble Tribunal I undertake to hold the said title documents in my custody at my office in Cheran Towers, Coimbatore, until conclusion of the arbitration proceedings.”
The Arbitral Tribunal, accordingly, directed to keep the title deeds in “Cheran Towers”. In the end of 2005, the 1st respondent filed an application No.5261/05 and O.A. No.1100/05 for injunction on the 1st appellant to restrain from dealing with the term deposit of Rs.25 Crores in the bank account of the 2nd appellant and for a direction to deposit the title deeds and share certificates. Both the applications were dismissed by this Court on 25th Jan., 2006. Learned Judge noticed that the argument advanced before the Arbitral Tribunal is ripe and at the stage of passing of an award and certain interim order or injunction, restraining the respondent of the said petition, from alienating the property to the extent of 343 acres, have already been passed, and in the circumstances, the Court refused to grant the relief. However, it was mentioned that the applicant can seek for appropriate remedy, if necessary, at appropriate time.
9. In fact, learned counsel for the appellant placed much reliance on the aforesaid order of learned Judge dated 25th Jan., 2006, in support of the first submission that the earlier applications having rejected, the subsequent application for the same relief ought not have been allowed by learned Judge in absence of any change of situation.
As pointed out, learned counsel for the 1st respondent, while took plea that the 1st appellant gave undertaking before the Court that it will bring the documents and deposit with the Court and, therefore, the same very appellant cannot challenge the order of the Court directing him to produce the document and deposit with the Court. This apart, the action and attitude of the 1st respondent was also highlighted to suggest the change of situation for issuance of such direction. The following action on the part of the 1st appellant was highlighted to show that all the time the 1st appellant intentionally gave wrong undertaking and later on, retracted from such undertaking :-
(i) The 1st appellant having agreed, the Arbitral Tribunal passed a consented award on 9th April, 2007, wherein the 1st appellant agreed to pay Rs.31,17,65,170/= along with interest @ 12% p.a. from 30th Sept., 2005 till the date of payment to the 1st respondent. The 1st appellant also agreed to pay a sum of Rs.56,50,000/= along with interest @ 12% p.a. from 30th Sept., 2005 till the date of payment to the 2nd respondent. Time for payment was granted till 30th Sept., 2007, and the Arbitrators were to consider the matter on 6th Oct., 2007 for restitution and damages in the event of non-payment by 30th Sept., 2007. Though the 1st appellant gave undertaking and consented to make such payment, but he retracted from such undertaking for which the Tribunal had to start hearing again since 2nd Nov., 2007. Therefore, the situation as was there on 25th Jan., 2006 that argument has been advanced and it was ripe and was at the stage of passing an award, which was noticed by learned Judge to refuse grant of relief, such situation completely altered in view of failure on the part of the 1st appellant to pay the amount.
(ii) Before the Arbitral Tribunal, the 1st appellant agreed to pay certain amount on the basis of which consent interim arbitral award was passed on 9th April, 2007, as pointed above. Subsequently, the 1st appellant retracted from the undertaking by filing petition u/s 34 in O.P. No.672/07 before this Court, wherein he made the following statement :-
“According to petitioners, they never consented for interim award being passed and the petitioners never authorised their counsel to submit before the Arbitration Tribunal for consent. However, the petitioners are surprised to see that the proceedings of the Arbitration Tribunal dated 3.4.2007 that they have consented to pay even when the claim itself is only against 2nd petitioner. However, to the shock and surprise of the 1st petitioner, he received an interim award dated 9.4.2007 directing him to pay sum of Rs.31,17,65,510/= together with interest thereon @ 12% from 30th September, 2005, till the date of payment and further sum of Rs.56,50,000/= together with interest to the 2nd respondent herein.”
It was in this background the 1st respondent wanted to examine the lawyer by impleading him as party respondent to find out whether it was on the instruction of the 1st appellant the consent award was passed by Tribunal. When such prayer was made by the 1st respondent to implead the lawyer for examination, the 1st appellant, then, immediately, prayed to withdraw the original application. The Court passed the following order on 1st Oct., 2007 in A. No.6373/07 in O.P. No.672/07 :-
“Application praying that this Honourable Court be pleased to implead Mr.Karthik Seshadri, Advocate, 15/8, 7th Cross, Indira Nagar, Adyar, Chennai 600 020, the sixth respondent herein as a respondent in the above Original Petition.
This Original Petition along with A. No.6373 of 2007 coming on this day before this court for hearing in the presence of Mr.A.K.Mylsamy for M/s.A.K.Mylsamy & Associates, Advocates for the Petitioners in O.P. Nos.672 of 2007 and for the respondents 1 and 2 in A.No.673 of 2007 and the respondents in O.P. 672 of 2007 and the applicant and respondents 3 to 6 in A.No.6373 of 2007, nor appearing in person or by advocate, and upon reading the petition and the counter affidavit of first respondent and the Interim Award dated 9-4-2007, field in O.P. No.672 of 2007 and the Judges Summons and the affidavit of N.Murali, filed in A.No.6373 of 2007 and the learned counsel for the petitioners having made an endorsement on the petition stating that “Under instructions from the petitioners the above O.P. Is hereby withdrawn as not pressed without prejudice to the rights of the petitioners” and this court doth recording the same.
IT IS ORDERED AS FOLLOWS :
(1) That the O.P. No.672 of 2007 do stand dismissed as withdrawn.
(2) That the A.No.6373 of 2007 do stand dismissed.
(3) That there be no costs of these proceedings.”
(iii) Before learned single Judge, when the Court repeatedly asked counsel as to which place the 1st appellant has kept the document, the 1st appellant refused to give reply.
10. In the present case also, as it appears from the impugned order dated 12th Aug., 2008, it will be evident that the court proceeded to decided the case on merit. At para-20 of the judgment, learned Judge observed that a prima facie case made out and the prejudice that would be caused to the interest of the applicant, if direction is not granted; interest of justice demands that the documents be deposited with the Registrar General of this Court to be kept herein till the disposal of the arbitration proceeding; by giving such direction, the interest of the respondent would not be seriously impaired or prejudiced. After the said order was dictated, learned senior counsel for the 1st appellant, on his behalf, gave undertaking to bring the title deeds pertaining to the lands in Chennai for the Advocate Commissioner to inspect and deposit the same with the Registrar General of this Court by filing report before this Court, relevant portion of the order is quoted hereunder :-
“25. After the order was dictated, the learned Senior counsel for the respondents states that the first respondent shall bring the title deeds pertaining to the lands to Chennai for the Advocate Commissioner to inspect and deposit the same before the Registrar General of this Court by filing the report before this Court. In the circumstances, the first respondent shall intimate the Advocate Commissioner and the applicant as to the availability and the time for causing the inspection.”
11. In the present appeal, again one of the ground taken by the appellants is that learned senior counsel had not given such undertaking before this Court. Though such ground has been taken, but neither any affidavit of senior advocate or a certificate of the senior advocate has been filed in support of such statement. Even the senior advocate, who argued the case before learned single Judge has not been engaged to argue the present appeal. Further, if that was the case that the senior advocate has not given any undertaking before the Court, but the court recorded the same, for that, appeal is not the forum, but the party ought to have moved before learned Judge and brought the same to the notice of learned Judge. In the present case, as no such step was taken by appellant to bring the fact to the notice of learned Judge; learned senior counsel has not appeared to state that he has not given such undertaking on behalf of the appellants; neither any affidavit nor certificate of the senior advocate has been filed stating that he had not given such undertaking before learned single Judge and from the past conduct of the 1st appellant, we find that he is habitual of retracting from his statement by filing affidavit with such plea that undertaking was not given by him or his lawyers, which at the time of determination was withdrawn in the earlier case, we reject the ground taken by the appellant that such undertaking on his behalf was not given by learned senior counsel.
12. It is also relevant to notice one development as taken recently in 2008. The 1st respondent has registered a FIR No.246/08 on 28th April, 2008, against the 1st appellant alleging that the 1st appellant has sought for property document pertaining to the 2nd appellant from the 1st respondent so that he could mortgage it and pay all the creditors of the 2nd appellant. It was alleged that the 1st appellant is cheating the 1st respondent. In the said case, the 1st appellant has applied for anticipatory bail and the matter is pending. The 1st respondent has filed petition opposing grant of anticipatory bail. It is in this background, learned counsel for the appellant has submitted that the subject matter of complaint being that the 1st appellant is permanently induced by the 1st respondent to part with the title deeds and share certificates, directing the 1st appellant to produce the title deeds and keep it in the custody of the court will be violative of Article 20 of the Constitution of India.
Reliance was placed on Supreme Court decision in M.P.Sharma & Ors. – Vs Satish Chandra, District Magistrate, Delhi & Ors. (AIR 1954 SC 300) and State of Bombay Vs Kathi Kalu Oghad (AIR 1961 SC 1808) to show that he has privilege to keep such document till the pendency of the criminal proceeding in regard to the same very sale deed.
13. In the present case, the question of producing the document does not arise as the Court has directed to keep the document in its custody. Production of a document is distinct from keeping the document in the custody of the Court. If a Court keeps a document in its custody, which is normally passed in an appropriate case, it never violates the right of any individual under Article 20 of the Constitution of India nor a person can take plea of privilege to keep such document. The judgments as has been referred to by counsel for the appellant relates to production of document to which a person has privilege, but is not applicable in the matter where a civil court of competent jurisdiction has directed to keep a document in its custody. If such document is required for any other case, it is always open to such party to request the Court to forward such document to the other Court. In any case, the appellants having given undertaking to produce the document before this Court for keeping in the custody of the Court before learned Judge of this Court, they cannot take the aforesaid plea.
14. There being no merit, the appeal is dismissed. But there shall be no order as to costs.
GLN
To
The Commissioner of Police
Commissionerate of Chennai
Egmore,
Chennai 8