Full Text
CS(OS) 2438/2014
Date of Decision: 5th November, 2014 POONAM CHOPRA & ANR ..... Plaintiffs
Through : Mr.Sanjeev Sindhwani, Sr. Adv. with
Mr.Anunaya Mehta, Advs.
Through : Mr.Anil Sapra, Sr. Adv. with Mr.Sanjeet
Singh, Advs. for defendants no.1 and 4.
Mr.J.P. Sengh, Sr. Adv. with Mr.Rakesh Mukhija, Advs. for defendants no.2, 4 to
10 along with defendant no.2.
Mr.Aman Nandrajog, Adv. for defendant no.3.
JUDGMENT
1. Plaintiffs have filed the present suit for specific performance, declaration, possession, permanent injunction and mandatory injunction.
2. As per the plaint, plaintiff no.1 is the widow of the deceased brother of defendants no.1 and 2 and son of defendant no.3. Plaintiff no.2 is the daughter of plaintiff no.1. Plaintiffs have sought specific performance of a Memorandum of Understanding (hereinafter referred to as „the MoU‟) executed between the parties on 31.7.2013, whereby the parties had agreed to end all pending disputes and differences in respect of the 2014:DHC:5743 ownership and functioning of various businesses including companies and partnerships run by the family members. Parties also made an endeavour to fairly distribute the property owned by them either in their individual names or in the names of the companies/partnerships inter se the members of the family.
3. It is the case of the plaintiffs that the settlement has not been enforced in its entirety by the parties especially qua the plaintiffs due to the infighting between defendants no.1 and 2 qua the management and control of defendant no.4.
4. Along with the plaint, the plaintiffs have also filed I.A.15251/2014 under Order XXXIX Rules 1 and 2 CPC. On 19.8.2014, when summons in the suit and notice in the application were issued, defendants entered appearance. Time was sought by counsel for the defendants to file written statement and reply to the stay application. Parties had agreed that no third party interest would be created in any of the properties, which are subject matter of the present suit, without prior permission of the Court. The defendants were further directed to approach the Bank individually or jointly to ascertain the current liability of all the loans, which have been raised by the defendants. On 13.10.2014, learned senior counsel for the plaintiffs had expressed urgency in the matter on account of proceedings pending before Debt Recovery Tribunal with respect to an immovable property, which had partly fallen to the share of the plaintiff, being no.47, Anand Lok, New Delhi, in which the plaintiffs claim 1/3rd share. It was pointed out that since the loan had not been cleared, the Bank had issued a notice dated 20.5.2014 under Section 13 SARFESI Act, a Receiver was likely to be appointed and the property was to be put to sale. The matter was adjourned to 30.10.2014, when a Mediator was appointed to enable the parties to explore the possibility of an amicable settlement. The Mediator was requested to grant a early hearing, as the next date fixed before the Debt Recovery Tribunal was 7.11.2014.
5. Mr.Sindhwani, learned senior counsel for the plaintiffs, submits that the prime concern of the plaintiffs is that in case the loan of ING Vyasa bank is not cleared or substantial amounts are not deposited with the bank the property, which has fallen to the share of the plaintiffs (1/3rd ), would be put to sale, resulting in plaintiffs‟ losing a roof over their head.
6. Mr.Sindhwani, learned senior counsel for the plaintiffs, has drawn the attention of the Court to the Memorandum of Understanding arrived at between the parties, as per which the businesses were to fall to the share of both the brother, which is evident upon reading of the MoU and the annexures, which form part of the MoU and various immovable properties fall to the share of the plaintiffs. Assets divided have been shown as annexures to the MoU, a perusal whereof would show that none of the businesses have fallen to the share of the plaintiffs.
7. The main thrust of the arguments of Mr.Sindhwani is that on account of infighting between defendants no.1 and 2 the plaintiffs are being made to suffer, as the Debt Recovery Tribunal is not likely to wait for a final decision in the Civil Courts and despite the understanding arrived at between the parties, as per which all loans including loan with respect to ING Vyasa Bank where property no.47, Anand Lok, New Delhi, has been mortgaged, were to be cleared by defendant no.4.
8. It is also the case of the plaintiffs, duly supported by defendant no.2, that the MoU has attained finality, the same has been acted upon and all the parties have derived benefit from the said MoU. Reliance is placed on para 25 of the plaint in support of the submission that the MoU has been acted upon.
9. It is also contended by Mr.Sindhwani, learned senior counsel for the plaintiffs, that based on the MoU the proceedings before the Executive Magistrate, Ms.Asha Thakur, SEM (South), Vasant Vihar, were settled. Mr.Sindhwani further contends that the MoU was also produced before the Company Law Board as well as before the High Court in OMP No.577/2013, which is evident from the Order dated 9.10.2013. The MoU was also produced before the Metropolitan Magistrate, Dwarka Courts; and the Sole Arbitrator, being a former Chief Justice of Punjab and Haryana High Court. The MoU was also acted which is evident from the fact that as defendant no.1 started manufacturing and selling goods under the name and style of S.K. Bentex, which was a term agreed upon by the parties.
10. Further, as per clause 1 of the MoU, the S.C. Group and K.C. Group deposited Rs.4.13 crores and Rs.1.68 crores, respectively, for and on behalf of Haryana City Gas Distribution Limited. Defendant no.1 also submitted the MoU to the I.O. before the Economic Offences Wing in FIR No.8/2013 to show settlement of all disputes between the parties and to bring a quietus to the criminal proceedings. Defendant no.2 has taken possession of their share of various properties and defendant no.1 has handed over possession of the same in terms of the MoU. It is, thus, the contention of the plaintiffs that the MoU is valid, binding, conclusive and acted upon.
11. It is also the case of the plaintiffs that in terms of the MoU the liability qua the loan was to be cleared by defendant no.4 and, thus, even before all the reliefs prayed for in the application are considered or heard the Court should issue a direction so that the property, in which the plaintiffs are residing is saved from sale under the orders passed by the Debt Recovery Tribunal. It is also the case of the plaintiffs that assuming for the sake of arguments that the MoU is not valid and binding, all the parties would still have 1/3rd share, each, in all the assets of all the groups and, thus, it would be in the fitness of things and in the interest of all the parties that the amount is released in favour of the Bank to avoid an unpleasant situation of auctioning of 1/3rd share of the plaintiffs, the only residential house where the plaintiffs are residing.
12. Learned senior counsel for the plaintiffs contends that the defence raised by defendant no.1 that the terms of the MoU were only a mere draft to be cemented by filing an application under Order XXIII Rule 3 CPC is factually incorrect as any application, which was required to be filed and agreed between the parties was only to formally place the understanding between the parties on record.
13. It is also the case of the plaintiffs that the application under Order XXIII Rule 3 CPC to be filed could not have contained any fresh clauses, which were entered into and signed by the parties after much deliberations. The intention of the parties was not to reopen the MoU at the stage of filing an application under Order XXIII Rule 3 CPC and any reference to such an application was from the point of view of procedure as an MoU could not have been placed on record without a proper application signed by the parties.
14. Learned senior counsel for the plaintiffs contends that defendant no.1 is a habitual litigant, who in the past has also retracted from the terms of the settlement agreed upon and even with respect to this MoU defendant no.1 has filed a suit for declaration primarily on the ground that defendant no.1 was forced and coerced into signing the terms of the MoU. Senior counsel further contends that the plaintiffs are willing to exchange the share of defendant no.1 with the share granted to the plaintiffs to show that the settlement was fair and just, and not one sided. Even otherwise, it is contended that the MoU was drafted after great discussion and deliberations.
15. It is also the case of the plaintiffs that the parties to the MoU either individually or through any company or partnership was/were holding 90% share of defendant no.4 and, thus, they were well within their rights to appoint defendant no.4 company and defendant no.4 company did not protest in any form to say that defendant no.4 would not be bound by the terms of settlement. In fact, as per the settlement the S.C. Group and K.C. Group deposited Rs.4.12 crores and Rs.1.68 crores, respectively in the account of defendant no.4 company, which would show that during drafting of the MoU the interest of defendant no.4 was taken into consideration.
16. Reliance is placed by learned senior counsel for the plaintiffs on Clause 9 of the MoU in support of the argument that the responsibility and liability to clear the loans was of defendant no.4 company. Reliance is also placed on Annexure A, as per which the loans, pertaining to 10 accounts, were to be the liability of defendant no.4.
17. Learned senior counsel for the plaintiffs also clarifies that although defendant no.1 had shifted out from the ground floor of the property in question prior to the signing of the MoU but physical possession was handed over only after the signing of the MoU and as of today neither defendant no.1 is in possession nor he claims possession in the suit property, which also shows that the MoU was acted upon. Senior counsel further submits that plaintiffs are bound to suffer on account of the disputes between defendants no.1 and 2, which is evident from the pleadings of the plaint filed by defendant no.1, copy whereof has been filed in the present proceedings, to show that not a single allegation has been made against the plaintiffs.
18. The submissions of learned senior counsel for the plaintiffs are supported by Mr.J.P. Sengh, learned senior counsel appearing on behalf of defendant no.2, who has placed reliance on para 25 of the plaint to show that the MoU has been acted upon and both the defendants no.1 and 2 have made substantial deposits in the account of defendant no.4 only after signing of the MoU. Senior counsel has also supported the case of the plaintiff that defendant no.1 is in the habit of signing documents and then going back on his commitments. Reliance is placed on the plaint of defendant no.1 where reference has been made to earlier MoUs as well.
19. Mr.Sengh submits that defendant no.2 also has 50% share holding in defendant no.4 company and defendant no.2 while admitting the MoU would have no objection if defendant no.4 is called upon to clear the loan liability with respect to the Anand Lok property. Mr.Sengh further submits that large amounts are lying in various banks including Rs.86.00 lakhs in HDFC bank and State Bank of Bikaneer and Jaipur, Faridabad Branch, and in any case no prejudice would be caused to any of the parties if defendant no.4 is directed to make the payment as in case the Anand Lok Property does not fall exclusively to the plaintiffs or defendant no.2 even then the property is liable to be protected.
20. It is also submitted that assuming the MoU is not to be acted upon or the submissions of counsel for defendant no.1 are taken to be correct even then defendant no.4 had executed a corporate guarantee for the repayment of loan and, thus, it cannot be said that defendant no.4 is a stranger to the loan transaction.
21. Mr.Sapra, learned senior counsel appearing on behalf of defendant no.1, submits that the MoU is not a final document. Senior counsel relies on various paras of the MoU to show that the intention of the parties was to file an application in the High Court, which would in fact contains the terms of settlement and since such an application was not filed the MoU would remain a still born child.
22. According to Mr.Sapra, Clause 2 of the Mou, as per which the parties had agreed to jointly file an application before the High Court reads as under: “thereby comprising of all their disputes and differences and claims against each other and upon recording of the compromise the parties would act upon and complete their respective obligations as soon as possible”.
23. Reference to such an application has also been made in para 4 of the MoU. In para 5 parties had agreed to request the Delhi High Court to appoint an Observer/Court Commissioner, a retired Judge of the High Court/Supreme Court under whose supervision and guidance, the obligations would be completed.
24. Reliance is also placed on Clause 11 wherein it has been stated that the MoU has been drawn with a broad understanding of the parties. Legal formalities and the mode and manner in which the MoU is to be implemented shall be drawn and reduced into writing and an application would be filed in the High Court. It is, thus, the case of defendant no.1 that in the absence of any such application having been filed the MoU cannot be looked into. It was only tentative, the broad terms were drafted and finality could only have been achieved after the final terms agreed upon between the parties were reduced in the form of an application under Order XXIII Rule 3 CPC.
25. Another submission of learned senior counsel for defendant no.1 is that defendant no.4 company was not a party or signatory to the MoU. Defendant no.4 company did not authorise any of its Directors or shareholders to acknowledge or accept its liability and in the absence of any specific authorisation defendant no.4 company cannot be bound by the MoU. It is further submitted that the MoU was not acted upon. The contents of para 24 of the plaint do not reflect the correct picture as before the Company Law Board, the proceedings did not attain finality based on the Mou. In the High Court in OMP No.577/2013 defendant no.1 simply acknowledged his signatures on the MoU, which is not disputed even today. The proceedings have also not attained finality even before the sole Arbitrator, who adjourned the matter sine die as no application was filed before him to close the proceedings in terms of MoU.
26. Senior counsel for defendant no.1 also submits that it was only under coercion and pressure, and with a view to bring back the money, which had been collected by defendant no.2 that the MoU was acted partially when Rs.4.13 crores was deposited by defendant no.1 and Rs.1.68 crores was deposited by defendant no.2. Senior counsel further contends that Annexure A does not clearly spell out as to what would be the liability of defendant no.4 and, thus, the document cannot be looked into on the grounds of uncertainty.
27. Reliance is placed on Rolta India Ltd. Mumbai and Another v. Venire Industries Ltd. Haryana and Others, reported at 2000 100 CompCas 19, by Mr.Sapra in support of his arguments that defendant no.4 company is not bound by the terms of the MoU. Paras 19 and 25 of the judgment read as under:
28. It has also been argued that defendant no.4 company would not be liable to clear the loan when the loan has been taken by as many as eleven persons. Mr.Sapra submits that it is not incorrect to submit that the MoU has been challenged simply on the grounds of coercion, however, the same has been challenged on various grounds including that the terms of the MoU are impossible to comply with, in addition to coercion.
29. I have heard learned counsel for the parties. Since the bone of contention between the parties is the MoU dated 31.7.2013, it would be worthwhile to reproduce some of the Clauses on which reliance has been placed by learned counsel for the parties.
30. Mr.Sapra, learned senior counsel for defendant no.1, has relied on Clauses, 2, 4, 5 and 11 in support of his arguments that the MoU was not a final document but a tentative understanding between the parties. This submission of learned senior counsel for defendant no.1 in my view is without any force as all the clauses of the MoU are to be read as a whole and not selectively. As per Clause 2 of the MoU, the parties were to file an application before the Delhi High Court to record the terms of compromise. As per Clause 4, the parties had agreed that they would divide the properties and other affairs as per Annexure A, which was to form part of the compromise application to be filed before Delhi High Court. It was also agreed as per Clause 4 that the parties would take all steps as may be required so that each property is legally transferred to one or the other party in a legal and tax friendly manner.
31. Para 5 of this MoU would show that the aid and purpose of moving an application under Order XXIII Rule 3 CPC was the implementation of the terms of the compromise application and the Court would be requested for appointment of an Observer/Court Commissioner, who be a Retired High Court or Supreme Court Judge under whose supervision regulations, guidelines and directions would be performed.
32. Para 11 which has also been referred to surely refers to broad understanding of the parties. Reading this para as a whole would show that after the MoU only the legal formalities and the mode and manner in which the MoU was to be implemented was to be drawn up, reduced into writing and was to form a part of the compromise application to be filed in the High Court.
33. Since at the stage of hearing of an application under Order XXXIX Rules 1 and 2 CPC the Court has only to give a prima facie view in the matter and on account of pendency of a suit for declaration by defendant no.1, the Court should say no more on the terms of this MoU, else the rights of defendant no.1 be adversely affected in those proceedings, being CS(OS) Nos. 532/2014. The terms of this MoU have been acted upon, which is evident firstly as defendant no.1 itself deposited a large amount of Rs.4.13 crores in the account of defendant no.4. Defendant no.2 was required to deposit Rs.1.68 crores, which defendant no.2 did deposit, a term in the right direction as per the terms of the MoU. If this MoU was tentative defendant no.1 would not have parted with such a large sum and deposited this amount in the account of defendant no.4. In case this MoU was tentative and further terms were to be reduced into writing or further negotiations were to be carried out as has been argued today in this Court, there was no reason to produce the MoU before the Court of the Special Executive Magistrate where the following order was passed: “That the parties state that all the disputes and differences between the parties have been settled and MOU dated 31.07.2013 has also been executed between the parties and parties are bound by same. It is therefore prayed that matter be disposed of in terms of settlement as now there is no threat in any manner.”
34. The proceedings were disposed of by the Executive Magistrate only because the parties had made a statement that they had settled their disputes and they would remain bound by the same.
35. Learned counsel for defendant no.1 had handed over in Court the order of the Company Law Board dated 11.10.2014 in support of his arguments that there was no finality before the Company Law Board.
36. Reliance is also placed in the order passed in OMP No.577/2013 but there is no explanation to the fact that reference has been made to MoU both before the Company Law Board and before the Delhi High Court in OMP No.577/2013 on 9.10.2014. Order dated 9.10.2014 reads as under: “ O R D E R 09.10.2013 IA No.16344/2013 (u/s. 151 CPC) This is an application moved by one of the groups representing petitioner no.1 company i.e., Kapil Chopra group. Mr. Tiku, the learned senior counsel on instructions seeks to withdraw the application with liberty, if necessary, to move an application in terms of the Memorandum of Understanding (MOU) arrived at with the other group claiming to represent petitioner no.1 i.e., Satish Chopra group. Mr. Singh, who appears for the Satish Chopra group says that signatures of the Satish Chopra group on the MOU is admitted. As prayed, the captioned application is dismissed as withdrawn with liberty to move the court, if necessary, in accordance with the law. The captioned application is accordingly disposed of.
37. It has also been contended that the proceedings before the Arbitrator have not attained finality but on 1.8.2013 the matter was adjourned at the request of counsel for the parties. The Tribunal was informed that the parties had arrived at a settlement and a copy of the MoU was filed.
38. Learned counsel also requested the Tribunal to pass an award in consensus with a MoU signed by all the parties. All the parties were directed to remain present before the Arbitrator on the next date. Order reads as under: “ ORDER SEVENTH HEARING The matter was listed for today, however on request of both the parties the matter was adjourned for a month, in view of the parties going through a settlement process. However, later the Counsel for the Respondent, Mr.Sanjay Mishra appeared before the Tribunal and apprised the Tribunal that the settlement had come through and filed a Memorandum of Understanding. The Counsel requested that the tribunal may pass an award in consonance with the Memorandum of Understanding signed by all the parties. All the parties are to be present on the next date of hearing. Accordingly, list the matter on 7th August, 2013 at 6.30 pm for pronouncement of the award in terms of the MOU. The Counsel for Mr.Satish Chopra and Kapil Chopra are directed to pay their share of Arbitrator‟s fees for the 7 hearings held till date on or before 7th August, 2013.”
39. This MoU is also brought to the notice of the Metropolitan Magistrate, Dwarka Courts. It has not been disputed in Court that defendant no.1 is not in possession in any portion of the property at Anand Lok although senior counsel for the plaintiff has agreed that part shifting has been done prior to the signing of the MoU but factually the property was vacated by defendant no.1 only after the signing of the MoU. Thus, prima facie, it can safely be said that this MoU has been acted upon by the parties and it is only after approximately eight months that defendant no.1 realised that he had been coerced into signing the MoU. I am also not inclined to accept the submission of counsel for defendant no.1 that the MoU would not bind defendant no.4.
40. There is no force in the submission of learned counsel for defendant no.1 that defendant no.4 company is not bound by the terms of the MoU. Parties to the present are close relations. Companies and partnerships were closely held by them and shareholding of defendant no.4 comprises of 95% shareholding of defendant no.4 comprises of either the parties to the present suit companies of partnership held by them. Since defendant no.4 is a beneficiary of the MoU and further defendant no.4 company had agreed to give a corporate guarantee for the loan, in case defendant no.4 company can be enriched by Rs.4.38 crores and Rs.1.68 crores in terms of the MoU, the MoU cannot be relied upon selectively at one stage for the benefit of defendant no.4. Moreover, the loan document handed over in Court and relied upon by all the parties were for different reasons would show that defendant no.4 had agreed to stand as a corporate guarantor for the loan advanced. It is settled law that the liability of the guarantor is joint and several.
41. An application under order XXXIX Rules 1 and 2 CPC is to be considered on three multiple factors being (i) prima facie case, (ii) balance of convenience and (iii) irreparable loss.
42. On the one side there is a widow and her 20 years old daughter, who lost her husband, and on the other side there is none else but the brothers of deceased husband of plaintiff no.1 i.e. defendants no.1 and 2.
43. In terms of the settlement properties were handed over to the plaintiffs while all the running business and concern have fallen to the share of defendants no.1 and 2 and they are the one, who are running the said businesses. Rightly the plaintiffs cannot be made homeless on account of the fighting between defendants no.1 and 2.
44. There is no allegation against the plaintiffs in the suit for declaration filed by defendant no.1. Learned senior counsel for defendant no.2 has agreed that Rs.86.00 lakhs lying in the HDFC Bank and State Bank of Bikaner and Jaipur be released in favour of ING Vyasa Bank and balance amount be paid to defendant no.4 of which defendant no.2 has 50% shares. This proposal is not acceptable by learned senior counsel for defendant no.1. The MoU, which this Court prima facie is of the view, has been acted upon between the parties. As per the MoU the liability of ING Vyasa bank is to be cleared by defendant no.4. Even otherwise defendant no.4 had furnished a corporate guarantee in favour of the bank. Since the proceedings under SARFESI Act are pending before the Debt Recovery Tribunal, defendant no.4 is directed to clear Rs.2.58 crores towards the ING Vyasa Bank after negotiation within a period of one week from the date of receipt of this order. This order is without prejudice to the rights and contentions of all the parties and pleas raised by them in the plaint and the written statement and subject to final adjustment. It is made clear that any expression made in this order is only for the purpose of deciding the present application filed under Order XXXIX Rules 1 and 2 CPC.
45. This order shall also be brought to the notice of the Debt Recovery Tribunal, Company Law Board and Company Court. All the parties are open to approach the Bank again for a one time settlement.
46. List on 2.2.2015. CS(OS) 2438/2014
47. List this matter before Joint Registrar on 17.11.2014, the date already fixed.
48. List this matter before Court on 2.2.2015.
49. DASTI. G.S.SISTANI, J NOVEMBER 05, 2014 msr