Shrikant G. Mantri v. Punjab National Bank

17 By his Advocate’s letter dated 22nd July, 2002 addressed to the Advocate for Nedungadi Bank Limited,the Plaintiff called upon the bank to refrain from selling the pledged shares. Recovery proceedings field by the Defendant before the Debt Recovery Tribunal against the Plaintiff in respect of the overdraft facility:-

18 In 2003, the Defendant filed proceedings before the DRT, Mumbai, against the Plaintiff, inter alia, seeking recovery of a sum of Rs.4,75,24,202.47 under the overdraft facility, being OA No. 7 of 2003.

19 By a Judgement dated 26th May, 2004, the DRT directed the Plaintiff to pay a sum of Rs.4,75,24,202.47 to the Defendant, with future interest at the rate of 15% p.a., with quarterly rests, from 26th December, 2002 till realization of the amount. S.R.JOSHI 7 of 59

20 Prior to the filing of the proceedings in DRT, Nedungadi Bank Limited had already realized an amount of Rs.2,89,69,215.79 by selling some of the pledged shares (other than the shares of Ansal Hotels Limited which could not be immediately sold as they were unlisted).

21 By a letter dated 11th February, 2004 addressed to the Defendant, the Plaintiff submitted a One Time Settlement (OTS) proposal to the Defendant.

22 By its letter dated 31st March 2005, the Defendant approved the OTS proposal of the Plaintiff.

23 Thereafter, the Plaintiff made necessary payments under the said OTS, and by its letter dated 10th May, 2005, requested the Defendant to issue a No Dues Certificate and arrange to release the Plaintiff’s shares which were pledged to the Defendant immediately.

24 By a letter dated 14th May, 2005, the Defendant issued a No Dues Certificate to the Plaintiff. S.R.JOSHI 8 of 59

25 By his letter dated 29th May, 2005, addressed to the Defendant, the Plaintiff once again called upon the Defendant to return 3,75,000 unlisted equity shares of Ansal Hotel Limited. The said demand was repeated by the Plaintiff by his letter dated 14th June, 2005 addressed to the Defendant. However, the Defendant continued to ignore the repeated requests of the Plaintiff. Share Trading Account Claims and Disputes:- 26 Independently of the aforesaid overdraft facility, Nedungadi Bank Limited had availed services of the Plaintiff as a Stock Broker to carry out transactions on the Bombay Stock Exchange and the Plaintiff had carried out the said transactions.

27 By its letter dated 4th May, 2001, Nedungadi Bank Limited made a claim of Rs.30,72,13,322.20, as being the amount due and payable by the Plaintiff under the said Share Trading Transactions. Further correspondence was exchanged between the parties in respect of these claims, which were denied by the Plaintiff. In August 2001, the Plaintiff filed a suit against Nedungadi Bank Limited in this Court, being Suit No. 1947 of 2001, inter alia, seeking to recover a sum of Rs.1.78 S.R.JOSHI 9 of 59 Crores in respect of the share trading transactions. Arbitration proceedings filed by Nedungadi Bank Limited against the Plaintiff with respect to the Share Trading Account:- 28 Nedungadi Bank Limited initiated arbitration proceedings against the Plaintiff before the Arbitration Forum of the Bombay Stock Exchange, under the Bye Laws of the Bombay Stock Exchange, inter alia, seeking to recover a sum of Rs.32,64,59,988/- on account of certain transactions/ contract notes. In the said arbitration proceedings, Nedungadi Bank Limited claimed that the Plaintiff had handed over the said shares of Ansal Hotels Limited as additional security against its dues in respect of the share trading transactions. In the arbitral proceedings, the Plaintiff filed a Written Statement and inter alia denied that the said shares of Ansal Hotels Limited were given as a security to Nedungadi Bank Limited against any alleged share trading transactions dues. It was stated that the said shares were given as security against the overdraft facility. The Arbitral Tribunal passed an Award dated 27th April, 2004, rejecting the claims of the Defendant.

29 The Defendant filed an Appeal before the Appellate Bench. By S.R.JOSHI 10 of 59 an Order dated 16th July, 2004, the said Appeal was dismissed and the Award dated 27th April, 2004 was upheld. In the said Order, the Appellate Bench held that, in the absence of any scrap of any evidence to substantiate the fact that the deposit of 37,50,000 equity shares of Ansal Hotels Limited was made by the Plaintiff with the Defendant towards security for payment of the share trading account, the plea of the Defendant on the same could not be accepted.

30 Thereafter, the Defendant filed an Arbitration Petition in this Court, being Arbitration Petition No.437 of 2004, challenging the Award dated 16th July, 2004 of the Appellate Bench. By an Order dated 15th September, 2008 passed by this Court, the said Arbitration Petition was dismissed.

31 The Defendant, thereafter, filed an Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”), being Appeal No. 499 of 2008, before the Division Bench of this Court. By an Order dated 2nd May, 2009, the said Appeal was also dismissed.

32 The Defendant, thereafter, filed SLP (Civil) No. 2067[7] of 2009 before the Hon’ble Supreme Court. In the said SLP, the Defendant S.R.JOSHI 11 of 59 challenged the findings of the Appellate Bench of the Bombay Stock Exchange holding that there were no evidence that the said shares of Ansal Hotel Limited were given as security towards the share trading account.

33 By an Order dated 8th November, 2010, the Hon’ble Supreme Court dismissed the SLP. Proceedings for recovery of the subject shares by the Plaintiff:-

34 The Plaintiff filed an Arbitration Petition, under Section 9 of the Arbitration Act, being Arbitration Petition No.256 of 2005, before this Court, inter alia, seeking release of the said shares of Ansal Hotels Limited. The said Petition was withdrawn with liberty to adopt appropriate proceedings.

35 On 15th June, 2006, the Plaintiff filed proceedings before the National Consumer Dispute Redressal Commission (“National Consumer Commission”),New Delhi, being Consumer Complaint No. 55 of 2006, seeking return of the then existing 3,75,000 shares of ITC Limited together with all further rights, bonuses and dividends as well as for S.R.JOSHI 12 of 59 deficiency of services.

36 By an Order dated 13th July, 2006, the National Consumer Commission issued notice and restrained the Defendant from transferring the disputed shares.

37 In the said Consumer Complaint before the National Consumer Commission, the Defendant filed its Written Statement.

38 By an Order dated 15th May, 2005, the National Consumer Commission listed the matter on 8th December, 2015.

39 The Plaintiff filed a SLP, being SLP No. 1688 of 2015, challenging the said Order dated 15th May, 2015 passed by the National Consumer Commission, listing the matter on 8th December, 2015.

40 By an Order dated 1st June, 2016, the National Consumer Commission dismissed the complaint filed by the Plaintiff on the basis of the preliminary objection raised by the Defendant that the Plaintiff was not a consumer and, hence, the National Consumer Commission did not have jurisdiction to entertain the complaint. The Commission, however, S.R.JOSHI 13 of 59 granted liberty to the Plaintiff to avail of the appropriate remedy by approaching the appropriate forum having jurisdiction.

41 Being aggrieved by the said Order dated 1st June, 2016, the Plaintiff field a Statutory Appeal before the Hon’ble Supreme Court of India. By an Order dated 28th November, 2016, the Hon’ble Supreme Court admitted the said Appeal.

42 By Judgement dated 22nd February, 2022, the Hon’ble Supreme Court dismissed the Appeal and recorded that the National Consumer Commission had already granted liberty to the Plaintiff to avail of his remedy by approaching the appropriate forum having jurisdiction.

43 In these circumstances, the Plaintiff filed the present Suit on 5th May, 2022. In the present suit, the Plaintiff filed an Interim Application, being Interim Application No. 2807 of 2022. By an Order dated 7th July, 2022 passed in the said Interim Application,the Defendant was directed to maintain status-quo in respect of the 11,25,000 shares of ITC Limited and accruals thereto. Further, by an Order dated 16th November, 2022 passed in the said Interim Application, the status-quo order in respect of 11,25,000 shares of ITC Limited and accruals thereto was continued till the hearing and final disposal of the said Interim S.R.JOSHI 14 of 59 Application. By the said Order, a statement was recorded on behalf of the Defendant that a separate account, being an internal account of the Defendant-bank, wherein the nomenclature would be “Sundry Provision Dividend ITC”, would be opened for the purpose of crediting the future dividend in respect of the 11,25,000 shares of ITC Limited. A further statement was recorded that the debiting of the said account would be frozen and the credits to that account would be restricted to future dividends from the shares of ITC Limited. A statement was also recorded that the dividend which was initially credited to the main bank account would, within 5 days, be transferred and credited to the separate account to be opened. A further statement was also recorded that credits to the separate account would not be shown as income accrued to the Defendant-bank but would be classified as a liability.

44 On 29th March, 2023, the present Interim Application was filed by the Plaintiff.

45 The Defendant has filed an Affidavit in Reply dated 7th August, 2023 to the present Application and also filed a Written Statement in the suit. S.R.JOSHI 15 of 59

46 Mr. Gaurav Joshi, the learned Senior Advocate appearing on behalf of the Plaintiff, made submissions in support of the Interim Application. Mr. Joshi referred to a judgement of the Delhi High Court in Deepali Designs and Exhibits Private Limited v/s. Encompass Events and submitted that it was held by the said judgement that the twin tests provided for a summary judgement are that there is no real prospect of succeeding or of defending the claim and there are no other compelling reasons as to why the claim should not be disposed of before recording of oral evidence. In the context of order XIII-A Rule of the CPC, Mr. Joshi also relied upon the judgements of the Delhi High Court in Sudarshan Dhoop Pvt. Ltd., v/s. Hotel Queen Road Private Limited and Others 2 and Su-kam Power Systems Ltd., v/s. Kunwer Sachdev and Another[3]. Mr. Joshi also relied upon a judgement of this Court in Indian Tobacco Company v/s. Jayant Industries[4]

47 Mr. Joshi submitted that an application under Order XIII-A of the CPC can be filed when the Defendant has no real prospect of 1(2022) SCC Online Del. 3269 2(2022) SCC Online Del. 2863 3(2019) SCC Online Del. 10764.

S.R.JOSHI 16 of 59 succeeding or defending the claim of the Plaintiff, which can be allowed without leading any evidence orally or documentary. Mr. Joshi submitted that such an application is also to be allowed when the averments made in the plaint are deemed to be admitted by the Defendant. Mr. Joshi submitted that the facts in the present case shows that the Defendant has not disputed that he is not entitled in law to dispute the case of the Plaintiff and has not raised any defence which requires parties to lead any oral evidence. Mr. Joshi submitted that the documents relied upon by the Plaintiff are also not disputed by the Defendant. He submitted that most of the documents relied upon by the Plaintiff are basically court proceedings and the orders passed therein.

48 Mr. Joshi submitted that the Court can grant summary judgement when the Plaintiff proves that there is no genuine defence as to any material fact of the case pleaded by the Plaintiff.

49 Mr. Joshi further submitted that the Defendant had filed his Reply dated 7th August, 2023 to the present Interim Application and also Written Statement dated 11th August, 2022. Mr. Joshi submitted that, from the same, it is clear that the Defendant has merely raised the following defences in the present suit i.e. (i) the suit filed by the Plaintiff S.R.JOSHI 17 of 59 is barred by the law of limitation, and, therefore, is liable to be dismissed;

(ii) the said shares of ITC Limited were pledged by the Plaintiff in favour of the Defendant to secure due repayments of all dues; and (iii) the reliefs sought for by the Plaintiff arose under three contract notes which have been held to be illegal by the Hon’ble Supreme Court.

50 With respect to the defence whether the suit is barred by law of limitation, Mr. Joshi referred to Section 14 of the Limitation Act, 1963. In this context, Mr. Joshi submitted that, on 14th May, 2005, the Defendant issued No Dues Certificate to the Plaintiff towards full and final settlement of the overdraft facilities under the OTS Scheme. The Defendant, on 10th June, 2005, withdrew the recovery proceedings filed against the Plaintiff before the DRT. The Plaintiff called upon the Defendant to return the shares on 29th May, 2005 and, thereafter, on 14th June, 2005.

51 The cause of action arose for the first time when the Defendant failed to release the said shares. The Plaintiff acted bonafidely and with due diligence, and within the period of limitation, on legal advice, filed Complaint No.55 of 2006 before the National Consumer Commission on 15th June, 2006. S.R.JOSHI 18 of 59

52 Mr. Joshi further submitted that the said proceedings before the National Consumer Commission were filed and diligently pursued by the Plaintiff from 2006 till their disposal on 1st June, 2016, when the Order dated 1st June, 2016 was passed by the National Consumer Commission rejecting the Complaint on the grounds of lack of jurisdiction. Mr. Joshi submitted that, however, liberty was granted to the Plaintiff to avail of his remedy by approaching the appropriate forum having jurisdiction. Further, Mr. Joshi submitted that, on legal advice and a bonafide belief of the jurisdiction of the National Consumer Commission, the said Order was bonafidely challenged before the Hon’ble Supreme Court by way of a statutory appeal, being Civil Appeal No.11397 of 2016. The said Civil Appeal was filed on 18th November, 2016. On 28th November, 2016, the said Civil Appeal was admitted by the Hon’ble Supreme Court. Mr. Joshi submitted that the said Civil Appeal was also diligently pursued by the Plaintiff but was ultimately rejected on 22nd February, 2022, holding that the National Consumer Commission had no jurisdiction and reiterating the liberty granted to the Plaintiff by the National Consumer Commission to avail his remedy by approaching the appropriate forum having jurisdiction.

53 Mr. Joshi relied upon the judgement of the Hon’ble Supreme S.R.JOSHI 19 of 59 Court in M. P. Steel Corporation v/s. Commissioner of Central Excise[5] to submit that Section 14 of the Limitation Act would save limitation if the lis is bonafidely pursued and not decided on merits.

54 As far as the Plaintiff bonafidely pursuing legal remedies is concerned, Mr. Joshi submitted that, by SLP No. 1688 of 2015, the Plaintiff had applied to the Hon’ble Supreme Court for expeditious hearing before the National Consumer Commission. He submitted that, by an Order dated 18th September, 2015, the Hon’ble Supreme Court expedited the hearing before the National Consumer Commission.

55 Mr. Joshi further submitted that the Plaintiff also filed Applications dated 29th November, 2019 and 9th November, 2021 before the Hon’ble Supreme Court to expedite Civil Appeal No. 11397 of 2016 pending before Hon’ble Supreme Court. The Hon’ble Supreme Court vide its Orders dated 24th February, 2020 and 29th November, 2011 expedited the hearing of the Civil Appeal.

56 Mr. Joshi submitted that all these facts established beyond doubt that the Plaintiff was diligently pursuing both the proceedings

S.R.JOSHI 20 of 59 before the National Consumer Commission and before the Hon’ble Supreme Court.

57 Mr. Joshi further submitted that the National Consumer Commission and the Hon’ble Supreme Court had also granted liberty to the Plaintiff to avail of his remedies by approaching the appropriate forum having jurisdiction. He submitted that, therefore, the time taken from 15th June, 2006 till 1st June, 2016 and thereafter from 18th November, 2016 to 22nd February, 2022 in pursuing the complaint before the National Consumer Commission and, thereafter, the statutory appeal before the Hon’ble Supreme Court, was required to be excluded under Section 14 of the Limitation Act, 1963, whilst computing the period of limitation. He submitted that, in the present case, the Plaintiff had bonafide and diligently pursued legal civil proceedings for recovery of the shares before the National Consumer Commission and the Hon’ble Supreme Court, which was ultimately held to have no jurisdiction.

58 Mr. Joshi submitted that the proceedings were between the same parties i.e. the Plaintiff and the Defendant. The subject matter of the proceedings before the National Consumer Commission and the Hon’ble Supreme Court was for release and return of the subject shares. S.R.JOSHI 21 of 59 He submitted that the dispute regarding return of shares was not decided on merits of the case in the National Consumer Commission or the Hon’ble Supreme Court and was merely rejected on the ground of nonmaintainability with liberty to file the disputes before the appropriate Court.

59 Mr. Joshi also submitted that the cause of action is a continuing cause of action and, therefore, the present suit is within time and no claim in the present suit is barred by law of limitation.

60 Mr. Joshi also submitted that the subject shares with the accruals thereon were withheld by the Defendant in breach of trust/ fiduciary duties. The shares were handed over in trust as and by way of pledge for the overdraft dues (i.e. bailment). After issuance of the No Dues Certificate, the Defendant was bound to return the same which it failed to do so in breach of its fiduciary duties/ duties as trustee, and, therefore, Section 10 of the Limitation Act, 1963, was applicable, and the suit was not barred by the law of limitation.

61 Mr. Joshi further submitted that the other defences raised by the Defendants were barred in law by the principles of res judicata/ S.R.JOSHI 22 of 59 constructive res judicata/ issue estoppel as was clear from the facts of the case. In this context, Mr. Joshi submitted that Nedungadi Bank Limited initiated Arbitration Proceedings, being Reference No. 883 of 2001, against the Plaintiff, before the Arbitral Forum of the Bombay Stock Exchange, inter alia, seeking to recover a sum of Rs.32,64,59,988/allegedly due and payable by the Plaintiff on account of certain transactions between the Plaintiff and the Nedungadi Bank Limited. Mr. Joshi submitted that Nedungadi Bank Limited dishonestly alleged that the Plaintiff had handed over the shares of Ansal Hotels Limited as additional security against its alleged dues in respect of share trading. However, in the present proceedings, the Defendant had conveniently changed its stand and claimed that the said shares were pledged by the Plaintiff in favour of the Defendant to secure due repayments of all the dues payable by the Plaintiff to the Defendant and not just the dues under the said overdraft facilities.

62 Mr. Joshi submitted that this change of stand did not help the case of the Defendant as the Defendant had admittedly issued a No Dues Certificate for the overdraft facilities.

63 Mr. Joshi further submitted that, on 27th April, 2004, the S.R.JOSHI 23 of 59 Arbitral Tribunal passed an Award rejecting the arbitration claim of the Defendant.

64 Being aggrieved by the Award dated 27th April, 2004, the Defendant filed an Appeal before the Appellate Tribunal of the Bombay Stock Exchange. On 16th July, 2004, the Appellate Tribunal dismissed the Appeal and upheld the Award. In its Award, the Appellate Tribunal had recorded that the Defendant had failed to produce any evidence to substantiate its claim that the shares of Ansal Hotels Limited were given as security for claims under the share trading account.

65 Mr. Joshi submitted that, thus, the Defendant’s case that the shares were pledged for the share trading account dues was rejected as not proved.

66 Mr. Joshi further submitted that, thereafter, the Defendant filed an Arbitration Petition in this Court, being Arbitration Petition NO. 437 of 2004, challenging the Award of the Appellate Tribunal. Mr. Joshi submitted that, in the said Petition, the Defendant specifically challenged the findings of the Appellate Tribunal in respect of the rejection of the Defendant’s claim relating to the deposit of the Ansal shares as security S.R.JOSHI 24 of 59 towards share trading account.

67 Mr. Joshi submitted that, by an Order dated 15th September, 2008, the said Arbitration Petition filed by the Defendant was dismissed. The Defendant filed an Arbitration Appeal, being Arbitration Appeal NO. 499 of 2008, where once again Defendant challenged the findings recorded by the Appellate Tribunal of the Bombay Stock Exchange in respect of the deposit of the shares as security towards the share trading account. Mr. Joshi submitted that the Arbitration Appeal was also rejected by an Order dated 2nd May, 2009 passed by this Court.

68 Mr. Joshi submitted that the Defendant thereafter filed SLP, being SLP (Civil) No.2067[7] of 2009, before the Hon’ble Supreme Court. In the said SLP, the Defendant had once again challenged the findings of the Appellate Tribunal of the Bombay Stock Exchange in respect of rejection of its claim that the Ansal shares were given as security towards share trading account.

69 Mr. Joshi submitted that, by an Order dated 8th November, 2010, the Hon’ble Supreme Court dismissed the said SLP. S.R.JOSHI 25 of 59

70 Mr. Joshi submitted that the pleadings filed by the Defendant in various proceedings with respect to the subject shares would demonstrate that the issue that the subject shares were given as security towards alleged share trading account was considered and rejected with a specific finding that there was no evidence to show that the said shares were given as security.

71 Mr. Joshi further submitted that the Defendant is barred by principles of res judicta/issue estoppal from claiming that it has any claim under the said share trading account or that the subject shares were given as security toward its claims for the share trading account or raising any similar contention / defence or in refusing to hand over the subject shares, with accruals thereon, to the Plaintiff.

72 Mr. Joshi further submitted that the Defendant had in breach of its fiduciary duties and/or breach of trust withheld/ converted the subject shares and continues to unlawfully and illegally withhold the same. Mr. Joshi submitted that the Defendant was under a legal obligation to hand back the original share certificates to the Plaintiff upon the Plaintiff paying the settlement dues and on the Defendant issuing a No Due Certificate dated 14th May, 2005. S.R.JOSHI 26 of 59

73 Mr. Joshi submitted that, since the Defendant failed to do so, it was now holding the shares in trust for and on behalf of the Plaintiff.

74 Mr. Joshi submitted that, in these circumstances, the Interim Application ought to be allowed and Summary Judgement, as prayed for, be passed in favour of the Plaintiff.

75 Mr. Simil Purohit, the learned Senior Advocate appearing on behalf of the Defendant, opposed the grant of any reliefs in the Interim Application. Mr. Purohit submitted that the present suit cannot be decided without oral evidence. Mr. Purohit referred to the letter dated 30th March, 2001 addressed by the Plainitiff to Nedungadi Bank Limited where by the Plaintiff had informed Nedungadi Bank Limited that it can keep the 37,50,000 equity shares of Ansal Hotels Pvt. Ltd. as security against the Plaintiff’s dues to the bank till the sale procedure in respect of these shares was completed.

76 Mr. Purohit submitted that it was clear from the said letter that the said shares did not form part of the earlier overdraft facility. Mr. S.R.JOSHI 27 of 59 Purohit further submitted that the said letter does not state that the shares were given as security to secure the overdraft account.

77 Mr. Purohit further submitted that the letter dated 27th March, 2001, at page 73 of the Plaint, showed that the total outstanding dues of the Plaintiff in respect of the overdraft facilities were Rs.5.98 Crores, while the value of the shares was Rs.26.75 Crores. Mr. Purohit submitted that this showed that the said shares were not given only towards the overdraft facility.

78 Mr. Purohit further referred to the letter dated 22nd July, 2002 which was addressed by the Advocates for the Plaintiff to the Advocates for the Defendant (Exhibit U to the Plaint at page 81). Mr. Purohit submitted that it was important to note that, although the said letter was addressed in respect of the overdraft facility, it did not make any reference to the shares of Ansal Hotels Limited, thereby clearly showing that the said shares were not pledged as security towards the overdraft facility.

79 Mr. Purohit further submitted that in the arbitration proceedings before the Bombay Stock Exchange, the Arbitral Tribunal of S.R.JOSHI 28 of 59 the Bombay Stock Exchange had specifically framed an issue as to whether the shares of Ansal Hotels Limited were offered as security towards the share trading account or to secure the overdraft account. However, the Award does not give any findings on the said issue and the claims of the Defendant were rejected on other grounds. Further, Mr. Purohit submitted that even the Appellate Tribunal did not adjudicate whether the Ansal shares were given towards other transcations.

80 Mr. Purohit submitted that that, therefore, it still has to be adjudicated whether the Ansal shares were given only towards the overdraft facility as submitted in the Plaint.

81 On the question of limitation, Mr. Purohit submitted that the Plaintiff has relied upon Section 14 of the Limitation Act, 1963, and had submitted that he was bonafidedly purusing his case before the National Consumer Commission and the Hon’ble Supreme Court. Mr. Purohit submitted that, whether the Plaintiff was bonafidely purusing these proceedings, is a question of fact which was required to be pleaded and proved. S.R.JOSHI 29 of 59

82 Mr. Purohit also submitted that the Plaintiff was put to notice by the Defendant that the proceedings would not lie before the National Consumer Commission by raising a preliminary objection to that effect but, despite the same, the Plaintiff pursued the said proceedings.

83 Mr. Purohit submitted that therefore it cannot be stated that the Plaintiff was bonafidely pursuing the said proceedings. In support of his submission, Mr. Purohit relied upon the judgement of the Kerala High Court in Mac-N-Hom Systems v/s. Vaidya Ratnam P. S. Varrier’s Aryavaidyasala[6]

84 Mr. Purohit further submitted that the filing of the Appeal before the Hon’ble Supreme Court by the Plaintiff also showed that the Plaintiff was not bonafidely pursuing the case, and, therefore, the Plaintiff is not entitled to rely upon Section 14 of the Limitation Act, 1963.

85 Mr. Purohit further submitted that the National Consumer Commission had only given the Plaintiff the liberty to adopt appropriate proceedings as applicable in law and the Hon’ble Supreme Court had only reiterated the same. Mr. Purohit submitted that the same does not 6 (2003) SCC Online Ker 255 S.R.JOSHI 30 of 59 absolve the Plaintiff from pleading and proving that he was bonafidely pursuing the proceedings before the National Consumer Commission and the Hon’ble Supreme Court. Mr. Purohit reiterated that this was a question of fact which had to be pleaded and proved. Hence, the Plaintiff would have to lead evidence in order to prove this fact and the Plaintiff could not succeed in the suit without proving the said fact by leading evidence.

86 Mr. Purohit submitted that, for all the aforesaid reasons, the Plaintiff was not entitled to a summary judgement as claimed by him.

87 In rejoinder, Mr. Joshi submitted that the grounds in the SLP filed by the Defendant shows that the Defendant understood the findings of the Appellate Tribunal of the Bombay Stock Exchange to mean that Ansal shares were not given towards other transactions.

88 As far as limitation is concerned, Mr. Joshi submitted that neither the National Consumer Commission nor the Hon’ble Supreme Court had stated that the proceedings before them had not been pursued bonafidely by the Plaintiff. He submitted that, on the contrary, they had given the Plaintiff liberty to file appropriate proceedings. S.R.JOSHI 31 of 59

89 Mr. Joshi further submitted that the Plaintiff had filed multiple applications for early disposal of the proceedings before the National Consumer Commission and the Hon’ble Supreme Court. Mr. Joshi submitted that this clearly showed that the Plaintiff was bonafidely pursuing these proceedings and no oral evidence was required to be led by the Plaintiff in that regard.

90 Mr. Joshi further referred to paragraphs 33 and 34 of the Written Statement and submitted that the Defendant had not specifically contended that the Plaintiff was not pursuing proceedings with due diligence. Further, Mr. Joshi also submitted that the Defendant had no answer to the other submissions on limitation made by the Plaintiff.

91 In sur-rejoinder, Mr. Purohit referred to a judgement of this Court in Foreshore Co-operative Housing Society Ltd., v/s. Praveen Desai and Others[7] to submit that, in order to rely upon Section 14, the Plaintiff would have to plead and prove by leading evidence that he was bonafidely pursuing proceedings before the National Consumer Commission and the Hon’ble Supreme Court. Mr. Purohit submitted that 7 (2006) 6 SCC Online Bom 72 S.R.JOSHI 32 of 59 the burden of proof would be on the Plaintiff and the said burden cannot be discharged by the Plaintiff except by leading evidence.

92 I have heard the learned counsel for the parties and perused the documents on record.

93 Rule 3 of Order XIII-A reads as under:

94 In its judgement in Su-kam Power Systems Ltd. (Supra), the Hon’ble Delhi High Court has discussed as to how Rule 3 of Order XIIIA has to be interpreted. Paragraphs 39 to 52 of the said judgement are relevant and are set out hereunder.

40. Amended Order XIIIA of CPC, as applicable to commercial disputes, enables the Court to decide a claim or part thereof without recording oral evidence. Order XIIIA of CPC seeks to avoid the long drawn process of leading oral evidence in certain eventualities. Consequently, the said provision enables disposal of commercial disputes in a time bound manner and promotes the object of the Commercial Courts Act, 2015.

41. Rule 3 of Order XIII-A of CPC empowers the Court to grant a summary judgment against a defendant where on an application filed in that regard, the Court considers that the defendant has no real prospect of successfully defending a claim, and there is no other compelling reason why the claim should not be disposed of before recording of oral evidence. Order XIIIA (3) of CPC, as applicable to commercial disputes, is reproduced hereinbelow:— “3. Grounds for summary judgment.—The Court may give a summary judgment against a plaintiff or defendant on a claim if it considers that- (a) the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim, as the case may be; and (b) there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.”

42. Consequently, the new Rule, applicable to commercial disputes, demonstrates that trial is no longer the default procedure/norm.

43. Rule 24.[2] of Civil Procedure Rules in England is identical to Rule 3 of Order XIIIA of CPC. It refers to the words ‘no real S.R.JOSHI 34 of 59 prospect’ of being successful or succeeding. Rule 24.[2] of Civil Procedure Rules in England is reproduced hereinbelow:— “24.[2] The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if— (a) it considers that-

(i) that claimant has no real prospect of succeeding on the claim or issue; or

(ii) that defendant has no real prospect of defending the claim or issue;’and

44. While deciding the test for summary judgment under Rule 24.2, House of Lords in Three Rivers District Council v. Governor and Company of the Bank of England, [2003] 2 A.C. 1, reiterated the observation in Swain v. Hillman, [2001]

1 All ER 91 that the word ‘real’ distinguishes ‘fanciful’ prospects of success and it directs the Court to examine whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success. The House of Lords in Three Rivers District Council (supra) also held that the Court while considering the words ‘no real prospect’ should look to see what will happen at the trial and that if the case is so weak that it has no reasonable prospect of success, it should be stopped before great expenses are incurred. The relevant portion of the Three Rivers District Council (supra) judgment is reproduced hereinebelow:— “[90] The test which Clarke J applied, when he was considering whether the claim should be struck out under RSC Ord 18, r 19, was whether it was bound to fail: see p 171 of the third judgment. Mr.Stadlen submitted that the court had a wider power to dispose summarily of issues under CPR Part 24 than it did under RSC Ord 18, r 19, and that critical issue was now whether, in terms of CPR rule 24.2(a)(i), the claimants had a real prospect of succeeding on the claim. As to what these words mean, in Swain v. Hillman [2001] 1 All ER 91, 92, Lord Woolf MR said: “Under r 24.2, the court now has a very salutary power, both to be exercised in a claimant's favour or, where S.R.JOSHI 35 of 59 appropriate, in a defendant's favour. It enables the court to dispose summarily of both claims or defences which have no real prospect of being successful. The words ‘no real prospect of being successful or succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or, as Mr. Bidder QC submits, they direct the court to the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.” [91] The difference between a test which asks the question “is the claim bound to fail?” and one which asks “does the claim have a real prospect of success?” is not easy to determine. In Swain v. Hillman, at p 4, Lord Woolf explained that the reason for the contrast in language between rule 3.[4] and rule 24.[2] is that under rule 3.4, unlike rule 24.2, the court generally is only concerned with the statement of case which it is alleged discloses no reasonable grounds for bringing or defending the claim. In Monsanto plc v. Tilly The Times, 30 November 1999; Court of Appeal (Civil Division) Transcript No. 1924 of 1999; Stuart Smith LJ said that rule 24.[2] gives somewhat wider scope for dismissing an action or defence. In Taylor v. Midland Bank Trust Co. Ltd. 21 July 1999 he said that, particularly in the light of the CPR, the court should look to see what will happen at the trial and that, if the case is so weak that it had no reasonable prospect of success, it should be stopped before great expense is incurred. [92] The overriding objective of the CPR is to enable the court to deal with cases justly: rule 1.1. To adopt the language of article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms with which this aim is consistent, the court must ensure that there is a fair trial. It must seek to give effect to the overriding objective when it exercises any power given to it by the Rules or interprets any rule: rule 1.2. While the difference between the two tests is elusive, in many cases the practical effect will be the same. In more difficult and complex cases such as this one, attention to the overriding objective of dealing with the case justly is likely to be more important than a search for the precise meaning of the rule. As May LJ said in Purdy v. Cambran (unreported) 17 December 1999: Court of Appeal (Civil Division) Transcript No. 2290 of 1999: S.R.JOSHI 36 of 59 “The court has to seek to give effect to the overriding objective when it exercises any powers given to it by the rules. This applies to applications to strike out a claim. When the court is considering, in a case to be decided under the Civil Procedure Rules, whether or not it is just in accordance with the overriding objective to strike out a claim, it is not necessary to analyse that question by reference to the rigid and overloaded structure which a large body of decisions under the former rules had constructed.” [93] In Swain v. Hillman Lord Woolf MR gave this further guidance: “It is important that a judge in appropriate cases should make use of the powers contained in Part 24. In doing so he or she gives effect to the overriding objectives contained in Part 1. It saves expense; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose, and, I would add, generally, that it is in the interests of justice. If a claimant has a case which is bound to fail, then it is in the claimant's interests to know as soon as possible that that is the position. Likewise, if a claim is bound to succeed, a claimant should know this as soon as possible... Useful though the power is under Part 24, it is important that it is kept to its proper role. It is not meant to dispense with the need for a trial where there are issues which should be investigated at the trial. As Mr. Bidder put it in his submissions, the proper disposal of an issue under Part 24 does not involve the judge conducting a mini trial, that is not the object of the provisions; it is to enable cases, where there is no real prospect of success either way, to be disposed of summarily.” (See [2001] 1 All ER 91 AT 94-95.)

45. The Supreme Court of Canada in Robert Hryniak v. Fred Mauldin, 2014 SCC OnLine Can SC 53 has also held that trial should not be the default procedure. In the said case, which was an action for civil fraud against the appellant and a corporate lawyer, who acted for the appellant, the allegation was that the appellant, through that company, had transferred more than US $10 million to an offshore bank following which he claimed that the money had been stolen. That money had initially been transferred to the appellant's S.R.JOSHI 37 of 59 company, by the respondents therein, in respect of an investment opportunity.

46. The Trial Court as well as the Court of Appeal considered Rule 20 of the Ontario Rules of Civil Procedure (RCP) and the appropriate standard of review in granting a summary judgment. Rule 20 of RCP reads as: “....(1) The court shall grant a summary judgment if, (a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment. (2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties.....”. It is pertinent to mention that the amendments to the RCP in December 2008 changed the test from “a genuine issue for trial” to whether “there is a genuine issue requiring trial”. The case was thereafter referred to the Supreme Court of Canada by way of an appeal from the Court of Appeal.

47. The Supreme Court of Canada, despite allegation of fraud, did not exercise the power to record oral evidence. Instead, the Court granted summary judgment in favour of the respondents/plaintiff on the basis of the material/pleadings already available with it. The Court held that there is no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. The Court further held that that is the case when the process allows the judge to make necessary findings of fact, allows the judge to apply the law to such facts and when such a process is proportionate, more expeditious and a less expensive means of achieving a just result. Consequently, when a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, it would not be necessary to proceed to trial. In this regard the standard for fairness is whether or not the procedure involved in a summary judgment would give the judge the confidence to find necessary facts and apply the relevant legal principles to resolve the dispute. The relevant portion of the said judgment is reproduced hereinbelow:— “[8] More than a decade ago, a group of American investors, led by Fred Mauldin (the Mauldin Group), placed their money S.R.JOSHI 38 of 59 in the hands of Canadian “traders”. Robert Hryniak was the principal of the company Tropos Capital Inc., which traded in bonds and debt instruments; Gregory Peebles, is a corporatecommercial lawyer (formerly of Cassels Brock & Blackwell) who acted for Hryniak, Tropos and Robert Cranston, formerly a principal of a Panamanian company, Frontline Investments Inc. xxx xxx xxx [11] Beyond a small payment of US$9,600 in February 2002, the Mauldin Group lost its investment. [14] The motion judge concluded that a trial was not required against Hryniak. However, he dismissed the Mauldin Group's motion for summary judgment against Peebles, because that claim involved factual issues, particularly with respect to Peebles' credibility and involvement in a key meeting, which required a trial. Consequently, he also dismissed the motion for summary judgment against Cassels Brock, as those claims were based on the theory that the firm was vicariously liable for Peebles' conduct. [19] The Court of Appeal concluded that, given its factual complexity and voluminous record, the Mauldin Group's action was the type of action for which a trial is generally required. There were numerous witnesses, various theories of liability against multiple defendants, serious credibility issues, and an absence of reliable documentary evidence. Moreover, since Hryniak and Peebles had cross claimed against each other and a trial would nonetheless be required against the other defendants, summary judgment would not serve the values of better access to justice, proportionality, and cost savings. [20] Despite concluding that this case was not an appropriate candidate for summary judgment, the Court of Appeal was satisfied that the record supported the finding that Hryniak had committed the tort of civil fraud against the Mauldin Group, and therefore dismissed Hryniak's appeal. S.R.JOSHI 39 of 59 [21] In determining the general principles to be followed with respect to summary judgment, I will begin with the values underlying timely, affordable and fair access to justice. Next, I will turn to the role of summary judgment motions generally and the interpretation of Rule 20 in particular. I will then address specific judicial tools for managing the risks of summary judgment motions.

IV. Analysis

[23] This appeal concerns the values and choices underlying our civil justice system, and the ability of ordinary Canadians to access that justice. Our civil justice system is premised upon the value that the process of adjudication must be fair and just. This cannot be compromised. [24] However, undue process and protracted trials, with unnecessary expense and delay, can prevent the fair and just resolution of disputes. The full trial has become largely illusory because, except where government funding is available, ordinary Canadians cannot afford to access the adjudication of civil disputes. The cost and delay associated with the traditional process means that, as counsel for the intervener the Advocates' Society (in Bruno Appliance) stated at the hearing of this appeal, the trial process denies ordinary people the opportunity to have adjudication. And while going to trial has long been seen as a last resort, other dispute resolution mechanisms such as mediation and settlement are more likely to produce fair and just results when adjudication remains a realistic alternative. [34] The summary judgment motion is an important tool for enhancing access to justice because it can provide a cheaper, faster alternative to a full trial. With the exception of Quebec, all provinces feature a summary judgment mechanism in their S.R.JOSHI 40 of 59 respective rules of civil procedure. Generally, summary judgment is available where there is no genuine issue for trial. [42] Rule 20.04 now reads in part: 20.04... (2) [General] The court shall grant summary judgment if, (a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment. (2.1) [Powers] In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence. (2.2) [Oral Evidence (Mini-Trial)] A judge may, for the purposes of exercising any of the powers set out in sub-rule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation. [43] The Ontario amendments changed the test for summary judgment from asking whether the case presents “a genuine issue for trial” to asking whether there is a “genuine issue requiring a trial”. The new rule, with its enhanced fact-finding powers, demonstrates that a trial is not the default procedure. Further, it eliminated the presumption of substantial indemnity costs against a party that brought an unsuccessful motion for summary judgment, in order to avoid deterring the use of the procedure. [49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the S.R.JOSHI 41 of 59 law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. [50] These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.”

48. In fact, the Federal Court Ottawa, Ontario in Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc., 2011 FC 776 and High Court of Ireland in Abbey International Finance Ltd. v. Point Ireland Helicopters Ltd., [2012] IEHC 374, have held that even damages as well as unliquidated compensation can be awarded by way of summary judgment. The relevant portion of the said judgments are reproduced hereinbelow:—

Inc. (supra):— “[96] Further, the British Columbia Court of Appeal has confirmed that if the judge on a Rule 18A application can find the facts as he or she would upon a trial, the judge should give judgment, unless to do so would be unjust, regardless of complexity or conflicting evidence. In determining whether summary trial is appropriate, the court should consider factors such as the amount involved, the complexity of the matter, its urgency, any prejudice likely to arise by reason of delay, the cost of taking the case forward to a conventional trial in relation to the amount involved, the course of the proceedings and any other matters that arise for consideration. See Inspiration Management Ltd. v. McDeermind St. Lawrenc Ltd. (1989), 36 B.C.L.R. (2d) 202, [1989] B.C.J. No. 1003 at paragraphs 48 and 53-57 (C.A.). [98] In this case, it is my view that summary trial judgment is S.R.JOSHI 42 of 59 appropriate, having regard to all of the evidence and jurisprudence. The British Columbia Supreme Court has itself granted judgment on summary trial in cases of the manufacture, importation, distribution, sale and offer for sale of counterfeit goods, even in cases with multiple defendants, a complex fact pattern, numerous investigations and affidavits, and relatively large damage awards, thereby confirming the appropriateness of doing so. See Louis Vuitton Malletier S.A. et al. v. 486353 B.C. Ltd. et al., 2008 BCSC 799, [2008] B.C.W.L.D. 5075 at paragraphs 42-48.”

Helicopters Ltd.(supra):—

S.R.JOSHI 43 of 59

49. Consequently, this Court is of the view that when a summary judgment application allows the Court to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. It bears reiteration that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the Court the confidence that it can find the necessary facts and apply the relevant legal principles so as to resolve the dispute as held in Robert Hryniak (supra).

50. In fact, the legislative intent behind introducing summary judgment under Order XIIIA of CPC is to provide a remedy independent, separate and distinct from judgment on admissions and summary judgment under Order XXXVII of CPC.

51. This Court clarifies that in its earlier judgment in Venezia Mobili (India) Pvt. Ltd. v. Ramprastha Promoters & Developers Pvt. Ltd., 2019 SCC OnLine Del 7761 while deciding two applications, both filed by the plaintiff in the said case (one under Order XII Rule 6 and other under Order XIIIA) it had applied the lowest common denominator test under both the provisions of the Code of Civil Procedure and held that the suit could be decreed by way of a summary judgment.

52. Consequently, this Court is of the opinion that there will be ‘no real prospect of successfully defending the claim’ when the Court is able to reach a fair and just determination on the merits of the application for summary judgment. This will be the case when the process allows the court to make the necessary finding of fact, apply the law to the facts, and the same is a proportionate, more expeditious and less expensive means to achieve a fair and just result.”

95 In the judgements in Deepali Designs and Exhibits Private Limited (Supra) and Sudarshan Dhoop Pvt. Ltd. (Supra), the Delhi High Court has reiterated what has been discussed in Su-kam Power Systems Ltd. (Supra). S.R.JOSHI 44 of 59

96 In the light of this position in law, one will have to consider as to whether the Plaintiff is entitled to a summary judgement under Order XIII-A.

97 One of the defences raised by the Defendant is that the Plaintiff has not prosecuted with due diligence the proceedings before the National Consumer Commission and the Hon’ble Supreme Court, and therefore, the time spent by the Plaintiff in these proceedings ought not to be excluded. The Defendant has submitted that, if the said time is not excluded, then the Suit would be barred by limitation.

98 In this context, the averments of the Plaintiff are found in paragraph nos.19 and 20 of the Plaint, which read as under:

99 The averments in the Plaint show that, in order to contend that the Suit is filed within the period of limitation, the Plaintiff has relied on Section 14 of the Limitation Act, 1963, and has averred that the Plaintiff was bonafidely pursuing legal civil proceedings before the National Consumer Commission and the Hon’ble Supreme Court. Section 14(1) of the Limitation Act reads as under: S.R.JOSHI 46 of 59

100 In its judgement in Foreshore Co-operative Housing Society Ltd. (Supra), this Court has, in the context of Section 14 of the Limitation Act, 1963, laid down as under: