1 nms-1232-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi NOTICE OF MOTION NO. 1232 OF 2011 IN SUIT NO. 3190 OF 2006. Suresh Lachhmandas Raheja. ..Plaintiff. vs. Gopal Lacchmandas Raheja & Ors. ..Defendant. .... Mr. I.M. Chagla, Senior Counsel, a/w. Mr. Virag Tulzapurkar, Senior Counsel, i.b. Kanga & Co., for Plaintiff. Mr. A.A. Kumbhakoni, i/b. Mahimtura & Co., for Defendant No.1. Ms. Deeksha Dadwal, i/b. Hariani & Co., for Defendant Nos. 2 & 4. Mr. Shyam Diwan, Senior Counsel, a/w. Zubin Behramkamdin, i/b. Bharucha & Partners, for Defendant No.3. .... CORAM : S.J. KATHAWALLA, J. RESERVED ON : 22ND JUNE 2011 PRONOUNCED ON : 12TH AUGUST 2011. P.C. : By this Notice of Motion, the original Defendant No.3 has prayed for the following relief :- “For an order that the ad-interim order of injunction granted in favour of the Plaintiff by and under the common order dated 30th November 2007 passed by the Hon’ble Division Bench in Appeal No. 270 of 2007 and Appeal No. 284 of 2007 has lapsed/ stands vacated from 30th November 2010 onwards.” The learned Advocate Shri S.A. Diwan, appearing for the Defendant No.3 has submitted that the above Notice of Motion has been taken out by the Defendant No.3 pursuant to the order passed by the 2 nms-1232-11 Hon’ble Supreme Court dated 11th April 2011 in S.L.P. No.4705 of 2011 pending before the Hon’ble Supreme Court from the Judgment and order dated 17th January 2011 passed by the Hon’ble Division Bench of this Court. The order dated 11th April 2011 of the Hon’ble Supreme Court is reproduced hereunder for the sake of convenience. “ We have heard the learned Senior Counsel appearing for the parties. Learned Single Judge shall be free to decide the question of continuation of the injunction. All the questions shall be open to the parties in that matter. List this matter after eight weeks.” 2. The facts which have led to the filing of the present Notice of Motion are in brief set out hereunder. 3. The Plaintiff has filed the above Suit for specific performance of an Agreement arrived at between the Plaintiff and the Defendant Nos. 1 and 3 in relation to property, which is described as “Second Lot” of property and to seek consequential reliefs as prayed in the Suit. In the said Suit, the Notice of Motion being No. 3899 of 2006, was taken out by the Plaintiff seeking various ad-interim and interim reliefs. The ad-interim order dated 26th March 2007 was passed by the learned Single Judge wherein parties were directed to maintain status-quo; the Court Receiver was appointed with a direction to file the report of plinth level; the Plaintiff was directed to deposit an amount proportionate to the extent of 21.42% of his share in the 3 nms-1232-11 property within 6 weeks; and the hearing of the Notice of Motion was expedited leaving all questions open. 4. From the ad-interim order of the learned Single Judge dated 26th March 2007, the Defendant Nos. 2 and 3 both preferred Appeals before the Hon’ble Division Bench of this Court being Appeal Nos. 270 of 2007 and 284 of 2007. Both the Appeals were disposed of by a common Judgment dated 30th November 2007. Paragraph 5 of the operative part of the Judgment provided as follows : - “5. The Plaintiff shall furnish an undertaking by way of an Affidavit and also furnish a security bond to the extent of 21.42% of the valuation clause of the Plaint to the satisfaction of the Prothonotary and Senior Master of this Court within four weeks from today, to compensate the Defendants in the event the Notice of Motion and/or the Suit is dismissed.” 5. The Hon’ble Division Bench thereafter by its order dated 17th January 2008 inter alia clarified its Judgment dated 30th November 2007 as follows : “5. .....................in order to place the case of the Appellant still at a higher footing and to protect their interest equally during the pendency of the final disposal of the Motion, we direct the Respondent herein to furnish security to the extent of Rs. 200 crores to the satisfaction of the Prothonotary and Senior Master in terms of the order.” The Hon’ble Division Bench by its order dated 17th January 2008 also extended the time for furnishing security by two weeks from the date of its order. The Hon’ble Division Bench by its order dated 18th January 2008 4 nms-1232-11 further clarified its order as follows :- “The opening word “Defendants” in paragraph 3 of the operative part of the order shall stand substituted by the words “Defendant Nos. 1 and 3”. Similar change would be made in other paragraphs of the operative part.” 6. The Plaintiff as well as the Defendant No.3 had filed S.L.P.s before the Hon’ble Supreme Court of India impugning the above orders passed by the Hon’ble Division Bench of this Court in Appeal Nos. 270 of 2007 and 284 of 2007. The Hon’ble Supreme Court by its order dated 28th July 2008 dismissed the S.L.P. filed by the Defendant No.3 being Nos. 18952-18954 of 2008 with the following observations : “...... We are of the opinion that having regard to the fact that the original Notice of Motion is still pending before the High Court and as all the contentions raised by the Petitioner herein can be raised before the High Court in the said original Notice of Motion, it is not necessary for us to interfere with the impugned judgment at this stage. We, however, make it clear that the question as to whether the Respondent herein should be directed to furnish adequate security or not, shall also be one of the questions which may be determined by the High Court. Keeping in view the facts and circumstances of this case, we would request the High Court to consider the desirability of disposing of the original Notice of Motion as expeditiously as possible, preferably within a period of eight weeks from the date of communication of this order. The Special Leave Petition is dismissed with the aforementioned observation.” 7. The Hon’ble Supreme Court by order dated 4th October 2010 5 nms-1232-11 dismissed the S.L.P. filed by the Plaintiff being Nos. 15312-15316 of 2010, on the ground of delay as well as on merits. 8. In the meantime, on 29th January 2008, the Prothonotary and Senior Master accepted the security bond and undertaking of the Plaintiff. Rule 133 of the Bombay High Court (Original Side) Rules, provides that any party who is aggrieved by the order passed by the Prothonotary and Senior Master may request the Prothonotary to adjourn the matter and place the same before the Chamber Judge for his decision. Since the Defendant No.3 was not satisfied by the order of the Prothonotary and Senior Master accepting the security bond and undertaking from the Plaintiff and not directing the Plaintiff to furnish security in the form of tangible assets of the value of Rs. 200 crores, the Defendant No.3 moved an Application before the learned Chamber Judge seeking a stay of the order of the Prothonotary and Senior Master dated 29th January 2008. The learned Chamber Judge by his order dated 1st July 2010 set aside the order passed by the Prothonotary and Senior Master dated 29th January 2008 and directed the Plaintiff to forward security consisting of tangible assets of the value of Rs. 200 crores to the satisfaction of the Prothonotary and Senior Master within a period of six weeks from the date of the order. An Appeal preferred from the order of the learned Chamber Judge was dismissed by the Hon’ble Division Bench of this Court by 6 nms-1232-11 its order dated 29th July 2010. However, the time allowed by the learned Single Judge for furnishing the security was further extended by a period of four weeks. An S.L.P. preferred therefrom by the Plaintiff being S.L.P. No. 2298 of 2010 was also dismissed by an order dated 26th August 2010. However, the time to forward the security was further extended by 12 weeks. 9. On 11th October 2010, the Plaintiff furnished security to the Prothonotary and Senior Master in the form of tangible assets (two residential flats) of the aggregate value of Rs. 233 crores along with valuation reports of two independent Government approved Valuers in support thereof, namely, - (i) A.V. Shetty and Associates, dated 8th September 2010 valuing the properties at Rs. 90,07,50,000/- and Rs. 143,78,50,000/- i.e. aggregating to Rs. 233.66 crores, AND (ii) Perfect Valuation and Consultants, dated 9th October 2010 valuing the properties at Rs. 92.62 crores and Rs. 147.90 crores, i.e. aggregating to Rs. 240.52 crores. 10. On 22nd October 2010, the Defendant No.3 filed its reply / objections to the valuation of the security furnished by the Plaintiff. On 25th October 2010, the Plaintiff filed his Rejoinder thereto. On 10th November 2010, the Defendant No.3 produced before the Prothonotary and Senior Master valuation report of Rane Engineers valuing the properties at Rs. 16.92 crores and Rs. 25.67 aggregating 7 nms-1232-11 to Rs. 45.50 crores based on ready reckoner values. On 15th November 2010, the Prothonotary and Senior Master held on the basis of the ready reckoner values that the flats offered as security were valued at Rs. 44,27,75,000/- and that the Plaintiff will have to furnish additional security so as to meet the requirement of Rs. 200 crores. In the meantime, on 8th November 2010, the Plaintiff filed I.A. No. 2 of 2010 in the Hon’ble Supreme Court for extension of time to furnish security in which the Plaintiff stated that “the injunction may lapse”. By order dated 16th November 2010, the Hon’ble Supreme Court extended time to give security by two weeks i.e. upto 30th November 2010. 11. Both the Plaintiff as well as the Defendants did not accept the decision of the Prothonotary and Senior Master and filed applications before the learned Chamber Judge under Rule 133 of the Bombay High Court (Original Side) Rules, for setting aside the order dated 15th November 2010 passed the Prothonotary and Senior Master. 12. The learned Chamber Judge after hearing the learned Advocates for the parties by his order dated 26th November 2010 under Rule 133 of the Bombay High Court (Original Side) Rules, passed the following order : (a) The order dated 15th November 2010 of the Prothonotary and Senior Master was set aside. 8 nms-1232-11 (b) It was held that neither of the valuation reports on which reliance has been placed by the parties can be accepted. (c) M/s. Johns Lard Laser (JLL) independent Valuers were appointed to carry out the valuation of the Securities (flats) furnished by the Plaintiff. (d) It was further ordered that in the event of the valuation report of the independent valuer suggesting any deficiency in the value of the security, the Plaintiff shall offer additional security so as to make good the total security of Rs. 200 crores as directed by the Division Bench and the Prothonotary and Senior Master shall consider whether the additional security offered is appropriate and proper. 13. By an order dated 3rd December 2010, the learned Single Judge extended time for the Valuer to complete the work since the copy of the order dated 26th November 2010 was made available only on that day. Since the Valuer – JLL declined the assignment, by an order dated 23rd December 2010, the learned Chamber Judge appointed Knight Frank India Private Limited to complete the valuation by 6th January 2011. M/s. Knight Frank India Private Limited submitted their report on 11th January 2011 valuing the security of the Plaintiff at Rs. 148,56,86,537/-. 14. The Defendant No. 3 preferred an Appeal against the above 9 nms-1232-11 orders passed by the learned Chamber Judge dated 26th November 2010 and 3rd December 2010 being Appeal (L) No. 861 of 2010. The said Appeal was admitted on 17th January 2011 and the Notice of Motion was disposed of as follows : “2. While declining to grant the prayer for interim stay of the order dated 26th November 2010, as modified by the order dated 3rd December 2010 by the learned Single Judge in the application under Rule 133 of the Bombay High Court, Original Side Rules, 1980, we make it clear that the appellant being required to participate in the proceedings before the Prothonotary & Senior Master pursuant to the order passed by the learned Single Judge under appeal, shall be without prejudice to the rights and contentions of the parties in this appeal. 3. We also make it clear that there is no stay against the hearing of the Notice of Motion before the learned trial Judge and that it would be open to the Respondents- Defendants to raise all available contentions at the hearing of such Notice of Motion including the contention, which is raised in this appeal, that the ad-interim injunction expired on account of the Plaintiff not having furnished a security of the value of Rs. 200 crores within the time limit granted/ extended by the Supreme Court. Notice of Motion stands disposed of.” 15. Since M/s. Knight Frank India Private Limited valued the security of the Plaintiffs at Rs. 148,56,86,537/- on 18th January 2011, the Plaintiff offered to the Prothonotary and Senior Master additional security of Rs. 67.14 crores to cover the deficit amount. On 28th January 2011, the learned Chamber Judge extended the time given to the Prothonotary and Senior Master upto 11th February 2011. On 11th February 2011, the Prothonotary and Senior Master ascertained 10 nms-1232-11 the security originally tendered by the Plaintiff dated 11th October 2010 at Rs. 99,36,22,680/- and directed the Plaintiff to furnish additional security, which order is once again challenged by the Plaintiff as well as the Defendant No.3 before the learned Chamber Judge under Rule 133 of the Bombay High Court (Original Side) Rules. The said applications are pending determination. 16. On 16th February 2011 Defendant No. 3 filed an S.L.P. impugning the orders of the learned Single Judge and the Division Bench dated 26th November 2010 and 17th January 2011, respectively. The said S.L.P. was listed for admission on 4th March 2011. On 4th March 2011, the Hon’ble Supreme Court stayed the orders passed by the learned Single Judge and the Hon’ble Division Bench dated 26th November 2010 and 17th January 2011 until further orders. On 11th April 2011, the Hon’ble Supreme Court passed an order recording that the learned Single Judge shall be free to decide the question of continuation of injunction. In view thereof, the above Notice of Motion is filed by the Defendant No. 3 praying that the common order dated 30th November 2007 passed by the Hon’ble Division Bench of this Court in Appeal No. 270 of 2007 and Appeal No. 284 of 2007 has lapsed / stands vacated from 30th November 2010 onwards. 17. Mr. S.A. Diwan, learned Senior Counsel appearing for the 11 nms-1232-11 Defendant No.3 after taking me through the aforestated facts, has submitted that there is no extension granted to the Plaintiff by any Court after 30th November 2010 to furnish security to the value of Rs. 200 crores. It is submitted that it is evident from the order of the Hon’ble Division Bench that the direction to the Plaintiff to furnish security was to balance the equities between the contesting parties and the ad-interim injunction granted thereunder was as such subject to and dependent on the Plaintiff on his part furnishing the security as directed thereunder to compensate the Defendant Nos. 1 and 3 in the event that the said Notice of Motion No. 3899 of 2006 and/or the above Suit was dismissed. It is submitted that the Plaintiff having failed to give the security as per the aforestated Orders, the said ad-interim injunction has lapsed / stands vacated from 30th November 2010. The Defendant No. 3 is in the circumstances entitled to and is moving the above Notice of Motion for an order confirming that the ad-interim injunction granted to the Plaintiff under the aforesaid order dated 30th November 2007 has lapsed / stands vacated from 30th November 2010 and for such other orders as this Court may deem proper in the circumstances of the case. 18. Shri I.M. Chagla, the learned Senior Advocate appearing for the Plaintiff has submitted that the attempt on the part of the 12 nms-1232-11 Defendant No.3 to move by way of a fresh Notice of Motion is nothing but an abuse of the process of Court/Law. It is submitted that the Defendant No. 3 has earlier failed to obtain similar relief before this Court as well as the Hon’ble Supreme Court. It is submitted that the Plaintiff has prior to 30th November 2010 provided security in the form of tangible assets to the learned Prothonotary and Senior Master, which according to two valuation reports of Government approved valuers (one of whom is on the panel of the valuers of the Prothonotary and Senior Master of this Court) are of the value exceeding Rs. 200 crores. The learned Prothonotary and Senior Master passed an order dated 15th November 2010 to the effect that the property offered as security by the Plaintiffs was not to her satisfaction but was of the value of only Rs. 44,27,75,000/- and that the Plaintiff will have to furnish additional security so as to meet the requirement of Rs. 200 crores. The parties are legally entitled to get the matter adjourned before the Prothonotary and Senior Master for having it placed on the board of the Chamber Judge which both the parties did. The said order of the Prothonotary and Senior Master was set aside by the learned Chamber Judge by his order dated 26th November 2010 i.e. before 30th November 2010 and the learned Judge appointed an individual valuer to go into the valuation and also directed the Plaintiff to offer 13 nms-1232-11 additional security in the event that the independent valuer suggested any deficiency in the value of the security provided by the Plaintiff. The Defendant No.3 preferred an Appeal from the order passed by the learned Single Judge which was admitted by the Hon’ble Division Bench of this Court. However, the order passed by the learned Single Judge was not stayed by the Hon’ble Division Bench and the parties were allowed to participate in the proceedings before the Prothonotary and Senior Master pursuant to the order passed by the learned Single Judge without prejudice to their rights and contentions in the Appeal. It is further submitted that as against the valuation of Rs. 44,27,75,000/- accepted by the Prothonotary and Senior Master by her order dated 15th November 2010, the independent valuer has valued the said property at Rs. 148,56,86,537/- which again the Prothonotary and Senior Master has not accepted but has now passed an order ascertaining the security originally tendered by the Plaintiff at Rs. 99,36,22,680/- and directing the Plaintiff to furnish additional security against which both the parties have filed an Appeal under Rule 133 of the Bombay High Court (Original Side) Rules before the learned Chamber Judge. However, no progress has been made thereon since the Hon’ble Supreme Court has by its order dated 4th March 2011 stayed the order passed by the learned Chamber Judge dated 26th November 14 nms-1232-11 2010 and the order of the Hon’ble Division Bench dated 17th January 2011. Mr. Chagla has submitted that the question therefore of the ad-interim injunction granted to the Plaintiff under the Order dated 30th November 2007 having lapsed / vacated from 30th November 2010 does not arise. Mr. Chagla has also submitted that in the order passed by the Hon’ble Supreme Court dated 11th April 2011 pursuant to which the present Notice of Motion is taken out by the Defendant No.3, the reference to ‘Single Judge’ and ‘in that matter’ bears out that the said question of continuation of the injunction is to be decided at the hearing of the original Notice of Motion No. 3899 of 2006 and cannot be construed as giving liberty to file a fresh Motion. Mr. Chagla has therefore submitted that the Defendant No. 3 is not entitled to the relief sought in the above Notice of Motion and the same deserves to be dismissed with compensatory costs. 19. I have considered the submissions advanced on behalf of the parties. I have also perused and considered the orders passed by the Hon’ble Supreme Court of India as well as this Court from time to time. It is true that by an order of the Hon’ble Division Bench of this Court, the Plaintiffs were directed to furnish security in the form of tangible assets of the value of Rs. 200 crores to the satisfaction of the learned Prothonotary and Senior Master. According to the Defendant No. 3, the time to furnish the said security by the Plaintiff came to an 15 nms-1232-11 end on 30th November 2010. However, from the aforesaid facts, it is established that the Plaintiff has furnished security in the form of tangible assets to the Prothonotary and Senior Master on 11th October 2010 i.e. much before the extended date i.e. 30th November 2010 along with two valuation reports of the Government approved Valuers one of whom is also on the panel of the valuers of the Prothonotary and Senior Master of this Court. According to both the valuers, the value of the security in the form of the tangible assets (flats) furnished by the Plaintiff was much above Rs. 200 crores. As against this, the Defendant No.3 relied on a valuation report according to which the value of the security furnished by the Plaintiffs was only Rs. 44.50 crores. By an order dated 15th November 2010, the Prothonotary and Senior Master took a view that the value of the flats offered as security by the Plaintiff were Rs. 44,27,75,000/- and that the Plaintiff will have to furnish additional security so as to meet the requirement of Rs. 200 crores. Under Rule 133 of the Bombay High Court (Original Side) Rules, any party aggrieved by the order passed by the Prothonotary and Senior Master, is entitled to have the decision of the Prothonotary adjourned and consequently the Prothonotary and Senior Master is required to adjourn the matter and put it on the board of the Judge in Chamber. Both the parties accordingly moved the Judge in Chamber, who after 16 nms-1232-11 hearing the parties was satisfied that the decision of the Prothonotary and Senior Master pertaining to the value of the security furnished by the Plaintiff was not correct. The learned Single Judge therefore by his order dated 26th November 2010 (i.e. before expiry of the time available to the Plaintiff upto 30th November 2010 to furnish security to the Prothonotary and Senior Master) set aside the order of the Prothonotary and Senior Master dated 15th November 2010 and appointed an independent Valuer to value the security furnished by the Plaintiff. The learned Single Judge also ordered that in the event that the valuation report of the independent valuer suggested any deficiency in the value of the security, the Plaintiff shall offer additional security so as to make good the total security of Rs. 200 crores as directed by the Hon’ble Division Bench of this Court. In view thereof, the learned Single Judge has by his order dated 26th November 2010 not only set aside the order of the Prothonotary not accepting the valuation reports submitted by the Plaintiff in support of their contention that the securities furnished by the Plaintiff are worth far above Rs. 200 crores, but has also appointed an independent Valuer to value the said securities and has further extended the time to enable the Plaintiff to furnish any deficiency in the value of the security after receipt of the report of the independent Valuer and the same being 17 nms-1232-11 considered by the Prothonotary and Senior Master of this Court. In view thereof, it would be incorrect to say that there is no extension