:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.1836 OF 2006 IN SUIT NO.1602 OF 2006 Parasmal M. Lodha ..Plaintiff. Vs. Ranganath Somani & Ors. ..Defendants. Mr.D.H.Mehta i/b.Mr.Ashok Saraogi & Mr.S.Chaurasia for the Plaintiff. Mr.Abhishek Munot i/b./s.M.Dhruva & Co. for Defendant No.1. Mr.D.Madon i/b.M/s.Thakore Jariwala & Associates for Defendant No.2. CORAM : S.J. VAZIFDAR, J. CORAM : S.J. VAZIFDAR, J. CORAM : S.J. VAZIFDAR, J. DATED : 28TH JANUARY, 2008 DATED : 28TH JANUARY, 2008 DATED : 28TH JANUARY, 2008 ORAL JUDGMENT : ORAL JUDGMENT : ORAL JUDGMENT : The Plaintiff has taken out this Notice of Motion for an order directing Defendant No.4 the escrow agent to furnish him a copy of an MOU dated 11.10.1994 and copies of share certificates and transfer deeds in respect of a company, Shreenivas Cotton Mills Limited and for an order directing Defendant No.4 to deposit the original MOU, share certificates and transfer deeds in Court. The Plaintiff has also sought an order staying all actions on the part of Defendant Nos.1 to 3 contrary to the MOU or disposing of, parting with possession :2: of or inducting any third party or creating any third party rights or interest in the controlling block of shares (51%) of the said company, numbering 56,978. The Plaintiff has also sought a right of first refusal for the grant of development rights in respect of the property of the company situated at Mumbai. 2. Defendant Nos.1, 2 and 3 are the members of the Somani family. Defendant No.4 with whom the said documents were kept in escrow, is a solicitor and a partner of M/s.Kanga & Company. Defendant No.5 is one H.S.Merchant. According to the Plaintiff, Defendant No.5 has assigned his rights under the MOU to him. The suit is filed for specific performance of the said MOU dated 11.10.1994 and for an order directing Defendant No.4 to furnish copies of the MOU, share certificates and transfer deeds. 3. There is no dispute that the MOU dated 11.10.1994 had been executed. According to the Plaintiff, the said MOU provided that the parties thereto would jointly prepare a scheme of arrangement or a compromise for the revival of the company which was put into liquidation by this Court. The Plaintiff further states that it was :3: agreed that subject to sanction of the scheme by this Court, Defendant Nos.1, 2 and 3 would transfer to the Plaintiff and his associates atleast 51% shares of the company in consideration of "a certain sum of money" upon the signing of the MOU, which was payable and thereafter to provide requisite financial assistance for carrying out the revival as contemplated by the scheme formulated by the parties thereto. 4. The Plaintiff admits that the MOU was signed and given to Defendant No.4 to be kept in his custody and that no copies thereof were made. Defendant Nos.1 to 3 also handed over to Defendant No.4 the original share certificates and signed transfer deeds in respect of 26,978 shares which constitutes 51% of the total share capital of the company. Defendant No.4 was therefore constituted as an escrow agent in respect of the MOU, the share certificates and the signed transfer deeds. 5. It is not necessary for the purpose of this Notice of Motion to refer to the facts regarding the various proceedings that ensued in the winding up :4: proceedings in respect of the schemes propounded by various parties. Suffice it to state that one such scheme was sanctioned by an order and judgment of a Division Bench of this Court to which I was a party, (Shree Niwas Girni Kamgar Kruti Samiti v. Rangnath Basudev Somani & Ors., (2005) 9 LJ Soft, 83 = (2005) 127, C.C.,752) I am informed that the Hon’ble Supreme Court has remanded the matter to this Court. 6. By a letter dated 26.3.2003 addressed to Defendant No.4, the Plaintiff requested Defendant No.4 inter-alia to ensure that Defendant Nos.1, 2 and 3 did not act contrary to the MOU. The Plaintiff further requested Defendant No.4 to furnish him a xerox copy of the original MOU. 7. Defendant No.4 by his letter dated 29.3.2003 rightly denied any obligation on his part to ensure performance of the agreement by Defendant Nos.1 to 3. He further stated that the said documents were deposited by the Plaintiff for safe custody in escrow, pending execution of the formal agreements and papers and that a copy of the MOU could be furnished only upon the written consent of the other parties thereto. :5: 8. By his letter dated 19.4.2003 addressed to Defendant No.4, the Plaintiff contended that there was an understanding between all the parties to the MOU that the Plaintiff at all material times would have proper access to the MOU and all other relevant papers lying in the custody of Defendant No.4. The Plaintiff further stated that he was entitled at all times to a copy of the MOU without the consent of the other parties thereto. 9. By a letter dated 24.4.2003, Defendant No.4 stated that the document having been kept in escrow indicated that it was meant to be confidential and that copies thereof were not to be given or circulated without the consent of all the parties. 10. Ultimately, the Plaintiff’s Advocate’s addressed a notice dated 17.4.2006 to Defendant No.4 reiterating the above contentions, and demand. 11. Defendant No.4 by his reply dated 26.4.2006 stated that he would abide by the directions of this Court. 12. Admittedly, the MOU had been executed as alleged. Admittedly again, the MOU and the other :6: documents were delivered to Defendant No.4 as an escrow agent. There are however no conditions in writing on which the documents were delivered in escrow to Defendant No.4. 13. Mr.Mehta however contended that Defendant No.4 was bound to furnish copies of the documents to the Plaintiff on demand and without insisting on the consent of all the parties. This he submitted was also the understanding between the parties. It is not the Plaintiff’s case that he is entitled to the documents forwarded as escrow on the ground that he has complied with the conditions of the escrow entitling him to the documents. Indeed, his case is to the contrary viz. that there were no conditions and that any party was entitled to a copy of the said documents on demand. It was merely contended that it was understood between the parties that each of them would have access to the documents kept in the custody of Defendant No.4 and shall be entitled to copies thereof if such need arose (paragraph 8 of the plaint). 14. I am unable to agree. In effect, according to the Plaintiff, there was no condition on which the :7: escrow arrangement had been made. It militates against the essence of an escrow arrangement. 15. When an instrument is delivered as an escrow, it is not to become the deed of the parties to it until some condition has been performed. The escrow agent is normally a person of mutual confidence in whom the parties to the documents/transaction reposed confidence inter-alia to the effect that he will not disclose, circulate or hand over possession of the documents unless and until the conditions on which the documents were delivered to him as an escrow are satisfied. 16. A document is not delivered as an escrow without some condition having to be fulfilled before the escrow agent is entitled to part with such document to the parties or any one or more of them. The delivery of a document in escrow posits that it was delivered on a condition or conditions, the fulfilment or performance whereof is essential to the document being handed over to the concerned parties. If there was no condition for the disclosure of such a document, there is no reason to deliver it as an escrow at all. :8: 17. In Halsbury’s Laws of England (Vol.12 fourth edition, paragraph 1332) it is stated :- "Like delivery as a deed, delivery as an escrow may be made in words or by conduct although it need not be made in any special form or accompanied with any particular words, the essential thing in the case of delivery as an escrow being that the party should expressly or impliedly declare his intention to be bound by the provisions inscribed, not immediately, but only in the case of and upon performance of some condition then stated or ascertained." 18. I mentioned earlier that there is no writing evidencing the conditions on which the documents were delivered to Defendant No.4 as escrow. In such circumstances, the conditions on which the documents were delivered will depend on inference from the circumstances of the case (Kingston v. Ambrian Investment Company Ltd. [1975] I ALL ER, 120, CA.). 19. I do not suggest that an application for disclosure of an instrument forwarded as an escrow can only be made to a party when he is under the terms and conditions of the escrow entitled to the same. That may well depend on the reasons for such disclosure. That aspect must be left to be decided :9: for another day. In the present case, a copy of the MOU has already been disclosed in the manner and circumstances I will shortly refer to. It is not therefore the Plaintiff’s case any longer atleast, that the MOU is not available even for the purpose of litigating in respect of the Plaintiff’s alleged right. It is not necessary for me therefore to consider whether even during the subsistence of an escrow arrangement, a party is entitled to inspect or have copies of the documents placed as escrow for the limited purpose of ascertaining the obligation required to be fulfilled by the party or for the purpose of protecting its rights pending the performance or fulfilment of the conditions of the escrow. 20. The Plaintiff has not contended that the copy of the MOU annexed to the second Defendant’s affidavit is incorrect. The averment in paragraph 4 of the Plaintiff’s affidavit in rejoinder merely states :- "................................ the same seems to be a typed copy with errors and as such, no reliance can be placed upon the same." :10: This is a vague averment. There are no particulars to support the same. Even the nature of the errors or the basis on which the averment is made is not specified. 21. Why then does the Plaintiff desire to have a copy of the document/MOU by an order of the Court ? I asked Mr.Mehta whether even if I were to permit the Plaintiff to have a copy of the MOU, the Plaintiff would accept the same on the condition that merely by virtue of such order the Plaintiff would not contend the approval of any rights in his favour. Mr.Mehta refused to do so. 22. It is clear therefore that the Plaintiff desires a copy of the document for more than just the reason of ascertaining the terms thereof. 23. Mr.Mehta then submitted that Defendant No.2 having received a copy of the MOU the Plaintiff certainly could not be denied the right of also receiving a copy thereof. Indeed a copy of this MOU has been annexed to the affidavit in reply filed by Defendant No.2. It is necessary to note however that a complaint was filed on 15.11.2005 by Defendant No.2 against Defendant No.1 with the :11: Economic Offences Wing. Defendant No.4 was called upon by the Directorate of the Economic Offences Wing to furnish them a copy of the MOU lying with him in escrow. Defendant No.2 made an application for a copy of the MOU to the Office of the Directorate of the Economic Offences Wing, pursuant to which a copy thereof had been furnished. 24. Thus, Defendant No.2 obtained a copy of the MOU in altogether different circumstances and for a different purpose altogether. To furnish the MOU or a copy thereof to the parties in the present proceedings, would indicate the fulfilment of the conditions of the agreement between the parties entitling them to the documents delivered as an escrow. The act of an escrow agent parting with the documents forwarded to him in escrow has its own consequences and implications. For instance, it may suggest the satisfaction of the escrow agent that the conditions have been fulfilled by the party entitling him to the documents. 25. In the circumstances, Defendant No.4 rightly refused to disclose the documents to the Plaintiff without the consent of the other parties. Had he disclosed the documents pursuant to the Plaintiff’s :12: request, he would have acted in breach of his duties as an escrow agent. Defendant No.4 has discharged his duties as an escrow agent correctly. Further, he has rightly and fairly, in discharge of his duties as an escrow agent, not taken as a partisan stand and has in effect suggested that the parties adopt proceedings in accordance with law by stating that he would abide by the orders of the Court. 26. The Plaintiff is therefore not entitled to the documents forwarded as escrow to Defendant No.4. 27. Nor is the Plaintiff entitled to the other reliefs claimed in suit. As rightly pointed out by Mr.Madon, the learned Senior Counsel appearing on behalf of Defendant Nos.1, 2 and 3, the Plaintiff has himself stated in paragraph 10 of the plaint that he is unable to make a comprehensive statement about the contents of the MOU. It is pertinent to note further that in paragraph 30 the Plaintiff has reserved his right to give comprehensive details regarding the contents of the MOU and has craved leave to alter, amend, modify and add to the contents of the plaint and the reliefs claimed, once :13: the copy of the MOU is supplied to him. 28. The Plaintiff has not, even after the filing of the copy of the MOU by Defendant No.2, amended the plaint. In these circumstances, it is doubtful whether the Plaintiff would be entitled to even maintain this suit for specific performance as admittedly he claims not even to be aware of the terms and conditions of the agreement of which he seeks specific performance. 29. It is also pertinent to note that specific performance is sought of the MOU dated 11.10.1994. There is nothing on record to indicate how the suit is not barred by the law of limitation. Prima-facie, the suit appears to be barred by limitation in view of the fact that the agreement is dated 11.10.1994. All that the Plaintiff states in the plaint regarding limitation is :- "44. The Plaintiff submits that this suit is for specific performance of the contract and the same is not barred by the law of limitation." 30. It is also important to note that the Plaintiff’s request contained in his letter dated :14: 26.3.2003 for copies of the said documents was not acceded to by Defendant No.4 by his letter dated 29.3.2003. The Plaintiff repeated his request by his letter dated 19.4.2003. The request was again rejected by Defendant No.4 by his letter dated 24.4.2003. The suit was filed only on 12.6.2006. 31. It is also pertinent to note that no steps were adopted by the Plaintiff for enforcement or protection of their rights under the said MOU for over three years. This was despite the fact that to the Plaintiff’s knowledge various proceedings had been adopted in the Company Court in respect of schemes with which the Plaintiff had no concern. In view of the delay also, the Plaintiff is not entitled to any reliefs. 32. Prima-facie, the Plaintiff’s conduct would indicate that he realised that he had no enforceable right. It would in any event be a strong indication of abandonment. 33. In the circumstances, the Notice of Motion is dismissed.