1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.357 OF 2009 IN NOTICE OF MOTION NO.2544 OF 2007 IN SUIT NO.2477 OF 2006 1. Dr. Prithi Paul Singh Sethi having his office at 46/47 Jerbhai Wadia Road, Bhoiwada, Parel, Mumbai-400 012. 2. M/s. Presto Exports Ltd. 3. M/s. Multiex Marketing & Commission Ltd. 4. M/s. Vamshi Exports Ltd. .. Appellants (Orig. Plaintiffs) All having their office at 46/47, Jerbhai Wadia Road, Bhoiwada, Parel, Mumbai- 400 012. Versus 1. M/s. Twist Spin Industries a partnership firm, having its office at Next to Opp. Hind Rajasthan Building, D.S.P. Road, Dadar (E), Mumbai - 400 028. 2. Shri Kiran Gokuldas Kalantary, residing at Madhuban Apartments, Khan Abdul Gaffar Khan Road, Worli, Mumbai - 400 018. 3. Smt. Sudha Kiran Kalantary, residing at Madhuban Apartments, Khan Abdul Gaffar Khan Road, Worli, Mumbai - 400 018. 2 4. M/s. Kalantary Textile Consultancy, .. Respondents having its office at (Orig. Defendants) C/207, Rajasthan Building, Next to Vivekanand Hospital, S.B. Kadam Marg No.1, Near Relief Cinema, Relief Road, Ahmedabad, Gujarat. CORAM : SWATANTER KUMAR, C.J. & A.M. KHANWILKAR, J. DATE OF RESERVING THE JUDGMENT : 16TH NOVEMBER, 2009 DATE OF PRONOUNCING THE JUDGMENT : 19TH NOVEMBER, 2009 JUDGMENT (Per Swatanter Kumar, C.J.) Dr. Prithi Paul Singh Sethi, appellant-plaintiff filed suit in this court interalia claiming the reliefs that the agreement of consultancy for tender dated 1st July, 2003 (Exhibit `A' to the plaint) was valid, subsisting and binding agreement between the parties; and the defendants, respondents in the appeal, be ordered and directed to execute all the necessary documents required to be executed for effecting transfer of the movable and immovable assets as well as equity shares of Devagiri Textile Mills Ltd., the property in dispute and in the event of default, requiring the Prothonotary & Senior Master to execute such documents. Interim relief of injunction and Receiver has also been prayed in the plaint. These reliefs had been claimed on the ground that the consultancy agreement had been 3 executed with the respondent-partnership firm. The appellants were interested to set up a textile plant and had expressed interest in acquiring second hand textile machineries, land/building etc. necessary for setting up a textile unit. According to the respondents, it was their business to deal with such transaction and one of such transaction was completed between the parties in relation to the factory shed at Khambhat, Gujarat where the appellants had entered into the agreement of lease with the respondents. Some other transaction of similar nature for different transactions were also completed between the parties. The agreement dated 1st July, 2003 was executed by respondent No.4 on behalf of the partnership concern. The terms and conditions of this agreement were to be binding on the parties. In furtherance to the said agreement, the respondents were to be paid Rs.25 lacs for their consultancy services and the plaintiffs issued a cheque for Rs.10 lacs and another cheque for Rs.35 lacs both drawn on the State Bank of Indore, Malad Branch, Mumbai. Rs.25 lacs was to be paid to Maharashtra State Textile Corporation towards the earnest money deposit and Rs.20 lacs was towards consultancy services of the respondents. It is alleged in the plaint that the appellants had issued eight demand drafts in favour of Maharashtra State Textile Corporation directly from their bank 4 account with State Bank of Indore amounting to Rs.50,10,000/- all dated 19th March, 2003. The appellants also made payment by cheques or bank demand drafts in favour of the respondents to the tune of Rs.6,75,90,000/- during the period 1st July, 2003 to 23rd September, 2004. All this was with regard to transfer of the property in dispute. Somewhere in first quarter of 2004, the respondents visited the appellant's office at Santacruz and asked for original file to sort out certain accounting problems in regard to the transaction and transfer of Devagiri Textile Mills, and particularly, with regard to certain payments. In the month of March, 2004, the respondents asked the plaintiff to make further payment of Rs.25 lacs which was made by three different cheques. The appellants asked for return of the original files as well as for completing the transaction. In April, 2004, it is averred that the respondents informed that they had paid stamp duty of Rs.2,77,006/- on behalf of the appellant for getting equity shares of Devagiri Textile Mills Ltd. transferred in the name of the appellant and asked for the reimbursement which was made by the appellants by cheque No.741435 dated 6.4.2004. In this manner, the total payment made by the appellants to the respondents during February, 2003 to September, 2004 amounted to Rs.8,08,77,006/-. Several months lapsed, however, the process of transferring the 5 shares as well as the properties was not effected by the respondents and in September, 2005, when the appellants contacted the respondents, to their surprise were threatened with dire consequences and terrorized by the respondents. The appellants having felt defrauded, lodged complaint at Vakola Police Station on 15th September, 2005. As no action was taken, they even filed a complaint in the court of Metropolitan Magistrate, 32nd Court, Bandra, Mumbai under sections 409, 419, 420, 201 and 506(ii) read with Section 34 of the Indian Penal Code, in which the learned Magistrate on 25th October, 2005 passed an order under section 156(3) of the Code of Criminal Procedure, 1973, directing the police to investigate the matter. The respondents obtained anticipatory bail order from the Sessions Court on 21st November, 2005. In breach of the terms of the agreement, the respondents are contemplating to dispose of the properties in question and completely frustrate and prejudice the interest of the appellants. In these circumstances and left with no alternative, the appellants filed the suit in question. 2. After institution of the suit, notice of motion was also taken out by the appellants being Notice of Motion No.2544 of 2007 praying 6 for the relief of interim injunction and appointing of the Receiver of the properties in question. The suit and the application were contested by the respondents who took up the plea that the agreement dated 1st July, 2003 was forged document and they had never entered into the agreement for transfer of the property. Various transactions in regard to the consultation of tender documents had taken place between the parties in the past. 3. It is stated in the reply to the Notice of Motion that no permission in writing of whatsoever nature was ever executed between the parties for any transaction. The transactions were purely in good faith. The respondents in their course of business had come to know that 100% of equity shares of Devagiri Textile Mills were owned by Maharashtra State Textile Corporation were to be put on auction by inviting tenders, got interested in the deal and purchased the tender form in the name of Twist Spin Industries on 8th July, 2003. They had intended to purchase 100% shares of Devagiri Mills Ltd. The respondents had initially offered Rs. 6 crores and were the successful bidders when their offer for Rs.7.51 crores was accepted. This bid was given by the respondents on behalf of the Respondent No.1-Twist Spin Industries and the shares were 7 purchased to be transferred in Respondent No.1 firm. According to the respondents, the appellants had dishonest intention when they requested the respondents to store the said machinery in the mill premises. It has also been stated that there is manipulation of payment by the appellants and it has been averred, "I state that in fact Plaintiff No.1 through his various concerns has till date made payments aggregating to Rs.13,07,37,106/- from the time he started dealing with the Defendants towards the price of machinery sold and delivered to the Plaintiff No.1 from time to time by Twist Spin Industries and Kalantry Textile Consultants, towards the machinery of some other Mills sold but the delivery not yet taken by the Plaintiff No.1, and the part payments of the machinery of Devgiri Textiles Mills which the Plaintiff No.1 requested the Defendants to allow him to keep at the Mill premises by agreeing to pay Rs.1 lakh per month as storage charges as detailed.............." 4. It is the case of the respondents that the investigating officer, after the order passed by the Court of competent jurisdiction, has conducted investigations and has submitted negative report. The appellants' request for further investigation has been rejected by the Court by order dated 18th April, 2007. 8 5. Notice of Motion taken out by the appellants came to be dismissed vide order dated 14th July, 2009 passed by the learned Single Judge against which the appellants have preferred the present appeal. The learned Judge noticed that existence or execution of the agreement of consultancy was in dispute; there was inordinate delay in taking out the application; there was rival expert's opinions in respect of the disputed signatures and, therefore, declined to grant relief to the applicants. The learned single Judge found that the applicants did not have a very good case on merits and as such did not accept the contention of the plaintiffs that they had a very good case and were likely to succeed in the suit. 6. The legality and correctness of the above order is challenged by the appellants interalia, on the grounds: (a) The learned Judge had not appreciated fully the contentions raised on behalf of the appellants and, in fact, there is no detailed discussion on the contentions raised before the court. (b) Interim prayers were made even in the plaint. Of 9 course, the Notice of Motion was taken at a subsequent stage. There was no such inordinate delay in taking out the Notice of Motion. In any case, this could not be a ground for declining the interim order. (c) It is a settled position of law that the interim order cannot also be declined on the sole ground that ad interim injunction or ad interim ex parte order was not granted to the Petitioner and was not in force at the time of consideration of the Notice of Motion. (d) From the pleadings of the parties and the documents on record, it was clearly established that the Appellants had a prima facie case, balance of convenience was in their favour and were entitled to the interim relief. (e) The learned Single Judge has also failed to consider independent expert’s report. Thus, the 10 order suffers from the patent error. 7. From the facts noticed by us above, it is clear that part of the averments made in the plaint to some extent are not in dispute between the parties. It has been admitted in the reply that large sums of money had been paid by the Appellant to the Respondents during the period in question. According to the Appellant, he had paid sum of Rs.8,08,77,006/- for this specific transaction while, according to the Respondents, sum of Rs.13,07,37,106/- had been from time to time in relation to the different transactions and there was no agreement between the parties to transfer the property in question. According to the Respondents, M/s. Twist Spin Industries – Respondent No.1 had to get the shares transferred in their own right and the Appellant was nowhere concerned with the property in dispute and had been permitted only to keep the machinery in the premises for meagre consideration of Rs.1 lakh per month as and by way of storage charges. The agreement dated 1st July, 2003 had been specifically disputed and it was denied that any such agreement had been executed between the parties. The Appellant had placed on record opinion of an expert who opined that the signature of the documents was that of Respondent No.4 whereas the Defendant had 11 also placed an opinion of another expert on record which was to the contrary. It must be noticed that in the criminal proceedings initiated by the Appellant where the Learned Magistrate had ordered investigation under Section 156 of the Code of Criminal Procedure, 1973, the documents in question had been sent for the opinion of the handwriting expert i.e. To Additional Chief State Examiner of Documents. This was in furtherance to the investigation conducted by a duly empowered officer and therefore the opinion of the Government expert was taken in which an opinion was clearly expressed that the signature in question was that of Respondent No. 4. The said document has been placed on record and the relevant extract of the said document is as under:- “EXHIBIT-II DD 141/2008 O P I N I O N Resultant upon a careful examination, I am of the opinion that : 1. The red-encircled signature marked as Ex.A-1 when compared with those on the Exs.C-1 to C-9 and B-1 shows similarities which are indicating of their common authorship. 2. The red-encircled signature (in the writing 12 form) marked as Ex.Q-1 when compared with those on the Exs.S-1 to S-12 & N-1, N-2 shows similarities which are indicating of their common authorship (Subject to confirmation on verification of the originals of Exs Q-1 & N-2 ). Sd/- ( D.P. Ahiwale ) Addl. Chief State Examiner of Documents, Mumbai. C.I.D., Maharashtra State, Date: 23/11/2008 Mumbai.” 8. In these circumstances, it is difficult for us to say that at least prima facie the Appellants have no case. We are unable to agree with the findings of the learned Single Judge wherein, in his order, it has been recorded that “the rival expert’s opinions on disputed signature is an additional factor which unless decided at this stage, difficult to accept the contentions/submissions of the plaintiffs to grant interim relief as prayed.” This is, in our opinion, not correct. The appreciation of the documents on record inasmuch as there were rival/contradictory opinions of the private experts engaged by the parties but the view of the independent expert, who belongs to the Government ought to carry some weight at this stage of the proceedings. There has been some delay on the part of the Appellants in pressing for the interim order but the fact of the matter 13 remains that ad interim order had not been declined at any stage and the application itself was pending for consideration before the Court. To draw an adverse inference on this score may not be just and fair. There was challenge to the existence of the agreement but the attendant circumstances i.e. payment of huge sums to the extent of Rs. 8 Crores read with the fact that there is no ex facie justifiable reason given for payment of that money and it is utilisation for any specific purpose, seen in the light of an independent experts’ opinion that the agreement was signed by Respondent No.4, in our view, the learned Single Judge was not correct in law in drawing adverse inference against the Applicant. Merely because the parties have disputed the documents per se cannot be a ground for declining an interim order to a party. The original agreement had not been produced by the Appellant but the case of the Appellant was and as specifically pleaded is that the original file itself was taken away by the Respondents on the plea of getting transaction completed and actually had even received the payment of more than Rs.2 lakhs towards stamp duty for execution of the Transfer Deed. Of course, the Appellant has to prove his case during the trial but partial admission on the part of the Respondents with regard to the receipt of the amount including the amounts for stamp duty, as well as the 14 fact that they had been dealing with the transaction of purchase of textile machinery and other machineries, the Court cannot completely ignore the averments made in the plaint. At this stage of the proceedings, the Court is concerned with the existence of a prima facie case as to balance equities between the parties and consider the possibilities of damage to the property in question while considering the case for grant and/or refusal of an interim order. In the case of Mrs. Kamal Kumari Malhotra & Ors. vs Praveen Malhotra, ( Appeal No.338 of 2008 decided on 27th November, 2008), a Division Bench of this Court held as under :- “6. At this stage of the proceedings, while dealing with interlocutory application, the Court is not called upon to determine the merits of the case and/or record findings so as to put an end to the issues involved in the Suit. The parties still have to lead evidence and prove their respective case. The Court is only concerned with prima facie view which it has to form on the basis of the pleadings and documents and the law applicable to the facts and circumstances of a given case. A Division Bench of this Court in a recent judgment in the case of M/s. Avdel Tools & Services vs M/s. Trufit Fasteners Private Limited, Appeal No.324 of 2008, delivered on 16th October, 2008 held as under:- “8. It is a settled principle of law that the Court at this stage of the proceedings while 15 considering application for interlocutory orders is to form a prima facie view and while considering various aspects for grant or decline of injunction the Court has to balance the enquiry between the parties. In a suit for specific performance, the Court is vested with wide discretionary powers in terms of Section 20 of the Specific Relief Act. This discretion has to be exercised in accordance with the settled precepts governing the subject and cannot be exercised arbitrarily. This principle would also be of help to the Court while deciding an interlocutory application for grant of injunction............” 9. In the case of Sridevi & Anr. Vs. Muralidhar & Anr., (2007)14 SCC 721, the Supreme Court took a view that where there is omission on the part of the trial Court to consider the respective cases of the parties, with regard to relevant questions, the Appellate Court is expected to interfere. It was also held by the Supreme Court that while considering an application for injunction, existence of a prima facie case, balance of convenience to parties, irreparable injury are required to be considered by the civil court with reference to the facts and circumstances of a given case. The Supreme Court followed the principles stated earlier in the case of M. Gurudas v. Rasaranjan, (2006)8 SCC 367. In the present case, the learned Judge merely made a reference to certain facts but has not examined the 16 contentions raised with reference to the facts of the case and the pleadings/documents placed on record by the respective parties. For example, only a reference has been made to rival reports of the experts but the report of the third independent Government expert has neither been referred nor considered, while arriving at a prima facie conclusion, authenticity of which can hardly be questioned even during the course of trial. Each of the parties to the proceedings during the course of trial would prove independent reports of their respective experts but the report of an independent government expert can always be relied upon by the Court. 10. Usefully reference can also be made to the dictum of the Supreme Court in the case of Ramdev Food Products (P) Ltd. v. Arvindbhai Rambhai Patel & Ors., (2006) 8 SCC 726, where the Court held as under:- ‘’125. We are not oblivious that normally the appellate court would be slow to interfere with the discretionary jurisdiction of the trial court. 126. The grant of an interlocutory injunction is in exercise of discretionary power and hence, the appellate courts will usually not interfere with it. However, the 17 appellate courts will substitute their discretion if they find that discretion has been exercised arbitrarily, capriciously, perversely, or where the court has ignored the settled principles of law regulating the grant or refusal of interlocutory injunctions. This principle has been stated by this Court time and time again. [ See for example Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, Laxmikant V. Patel v. Chetanbhai Shah, (2002) 3 SCC 65 and Seema Arshad Zaheer v. Municipal Corpn. Of Greater Mumbai, (2006)5 SCC 282].” 11. It may not be entirely correct to accept, as contended by the Respondents, that the Appellant has slept over for his rights for all this period. The agreement was entered into on 1st July, 2003 whereafter parties alleged payment were made. It was at a much later stage in the April, 2004 that the Respondents started avoiding to complete the contract as alleged by the Plaintiffs/Appellants. Thereafter, even a criminal complaint was filed. During the pendency of that complaint, an order was passed by the learned Magistrate directing investigation under Section 156(3) of the Code of Criminal Procedure, 1973. Of course, ultimately, it is alleged that negative report has been filed by the police which again is a matter of adjudication before the Courts. Then the suit came to be filed in the year 2005 in which Notice of Motion was moved subsequently and 18 thereafter it was pressed before the Court but the interim orders were declined. We have already noticed that there are sufficient documents on record to show that the parties had dealings and amounts in question were admittedly paid by the Appellant to the Respondents. For what purpose and towards what transaction is a matter which has to be examined by the Court after the parties have been provided an opportunity to prove their respective cases. One important factor is that the Respondents have completely denied the execution and implementation of the Agreement but the report of the Government independent expert supports the case of the appellant that it bears the signature of Respondent No.4. This is the stage where the said report cannot be discarded for all purposes and intents. 12. We are of the considered view that the Appellant has been able to establish prima facie case at this stage that if third party interests are permitted to be created, irreparable injury can be caused to the Appellants inasmuch as even if the Appellant succeeds in the suit, there will be no property left for being transferred in their favour and payment of compensation would not be an adequate relief, keeping in view that the property prices, as commonly known, have gone up 19 to a great extent. We may notice that the Appellant has not been able to make out prima facie case and even for an absolute grant of all injunctions of any other kind except to the extent that the Respondents should be restrained from creating third party interests in the property in question. Therefore, while setting aside the order under Appeal, we grant limited injunction in favour of the Appellants and against the Respondents restraining them from creating any third party interests in the property in question and for remaining relief, the Notice of motion of the Appellants is dismissed. While granting the partial relief, the Appeal is allowed without any order as to costs. 13. Any observations made in this order will not, in any way, be prejudicial to the interest of any parties and all contentions raised are kept open to be determined at the final stage of the suit. Liberty to the parties to apply before the learned Single Judge for expeditious disposal of the suit. CHIEF JUSTICE A.M. KHANWILKAR, J.