1 inpt91-06 IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN INSOLVENCY NSOLVENCY PETITION NO.91 OF 2006 Re. : N.A. Parikh & Ors. ....Debtors Ex-parte :- SICOM Ltd. ....Petitioning Creditor Mr.Priyadarshan V. Shah for the Petitioning Creditor. Mr.R.V. Pai with Ms.Beena Pai i/b Mr.Ajit Kocharekar for the Debtors. CORAM : S.J. VAZIFDAR, J. DATE : 6TH AUGUST, 2010. P.C. :- 1. This is a petition for adjudicating the debtors as insolvents. 2. The Petitioning Creditor had filed Summary Suit No.159 of 1997 inter-alia against the debtors for a decree in the sum of Rs. 1,28,03,103/- together with interest thereon at 18.5% from the date of the suit 16.1.1997 till payment. By an order dated 24.3.1998, the learned Judge disposed of the suit in terms of the consent terms entered into between the parties. Under the consent terms the Defendants, including the debtors, submitted to a decree on admission and for costs quantified at Rs.25,000/-. It was however, agreed that in the event of the debtors paying a sum of Rs. 69,51,270/-, the decree shall be marked fully satisfied. The said amount was to be paid in installments as stipulated therein. Clause 9 provided that 2 inpt91-06 in the event of default, the Defendants would not be entitled to the concession and the decree on admission shall forthwith become operative and the amount thereunder shall forthwith become due and payable by the debtors to the Petitioning Creditor and the Petitioning Creditor would in that event be forthwith entitled to execute the decree. 3. The debtors contended that the decree had been fully satisfied. They also contended that the decree had been modified by consent. These contentions were raised before A.M. Khanwilkar, J. in the above petition itself. By an order dated 7.1.2008, the learned Judge held that the question whether the debtors had paid the entire amount or otherwise is a matter which can be addressed only before the Civil Court. The learned Judge held that it is obligatory on the part of the debtors to approach the Civil Court to record a positive opinion that the decree stands satisfied and that in the absence thereof, the debtors are obliged to pay the amount as per the decree. The learned Judge observed that the contentions were merely an attempt on the part of the debtors to protract the proceedings. However, with a view to granting the debtors an opportunity of making an application to the Civil Court, the petition was adjourned. 4(A). Thereafter the debtors filed Chamber Summons No.328 of 2008 for the following reliefs :- “(a) That this Honourable Court be pleased to direct the Prothonotary and Sr. Master, High Court, Original Side, Bombay to amend the Consent Terms dated 16th March 1998 and Consent Decree dated 24th March 1998 by substituting the repayment schedule by adding clause 8A after Clause 8 as set out in the Schedule 3 inpt91-06 hereto annexed in terms of the repayment arrangement reflected in the Plaintiffs' letter dated 9.4.2002 is also annexed at Exhibit 1 to the Schedule hereto; (b) That this Honourable Court be pleased to direct the Prothonotary and Sr. Master, High Court, Original Side, Bombay to enter satisfaction of the Consent Decree dated 24th March, 1998 as amended or otherwise.” (B). The above Chamber Summons was disposed of by an order and judgment dated 16.3.2009.The learned Judge held that the debtors had not made payment of the installments as per their due dates and that therefore, the entire sum as claimed by the Petitioning Creditor became due and payable. The learned Judge recorded that it is not the case of the judgment debtors that they had made payments in terms of the consent terms. Paragraphs 14, 15 and 16 of the judgment read as under :- “14. On the other hand, what Mr. Pai seeks by this Chamber Summons is modification of the clause requiring the Defendants to make payment and that too of a sum which is determined by concession earlier. That concession is no longer available. However, if the prayers of the Chamber Summons are perused, it is apparent to me that the same seeks alteration or modification of the Consent Decree. Now, there are no Consent Terms. The Terms are taken on record and Decree has been passed in furtherance of these Terms. Hence, what is sought is altering the Decree. That is not permissible save and except in situations provided under Section 152 of Code of Civil Procedure. That type of situation is admittedly not arising in this case. What is sought is complete modification by substituting the schedule of repayment 4 inpt91-06 under the Consent Terms. In my view, such a relief cannot be granted in this Chamber Summons. Mr. Pai relied upon Order XX Rule 16 of C.P.C. That provision can have no application in as much as the final Decree is already passed. This is an Application in Execution Proceeding. Further, unless both sides agree that the matter is required to be referred to some person to find out the extent of liability, this Court cannot in the limited jurisdiction issue any such direction. In fact, the Decree holder does not admit that there is any error or discrepancy in accounts. There is no question of going behind the Consent Decree. Hence, even this submission is devoid of any substance. 15. I am in agreement with Mr. P.V. Shah, learned Counsel appearing for the Plaintiffs that the Defendants are in default. I am in agreement with him that this Chamber Summons is not maintainable. The liberty granted by this Court does not mean that Defendants 1 and 3 can move this Court and seek complete modification of the Terms. That too on grounds which have already been gone into and rejected in the Writ Petition. The Plaintiffs admittedly gave a Take Over Notice on 20th December 2001 for a larger amount. However, even thereafter, there were defaults. Here, it is pertinent to note that the Defendants are trying to link the sale pursuant to Take Over Notice and credit of the proceeds thereof with Exhibit `B' to the Chamber Summons. That has been clarified by the Plaintiffs in their Affidavit in Reply in paragraph 9(e). These are two separate events according to them. The Consent Terms do not refer to any Take Over Notice. Merely because a Take Over Notice was issued does not mean that Defendants 1 and 3 are 5 inpt91-06 absolved from the liability to honour their undertaking to this Court and pay the sums under the Consent Decree. Further, the Plaintiffs have pointed out in their Affidavit in Reply as to how the sale took place. That aspect has been agitated and re-agitated by Defendant Nos.1 and 3. It cannot be now made subject matter of this Chamber Summons. On the other hand, there is default as pointed out. In these circumstances, and when different types of Loan were given to the Company so also the instant Suit being in respect of the Term Loan, that I find substance in the contentions of Mr. P.V. Shah that Defendants 1 and 3 are trying to confuse the issues and wriggle out of their obligation to honour the undertaking. In Paragraph 9(t) it is pointed out that how different types of Loans were advanced and how the amounts received were appropriated. I see no reason to dis-believe this version. Moreso, when in the Consent Decree, the Defendants have admitted their liability clearly. Thus, all these are nothing but attempts to re-open the proceedings and the Consent Decree which have become final. In these circumstances, I am of the view that the Chamber Summons is thoroughly mis-conceived. It is moved only because one of the Defendants is now faced with an Insolvency Notice. I see no reason to dis-believe the version of the Plaintiffs. Once there is a default, then, Clause 9 of the Consent Terms operates with full force and the amounts outstanding as principal and interest have become due and payable. Once there is no dispute about the defaults, then, there is no question of the matter being re- opened. 16. In the result, this Chamber Summons is dismissed. However, there will be no order as to costs. “ 6 inpt91-06 5. In other words, the learned Judge rejected both the prayers. 6. Mr.Pai, the learned counsel appearing on behalf of the debtors however, submitted that the judgment is wrong. He submitted that the learned Judge had not decided the questions of facts regarding whether the payment was made or not on merits and as per the evidence available. He submitted that the only issue before the learned Judge was whether the decree was satisfied and that he decided this issue wrongly. He also submitted that even the decree has been wrongly interpreted by the learned Judge. 7. The submissions require merely to be stated to be rejected. The judgment is binding on me. The judgment has not been set-aside either in review, appeal or otherwise. Section 7 of the Presidency-Town Insolvency Act, 1909 does not permit me to take a different view. Section 7 of the said Act does not permit me to ignore the doctrine of precedent. 8. Faced with this, Mr.Pai relied upon an order of the Division Bench of this Court in appeal filed by the judgment debtors against the judgment and order dated 16.3.2009 being Appeal No.264 of 2009. The Division Bench by an order dated 8.3.2010, passed the following order :- “We have heard Mr.Pai, the learned counsel for the appellants, on the maintainability of this appeal. Mr.Pai seeks leave to withdraw the appeal. Leave granted and the appeal is disposed as withdrawn. All contentions of the parties are left open.” Mr.Pai strongly relied upon the sentence in the order of the Division Bench : “All contentions of the parties are left open”. He submitted 7 inpt91-06 that in view of this sentence, I was entitled to ignore the orders of S.C. Dharmadhikari, J. and A.M. Khanwilkar, J. dated 7.1.2008 and 17.3.2009 respectively. I do not agree. All that is meant by this sentence is that all the contentions as are available to them in law are kept open. It is not open to this Court to ignore the binding effect of an order. To hold otherwise would mean that by the said order the Division Bench had in effect allowed the appeal and set aside the said orders. 9. Mr.Pai submitted that it is open to the debtors to adopt proceedings against the said orders. That is another matter altogether. If the said orders are set-aside or modified, it is always open to the debtors to adopt proceedings in respect of this judgment and order as well. 10. In the circumstances, the petition is made absolute as prayed with costs fixed at Rs.10,000/-. This order is stayed upto and including 30.9.2010 to enable the debtors to challenge the same.