IN THE HIGH COURT OF GUJARAT AT AHMEDABAD APPEAL FROM ORDER No 400 of 1998 For Approval and Signature The Hon'ble Mr. Justice S.K. KESHOTE --------------------------------------------------------- 1. Whether reporters of local papers may be allowed to see the judgment ? 2. To be referred to the reporters or not ? 3. Whether their lordships wish to see the fair copy of the judgment ? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950, or any order made thereunder ? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------------- BHUPENDRA STEEL Versus KRISHNA EXPORT -------------------------------------------------------------- Appearance: Mr. K.S. Nanavati, Sr. Advocate with Mr. Vimal Patel for the appellant Mr. B.J. Shelat, with Mr. D.C. DAVE for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE S.K.KESHOTE Date of decision:16/09/1998 C.A.V. JUDGMENT #. This appeal from order is directed against the order dated 11th August, 1998 passed by the learned Chamber Judge, Court No.18, City Civil Court,Ahmedabad, below Exh.5 (notice of motion) in Civil Suit No.3266 of 1998 whereunder the ad-interim relief granted by the trial court earlier has been vacated. #. The learned counsel for the partied do not dispute that the application Exh.5 was filed under Order 39 Rule 1 and 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code). So this appeal is under section 104 read with Order 43 Rule 1 (r) of the Code. #. Grant of interim injunction under Order 39 Rule 1 of the Code is discretionary and equitable relief, though the discretion is to be exercised judiciously. An appeal against discretionary order or order of equitable relief under section 104 read with Order 41 Rule 1(r) of the Code is an appeal against interlocutory discretionary order, and an order passed in equitable jurisdiction, and the powers of the appellate court in such appeal are not as wide as are of the appellate court in a regular appeal against decree. Appellate Court hearing appeal under section 104 read with Order 41 Rule 1(r) of the Code will interfere with discretionary order by the court of first instance, and substitute its own discretion except where the discretion has shown to have been exercised arbitrarily or capriciously or perversely or where the court has ignored the settled principles of law regarding grant or refusal of interlocutory injunctions. So an appeal against a discretionary order can conveniently be said to be an appeal on principle. In such case the appellate court will not reassess the material and reach to a conclusion different from the one reached by the learned trial court solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in judicious manner, the fact that this court as appellate court would have taken a different view may not justify interference with the trial court exercising discretion. #. The learned counsel for the parties have addressed in this appeal their contentions as if this court is sitting on original side. I frankly concede that this court has also granted some latitude to the learned advocates for the parties, to a certain extent, to address the matter as if it is the original court. But the learned advocates have not taken that much of liberty and have not misused the liberty granted by this court. It deserves appreciation by the court that both the learned counsel for the parties, despite having been given this latitude by the court, were very precise, to the point and brief in making their submissions. #. As this is an appeal under section 104 read with Order 43 Rule 1(r) of the Code and looking to the fact that this Court has a very limited jurisdiction to interfere with the discretionary order passed by the trial court, and in the facts and circumstances of the present case, this appeal itself lies only on the principle, and I do not consider it necessary to set forth in this order the facts of the case in detail. The facts of the case are given in detail in the impugned order by the learned trial court, and that is another reason which persuaded me not to give out in extenso the facts of the case. However, I could not refrain from observing at this stage one important aspect. The pleadings of this appeal have been made by the learned counsel for the parties voluminous more than what it was necessary. The record has been made voluminous in two ways. Firstly, by making bulky pleadings in the form of memo of appeal, civil applications, reply affidavit, counter affidavit, etc., and secondly, by producing additional documentary evidence in the appeal. Learned counsel for the plaintiff-appellant filed civil applications No. 7469 of 1998 and 8334 of 1998 purporting to be under Order 41 Rule 27 of the Code. By these applications prayer has been made by the plaintiff-appellant to permit him to produce additional evidence as detailed therein. I will deal with these applications at the appropriate place in this order. #. Howsoever brief I may be in this order in narration of the facts of the case few facts of the case are to be taken out from the record for the purpose of appreciating the controversies raised by the learned counsel for the parties in the appeal. One Tawakuli Trading Co., L.L.C.,of Dubai (U.A.E.) (hereinafter referred to as "the importer") was desirous of purchasing the programmed floppies (hereinafter referred to as "the said goods"). It is the case of the plaintiff-appellant that for import of these goods, the importer contacted one Jagdish D. Trivedi, brother of the plaintiff, who is permanently residing in Dubai. Through his brother Jagdish D. Trivedi, plaintiff contacted defendant No.1 respondent No.1 herein and negotiated for purchase of the said goods. In pursuance of the negotiations which took place between the plaintiff-appellant and the importer through the mediation of Jagdish D. Trivedi, the importer placed firm order for purchase of the said goods upon the plaintiff-appellant. The plaintiff-appellant did not possess the requisite exporter-importer code (licence). It was necessary for him to route the transaction through a person or entity holding requisite exporter-importer licence for the purpose. Defendant No.1 -respondent No.1 had agreed to export the said goods to the importer on the basis of his exporter-importer code (licence). The total value of the goods was U.S.$ 2,85,714-50 . (equivalent to Indian Rs.1,21,42,866.25 ps. approximately). The plaintiff-appellant had agreed to pay 1% of the value of the order to defendant-respondent No.1. That agreement was negotiated and finalised between the plaintiff-appellant and defendant No.1-respondent No.1 at Ahmedabad. As per the said agreement which in the form of letter dated 27th March, 1998, defendant No.1-respondent No.1 was also liable to execute a power of attorney in favour of the plaintiff -appellant to enable him to withdraw the amount from his account maintained with defendant No.2 Bank. Defendant No.1-respondent No.1 exported the said goods to the importer, and the importer did open letter of credit in his favour, and the amount of U.S.$ 2,85,714.50 was to be credited in account No.616 of defendant No.1-respondent No.1 with defendant No.2. The plaintiff-appellant has come up with further case that despite repeated requests made to defendant No.1-respondent No.1 he has not executed the power of attorney in his favour to enable him to withdraw the said amount from the Bank as per the agreement reached. The grievance made by the plaintiff-appellant is that after completion of the export, defendant No. 1- respondent No.1 has developed evil intentions and as a result thereof he has not executed the power of attorney. The plaintiff -appellant filed civil suit No.3266 of 1998 in the City Civil Court at Ahmedabad, and prayed for grant of the following reliefs: "(a) to declare that the plaintiff is legally entitled to receive Rs.1,21,42,866.25 (equivalent to US $ 2,85,714.50) from account No.616 of defendant No.1 maintained with defendant No.2. (b) to grant mandatory order / injunction permitting the plaintiff to withdraw Rs.1,21,42,866.25 ps. (equivalent to US $ 2,85,714.50 ) from account No.616of defendant No.1 with defendant No.2; in the alternative to pass order directing defendant No.2 to pay to the plaintiff the sum of Rs.1,21,42,866.25 (equivalent to US $ 2,85,714.50 from out of the defendant No.1's account No.616). (c) to grant permanent injunction restraining defendant No.1 from withdrawing Rs.1,21,42,866.25 (equivalent to U.S. $ 2,85,714.50) or any part thereof from Account No.616 with defendant No.2 and be further pleased to restrain defendant No.2 from making payment to defendant No.1. (d) to grant such other and further reliefs as deemed fit and proper in the circumstances. (e) to award cost of the suit to the plaintiff from defendant No.1." Along with the civil suit the plaintiff filed application Exh.5 under Order 39 Rules 1 and 2 of the Code for grant of interim injunction. The prayer made in this application are as under: "9(a) Pending hearing and final disposal of the suit, be pleased to grant mandatory order / injunction permitting the plaintiff to withdraw Rs.1,21,42,866.25 (equivalent to US $ 2,85,714.50) from account No.616 of defendant No.1 with defendant No.2; in the alternative, to pass order directing defendant No.2 to pay to the plaintiff the sum ofRs.1,21,42,866.25 ( equivalent to US $ 2,85,714.50 from out of the defendant No.1's Account No.616. (b) Pending hearing and final disposal of the suit, be pleased to grant temporary injunction restraining defendant No.1 from withdrawing Rs.1,21,42,866.25 (equivalent to US $ 2,85,714.50) or any part thereof from Account No.616 with defendant No.2 and be further pleased to restrain defendant No.2 from making payment to defendant No.1." The trial court granted ex parte ad interim relief on 6-7-1998 in terms of para 9(b). In reply to the notice of motion defendant No.1 -respondent No.1 put appearance and contested the application on merits. Briefly stated, the defences taken by him are as follows: (i) Plaintiff is brother in law of one Kamlesh K. Thakkar who is known to defendant No.1-respondent No.1. (ii) Kamlesh K. Thakker is doing the business of steel, and the plaintiff to his belief is in the employment of said Kamlesh K. Thakkar in his firm M/s. Kannailal Mohanlal. (iii) Defendant No.1- respondent No.1 does not know Jagdish D. Trivedi. (iv) Said Kamlesh K. Thakkar is dealing in the business of merchant export. He passed on to defendant No.1 -respondent No.1 information to the effect that the importer at Dubai was interested in procuring from India software packages for accounting purposes from a party who can effectively deliver the same to the importer at Dubai. However, it is not in the knowledge of defendant No.1-respondent No.1 as to how said Kamlesh came to know about the said information of requirement of goods by the importer at Dubai. (v) The importer placed order for export of goods with defendant No.1. Defendant No.1 forwarded export proforma invoice dated7-3-1998 inter alia stipulating therein terms and conditions, subject to which he would like to export the kind of his software packages desired by the importer. In the proforma invoice neither the name of the plaintiff-appellant nor Kamlesh Thakkar Trivedi figured as agent, which otherwise should have figured as per the practice prevalent in the trade, in case the case of the plaintiff appellant would have been correct. (vi) The export proforma invoice of defendant No.1 has been accepted by the importer and as a result thereof as per the practice prevalent in the trade, letter of credit dated 2nd April, 1998 came to be opened at the behest of the importer in favour of defendant No.1 as the beneficiary therein. (vii) The kind of software package to be exported was got developed by defendant No.1 through one Flyfot Software Developer of Vallabh-Vidyanagar; and till now Rs.20 lacs have been paid to the said concern for this work, and huge sum remains to be paid by defendant No.1 to said Flyfot Software Developer. (viii) The goods were exported to the importer which was subsequently followed by letter dated 26th May, 1998 to defendant No.2 with request to give credit of the amount referred to therein in his account in furtherance of the letter of credit referred therein . (ix) That the entire transaction of export undertaken by defendant No.1-respondent No.1 was duly completed . He denied any sort of agreement and particularly the agreement as pleaded by the plaintiff-appellant. #. Defendant No.1-respondent No.1 has come up with the case that the agreement is a forged document. It is further case of the defendant-respondent No.1 that the expenditure which was required to be incurred for the purpose of paving way for smooth export of the software packages were entirely and solely made by him. The requisite formalities which were required to be undertaken for the purpose of export were also solely and exclusively shouldered by defendant-respondent No.1. The pleadings were further supplemented by the parties. In the further pleadings defendant - respondent No.1 has come up with the case that the letter dated 24thMarch, 1998 of Tawakuli Trading Co.L.L.C. is also a forged document. #. After considering the pleadings of the parties and the documents produced in support thereof , and after hearing the learned counsel for the parties, under the impugned order the trial court vacated the ad interim relief granted earlier and the notice of motion was ordered to stand disposed of. Hence this appeal before this court. #. With this appeal there are three civil applications filed by the plaintiff-appellant, details of which are as under: Civil Application No.7461 of 1998: In this civil application prayer has been made for grant of interim injunction in terms para 4 (B) and (C) thereof. Civil Application No.7469 of 1998: By this civil application under Order 41 Rule 2 of the Code prayer has been made for permitting the appellant-plaintiff to produce additional evidence, details of which are as under: (i) General power of attorney dated 10-12-1997 executed by Krishna Exports (defendant No.1- respondent No.1). (ii) Letters of Krishna Exports showing identical letter heads. (iii) Letters of transaction in question which show that defendant No.1-respondent No.1 was aware of Shyam Sunder Mehra. Civil Application No.8384 of 1998: By this civil application prayer has been made for producing further documentary evidence, details of which are as under: (i) Copy of affidavit dated 20thAugust, 1998 of Tawakuli Trading that contract was negotiated by the Company only with Bhupendra Steel and not with Krishna Exports. (ii) Reports dated 27-8-1998 of hand writing export. (iii) Quotation dated 24-8-1998 of Ravi Enterprise for supply of super power software packages. ##. First of all I consider it proper to deal with the two civil applications filed by the plaintiff-appellant for granting permission to him for producing the documents referred therein as additional evidence in this appeal. Initially both the learned counsel for the parties made detailed submissions on these civil applications. But in later point of time learned counsel for defendant No.1 respondent No.1 gave up the challenge to these applications and conceded that these documents may be considered at this stage to avoid any further delay in the matter. ##. It has further been contended that he is conceding for taking these documents on record for the consideration of the Court, persuaded by the reasons first, that in the suit the issues have not been framed so far; and secondly any delay in disposal of these proceedings of interlocutory nature results in recurring loss of Rs.10,000/- per day by way of interest to the defendant No.1. Learned counsel for the appellant submitted on this last point that the loss may not be more than Rs.6,000/- per month because of the pendency of these proceedings before this court. ##. In this appeal it is true that this court has not granted any interim relief in favour of the plaintiff-appellant. But the learned counsel for defendant No.1-respondent No.1 has put appearance on caveat and given out the understanding that till this matter is decided his client will not withdraw the amount of the letter of credit which has been credited in his account No.616 with respondent No.2 bank. This understanding given by the learned counsel for respondent No.1 is as good as grant of interim relief by this court. Be that as it may. In view of this concession made by the learned counsel for the defendant- respondent No.1 it is not necessary for this court to go on merits of these two civil applications. ##. On merits of the appeal learned counsel for the appellant contended that the document dated 27th March, 1998 is not a forged document. This document is an agreement between the parties and learned trial court should have given effect to the same. This document does not contravene any of the provisions of the Foreign Trade (Development and Regulation) Act,1992 (hereinafter referred to as the Act, 1992). Such memorandum of understanding or agreement is not hit by the provisions of section 23 of the Contract Act also. Learned trial court has not correctly appreciated the aforesaid regulation and has fallen in error in holding that the ostensible legality of the document would not help the plaintiff for the simple reason that the agreement in question is prima facie to circumvent the provisions of law. It has next been contended that the learned trial court, though held that this document / agreement dated 27th March, 1998 is not illegal ex facie, but still it declined relief to the appellant -plaintiff by holding that upholding of such type of contract would tantamount to encourage persons to circumvent the provisions of statute, which otherwise explicitly forbids export without licence. Lastly it is contended that the document / agreement was not held to be forged document even prima facie, and the learned trial court in that view of the matter and in the fact of the case ought to have considered that decline of interim relief will result in causing irreparable injury to the plaintiff-appellant, and further that the balance of convenience also favours grant of interim relief. Voluminous documentary evidence produced by the plaintiff-appellant to prove that it was genuine agreement and defendant respondent No.1 has voluntarily executed the same as he was benefitted by the said agreement was not considered in correct perspective. Moreover, now whatever suspicion or doubt about genuineness of this document even ever exists no more remains as the handwriting expert's opinion is there on the record where he opined that the signature of defendant -respondent No.1 is there on this document. ##. On the other hand the learned counsel for defendant-respondent No.1 contended that it is a case of fraud which has been committed by the plaintiff-appellant at all stages i.e. before and post filing of the suit. The agreement dated 27th March,1998 is a forged document. Not only this, the letter of the importer dated 24th March,1998 is also a forged document. To prove this document to be genuine the plaintiff-appellant has procured many other documents and it is now clearly borne out that some body sitting at Dubai is the person interested and this suit has been filed at the instance of that person by the plaintiff-appellant. Learned counsel for the respondent No.1 has illustrated many of the suspicious circumstances surrounding the document dated 27th March, 1998 and the letter of the importer dated 24th March, 1998. It has next been contended that in the matter of grant of temporary injunction it the discretion of the court and if we go by this agreement and it is strictly considered, then the trial court has not committed any error whatsoever in holding it to be an agreement to frustrate the provisions of the Act, 1992. The very fact that out of the total amount of letter of credit, i.e. U.S.$ 2,85,714.50 , amount of costs of the bill of export, 99% thereof has to be shared by the plaintiff-appellant is nothing but a clear case where he, though not having any licence for export or import, stood in the position of exporter and the person who is an exporter - importer licence holder has to stand in the position only of getting 1 per cent commission. It is totally a reversal order, if this agreement is accepted i.e . the real exporter will only be a commission agent and the person who has procured the order, what at the best the case of the plaintiff is, will be exporter. This is clearly a trick played by the plaintiff to make the provisions of the Act, 1992 nugatory. ##. Carrying this contention further learned counsel for the defendant-respondent No.1 submitted that otherwise also the conduct of the plaintiff-appellant deserves to be taken note of and only on this conduct as he illustrated, the decline of injunction by the trial court cannot be said to be illegal or arbitrary. During the course of arguments in the trial court, learned counsel for the plaintiff -appellant has given out that all the expenses of the export of goods were borne by the defendant-respondent No.1, and the plaintiff-appellant is entitled to 99% of the reminder of the amount of letter of credit after excluding the expenses incurred by defendant-respondent No.1 for exporting of the goods. Necessary amendment in the plaint and the application Exh.5 has not been made and insistence still is of 99% of the total amount of letter of credit. From this fact it is clear that the plaintiff-appellant has not come up with clean hand before the Courts. To supplement this contention, learned counsel for the defendant-respondent No.1 urged that otherwise also this alleged agreement on the face of it is unreasonable and even if this agreement is taken to be a genuine agreement for the sake of argument it is not obligatory on the part of the court to still insist for execution thereof by defendant -respondent No.1. It is difficult to understand, even if such type of business is legal to share the profit by the agent to the extent of 99%. Lastly, learned counsel for the defendant-respondent No.1 submitted that it is not a fit case where interim injunction deserves to be granted in favour of the plaintiff-appellant, as declining of the same will not cause any injury, much less irreparable injury, which cannot be compensated in terms of money if ultimately he succeeds in the suit. Balance of convenience in the given facts of the case also favours for declining the injunction. ##. I have given my thoughtful consideration to the submissions made by the learned counsel for the parties. ##. If we go by the prayer made by the plaintiff-appellant in the application Exh.5, I find that one of the prayer is that the defendant - respondent No.2, namely, Bank of Baroda (Main) Branch, Anand, be restrained from making payment to defendant-respondent No.1 of amount of Rs.1,21,42,866. 25 ps. (equivalent to US $ 2,85,714.50), the amount which has been credited in account No.616 of defendant -respondent No.1 in pursuance of the letter of credit issued by the importer wherein he has been shown as the beneficiary thereof. The parties are not at variance that in pursuance of the letter of credit, wherein defendant respondent No.1 is the beneficiary, the aforesaid amount has been credited in his account. The importer has not filed any suit against the defendants-respondents. ##. It is a different matter that behind the curtain the importer is supporting the plaintiff- appellant. But it is equally true that the importer has not disputed this export transactions and letter of credit in favour of defendant - respondent No.1. At the cost of repetition it is to be stated that the importer is no way and manner praying for injunction against the Bank of Baroda, (Main) Branch, Anand to restrain it from making payment of the amount of letter of credit which is credited in the account of defendant -respondent No.1 to him.