1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. CHAMBER SUMMONS NO.545 OF 2008 IN EXECUTION APPLICATION (LODG.) NO.339 OF 2005 IN EXECUTION AWARD DATED 15/02/2005 Payal Telefilms Pvt. Ltd. ..Plaintiff. Vs. Reminiscent India Television Limited and another ..Defendants WITH CHAMBER SUMMONS NO.546 OF 2008 IN EXECUTION APPLICATION (LODG.) NO.209 OF 2005 IN SUMMARY SUIT NO.2561 OF 2002 Payal Electronics and Video Pvt.Ltd. ..Plaintiff. Vs. Reminiscent India Television Limited and another Defendants. WITH CHAMBER SUMMONS NO.547 OF 2008 IN EXECUTION APPLICATION (LODG.) NO.338 OF 2005 IN EXECUTION AWARD DATED 15/02/2005 Payal Telefilms Pvt. Ltd. ..Plaintiff. Vs. Reminiscent India Television Limited 2 and another ..Defendants WITH CHAMBER SUMMONS NO.296 OF 2008 IN EXECUTION APPLICATION (LODG.) NO.209 OF 2005 IN SUMMARY SUIT NO.2561 OF 2002 Payal Electronics and Video Pvt. Ltd. ..Plaintiff. Vs. Reminiscent India Television Limited and another Defendants. CHAMBER SUMMONS NO.297 OF 2008 IN EXECUTION APPLICATION (LODG.) NO.339 OF 2005 IN EXECUTION AWARD DATED 15/02/2005 Payal Telefilms Pvt. Ltd. ..Plaintiff. Vs. Reminiscent India Television Limited and another ..Defendants. WITH CHAMBER SUMMONS NO.298 OF 2008 IN EXECUTION APPLICATION (LODG.) NO.338 OF 2005 IN EXECUTION AWARD DATED 15/02/2005 Payal Telefilms Pvt. Ltd. ..Plaintiff. Vs. Reminiscent India Television Limited and another ..Defendants .... Mr. Paritosh Jaiswal with Mr. Mayur Khandeparkar i/b M/s. 3 Kanga & Co. for the Plaintiff and for the Applicant in Chamber Summons 545, 546 and 547 of 2008. Ms P. Lambey i/b M/s. Lambey & Co. for Respondent No.1 and for Applicants in Chamber Summons 296, 297 and 298 of 2008. Mr. Kishor Jain with Ms. Kavita A. Shah for Respondent No.2. .... CORAM : DR. D.Y. CHANDRACHUD, J. 23rd June, 2009. P.C. : 1. Two sets of Chamber Summons form the subject matter of adjudication in execution proceedings. The First Group1 has been taken out by decree holders seeking the payment of amounts due and payable under decrees operating out of two arbitral awards and one judgment in a summary suit. The Second Group2 has been taken out by the judgment debtor seeking the payment of an amount of Rs.2.45 Crores in order to meet its liabilities. 2. Briefly stated, three decrees enure to the benefit of three 1 Chamber Summons 545, 546 and 547 of 2008. 2 Chamber Summons 296, 297 and 298 of 2008. 4 companies, two of them arising out of arbitral awards under the Arbitration and Conciliation Act 1996 and one out of a summary suit under Order 37 of the Code of Civil Procedure, 1908. The decree holders, for convenience of exposition can be referred to as companies in the Payal Group of companies. The decree in the summary suit was passed by this Court on 7th September, 2004 while the arbitral awards were made on 15th February, 2005. All of them have attained finality. 3. On 27th April, 2005 a conveyance was executed by the judgment debtor of certain movable and immovable property comprising of CTS No.694 of Village Oshiwara admeasuring 1864.30 sq. mtrs. together with a building standing thereon, consisting of a built up area of 25,000 sq. ft. The judgment debtor had large outstandings to the Development Credit Bank. A portion of the property which formed the subject matter of the conveyance on the third floor was in the occupation of a licensee. Under the conveyance the purchaser who is the Second Respondent to the Chamber Summons 5 purchased the property together with the building at and for a consideration of Rs.6 Crores. Of the consideration an amount of Rs.3.50 Crores was paid to the bank; an amount of Rs.5 lacs to the judgment debtor while the balance of Rs.2.45 Crores was to be paid to the judgment debtor within six months in the manner indicated in the conveyance. The following provision was made in regard to the payment of the balance : “AND THIS INDENTURE FURTHER WITNESSETH THAT as an integral part of this Conveyance as regards third floor premises occupied by Savoices Software Consultants Pvt. Ltd. (Licensee), it is agreed that (a) the Vendors will cause the Licensee to enter into a fresh Leave & Licence Agreement with the Purchasers for a period of 6 months from the date hereof. (b) it will be the sole responsibility and obligation of the Vendor to obtain the peaceful and vacant possession of the third floor premises from the Licensee and handover the same to the Purchasers within 6 months from the execution hereof. (c)the security deposit received by the Vendors from the Licensee will be refunded by the Vendors alone and the Purchasers shall not be responsible for the same. (d) as a guarantee for the performance by the Vendors of what is stated in (b) above, the Purchasers’ obligation to pay the balance sum of Rs.2.45,00,000/- (Rupees two crores forty five lacs only) will be only after the Vendors 6 complying with conditions referred in (b) above and not otherwise.” 4. An application under Section 9 of the Arbitration and Conciliation Act, 1996 was taken out after the arbitral award in aid of the execution thereof by the decree holder. On 28th June, 2005 a statement was made by the Second Respondent who had purchased the property from the judgment debtor that whenever any amount became payable by the purchaser out of Rs.2.45 Crores, a sum of Rs.58.89 lacs, if the sum payable exceeded Rs.58.89 lacs, or such lesser sum if the same does not exceed that amount, shall be deposited in the Court in these petitions. This statement was to remain in effect for a period of eight weeks. The challenge to the arbitral awards was disposed of by another judgment of the Learned Single Judge dated 28th June, 2005. Similarly, in the Execution Application which was initiated out of the decree that was passed in the summary suit, an order was passed by a Learned Single Judge of this Court on 24th October, 2005 recording that under the deed of conveyance, the judgment debtor had 7 already received the sum of Rs.3.50 Crores and that the balance of Rs.2.45 Crores would be receivable by the judgment debtor in the event that he ensures vacant and peaceful possession of the third floor being handed over to the purchaser within six months from the date of the deed of conveyance. The Learned Single Judge directed that the purchaser shall, in the event that he is required to pay any further amount to the judgment debtor under the conveyance deed, shall set apart an amount of Rs.25 lacs to the account of the suit. The Learned Single Judge also clarified that in the event that the purchaser was required to directly negotiate with the licensee for obtaining vacant possession of the premises on the third floor, it would be open to him to approach the Court for appropriate orders. A similar order was passed on 25th October, 2005 in another Execution Application. 5. The judgment debtor admittedly failed to handover vacant possession of the third floor to the Second Respondent – 8 purchaser as required in the deed of conveyance. There upon three Chamber Summons1 were taken out by the purchaser in terms of the order passed by this Court on 23rd October, 2005 seeking liberty to negotiate directly with the licensee for obtaining vacant possession of the third floor. On the Chamber Summons, an order was passed on 15th February, 2007 by a learned Single Judge of this Court making the Chamber Summons absolute subject to the purchaser depositing in this Court an amount of Rs.2.45 Crores. The Learned Single Judge further directed that from the amount so deposited, the three decrees – two under the arbitral award and one under the summary suit shall be satisfied and if any amount remained after satisfying those decrees, the purchaser will be entitled to withdraw the amounts. The judgment of the Learned Single Judge was carried in appeal. The Division Bench by its judgment dated 11th June, 2007 observed that the relief that was sought in the Chamber Summons was merely to deal with and negotiate with the licensee for obtaining possession of the 1 Chamber Summons 530 of 2006, 533 and 534 of 2006. 9 third floor premises. The Division Bench was of the view that in such an application, there was no justification for the Learned Single Judge to issue a direction for the satisfaction of the decrees obtained by the decree holders by the deposit of the required amount in that regard, in order to enable the purchaser to negotiate with the licensee for obtaining possession of the suit premises. The Division Bench observed that the Execution Applications, or any other Chamber Summons which may be taken out in the proceedings would be examined by the Single Judge on merits and the directions issued by the Single Judge beyond making the Chamber Summons absolute in terms of prayer clause (a) were set aside. At the same time, the direction for the deposit of Rs. 2.45 Crores was maintained with the condition that this would operate only prior to obtaining the possession of the suit premises and not for initiating negotiations with the licensee. All other contentions were expressly kept open and the appeal came to be disposed of. 10 6. On behalf of the decree holder it has been submitted that the three Chamber Summons are in the nature of garnishee proceedings requiring that out of the amount of Rs.2.45 Crores deposited by the purchaser, amounts representing the decrees arising out of the arbitral awards and the summary suits should be permitted to be withdrawn by the decree holders. It was urged that the Second Respondent – purchaser had set up a case to the effect that upon the failure of the judgment debtor – who was also the vendor of the premises – to handover vacant possession of the third floor within a period of six months, the purchaser was not liable to make the balance payment of Rs.2.45 Crores. It is submitted that the aforesaid contention was given up before the Division Bench which disposed of on 11th June, 2007 an appeal arising out of the judgment of the Learned Single Judge dated 15th February, 2007. The learned counsel further submitted that the agreement between the Second Respondent and the judgment debtor did not contain any provision for forfeiture. Moreover, it was urged that of the built up area of 25,000 sq. 11 ft, the licensee was in the possession of 3,500 sq.ft. The consideration of Rs.6 Crores was for the entire building consisting of 25,000 sq. ft. and it was not probable that the purchaser would be entitled to forfeit an amount of Rs.2.45 Crores on the failure of the judgment debtor to handover possession of the premises on the third floor. 7. On behalf of the judgment debtor the learned counsel submitted that the property was mortgaged with the Development Credit Bank which had a claim in excess of Rs. 6.50 Crores. The bank had initiated securitization proceedings and it was upon the permission of the Bank that the purchaser was brought forth. The purchaser paid an amount of Rs.3.50 Crores directly to the Bank. The judgment debtor, it was submitted, had in his turn taken out three Chamber Summons for the payment of the amount which has been deposited by the purchaser in pursuance of the order of the Division Bench dated 11th June, 2007 and that this amount may be permitted to be withdrawn by the judgment debtor. 12 8. On behalf of the purchaser all the Chamber Summons have been opposed and it was urged that (i) in the course of the execution proceedings it would not be open to the Court to rewrite the agreement that was arrived at with the judgment debtor as a vendor of the premises and (ii) the claim of the decree holder could not in any event event rank higher than that of the judgment debtor qua the purchaser of the premises. The Second Respondent does not hold any funds of the judgment debtor, which can be the subject matter of garnishee proceedings. Plainly, the agreement between the parties contemplated that the judgment debtor would be entitled to the balance of Rs.2.45 Crores only against obtaining peaceful and vacant possession of the third floor premises within a period of six months and not otherwise. The judgment debtor having failed to do so, there was no question of the aforesaid amount being paid over. 9. In assessing the merits of the rival contentions, a 13 reference would have to be made to the principal clauses contained in the deed of conveyance dated 27th April, 2005. The deed of conveyance postulates that the property was in the occupation of the vendors viz. the judgment debtor save and except for the third floor in respect of which a license had been created. The total agreed consideration was Rs.6 Crores of which an amount of Rs.3.50 Crores was paid to the bank and an amount of Rs.5 lacs was paid to the judgment debtor as vendor. The balance of Rs.2.45 Crores was agreed to be paid by the purchaser to the vendor within six months of the date of the execution of the agreement in the manner mentioned thereafter. The conveyance specifically provides that it was to be the sole responsibility and obligation of the vendor to obtain peaceful and vacant possession of the premises from the licensee and to handover the same to the purchaser within six months from the execution thereof. The conveyance stipulates that as a guarantee for the performance by the vendor of the aforesaid obligation, the purchaser’s obligation to pay the balance of Rs.2.45 Crores “will be only after the vendors 14 complying with” the aforesaid condition “and not otherwise”. In other words, it is evident that the vendor was entitled to the balance of Rs.2.45 Crores only upon its complying with its obligation to obtain peaceful and vacant possession of the third floor premises from the licensee within six months and not otherwise. Now it is an undisputed position before the Court that the vendor failed to obtain possession of the third floor premises from the licensee. Upon the failure of the vendor to do so the obligation of the purchaser to pay the balance of Rs. 2.45 Crores to the vendor did not come into existence. That being the position, the decree holder cannot be heard to contend that he would be entitled to the payment of the decretal amount out of the amount of Rs.2.45 Crores that has been deposited by the purchaser in pursuance of the order passed by the Division Bench on 11th June, 2007. 10. An attempt was made to urge that during the course of the proceedings before the Division Bench the purchaser had given up its contention that it was not liable to pay an amount 15 of Rs.2.45 Crores to the vendor upon the failure of the vendor to handover possession of the third floor. A plain reading of the judgment of the Division Bench does not support such a proposition. As already noted earlier, a Learned Single Judge of this Court had by an order dated 24th October, 2005 directed that it would be open to the purchaser to move this Court for appropriate orders as and when an occasion arose for the purchaser to directly negotiate with the licensee for obtaining vacant possession. Such an eventuality obviously would arise upon the failure of the vendor to obtain possession from the licensee in discharge of its obligation to obtain such possession. In pursuance of the liberty granted in the order dated 24th October, 2005 a Chamber Summons was moved by the purchaser for permission to negotiate with the licensee for possession. A Learned Single Judge of this Court had by an order dated 15th February, 2007 observed that permission could be granted to the purchaser to do so only subject to his satisfying the decrees that were held by the decree holders in the execution proceedings. The Division Bench set aside those 16 observations but at the same time directed the purchaser to deposit an amount of Rs.2.45 Crores prior to obtaining possession. While doing so the Division Bench expressly kept all contentions open and observed that the execution applications or any Chamber Summons which may be taken out in the proceedings would be independently disposed of on merits by the Single Judge. These observations of the Division Bench clearly establish that the purchaser had not at any stage given up its contention that his obligation to pay the balance of Rs.2.45 Crores to the vendor had not come into being upon the failure of the vendor to handover vacant possession. The observation in paragraph 5 of the judgment of the Division Bench is that it was not in dispute that in terms of the agreement, the balance amount was required to be paid at the time of obtaining possession of the premises. The deed of conveyance, it must once again be reiterated expressly provides that it was the sole responsibility of the vendor to obtain vacant possession of the third floor which was in the occupation of the licensee; that as a guarantee for the 17 performance of such an obligation, the obligation of the purchaser to pay the balance of Rs.2.45 Crores will be only after the vendor had complied with this condition and not otherwise. Clearly it is not open to the execution Court to rewrite the agreement between the vendor and the purchaser. Nor for that matter can the decree holder claim from the purchaser any amount in excess of what the judgment debtor would have been entitled to assert as against the purchaser. 10A. In the circumstances, there is absolutely no merit in the Chamber Summons which have been taken out by the decree holder for the payment of an amount of the decreetal agreement from the amount of Rs.2.45 Crores which has been deposited by the purchaser. Insofar as the Judgment debtor – vendor is concerned there is similarly no merit in the three Chamber Summons that have been taken out. The vendor having admittedly failed to discharge its obligation to obtain vacant possession, it would not be entitled to the relief that has been sought in the Chamber Summons. All the Chamber Summons 18 will accordingly have to be dismissed. 11. Counsel appearing for the purchaser has stated before the Court that the purchaser will adopt separate proceedings for the refund of the amount of Rs.2.45 Crores that has been deposited in Court. It is not necessary for the Court to make any observation in that regard since the purchaser would be at liberty to take recourse to such remedies as are available in law. In the event that the purchaser does so, he shall furnish due and adequate notice of any such application both to the judgment debtor and to the decree holder. *****