1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.3458 OF 2009 IN SUIT NO.2435 OF 2009 Mrs.Bindu Nambiar .. Plaintiff Versus Global Trade Finance Ltd. And Ors. .. Defendant Mr.F.E.De Vitre, Senior Advocatte with Cyrus Ardeshir, Rajeev Bhatia and Shreyas Mehta i/b. Apex Consillis for plaintiff Ms.Rajani Iyer, Senior Advocate with Chirag Balsara, Mihir Mody, Pratiksha Mody, Rajesh Talekar i/b. M/s.K.Ashar and Co. for defendant No.1. CORAM : S.C.DHARMADHIKARI, J. DATE : 6th October 2009. P.C.: 1] Heard Mr.De Vitre, learned Senior Counsel on behalf of plaintiff and Ms.Rajani Iyer, learned Senior Counsel for first defendant. It is stated that defendant Nos. 2 to 6 are duly served. However, no relief is sought against them. The plaintiff who is an Indian citizen resides at Secunderabad, Andhra Pradesh. She is wife of defendant No.6, daughter of defendant Nos. 3 and 5 and sister of defendant No.4. It is stated that 2 defendant Nos. 3, 5 and 6 are Directors of the second defendant company. It is urged that plaintiff and defendant No.4 are and have been at all material times, joint owners of a property more particularly described in para 2 of the plaint. 2] It is stated that the plaintiff and her husband (defendant No.6) were likely to be out of India for a considerable period of time and, therefore, she executed a power of attorney in favour of her father defendant No.3 on 17th February 1998. 3] Mr.De Vitre submits that this power of attorney must be seen as giving a restricted power to the father. He invites my attention to the said power of attorney and more particularly clause No.13 thereof. He submits that it is only to raise loan and borrow money from time to time, on the account of plaintiff - daughter, that the power of attorney has been given. Further, it is only to secure such debt that the mortgage or charge could have been created by her father. He submits that in the instant case, the mortgage has not been created by the plaintiff for her own debt or on her account. It is stated to be to secure a sum under the deed of guarantee 3 executed by the plaintiff as mortgagor No.1. However, there is no such guarantee executed in favour of the first defendant by the plaintiff. Therefore, there is no question of the plaintiff's share being dealt with or disposed of by relying upon the deed of mortgage. More so, when the second defendant which is stated to have approached first defendant for financial benefits, the plaintiff was a shareholder at one time but her shares are disposed of under a deed of transfer dated 10th December 2007. For all these reasons, the first defendant and also third defendant be restrained by appropriate interim order and injunction from acting in furtherance of the deed of mortgage and the power of attorney. 4] On the other hand, Ms.Iyer appearing for defendant No.1 submits that this is a suit now filed by the second defendant, the mother, brother and husband of the plaintiff, to avoid the consequences under the deed of guarantee and the mortgage created in favour of the first defendant to secure the amounts lent and advanced from time to time as is apparent from the affidavit in reply and the annexures thereto. The plaintiff was very much a part of the group business activities. She is a member of the family. There is no question of her having any dispute with her father or 4 her husband and that is not even the case set out in the plaint. On the other hand, she resides with them and is part of the family. It is the family who has approached the first defendant and relying upon the documents, including the power of attorney, which is executed as early as in February 1998 that the amounts have been advanced. In such circumstances and when the defaults are committed by the second defendant, in February 2009 and thereafter, to the knowledge of the plaintiff, the first defendant was taking steps in furtherance of the mortgage, that the suit is filed at the last minute and to stall disposal of the properties, duly mortgaged in favour of the first defendant. In these circumstances, this is not a bonafide claim and must be, therefore, rejected. More so, when the plaintiff does not seek any damages for the alleged wrongful act of her father. 5] With the assistance of learned Senior Counsel for both sides, I have perused the plaint and annexures thereto. The plaintiff does not dispute that the first defendant carries on business of non banking financial and related services. She does not dispute that the other defendants to this suit are the joint owners, save and except, defendant No.6. She has stated 5 that on 27th June 2009, she visited Mumbai and met defendant No.3. The defendant No.3 informed her that the first defendant, through their Advocates have sent a notice to the plaintiff and defendant Nos. 3 to 6, purporting to invoke, inter alia, the deed of mortgage dated 22nd February 2008. It is her case in para 4 that she was not previously aware that the property was allegedly mortgaged by third defendant on the basis of the Power of Attorney dated 17th February 1998. She, therefore, made enquiries with defendant Nos. 3 and 6 and learnt about the letter of sanction, English mortgage etc. She was unaware of the default committed. Prior thereto, she has gone to the extent of urging that she was unaware of any financial assistance sought. Her case appears to be that she is not a guarantor for any loan nor has she executed any guarantee letter nor that the plaintiff was ever required or called upon by the first defendant to execute any guarantee, including any personal guarantee. 6] Prima facie, it is difficult to accept these contentions. In the affidavit in reply, the first defendant has pointed out that the power of attorney is dated 17th February 1998. A copy of this power of attorney 6 has been annexed to the plaint as Annexure B. There is no dispute with regard to the execution of the same. That is executed by the plaintiff in favour of her father. From clauses 2, 3, 6 and 8 it appears that she has given complete authority with regard to the management of her business either carried individually or in partnership, with others or in respect of any other property or properties belonging to her or jointly held with others as co-owners. That is a clear mandate flowing from clause 2. Clause 3 provides for an authority to accept and withdraw on her behalf any compensation payable to her for acquisition or compulsory purchase of immovable property. Clause 4 gives authority with regard to legal proceedings. Clauses 8 and 9 deal with investment and operation of bank accounts and obtaining facilities, not only for her personal business but as partner or owner or in plaintiff’s personal name wherever applicable in her individual capacity. Clause 10 deals with receiving and recovering any debt owing to her by any person, company and association. Clause 11 deals with voting in meetings of the company or the firm or otherwise to act as Proxy in respect of shares now held or to be held thereafter. Complete authority with regard to signing of cheques and necessary documents for management of the affairs is given vide clause 12 and then 7 comes clauses 13 and 14. Clause 13 has been relied upon but to my mind, prima facie, it cannot be seen in isolation but must be construed and read along with other clauses. It is not the case of the plaintiff that she was not knowing about any family business nor that she was totally disassociated with it. As is evident from the affidavit in rejoinder wherein she makes a statement that prior to the sanction of the alleged loan by defendant No.1 to defendant No.2, she held 2500 shares of defendant No. 2. She states that on or about 10th December 2007, she transferred her aforesaid shareholding in favour of defendant No.6. She states that this was prior to the letter of sanction dated 11th February 2008 and deed of mortgage dated 22nd February 2008. Thus, she was not shareholder of defendant No.8 at the time when alleged loan was sanctioned and allegedly availed of by defendant No2. Her case in para 7 of the rejoinder is also that assuming without admitting that she is shareholder of defendant No.2 at the relevant time, that by itself would not authorise her father to create a mortgage on behalf of plaintiff under the power of attorney dated 17th February 1998. These averments are made in the affidavit in rejoinder but the plaint is silent with regard to the association and the disposal of the shareholding of defendant No.2. 8 7] From 17th February 1998 till the execution of the relevant documents and till her correspondence with the first defendant at no time prior thereto, the plaintiff ever complained of any dealing or transaction by her father in furtherance of the power of attorney. In fact, the documents executed in favour of the first defendant are also signed by her husband, defendant No.6 and her mother. (see Annexures D and E to the plaint). There is also a pledge of shares. In such circumstances, it is difficult to believe, prima facie, that the plaintiff has given any limited authority or that she was not a party to the transactions of the second defendant with first defendant. By reading the recitals of the deed of mortgage and some of the clauses in isolation, it will not be proper to hold that the plaintiff has at no time agreed to mortgage her share in the immovable property in favour of first defendant. Ultimately, this matter cannot be seen in the backdrop of the plaint allegations and from the view point of the plaintiff. She is not disputing that the details of the properties in which she has a share, were duly forwarded along with that of her husband, brother, mother and father to the first defendant. She does not dispute that the family as a whole is carrying on business and that the 9 conversion of one of the partnership business, later on into a public limited company under the Certificate of Incorporation dated 17th February 2006. The Prospectus sets out complete details. It sets out that the plaintiff is daughter of the third defendant and is a Graduate in Commerce from Mumbai University having 10 years of experience in Home Textile and currently she is liasoning with U.S. customers for coordinating orders, effect deliveries, payments etc. Although, this is a prospectus of the group company, it is apparent from a perusal of the same that the name of second defendant is mentioned as a part of the family business under the clause related party disclosure. Thus, the projection of the plaintiff as if she is a complete stranger to the suit transaction is difficult to accept. This is an attempt on behalf of the family members to now put up the plaintiff and avoid conseqences of defaults committed in repayment of the loans advanced by the first defendant. From the plaint averments, it is apparent that she is aware of the facilities extended by defendant No.1. She is referring to the sanction letter and other documents and prima facie they do not show her ignorance or innocence. Her association with the business activities being revealed in the reply affidavit, she pleads her disassociation for the 10 first time in the rejoinder and alleges that the shares held by her in the defendant No.2 are disposed off in 2007. The plaint is silent about the alleged disposal. Even in the letter/ notice prior to the institution of the suit, this fact is not stated by her. Therrefore, the plaintiff’s conduct cannot prima facie, be ignored. 8] There is prima facie, therefore, much substance in the contentions of Ms.Iyer that the plaintiff has suppressed material facts and also that she owns 2500 shares of the second defendant. The second defendant is closely held company of plaintiff and her family members. In such circumstances, when the father was acting as a power of attorney holder and the plaintiff has had no issue or dispute with him from 1998 till 2008, then, it is difficult to accept that the plaintiff was unaware that her share was being dealt with and despite facilities being sanctioned in favor of the second defendant, her share is mortgaged not to secure any benefit to her or for her personal use. She has acted in furtherance of this document, although, there was no personal benefit to her. It is difficult to, therefore, accept at this prima facie stage, the submission of Mr.De Vitre that the plaintiff having not executed any guarantee and having not agreed to 11 secure any sum lent and advanced by the 1st Defendant, her share cannot be dealt with by the first defendant on the basis of the documents executed in its favour by the defendant Nos. 3 to 6. That apart, her interpretation of the power of attorney and the Deed of Mortgage cannot be straight away accepted without anything more, at this stage. If she is aggrieved by the acts of her father and the family members after 10 years of the execution of the Power of Attorney and nearly 1 ½ years of the Letter of Sanction, then, she must prove them. Her version is difficult to accept as it is coming for the first time in August 2009. 9] In the result, finding that the application is not bonafide so also the plaintiff suppressing material facts from this Court, I do not think that this is a fit case for grant of any ad-interim relief. The request is, therefore, rejected and also on the ground that the application being made belatedly and as an after thought. Ad-interim reliefs rejected. 9] Mr.Ardeshir on instructions makes a statement that the request, although, made for ad-interim reliefs, considering that elaborate arguments have been advanced and affidavits being filed, this order be 12 taken as disposing of the notice of motion itself. This course of action suggested by Mr.Ardeshir is not opposed by the learned Counsel for defendant No.1. In these circumstances and since elaborate reasoning has been given, after considering all aspects at this prima facie stage, this order shall be treated as disposing of the notice of motion itself finally. However, all observations and findings are tentative and prima facie and shall not influence the Court while trying the suit. Similarly, all actions of first defendant shall be subject to the outcome of the suit. Notice of motion is disposed of accordingly. (S.C.DHARMADHIKARI, J)