AJN 00-APEAL(L)433.11 : 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL (L) NO.433 OF 2011 IN NOTICE OF MOTION NO.1615 OF 2011 IN SUIT NO.1120 OF 2011 M/s. Starlight Systems Private Limited, a company, incorporated under the provisions of the Companies Act, 1956, having its Registered Office at 5-9th Floor, Housefin Bhavan, C-21, Bandra- Kurla Complex, Bandra (East), Mumbai – 400 059. ) ) ) ) ) ) ) ) ... Appellant Versus 1. M/s. Tristars Multi-Trade Private Limited, a company incorporated under the provisions of the Companies Act, 1956, having its registered office at, 902, Solitaire Corporate Park, Andheri-Ghatkopar Link Road, Chakala, Andheri (East), Mumai – 400 093. ) ) ) ) ) ) ) ) ) ) 2. Bhupendra Surani, son of Jivraj Surani also known as Jivraj Dharukawala, residing at 902, Solitaire Corporate Park, Andheri-Ghatkopar Link Road, Chakala, Andheri (East), Mumbai – 400 093. ) ) ) ) ) ) ) AJN 00-APEAL(L)433.11 : 2 : 3. Sanjay Khemka, son of late Sita Ram Khemka, having his office at 902, Solitaire Corporate Park, Andheri- Ghatkopar Link Road, Chakala, Andheri (East), Mumbai – 400 093. ) ) ) ) ) ) ) ... Respondents. Mr. Virag Tulzapurkar, senior counsel with Mr. Adarsh Saxena i/b Amarchand Mangaldas & S. A. Shroff & Co. for the appellant. Mr. Sanjay Khemka, C.E.O. Authorized representative of respondent 1 and respondent 3 himself, present in person. CORAM: MRS. RANJANA DESAI & RANJIT MORE, JJ. DATE ON WHICH THE ORDER IS RESERVED : 26TH JULY, 2011. DATE ON WHICH THE ORDER IS PRONOUNCED: 2ND AUGUST, 2011. P.C. :- 1. Admit. By consent of the parties, taken up for hearing forthwith. 2. The original plaintiff in Suit No.1120 of 2011 has challenged order dated 24/6/2011 passed by learned Single Judge on Notice of Motion No.1615 of 2011 taken AJN 00-APEAL(L)433.11 : 3 : out by the plaintiff for a direction to the defendants to hand over/deliver the post dated cheques bearing Nos. 000539 to 000545 issued by the plaintiff in favour of defendant 1, to this court. The plaintiff has also prayed for an order of temporary injunction restraining the defendants, from depositing/presenting the said post dated cheques in any bank pending the hearing and final disposal of the suit. By impugned order dated 24/6/2011, ad-interim relief has been denied to the plaintiff. 3. We need to narrate the gist of the plaintiff's case: The plaintiff-company is doing the business of real estate and construction. Defendant 1 is a private limited company. Defendant 2 is a subscriber to the Memorandum of Association of defendant 1. Defendant 3 is the Chief Executive Officer of defendant 1 and also the constituted attorney of defendant 2. In March, 2007, defendant 2 had submitted an application for allotment of a residential unit at “Signature Island”, a project of construction of residential units at Bandra-Kurla Complex, AJN 00-APEAL(L)433.11 : 4 : Bandra (East), Mumbai, undertaken by the plaintiff. The application was accepted. Defendant 2 issued a cheque dated 20/3/2007 for Rs.3,60,00,000/- as non-refundable earnest money deposit. The plaintiff by its letter dated 22/10/2007 called upon defendant 2 to pay the second instalment of Rs.3,04,20,000/-. According to the plaintiff, defendant 2 failed and neglected to pay the same. Thereafter, several proceedings have been filed by the parties against each other including criminal proceedings. Thereafter, according to the plaintiff, they came to know that defendant 2 had been adjudged bankrupt by a court in Hong Kong. The defendants threatened them in various ways, so that they would return, the earnest money deposit to them and not to the trustees of defendant 2's estate appointed by the Hong Kong Court. According to the plaintiff, several threatening SMSs were sent to the plaintiff. Copies thereof are annexed to the plaint. Ultimately, the plaintiff was compelled to issue cheque No. 000603 dated 16/1/2010 for Rs.50 lakhs only in favour of defendant 1 by way of loan pending finalization of the AJN 00-APEAL(L)433.11 : 5 : deal. On the same day, according to the plaintiff, defendant 3 caused defendant 1 to raise nine bogus post dated invoices totalling to Rs.4,14,16,764/- in the name of VSR Steels Private Limited (for short, “VSR”) for supply of certain software. The defendants deny that the said invoices are not genuine (Ex-S-1 to Ex-S-9). According to the plaintiff, the defendants continued to threaten the plaintiff. Defendant 3 caused defendant 1 to raise nine more bogus invoices in the sum of Rs.4,11,57,325 (Ex-U1 to Ex-U9). According to the plaintiff, on 12/7/2011, defendant 3 compelled the plaintiff to enter into consent terms whereby, inter alia, defendant 2 purported to give up his claim for Rs.3,60,00,000/- and the plaintiff was compelled to give up his claim for specific performance of the agreement evidenced by the application for allotment and the payment schedule. According to the plaintiff, after the consent terms were signed, defendant 3 revised the aggregate amount of the said invoices and issued eight fresh invoices (which were also bogus) now aggregating to Rs.4,03,24,756/- in the name of the AJN 00-APEAL(L)433.11 : 6 : plaintiff (Ex-W-1 to Ex-W-8). It is further the case of the plaintiff that defendant 3 compelled Mr. Sanghavi and Khetan of the plaintiff to issue eight post dated cheques bearing Nos.000538 to 000545 in the name of defendant 1 from the plaintiff's account and returned the earlier cheques issued from VSR's account. These new post dated cheques were given as per the earlier post dated cheques. These cheques are the subject matter of the suit. 4. Since it is the case of the plaintiff that the cheques are taken from it under threats, the plaintiff has issued instructions to the bank to stop payment. So far as cheque No.000539 dated 1/9/2010 drawn in the sum of Rs.50,00,000/- is concerned, it appears that after it was presented for payment by the defendants, it was dishonoured by the bank. The defendants have filed a complaint under Section 138 of the Negotiable Instruments Act against the plaintiff. The same is pending. In respect of post dated cheque No.000541 dated 1/3/2011 in the sum of Rs.50,00,000/- the plaintiff AJN 00-APEAL(L)433.11 : 7 : took out a notice of motion inter alia for an order restraining the defendants from presenting it in any bank. On 24/2/2011, learned Single Judge (Kathawalla, J.) adjourned the notice of motion to 28/2/2011 and in the meantime restrained the defendants from presenting it in any bank for payment. On 28/2/2011, by consent of the parties, learned Single Judge passed the following order: (i) Defendant 1 shall on or before 3/3/2011 deposit with the Prothonotary & Senior Master of this court the cheque of Rs.50,00,000/- dated 1/3/2011 bearing No.000541 drawn on the Kotak Mahindra Bank by the plaintiff in favour of defendant 1, which the Prothonotary & Senior Master shall keep in safe custody and produce the same as and when called upon to do so. (ii) The plaintiff shall deposit an amount of Rs. 50,00,000/- with the Prothonotary & Senior Master of this court on or before 4/3/2011. AJN 00-APEAL(L)433.11 : 8 : Upon deposit of the said amount, the Prothonotary & Senior Master shall invest the same in a fixed deposit of a nationalized bank initially for a period of three months. (iii) Pending deposit of the cheque set out in clause (i) above, the defendants are restrained from depositing the said cheque with their bankers for encashment of the same. 5. On 27/4/2011, in view of the above order, a similar order came to be passed in respect of cheque bearing No. 000542 dated 1/5/2011 drawn in the sum of Rs. 48,80,000/- by another court (Dr. D.Y. Chandrachud, J.) 6. The present notice of motion is, therefore, taken out by the plaintiff in respect of cheque No.000543 dated 1/7/2011, cheque No.000544 dated 1/9/2011 and cheque No.000545 dated 1/12/2011 for Rs.38,45,000/-, Rs. 35,45,000/- and Rs.27,54,756/- respectively all drawn by AJN 00-APEAL(L)433.11 : 9 : the appellant on Kotak Mahindra Bank Limited in favour of defendant 1. Cheque No.000544 is dated 1/9/2011 and cheque No.000545 is dated 1/12/2011. It is therefore, not necessary, at this stage, to pass any orders in respect thereof. We shall concentrate only on cheque No.000543 dated 1/7/2011. Mr. Tulzapurkar, learned senior counsel appearing for the appellant-plaintiff submitted that considering the nature of dispute, learned Single Judge should have passed order similar to the orders passed by learned Single Judges of this court which we have quoted hereinabove. Counsel submitted that learned Single Judge erred in not going into the merits of the case. Counsel submitted that in the circumstances, this court should set aside the impugned order and pass similar order which learned Single Judges have passed in respect of two other cheques. 7. Mr. Khemka, the Chief Executive Officer and authorized representative of defendants 1 and 3 appeared in person. He submitted that the earlier orders are passed with AJN 00-APEAL(L)433.11 : 10 : consent of the defendants. He submitted that the defendants do not wish to consent and obtain a similar order. He submitted that the defendants cannot be restrained from exercising their right to present the cheques in the bank and if they are dishonoured to file a complaint. He submitted that the transaction in question is genuine. The plaintiff is fraudulently trying to evade payment. He submitted that on all the invoices, there is a handwritten endorsement to the effect that the plaintiffs had received the software in good working condition. Mr. Sanghavi of the plaintiff has signed thereon. Mr. Khemka submitted that under Section 138 of the Negotiable Instruments Act, the criminal court can impose on the accused fine which may extend to twice the amount of the cheque. Therefore, asking the plaintiff to deposit the cheque amount is not equitable. Mr. Khemka submitted that in the circumstances, the appeal be dismissed. 8. The plaintiff's prayer in the plaint, inter alia, is for a declaration that all the four sets of invoices raised by AJN 00-APEAL(L)433.11 : 11 : defendant 1 upon VSR and/or the plaintiff, cheque bearing No.000603 dated 16/6/2010 and the post dated cheques bearing Nos.000538 to 000545 are null and void and they may be cancelled. The plaintiff has prayed that the entire transaction defined in paragraph 7 of the plaint be declared void. In this connection, Mr. Tulzapurkar, learned counsel for the appellant-plaintiff has drawn our attention to Section 31 of the Specific Reliefs Act, 1963. 9. There is some substance in the contention of Mr. Khemka that the defendants cannot be restrained from initiating or prosecuting any proceeding in a criminal matter. If the plaintiff's cheque is dishonoured, he has a right to file a criminal complaint. Section 41(d) of the Specific Reliefs Act, 1963 clearly states that an injunction cannot be granted to restrain any person from instituting or prosecuting any proceeding in a criminal matter. Though, learned Single Judge has not referred to this provision, he has observed that there was no reason to restrain the defendants from presenting the cheques and AJN 00-APEAL(L)433.11 : 12 : in the event of the same being dishonoured, to proceed in accordance with law, including filing a complaint under Section 138 of the Negotiable Instruments Act. It is true that by earlier orders, the defendants were restrained from presenting the cheques to the bank but those orders were passed by consent. 10. Mr. Khemka has, however, made a statement that he does not want to take a similar order by consent. At the same time, it must be noted that we are at ad-interim stage. The motion has to be finally heard. None of the orders passed by this court restrain the defendants from prosecuting a complaint. Since, the plaintiff has prayed that the said cheques be adjudged void, learned Single Judges have directed the plaintiff to deposit the cheque amount in the court and have also directed the defendants to deposit the cheques with the Prothonotary & Senior Master. Under section 31 of the Specific Relief Act, in a given case, the defendants can be asked to deliver a written instrument to the court and the court can AJN 00-APEAL(L)433.11 : 13 : cancel it. Whether Section 31 of the Specific Reliefs Act is attracted to this case will be decided at the trial of the suit. In the circumstances of the case, however, prima facie, at this ad-interim stage, such order appears to be equitable. It does not restrain the defendants from prosecuting criminal case. However, since under Section 138 of the Negotiable Instruments Act, the plaintiff can be directed to pay fine which may extend to twice the amount of the cheque, in our opinion, the plaintiff must be directed to deposit some more amount in the court. Since, we are only passing order in respect of cheque No. 000543 dated 1/7/2011 of Rs.38,45,000/-, in our opinion, the plaintiff must be directed to deposit Rs.50,00,000/- with the Prothonotary & Senior Master of this court. Hence, the following order: O R D E R : (a) Impugned order dated 24/6/2011 is set aside. AJN 00-APEAL(L)433.11 : 14 : (b) The plaintiff shall deposit an amount of Rs.50,00,000/- with the Prothonotary & Senior Master on or before 9/8/2011. Upon deposit of the amount, the Prothonotary & Senior Master shall invest it in a fixed deposit in a nationalized bank initially for a period of three months. (c) On or before 8/8/2011, defendant 1 shall deposit with the Prothonotary & Senior Master cheque bearing No. 000543 dated 1/7/2011 for Rs. 38,45,000/- drawn on Kotak Mahindra Bank by the plaintiff in favour of defendant 1, which the Prothonotary & Senior Master shall keep in safe custody and produce as and when called upon to do so. AJN 00-APEAL(L)433.11 : 15 : (d) Pending deposit of the cheque set out in clause (a) above, the defendants are restrained from depositing the said cheque with their bankers for encashment of the same. 11. So far as cheque No.000544 dated 1/9/2011 and cheque No.000545 dated 1/12/2011 are concerned, we have not dealt with them in this order because the motion is pending and submissions in respect thereof can be made when the notice of motion is finally heard. We request learned Single Judge to hear the motion finally preferably before 1/9/2011 subject of course to his convenience. We feel that in the meantime, the parties must make a genuine effort to settle the dispute. 12. Appeal is disposed of in the aforestated terms. [SMT. RANJANA DESAI, J.] [RANJIT MORE, J.]