1 ao230 ssp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELATE JURISDICTION APPEAL FROM ORDER NO.230 OF 2011 Car Mart Pvt.Ltd. & Ors. ...Appellants vs. Bombay Mercantile Co-operative Bank Ltd. ...Respondent Mr.Padeep Sancheti and Mr.Sagar Ghogare i/b M/s.Udwadia & Udeshi for the appellants Mr.D.Banerji a/w Ms Sapna i/b Mr.T.N.Tripathi for the respondent CORAM : A.S.OKA,J. DATE : MARCH 23,2011 P.C.: 1 The submissions of the learned counsel for the parties were heard yesterday. The appellants who are plaintiffs have challenged the Judgment and Order dated 27th January 2011 by which the trial Court has declined to grant order of temporary injunction. 2 To appreciate the submissions made by the learned senior counsel for the appellants, it will be necessary to appreciate the facts of the case in brief. Even according to the case of the appellants, the first appellant company availed of overdraft facility of Rs. 90,00,000/- from the respondent-bank for meeting its working capital requirements. The overdraft facility was granted in or around 1993. There does not appear to be in dispute that the amount has not been repaid to the respondent-bank. 3 One Shri Rajeevkumar Sah was the Managing Director of the first appellant. It is stated that he died in an accident on 29th October 1994. The averments made in the 2 ao230 plaint disclose that the second appellant is the wife of said Rajeevkumar Sah and the third appellant is his daughter. Essentially, a suit was filed for declaration that the first and second plaintiffs and the deceased Rajeevkumar are not the members of the respondent-bank. A declaration is sought that the documents on the basis of which the respondent-bank seeks to establish the membership of the first and second plaintiffs and deceased Rajeevkumar are fabricated, forged and void ab- initio. 4 In the plaint it is set out that initially the respondent had filed a dispute before the Co-operative Court under section 91 of Maharashtra Co-operative Societies Act,1960 against the appellants for recovery of sum of a sum of Rs.1,07,62,949.47 with interest thereon. The dispute was dismissed by the Co-operative Court on the ground of want of jurisdiction. Though appeal was preferred by the respondent, the same was withdrawn. It is pointed out that subsequently an application was made by the respondent-bank invoking section 84 of the Multi State Co-operative Societies Act,2002 (hereinafter referred to as the said Act). The respondent-bank sought reference to the arbitration and accordingly, arbitral proceedings were commenced on 25th September 2009. It is set out in the plaint that before the arbitral tribunal, an application under section 16 of the Arbitration and Conciliation Act,1996 was moved contending that first and second appellants as well as late Rajeevkumar were not members of the respondent-bank. In the application filed by the appellants before the learned Arbitrator it was alleged that the respondent-bank has produced false and fabricated documents such as an extract of a meeting of the Finance Committee of the Board of Directors of the respondent-bank held on 30th September, specimen 3 ao230 signature card dated 14th August 1989 etc. 5 In the plaint it is contended that as the appellants are not members, arbitration proceedings under section 84 of the said Act cannot lie against the appellants. In the plaint first prayer is for declaration that neither first and second appellants nor late Rajeevkumar were members of the respondent-bank in eyes of the law. The second prayer is regarding declaration that the respondent-bank has committed forgery and has fabricated documents. The third prayer is for declaration that certain documents be declared as forged and void. The fourth prayer is also a similar prayer in respect of the certain documents. It is pertinent to note that there is no final relief claimed in the suit as regards arbitral proceedings. In the said suit, a notice of motion was taken out by the appellants restraining the learned Arbitrator from proceeding or trying arbitration case filed by the respondent. A prayer was also made that the proceedings before the learned Arbitrator be stayed till the issue of membership is decided by the trial Court in the suit. By the impugned order, the said notice of motion has been dismissed by the trial Court. 6 The learned senior counsel for the appellants relied upon the decision of the Division Bench of this Court in case of MSM Satellite (Singapore) Pvt.Ltd. Vs. World Sport Group (Mauritius) Limited in Appeal (L) no.534 of 2010. He submitted that the Civil Court can always grant injunction restraining the learned Arbitrator from proceeding with the matter. He pointed out that very serious issues regarding fabrication of the several documents by the respondent-bank have been raised in the suit. He submitted that the allegations of forgery and fraud made by the appellants in respect of the several 4 ao230 documents regarding alleged membership of first and second appellants and late Rajeevkumar can be decided only by the Civil Court. The issue of forgery and fraud can be decided by the Civil Court and not by the learned Arbitrator. He submitted that once frabrication and forgery of the documents relating to alleged membership of the first and second appellants and deceased Rajeevkumar is established, the arbitral proceedings cannot continue. He submitted that the finding of the learned trial Judge that the appellants have suppressed various rounds of litigation and the appellants have lost at every level is completely erroneous. He submitted that though the challenge by the appellants to the proceedings initiated by the respondent under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Securitisation Act) failed, in a Special Leave Petition preferred by the third appellant, the Apex Court has issued notice and has passed interim order directing that the appellant before the Apex Court shall not be dispossessed without permission of the Apex Court. He submitted that the issue whether the first and second appellants as well as deceased Rajeevkumar were members of the respondent-bank goes to the root of the matter in as much as the learned Arbitrator will get the jurisdiction only if the first and second appellants and deceased Rajeevkumar were members. He submitted that there cannot be any dispute regarding power of the Civil Court of staying the proceeding before the learned Arbitrator and considering the serious nature of the allegations of fraud and forgery, till the decision of the Civil Court on the aspects of fraud and forgery, proceedings before the learned Arbitrator ought to have been stayed. 5 ao230 7 I have given careful consideration to the submissions. It is not in dispute that the first appellant company admittedly availed of an overdraft facility of a sum of Rs.90,00,000/- from the respondent- bank. In the plaint there is a reference to letter dated 2nd January 1995 by which the first appellant offered to pay certain amounts to the respondent-bank. In the plaint it is stated that the respondent-bank declared the account as non performing asset and called upon the first appellant to pay entire amount of Rs.92,46,693.43. The learned senior counsel for the appellants submitted that the said action was illegal and the said action was taken though the appellants had offered to repay the amount. He submitted that as a result of the illegal action, the appellants have suffered loss. Perusal of the entire plaint shows that the liability of the first appellant to repay the amount to the respondent-bank is not disputed. Admittedly, the first appellant has availed of an overdraft facility in the amount of Rs.90,00,000/- way back in the year 1993. Perusal of the prayers made in the plaint show that the appellants are alleging that even the specimen signature card of the first appellant which is signed by late Rajeevkumar along with others on 14th August 1989 is forged. In fact, several documents executed by the first appellant and the said Rajeevkumar of the year 1989 are alleged to be fabricated. The declaratory suit has been filed by the appellants on 8th December 2010. It is not in dispute that in the year 1996, the respondent-bank had filed a dispute in the Co- operative Court for recovery of the amount from the appellants on the footing that the first and second appellants and late Rajeevkumar were members of the respondent-bank. Thereafter, there was proceedings initiated under the Securitisation Act which was unsuccessfully challenged by the appellants in this 6 ao230 Court. The Special Leave Petition filed by the appellants in the said proceedings is pending in which the Apex Court has granted interim relief. 8 It is not in dispute that only a member of the respondent-bank is entitled to avail of the overdraft facility. In the present case, the first appellant has availed of overdraft facility way back in the year 1993. As narrated above, the liability of the first appellant to repay the amount is not disputed in the plaint. On this background, the learned trial Judge has declined to grant relief of discretionary and equitable nature in favour of the plaintiffs. 9 There is one more aspect of the matter. In the plaint, there is no final relief claimed as regards the arbitral proceedings. The prayer in the notice of motion is for stay to the arbitral proceedings. An interim relief can be granted provided it is in the aid of final relief. Therefore, this relief cannot be said to be in the aid of final relief. 10 It is not in dispute that the proceeding initiated by the respondent under Securitisation Act was challenged by the appellants by filing a petition in this Court and the said petition was rejected. This fact was specifically not pointed out in the plaint. What is pointed out is the interim order passed by the Appellate Court. The issue of jurisdiction based on the same allegations of forgery has already been raised by the appellants by filing an application section 16 of the Arbitration and Conciliation Act, 1996 before the learned Arbitrator. 7 ao230 11 This appeal is under clause (r) of Rule 1 of Order XLIII of the Code of Civil Procedure,1908. The scope of interference in such appeal is limited. There is no patent illegality or perversity shown in the impugned order. Moreover, this was a case where the learned trial Judge was fully justified in declining to grant relief of temporary injunction which is an equitable and discretionary relief. There is no merit in the appeal and the same is dismissed. 12 It is made clear that all issues arising in the suit as well as in the pending arbitral proceedings are kept open. 13 Civil Application no.338 of 2011 does not survive and the same is disposed of. JUDGE