Case: The Bank of New York Mellon Vs. Zenith Infotech Limited &amp; Others

1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote. [Para 113(3)] The Courts must give sufficient allowance to the Trial Judge and raise a presumption that any discretionary order which he passes must be presumed to be correct unless it is ex facie legally erroneous or causes grave and substantial injustice. [Para 119(1)]After giving the illustrative examples of the orders which may be treated as judgments, the Supreme Court made the following pertinent observations:-122. We have by way of sample laid down various illustrative examples of an order which may amount to judgment but it is not possible to give such an exhaustive list as may cover all possible cases. Law with its dynamism, pragmatism and vastness is such a large ocean that it is well-nigh impossible for us to envisage or provide for every possible contingency or situation so as to evolve a device or frame an exhaustive formula or strategy to confine and incarcerate the same in a strait-jacket.18. Applying the aforesaid principles, we find considerable substance in the submission made on behalf of the appellant-plaintiff that if a copy of the valuation report is not given to the plaintiff in advance, grave and substantial injustice will be caused to the plaintiff, particularly to the bond holders for whom the plaintiff is the trustee, who have not been paid a single farthing against their dues of Rs.450 crores, inspite of the fact that defendant No.1 has sold its MSD business ostensibly for the purpose of repayment of the bonds subscribed by the bondholders. In fact in the affidavit in reply dated 17 October 2011 filed by defendant No.1 in the City Civil Court it was specifically stated that upon sale of the MSD business of defendant No.1 company the sale proceeds will be applied towards redemption of the bonds.As per the valuation report cloud computing business of defendant No.1 company is valued at Rs.598 crores. If the plaintiff does not get an opportunity to get the valuation report in advance, the plaintiff will not be able to get the valuation made on its own and will not be able to test the correctness or otherwise of the valuation made by M/s.Ernst & Young Pvt. Ltd. The plaintiff will, therefore, be seriously prejudiced at the hearing of the Notices of Motion in which they are seeking interim relief directing the defendants to furnish security for the suit claim of Rs.450 crores. If the plaintiff does no get t an opportunity to get the report in advance, merely being permitted to peruse the valuation report or getting the valuation report at the hearing of the Notices of Motion, will not enable the plaintiff to submit the valuation report of its own valuer, who may disagree with the valuation report submitted by M/s.Ernst & Young Pvt. Ltd.19. The learned trial Judge while passing the impugned order did not consider that on 14 February 2012, the learned predecessor Judge had specifically reserved liberty to move the Court for seeking permission to obtain a copy of the valuation report submitted by M/s.Ernst & Young Pvt. Ltd.20. In the above view of the matter, this Court has no hesitation in holding that the impugned order of the learned trial Judge causes grave and substantial injustice. The learned trial Judge has decided an important aspect of the trial in the Chamber Summons by rejecting the plaintiffs prayer for being supplied with a copy of the valuation report in advance. The adverse effect of the impugned order on the plaintiff as explained above is direct and immediate, rather than indirect or remote.21. As regards the contention of the defendants that the valuation report contains confidential information regarding the business of defendant No.1 and, therefore, a copy of the valuation report should not be given to the plaintiff, this submission is merely based on the perception of the defendant No.1 that confidential information given by defendant No.1 to the valuer might have been indicated in the report.22. After hearing the learned counsel for the parties and with the consent of the learned counsel for the defendant No.1, at the hearing of this appeal on 22 March 2012 we had perused the valuation report and noted that only page 8 of the valuation report could be said to be containing confidential information.23. We must also place on record that on 22 March 2012 as well as today when the hearing commenced the learned counsel for the defendants were offered inspection of the valuation report contained in the sealed envelope in order to point out whether the contents of any part of the valuation report (other than page 8) contains, according to the defendants, any confidential information. Learned counsel for the defendants, however, stated that he himself is not an expert. Thereupon the Court has permitted the learned counsel for the defendants to enquire from their clients, but the learned counsel for the defendants has not accepted the said offer also.24. Having heard the learned counsel for the parties and having gone through the valuation report and also having gone through the previous orders of this Court particularly order dated 25 November 2011 whereby this Court had directed that a copy of the affidavit containing disclosure about the sale of MSD business of defendant No.1 company be handed over to the learned Advocate for the plaintiff and that the plaintiff as well as about six bond holders will be permitted to see the report, but they shall not disclose the particulars set out in the said affidavit to any other persons, but if required it may be produced before any Court of Law or Statutory Authority, we are inclined to allow the appeal in the same terms.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]17. In Shah Babulal Khimji vs. Jayaben D. KaniaAnr., (1981) 4 SCC 8  , the Supreme Court has, inter alia, laid down the followingmay also be interlocutory orders which are not covered by Order 43 Rule 1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote. [Para 113(3)] The Courts must give sufficient allowance to the Trial Judge and raise a presumption that any discretionary order which he passes must be presumed to be correct unless it is ex facie legally erroneous or causes grave and substantial injustice. [Para 119(1)]After giving the illustrative examples of the orders which may be treated as judgments, the Supreme Court made the following pertinentWe have by way of sample laid down various illustrative examples of an order which may amount to judgment but it is not possible to give such an exhaustive list as may cover all possible cases. Law with its dynamism, pragmatism and vastness is such a large ocean that it isApplying the aforesaid principles, we find considerable substance in the submission made on behalf of thethat if a copy of the valuation report is not given to the plaintiff in advance, grave and substantial injustice will be caused to the plaintiff, particularly to the bond holders for whom the plaintiff is the trustee, who have not been paid a single farthing against their dues of Rs.450 crores, inspite of the fact that defendant No.1 has sold its MSD business ostensibly for the purpose of repayment of the bonds subscribed by the bondholders. In fact in the affidavit in reply dated 17 October 2011 filed by defendant No.1 in the City Civil Court it was specifically stated that upon sale of the MSD business of defendant No.1 company the sale proceeds will be applied towards redemption of the bonds.In the above view of the matter, this Court has no hesitation in holding that the impugned order of the learned trial Judge causes grave and substantial injustice. The learned trial Judge has decided an important aspect of the trial in the Chamber Summons by rejecting the plaintiffs prayer for being supplied with a copy of the valuation report in advance. The adverse effect of the impugned order on the plaintiff as explained above is direct and immediate, rather than indirect or remote.We must also place on record that on 22 March 2012 as well as today when the hearing commenced the learned counsel for the defendants were offered inspection of the valuation report contained in the sealed envelope in order to point out whether the contents of any part of the valuation report (other than page 8) contains, according to the defendants, any confidential information. Learned counsel for the defendants, however, stated that he himself is not an expert. Thereupon the Court has permitted the learned counsel for the defendants to enquire from their clients, but the learned counsel for the defendants has not accepted the said offer also.24. Having heard the learned counsel for the parties and having gone through the valuation report and also having gone through the previous orders of this Court particularly order dated 25 November 2011 whereby this Court had directed that a copy of the affidavit containing disclosure about the sale of MSD business of defendant No.1 company be handed over to the learned Advocate for the plaintiff and that the plaintiff as well as about six bond holders will be permitted to see the report, but they shall not disclose the particulars set out in the said affidavit to any other persons, but if required it may be produced before any Court of Law or Statutory Authority, we are inclined to allow the appeal in the same terms.