Case: Sanwarlal Agrawal and Ors Vs. Ashok Kumar Kothari and Ors

2. The matter arises this way. The Respondents are the plaintiffs and decree holders. The Appellants (the Agrawals; the Agrawal Group) are the defendants and judgment debtors. Plaintiff Nos. 1 to 5 (the Kotharis) hold 50% of the equity in Plaintiff No. 6 a company known as Specialty Ear, Nose, Throat Hospital Pvt. Ltd. Hospital (the Company). Of necessity, the Company is a judgment creditor in one execution application and a judgment debtor in the other. The Agrawal Group holds the remaining 50% equity in the Company.3. The Company was granted a land for a specific purpose of a super-speciality hospital. The joint venture between the Kotharis and the Agrawals was to set up this multi-speciality hospital. Before the disputes actually broke out, each group had advanced an interest-free loan of roughly 10 crores to the Company. Each party had a share capital of Rs. 3,11,77,500/-. The two loans were roughly about Rs. 10.35 Crores. According to the Kotharis, there was an agreement by which the Agrawals were required to sell their stake in the Company to the Kotharis. That there was an agreement is undisputed. At what amount or for what consideration the Kotharis were to buy out the Agrawals lies at the heart of the dispute. The Kotharis claim that the agreed amount covered not only the purchase by the Kotharis of the Agrawals shares in the Company, but also the Agrawals loan to the Company (meaning, of course, that once the entire amount was paid, the Agrawals could not seek repayment of the loan from the Company). The Kotharis say this was the agreement recorded in an email dated 28 March 2019 addressed by Dr. Vikas Agrawal, Defendant No. 2, and which is said to have incorporated an understanding arrived at the previous day, 27th March 2019. As we shall presently see, on account of certain email correspondence, the Plaintiffs had filed a Notice of Motion for a judgment and decree on admission but this never came to be pressed because the Defendants submitted directly to a decree. Dr. Vikas Agrawal was present in Court at the time of the decree.4. Before we turn to the impugned judgment, it is necessary to understand clearly what is it that the Kotharis sought in their suit. The decree itself was of 5th August 2019, and it was in terms of prayer clauses (a), (b), (c) and (d) of the plaint. These prayers are reproduced in the impugned order (while reproducing the decree) at pages 49 and 50.(a) That this Honble Court be pleased to declare that the said agreement arrived at on March 27, 2019 which is reduced to writing by the defendant no. 2 and is recorded by the email dated March 28, 2019 in respect of the 50% shares held by the Agarwal Group in the capital of the plaintiff no. 6 is valid, subsisting and binding upon the defendants and upon persons claiming by, through or under the defendants;(b) That this Honble Court be pleased to order and decree the defendant to specifically perform the said agreement arrived at on March 27, 2019 for sale of the 50% shareholding of the defendants in the plaintiff no. 6 as reduced into writing and as recorded by the email dated March 28, 2019 of the defendant no. 2 inter alia by:(i) executing, signing and attesting all necessary deeds and documents necessary to transfer, assign and vest the fifty percent shareholding of the defendants in the plaintiff no. 6 in favour of the plaintiffs or their nominees;(ii) handing over original title deeds, documents and writings in respect of the suit plot which are lying with the defendant no. 2 and in the locker to be operated jointly by the defendant no. 2 and the plaintiff no. 2 to the plaintiffs.(iii) doing or causing to be done all acts, deeds, matters and things and to sign, execute and register all deeds, documents and writings as may be necessary for the transfer of the said 50% shares of the Agarwal Group to the plaintiff nos. 1 to 5 and/or their nominees free of all claims of the defendants.(iv) Tendering their resignation from Directorship of the plaintiff no. 6 company.(c) That this Honble Court be pleased to order and decree the defendants to do or cause to be done all acts, deeds, matters and things and to sign and execute all deeds, documents or writings necessary under the supervision of this Honble Court for the purposes of the order of specific performance or to give effect to the reliefs sought in terms of prayer (b) above.(d) That for the purposes aforesaid all inquiries be made, awards be made, orders be passed, directions be given and accounts be taken as this Honble Court may deem just and proper in the facts and circumstances of the case.5. We may also reproduce the prayers in the Notice of Motion for a decree on admission under Order XII 12 Rule 6 of the Code of Civil Procedure, 1908. We find these at pages 50 to 55:A. That this Honble Court be pleased to pass a decree on admission under Order XII Rule 6 of the Code of Civil Procedure, 1908 that:(i) the defendants have admitted that there is a valid and subsisting agreement dated March 27, 2019 between the parties to this suit;(ii) the defendants have admitted the contents of their email dated March 28, 2019 which contains the terms and condition of the agreement between the parties to this suit;(iii) the entire consideration payable to the defendants by the plaintiffs is the sum of Rs. 36.75 crores which includes repayment/refund of the unsecured loans of the defendants on the Books of Accounts of the plaintiff no. 6 and the sale by transfer of the entire 50% shareholding of the defendants in the plaintiff no. 6 in favour of the plaintiff nos. 1 to 5.B. That this Honble Court be pleased to pass a decree on admission of the defendants that the agreement arrived at on March 27, 2019 is to be performed by payment by the plaintiff nos. 1 to 5 to the defendants of the sum of Rs. 36,75,00,000/- (Rupees Thirty-six Crores Seventy-five lakhs only) within 120 days of the order which may be passed by this Honble Court.(i) in consideration of the transfer of the entire shareholding and proportionate share of the assets of the defendants in the plaintiff no. 6 and;(ii) in consideration of the satisfaction and full and final payment of all debts and liabilities owed to the defendants by the plaintiff no. 6 and;(iii) in consideration of the defendants declaring that they have no subsisting right, title or interest whatsoever; either directly or indirectly, in any of the assets, rights and liabilities of the plaintiff no. 6.(C) That this Honble Court be pleased to pass an order and decree of specific performance of this Honble Court ordering and decreeing the defendants to specifically perform the said agreement arrived at on March 27, 2019 for sale of the 50% shareholding of the defendants in the plaintiff no. 6 as reduced to writing and as recorded by the email dated March 28, 2019 of the defendant no inter alia by,(i) executing, signing and attesting all necessary deeds and documents necessary to transfer; assign and vest the fifty percent shareholding of the defendants in the plaintiff no. 6 in favour of the plaintiffs or their nominees;(ii) handing over original title deeds, documents and writings in respect of the suit plot which are lying with the defendant no. 2 and in the locker to be operated jointly by the defendant no. 2 and the plaintiff no. 2 to the plaintiffs;(iii) doing or causing to be done all acts, deeds, matters and things and to sign, execute and register all deeds, documents and writings as may be necessary for the transfer of the said 50% shares of the Agrawal Group to the plaintiff nos. 1 to 5 and/or to their nominees free of all claims of the defendants;(iv) Tendering their resignation from Directorship of the plaintiff no. 6 company.(D) In the alternative and without prejudice to prayers (A) to (C) above, if the defendants are desirous to perform the agreement arrived at on March 27, 2019 by themselves then in that event, this Honble Court be pleased to direct the defendants to pay to the plaintiffs an amount of Rs. 43,46,52,700/- (Rupees Forty-three crores forty-six lakhs fifty two thousand seven hundred only) in terms of clause 4 of the agreement dated March 27, 2019 for,(i) transfer of the entire shareholding and proportionate share of the assets of the plaintiff nos. 1 to 5 in the plaintiff no. 6 and;(ii) in consideration of the satisfaction and full and final payment of all debts and liabilities owed to the plaintiff nos. 1 to 5 by the plaintiff no. 6 and;(iii) in consideration of the plaintiff nos. 1 to 5 declaring that they have no subsisting right, title or interest whatsoever, either directly or indirectly, in any of the assets, rights and liabilities of the plaintiff no. 6.

Reasoning:
7. The consequence of this is immediately obvious. If what Mr. Samdhani says for the defendants in appeal before us is correct, then the Kotharis payment of around Rs. 36 Crores is only for the equity shares of the Agrawals. The recovery of the Rs. 10.55 Crores by the Agrawals from the Company stands outside this transaction. Mr. Samdani maintains that on any reading of even the plaint as it stands, there is absolutely no ambiguity and no reason for anyone to misconstrue decree that was ultimately passed.9. What is equally important is the statement in the plaint that the conditions and the terms of the agreement arrived at on 27th March 2019 were recorded in an email by the defendants themselves specifically Dr. Vikas Agrawal on 28th March 2019. This email is really the centre of the attack on the impugned order. We find a copy of this at page 541 with a legible copy annexed immediately thereafter. This email confirms at least to this extent that there were counter bids and that bid of the Kothari group 5% higher at Rs. 36.75 crores. This is stated to be the consideration and the consolidated price. It is then said later in the same email that when the parties met Mr. Shrimali, their common friend or second mediator, the Kotharis confirmed that they would purchase the Agrawals stake at Rs. 36.75 Crores. We note that the prayers in the suit make reference not only to the email of 28th March 2019, but also to the agreement of the preceding date 27th March 2019.10. There are thus two aspects to this before us. There is the agreement of 27th March 2019, and there is the email of 28th March 2019. The Agrawals do not of course deny 28th March 2019 email. They also do not dispute that there was an agreement of 27th March 2019. But they do contend that it is not the agreement as set out in paragraph 12 of the plaint i.e. that the Agrawals loan to the Company was not part of the consolidated consideration payable by the Kotharis to the Agrawals.Mr. Samdani submits that there is no averment or pleading of a variation or modification of the written agreement and that it is impermissible to add to the terms of the written agreement.We do not think this submission is validly taken because what is being urged by the plaintiffs is not a oral agreement that followed a written agreement but the other way around: that is to say, a written agreement that followed a previous oral understanding. This makes all the difference to the case at hand.11. These points seem to have been laboured to a very great extent before the learned Single Judge. We have been taken through a series of emails which we will now consider because it is Mr. Samdanis case that even in email correspondence, the Kotharis had agreed that the loan repayment was not part of the transaction, but instead agreed that the loan repayment was a mere modality. We do not think this is a fair reading of these emails. The first of these emails after 28th March 2019 is a reply by the Kotharis at pages 544/544A.14. We come next to an email of 19th April 2019. Here, Mr. Kothari referenced the previous two emails and said he had put forth suggestions for procedures and modality.Mr. Samdanis submission is that it is inconceivable that a loan amount of Rs. 10 Crores would be merely a modality or a procedure.We find that this submission is misplaced because in at least one previous email, the one dated 29th March 2019, in paragraph 4, the Kotharis suggested what precisely they meant by modalities viz., either following an escrow methodology or protocol or some other payout system. We do not believe it is possible to equate the agreed consideration with the modality for effecting payment. It is not correct to say that the Kotharis accepted that the loan payment was only a modality and not part of the consideration.15. The learned Single Judge in his discretion considered the pleadings in the plaint and on which the prayers in the suit were based and on which the decree was passed. He noted that there was no reply to the Notice of Motion and no attempts to enter a written statement to traverse any portion of the plaint. This is not in our view a question of an executing court attempting to go behind the decree. It is a case where the executing court endeavoured to ascertaining what was the decree that was passed. No attempt was made by the learned single Judge to go behind the decree to see if it was properly passed. He only endeavoured to see what the decree passed actually was. Indeed an executing court must know precisely what was the decree because otherwise it cannot fulfil its purpose as the court in execution.16. In Bhavan Vaja &Ors. v. Solanki HanujiKhodajiMansang&Anr., (1973) 2 SCC 40  the Supreme Court was considering a question of the jurisdiction of the executing court; and, specifically, whether it can go behind the decree. In paragraph 20, the Supreme Court said:20. It is true that an executing court cannot go behind the decree under execution. But that does not mean that it has no duty to find out the true effect of that decree. For construing a decree it can and in appropriate cases, it ought to take into consideration the pleadings as well as the proceedings leading up to the decree. In order to find out the meaning of the words employed in a decree the Court, often has to ascertain the circumstances under which those words came to be used. That is the plain duty of the execution Court and if that Court fails to discharge that duty it has plainly failed to exercise the jurisdiction vested in it.17. Plainly, this is what the learned Single Judge did when he looked at the necessary averments in the plaint. We therefore do not find fault with the learned Single Judge in his approach in assessing the averments in the plaint. As the learned Single Judge noted, had there been a denial of anything stated in the plaint in any manner whatsoever that is to say, if not in a written statement at least in an Affidavit in Reply to the Notice of Motion for a decree on admission or even in correspondence post-suit matters might have been on a different footing.18. At page 62 in paragraph 31 (and elsewhere), the learned Single Judge clearly identified his task as being to construe the decree not go behind it. It is true that the since the Motion was not pressed the learned Single Judge did not consider the reliefs in it perhaps rightly so. There is also good reason for that. The Motion would have been triggered by a statement made in correspondence after the suit was filed. It is for this reason that its prayers would not have necessarily have matched those in the plaint. The fact that it separately mentioned the loan amount is almost entirely immaterial when one sees paragraph 12 of the plaint.19. It is for this reason that the learned Single Judge concluded that the amount payable to the Agrawals would include the amount of the loan.20. It does seem to us in conclusion that the approach of the Agrawals in contesting the nature of the decree after submitting to it, without any denial or traverse of the plaints averments, is perhaps a piece of cleverness that should not be countenanced by any equity-minded court. The Agrawals knew perfectly well what the Kotharis were saying in paragraph 12 of the plaint. They knew exactly what the Kotharis meant when they said that the email of 28th March 2019 was in terms of the oral agreement of the day before. Any ambiguity about this is eliminated by the Kotharis email of 29th March 2019 at page 545, which explicitly set out in paragraph 3 what consideration meant. To this, too, there is no denial. To say now that the decree is not what it was but something else is a case of not of the Kotharis but of the Agrawals wanting the court to go behind the decree. It is an attempt to alter the decree completely to something it never intended to be.21. There is no dispute that 5% of the decretal amount has been sent by the Kotharis to the Agrawals and has been encashed.22. The view of the learned Single Judge is not just a plausible view within the frame of the decision of the Supreme Court in Wander Ltd. v. Antox India Pvt. Ltd., 1990 (Supp) SCC 727 emphatically reaffirmed by the Supreme Court in Mohd. Mehtab Khan v. Khushnuma Ibrahim Khan. (2013) 9 SCC 221 . In our view, it is the only that could have been passed in the facts and circumstances of the case.