Deflecting the course of judicial proceedings is an abuse of Judicial proceedings : Delhi High Court

 IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: September 21 2020 Decided on: January 12 2021 CS(COMM) 1319 2018 ALTICO CAPITAL INDIA LIMITED Plaintiff Represented by: Mr.Gopal Jain Sr.Advocate with SARE GURUGRAM PRIVATE LIMITED & ORS...... Defendants Represented by: Mr.Rajshekhar Rao Ms.Pooja Mehra Mr.Amit K Mishra Mr.Akshat Hansaria Ms.Manasi Chatpalliwar Ms.Etisha Srivastava Mr.Tushar Bhatnagar and Ms.Astha Ahuja Advocates. Saigal Mr.Amit Singh Chauhan Ms.Gauri Puri Mr.Anandh Venkataramani and Mr.Hemant Chauhan Advocates for defendant No.4. Mr.Krishanu Barua and Mr.Sahil Monga Advocates for defendant Mr.Ashim Sood Mr.Prabhav Shroff Mr.Apoorva Gupta and Mr.Rhythm Buariah Advocates for defendant Mr.Vijay Nair and Mr.Manoranjan Sharma Advocate for Intervenor Wafra Capital in OA No. 23 2020. HON BLE MS. JUSTICE MUKTA GUPTA I.A. 17846 2018I.A. 199 2019I.A. 10 2020CS(COMM) 1319 2018 This suit has been filed by Altico Capital India Ltd.impleading 14 defendants that is SARE Gurugram Pvt. Ltd. Ramprastha SARE Landholding Company Two Pvt. Ltd. Ramprastha SARE Landholding Company Five Pvt. Ltd.SARE Public Company Ltd.(in short „SARE Cyprus‟) Avon Infracon Pvt. Ltd. in short „Avon‟) Brilliant SARE Realty Pvt. Ltd. Impact SARE Magnum Townships Pvt. Ltd. SARE Realty Projects Pvt. Ltd.SARE Cyprus) SPVLtd.SARESPV (in short „SARE Cyprus SPV 11‟) SARE Cyprus Ltd. SARE Realty Singapore Lte Ltd. (all group companies of SARE Group) Axis Trustee Services Ltd.and Vistra ITCLLimitedas defendant Nos. 1 to 14 respectively. In the suit the plaintiff inter alia prayed for a decree of permanent injunction against the defendantsrestraining them from acting in breach of the Facility Agreement with respect to changing its management shareholding restructuring both corporate and capital and charter documents without prior consent of the Plaintiff directly or indirectly restraining the defendants from acting in breach of the following agreements with respect to changing its management shareholding restructuring both corporate and capital and charter documents without prior consent of the plaintiff directly or indirectly viz Amendment dated 24th November 2016 to Debenture Trust Deed dated 4th December 2015 Memorandum of Hypothecation executed by Defendant Nos.1 2 & 3 dated 3rd November CS(COMM) 1319 2018 2016 Unattested Share Pledge Agreement dated 24th November 2016 executed by Defendant Nos.2 & 3 Corporate Guarantee executed by Defendant Nos.2 & 3 dated 24th November 2016 Corporate Guarantee executed by Defendant No.8 dated 2nd March 2017 Unattested Share Pledge Agreement dated 2nd March 2017 executed by Defendant No.8 Memorandum of Hypothecation executed by Defendant Nos.1 2 & 3 dated 24th November 2016 Debenture Trust Deed dated 11th April 2017 restraining the Defendant Nos. 1 2 3 & 8 from changing its board of director management of shareholding restructuring both corporate and capital charter documents without prior approval of the Plaintiff directly or indirectly viz. and acting in breach of the agreements executed in furtherance of the Facility Agreement and Debenture Trust Deed restraining the defendant Nos. 4 5 6 & 7 from changing its management capital structure or shareholding under the Facility Agreement dated 14th May 2018 without prior consent of the Plaintiff directly or indirectly restraining Defendant No.8 from changing its management and control without the prior consent of the Plaintiff directly or indirectly under the Deed of Corporate Guarantee dated 14th May 2018 and Unattested Share Pledge agreement under the Facility Agreement dated 14th May 2018 and Corporate Guarantee and Unattested Share Pledge Agreement under the Debenture Trust 2. Briefly the case of Altico is that Altico and KKR India Asset Finance Pvt. Ltd.entered into a Facility Agreement dated 14th May 2018 with SARE Gurugram. Under the Facility Agreement Altico along with KKR India the lenders of the Facility sanctioned a loan of ₹100 crores to SARE Gurugram out of which loan amount of ₹60 crores was CS(COMM) 1319 2018 extended by Altico and ₹40 crores by KKR India. In addition to the Facility Agreement Altico had previously also disbursed money to SARE Gurugram and debentures in this regard were issued in favour of Altico under the Debenture Trust Deed dated 4th December 2015and a Debenture Trust Deed dated 24th November 2016. Altico had also disbursed money to SARE Realty and in this regard debentures were issued in favour of Altico under Debenture Trust Deed dated 11th April 2017. As a term of the Facility Agreement dated 14th May 2018 defendant Nos.1 to 12 were required to create interest in form of mortgage charge pledge lien hypothecation assignment by way of security Deed of Trust or any other encumbrances on the secured assets in orders to secure the facility loan and confer priority to the payment of Altico and other lenders. Consequently parties executed various ancillary agreements with the lenders appointed security trustees that is Axis Trustee and Vistra. After the first disbursement of the loan amount under the Facility Agreement the guarantors had a period of one year to duly execute mortgage documents in relation to the lands at Panvel Indore and Amritsar along with the guarantees. Further in terms of the facilities defendant Nos.1 to 9 had undertaken to seek the consent of Altico before carrying out any change in their management corporate structure or charter documents. According to Altico thus under the expressed terms of the Facility Agreement defendants were restrained from changing their Board of Directors Management or the shareholding without a prior written consent of the plaintiff Altico. According to Altico Receiver of SARE Cyprus had already appointed Directors in SARE Cyprus Ltd. and Altico apprehended that the receiver may make changes in the management of various CS(COMM) 1319 2018 defendants except SARE Cyprus SARE Cyprus Ltd. Axis Trustee and Vistra in violation of the various agreements as mentioned in the suit in relation to the credit facility. It was thus the case of Altico that any change in the Board of Directors or Management of defendant Nos.1 to 9 would result in loss to Altico and affect the security creation in its favour. Consequently Altico sought the reliefs as noted above. 4. When the suit came up before this Court on the first date of hearing that is 24th December 2018 this Court based on the representation on behalf of Altico passed the following order in I.A.17846 2018 This is an application under Order XXXIX Rule 1 & 2 of Code of Civil Procedure 1908 seeking ex parte ad interim injunction restraining the defendants from acting in breach of the Facility Agreement and other ancillary agreement with respect to changing its management and shareholding without prior consent of the plaintiff directly or indirectly. While the application has several prayer clauses learned senior counsel for the plaintiff at this stage submits that he will be restricting his claim to the interim injunction as prayed above. Learned senior counsel for the plaintiff submits that he had entered into a Facility Agreement on 14.05.2018 and other ancillary agreement with SARE Gurugram Private Limited and other companies i.e. defendant nos.1 to 12. It is submitted that the Facility Agreement created a negative covenant wherein clauses 2.12 and 3.6 of Schedule 6 required a prior mandatory consent of the Lenders in order to make any change in management of defendant no.1 as well as „Third Party Security providers‟ and „SARE groups‟. The relevant clauses are as under: “2.12 Merger The Company the Third Party Security providers and CS(COMM) 1319 2018 SARE group shall not except with the prior consent of all the lenders allow any changes to the management of the Company or the Third Party Security providers or the Sare Group as the case may and or enter into any arrangements with its shareholders or creditors or implementation of any scheme or proposal or taking of any action restructuring for or allowing any reconstruction consolidation amalgamation merger demerger or re schedulement of its debts 3.6 Other Negative Covenants Without the prior written approval of the Majority Lenders the Company shall not…. bb) any direct or indirect change in management and Control of the Company Sare Two or Sare Five or It is submitted by learned senior counsel for the plaintiff that they understand from Defendant no.1 that in exercise of its power the Receiver of Defendant no.4 has already appointed his Directors in Defendant no.11. The plaintiff apprehends that the Receiver will now make changes in the management of the Defendants in violation of the Facility Agreement and various other agreements which would cause irreparable harm and injury to the plaintiff. Learned senior counsel for the plaintiff has very fairly filed a copy of the order dated 12.10.2018 passed by the learned Single Judge of this Court in CS11718 by SARE Public Company Ltd. through its Receiver wherein an injunction has been granted in favour of the plaintiff therein and against the defendant no.17 1319 2018 been made that „Altico are lenders from whom financial facilities are being availed by SARE Gurugram by encumbering the properties assets of SARE Public and its subsidiaries including Brilliant SARE Avon.‟ The prayer in the present injunction application is “to restrain the defendants from acting in breach of the Facility Agreement and other ancillary agreement with respect to changing its management shareholding directly or indirectly without the prior consent of the plaintiff.” I have gone through the relevant clauses extracted above. Clauses 2.12 and 3.6stipulate that Defendant nos.1 to 12 will not allow any change directly or indirectly in the management shareholding control of the companies without prior consent of the Lenders. A perusal of the order dated 12.10.2018 shows that injunction was granted to the limited extent of taking any further lien charge security mortgage and pledge over any of the assets of defendant nos.1 to 15 till the next date of hearing which is 28.01.2019 and does not extend to the relief sought in the present application. The plaintiff has made out a prima facie case in its favour and balance of convenience is also in its favour. This court is of the opinion that irreparable harm and injury will be caused if the relief of injunction as prayed above is not The Defendant nos.1 to 12 are hereby restrained from the management and shareholding directly or indirectly under the Facility Agreement dated 14.05.2018 and other ancillary agreements without prior consent of the plaintiff till the next date of hearing.” Contentions of learned counsel appearing on behalf of SARE Cyprus defendant No.4) seeking rejection of the plaint are two folds. Firstly in the entire suit though no cause of action is pleaded against SARE Cyprus however surreptitiously reliefs are sought by including SARE Cyprus in the averments and prayers. It is the case of SARE Cyprus that it is not a CS(COMM) 1319 2018 signatory to the Facility Agreement nor any other agreement even though it is the parent company of SARE Gurugram and it provided no security nor any collateral for the Facility Agreement. Further SARE Cyprus has never authorised SARE Gurugram to make any commitment undertaking on its behalf in the Facility Agreement including the negative covenant of no change in shareholding management of SARE Cyprus without prior consent of the plaintiff Altico. Secondly it is contended that since Altico had assigned the facilities to ACRE no cause of action subsisted in favour of Altico and the suit cannot be maintained by consenting to the impleadment of KKR India as a defendant in the suit. Contentions on behalf of SARE Cyprus in relation to I.A.199 2019 under Order XXIX Rule 4 CPC seeking vacation of the interim order against SARE Cyprus are that while seeking an interim order from this Court Altico suppressed material facts. Altico‟s cause of action was premised on the order dated 12th October 2018 passed in CSNo.1179 2018 titled as „SARE Public Company Ltd. vs. Sare Gurugram and others‟. However Altico failed to file the plaint and the necessary documents of the said suit as mandated under Order VII Rule 14 CPC intentionally and deliberately suppressing material documents. Further after appointment of the receiver of SARE Cyprus none of the defendants of SARE Group can create any security mortgage pledge dispose of any property enter into or sign any new contracts or agreements etc. without first obtaining the receiver‟s written consent. Thirdly that on the date of signing of the Facility Agreement only two Directors were on Board in SARE Cyprus both of whom resigned on 29th August 2018 and thus under the Companies Law of Republic of Cyprus there was an urgent need to CS(COMM) 1319 2018 appoint atleast two Directors on the Board of SARE Cyprus. Learned counsel for SARE Cyprus further states that despite the fact that the cause of action in favour of Altico allegedly arose on 12th October 2018 when a suit was filed by the Receiver of SARE Cyprus being CS Comm.) No.1179 2018 and an ex parte ad interim order was passed restraining SARE Entities from creating any lien charge or encumbrances on their assets in furtherance of the Facility Agreement the said interim order dated 12th October 2018 was not filed along with the plaint but a copy of the order was merely handed over across the Bar at the time of hearing. Therefore even the document which forms the fundamental basis of cause of action of Altico was not filed along with the plaint. 8. Mr.Rajshekhar Rao learned counsel for SARE Cyprus relies upon the decisions reported as 2006 SCC 100 Mayar Ltd. & Ors. vs. Owners and Parties Vessl M.V. Fortune Express & Ors. 8 SCC 706 Church of Christ Charitable Trust & Educational Charitable Society vs. Poniamman Education Trust 1977SCC 467 T. Arivandandam vs. T.V. Satyapal & Anr. 1998SCC 70 I.T.C. Ltd. vs. Debts Recovery Appellate Tribunal & Ors. 1998DRJ DB 109 Satish Khosla vs. Eli Lilly Ranbaxy Ltd. 2012DRJ 108Raj Kumari Garg vs. SM Ezaz & Ors. AIR 2005 Mad 72 Suguna Poultry Farm Ltd. vs. Arul Maniamman Textiles Ltd. Reliance is also placed on the decision reported as ILR 1987 Delhi 210 Pratap Chand Mehta vs. Krishna Devi Mehta to contend that when the suit is not maintainable it cannot be allowed to continue by a subsequent application for substitution or addition of parties. According to learned counsel for Altico one of the condition precedent for entering into the Facility Agreement with SARE Gurugram CS(COMM) 1319 2018 was that all companies of SARE Group shall not without the prior consent of all the lenders allow any changes to the management of these companies. In terms of Clause 2 of the conditions precedent SARE Cyprus passed the Board Resolution dated 20th April 2018 which was signed by the Director of SARE Cyprus consenting to the issuance of corporate guarantee in terms of the Facility Agreement. Thus SARE Cyprus was bound by the terms of the Facility Agreement. Further the present suit was not filed by Altico to enforce its security under the Facility Agreement or any other independent guarantee but to enforce a negative covenant restraining the change in the management and control of SARE Cyprus and other defendants without prior consent of Altico. It is further contended that a statement made by a subsidiary company that is SARE Gurugram will bind the parent company that is SARE Cyprus. 10. Relevant clauses of Facility Agreement on which Altico basis its claim are reproduced herein under: “SCHEDULE 2 CONDITIONS PRECEDENT PART A CONDITIONS PRECEDENT TO EXECUTION 1. CORPORATE b) A copy of resolution of the board of directors of the Company relevant Guarantors relevant Pledgers terms of and contemplated by the Facility Documents and resolving that it execute the Facility Documents to which it is a party ii) authorizing a specific Person or Persons to execute the Facility Documents to which it is a party on its behalf iii) authorizing a specific Person or Persons on its behalf to sign CS(COMM) 1319 2018 and or dispatch all certificates documents and notices to be signed and or dispatched by it under or in connection with the Facility Documents to which it is a party. SCHEDULE 6 COVENANTS AND UNDERTAKINGS 2. GENERAL UNDERTAKINGS 2.12. MERGER The Company the Third Party Security Providers and Sare Group shall not except with the prior consent of all the Lenders allow any changes to the management of the Company or the Third Party Security Providers or the Sare group as the case maybe and or enter into any agreements with its shareholders or creditors or implementation of any scheme or proposal or taking of any action for or allowing any restructuring reconstruction consolidation amalgamation merger de merger or reschedulement of its debts any direct or indirect change in management and Control of the Company Sare Two and Sare Five." 11. This Court during the course of arguments sought a specific reply from learned Senior Counsel for Altico as to whether SARE Cyprus was a signatory to the Facility Agreement or any ancillary or supplementary agreement or guarantee. The answer on this query was in the negative. It was however stated that even though SARE Gyprus was not a signatory to the Facility Agreement or any other ancillary agreement SARE Cyprus had passed the Board Resolution dated 20th April 2018 signed by the Director of SARE Cyprus consenting to the issuance of corporate guarantee in terms of the Facility Agreement. Thus SARE Cyprus was bound by its Board Resolution. When this Court wanted to peruse the said Board Resolution learned counsel for Altico stated that this document was not filed by Altico CS(COMM) 1319 2018 along with the plaint however the same was filed by KKR along with I.A.494 2019 for impleadment in the suit as KKR had not been originally impleaded as a defendant by Altico. I.A.494 2019 came up before this Court on 16th January 2019. Admittedly no advance copy of this application was served on learned counsel for SARE Cyprus and was served only on learned counsel for Altico. The said application was allowed permitting impleadment of KKR under Order I Rule 10 CPC based on the no objection furnished by learned counsel for Altico on 16th January 2019 itself. Hence SARE Cyprus had no knowledge of this purported Board Resolution since the same was never served on SARE Cyprus or its counsels. 13. For the first time the purported Board Resolution of SARE Cyprus dated 20th April 2018 signed by Mr.Michael Henry O‟ Sullivan resolving the issuance of the corporate guarantee for securing the repayment of monies to the lenderas a condition precedent in terms of Schedule 2 of the Facility Agreement was referred to and relied upon by learned counsel for the plaintiff Altico during the course of hearing in these applications. 14. Learned counsel for SARE Cyprus took instructions and it was revealed that the person who signed the said resolution that is Mr.Michael Henry O‟ Sullivan was never a Director of SARE Cyprus. When learned counsel for Altico was confronted with this fact learned counsel for plaintiff Altico had no reply to the same. Hence the reliance on behalf of Altico on the purported Board of Resolution dated 20th April 2018 which never formed part of the documents of the plaint is wholly unwarranted as the same is not a genuine document. 15. For the facts noted above contention on behalf of Altico while CS(COMM) 1319 2018 seeking an ex parte ad interim injunction before this Court on 24th December 2018 that Altico had entered into the Facility Agreement on 14th May 2018 and other ancillary agreement with the defendant Nos.1 to 12 was incorrect in so far as SARE Cyprus was concerned for the reason there was neither any agreement nor any board resolution of the SARE Cyprus authorising SARE Gurugram or any other person to incur obligation on behalf of SARE Cyprus. In para 20 of the plaint Altico has stated that the defendants were mandated with multiple obligations under the Facility Agreement dated 14th May 2018 arrived at between Altico KKR and SARE Gurugram. SARE Gurugram was thus required to create security and obligations were imposed on the guarantors. As per para 24 of the plaint in terms of the negative covenants the third party security providers which included defendant Nos.2 3 4 5 6 and 7 were bound by the negative covenants. In sub paras a) to of para 25 of the plaint Altico has enumerated the guarantees mortgages and agreements termed as ancillary agreements executed by the various defendants however there is no mention whatsoever of any agreement undertaking mortgage or guarantee executed by SARE Cyprus. Again in paragraph 36 of the plaint Altico claims that the defendants executed various ancillary agreements with defendant No.13 that is Axis Trustee on behalf of Altico which restricted the defendants from changing its management without a prior notice to the security trustee or the lender. It would be further relevant to note that though there was no agreement with SARE Cyprus in para 36 of the plaint Altico specifically stated that the defendants had even executed various ancillary agreements stated above with the CS(COMM) 1319 2018 defendant No.13 Axis Trustee on behalf of Altico which specifically restricted the defendants from changing its management without prior notice to the security trustees or the lenders. While dealing with the specific deeds of guarantee in para 38 39 40 41 and 42 of the plaint Altico nowhere refers to any specific deed of guarantee or the clauses thereunder with SARE Cyprus however in para 43 of the plaint again by general averments it is pleaded that the express clauses restrained the defendants which would include SARE Cyprus) from changing their board of directors management or shareholding without prior written consent of Altico or defendant No.13 Axis Trustee which is acting on behalf of the Altico. Similarly while mentioning ancillary agreements in para 67 of the plaint though no reference is made to any agreement with defendant No.4 SARE Cyprus however subsequently the acts agreements of the other defendants are also attributed to SARE Cyprus thereby including SARE Cyprus in the sweep with all the defendants. 18. Thus it is incorrectly noted in para 66 and other paragraphs of the plaint that the Facility Agreement imposes restrictions and negative covenants on third party security providers that is defendant Nos.2 3 4 5 6 and 7. 19. On pages 886 and 888 of the documents filed Altico has placed on record copies of the deeds unconditional irrevocable deed of guarantee executed to be executed by SARE Cyprus however the fact remains that no such guarantees were ever executed by SARE Cyprus. From the plain reading of the plaint it is evident that though there is no specific averment qua SARE Cyprus nor any specific undertaking MoU agreement guarantees etc. is attributed to be executed by SARE Cyprus CS(COMM) 1319 2018 oath. however in the sweep all defendants SARE Cyprus has been included in different paragraphs and thus injunction also sought against SARE Cyprus besides other defendants. Thus not only is the present suit where there is no cause of action against SARE Cyprus but the suit contains false and incorrect pleadings with concealment and suppression of material facts on 21. Despite specific pleadings in respect of SARE Cyprus in the plaint that a Receiver of Wafra has been appointed in respect of SARE Cyprus and a suit being CSNo.1179 2018 was filed wherein Altico and KKR were injuncted by this Court neither were the plaint and documents of the said suit filed nor Wafra impleaded by Altico rather when Wafra filed an application for impleadment the same was opposed by plaintiff Altico. 22. Further though Altico sought the prayers seeking restrain of the change of management against all the defendants the averments in the plaint in paras 87 and 88 of the plaint are as under: 88. 87. Thereafter Wafra appointed a Receiver on August 08 2018 to manage the affairs and assets of the Defendant No. 4 in reference of the Purchase Agreements dated April 28 2011 and Debenture dated April 28 2011 regarding the secured assets of the Defendant No.4. It is submitted that the Plaintiff understands from Defendant 1 that in exercise of its powers the Receiver of the Defendant No.4 has already appointed his directors in the Defendant No. 11. The Plaintiff now apprehends that the Receiver may make changes in the management of the various defendants except Defendant Nos. 4 11 13 and 14 in violation of the various agreements mentioned earlier in this suit entered into CS(COMM) 1319 2018 by the Defendants in relation to the credit facilities advanced by the Plaintiff. It is thus evident that Altico was aware that to manage the affairs and assets of SARE Cyprus Wafra has appointed a receiver on 8th August 2018 and in para 88 of the plaint specifically notes that the receiver of SARE Cyprus has already appointed its Directors in defendant No.11 SARE Cyprus Ltd. and Altico apprehended that the receiver may make changes in the management of the various defendants except defendant Nos.4 11 13 and 14 that is SARE Cyprus SARE Cyprus Ltd. Axis Trustee and Vistra respectively in violation of the various agreements however while seeking the relief in the prayer clause injunction is sought against all the defendants from changing their management Directors shareholdings etc. Similar averments had been made in para 11 of I.A.17846 2018 but in the prayer a sweeping interim injunction is sought against all the defendants. 24. Prayers(e) andof the plaint are as under: a. A decree of permanent injunction restraining the Defendants from acting in breach of the Facility Agreement with respect to changing its management shareholding restructuring both corporate and capital and charter documents without a prior consent of the Plaintiff directly or indirectly e. A decree of permanent injunction against Defendant No. 1 2 3 and 8 restraining them from changing its board of director management shareholding restructuring both corporate and capital and charter documents without prior approval of the Plaintiff and acting in breach of the agreements executed in furtherance of the Facility Agreement and the Debenture Trust h. A decree of permanent injunction against Defendant Nos. 4 5 6 and 7from changing its management capital structure or shareholding under the Facility Agreement dated May 14 CS(COMM) 1319 2018 2018 without a prior consent of the Plaintiff directly or 25. Though in prayer e Altico noted that relief was sought against defendant Nos. 1 3 and 8 however in prayer a injunction is sought against all the defendants. A perusal of the interim order passed by this Court reveals that these facts were not brought to the notice of this Court and a general sweeping order was sought restraining defendant Nos. 1 to 12 from changing the management and shareholding directly or indirectly under the Facility Agreement dated 14th May 2018 and other ancillary agreement without the prior consent of the plaintiff. In the decision reported as AIR 1994 SC 853 S.P.Chengalvaraya Naidu by LRs. Vs. Jagannnath by LRs. & Ors. Supreme Court clearly held that the Courts of law are meant for imparting justice between the parties and one who comes to the Court must come with clean hands. It can be said without hesitation that a person who‟s case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. Supreme Court noted that a litigant who approaches the Court is bound to produce all documents executed by him which are relevant to the litigation if he withholds the vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party. 27. Supreme Court in the decision reported as AIR 1998 SC 1297 K.K. Modi vs. K.N. Modi & Ors. explaining the expression “abuse of the process of the court” held that the same has to be understood in the context that the CS(COMM) 1319 2018 process of court must be used bona fide properly and must not be abused. Supreme Court noted: 43. The Supreme Court Practice 1995 published by Sweet & Maxwell in paragraphs 18 19 33 explains the phrase “abuse of the process of the court” thus: “This term connotes that the process of the court must be used bona fide and properly and must not be abused. The court will prevent improper use of its machinery and will in a proper case summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation. … The categories of conduct rendering a claim frivolous vexatious or an abuse of process are not closed but depend on all the relevant circumstances. And for this purpose considerations of public policy and the interests of justice may be very 28. In the decision reported as 1995SCC 421 Chandra Shahi vs. Anil Kumar Verma Supreme Court held: fairly and “1. The stream of administration of justice has to remain unpolluted so that purity of court s atmosphere may give vitality to all the organs of the State. Polluters of judicial firmament are therefore required to be well taken care of to maintain the sublimity of court s environment so also to enable it to the satisfaction of all 2. Anyone who takes recourse to fraud deflects the course of judicial proceedings or if anything is done with oblique motive the same interferes with the administration of justice. Such persons are required to be properly dealt with not only to punish them for the wrong done but also to deter others from indulging in similar acts which shake the faith of people in the system of administration of justice.” 29. As noted above the case of Altico in its pleadings specially qua SARE Cyprus is based on false and incorrect facts and finally Altico basis its case on a purported Board Resolution of SARE Cyprus which was a CS(COMM) 1319 2018 fabricated document. No cause of action has been shown in the plaint qua SARE Cyprus. There is concealment of material facts and documents and incorrect and false facts have been pleaded on oath. Without any agreement guarantee or any board resolution passed by SARE Cyprus Altico sought injunction and was granted injunction in the sweep of including it in all the defendants without SARE Cyprus being a privity to any of the contracts with Altico. Thus the present suit is a clear abuse of the process of the Court specially in so far as defendant No.4 SARE Cyprus. It is thus to be seen whether the present plaint can be rejected qua one defendant that is defendant No.4 SARE Cyprus. In the decision reported as 2012 SCC 706 Church of Christ Charitable Trust and Educational Charitable Society vs. Ponniamman Educational Trust one of the issue dealt by the Supreme Court was whether the Single Judge of the High Court was justified in ordering rejection of the plaint in so far as the first defendant was concerned. Supreme Court explaining what cause of action was upheld the judgment of the Single Judge in so far as it rejected the plaint qua one of the defendants. It was held that in the absence of any cause of action shown against the first defendant the suit cannot be proceeded against the first defendant and thus the plaint was rightly rejected as against the first defendant. 31. As noted from the facts above in the entire plaint no cause of action has been brought out against SARE Cyprus and by pleading causes of actions against various other defendants SARE Cyprus is sought to be brought in the sweep of all the defendants and reliefs sought against SARE Cyprus. Therefore the plaint is rejected qua SARE Cyprus defendant No.4 and SARE Cyprus is directed to be deleted from the array of parties. The CS(COMM) 1319 2018 interim order dated 24th December 2018 in application being I.A.17846 2018 under Order XXXIX Rule 1 and 2 CPC is vacated qua SARE Cyprus and is modified to this extent. 32. Consequently I.A. 17846 2018 I.A. 199 2019and I.A. 10 2020 are disposed of with a cost of ₹1 Lakh against Altico to be deposited in Delhi High Court Legal Services Committee within four week. JANUARY 12 2021 CS(COMM) 1319 2018 

Summary: Recourse to fraud, deflecting the course of judicial processes is an interference with the administration of justice and causes an abuse to the proceedings. This principle was asserted by the Delhi High Court in the case of Altico Capital India Limited vs. SARE Gurugram Private Limited [CS (COMM)1319/2018] by J. Mukta Gupta. In the suit, the Altico Capital India Limited inter alia prayed for a decree of permanent injunction against the defendants restraining them from acting in breach of the Facility Agreement, with respect to changing its management, shareholding, restructuring both corporate and capital, and charter documents, without prior consent of the Plaintiff, directly or indirectly. The plaintiff also pleaded injunction against restraining the defendants from acting in breach of the following agreements with respect to changing its management, shareholding, restructuring both corporate and capital, and charter documents, without prior consent of the plaintiff, directly or indirectly. In the decision reported as Chandra Shahi vs. Anil Kumar Verma, Supreme Court held: “The stream of administration of justice has to remain unpolluted so that purity of court’s atmosphere may give vitality to all the organs of the State. Polluters of judicial firmament are, therefore, required to be well taken care of to maintain the sublimity of court’s environment; so also to enable it to administer justice fairly and to the satisfaction of all concerned. Anyone who takes recourse to fraud, deflects the course of judicial proceedings; or if anything is done with oblique motive, the same interferes with the administration of justice. Such persons are required to be properly dealt with, not only to punish them for the wrong done, but also to deter others from indulging in similar acts which shake the faith of people in the system of administration of justice.”