Case Details

Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 1 of 7 O R D E R Below exhibit 4 (Delivered on this the 15th day of the month of September of the year 2017.) 1. Perused this application, the pleadings of the parties including affidavit in reply, rejoinder and sur-rejoinders and considered the arguments advanced by Ld. Sr. Advocate Shri S. Dessai on behalf of the plaintiff, Ld. Advocate Ms. M. Viegas on behalf of defendant nos. 1, 2 and 4 and Ld. Advocate Shri M. Dessai on behalf of defendant nos. 3, 5, 6 and 7. 2. The undisputed facts of this case is that the plaintiff company had advanced a total sum of `4,00,00,000/- to the defendant no.1 firm, which was engaged in the business of trading in iron ore. While the plaintiff have pleaded that it was a loan, according to the defendants, it was an investment. 3. It is also undisputed that the parties had executed a Memorandum of Understanding dated 01.09.2012 and a loan agreement with security, dated 06.08.2013, was also executed, with the defendant nos. 6 and 7 as pledgors and the property known as ‘Premiero Doncotto’ surveyed under no. 84/2 and 85/8 of Cuncolim village, except for part of property surveyed under no. 85/8 sold to defendant nos. 4 and 5 to defendant no. 2, was pledged as security and that the sale deed dated 14.06.2006 by which the defendant no.2 had purchased the plot 'A' from defendant nos. 4 and 5, thereby charging, pledging or mortgaging the said plot also to the plaintiff. 4. The plaintiffs, alleging that the defendant no.1 had defaulted in the repayment of the said amount as even the cheques issued towards the said repayment by the defendant no.1 were returned dishonoured, Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 2 of 7 have filed the suit praying for (a) a decree against the defendant nos. 1, 2 and 4 to jointly and severally pay to the plaintiff company sum of `6,40,00,000/- with interest on the principal amount from 01.08.2016 till actual payment of the principal amount at the rate of 45% per annum till payment; (b) for a decree of sale of the suit plot at a value to be determined by this Court or by appointing a competent Valuer for the purpose or by a Public Auction within 30 days from the date of decree directing the sale amount to be deposited in this Court and paid to the plaintiff company towards satisfaction on the amount decreed; (c) permanent injunction restraining the defendant nos. 2, 3, 6 and 7 their agents, servants, family members, relatives or any of them from directly or indirectly encumbering the suit plot and the suit property or wasting, damaging, alienating, selling the suit plot and the suit property or otherwise causing any injury to the plaintiff company in relation thereto. This application is to seek interim relief, in terms of prayer (c). 5. Ld. Sr. Advocate Shri S. Dessai, taking me through the above referred MOU and Agreement and, placing reliance on the judgment of the Apex Court in the case of State of Haryana Vs Navir Singh & anr., 2014 (1) SCC 105, has submitted that as the defendant no.1 has committed a default in the payment as contemplated by the agreement, the plaintiff was entitled to enforce the mortgage and sell the property. 6. Placing reliance on the judgment of the Hon’ble High Court in the case of M/s Gujarat Pottling Company Ltd. & ors. Vs. Coca Cola Co. & ors. 1995 (5) SCC 545, Ld. Sr. Advocate Shri S. Dessai submits that while exercising discretion of interlocutory injunction, the Court has to apply (i) whether the plaintiff has a prima facie case; (ii) whether the balance of convenience is in favour of the plaintiff; and (iii) whether the Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 3 of 7 plaintiff would suffer an irreparable injury if his prayer for interlocutory injunction is disallowed and that the relief by way of interlocutory injunction is granted to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved. 7. Ld. Sr. Advocate Shri S. Dessai submits that the plaintiff has sought for temporary injunction only to maintain status quo of the property till the time the suit is decided and therefore, this application be granted. 8. As against this, Ld. Advocate Ms. M. Viegas has submitted that the pleadings of the plaintiff are to the effect that the defendants were liable to pay the amounts to the plaintiffs and there is absolutely no averment in the plaint that the defendants were trying to alienate or sell or damage the property and therefore, had failed to make out a prima facie case and as such, the injunction, as prayed for, cannot be granted. 9. Ld. Advocate Ms. M. Viegas submits that the suit is actually a suit for recovery of money, the payment of which is secured and for this reason also, no temporary injunction can be issued. The learned advocate submits that at the most, it may be that the remedy for the plaintiff was and application under Order XXXVIII CPC but the plaintiffs had not made a ground for such relief also. 10. Ld. Sr. Advocate Shri M. Dessai had adopted the arguments of Ld. Adv. Ms. M. Viegas and has further submitted that there was no consideration received by defendant nos. 6 and 7 and therefore, the agreement with them is without consideration and null and void. Taking me through the agreement, Ld. Adv. Shri M. Dessai submits that for the Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 4 of 7 plaintiff to be entitled to the amount, a notice was required to be issued but no such notice is issued by the plaintiff to the defendant no. 1 and though one notice has been produced, the same was in respect of the dishonour of cheque and not in terms of Clause 4. 11. Ld. Sr. Advocate Shri S. Dessai, in rejoinder, has submitted that a perusal of the prayer shows that the suit was not for recovery and that the notice produced on record are in compliance with Clause 4 and therefore, the arguments of Ld. Advocate Shri M. Dessai that no notice is issued cannot be upheld. It is the contention of Ld. Sr. Advocate Shri S. Dessai that the advancing of the loan to the defendant no. 1 was the consideration for the agreement and it cannot be said that the agreement was null and void. 12. The question before me is whether the plaintiffs have made out a case for the grant of temporary injunction as prayed for. 13. Order XXXIX Rule 1 C.P.C. lays down that where in any suit it is proved by affidavit or otherwise (a) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree, or (b) that the defendant threatens, or intends, to remove or dispose of his property with a view to (defrauding) his creditors; and (c) that the defendant threatens to dispossess, the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit, the Court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal or disposition of the property (or dispossession of the plaintiff, or otherwise causing injury to the plaintiff Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 5 of 7 in relation to any property in dispute in the suit) as the Court thinks fit, until the disposal of the suit or until further orders. 14. In the case at hand, the pleadings of the plaintiff brings out that the plaintiffs had committed default in the payments under the loan agreement. However, except for averments that the defendant nos. 2, 3, 6 and 7 are not men of credibility and are capable of transferring their right to the suit property and create third party rights in relation thereto, there is absolutely no averment that the defendants threatened or intended to remove and dispose of the property or that the defendants were likely to waste, damage or alienate the property. Therefore, no case for relief under Order XXXIX Rule 1 is made out. 15. Order XXXIX Rule 2 (1) lays down that in any suit for restraining the defendant from committing a breach of contract or other injury of any kind, whether compensation is claimed in the suit or not, the plaintiff may, at any time after the commencement of the suit, and either before or after judgment, apply to the Court for a temporary injunction to restrain the defendant from committing the breach of contract or injury complained, of, or any breach of contract or injury of a like kind arising out of the same contract or relating to the same property or right. 16. As submitted by Ld. Advocate Ms. M. Viegas and Ld. Advocate Shri M. Dessai, the case of the plaintiff would also not come within the purview of Order XXXIX Rule 2(2) C.P.C. 17. Though the plaintiff has prayed for a decree of sale of the suit property, the prayer (a) is a prayer for recovery of a sum of `6,40,00,000/- with future interest. Clause 7 of the loan agreement with security, dated 06.08.2014, lays down that in case the borrower fails Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 6 of 7 and/or neglects to repay the amount of loan or the amount of interest on the due date it shall be lawful for the lender to sell or dispose off, at the cost and expenses of the borrower, all or some of the property either by way of private arrangement or in the open market and to apply the net proceeds thereof towards satisfaction of the amount of loan or the interest then outstanding. Therefore, as submitted by Ld. Adv. Ms. M. Viegas, the money was totally secured and as such, no temporary injunction, as prayed for in this application can be granted. 18. Further, Clause 4 of the said agreement stipulates that in case the lender i.e. plaintiff sends notice to the borrower i.e. defendant no. 1 to 2 to make good the margin in the property and the borrower fails and/or neglects to make good the margin within the stipulated period as mentioned in the notice, the Borrower shall be deemed to have committed default of the terms of the agreement and in that event it shall be lawful for the lender (but not compulsory) to demand from the borrower repayment of the loan alongwith the interest then outstanding and the borrower shall be liable to repay the loan in full along with interest thereon without any objection and/or demur. 19. Therefore, as pointed out by Ld. Advocate Shri M. Dessai, in view of Clause 4, the lender was first required to issue a notice to the defendant nos. 1 and 2 to make good the money and only in case the money was no paid, it would amount to a default by them. 20. Though the plaintiff has produced on record a notice dated 02.05.2015 addressed by Advocate Shri K.K. Takore to the defendant nos. 1, 2 and 4, this notice is issued demanding payment for the dishonour of the cheque bearing no.276321 for the amount of `1,91,76,000/- within 15 days failing which, the plaintiff has threatened to file criminal proceedings under Section 138 of the Negotiable Spl. Civil Suit (Comm) no.2/2017 Order Exh.4 Page 7 of 7 Instruments Act. I am therefore, unable to uphold the contention of Ld. Senior Advocate Shri S. Dessai that the said notice was the notice as contemplated under Clause 4 of the agreement. 21. I am therefore, of the considered view that the plaintiffs have failed to make out a prima facie case. Consequently, this application is hereby dismissed. Margao. Dated:15.09.2017. ( Edgar P. Fernandes ) District Judge-1, South Goa, Margao. MF/-

Spl.Civil Suit (Comm) no.2/2017 Order Exh.29 Page 1 of 1 O R D E R Below exhibit 29 (Delivered on this the 2nd day of the month of May of the year 2018.) 1. The plaintiffs have objected to this application only on the ground that the same is not maintainable. Ld. Adv. Ms. A. Jain, holding for Ld. Adv. M. Dessai on behalf of defendant nos. 3, 5, 6 and 7, has endorsed her no objection to the application. 2. By the proposed amendment, the defendant nos. 1, 2 and 4 are seeking to plead that no notice to recall the loan was issued and as such, the suit is not maintainable. The said pleading sought to be incorporated, does not in any manner change the nature of the defence. 3. Hence, application is hereby granted. Defendant nos. 1, 2 and 4 to carry out the amendment within a period of 14 days from today. Margao. Dated:02.05.2018. ( Edgar P. Fernandes ) District Judge-1, South Goa, Margao. MF/-

CNR NO.GASG01-000689-2017 Exh.44 Special Civil Suit (coml.) no.2/2017 page 1 of 2 O R D E R (below exhibit 44) (Delivered on this the 3rd day of the month of October of the year 2018). 1. The defendants have objected to the application on the ground that it is not verified in accordance with law and therefore to be dismissed. Ld. Adv. Joshi submits that the proposed amendment is to correct a typographical error and therefore, the same should be granted. 2. As against this, Ld. Adv. B. Fernandes submits that the application is not supported by the statement of truth as required by Commercial Courts Act and therefore cannot be granted. Ld. Adv. M. Dessai adopts the arguments advanced by Ld. Adv. B. Fernandes. 3. It is true that Order 6 Rule 15A(1), as duly amended by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 requires that every pleading in a commercial dispute shall be verified by an affidavit in the manner and form prescribed in the Appendix to the schedule. It is also true that the present application does not have such a verification as required by Rule 15A(1). 4. However Order 6 Rule 15A(3) lays down that where a pleading is amended, the amendment must be verified in the form and manner referred to in sub-rule(1) unless the Court orders CNR NO.GASG01-000689-2017 Exh.44 Special Civil Suit (coml.) no.2/2017 page 2 of 2 otherwise. Therefore, it is the amended pleading which will have to be verified in terms of Rule 15A(3) CPC. Therefore, I am unable to uphold the contention of Ld. Adv. B. Fernandes that this application, having not been verified by a statement of truth, cannot be granted. 5. Considering that the proposed amendments are only for the purpose of correcting the typographical errors, the same is required to be granted. 6. Hence application is hereby granted. The plaintiff to carry out the amendment within a period of one week from today. Margao Dated:03.10.2018 ( Edgar P. Fernandes ) District Judge-1 South Goa, Margao. Cg/-

CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 1 of 8 O R D E R (below exhibit 52) (Delivered on this the 18th day of the month of January of the year 2019). 1. The plaintiff has replied to this application stating that it is not maintainable as the provisions of Order 7 Rule 11 CPC are not attracted in this case. It is submitted that the notice dated 02.05.2016 was issued to the defendants and as such, the application deserves to be dismissed at limine. 2. Ld. Adv. Ms. M. Viegas has taken me through the plaint and Clause 4 of the Loan Agreement with Security dated 06.08.2013 and has submitted that the agreement contemplates the issue of a notice to the borrower and as in the case at hand, no notice as contemplated by Clause 4 was issued, there was no cause for the plaintiff to file the suit. 3. It is the contention of Ld. Adv. Ms. M. Viegas that the plaint states that the notice relied upon by the plaintiff to plead a cause of action was a notice issued under Section 138 of the Negotiable Instruments Act pursuant to which proceedings under section 138 were filed and therefore, was not the one contemplated under the said agreement. CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 2 of 8 4. Taking me through Clause 3 of the Memorandum of Understanding dated 06.08.2013, Ld. Adv. Ms. M. Viegas submits that the period for Memorandum of Understanding was seven years and therefore, no cause of action had arisen for the plaintiff. 5. The learned advocate has submitted that the reading of the plaint shows that it does not disclose a cause of action. 6. As against this, Ld. Sr. Adv. Shri S. Dessai has submitted that the application does not state the clause of Order 7 Rule 11 CPC under which it was filed and for this reason itself, the application is liable to be rejected with costs. 7. The learned Senior Advocate has submitted that a perusal of the application makes it clear that it is based on the objections raised by the defendants in the written statement and therefore, the arguments that the plaint does not disclose cause of action cannot be entertained by this Court. 8. Ld. Sr. Adv. Shri S. Dessai has submitted that Order 7 Rule 11 does not contemplate the rejection of the plaint only on the ground that the notice demanding the amount was not issued. The learned Sr. Advocate has further submitted that Clause 4 of the said agreement only required notifying the defendants before taking action and therefore, the notice referred to in the pleadings and produced on record would meet the requirement of the said clause. 9. It is further the contention of Ld. Sr. Adv. Shri S. Dessai that it is a settled law that at the stage of deciding an application under Order 7 CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 3 of 8 Rule 11, the pleadings are assumed to be true and that the liability of the cheque is in terms of the agreement and that the question whether the said notice, which was also as required by the provisions of Section 138 of the Negotiable Instruments Act, can be said to be a notice as required under the agreement is a matter that will have to be decided on merits. Ld. Sr. Adv. Shri S. Dessai further submits that there is no format of the notice stipulated in the agreement. 10. The learned Senior advocate submitted that the pleadings very clearly bring out the case of the plaintiff that the defendants had defaulted in the payment and that the plaintiff had filed the suit for its recovery. 11. Ld. Sr. Adv. Shri S. Dessai has placed reliance on the judgments of the Hon'ble Apex Court, in the case of Saleem Bhai and others V/s State of Maharashtra and others {(2003) 1 SCC 557}, Sopan Sukhdeo Sable & Ors. vs Assistant Charity Commissioner and Ors. {AIR 2004 SC 1801}, Popat and Kotecha Property V/s State Bank of India Staff Association {(2005) 7 SCC 510}, Kamala and others V/s K.T. Eshwarasa and others {(2008) 12 SCC 661}, R.K. Roja V/s U.S. Rayudu and ors. {AIR 2016 SC 3282} and Electronica India Ltd. V/s Electronica Hitech Machine Tools Pvt. Ltd. {MANU/MH/4404/2017} in support of his arguments that the application is liable to be dismissed. 12. I have perused the plaint and the documents relied upon by the plaintiff and considered the arguments advanced by learned advocates. CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 4 of 8 13. Order 7 Rule 11 CPC lays down that the plaint shall be rejected in the cases specified therein, at any stage of the suit right from the presentation of the plaint. Therefore, if the Court can reject a plaint suo motu and that too before admitting the plaint, I am unable to uphold the argument that the application is liable to be dismissed merely because that the defendants had not stated the clause of Order 7 Rule 11 CPC under which the plaint is sought to be rejected. 14. In the case of Sopan Sukhdeo Sable (supra), the Honble Apex Court observed that there cannot be any compartmentalization, dissection, segregation and inversions of the language of various paragraphs in the plaint and the intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. The Hon'ble Apex Court observed that it should be borne in mind that no pedantic approach should be adopted to defeat justice on hair-splitting technicalities. It was observed that the real object of Order 7 Rule 11 of the Code is to keep out of courts irresponsible law suits. 15. In the case of Popat and Kotecha Property (supra), the Hon'ble Apex Court reiterated that the real object of Order 7 Rule 11 of the Code is to keep out of courts irresponsible law suits and that Order 10 of the Code is a tool in the hands of the Courts by resorting to which and by searching examination of the party in case the Court is prima facie of the view that the suit is an abuse of the process of the court in the sense that it is a bogus and irresponsible litigation, the jurisdiction under Order 7 Rule 11 of the Code can be exercised. CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 5 of 8 16. It is also settled position of law that for the parties deciding an application under Clause (a) and (d) of Order 7 Rule 11 CPC, the averments of the plaint are germane. 17. In the case at hand, the plaintiff has pleaded that the plaintiff Company had invested a sum of ₹2,30,00,000/- in the defendant no.1 Firm and executed a Memorandum of Understanding dated 01.09.2012 in respect of its repayment with interest at the rate of 24% p.a., which the defendant no.1 agreed to repay by making payment by RTGS to the plaintiff Company on the 25th of every month and also by giving post dated cheques to the plaintiff and in case of default or delay by the defendant no.1, the plaintiff company was entitled to encash the relevant post dated cheque by depositing the same on the 30th of the same month. 18. The plaint states that the defendant no.1 firm paid to the plaintiff only the agreed amount from time to time while keeping the principal amount unpaid and accordingly, on the expiry of the said Memorandum of Understanding on 31.08.2013, the principal amount of ₹2,30,00,000/- remained to be cleared by the defendant no.1. 19. It is further pleaded in the plaint that the parties mutually agreed to consider the said amount of ₹2,30,00,000/- as the loan amount as on 01.09.2013 and that the plaintiff Company also extended a loan of ₹1,70,00,000/- to the defendant no.1 firm and thereby the loan amount extended or agreed to be extended to the defendant no.1 was totalling to ₹4,00,00,000/-, which amount was payable to the plaintiff Company by the defendant no.1 firm with CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 6 of 8 interest @ 24% p.a. within a period of 7 years commencing from 01.09.2013 and ending on 31.12.2020 by equated monthly installment of ₹13,16,342/- by RTGS, as spelt out by the Memorandum of Understanding executed between the parties on 06.08.2013,. 20. The plaintiff further pleaded that the first accumulated EMI for 14 months in the amount of ₹1,84,28,788/- became due in November 2014 which the defendant no.1 failed and neglected to pay and, in December 2014 issued a cheque dated 31.12.2014 in the amount of ₹1,91,76,000/- towards EMI payments out of the said cheques was returned dishonoured. 21. The plaintiff further pleaded that the meetings were held between the parties and the defendant no.1 handed over three post dated cheques dated 27.05.2015 in the amount of ₹50,40,000/- towards the pending dues, the second dated 27.12.2015 in the amount of ₹42,00,000/- towards penal interest and the third in the amount of ₹1,91,76,000/- in exchange of the bounced cheque dated 31.12.2014. 22. The plaintiff has further pleaded that the defendants took back the said three post dated cheques and handed over four cheques bearing nos.276321, 276322, 276324 and 276325, all post dated and that the first cheque bearing no.276321 was dated 21.03.2016 in the sum of ₹1,91,76,000/-, which cheque was returned dishonoured on the ground that the account was blocked. 23. It is further alleged in the plaint that on 02.05.2016, the plaintiff issued a legal notice to the defendants pointing about the dishonour of CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 7 of 8 the cheque and to make the payment of the cheque amount within 15 days from the receipt of the notice failing which the plaintiff Company will be constrained to file proceedings under Section 138 of the N.I.Act. 24. The plaintiff further pleaded that on account of the repeated defaults on the part of the defendant no.1 and the defendant nos.2 and 4, the entire amount of ₹4,00,00,000/- together with interest accrued thereon, amounting to `10,40,00,000/-, has become due to the plaintiff Company and have prayed that the defendants be jointly and severally directed to repay the said amount to the said Company, along with other reliefs. 25. Therefore, the plaint very clearly discloses a cause of action against the defendants. 26. Clause 4 of the Loan Agreement with Security dated 06.08.2013 lays down as under: “In case the Lender sends the notice to the Borrower to make good the margin in the property and the Borrower fails and/or neglects to make good the margin within the stipulated period as mentioned in the notice the Borrower shall be deemed to have committed default of the terms of this agreement and in that event it shall be lawful for the Lender (but not compulsory) to demand from the Borrower repayment of the loan alongwith the interest then outstanding and the Borrower shall be liable to repay the loan in full alongwith interest thereon without any objection and/or demur” CNR NO.GASG01-000689-2017 Exh.52 Special Civil Suit (commercial) no.2/2017 page 8 of 8 27. Considering the use of the word “in case” at the beginning of the clause and the words “but not compulsory” before the words “to demand from the borrower repayment of the loan...”, I am unable to uphold the contention of Ld. Adv. Ms. M. Viegas that in view of the pleadings read alongwith the Memorandum of Understanding and the Loan Agreement with Security, it follows that the plaint does not disclose a cause of action. 28. As observed by the Hon’ble Apex Court, in the case of Jageshwari Devi and others V/s Shatrugan Ram {(2007) 15 SCC 52}, non disclosure of a cause of action is distinct from a defective cause of action and while the former falls within the scope of Order 7 Rule (a), the latter does not. Also, it is a settled position of law that at the time of deciding an application under Order 7 Rule 11, the pleadings in the plaint have to be taken at their face value. 29. Hence application is hereby dismissed with costs of ₹1,000/- Margao Dated:18.01.2019. ( Edgar P. Fernandes ) District Judge-1 South Goa, Margao. Cg/-