PRITHI PAUL SINGH SETHI Vs. TWIST SPIN INDUSTRIES

JUDGEMENT

(1.) Dr. Prithi Paul Singh Sethi, appellantplaintiff filed suit in this court interalia claiming the reliefs that the agreement of consultancy for tender dated 1st July, 2003 (Exhibit 'A' to the plaint) was valid, subsisting and binding agreement between the parties; and the defendants, respondents in the appeal, be ordered and directed to execute all the necessary documents required to be executed for effecting transfer of the movable and immovable assets as well as equity shares of Devagiri Textile Mills Ltd., the property in dispute and in the event of default, requiring the Prothonotary & Senior Master to execute such documents. Interim relief of injunction and Receiver has also been prayed in the plaint. These reliefs had been claimed on the ground that the consultancy agreement had been executed with the respondentpartnership firm. The appellants were interested to set up a textile plant and had expressed interest in acquiring second hand textile machineries, land/building etc. necessary for setting up a textile unit. According to the respondents, it was their business to deal with such transaction and one of such transaction was completed between the parties in relation to the factory shed at Khambhat, Gujarat where the appellants had entered into the agreement of lease with the respondents. Some other transaction of similar nature for different transactions were also completed between the parties. The agreement dated 1st July, 2003 was executed by respondent No.4 on behalf of the partnership concern. The terms and conditions of this agreement were to be binding on the parties. In furtherance to the said agreement, the respondents were to be paid Rs.25 lacs for their consultancy services and the plaintiffs issued a cheque for Rs.10 lacs and another cheque for Rs.35 lacs both drawn on the State Bank of Indore, Malad Branch, Mumbai. Rs.25 lacs was to be paid to Maharashtra State Textile Corporation towards the earnest money deposit and Rs.20 lacs was towards consultancy services of the respondents. It is alleged in the plaint that the appellants had issued eight demand drafts in favour of Maharashtra State Textile Corporation directly from their bank account with State Bank of Indore amounting to Rs.50,10,000/all dated 19th March, 2003. The appellants also made payment by cheques or bank demand drafts in favour of the respondents to the tune of Rs.6,75,90,000/during the period 1st July, 2003 to 23rd September, 2004. All this was with regard to transfer of the property in dispute. Somewhere in first quarter of 2004, the respondents visited the appellant's office at Santacruz and asked for original file to sort out certain accounting problems in regard to the transaction and transfer of Devagiri Textile Mills, and particularly, with regard to certain payments. In the month of March, 2004, the respondents asked the plaintiff to make further payment of Rs.25 lacs which was made by three different cheques. The appellants asked for return of the original files as well as for completing the transaction. In April, 2004, it is averred that the respondents informed that they had paid stamp duty of Rs.2,77,006/on behalf of the appellant for getting equity shares of Devagiri Textile Mills Ltd. transferred in the name of the appellant and asked for the reimbursement which was made by the appellants by cheque No.741435 dated 6.4.2004. In this manner, the total payment made by the appellants to the respondents during February, 2003 to September, 2004 amounted to Rs.8,08,77,006/. Several months lapsed, however, the process of transferring the shares as well as the properties was not effected by the respondents and in September, 2005, when the appellants contacted the respondents, to their surprise were threatened with dire consequences and terrorized by the respondents. The appellants having felt defrauded, lodged complaint at Vakola Police Station on 15th September, 2005. As no action was taken, they even filed a complaint in the court of Metropolitan Magistrate, 32nd Court, Bandra, Mumbai under sections 409, 419, 420, 201 and 506(ii) read with Section 34 of the Indian Penal Code, in which the learned Magistrate on 25th October, 2005 passed an order under section 156(3) of the Code of Criminal Procedure, 1973, directing the police to investigate the matter. The respondents obtained anticipatory bail order from the Sessions Court on 21st November, 2005. In breach of the terms of the agreement, the respondents are contemplating to dispose of the properties in question and completely frustrate and prejudice the interest of the appellants. In these circumstances and left with no alternative, the appellants filed the suit in question.

(2.) After institution of the suit, notice of motion was also taken out by the appellants being Notice of Motion No.2544 of 2007 praying for the relief of interim injunction and appointing of the Receiver of the properties in question. The suit and the application were contested by the respondents who took up the plea that the agreement dated 1st July, 2003 was forged document and they had never entered into the agreement for transfer of the property. Various transactions in regard to the consultation of tender documents had taken place between the parties in the past.

(3.) It is stated in the reply to the Notice of Motion that no permission in writing of whatsoever nature was ever executed between the parties for any transaction. The transactions were purely in good faith. The respondents in their course of business had come to know that 100% of equity shares of Devagiri Textile Mills were owned by Maharashtra State Textile Corporation were to be put on auction by inviting tenders, got interested in the deal and purchased the tender form in the name of Twist Spin Industries on 8th July, 2003. They had intended to purchase 100% shares of Devagiri Mills Ltd. The respondents had initially offered Rs. 6 crores and were the successful bidders when their offer for Rs.7.51 crores was accepted. This bid was given by the respondents on behalf of the Respondent No.1Twist Spin Industries and the shares were purchased to be transferred in Respondent No.1 firm. According to the respondents, the appellants had dishonest intention when they requested the respondents to store the said machinery in the mill premises. It has also been stated that there is manipulation of payment by the appellants and it has been averred, "I state that in fact Plaintiff No.1 through his various concerns has till date made payments aggregating to Rs.13,07,37,106/from the time he started dealing with the Defendants towards the price of machinery sold and delivered to the Plaintiff No.1 from time to time by Twist Spin Industries and Kalantry Textile Consultants, towards the machinery of some other Mills sold but the delivery not yet taken by the Plaintiff No.1, and the part payments of the machinery of Devgiri Textiles Mills which the Plaintiff No.1 requested the Defendants to allow him to keep at the Mill premises by agreeing to pay Rs.1 lakh per month as storage charges as detailed.............."