Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(SC) 147

SUPREME COURT OF INDIA
KRISHNA MURARI, S. RAVINDRA BHAT, JJ.
Sanwarlal Agrawal & Ors. - Appellants
Versus
Ashok Kumar Kothari & Ors. - Respondents
Civil Appeal Nos. 1312-1313 of 2023 [@ Special Leave Petition (Civil) Nos. 13478-13479 of 2022]
Decided On : 21-02-2023

Advocates appeared:
For the Petitioner(s): Mr. Shyam Divan, Sr. Adv. Mr. Udayaditya Banerjee, AOR Ms. Shreya Bhojnagarwala, Adv. Mr. Bhavin Bhatiya, Adv. Mr. Amog Singh, Adv.
For the Respondent(s): Mr. Shekhar Naphade, Sr. Adv. Mr. Pallav Shishodia, Sr. Adv. Mr. Jatin Zaveri, AOR Mr. Harsh Mehta, Adv. Ms. Aishwarya Dash, Adv. Ms. Farah Hashmi, Adv. Mr. Kumar Mitakshar, Adv. Mr. Neel Kamal Mishra, Adv. Dr. Prashant Pratap, Adv.

IMPORTANT POINT
Executing Court cannot alter terms of consent decree.

Headnote:
Civil Procedure Code, 1908 – Order XXI Rule 30 and Order XII Rule 6 – Execution of decree – Decree on admission – Executing Court can construe a decree if it is ambiguous – However, this cannot result in additions to terms of consent which were not agreed upon by parties, since decree was drawn on by consent of both parties at admissions stage itself – Both Courts have, by selectively perusing emails, altered terms of decree to include loan amount into agreement consideration – Such a reading was despite clauses in joint venture agreement entered into between parties which provided for a separate mechanism of settling all outstanding loans – Impugned Judgment set aside. (Paras 16, 19 and 20)
Facts of the case:
These two appeals are preferred against the common impugned judgment and final order of High Court of Judicature at Bombay, dated 14.06.2022, in which order of Single Judge dated 04.01.2021, was affirmed.
Findings of Court:
Both Single Judge and Division Bench of the High Court have interpreted the appellants’ silence (manifest in their not filing any written statement) as acquiescence to the inclusion of the loan amount, which, is although worthy of adverse inference, cannot be the reason to justify expansion of decree.
Result : Appeals allowed.

JUDGMENT :

S. Ravindra Bhat, J.

1. Leave granted. These two appeals are preferred against the common impugned judgment and final order of the High Court of Judicature at Bombay, dated 14.06.2022,¹[Sanwarlal Agrawal v. Ashok Kumar Thakur, Appeal (L) No. 3075/2021 and 3079/2021.] in which the order of the single judge dated 04.01.2021,²[Ashok Kumar Kothari v. Sanwarlal Agrawal, Execution Application (L) No. 1713/2019 and 139/2020 in Commercial Suit No. 844/2019.] was affirmed.

I. Factual Background

2. The parties entered into a joint venture agreement in 2017 to operate a multi-specialty hospital in Malad, Mumbai. As equal shareholders, each brought in Rs. 10 crores as interest-free loans to finance the project. On 27.03.2019, the respondents (hereafter, ‘Kotharis’) bid for the entire 50% shareholding of the appellants (hereafter, ‘Agrawals’), which was accepted, and reduced in writing by way of an email dated 28.03.2019, which stated the terms as follows:

“The te(r)ms and conditions agreed by you are also agreeable to us, which are as follows,

l. consideration- 36.75 crores

2. token 5 percent of the consideration

3. Further 50 percent of consideration within 45 days, after which Kothari group will be allowed to start work on the project.

4. remaining 45 percent of consideration within 120 days.

Failure to pay 50 percent amount within 45 days will lead to forfeiture of token amount of 5 percent and automatic sale of 50 percent shares of Kothari group to Agrawal group at their bid price of 35 crore on same terms and condition starting 45th day. Failure to pay the final 45 percent in time will lead to forfeiture of 5 percent of the consideration and automatic sale of 50 percent shares of Kothari group to Agrawal group at their bid price of 35 crore on same terms and condition sta1iing 120th day. There will be no interest paid by Agrawal group on the balance consideration.

Deal date march 27, 2019.”

3. Thereafter, token amount of Rs.1,83,75,000/- (or 5%) was paid (of which Rs.1,25,000/- was contested as having never been received in the account of Agrawals). However, on 29.03.2019, Kotharis, by way of email, provided a break-up of the consideration of Rs. 36.75 crores, as under:

“At the outset, please note that the total consideration of Rs. 36.75 Crores payable to you comprises of:

a. the total value of your 50% shareholding in the company being the sum of Rs. 26,45,45,000/- (Rupees Twenty-Six Crores Forty-Five Lakh Forty-Five Thousand Only)

b. re-payment of your group's interest free loan lying with the company of the sum of Rs. 10,29,55,000/- (Rupees Ten Crores Twenty-Nine Lakhs and Fifty-Five Thousand) which will be paid and discharged to you through the bank account of the company.”

(emphasis supplied)

This inclusion of the loan amount was not acceptable to Agrawals, who expressly rejected the same in an exchange of emails thereafter, dated 03.04.2019, 11.04.2019, 19.04.2019 and 20.04.2019.

4. On 30.04.2019, Kotharis filed Commercial Suit No. 844/2019, for declaration that the agreement dated 28.03.2019 was binding on the Agrawals, and for specific performance. This was followed by a Notice of Motion No. 1619/2019, dated 29.07.2019, under Order XII Rule 6 of the Code of Civil Procedure, 1908 (hereafter, “CPC”), seeking decree on admission, which was awarded by order dated 05.08.2019 in the following terms:

“1. Mr. Saraogi and Mr. Hakani on instructions from Dr. Vikas Agarwal, Defendant no.2, who says that he has instructions on behalf of other defendants to make the statement, state that they are submitting to a decree in terms of prayer clauses (a) to (d), which read as under:

(a) That this Hon'ble 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 cl