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2017 Supreme(Cal) 286
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SOUMEN SEN, J.
SESA International Limited – Appellant
Versus
Avani Projects & Infrastructure Limited & Others – Respondent
G.A. Nos. 1705, 1919 & 2282 of 2017 & C.S. No. 113 of 2017 (Original Side)
Decided on : 05-09-2017
Anindya Kumar Mitra, Ajay Krishna Chatterjee, Abhrajit Mitra, S.K. Kapoor, Ranjan Bachawat, Jishnu Saha, Tilak Kr. Bose, Sr. Advocates, V.N. Dwivedi, Argha Jena, Jayanti Char, Vikas Tewary, Sanket Saraogi, Anirban Kr. Ray, Ravi Kapur, A. Kanodia, Advocates.
Headnote:
In a suit for recovery of money, the plaintiff sought attachment before judgment of a property owned by the defendant No.2, alleging that the defendant No.3, on behalf of the defendant Nos.1 and 2, had agreed to allot 21,000 sq.ft. of super built-up area in the said property and to refund the consideration amount along with interest and damages upon the petitioner agreeing to terminate the said allotment. The defendant No.2 resisted the attachment, contending that the plaintiff was only having a money claim against the defendant No.1 and that the plaintiff had suppressed the prior mortgage and charge registered with the Registrar of Companies in favour of the applicant, Reliance Commercial Finance Ltd. (RCFL). The applicant, RCFL, intervened in the proceedings, claiming to have lent and advanced various sums of money to the defendants for the project named “Avani Grand” to be developed and constructed at the said property and that the defendants had created an equitable mortgage by deposit of title deeds in favour of the applicant. The applicant contended that the plaintiff’s claim was intrinsically unbelievable and that the plaintiff had spun a story and had filed this proceeding in collusion with the defendant No.3.
Fact of the Case:
The plaintiff, SESA International Limited, filed a suit for recovery of money against the defendants, Adone Hotels & Hospitality Ltd. (defendant No.1) and DLF Hilton Hotels Limited (defendant No.2). The plaintiff claimed that it had entered into an oral agreement with the defendants for purchase of 21,000 sq. ft. of “Avani Grand” to be developed and constructed at the said premises and had made payment of a sum of Rs.21 crores against the allotment of unspecified area of 21,000 sq. ft. in the residential block of the project. The plaintiff alleged that since the construction work did not commence, the defendant No.3 proposed to refund the said sum of Rs.21 crores with interest at the rate of 18% per annum till the date of repayment as also pre-estimated damages of Rs.8 crores by way of compensation upon the petitioner agreeing to terminate the said allotment. The plaintiff claimed that the parties had mutually agreed to settle their disputes and the said defendant had made payment of five instalments through RTGS aggregating to Rs.4.25 crores out of Rs.8 lakhs payable towards compensation and/or pre-estimated damages leaving balance amount of Rs.3.75 crores. The plaintiff further claimed that the defendant No.1 had issued 23 cheques aggregating to a sum of Rs.35,88,34,387/- after deducting the amount of tax deducted at sources (TDS), which were dishonoured on presentation and returned to the plaintiff with the endorsement “insufficient funds”. The plaintiff filed the suit for recovery of the said amount and sought attachment before judgment of the property No.8, JBS Halden Avenue, Kolkata- 700 105, owned by the defendant No.2. Reliance Commercial Finance Ltd. (RCFL) intervened in the proceedings, claiming to be a mortgagee of the said property and alleging that the plaintiff was colluding with the defendants to defeat the rights of RCFL.
Finding of the Court:
The court found that the plaintiff was only an unsecured creditor and that the plaintiff’s claim was intrinsically unbelievable. The court also found that the applicant, RCFL, had a superior right as a mortgagee in relation to the petitioner and that the defendants were not authorized to create any mortgage or third party interest in respect of the property in question without the consent of RCFL. The court further found that the order passed by the court attaching the property was over and in respect of the Haldane Avenue property and not restricted to the equity of redemption alone and that the entire interest of the right of the mortgagor, that is, the defendant No.2 had been attached.
Issues: Whether the plaintiff was entitled to an attachment before judgment of the property owned by the defendant No.2.
Ratio Decidendi: The court held that the plaintiff was not entitled to an attachment before judgment of the property owned by the defendant No.2. The court reasoned that the plaintiff was only an unsecured creditor and that the plaintiff’s claim was intrinsically unbelievable. The court also found that the applicant, RCFL, had a superior right as a mortgagee in relation to the petitioner and that the defendants were not authorized to create any mortgage or third party interest in respect of the property in question without the consent of RCFL. The court further found that the order passed by the court attaching the property was over and in respect of the Haldane Avenue property and not restricted to the equity of redemption alone and that the entire interest of the right of the mortgagor, that is, the defendant No.2 had been attached.
Final Decision: The court dismissed the plaintiff’s application for attachment before judgment and appointed a receiver over the bank accounts of the defendant No.1 to ensure that the amounts collected by the defendant No.1 in respect of three of its projects were not diverted to other projects or to meet the other financial obligations of the defendant No.1.
1. The three applications filed by the plaintiff, the defendant No.2 and Reliance Commercial Finance Ltd. are disposed of by this common judgment.
2. The petitioner claims to be an allottee of 21,000 sq.ft. of super built-up area in service apartment in project ‘Avani Grand’ located at 8, JBS Haldane Avenue, Kolkata – 700 105 (hereinafter referred to as “said property”). It is alleged that the respondent has agreed to allot the same at a price of Rs.10,000/- per sq.ft. aggregating to Rs.21 crores. It was represented on behalf of the respondent that the construction work would commence within August, 2014 and would be completed by December, 2016.
3. Pursuant to the agreement, the petitioner paid Rs.21 crores by RTGS through its banker. Since the construction work did not commence, the respondent no.2 proposed to refund the said sum of Rs.21 crores with interest at the rate of 18% per annum till the date of repayment as also pre-estimated damages of Rs.8 crores by way of compensation upon the petitioner agreeing to terminate the said allotment. It is claimed that the parties have mutually agreed to settle their disputes and the respondents have made payment of five instalments through RTGS aggregating to Rs.4.25 crores out of Rs.8 lakh payable towards compensation and/or pre-estimated damages leaving balance amount of Rs.3.75 crores. The petitioner has disclosed the particulars of the cheques aggregating to Rs.35,88,34,387/- payable on account of refund of the consideration amount along with pre-estimated damages and compensation. The said cheques were dishonoured on presentation and returned to the plaintiff with the endorsement “insufficient funds”. The twenty-three several cheques aggregating to a sum of Rs.35,88,34,387/- were issued by the respondent no.1 after deducting the amount of tax deducted at sources (TDS). The said respondent also did not submit the certificate of tax deduction at sources in spite of requests. The amount of TDS deducted by the respondent no.1 comes to Rs.1,23,70,489/-.
4. The plaintiff has filed the suit for recovery of the said amount.
In the said suit, the plaintiff has filed an application being G.A. No.1705 of 2017 seeking reliefs in the nature of attachment before judgment. On 17th May, 2017 a Special Officer was appointed to file a status report with regard to the progress of work at the said premises. The respondents were restrained from creating any further encumbrance in respect of the property till the returnable date. A rule was also issued against the defendants requiring them to show cause as to why the respondents should not be called upon to furnish security. The matter was made returnable on 14th June, 2017.
On 14th June, 2017, the respondent did not file any affidavit in answer to the show cause. The respondents, however, prayed for two weeks time to file an affidavit to disclose the present financial status of the respondents and the manner in which the respondents proposed to secure the claim of the plaintiff. The said order also records that the respondent No.1 may not have any defence to the claim of Rs.21 Crores and the respondents have expressed their inability to presently pay the aforesaid sum. It was, however, submitted that the respondents have already created a mortgage in favour of the Reliance Commercial Finance Ltd. as a security for loan of a sum of Rs.270 crores was disbursed in connection with the said project. Another company belonging to the Reliance Group has also disbursed a sum of Rs.50 crores for development of the self-same project and both the lenders have a pari passu charge over the securities created in respect of the property in question prior to the order dated 17th May, 2017.
On the same date, that is, 14th June, 2017, Reliance Commercial Finance Ltd. made an oral intervention. Mr. Tilak Kumar Bose, the learned Senior Counsel representing the said Company submitted that any order concerning the property in question is likely to affect the rights of
