IN THE HIGH COURT OF CALCUTTA
SOUMEN SEN, J.
Lindsay International Pvt. Ltd. and Ors. - Plaintiffs
Versus
Laxmi Niwas Mittal and Ors. - Defendants
G.A. No. 1951 of 2017, C.S. No. 2 of 2017.
Decided on : 18-09-2017
The Court considered the application filed by the defendant to revoke the leave granted under Clause 12 of the Letters Patent and for dismissal of the suit on the ground that the plaint does not disclose any cause of action against the defendant. The Court held that the plaint discloses several causes of action against the defendant, including breach of contract, tortious interference with contractual relations, and economic torts. The Court found that the plaintiff has given sufficient particulars of fraud, conspiracy, and unlawful means, and that the essential elements of an economic tort are present in the plaint. The Court also held that the agreement pleaded in the plaint can be oral and can be proved by conduct and course of dealings between the parties. The Court rejected the defendant's application and dismissed the suit with no order as to costs.
Fact of the Case:
The plaintiff, a company, entered into a pre-incorporation agreement with the defendant, an individual, to procure all supplies for the plaintiff's company. After the plaintiff company was incorporated, the defendant allegedly breached the agreement by negotiating and making direct purchases of goods from the plaintiff's vendors. The plaintiff filed a suit against the defendant, alleging breach of contract, tortious interference with contractual relations, and economic torts. The defendant filed an application to revoke the leave granted under Clause 12 of the Letters Patent and for dismissal of the suit on the ground that the plaint does not disclose any cause of action against the defendant.
Finding of the Court:
The Court found that the plaint discloses several causes of action against the defendant, including breach of contract, tortious interference with contractual relations, and economic torts. The Court found that the plaintiff has given sufficient particulars of fraud, conspiracy, and unlawful means, and that the essential elements of an economic tort are present in the plaint. The Court also held that the agreement pleaded in the plaint can be oral and can be proved by conduct and course of dealings between the parties.
Issues: Whether the plaint discloses a cause of action against the defendant. Whether the plaintiff has given sufficient particulars of fraud, conspiracy, and unlawful means. Whether the essential elements of an economic tort are present in the plaint. Whether the agreement pleaded in the plaint can be oral and can be proved by conduct and course of dealings between the parties.
Ratio Decidendi: The Court held that the plaint discloses several causes of action against the defendant, including breach of contract, tortious interference with contractual relations, and economic torts. The Court found that the plaintiff has given sufficient particulars of fraud, conspiracy, and unlawful means, and that the essential elements of an economic tort are present in the plaint. The Court also held that the agreement pleaded in the plaint can be oral and can be proved by conduct and course of dealings between the parties.
Final Decision: The Court rejected the defendant's application and dismissed the suit with no order as to costs.
Soumen Sen, J.
The defendant No. 1 is the applicant. This is an application for revocation of leave under Clause 12 of the Letters Patent and for dismissal of suit on the ground that the plaint does not disclose any cause of action against the defendant No. 1.
2. The contention of the defendant No. 1 is that according to the plaintiffs there was a pre-incorporation agreement between the plaintiff No. 1 and the defendant No. 1. The pre-incorporation agreement as alleged in paragraph 6 of the plaint does not exist. The plaintiffs have failed to produce any document which reflects the terms mentioned in paragraph 6 of the plaint. In absence of any document evidencing such pre-incorporation agreement it has to be assumed that the plaintiffs do not have any cause of action against the defendant No. 1 based on such non-existent pre-incorporation agreement. The Court cannot grant any relief on a mythical hypothetical agreement.
3. Mr. P. Chidambaram, the learned Senior Counsel appearing on behalf of the petitioner submits that the Specific Relief Act, 1963 in Section 15(h) has recognised pre-incorporation agreement. A pre-incorporation agreement must be incorporated in the terms of the actual incorporation of the company. The Memorandum and Articles the Association of the plaintiff No. 1 company do not contain any of the descriptions, discussions and/or representation averred in paragraph 6 of the plaint. Though, the plaint at paragraph 8 refers to MOA and AOA of the plaintiff No. 1, the said documents were not produced along with the plaint. The plaintiff also does not rely upon the said document to assert that the alleged pre-incorporation agreement subsists. Inducing one person not to contract with other may, however, become tortious if unlawful means are used or threatened.
4. In fact, the averments made in the plaint describing the later developments with regard to the shareholding of the plaintiff No. 1 company itself would indicate that the plaintiffs do not have in support of the reliefs of specific performance of the alleged pre-incorporation agreement against the defendant No. 1 nor does the plaint discloses any such cause of action in relation to the said relief. In amplifying Mr. Chidambaram submits that neither MOA nor AOA of the plaintiff No. 1 contain any terms reflecting the alleged pre-incorporation agreement. At the relevant time the defendant No. 1 held 75% shareholding in the plaintiff No. 1 company through a holding company named Benhill Finance Limited. In August, 2002, Benhill Finance Limited ceased to be a shareholder of the plaintiff No. 1 company. The entire shareholding of Benhill Finance Limited in the plaintiff No. 1 company was transferred by way of gift to the plaintiff No. 2 and 3, who became 100% shareholders of the plaintiff No. 1. The plaintiff nos. 2 and 3 continued to be 100% shareholders of the plaintiff No. 1 from August, 2002 right up to January, 2010. A new shareholders Agreement dated 21st January 2010 was executed between the plaintiff nos. 2 and 3 and the defendant No. 3 in relation to the shareholding of the plaintiff No. 1 and their mutual rights and obligations. The defendant No. 3 became a 25% shareholder of the plaintiff No. 1 in terms of this shareholders' Agreement. The Shareholders' Agreement provides that it is the entire agreement between the parties. The learned Senior Counsel has referred to Clause 16 of the Amendment agreement dated 29th February, 2016 to show that the said clause reiterates that the amendment constitutes the entire agreement between the parties relating to its subject matter and is in substitution of any previous written or oral agreement/understanding thereon between the parties. The defendant No. 1 is not a party to the shareholders' Agreement. The Shareholders' Agreement is on record. The plaintiffs have not produced any other agreement. The terms of the Shareholder's Agreement are expressly contrary to the contents of paragraphs 6 and 29 of the plain
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Mansukhlal Dhanraj Jain & Ors. v. Eknath Vithal Ogale reported at 1995 (2) SCC 665
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Roop Lal Sathi v. Nachhattar Singh Gill reported at 1982(3) SCC 487
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