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High Court of Judicature at Madras
R. SUBBIAH, J.
M/s. Aanchal Cement Limited & Another
Versus
M/s. Gimpex Limited
Original Application No. 252 of 2013 & Application No. 2492 of 2013 in C.S. No. 234 of 2013
Decided on: 01-12-2014
Companies Act, 1956 - Arbitration and Conciliation Act - Sections 5 and 8 - Contract Act - Section 23 - Specific Relief Act - Section 27 - Transfer of Property Act, 1882 – Criminal Procedure Code - Section 202 - Temporary injunction - Negotiable instruments - Ancillary and consequential relief - Negotiable instruments Act - Application has been filed by applicants/plaintiffs seeking to direct respondent/defendant to forthwith deposit a sum represented by Demand Draft drawn on Bank extracted under impugned Deed of Compromise to credit of suit before this Court - For sake of convenience parties are referred to as per their rankings in the suit - Plaintiffs have filed suit for following reliefs - Declaring deed of compromise purported to be between 1st plaintiff and defendant as illegal null and void abs-initio and not binding on plaintiffs and if necessary setting aside and cancelling same and granting ancillary and consequential relief directing defendant its officers and servants to forthwith return to plaintiffs cancelled deed along with all instruments that were extracted by defendant from 1st plaintiff under cover of said deed set out in detail in Schedule – Held, In dealing with such agreements it is however necessary to bear in mind distinction between motive which may operate in mind of complainant and accused and which may indirectly be responsible for agreement and consideration for such an agreement - It is only where agreement is supported by prohibited consideration that it falls within mischief of principle that agreements which intend to stifle criminal prosecution are invalid - On a consideration of matter court hold that doctrine of stifling of prosecution is not attracted in present case - In reaching this conclusion court do not put out of consideration that it is inconceivable that Union of India would under threat of a prosecution coerce UCC to pay million US dollars or any part thereof as consideration for stifling of prosecution - In context of Union of India plea lacks as much in reality as in a sense of proportion - Accordingly on Contention court hold that settlement is not hit by Section 23 or 24 of Indian Contract Act and that no part of consideration for payment of million US Dollars was unlawful - Only when criminal charges are matters of public concern same cannot be a subject matter of private bargain and compromise - If dropping of criminal prosecution in respect of non-compoundable offence is a motive for entering into compromise agreement but same has not been made as a consideration then doctrine of stifling of prosecution will not be attracted - If there is a pre-existing civil liability in those cases dropping of criminal prosecution need not necessarily be a consideration – In instant case agreement was entered into between parties only to settle preexisting liability - Certainly dropping of prosecution cannot be a consideration and it may be motive for entering into agreement - It cannot be said that agreement entered into between private parties for settling pre-existing civil liability with a motive to withdraw criminal complaint is opposed to public policy – Therefore Judgments relied upon by counsel for plaintiffs wherein entering into an agreement for dropping of criminal prosecution was made as a consideration cannot be made applicable to facts of present case – Further one more reference could be place in judgment reported wherein it has been held that when a dispute is purely a personal one between two contesting parties and when it arose out of extensive business dealings between them then there is absolutely no public policy involved - Dictum laid down in said judgment is squarely applicable to present case – Application are dismissed
1. Original Application No.252 of 2013 has been filed by the applicants/plaintiffs seeking to grant a temporary injunction restraining the respondent/defendant, from parting with or encashing any of the negotiable instruments set out in the schedule to the Judges summons pending disposal of the suit.
2. Application No.2492 of 2013 has been filed by the applicants/plaintiffs seeking to direct the respondent/defendant to forthwith deposit a sum of Rs.3 crores, represented by the Demand Draft dated 11.03.2013, bearing No.271351, drawn on the Karur Vysya Bank, Chennai-I, extracted under the impugned Deed of Compromise, dated 12.03.2013, to the credit of the suit before this Court.
3. For the sake of convenience, the parties are referred to as per their rankings in the suit.
4. The plaintiffs have filed the suit for the following reliefs –
(a) Declaring the deed of compromise dated 12.03.2013 purported to be between the 1st plaintiff and the defendant as illegal, null and void ab-initio and not binding on the plaintiffs and if necessary, setting aside and cancelling the same and granting the ancillary and consequential relief directing the defendant, its officers and servants to forthwith return to the plaintiffs the cancelled deed along with all the instruments that were extracted by the defendant from the 1st plaintiff under cover of the said deed set out in detail in the Schedule given hereunder;
(b) Directing the defendant, its officers, servants and agents to pay the plaintiffs such damages, not less than Rs.1 crore, as may be determined by this Court.
(c) Directing the defendant to pay the costs of the plaintiff in this suit.
5-1. The case of the plaintiff, in nutshell, is as follows:-
The 1st plaintiff M/s. Aanchal Cement Limited, is a company incorporated under the Companies Act, 1956 and the 2nd plaintiff is its Director. During the course of its business, the 1st plaintiff approached the defendant for buying 15,000 MTS of Ordinary Portland Cement Clinker (OPCC) from Vietnam and accordingly, the defendant issued a Proforma Invoice dated 09.03.2012. During the time of such transaction, the 1st plaintiff company was known as Kalika Cement Limited. Under the said Proforma Invoice, the defendant had quoted the price at Rs.4,225/-per M.T., inclusive of Customs, Excise Duty, clearing and forwarding charges. It has been further stated that the price was calculated on Customs Duty, Excise Duty, Clearing and Forwarding charges prevailing as on that date and any increase or decrease thereof would be to the Buyer's Account.
5-2. On receipt of such Proforma Invoice, the 1st plaintiff paid Rs.60 lakhs to the defendant as advance. Then, by their letter dated 13.03.2012 the 1st plaintiff placed an order for purchase of a further 15,000 MT of the same goods on the same Terms & Conditions and the plaintiffs remitted a further sum of Rs.40 lakhs as further advance. However, the defendant did not supply against these orders inspite of the fact that advance of Rs.1 crore was already remitted as stated above.
5-3. In the interest of business and to adjust the said advance payment of Rs.1 crore already paid by the 1st plaintiff to the defendant, the 1st plaintiff and the defendant agreed for a Joint Venture arrangement on 50:50 basis, whereby the OPCC shall be shipped by the defendant at their sole risk and responsibility, while the 1st plaintiff shall sell the OPCC thus shipped. The said agreement was concluded by correspondence.
5-4. As per the terms of such Joint Venture arrangement, the 1st plaintiff issued eighteen undated cheques, each for Rs.50 lakhs as security to the defendant. After a great delay, 104064 MT of goods arrived in 2 shipments, but there was a shortage and the actual tonnage was only 102864 MT. The 1st plaintiff paid Rs.25 crores to the defendant and spent Rs.13.40 crores towards expenses like Duty, Taxes, Freight etc. The defendant had collected some monies directly from the parties, who bought the goods from the 1st plainti
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