FLS/CHC/SB009/2017

IN THE HIGH COURT AT CALCUTTA

SAHIDULLAH MUNSHI, J.

Efcalon Tie Up Pvt. Ltd….Plaintiff Vs. West Bengal Financial Corporation…Defendant

GA No. 1966 of 2017; CS No. 138 of 2016; Ordinary Original Civil Jurisdiction; Judgment on: 06.09.2017

Ratio of Law:

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Advocates Appeared in this Case:-

  • For the plaintiff: Mr. Sabyasachi Chowdhury, Mr. Anirban Kar, Ms. Anindita Ghose
  • For the defendant: Mr. Jishnu Chowdhury, Mr. Chayan Gupta, Mr. Sandip Dasgupta

List of cases in the Judgment:-

The following judgment was delivered by Sahidullah Munshi, J.:-
  1. This G.A. 1966 of 2017 is at the instance of the plaintiff Efcalon Tie Up Private Limited, has been filed praying for an order for framing ofpreliminary issue to the extent whether the document dated 7thJuly, 2008 beinga Memorandum of Understanding (MOU), has been adequately stamped as perthe Indian Stamp Act, 1899 and required to be registered as per IndianRegistration Act, 1908 and to decide the suit only on that issue considering it tobe an issue of law.

  2. Such an application has been made by the petitioner-plaintiff to advancean argument that the document (MOU) dated 7thJuly, 2008, executed by and between Efcalon Tie Up Private Limited and West Bengal Financial Corporation,is in accordance with law and is admissible in evidence. According to theplaintiff, the only core issue is that whether the document has been executed inaccordance with law and in consonance with the Indian Stamp Act, 1899 and theIndian Registration Act, 1908. The petitioner submits that this is an issue of lawas to whether the document is admissible in evidence or not and if such an issueis decided as a preliminary issue, the suit need not be tried on evidence and noamount of evidence is required to prove the document. In this context the reliefsought for by the plaintiff is required to be noted. The plaintiff/petitioner hasmade the following prayers in the plaint:
    “1.a) Decree for an amount of Rs.2, 64, 67965.58 (Rupees Two Crore Sixty Four Lakhs Nine Hundred Sixty Five and Fifty Eight Paisa only) against thedefendant in terms of paragraph 23 hereof;
    b) Interim interest and interest upon judgment at the rate of 18% perannum;
    c) Injunction;
    d) Receiver;
    e) Attachment;
    f) Costs;
    g) Further or other reliefs;”

  3. In order to deal with the present issue involved in the petition filed by thepetitioner/plaintiff reading of the plaint is necessary. Paragraph 13 of the plaintsays that the defendant entered into an amicable settlement with the plaintiff byexecuting a Memorandum of Understanding dated 7th July, 2008 whereby andwhere under the defendant agreed to settle the disputes by agreeing to withdrawthe appeal of the defendant against the order dated 6th January, 2005 and alsoagreeing to transfer its entire claim against the company (in liquidation) and its ex-Directors, namely, Gouranga Sundar Das and Sunil Kumar Das in favour ofthe plaintiff. The Memorandum of Understanding is drawn on a Rs.500/- stampand has been certified by a Notary Public. The said MOU has been acted upon byboth the parties and in furtherance thereof, the appeal preferred by thedefendant against the order dated 6th January, 2005, was withdrawn. In terms ofthe MOU defendant also issued a Power of Attorney in favour of therepresentative of the plaintiff to continue the proceedings in T.A. No.41 of 2003on behalf of the defendant so that the same may be taken to its logicalconclusion. The defendant also received the entire consideration in terms of theMOU and the plaintiff engaged some Advocates to proceed with the matter in T.A.No.41 of 2003 and conducted proceedings on behalf of the defendant andincurred the entire expenses for the same thereafter. The said Memorandum ofUnderstanding contained various terms, the important portions of which are asfollows:-
    A) With the execution of the Memorandum of Understanding the first party(defendant) shall be deemed to have transferred, conveyed, assured andassigned all its claims against the company (in liquidation) and against the said Gouranga Sundar Das and Sunil Kumar Das to the secondparty (plaintiff) including its claims in T.A. No.41 of 2003 and thecharge being claimed by it over and in respect of the premises of Biren Roy Road, at or for the consideration of Rs.53, 70,000/- only.consequently, the first party (defendant) no longer be entitled in anymanner either to enforce or to seek to enforce the same and the secondparty will alone be entitled to pursue and to enforce all claims of thefirst party against the company (in liquidation) and against the said Gouranga Sundar Das and Sunil Kumar Das.
    B)Simultaneously, with the execution of the said Memorandum ofUnderstanding the first party (defendant) shall, therefore, also executein favour of the second party (plaintiff) a specific irrevocable Power ofAttorney authorizing the second party (plaintiff) to do all acts, deeds andthings on behalf of the first party (defendant) that the first party(defendant) would have done in the matter of pursuing its claimsagainst the company (in liquidation) and against the said Gouranga Sundar Das and Sunil Kumar Das.

  4. The pleadings in the plaint have been controverted by the defendant byfiling a written statement. Said written statement, inter alia, contains thefollowing pleadings –
    “a) The Single Bench of this Hon’ble Court by an order dated 6th January,2005 confirmed sale of front portion and directed the Official Liquidatorto execute conveyance in respect of the front portion of the Behala landad measuring 3 bighas 10 cottahs in favour of the plaintiff and alsodirected the plaintiff to negotiate with Das Reprographics Limited (inliquidation) who had also obtained financial assistance from UnitedBank of India and had created a charge over its current assets infavour of United Bank of India.
    b)The defendant filed an appeal being ACO No.60 of 2005 from the orderof sale dated 6th January, 2005 and the said order was stayed. Theappeal was pending.
    c)The said two Das brothers through the plaintiff company wanted tosettle the dispute regarding validity of sale of front portion of the saidproperty.
    d)In the above background the MOU was entered into in 2008.”
    e)It is denied that the plaintiff in terms of the MOU was to receive the saidamount of Rs.2,38,72,006.94/- or any portion thereof or the defendantby reason of the said MOU was obliged to pay the aforesaid amount tothe plaintiff. The plaintiff’s reliance on the said MOU is misplaced.Clause 6 of the said MOU expressly entitled the defendant to receiveand retain the sale proceeds of rear portion of the Behala land. However, the payment of sale proceeds of the said rear portion of the Behala land was not received within one year from the date of executionof the said MOU.
    f)In the event it is contended by the plaintiff that the said MOU dated 7thJuly, 2008 purported to transfer or assign all the claims of thedefendant against the said company Das Reprographics Limited, thecompany in liquidation, the claims of the defendant were not only formoney but also against the mortgaged immovable property which wassecurity given to the defendant for all amounts financed by thedefendant to the said company before its liquidation. It was a claimsecured by immovable property of the value of more than Rs.100/- andsuch rights and claims of the defendant cannot be assigned ortransferred save and except by way of registered document dulystamped and registered. The MOU obtained by the plaintiff is grosslyinadequately stamped and not registered. In the premises, the saidMOU will be void and cannot be looked into or admitted as evidence forthe purpose of the contention if raised by the plaintiff that the saidMOU has transferred and/or assigned all claims of the defendant whichwere claim secured by immovable property of value of more thanRs.100/- and the said MOU will be void to that extent. The said MOU isdivisible and severable and the aforesaid portions of the said MOUwhich according to the plaintiff purport to transfer or assign the claimof the defendant against the company in liquidation can be separatedfrom the rest of the MOU.

  5. Defendant claims that the said MOU dated 7thJuly, 2008 as purportedlyrelied by the plaintiff in the plaint are incorrect and contrary to the tenor of thesaid MOU. The said MOU is confined to and was entered into in the contextof sale of the front portion of the Behala land only and had no relation tothe rear portion of the Behala land which took place nearly six years afterthe said MOU dated 7th July, 2008. The plaintiff has received the possessionof the front portion of the Behala land and all the moveable assets sold byand under the order of this Hon’ble Court and the sale as confirmed by this Hon’ble Court as mentioned herein before.

  6. It is further stated that the said power of attorney was not, however,registered and as such could not validly or at all confer any right on thesaid attorney in respect of any immovable property of the value of aboveRs.100/-. The rear portion of the said Behala land was worth of more thanRs.100/- and no right to deal with or to affect the ownership or interest inrespect of the said rear portion of the Behala land could be validly conferredon the said power of attorney holder. If it be contended by the plaintiff thatthe said power of attorney conferred right on the power of attorney holderin respect of the rear portion of the said Behala land, then it would besubmitted that the power of attorney would be inadmissible, inoperativeand void insofar as the right in respect of the said immovable property at Behala. The plaintiff company did not acquire any legal right to deal withthe rear portion of the Behala land by and under the said power of attorneyor otherwise.

  7. In the background of the aforesaid pleadings of the plaintiff and thecounter-pleadings of the defendant it is not the case that the defendant hasadmitted the contents of the MOU as claimed by the plaintiff, nor has thedefendant admitted the claim made in the plaint, nor is it evident from anywhereon a scrutiny of the pleadings of the parties that the defendant has admitted theplaintiff’s claim based on the MOU or the act performed by the constitutedattorney on the basis of the power of attorney in question.

  8. From the averment of the pleadings it appears that further scrutiny withregard to the admission of MOU and also the power of attorney is to be made andsuch scrutiny necessitates examination of pros and cons of the MOU but not onits face value only. In order to deal with the question, whether the plaintiff isentitled to the amount claimed, can straightway be passed on the basis of theMemorandum of Understanding and whether the power of attorney was requiredto be registered or not and on the basis of the said power of attorney whether theattorney was entitled to transfer any immovable property or not needsinvestigation in detail. These are the questions to be taken care of only after theevidence is forthcoming. Without trial on evidence Court cannot give answer tothe questions raised by the plaintiff in the plaint vis-à-vis the objection raised by the defendant.

  9. In the application the petitioner has pointed out that the only core issue in the suit is whether the documents dated 7thJuly, 2008 executed by and between the plaintiff and the defendant is in accordance with law. Even assuming that this is the core issue according to the plaintiff, but whether this has been done in accordance with law or not, various other factors are involved or to be involved to come to a conclusion that a document is a valid and enforceable document.Without the parties being given opportunity to adduce evidence in support of the said document Court cannot come to a conclusion simply on perusal of the document that the plaintiff is entitled to the decree as claimed, nor can it beheld, as the plaintiff has submitted, that if a document is admissible in evidence the Court should not hesitate to pass a decree on the basis of such document.This Court cannot agree with such submission made on behalf of the plaintiff.Even if a document is admissible in evidence and marked as an Exhibit, the same will not be sacrosanct for the Court to come to a conclusion that executionof the document is also admitted and there cannot be any dispute with regard tothe contents of the document. Therefore, this is not a question of law on which apreliminary issue can be settled to decide the suit without calling for anyevidence. Provisions of Order 14, Rule 2 is relevant in the present case and thoseare set out below:-
    “R.2.Court to pronounce judgment on all issues.–(1)Notwithstanding that a case may be disposed of on a preliminary issue, theCourt shall subject to the provisions of sub-rule (2), pronounce judgment onall issues.
    (2) Where issues both of law and of fact arise in the same suit, and theCourt is of opinion that the case or any part thereof may be disposed of onan issue of law only, it may try that issue first if that issue relates to –
    (a) The jurisdiction of the Court, or
    (b) A bar to the suit created by any law for the time being in force, andfor that purpose may, if it thinks fit, postpone the settlement of the otherissues until after that issue has been determined, and may deal with thesuit in accordance with the decision on that issue.”

  10. Sub-Rule (2) of Rule 2 says that Court may try the issue of law provided,such issue relates to (a) jurisdiction of Court or (b) a bar to the suit created byany law for the time being in force, and for that purpose may, if it thinks fit,postpone the settlement of the other issues only after that issue may bedetermined and may deal with suit in accordance with law on that issue. ThisCourt respectfully disagree with the submission made by Mr. Sabyasachi Chowdhury that in the present case Court can proceed on the basis of apreliminary issue for which the application has been filed. Whether the MOU andthe power of attorney are legal valid and binding cannot be an issue of law. Thisis a question to be gone into only on consideration of the evidence to be adducedby the parties. The question that has been raised also does not come within themeaning of Sub-Rule (2)(a) and (b). Therefore, this Court is not in a position tosettle the issue as an issue of law within the meaning of Order 14, Rule 2, Sub-rule (2) of the Code of Civil Procedure.

  11. Mr. Jishnu Chowdhury is right in pointing out that the application itself isnot maintainable because only the suggested issues have been offered by theparties and issues have not yet been settled. According to him, without theissues are settled question of settling of an issue of law does not or cannot arise.According to him, the issues have to be settled first and thereafter one can file anapplication by requesting the Court to postpone other issues if it is possible togive a judgment on the issue of law but the case here is totally different becausethe issue which has been raised does not appear to be issue on law only, it is anissue to be decided on evidence. Mr. Jishnu Chowdhury has also contended thatthe application is misleading inasmuch as it does not say anything about thepower of attorney under the garb of which title of a property is passing throughand whether the power of attorney is a valid power of attorney or not, is yet to bedecided. Mr. Chowdhury also submits that besides the issue of MOU there areother issues raised by the defendants which are not canvassed in the application before this Court. Therefore, the submission made on behalf of the plaintiff that only on a particular issue of MOU the suit can be decided is not the correct position.

  12. Mr. Jishnu Chowdhury also draws attention of this Court to the orderdated 20thDecember, 2016 whereby one of the Hon’ble Judges of this Courtwhile disposing of GA No. 2693 of 2016, GA No. 2691 of 2016 and GA No. 2944of 2016 directed the defendant to deposit a sum of Rs. 2.38 crore with any nationalized bank and to make over the fixed deposit receipt to the Registrar, Original Side by January 15, 2017. Upon such exercise being completed, thedefendant would be at liberty to file its written statement within four weeksthereof. The documents were directed to be discovered within four weeks of thewritten statement being filed and inspection completed forthwith thereupon forthe suit to be ready to be placed before the appropriate Bench in March, 2017.

  13. It is submitted on behalf of the defendant that the said order has alreadybeen complied with by keeping the said sum in a fixed deposit and the originalfixed deposit receipt to the Registrar, Original Side, High Court, and Calcutta.

  14. Mr. Chowdhury further draws attention of this Court that in view of suchorder passed by the Hon’ble Court and the same having not been appealedagainst, it cannot be contended by the plaintiff that the suit need not be tried onevidence. I accept the submission made by Mr. Chowdhury and it is not possibleto accept the argument advanced on behalf of the plaintiff that the suit may bedisposed of without going for trial at all rather it can be disposed of only onconsideration of an issue of law.

  15. On a close scrutiny of the fact involved in this case and on a carefulconsideration of the provisions of Order 14, Rule 2, this Court is of theconsidered opinion that the said provision has no manner of application in thefacts of the present case. Apart from the submission that before settling theissues no issue of law can be finalized, I am of the opinion that the questionwhich has been raised by the plaintiff is not based on the issue of law only and,therefore, such issue cannot be considered to be an issue of law within themeaning of Order 14, Rule 2, Sub-Rule (2) of the Code of Civil Procedure.

  16. The application is dismissed. However, there will be no order as to costs. Let the suit appear in the list one week after vacation for settlement of issues.