Judgment:
1 ORDER
SHEET AP1070of 2016 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction ORIGINAL SIDE VESUVIUS INDIA LIMITED versus LINDSAY INTERNATIONAL PRIVATE LIMITED.
BEFORE: THE HON’BLE JUSTICE SOUMEN SEN Date : 23rd December, 2016.
Appearance: Mr.Anindya Mitra, Sr.Adv.Mr.Pratap Chatterjee, Sr.Adv.Mr.Rishad Medora, Adv.Ms.Anshumala Bansal, Adv.Mr.Arunabha Deb, Adv....for the petitioner.
Mr.S.K.Kapoor, Sr.Adv.Mr.S.N.Mookherjee, Sr.Adv.Mr.Abhrajit Mitra, Sr.Adv.Mr.Shaunak Mitra, Adv.Mr.Satadeep Bhattacharyya, Adv.Mr.S.R.Kakrania, Adv.Mr.Sanjeeb Seni, Adv.Mr.Souvik Kundu, Adv...for the respondent.
The Court: The petitioner is an unpaid vendor.
The petitioner has filed this application for securing and/or preservation of Rs.9 crores payable by the respondent to the petitioner on account of goods sold and delivered to ArcelorMittal (hereinafter referred to as “AM”).The petitioner alleged that under the terms of purchase ordeRs.the respondent is obliged to release payments within three working days of receipt of payments by the respondent from the overseas buyeRs.It is alleged that the respondent is not disputing that the payments from the overseas buyers have been received, but for some oblique purpose or reason the respondent is avoiding payment.
Mr.Anindya Mitra, the learned Senior Counsel appearing on behalf of the petitioner, has referred to the purchase order dated 8th April, 2016 and submits that the respondent having receive the entire amount covered by the purchase order is required to disbuRs.the said amount to the petitioner as the respondent is holding the said amount in trust for and on behalf of the petitioner.
It is submitted that the respondent cannot have any claim whatsoever on the said amount and the refusal to release payment in respect of the said purchase order is illegal and wrongful.
It is submitted that under the agreed terms and conditions, the respondent is required and obliged to pay the consideration amount after deduction of certain percentage depending on the transaction value within three working days of receipt of the payment from overseas buyer, namely, AM group.
The respondent is not denying nor they can deny that they have not received payment of approximately Rs.9 crores covered by the purchase orders and after having received payment in terms of the purchase order, the respondent is obliged to remit the said proceeds after deduction of their commission as agreed upon between the parties.
The petitioner has also entitled to receive amounts over and above Rs.9 crores but since overseas buyers have not released payment in respect of those consignments, the respondent is not making any claim on account of those transactions.
The petition is only confined to the amounts already received from the overseas buyer but not paid to the petitioner.
Mr.Mitra has referred to the e-mail dated 21st October, 2016 and the response of the respondent to the said e-mail.
Per contra, Mr.S.K.Kapoor, learned Senior Counsel appearing on behalf of the respondent, submits that the admission of liability as argued on behalf of the petitioner cannot e considered in isolation disregarding the entire transaction and how the parties have conducted themselves for the last several yeaRs.Mr.Kapoor has referred to e-mails and correspondence prior to October 28, 2016 to demonstrate that notwithstanding non-exclusivity clause in the purchase ordeRs.the petitioner was directly communicating with ArcelorMittal thereby committing a breach of contract for which the respondent is entitled to damages.
Mr.Kapoor has referred to the communication dated 25th October, 2016 where the respondent has asserted implied contract of exclusivity and has threatened the petitioner to claim loss and damage in case there is a breach of the exclusivity clause.
It is submitted that the respondent is having a claim on account of damages and at an appropriate time, such claim should be lodged.
The learned Senior Counsel has submitted that the dispute is required to considered on a broader perspective and myopic view restricting an enquiry into few purchase orders would not be the correct approach to understand and appreciate the problem as AM has procured a breach of contract between the petitioner and the respondent.
The petitioner is colluding with AM to ruin the business of the respondent.
It is argued that the respondent over a period of time has dedicated fully for developing the business of AM which the said AM along with the petitioner vendor is seeking to ruin.
Mr.Kapoor submits that the sequence of events from 2nd December, 2010 would show that this application is malafide and the petitioner without discharging its obligation is raising this malafide claim with a view to run the business of the respondent.
Mr.Kapoor further submits that the petitioner has not given a clear picture of the nature of dispute and has suppressed important and material documents which would establish that there has been an implied contract between the parties that the entire materials are to be supplied through the respondent only.
Mr.Kapoor has referred to the e-mails dated 14th July, 2016 and submits that the exchange of correspondence between the parties clearly establish that all the supplies are to be routed through the respondent.
In fact, as late as on 28th November, 2016, a draft Memorandum of Understanding was forwarded to the petition for execution and return.
The said draft agreement was prepared in line and in tune with the existing arrangement.
The petitioner, however, deleted the exclusivity clause, although, it had recognized that the arrangement on exclusive basis was continuing since 2004.
The learned Senior Counsel has laid much emphasis on the e-mail dated 13th November, 2016 referred by AM in an earlier proceeding and submits that the said e-mail would support the contention of the respondent that the sale was on exclusive basis between the Vesuvius India LTD.and the respondent and such arrangement was approved and agreed upon by AM Group.
The relevant portion of the e-mail dated 13th February, 2016 from Francois.Wanecq of petitioner to Aditya Mittal of AM reads as follows:- “The procurement relationship between VIL and LIPL was agreed upon by ArcelorMittal group, with the subsequent trading undertaken with full involvement, guidance and support of AM.
LIPL was in fact appointed as a purchasing agent of AM, as evidenced by the exclusive sale of products by LIPL to AM, but the purchase of products by LIPL from several competitors of Vesuvius as well as VIL.
AM also holds a significant share in LIPL’s capital and is represented by a director in the board.
As a consequence, any legal action that could be initiated by the creditors of LIPL will inevitably drag AM into it and the fall out thereof.” The learned Senior Counsel submits that these documents are material and essential for proper adjudication of the disputes and the petitioner having deliberately concealed and suppressed these documents, no interim order should be passed in favour of the petitioner.
The said submission is made on the basis of the decisions of our High Court in Mica Export Promotion Council & ORS.versus G.C.L.Joneja & ORS.reported at 72 CWN117and Jagannath Gupta & Company Private LTD.versus Mulchand Gupta reported at 72 CWN872 The learned Senior Counsel has also produced before this Court a chart showing that the petitioner is required to supply goods worth more than Rs.27 crores to the respondent in order to enable the respondent to honour its obligation with AM.
It is alleged that AM and the petitioner in collusion and are trying to procure breach of the respective agreements in order to ruin the business of the respondent.
Mr.Kapoor further submits that there has been an implied contract between the petitioner and the respondent that the petitioner shall not deal directly with AM and all goods meant for AM shall be supplied through the respondent only which is now sought to be breached.
Mr.Kapoor, however, on an enquiry submits that the respondent would be in a position to given an undertaking in respect of 3 acres of land at Rajarhat if required.
This submission is, however, without prejudice to the rights and contention of Mr.Kapoor that the petitioner is not entitled to any relief.
Mr.Kapoor has reminded this Court of the learned Single Bench Judgment of Calcutta High Court in Premraj Mundra v.
Md.Maneck Gazi & ORS.reported at AIR1951Calcutta 156 and has referred to a Single Bench decision of the Bombay High Court in Harkisondas Nanjibhai versus Chaturbhuj Prabhudas reported at AIR1947Bombay 434.
Mr.Kapoor has also referred to the judgment of the Hon’ble Supreme Court in Raman Tech.
& Process Engg.
Co.& Anr.
versus Solanki Traders reported at (2008) 2 SCC302in support of his submission that the Court is required to be satisfied that the conditions of Order 38 Rule 5 of the Code of Civil Procedure are fulfilled since power under the provision is drastic and extraordinary and should not be used as a tool to stifle the business of the respondent.
It is submitted that the said decisions clearly recognize the principle that if the plaintiff does not have any specific claim over the properties is a mere general creditor seeking to obtain payment by sort of equitable action of assumpsit or debt no order of receiver or attachment should be allowed.
In short, it is argued that any order in this proceeding, at this stage, would convert the claim of mere general creditor to a secured creditor without there being an adjudication as to the claim of the respondent.
Mr.Anindya Mitra, the learned Senior Counsel in reply has refuted the said submission of oral understanding and has referred to the parent agreement between AM and the respondent to show that there is no exclusivity clause which debars AM from procuring the material directly from the vendors nor does it prevent a vendor to supply to AM directly.
However, it is submitted that such issue may not be gone into since it is an admitted position that specific amount concerning the purchase orders in question aggregating to a sum of Rs.9 crores approximately has been paid in the account of the respondent to be transferred to the petitioner after deduction of a commission of 5 per cent.
The respondent is only entitled to a commission and nothing more.
In the aforesaid background it needs to be considered whether any interim order should be passed before filing affidavits.
Section 9 of the Arbitration and Conciliation Act, 1996 is an amalgam of Order 38, Order 39 and Order 40 of the Code of Civil Procedure.
The duty of the Court is to preserve the subject matter of dispute.
In a situation whether there is a claim and counter-claim, the Court is required only to form a prima facie view on assessment of the quality of the defence raised if any interim order is required to be passed and thereafter left it for the parties to have their disputes resolved through arbitration.
The application is filed in contemplation of an arbitration proceeding.
In the instant case, the arbitration has not commenced.
The prayer in the petition is in the nature of attachment before judgment.
It is at the initial stage being decided without affidavits.
The question is whether, at this stage, any interim protection is to be given to the petitioner in respect of Rs.9 crores.
Prima facie it appears from the documents relied upon the by Mr.Kapoor that Vesuvius understood that the supplies to AM would be effected through the respondent only.
Vesuvius also initially appears to have not agreed to sell the goods directly to AM or its group bypassing the respondent.
However, at the same time, it appears that since October, 2016, Vesuvius has not been paid.
It is also an admitted position that a sum of approximately Rs.9 crores have been received by the respondent from the overseas buyer which was paid in connection with the goods sold by the petitioner to AM group through the respondent.
Although, it is alleged that the AM has procured a breach of contract between the parties and the petitioner is now colluding with AM group in order to bypass the existing arrangement with a view to ruin the business of the respondent but as on date this Court is unable to form an opinion that there could a valid defence to the claim of Rs.9 crores.
The claim of the respondent, at this stage, sounds in damages.
It is true that the claim on account of damages as of now is an uncertained sum as opposed to a claim on account of price of goods sold and delivered being quantified as Rs.9 crores, the merits of the defence to the claim are yet to be ascertained.
Considering the documents disclosed in this proceeding by the respondent during argument, I am inclined to give an opportunity to the respondent to file an affidavit and only thereafter to consider the prayers made in the petition.
In earlier materials, concerning the similar situation, the respondent has earmarked a sum of Rs.250 lakhs to the credit of one of the matteRs.namely, AP No.1045 of 2016 and has agreed to give an undertaking in AP No.1058 of 2016 with regard to a valuable property at Rajarhat which in the estimation of the respondent would be more than Rs.25 crores, in my view, the interest of the petitioner would be adequately protected if an undertaking is also given by the owners of the Rajarhat property to the effect that they shall not alienate, encumber and/or dispose of the property without the leave of the Court until further ordeRs.The learned Senior Counsel appearing on behalf of the respondent submits that the said property at Rajarhat is presently in control of Sr.Kunal Dalmia and the owners of the property at Rajarhat are in a position to give an undertaking if required.
Under such circumstances, the respondent shall file an affidavit of undertaking from the owners of the property situated at Rajarhat on or before 4th January, 2017 to the effect that the owners of the property shall not alienate, encumber and/or dispose of the property without the leave of the Court failing which, a sum of Rs.8.50 crores shall remain attached.
The interim order shall valid for a period of 90 days from the date within which the arbitration proceeding shall commence failing which the interim order shall stand automatically vacated.
Let affidavit-in-opposition be filed on or before 6th January, 2017 reply thereto if any be filed within 7 days thereafter.
Let the matter appear under the heading “Arbitration Motion” adjourned three weeks after Christmass Vacation.
(SOUMEN SEN, J.)