Judgment:
1 ORDER
SHEET AP1058of 2016 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction ORIGINAL SIDE IFGL REFRACTORIES 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.214 lakhs 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, learned Senior Counsel appearing on behalf of the petitioner, has referred to the Memorandum of Understanding dated 28th October, 2016 and the correspondence preceding the said Memorandum of Understanding and submits that in the Memorandum of Understanding and submits that in the Memorandum of Understanding the respondent has unequivocally admitted receipt of a sum of Rs.4.21 crores which include Rs.214 lakhs of the petitioner, but has refused to release the said payment.
It is submitted that the said amount is being held by the respondent in trust for the petitioner and the respondent cannot refuse to release the said payment.
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, is not reflected from the recitals of the said Memorandum of understanding as it clearly stipulates that there are disputes with regard to the amount to be paid to the petitioner as also the duty draw-back amount.
It is submitted that under the Memorandum of Understanding, it was upon the petitioner as well to have a discussion and resolve the matter amicably and the respondent was all throughout willing resolve it.
Mr.Kapoor has referred to emails 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.
It is submitted that the petitioner has deliberately breached the MOU by not facilitating opening of an Escrow Account.
Although the respondent has discharged all its obligations by forwarding the necessary documents to open Escrow bank account.
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.
The learned Senior Counsel submits that the letter dated 6th December, 2016 would show that following the intention of the MOU, the respondent paid Rs.21,71,601/21 towards the supplies on 2nd December, 2016 and even forwarded necessary documents to facilitate opening of Escrow account.
Curiously, the petitioner on 5th December, 2016 by a one liner cancelled the MOU.
It is submitted that the MOU could not be terminated unilaterally.
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.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 though the respondent only which is now sought to be breached.
The respondent has protested against such conduct in its communication dated 25th October, 2016 and the same has also been duly acknowledged by the petitioner in the MOU.
The MOU is required to be read as a whole and not in isolation.
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.214 lakhs approximately has been paid in the account of the respondent to be transferred to the petitioner after deduction of a commission of 4.5 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.214 lakhs.
I am not inclined to read the Memorandum of Understanding to be an unequivocal admission of liability of Rs.214 lakhs as there are indications in the recitals itself which shows that there are disputes with regard to the said claim which would also be reflected from the communication dated 25th October, 2016 and also the earlier correspondence exchanged between AM and IFGL which are produced at the time of argument.
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.214 lakhs, the merits of the defence to the claim are yet to be ascertained.
Had there been no reservation with regard to Rs.4.21 crores which include Rs.214 lakhs approximately, what has been argued by Mr.Anindya Mitra, learned Senior Counsel appearing on behalf of the petitioner would have been readily acceptable to this Court for passing an order of attachment.
Considering the letter dated 25th October, 2016 and the recital in the Memorandum of Understanding dated 28th October, 2016, I am of the view that the respondent should be given opportunity to answer to the cause and only thereafter the prayers could be considered.
In an earlier matter being AP No.1045 of 2016 where in a similar situation respondent was directed to earmark Rs.250 lakhs to be kept in a separate account.
It is submitted on behalf of the respondent that they have earmarked a sum of Rs.250 lakhs to the credit of the said matter till the said matter is decided.
This fact shows that the respondent is solvent.
The respondent has also agreed to give an undertaking of a valuable property which in their estimation would be Rs.25 Crores belong to their sister concern to secure the claim of the respondent, if they are required to do so in the instant matter.
The said property is presently in control of Sr.Kunal Dalmia.
Under such circumstances, the respondent shall file an affidavit of undertaking from the owners of the property situated at Rajarhat within 4th January, 2017 to the effect that the owners of the said properties shall not alienate, encumber and/or dispose of the property without the leave of the Court, failing which, the said sum of Rs.214 lakhs 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.)