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Star India Private Ltd. Vs. A.K. and I Advertising Pvt. Ltd. and Others - Court Judgment

SooperKanoon Citation
CourtMumbai High Court
Decided On
Case NumberNotice of Motion No. 136 of 2011 Along with Notice of Motion No. 2452 of 2012 In Suit No. 127 of 2011
Judge
AppellantStar India Private Ltd.
RespondentA.K. and I Advertising Pvt. Ltd. and Others
Excerpt:
civil procedure code - order 12 rule 6 and order 38 rule 5 - arbitration and conciliation act, 1996 – section 9 – “notice of motion� - plaintiff sued for declaration of  two gift deeds are null and void and recovery of money - plaintiff was to telecast certain advertisements at certain times for defendant no.1 - plaintiff raised its bill - defendant no.1 did not make payment – first arbitration proceedings has not success - defendant no.4/wife of defendant no.3 purchased equity shares – second arbitration was initiated – plaintiff got liberty to file suit - plaintiff learnt defendant execute the gift deed in favour of his wife and child - defendant no.4 contended that wife filed petition for.....1. the plaintiff has sued for declaration that two gift deeds dated 10th december, 2007 and 26th october, 2009 executed by defendant no.3 in favour of defendant no.5 and one gift deed dated 4th november, 2009 executed by defendant no.4 in favour of defendant no.3 and the business transfer agreement between defendant nos.2 and 4 are bad in law and not binding upon plaintiff. the plaintiff has also sued for recovery of rs.1,13,73,836.40 upon invoice dated 30th june, 2008 consisting of the amount under the invoice together with interest agreed at the rate of 1.5 % p.a. on the amount of the invoice. 2. the plaintiff and defendant no.1 entered into an agreement stated to be dated 20th june, 2008 exh.a to the plaint. the agreement specified options upon the terms and conditions mentioned.....
Judgment:

1. The plaintiff has sued for declaration that two gift deeds dated 10th December, 2007 and 26th October, 2009 executed by defendant No.3 in favour of defendant No.5 and one gift deed dated 4th November, 2009 executed by defendant No.4 in favour of defendant No.3 and the business transfer agreement between defendant Nos.2 and 4 are bad in law and not binding upon plaintiff. The plaintiff has also sued for recovery of Rs.1,13,73,836.40 upon invoice dated 30th June, 2008 consisting of the amount under the invoice together with interest agreed at the rate of 1.5 % p.a. on the amount of the invoice.

2. The plaintiff and defendant No.1 entered into an agreement stated to be dated 20th June, 2008 Exh.A to the plaint. The agreement specified options upon the terms and conditions mentioned therein. The plaintiff was to telecast certain advertisements at certain times for defendant No.1. The total outlay for the same is shown to be Rs.81,96,720/- under the terms and conditions stipulated as an annexure to the agreement. Under clause 4(e) the invoices of the plaintiff's were to be settled within 30 days by defendant No.1. The time for payment was to be the essence under the clause 7 of the terms. Defendant No.1 agreed that the invoice raised by the plaintiff was to be definitive proof that the advertisements were delivered and screened properly in a manner consistent with the agreement under clause 11 thereof.

3. Defendant No.1 raised its advertisement release order upon the plaintiff, thus accepting the agreement by performance of itself. However, defendant No.1 gave certain other instructions to the plaintiff, one of which specified an additional requirement for making the payment which was not part of the agreement between the parties. The plaintiff raised its bill for the period 9th June, 2008 to 30th June, 2008 which is stated to be not inconsonance with the terms of the agreement and has been explained by the plaintiff by way of amendment to the plaint and which also would be considered in the suit. The plaintiff's invoice dated 30th June, 2008 is a consolidated invoice over the total outlay mentioned in the agreement though only one of the programmes came to be mentioned therein.

4. Defendant No.1 did not make payment. The plaintiff sent its letter dated 6th November, 2008 for the outstanding payment along with details of the outstanding amount payable. This was followed by further letters dated 25th August, 2009 and 4th November, 2009 and thereafter a legal notice dated 24th November, 2009 for recovery of the amount not disputed by defendant No.1. The plaintiff invoked arbitration on 11th January, 2010 in terms of the agreement between the parties. The plaintiff claimed the amount of the bill together with interest at the agreed rate of 1.5% p.a. on delayed payments as specified under clause 7 of the agreement. The defendant neither accepted the arbitration, nor made payment nor raised any dispute about the liability for payment.

5. The plaintiff filed an Arbitration Petition U/s.9 of the Arbitration and Conciliation Act, 1996 ('the Act') to apply for interim relief. Pending the arbitration the defendant No.1 not only accepted the advertising agreement dated 20th June, 2008 between plaintiff and defendant No.1, but also full liability under the plaintiff's invoice dated 30th June, 2008. Defendant No.1 specified that the payment became due on 15th September, 2008 in its reply to the Arbitration Petition, but contended that there was financial crises, that defendant No.1 Company was to be revived and that defendant No.1 would generate funds for payment. It also stated that it was not to create any charge on the immoveable properties as contended by the plaintiff and that it had no immoveable assets œin whatsoever manner?. The plaintiff sought to obtain certain order against the business premises of the defendant No.1 which was stated to be taken on license. The license agreement produced before this Court in respect of the office premises of defendant No.1 shows the license in the name of defendant No.3 as the Chairman and Managing Director (CMD) of defendant No.1 who licensed said premises on and from 15th June, 2009. The claim of license has not been substantiated in the reply of defendant No.1 filed in the Arbitration Petition.

6. It would be seen that not only is the agreement expressly admitted but the precise amount payable is also admitted and the due date of payment is stated by defendant No.1 itself. This was after three letters and the legal notice which remained unreplied.

7. The Arbitration Petition U/s.9 of the Act came up for hearing on 18th March, 2010 before this Court. In view of the affidavit in reply of the defendant No.1 showing that it had no immovable property in any manner whatsoever the petition came to be disposed off with no relief granted to the plaintiff.

8. Soon thereafter on 5th April, 2010 the plaintiff learnt about public notice given by defendant No.4, the wife of defendant No.3 for purchase of equity shares of one Gurukripa Communications Pvt. Ltd. (Gurukripa) which was shown as the changed name of defendant No.2, another concern of defendant No.3. The said Gurukripa was shown as having owned a flat being flat No.67 in a building called Rupam, Worli Sea face, Mumbai 400 018. The advertisement clearly showed the immovable property of defendant No.1 which was sought to be alienated and transferred. The plaintiff filed its objection on 14th April, 2007 to the same. The plaintiff again invoked arbitration on that date and again filed a petition u/s.9 of the Act for obtaining interim relief for protection of property of defendant No.1 pending arbitration for payment to the plaintiff. The plaintiff obtained an exparte adinterim injunction relief in terms of prayer 'c' of the petition dated 14th May, 2010.

9. Defendant No.4 herein filed her reply on behalf of Gurukripa shown as the co-respondent in that petition which was the company shown as the successor-in-title of defendant No.1 herein in the public advertisement. Defendant No.4, the wife of defendant No.3, claimed to have been judicially separated. She produced certain consent terms dated 18th December, 2009 entered into by and between her husband, CMD of defendant No.1. She claimed to have been transferred the flat in Rupam as and by way of settlement for the residence and maintenance of herself and her three children. She claimed to have been gifted the shares of Gurukripa, the co-respondent shown in the petition which was shown as the successor-in-title of defendant No.2 in the public advertisement. She claimed to have gifted certain shares of defendant No.1 to defendant No.3. Defendant No.3 further claimed to have gifted certain shares of Gurukripa, which in terms denotes the flat in Rupam, to defendant No.5, his daughter also.

10. Copies of the gift deeds were produced by the defendants. The gift deeds are unregistered and insufficiently stamped documents. Their execution has been challenged in this suit.

11. The defendant No.4 produced the papers and proceedings in the petition for judicial separation filed by her, the consent terms executed by her with her husband and the order of the Family Court. Defendant No.4 also produced a Memorandum of Understanding showing how the flat in Rupam at Worli Sea face came to be sold by her and her daughter to a third party which was earlier claimed by her on behalf of Gurukripa, the co-respondent in the second Arbitration Petition.

12. In view of defence showing the alienation and transfer of certain businesses as also shares of the company which was shown to have owned the flat in Rupam, the plaintiff could not proceed with the second Arbitration Petition also for interim reliefs pending the arbitration.

13. An order came to be passed on 9th June, 2010 that the ad-interim order passed on 14th May, 2010 stood revoked œso far as today is concerned?. Liberty was granted to the plaintiff to amend that petition or to take out appropriate proceedings and then apply for appropriate reliefs.

14. This suit is accordingly filed pursuant to such liberty. The plaintiff cannot and has not sought to enforce arbitration agreement because arbitration agreement is only with defendant No.1 as aforesaid. In view of the acts of defendant No.3 on behalf of defendant No.1 in accepting the agreement between the plaintiff as also plaintiff's claim but not making payment and later admitting the liability but stating that it was in financial difficulty and thereafter disposing off the assets of defendant No.1 that the plaintiff had to sue to challenge the documents executed upon such acts and to make defendants other than defendant No.1 party defendants to the suit who could not be referred to arbitration.

15. In view of the aforesaid, it would have to be seen how and why the Deeds of Gift and the business transfer agreement are challenged. A short chronology of the aforesaid dates would serve well in appreciating at what juncture the various acts by defendant No.3 on behalf of defendant No.1 have been done.

16. The very first Deed of Gift between husband and wife, insufficiently stamped and unregistered, and which cannot be even be relied upon by the defendants in Court, is shown to be dated 10th December, 2007. This document claimed to have been executed on that date cannot even be accepted in view of the later chronology as shall be considered presently. The remainder of the documents are after the advertising sales agreement was admittedly executed by and between the plaintiff and defendant No.1 on 20th June, 2009 followed by the plaintiff's invoice, the various letters and the notice of demand by 6th November, 2008 which the defendant No.3, on behalf of defendant No.1 neither disputed nor made payment thereupon.

17. The second Deed of Gift is dated 26th October, 2009 soon after the liability became admittedly due. There is third Deed of Gift from wife to the husband on 4th November, 2009 which, strangely mentions that gift is made out of love and affection by the wife to the husband.

18. Within a fortnight thereafter the wife filed the matrimonial petition for judicial separation on the ground of adultery without making any party a co-respondent to end her marriage of 3 decades and within a month thereafter the husband and wife entered into consent terms on 18th December, 2009 upon which the Family Court passed the decree of judicial separation on 12th March, 2010 by which time the plaintiff had filed its first petition for interim reliefs pending the arbitration which was invoked by the plaintiff.

19. It will be relevant to see the petition for judicial separation and the consent terms brought to the notice of the plaintiff largely in the second petition filed U/s.9 of the Act. The otherwise verbose petition setting out what transpired in the marital life of the wife and the husband spanning three decades, the only allegation showing the ground for judicial separation is made in paragraph 16 thereof. It shows that some time in the middle of 2007 the wife observed that the husband was developing a close relationship with some other woman from his office. About month thereafter in July, 2007, the wife is stated to have œfinally reached the point where she could not take any more? and then appealed to the husband to give up relations. However, husband is alleged to have deserted the wife, left home and moved out. The aforesaid is stated to have transpired from the middle of 2007 until July, 2007. The petition was filed some time in 2009 after the parties tried to arrive at an amicable settlement which proved futile. The allegations of adultery noticed in the middle of 2007 which came to be head in July 2007 is shown to have been tried to be settled in amicably. This Court fails to understand what an amicable settlement of an adulterous relation could be which ended in futility and resulted in the matrimonial petition.

20. Whatever that be, even after noticing that close relationship in the middle of 2007, which could not be accepted or tolerated by July, 2007, the wife is shown to have executed a gift deed in favour of the same renegade, adulterer husband two weeks prior to the filing of that very petition. The marital life of 30 years which had begotten three daughters was sought to be brought to an end two weeks after the gift and two years after knowing of the adulterous relationship.

21. By the way and in the passing a statement came to be made by counsel on behalf of the wife that the husband and wife have since been divorced. No documentation of any petition for divorce or decree of divorce is produced.

22. The consent terms filed by husband and wife in the petition for judicial separation is worth a note. It is unlike any other. Its uniqueness is not only in the two parties, married for 30 years and who had gifted to and fro the shareholdings in companies including a company which owned the aforesaid flat in Rupam, but also in the timing of the consent terms itself. It came to be filed within a month of the petition being filed two years prior after the discovery of the husband's relationship and though the petition itself came to be filed because an effort at amicable settlement had ended in futility.

23. It may at once be mentioned that the ignoble end to the petition came to be brought about far more speedily then would be in a consent petition in which parties would have to wait for a period of six months which these parties did not desire to. Consequently, a contested petition came to be ended without contest within a month of its filing.

24. The consent terms shows not only intrinsic but interesting deals between the parties. Under the consent terms the husband and wife unconditionally (erroneously stated as conditionally) withdrew their respective allegations. Aside from the custody of the two minor daughters, from amongst the three daughters and the access rights to the husband nothing in the consent terms is as per the usual norms.

25. The wife was given exclusive possession and occupation of the œencumbered? matrimonial home, the husband was to have no right of residence therein and was not to claim any right, title and interest in the said home being the flat in Rupam. The parties agreed that assets, liabilities and contracts in the existing business of defendant No.1 other then the flat in Rupam would be assigned by the business transfer agreement to another company which shall be owned to the defendant No.3, the husband therein. The business was to be renamed and defendant No.3 was allowed to use that name for his special purpose vehicle (SPV). The wife agreed that the husband would use the name of the first defendant company. The wife was to manage and control and deal with the first defendant company under its new name Gurukripa, which was the co-respondent in the second Arbitration Petition filed by the plaintiff U/s.9 of the Act. The flat in Rupam was to belong to the said company Gurukripa which formerly belonged to defendant No.1 and would continue in possession and occupation of the wife and her three children. That flat was shown to belong to Gurukripa in the second arbitration petition consequent upon the consent terms between the husband and wife.

26. The consent terms further showed that the defendant No.2 company renamed as Gurukripa would continue to retain the flat in Rupam which is the matrimonial home of the wife who owns 50% of the shares of defendant No.1. The husband would have no shares of defendant No.1, he having gifted his 20% share to his daughter Rakhi under another unregistered and insufficiently stamped gift deed dated 26th October, 2009 (erroneously stated as 29th October, 2009). The wife agreed to take over the liability of CitiBank in favour of whom two bank charges were created in respect of the Rupam flat. She also took over certain further liabilities with which this suit is not concerned. It was thus that the wife was to be in exclusive possession of the œencumbered? the matrimonial home. The consent terms make specific references at at least three places to a family arrangement which is not produced though a family arrangement between the wife and adulterer husband is rather incomprehensible.

27. The wife took over the aforesaid liabilities of the company under a business transfer agreement which is also not produced. The wife agreed to relieve the husband of his obligation to pay his EMIs to the extent of Rs.4.23 Crores in return for the right to sell the flat in Rupam for which the husband had no objection upon the discharge of the loan of Rs.4.23 Crores by the wife guaranteed by defendant No.1 against the security of the flat.

28. After all these that the wife agreed to do, she recited that she had no source of income at all. Consequently under the consent terms the husband agreed to pay the wife and his two minor children Rs.9 lacs p.m. and to make advance payments of Rs.27 lacs for each quarter. That was the husband who was CMD of defendant No.1 which had no assets, which was in financial crises and which prayed for time without disputing its liability under the suit agreement. The husband also agreed to make arrangement for medical reimbursement, health issues, health insurance, marriage and education expenses and the repayment of education loan for the education of his children in the United States.

29. The husband further agreed that the wife shall use the office premises of defendant No.2 of which he was the CMD which he was shown to have used for 12 months prior to the consent terms. It would have been taken on license by defendant No.3 within those 2 years of his adulterous relationship.

30. Further the wife was to be the nominee in respect of certain insurance policies.

31. She was given three cars for the use of herself and her children which was used by her though bought by the husband upon taking bank loans, the installments of which also he undertook to continue to pay.

32. The wife and the husband agreed further that one property at Alibaug which was stated to have belonged to the HUF of her father (but which fact is not substantiated by the defendants who allege the fact) would be transferred to the names of the three children and belong to them exclusively. The husband, (despite having no right, title and interest in respect of his father-in-law's property) undertook to effect the transfer in favour of the children by 31st December, 2009.

33. The parties agreed to abide by the family arrangement hitherto not produced.

34. The consent terms is as much sham as the petition filed by the wife itself and the allegations of adultery made thereunder. The timing of the gift deed by the husband to the daughter and the wife to husband days before the filing of the petition and the consent terms executed days thereafter call their bluff.

35. It is seen to be a clear exercise to outreach the creditors of the husband who claimed to be in financial crises but agreed to transfer all his assets to the wife, changed the name of the company in which he was CMD, handed over his three cars to the wife and agreed to pay Rs.9 lacs p.m. to the wife and children. The wife indeed profited from the husband's adulterous affair which permitted her to end her marriage and to begin her life anew (to deny and defeat the plaintiff's claim in the arbitration sought to be invoked by the plaintiff.)

36. This is not all. Within four months of the consent terms the wife sold the flat in Rupam to a third party on 30th April, 2010 under an unregistered, insufficiently stamped MOU. The third party, shown as the buyer, paid consideration of Rs.4.5 Crores and reimbursed the BMC charges of Rs.4.72 lacs to the wife. Of course, the CitiBank loan, then of Rs.4.30 Crores was to be discharged to remove the encumbrance from the flat and obtain a œno dues? certificate for the buyer. The wife, therefore, made a clear profit of Rs.20 lacs on the deal and the husband rid himself and his company of the asset. It is not known where the wife would reside with her 3 children.

37. In the face of such documents it is contended on behalf of the defendants that the transactions are clean and clear, that the relationship between the husband and wife is at an end and that the adulterous relationship is shown in but one sentence specifying a close relationship of a husband with another woman from his office resulting in desertion. One wonders where the husband would spend the rest of his life and with whom in view of the fact that he has washed himself off all his properties, moveable and immoveable “ the flat and the cars. Upon a query of the Court it was stated that the husband lives in a licensed premises in Gurgaon, the documentation of which is, of course, not produced.

38. It would be insulting the intelligence of even an ignoramus to contend that the acts, transactions and documents executed by or between the wife and the husband could be allowed to remain as legal and enforceable in view of the total lack of any dispute raised by the husband to the plaintiff's claim.

39. In fact, upon the specific admission of the specific liability of Rs.78,28,359.40 by the husband in his affidavit in reply filed in the first arbitration petition filed by the plaintiff and his statement of the payment having become due on 15th September, 2008, a judgment on admission would otherwise be required to be passed under the provisions of Order 12 Rule 6 of the CPC.

40. Defendant No.3 has sought to contend that the agreement was not executed, and is in the nature of an offer despite the performance by defendant No.3 himself on behalf of defendant No.1 as per his advertisement release order. Defendant No.3 has also sought to contend that telecast certificate was to be given by the plaintiff before any payment was to be made which under clause 7 of the telecast instructions in advertisement release order is unilateral. Defendant No.3 has also contended that the plaintiff's invoice is relating to 1/10th of the programs and has been issued almost immediately after the advertisement release order and hence is disputed. The defendant further contends that certain joint committee meetings of the Indian Broadcasting Foundation (IBF) who sought to settle the dispute showed that the plaintiff was part of it and one of its members was the plaintiff's chairman. Defendant No.3 on behalf of defendant No.1 never raised any such objections in the first arbitration petition and not only admitted the execution of the agreement but the extent of the liability and the due date of payment. The aforesaid disputes are belatedly raised and distinctly an after thought. The plaintiff would require to be secured of the admitted liability, in the face of the acts of defendant No.3 on behalf defendant No.1 as its Director to outwit the plaintiff.

41. This is not even a case of apprehension that the defendant would seek to alienate the assets of the defendant to defeat the plaintiff's claim. The plaintiff's claim is upon the actual alienation made by the defendant Nos.1 and 3 in favour of defendant Nos.4 and 5, his wife and child under the unregistered and insufficiently stamped Deeds of Gift, the business transfer agreement hitherto not produced and under mere declarations in the consent terms not only with regard to his own property but also the property alleged to be of his father-in-law bequeathed to his wife. The plaintiff has sought to trace the properties of defendant No.4 who has been the largest single beneficiary of defendant No.3 in the isoteric Family Court petition. The plaintiff has also sought to lift the corporate veil of defendant Nos.1 and 2 and aforesaid Gurukripa to show the interior of the facade of these companies. The plaintiff's Notice of Motion seeks attachment before judgment of three specific properties.

42. In the case of Raman Tech. Process Engg. Co. and Anr. Vs. Solanki Traders, (2008) 2 Supreme Court Cases 302, the object of Order 38 Rule 5 of the CPC is held to prevent ends of justice being defeated and to prevent the defendant from defeating the realization of decree that may ultimately be passed in favour of the plaintiff. It is also held that the Court must see that the claim of the plaintiff is bonafide and valid that the defendant would remove or dispose of his property. This case goes even further; the plaintiff's claim is expressly admitted; the defendants have already removed and disposed of all their properties between them and subsequent purchaser. A case for furnishing security and failing which for attachment of the properties of the defendants is amply made out.

43. Even the changes in the title of the various properties by and between the defendants and their business concerns comes under the scanner of the corporate veil, requiring it to be lifted to see the reality within “ the properties of defendant No.1 having changed hands and nestled in the coffeurs of defendant Nos.4 and 5. The principles enunciated in the case of Delhi Development Authority Vs. Skipper Construction Co. (P) Ltd. and Anr., (1997) SC 362 Vol.89 to which my attention has been drawn by Mr. Saraf come into play and require to be followed. The very concept of various separate corporate entities in which defendant Nos.3 and 4 have shareholdings are seen to be deceptive. The observations of the Supreme Court within regard to corporate entities of such nature apply to his case and run thus:

The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned.

If it is found that someone has acquired properties by defrauding the people and if it is found that the persons defrauded should be restored to the position in which they would have been but for the said fraud, the court can make all necessary orders for the purpose.

44. That was the case of one T who sought to purchase a property at an auction held by the DDA and failed to pay the auction purchase price as mandated by law and yet sought to develop the property and created transfers of units therein in the names of various companies.

45. The Supreme Court reiterated the exception to the rule of separate corporate entity since the oft cited earliest case of AronSalomon V. Salomon and Co. Ltd. (1897) AC 22 and 51, in which the House of Lords enunciated the principle of exception thus:

œwhen the corporate personality is being blatantly used as a cloak for fraud or improper conduct.?

46. The Supreme Court also cited the legal principle of fraud and deception requiring the corporate entity to be treated only as an association of person in the 4 instances cited by Sanborn, J.

œ¦.. legal entity being used? to defeat public convenience, justify wrong, protect fraud and defend crime.?

47. Citing American research it accepted the concept of lifting the corporate veil: When the conception of corporate entity is employed to defraud creditors to evade an existing obligation. ¦. The courts will draw aside, the web of entity, will regard the corporate company as an association of live, upanddoing, men and women shareholders, and will do justice between real persons.

¦. the Courts have further shown themselves willing to 'lifting the veil' where the device of incorporation is used for some illegal or improper purpose.

¦. The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the Court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned.

48. The Supreme Court treated all the entities created by 'T' as one entity belonging to and controlled by him and his family observing that they were 'Cloaks' behind which 'T' and the members of his family 'lurked' with the device of incorporation of various legal entities 'really a ploy adopted for committing illegalities and / or to defraud people'. (See page 381).

49. The Supreme Court inter alia directed attachment of properties not until then attached, continuation of attachment of already attached properties until its sale and directed 'T' to deposit the amount of auction purchase price in full before reprimanding the deceptive acts of persons who were strictured to have œmade a 'property career' the sole aim of their life?.

50. In this case property at Alibaug is stated to be of the HUF of the father of the wife in clause 18 of the consent terms without particulars given by the wife. It is stated to have been bequeathed to the wife in the affidavit in reply of defendant No.1 filed in the plaintiff's Notice of Motion. It, therefore, belongs to the wife. The husband and wife are seen to be one. The other properties are shareholdings in various companies of the family. The wife as well as husband have shareholdings in various companies belonging to the family as stated above.

51. The acts of the defendants merit an order of deposit of the amount in the suit as also an order of attachment before judgment being passed in the suit. The plaintiff has prayed for deposit of admitted amount of Rs.78,28,359.40 and the interest amount at an agreed rate of 1.5% p.a. aggregating to Rs.1,13,73,836.40 for which the suit has been filed. It would be the amount which would have been awarded to the plaintiff in the arbitration invoked by the plaintiff had the defendant Nos.1 and 3 not evaded that proceeding by alleging financial crises whilst admitting the liability.

52. The defendants' Notice of Motion for reference of the dispute to the arbitration is as much to outreach to Court as the previous transactions have been to outreach the plaintiff. Despite twice invoking the arbitration, the plaintiff was unable to recover its modest dues to Rs.1.13 crores from the defendant No.1 with whom he had contracted or to be secured any assets U/s.9 of the Act. The defendants' application for reference of the dispute to arbitration cannot be granted in view of various parties to the suit who are parties to the fraud alleged and shown by the plaintiff who are not parties to the Arbitration agreement. (See SukanyaHoldings (P) Ltd. Vs. Jayesh H. Pandya and Anr. (2003) 5 Supreme Court Cases 531, Ivory Properties and Hotels Pvt. Ltd. Vs. Nusli Neville Wadia, 2011(2) Bom C R 559 and N. Radhakrishnan Vs. Maestro Engineers and Ors., (2010) 1 Supreme Court Cases 72.)

53. Hence the following order:

1. Notice Motion No.2452 of 2012 is dismissed.

2. The plaintiff's Notice of Motion No.136 of 2011 is made absolute in terms of prayer 'c'.

3. The defendants shall deposit Rs.1,13,73,836.40 in this Court within four weeks from today failing which the plaintiff's Notice of Motion is made absolute in terms of prayer 'a' as also prayer 'b' in respect of the properties mentioned in clause (i) and (iii) thereunder.

4. Defendant No.3 shall pay costs of the plaintiff's Notice of Motion fixed at Rs.1 lac to the plaintiff.


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