M/s S.S. Agro Bio-Tech Flour Mills (Pvt.) Ltd Vs Arvind Singh

Anubha Rawat Choudhary, J.

1. This commercial appeal has been filed by defendant nos. 1 to 3 challenging the Judgment and Decree dated 30.09.2019 (Decree signed on 07.11.2019) passed by learned District Judge-XIV cum P.O., Commercial Court, Dhanbad in Original Suit No. 35/2017 (Original Suit No. 85/2016), whereby and whereunder, the suit of the Plaintiff has been decreed in favour of the Plaintiff by which the defendant nos. 1 to 3 (Appellants herein) have been ordered to pay an amount of Rs. 89,75,000/- to the Plaintiff (Respondent No. 1 herein) together with interest @ 12% per annum from the filing of the suit till realization of the amount.

2. The prayers made in the plaint are quoted as under:

“A) A decree of specific performance of contract dated 20.12.2012 may kindly be passed in favour of Plaintiff against the Defendant no-3 with direction to execute the sale deed and get it registered and on failure thereof the sale deed be executed and registered according to law.

alternatively,

A decree may kindly be passed directing the Defendant no-3 to pay a sum of Rs.36,00,000/-(Thirty six lacs) along with interest pendente lite to the Plaintiff;

B) A decree in favour of Plaintiff for recovery of money may kindly be passed directing the Defendant no-1 and Defendant no-3 to pay a sum of Rs. 53,75,000/- (Rs. Fifty Three Lakhs Seventy Five Thousand) only along with interest pendente lite.

C) A decree in favour of the Plaintiff directing the Defendant no-1 and 3 to pay compensation of Rs. 20,00,000/- for mental agony and pain to the Plaintiff; and

D). A decree of permanent injunction restraining Defendants from doing any act including mortgaging, creating encumbrances or charge by any other means over the Schedule 'A' property in favour of Defendant no-4, 5 and 6 in contravention of the "agreement for sale" dated 20.12.2012; and

E). A decree may be passed for appointment of a Court Receiver to manage the affairs of the Defendant No. 1 Company with assistance of such person/persons whom such Court receiver thinks fit and proper on such terms and conditions as the Court deems fit and proper; and

E1) A decree of mandatory injunction directing the defendant no. 4, 5 and 6 to return original sale deeds bearing no. 7349, 6251, 6252, 2676, 2677, 3378, 4139, 2382, 2294 to plaintiff.

F) An interim order may be passed to attach the Schedule 'A' property before the judgement of the suit; and

G) A decree for cost; and/or

H) Any other relief/reliefs to which the Plaintiff is found entitled to.”

The details of the properties have been provided in the Schedule to the plaint and also mentioned in the decree issued by the learned Court.

3. In the suit, defendant nos. 1, 2 and 3 (appellants herein) were debarred from filing written statement on 11.01.2017. Upon a question put by this court, the learned counsel for the appellants has submitted that the plaint was served upon them on 24.08.2016 and as per Order VIII Rule 1 of Code of Civil Procedure, 1908 (hereinafter referred to as ‘CPC’) as amended and applicable to the proceedings under Commercial Courts Act, 2015 period of 120 days expired on 24.12.2016. The time petition was filed on 11.01.2017 which was rejected on the same day . Defendant nos. 4, 5 and 6 representing the Bank contested the matter by filing written statement taking a specific stand that properties involved in the prayer for specific performance of contract were mortgaged with the bank and hence the suit was not maintainable in view of bar under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Hereinafter referred to SARFAESI Act).

Arguments on behalf of the appellants (defendant nos. 1, 2 and 3)

4. The learned counsel for the appellants has submitted that the following points are involved in this appeal: -

a. The appellants [defendant nos. 1, 2 and 3] were wrongly debarred from filing the written statement.

b. The learned Court did not frame an issue as to whether the dispute involved in the case was 'commercial dispute'. The learned counsel has submitted that the dispute was not a ‘commercial dispute’ and accordingly could not have been decided by the commercial court. The learned counsel has relied upon the judgment rendered by the Hon'ble Supreme Court in the case of "Ambalal Sarabhai Enterprises Limited v. K.S. Infraspace LLP and another" reported in (2020) 15 SCC 585 to submit that specific performance in connection with execution of deed relating to immovable property cannot constitute 'commercial dispute'. She has referred to paragraph no. 37 which is as under.

“37. A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub-clause(vii) of Section 2 (1) ( c) of the Act viz. “the agreements relating to immovable property used exclusively in trade or commerce”. The words “used exclusively in trade or commerce” are to be interpreted purposefully, the word “used” denotes “actually used” and it cannot be either “ready for use” or “likely to be used” or “to be used”. It should be “actually used”. Such a wide interpretation would defeat the objects of the Act and the fast-tracking procedure discussed above.”

c. The defendant bank had also raised an objection that the suit was barred under the provisions of SARFAESI Act inasmuch as the properties were already mortgaged with the bank.

d. The plaint was not filed in compliance of Order VII Rule 14 of CPC, inasmuch as, the document was not annexed along with the plaint. Plaintiff did not even seek leave of the Court to file the document. However, the documents were subsequently exhibited. The objection in connection with non-compliance of Order VII Rule 14 was taken by the defendant Nos. 4, 5 and 6 in their written statement.

e. Order VI Rule 15-A of CPC as applicable to the Commercial Courts Act, 2015 as per the schedule provides that the verification has to be in a prescribed manner and every pleading, if not verified in the manner as provided in sub-rule (1), the parties shall not be permitted to rely on such pleadings as evidence or any of the matters set out therein. The plaint was not verified in terms of Rule 15-A as applicable.

f. The learned counsel has referred to Appendix I of the Commercial Courts Act, 2015 and has drawn the attention of this Court to paragraph no. 5 which is quoted hereinbelow:

“5. I say that all documents in my power, possession, control or custody, pertaining to the fact and circumstances of the proceedings initiated by me have been disclosed and copies thereof annexed with the plaint, and that I do not have any other documents in my power, possession, control or custody.”

She submits that the aforesaid compliance is not a mere formality; Appendix I having not been complied, the suit itself has to be dismissed.

g. The learned counsel has also submitted that the defendant no.1 is a company and therefore, its liability could have not have been fastened upon its director.

Arguments of the respondent no. 1 (plaintiff)

5. Learned counsel appearing on behalf of the respondent no. 1/plaintiff has opposed the prayer and has submitted that the suit was based on specific performance of contract as contained in Exhibit 8 and Exhibit 8/5, both dated 20.12.2012. He has submitted that Exhibit 8 is an agreement dated 20.12.2012 with defendant nos. 1 to 3 where the defendant no. 3 had signed the agreement with the plaintiff in the capacity of Director of the defendant no. 1 and proprietor-cum-owner of defendant no. 2. So far as the agreement contained in Exhibit 8/5 dated 20.12.2012 is concerned, the same is an agreement between the plaintiff and the defendant no. 3.

6. Upon a query of this Court, learned for the plaintiff has submitted that the defendant no. 1 is not a party to Exhibit 8/5, but the defendant no. 2 is a proprietorship firm of defendant no. 3; defendant no.3 is the signatory of the agreement and therefore, with respect to transactions relating to Exhibit 8/5, defendant nos. 2 and 3 are liable but not defendant no. 1. He submits that so far as Exhibit 8 is concerned, defendant nos. 1 to 3 are jointly and severally liable.

7. The learned counsel further submits that the suit was filed before the Civil Judge, Senior Division at Dhanbad and was numbered as Original Suit No. 85 of 2016 but, by virtue of the operation of Section 15 of the Commercial Courts Act and upon constitution of Commercial Court in the District of Dhanbad, the suit was transferred to the Commercial Court and was numbered as Original Suit No. 35 of 2017. The learned counsel submits that no grievance was raised by the appellants in connection with the transfer of the suit to the commercial court and the plaintiff has no role to play in the matter.

8. The learned counsel has further referred to Section 15 of the Commercial Courts Act to submit that as per Section 15(3) of the Act, when a suit stands transferred to Commercial Court, the provision of the Commercial Courts Act is to apply to those procedures which were not completed at the time of transfer. He submits that the suit having been filed before the regular Court, there was no occasion to file the plaint at that point of time in terms of the verification, affidavit and other requirements as provided under the Commercial Courts Act, 2015 with respect to applicability of Civil Procedure Code as amended by the said Act of 2015. The learned counsel has further submitted that otherwise also the filing of the affidavit, verification, etc. is essentially a matter of procedure. He submits that in view of the fact that the suit was filed before regular Court, the objection with regard to verification, affidavit, etc. which has been raised by the appellants and recorded in order dated 21.08.2024 has no bearing in the matter. He submits that otherwise also, the suit was decreed on the basis of evidences adduced by the parties and the defendant nos. 1 to 3, though had not filed the written statement and had not adduced any evidence but had duly participated in the proceeding and cross-examined the witnesses.

9. The learned counsel for the plaintiff further submits that so far as the filing of written statement is concerned, though no specific challenge has been made to the order by which the defendant nos. 1 to 3 were debarred from filing written statement, but a ground has been taken in the Memo of Appeal. He has submitted that the perusal of the records reveals that on notice, interalia, the defendant no.1 to 3 had appeared and vide order dated 11.01.2017, time petition filed on behalf of the defendant nos. 1, 2 and 3 for filing show cause and written statement was rejected by the Commercial Court as by that time, 120 days from service of summons had already expired. The defendant nos. 1 to 3 filed petition seeking recall of order dated 11.01.2017 and for admission of the written statement filed but such petition was dismissed by the Commercial Court on 11.04.2017. The order dated 11.04.2017 was challenged before this court in W.P.(C) No. 3649 of 2017 and ultimately the writ petition was withdrawn vide order dated 02.08.2023. He submits that by the time the said writ petition was taken up by this court, the suit was already decreed.

10. With regard to the objection that the present dispute is not a commercial dispute, as argued by the learned counsel for the appellants, it is submitted that the entire transaction amongst the parties was arising out of a commercial transaction and the agreement of sale of land cannot be seen in isolation as there were other reliefs also in the suit. He has again submitted that the suit was filed before the Civil Judge, Senior Division and was transferred to the Commercial Court by virtue of Section 15 of Commercial Courts Act upon constitution of commercial court.

11. The learned counsel for the plaintiff has also submitted that the plaintiff had also prayed for refund of the amount paid in connection with Exhibit 8/5 as an alternative relief to the specific performance of the said contract. He further submits that the objection raised by the appellants at this stage was not raised before the learned Court nor the other defendants raised such a point, though the point of maintainability of the suit was raised in connection with other points and the point that the dispute is not a 'commercial dispute' was never raised by any of the parties.

12. With respect to the action taken by the bank under the SARFAESI Act, the learned counsel for the plaintiff has submitted that the relief as sought for by the plaintiff could not have been granted by the Debt Recovery Tribunal and otherwise also, the action under SARFAESI Act was initiated by the bank only after they had received the notice in the suit and therefore, there was no legal bar in filing the case before the Civil Court.

13. So far as the nature of relief as prayed for by the plaintiff before the Commercial Court is concerned, the learned counsel has submitted that no such objection was raised by the defendants before the Court concerned and the dispute was essentially interconnected amongst the parties.

14. With regard to filing of documents along with the plaint, the learned counsel for the plaintiff has submitted that the same is also essentially a procedural matter. He submits various documents were duly exhibited before the learned Court and the documents were also marked as Exhibit; some with objection and some without objection.

15. During the course of argument, the learned counsel for the respondent no.1/plaintiff has submitted that the liability with respect to Item No. 3, as decided by the learned Court, can remain confined to that of defendants nos. 2 and 3, and the defendant no. 1 may not have any liability arising out of Exhibit 8/5. He submits that he has no objection if the decree involved in the present case is modified or clarified to the said extent.

16. The learned counsel submits that since the appellants have not raised any argument so far as the merit of the case is concerned, therefore, no such argument is being advanced and he has responded to the arguments of the appellants as recorded in order dated 21.08.2024.

Arguments of the respondent- Bank (defendant nos. 4, 5 and 6)

17. Learned counsel appearing on behalf of the respondent- Bank has submitted that the bank has nothing to say in the matter as the agreements contained in Exhibit 8 and 8/5 were admittedly unregistered document and the security interest of the bank is not at all affected by the impugned judgment and decree. However, during the course of argument it is not in dispute that the bank had initiated action under SARFAESI Act after receipt of legal notice from the plaintiff and the action under SARFAESI Act was taken after institution of the suit.

Rejoinder arguments on behalf of the appellants (defendant nos. 1 to 3)

18. In response, the learned counsel for the appellants submitted that her arguments have already been recorded in order dated 21^st August 2024 and she has nothing to add to the same.

Findings of this Court.

19. Written submissions have been filed by the appellants and also respondent no.1.

20. The plaint.

A. As per the plaint, the plaintiff is a businessman residing in the district of Dhanbad. The defendant no. 1 is a private limited company. The defendant no. 2 is a proprietorship firm represented through its sole proprietor, defendant no.3. The defendant no. 3 is the director of defendant no. 1 company. Defendant nos. 4, 5 and 6 are the authorities who are representing the Bank of Baroda.

B. It is the case of the plaintiff that the Defendant No. 2 approached the Plaintiff for financial help to the tune of Rs. 21,00,000/- for starting a flour mill at Dhanbad. The Plaintiff gave a sum of Rs. 21,00,000/- (Twenty-One Lacs) in the name of Defendant Nos. 1 & 3 by three Cheques details of which is given in Schedule ‘C’ to the plaint which is as under:

1	Ch. No.- 064596	30.09.2011	15,00,000.00
2	Ch. No.-065590	02.09.2011	1,00,000.00
3	Ch. No.-109426	20.11.2012	5,00,000.00

All the three Cheques were payable at Central Bank of India, Bank More, Dhanbad which were duly encashed by the Defendant No. 1 Company. It is the case of the plaintiff that earlier the Defendant No. 3 entered into in an agreement with the Plaintiff on 06.07.2010 whereby he promised to allocate 54% share to the Plaintiff in the Defendant No. 1 Company. The Defendant No. 3 also promised that with effect from 06.07.2010 the Defendant No. 1 would pay Rs. 1,00,000/- per month as salary apart from other expenses and conveyance incurred in setting up of the Defendant no.1 and commencement of production. It was admitted and undertaken by the Defendant No. 3 that although 54% of share was being allotted to the Plaintiff the same should have nothing to do with the profit/loss of the Company. The said agreement had a validity period of six months but the promise made by the Defendant No. 3 was never acted upon.

C. The Defendant No. 1 entered into an agreement de novo dated 20.12.2012 wherein the Defendant No. 3 acknowledged the receipt of an amount of Rs. 21,00,000/- (Twenty-One Lacs) from the Plaintiff. It was also admitted and acknowledged that the arrear of monthly payment of Rs. 1,00,000/- (One Lac) should be paid in lump-sum by 21.12.2012 to the plaintiff. The Defendant No. 3 undertook to pay a sum of Rs. 50,00,000/-(Fifty Lacs) as damages and other expenses including the arrears of salary but excluding the aforesaid Rs. 21,00,000/-(Twenty One Lacs) received as consideration for allotment of share.

D. The Defendants breached their promise and issued no share certificate to the Plaintiff. Neither did the Defendant No.1 and/or Defendant No. 3 took any steps according to Company law to issue/transfer/allot shares to the Plaintiff.

E. Several Cheques were issued by the Defendant No. 1 Company either from the Company's account or from the account of the Director, Nabiullah Siddique i.e. Defendant No. 3 in favour of the Plaintiff which included Cheque dated 27.02.2013 for Rs. 20,00,000/-, Cheque dated 25.02.2013 for Rs. 23,50,000/-, Cheque dated 28.02.2013 for Rs. 1,00,000/- and cheque dated 26.02.2013 for Rs. 1,25,000/- towards discharge of liability. The details of the cheques have been mentioned in the plaint. The Defendant No. 3 promised to issue Cheques for the remaining amount of Rs. 25,25,000/-.

F. However, said Cheques on presentation were not honoured by the Banker of the drawers and the plaintiff issued legal notice to the Defendant Company on 08.03.2013 for repayment of the amount and compensation. In lieu of the aforesaid dishonoured cheques the Defendant Nos. 2 and 3 paid a total sum of Rs. 17,25,000/- (Seventeen Lacs Twenty-Five Thousand only) on different dates as follows: -

Amount	Date	Mode
Rs. 1,25,000/-	09.04.2013	Intra Bank Transfer
Rs. 14,00,000	17.06.2013	R.T.G.S.
Rs. 2,00,000	13.03.2014	Cheque

G. In this manner out of aforesaid of Rupees Fifty Lacs, payable in the head of salary and expenses, a sum of Rs. 17,25,000/- only was repaid by the Defendant Nos. 1 and 3 to the Plaintiff and as such a total amount of Rs. 32,75,000/- was said to be outstanding in the Head of salary etc.

Another agreement as per the plaint

H. The Plaintiff and the Defendant No. 3 entered into another agreement dated 15.05.2012 for sale of land described in Schedule 'A' of the plaint for a total consideration amount of Rs. 37,00,500/-. The agreement for sale dated 15.05.2012 was to culminate into registration of sale deed within seven months. Thereafter, another de novo agreement for sale dated 20.12.2012 (exhibit- 8/5) was entered into between the Plaintiff and the Defendant No. 3 for registration of the lands mentioned in Schedule 'A' to the plaint and the Defendant No. 3 promised and undertook to execute the registered sale deed within six months of the agreement dated 20.12.2012. The Plaintiff has paid total sum of Rs. 36,00,000/- details of which have been provided in Schedule 'B' of the plaint. Schedule ‘B’ to the plaint is quoted as under:

S. No.	Dates	Particulars	Amount
1.	27.09.2011	Paid the Cheque No. 193440	Rs.7,00,000.00
2.	30.11.2011	Payment made in cash out of Cheque No. 196191	Rs.2,80,000.00
3.	24.03.2012	Payment made in cash out of Cheque No. 196195	Rs.40,000.00
4.	31.03.2012	Payment made in cash out of Cheque No. 196196	Rs.50,000.00
5.	03.04.2012	By Cash	Rs.1,60,000.00
6.	14.05.2012	Payment made in cash out of Cheque No. 196197	Rs.4,00,000.00
7.	16.06.2012	Payment made in cash out of Cheque No. 196198	Rs.1,40,000.00
8.	17.06.2012	By Cash	Rs.1,50,000.00
9.	17.06.2012	By Cash	Rs.80,000.00
10.	04.11.2011	Central Bank of India, Bank More Branch payment made in cash out of Cheque No. 064583	Rs.36,000.00
11.	09.11.2011	Payment made through cheque vide Cheque No. 064595	Rs.1,20,000.00
12.	13.12.2011	Payment made in cash out of Cheque No. 064596	Rs.1,30,000.00
13.	04.09.2012	Cash	Rs.70,000.00
14.	07.09.2012	Cash	Rs.80,000.00
15.	09.09.2012	Cash	Rs.64,000.00
16.	07.12.2012	Payment in through cheque vide Cheque No. 109427	Rs.5,00,000.00
17.	23.11.2012	Payment in through Cheque vide Cheque No. 109428	Rs.5,00,000.00
18	10.12.2012	Payment in through Cheque vide Cheque No. 109430	Rs.1,10,000.00
Total-	Rs.36,00,000.00

I. The Plaintiff served a legal notice dated 30.05.2013 on the Defendant No. 3 demanding to register the sale deed but the said notice was not responded to by the Defendant No. 3.

Mortgage of the property with defendant nos. 4, 5 and 6 (bank) as per the plaint

J. The Plaintiff came to know about the action of Defendant No. 3 to get the 'property under agreement' dated 20.12.2012 mortgaged in favour of Bank and obtain loan. The Plaintiff served another legal notice upon the Defendant Nos. 1 & 3 on 01.08.2014 with copy to defendant bank and also called upon the Defendant No. 3 to execute registered sale deed of the Schedule 'A' property in favour of the Plaintiff.

K. The Defendant Bank sent a reply to the said notice enclosing a reply of Defendant Nos. 1 & 3 dated 27.08.2014 wherein the Defendant no. 1 and 3 took a stand that no such agreements were ever executed but certain payment details were mentioned about transactions between the Plaintiff and Defendant nos. 1 and 3. The Defendants also enclosed a copy of complaint petition in C.P. Case No 834/2015 wherein the Defendant No 3 had admitted that defendant nos. 1 and 3 have availed loan from the Plaintiff.

L. It was stated in the plaint that the Plaintiff was ready and willing to pay the sum of Rs. 1,05,000/- (One lac Five Thousand) only for registration of sale deed in his favour. It was also asserted that the Defendant nos. 3 was liable to execute and register sale deed in favour of the Plaintiff in respect of Schedule 'A' property.

M. Thus, the plaint is primarily based on two agreements (Exhibit-8 and 8/5).

21. The written statement of defendant bank

I. Common written statements have been filed by defendant nos. 4, 5 & 6, who are representing Bank of Baroda, wherein it is stated that they are not the necessary party in the suit and the plaintiff had made these defendants as party in the suit by way of an ostensible attempt to put a legal hindrance in connection with the business and services of the Bank.

II. In paragraph nos. 4 & 5 of the written statements, following objections were also taken:

“(4) That the claim and prayer as made in the plaint by the plaintiff are based on documents but the plaintiff did not submit the list of documents and document in the Court along with the plaint and also did not supply the copy of list and of documents upon which he relied to these defendants along with the copy of plaint. This is a contravention of order VII Rule 14(i). This makes the suit not maintainable.

(5) That on other date the plaintiff submitted the list of documents and copy of the documents without supplying the same to these defendants. Moreover, before submitting the documents the plaintiff neither obtained the leave of the Court nor even sought for the leave of the Court in contravention of order VII Rule 14(3). This contravention of order VII Rule 14(3) is another point to make the suit non maintainable.”

III. Further stand was taken that the defendant no.3 applied for loan before the defendant no.4 and deposited the copies of registered sale deeds of land, all standing in the name of defendant no.3 and the defendant no.3 also submitted the required documents to prove his title and ownership of the property involved in the case and at the relevant point of time, no encumbrance was found on the property.

IV. A stand was taken that any agreement for the sale of any immovable property particularly land is necessarily required to be registered.

V. Further stand was taken in paragraph nos. 13, 14, 17, 22 & 33 of the written statement that having been satisfied with the title and ownership of land in the name of defendant no. 3, and having been satisfied with the genuineness of document which he submitted that these lands have been validly leased to defendant no. 1 & 2, defendant no. 4 processed the loan papers which was duly sanctioned by the competent authority for loan of Rs. 6,23,00,000/- only. The documents for mortgage was executed on 14.02.2013 and loan amount of Rs. 2,98,00,000/-was disbursed on 26.02.2013 as per procedure of bank for disbursement and upon fulfillment of the conditions prescribed before disbursement out of sanctioned loan of Rs. 6,23,00,000/-. The defendant bank on 01.08.2014 for the first time came to know about the dealing of the plaintiff with the defendant no. 3 only upon receipt of a copy of legal notice sent by the plaintiff and addressed to defendant no. 3 to 5. By this time the defendant no. 3 had already got loan on 26.02.2013.

The loan of Rs. 2,98,00,000/- (Two Crores and Ninety-Eight Lacs) only was already disbursed on the defendant no. 3 for setting up a company and further due loan was also paid for working capital by name & style of defendant no. 1 on 26.02.2013. It was also asserted that the defendant nos. 1 & 3 cannot register the property already mortgaged with the Bank against the loan without paying the entire amount of loan along with interest as per the Bank Rules.

22. Issues before the learned Court.

Five issues were framed by the learned Commercial Court:

“1. Whether the present suit is maintainable in its present form?

2. Whether agreements dated 20.02.2012 are valid and effective and binding upon defendant no. 1, 2 and 3?

3. Whether the right to purchase land vested in agreement to sell dt. 20.12.2012 is affected in any manner by subsequent equitable mortgage created by the defendant 1, 2 and 3 in favor of bank (defendant 4, 5 and 6) when the bank was aware of the same?

4. Whether plaintiff is entitled to claim compensation for breach of promise to transfer share in defendant no. 1 Company as contained in agreement dated 20.12.2012?

5. Whether plaintiff is entitled to reliefs as claimed?”

23. The trial court proceedings and the impugned judgement.

A. Altogether three witnesses were examined on behalf of the plaintiff including himself as P.W. 1, Rajiv Ranjan Prasad as P.W. 2 and Arjun Kumar Mondal as P.W. 3. The following documents were exhibited: -

Distinguis -hing mark or number	Description of documents	By whom filled	Date of admission	Whether admitted after or without objection	Remarks
1	2	3	4	5	6
Ext. 1	Cheque payment details in SB A/c No. 3045001100000031 issued by PNB	Plaintiff	12.06.2019	With objection
Ext. 1/1	Cheque payment details in SB. A/c No. 3123597539 issued by Central Bank of India	’’	’’	’’
Ext. 2	Photocopy of Cheque No. 240365 dated 26.02.13 of Rs.1,25,000/-	’’	’’	’’
Ext. 2/1	Photocopy of Cheque No. 240341 dated 27.02.13 of Rs.20,00,000/-	’’	’’	’’
Ext. 2/2	Original Cheque No. 240340 dated 25.02.13	’’	’’	’’
Ext. 2/3	Original Cheque No. 240366 dated 28.02.13	’’	’’	’’
Ext. 3	Original deposit slip in Central Bank of India dated 28.02.13	’’	’’	’’
Ext. 4	PNB Cheque Bouncing memo of Cheque no. 240365, 240366, 240340, 240341 total amounting Rs, 45,75,000/-	’’	’’	’’
Ext. 5	Pleader notice of Adv. Ranjeet Kumar Saw, dated 8.3.13 along with original postal receipt dated 11.3.13	’’	’’	’’
Ext. 5/1	Office copy of pleader notice of Adv. Deepak Kumar Shaw dated 30.5.13 with original postal receipt	’’	’’	’’
Ext. 5/2	Office copy of pleader notice of Adv. Manjeet Kumar Sinha, dated 01.08.14	’’	’’	’’
Ext. 6	Six original postal receipts	’’	’’	’’
Ext. 7	Certified copy of order of Hon’ble High Court of Jharkhand in	’’	’’	Without objection
	Company Petition No. 04 of 2014
Ext. 8	Original deed of contract dated 20.12.12	’’	’’	With objection
Ext. 9	Certified copy of deed no. 6251 dated 11.06.09	’’	’’	Without objection
Ext. 9/1	Certified copy of deed no. 6252 dated 11.06.09	’’	’’	’’
Ext. 9/2	Certified copy of deed no. 7349 dated 25.5.11	’’	’’	’’
Ext. 9/3	Certified copy of deed no. 3378 dated 20.7.11	’’	’’	’’
Ext. 9/4	Certified copy of deed no. 2382 dated 15.04.04	’’	’’	’’
Ext. 9/5	Certified copy of deed no. 5316 dated 12.05.18	’’	’’	With objection
Ext. 9/6	Certified copy of deed no. 11744 dated 28.10.09	’’	’’	’’
Ext. 9/7	Certified copy of deed no. 15266 dated 16.11.10	’’	’’	’’
Ext. 9/8	Certified copy of deed no. 1141 dated 27.01.11	’’	’’	’’
Ext. 9/9	Certified copy of deed no. 2676 dated 12.10.2000	’’	’’	Without objection
Ext. 9/10	Certified copy of deed no. 11344 dated 29.12.06	’’	’’	’’
Ext. 9/11	Certified copy of deed no. 4139 dated 20.08.01	’’	’’	’’
Ext. 10	Claim of Bank of Baroda	’’	’’	’’
Ext. 8/1	Signature of Nabiullah Siddique alias Shahzada on original deed of contract dated 20.12.12 as 1st party	’’	28.06.2019	With objection
Ext. 8/2	Signature of Arbind Singh on original deed of contract dated 20.12.12 as 2nd party	’’	’’	’’
Ext. 8/3	Signature of Rajiv Ranjan Prasad on original deed of contract dated 20.12.12 as witness	’’	’’	’’
Ext. 8/4	Signature of Arjun Kumar Mandal on original deed of contract dated 20.12.12 as witness	’’	’’	’’
Ext. 8/5	Original deed of contract (Sales) dated 20.12.12	’’	’’	’’
Ext. 8/6	Signature of Nabiullah Siddique alias Shahzada on original deed of contract (Sales) dated 20.12.12 as 1st party	’’	’’	’’
Ext. 8/7	Signature of Arbind Singh on original deed of contract (Sales) dated 20.12.12 as 2nd party	’’	’’	’’
Ext. 8/8	Signature of Rajiv Ranjan Prasad on original deed of contract (Sales) dated 20.12.12 as witness	’’	’’	’’
Ext. 8/9	Signature of Arjun Kumar Mandal on original deed of contract (Sales) dated 20.12.12 as witness	’’	’’	’’	Sd/- DJ-XIV- cum-PO, Comm. Court, 28.6.19

B. On behalf of defendant nos. 4, 5 & 6 the witness examined is D.W. 1 Subodh Panjiara and the following documents were exhibited:

Disting- uishing mark or number	Description of documents	By whom filled	Date of admission	Whether admitted after or without objection	Remarks
1	2	3	4	5	6
Ext. ‘A’	Extract of the land mortgaged with bank	Def. No. 4,5 & 6	25.07.2019	Without objection
Ext. ‘B’	Copy of legal notice of Adv. Manjeet Kumar Sinha	’’	’’	’’
Ext. ‘C’	Copy of reply of legal notice dated 27.8.14	’’	’’	’’	Sd/- DJ-XIV- cum-PO, Comm. Court, 25.07.19

C. On behalf of defendant nos. 1, 2 & 3, Nabibullah Siddique had filed his examination-in-chief on oath on 05.07.2019 along with a petition dated 09.07.2019 and sought permission to depose in the case which was rejected vide order dated 22.07.2019.

D. Although the defendant nos. 1 to 3 were debarred from filing written statement but the case of the defendant nos. 1 to 3 as argued before the learned Court is recorded in paragraphs 16 of the impugned judgement. It was, inter alia, argued that the suit was not maintainable and the agreements were forged and fabricated.

E. The learned Commercial Court decided the issue of maintainability of the suit in favour of the plaintiff as under:

“28. For Issue no. 1 & 5- By these issues it is to be seen whether the suit is maintainable or not and whether the plaintiff is entitled to the relief claimed or not? The Ld. counsel of defendant no. 1, 2 and 3, has stated that the suit filed by the plaintiff is not maintainable in view of the provisions of Section-16 (2) of commercial Ordinance 2015. Sub-section-(2) of Section-16 of the Commercial Court Ordinance 2015 envisaged that the Commercial Court shall follow the provisions of the Code of Civil Procedure 1908 (5 of 1908), as amended by the Ordinance, in the trial of a suit in respect of Commercial dispute of a specified value accordingly amendment has been made in the provisions of in Certain Sections and Orders of the Civil Procedure Code which is mention in Schedule of Chapter VII of the Commercial Ordinance 2015. I have gone through the amendment… The Ld. Counsel of defendant no 1,2 & 3 states that in this case the pleading of the plaintiff is not verified in accordance with amended provisions of Order-VI, Rule-15A of the Code of Civil Procedure and Appendix, hence in view of the amended provisions of Rule-15A (4) of Code of Civil Procedure the plaintiff shall not be permitted to rely on such pleading as evidence or any matters set out therein. Due to non-compliance of the aforesaid amended provisions of Code of Civil Procedure by the plaintiff his pleading cannot be relied on as evidence or any matters set out therein and as such the suit of the plaintiff is not legally maintainable and is liable to be dismissed.

29. The case of the defendant no. 4, 5 and 6 on the point of maintainability of the suit is that The plaintiff have not submitted the list of document along with the plaint and have not supplied the copy of the list of the document to the defendants, which is contravention of Order VII Rule 14 (1) of the CPC and the suit is not maintainable. The plaintiff have neither obtained the leave of the court nor even sought for the leave of the Court in contravention of Order VII Rule 14 (3) of the CPC. The Nationalised bank is under obligation to lend money by way of loan to its customers who have account in the bank under different schemes for their benefit and who want to be enterpreneur to start business and to create employment. Defendant no. 3 has applied for loan before defendant no. 4 and deposited the copies of the registered sale deed of the land. Apart from the required document to prove his title and ownership on the piece of land.

30. The Ld. counsel of the plaintiff has stated that the plaintiff has instituted this suit for decree of specific performance of contract, recovery of money, compensation, permanent injunction etc. against the defendants. There are two sets of defendants. First set is defendant no. 1, 2 and 3 who did not file written statements within time and as such the present suit is deemed to be tried under order 8 Rule 10 of C.P.C. The second sets of defendant are Bank of Baroda and its officers who have filed their written statement and also adduced evidence. Since there is no written statement so the defendant no. 1, 2 and 3 did not adduce any evidence. In the cross examination, which as per law, could not have been propagation of defendants own case there was nothing to bring contradiction or to demolish the plaintiffs case. Plaintiff is entitled to the decree of specific performance.

31. In the light of above discussed facts of the case and the provisions of law, I have gone through the record and find that the plaintiff has complied with the provisions of Sec.16 (2) of the Commercial Court Act 2015 as well as provisions of Order VI Rule 15 A of the CPC. The pleading is verified by the plaintiff as per law. So, in the light of above discussed material on record it is held that the suit is maintainable. Issue no. 1 is decided accordingly.”

F. The findings with regards to issue nos. 2 to 4 have been considered in the impugned judgment from paragraphs 19 to 27. The learned court refused to grant decree of part performance of agreement [exhibit- 8/5] and directed to refund the amount paid by the plaintiff and further allowed the relief in favour of the plaintiff in connection with agreement [exhibit-8]. The relief in connection with compensation of Rs.20,00,000/- was not granted. All the banking transactions and payment has been held to be proved and the agreements dated 20.12.2012 (exhibit 8 and 8/5) have been held to be proved by the plaintiff and supported by the witnesses to the agreement - P.W-2 and 3. The entire case revolves around exhibit-8 and 8/5 and the findings with respect to these two exhibits and other findings are as under: -

“25…Exhibit 8 is original deed of agreement dated 20-12-12. On perusal of the same I find that it is an unregistered deed of agreement entered in between Md. Nabibulla Siddique (first party) and Arvind Singh (second party). Md. Nabibulla Siddique has given his DIN no. 03559530 with registration no. of M/s S. S. Agro Bio-Tech Flour Mills (Pvt.) Limited as 15400WB2004PTC100231. It is admitted in this deed that first party has received Rs. 21,00,000/- through cheque from the second party which was given vide cheque no. 064596 dated 03- 09-12 Rs. 15,00,000/-, cheque no. 64590 for Rs. 1,00,000/-and on 20- 11-12 cheque no. 109426 (cash Rs. 5,00,000/-). This payment is admitted by the first party. So the oral evidence regarding signing of blank stamp paper by Nabibulla Siddique defendant no. 3 falls on ground. First party Nabibulla Siddique has admitted that he is transferring 53% of the share of the said flour mill to the second party. The second party is working in the flour mill as partner since 06-07-10 and he will be paid Rs. 1,00,000/- per month. But the money was not paid. So on 21-12-12 the first party Nabibulla Siddique has agreed to pay the second party in single go till 21-12-12. The first party will include second party as director. He has also admitted that in case of non functioning of the flour mill, the first party will pay Rs. 21,00,000/- apart from the compensation and other expenses of Rs. 50,00,000/- to the second party. This deed was signed on stamp paper with revenue stamp of witness by at least five persons. Out of them Rajiv Kumar Prasad P.W. 2, and Arjun Kumar Mandal P.W. 3 are examined.

Exhibit 9 series are certified copy of deeds. Exhibit 10 is claim of bank of Baroda. Exhibit 8/5 is deed of agreement for sale executed by Md. Nabibulla Siddique in favour of Arvind Singh for consideration amount of Rs. 37,00,500/- out of which he has received Rs. 36,00,000/- as per his own admission. It was agreed that only Rs. 1,00,500/- is yet to be paid. Nabibulla Siddique has agreed to sale land of village Amlatand under Khata no. 55,24,28 and of village Tilabani under Khata no. 59. He has accepted that he has received Rs. 36,00,000/-through cheques and cash from the plaintiff. This agreement is also signed by Nabibulla Siddique on revenue stamp and witnessed by at least five witnesses.

The admitted position is that through deed of agreement dated 20-12-12 Exhibit 8 Nabibulla Siddique and Arvind Singh have entered into an agreement in which he has admitted that he has received Rs. 21,00,000/- from Arvind Singh and he has also agreed that apart from that amount he will pay Rs. 50,00,000/- to Arvind Singh. Exhibit 8/5 is the agreement of sale of land executed by Nabibulla Siddique in favour of Arvind Singh for sale of land of village Amlatand and Tilabani under various khatas, total area 2.76 ½ acres on consideration amount of Rs. 37,00,500/-. Out of which, as per his own admission, Nabibulla Siddique has received Rs. 36,00,000/-.”

G. The learned Commercial Court decided the issue nos. (2), (3) and (4) as under:

"27. After going through above discussed evidence and the provision of law I find that the property mortgage by Nabibulla Siddique with the Bank cannot be asked to be sold to the plaintiff since the agreement of sale Exhibit 8/5 is not registered and the same is barred by section 17 (1-A) and section 49 of the Indian Registration Act. So, Nabibulla Siddique cannot be asked to execute sale deed for rest of the land which is not covered by the mortgage with Bank of Baroda, Govindpur, to the plaintiff.

However, admitted position is that as per agreement Exhibit 8 Nabibulla Siddique has admitted that he had demanded Rs. 21,00,000/- from the plaintiff which the plaintiff has given to him through different cheques as discussed above and it is also admitted that he will pay the dues in lump sum by 21-12-12 to the plaintiff. Nabibulla Siddique undertook to pay Rs. 50,00,000/- as damage and other expenses apart from Rs. 21,00,000/-. So, the plaintiff is entitled to recover Rs. 36,00,000/- as consideration amount with interest pendite lite. It came on record and as per admitted fact that in lieu of dishonoured cheque, defendant no. 2 and 3 has paid him a sum of Rs. 17,25,000/- on different dates as Rs. 1,25,000/- on 09-04-13 by Intra Bank transfer, Rs. 14,00,000/- on 17-06-13 through RTGS and Rs. 2,00,000/- on 13-03-14 through cheque. The plaintiff has claimed that he is entitled for rest of the Rs. 32,75,000/- outstanding dues in the head of salary. On the basis of above discussed evidence on record and the provisions of law, it is held that the agreement dated 20-12-12 are valid and effective document and binding upon defendant no. 1, 2 and 3 but since the same is not registered. So, the defendant no. 1, 2 and 3 can't be asked to execute any sale deed in favour of the plaintiff on the basis of unregistered deed of agreement. It is also held that the Court can't pass the order for the properties for which equitable mortgage was created by defendant no. 1, 2 and 3 in favour of the bank (Defendant no. 4, 5 and 6). It is also held that the plaintiff is also entitled for the amount as discussed above. Issue no. 2, 3 and 4 are accordingly decided."

24. Points for determination.

Considering the arguments advanced on behalf of the parties, following points arise for determination by this Court:

(a) Whether the dispute involved in the present case is a commercial dispute and whether the learned Commercial Court could have decided the same as a commercial suit?

(b) Whether the suit was barred by the provisions of section 34 of the SARFAESI Act?

(c) Whether the appellants (defendant nos. 1, 2 & 3) were rightly debarred from filing the written statement on 11.01.2017 by the learned Commercial Court?

(d) Whether the suit was barred on the ground that the plaint was not accompanied with the documents and allegedly the plaintiff did not seek leave from the Court to file the documents and consequently there was violation of Order VII, Rule 14 of the Code of Civil Procedure?

(e) Whether the suit ought to have been dismissed on account of violation of the provisions of Order VI, Rule 15-A of the Code of Civil Procedure as applicable to the Commercial Courts Act, 2015 on the alleged ground that the verification in the plaint was not made as per the prescribed procedure as provided under sub-rule (1) with particular reference to paragraph no. 5 of Appendix I?

(f) Whether the plaintiff was entitled for any decree for recovery of any money in connection with two agreements dated 20.12.2012 (Exhibits 8 and 8/5)?

(g) Whether the learned Court was justified in issuing a decree for realization of any amount from defendant nos.1 and 2 in connection with agreements dated 20.12.2012 (exhibit-8 and exhibit - 8/5)?

25. The plaint, written statement of defendant nos. 4 to 6 and arguments advanced by the respective parties including defendant nos. 1 to 3 before the learned court and also before this court (although defendant nos. 1 to 3 were debarred from filing written statement by the learned court) have already been discussed above. The documents exhibited by the plaintiff and defendant nos. 4 to 6, (with or without objection) have been mentioned above. This Court also finds that three witnesses were examined from the side of the plaintiff including the plaintiff himself and all the witnesses were cross examined by all the defendants including defendant nos. 1 to 3 who were debarred from filing written statement by the learned commercial court and the defendant no.3 fully participated in the trial of the suit till the stage of arguments. All the money transactions made between the concerned parties have been duly proved by oral and documentary evidences which were substantially supported by banking transactions. The two agreements dated 20.12.2012 (Ext.8 and 8/5) were also proved by oral and documentary evidences produced by the plaintiff. This Court finds that the learned Court refused to direct the defendant no. 3 to execute sale deed in favour of the plaintiff on the basis of agreement of sale as contained in Exhibit 8/5. However, the plaintiff is not aggrieved by such finding and has accordingly not filed any appeal or cross-objection in connection with the aforesaid finding. The said finding is also not under challenge by the appellants (defendant nos. 1 to 3). Since the learned Court has refused to direct the defendant no. 3 to execute sale -deed in favour of the plaintiff on the basis of Exhibit-8/5, the bank (defendant nos. 4, 5 and 6) is also not aggrieved by the impugned judgment as the mortgage in favour of the Bank in connection with some of the properties mentioned in Exhibit – 8/5 has not been disturbed by the learned Commercial Court.

Point of consideration no. (a)

26. The learned counsel for the appellants (defendant nos. 1 to 3) has submitted before this Court that the dispute was not a ‘commercial dispute’ as defined under the Commercial Courts Act, 2015 and accordingly the suit could not have been decided by the Commercial Court. The learned counsel has relied upon the judgment rendered by the Hon'ble Supreme Court in the case of "Ambalal Sarabhai Enterprises Limited Vs. K.S. Infraspace LLP and another" reported in (2020) 15 SCC 585 to submit that specific performance in connection with execution of deed relating to immovable property cannot constitute 'commercial dispute'. She has referred to paragraph no. 37 of the aforesaid judgment which is quoted as under: -

27. In the judgment passed by the Hon’ble Supreme Court in the case of Ambalal Sarabhai Enterprises Limited (Supra), the suit was filed before the Commercial Court and upon notice, the defendant in the suit filed written statement contending that the suit was not maintainable as the dispute in the suit could not be termed as “commercial dispute” within the meaning of Section 2(1)(c) of the Commercial Courts Act, 2015. Accordingly, a petition under Order VII Rule 10 CPC seeking an order to return the plaint to be presented in the Court in which the suit should have been instituted was filed. The plaintiff did not choose to file any objection to the application, but simply opposed the same and the learned Judge of the Commercial Court rejected the application under Order VII Rule 10 CPC. The defendants approached the High Court and the High Court set-aside the order passed by the Commercial Court and consequently the plaintiff was before the Hon’ble Supreme Court.

28. The Hon’ble Supreme Court dismissed the appeal and observed that in the case before the Hon’ble Supreme Court neither the agreement between the parties referred to the nature of the immovable property being exclusively used for trade or commerce as on the date of the agreement nor there was any pleading to that effect in the plaint. Further the very relief sought in the suit was for execution of the Mortgage Deed which was in the nature of specific performance of the terms of Memorandum of Understanding without reference to nature of the use of the immovable property. The Hon’ble Supreme Court directed the Commercial Court to return the plaint indicating a date for its presentation before the Court having jurisdiction. The Hon’ble Supreme Court held that a dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub-clause (vii) of Section 2(1)(c) of the Commercial Courts Act i.e. “the agreements relating to immovable property used exclusively in trade or commerce”. It has been held that the words “used exclusively in trade or commerce” are to be interpreted purposefully. The word “used” denotes “actually used” and it cannot be either “ready for use” or “likely to be used” or “to be used”. It should be “actually used”. Such a wide interpretation would defeat the objects of the Act and the fast-tracking procedure of commercial suit.

29. In the present case, the suit was filed before a regular court which was transferred to a Commercial Court upon constitution of Commercial Court under the Commercial Courts Act, 2015 after the filing of the suit and the defendants never raised any objection with regard to the maintainability of the suit before the Commercial Court. The fact remains that the suit was partly relating to ‘commercial dispute’ and partly relating to ‘specific performance of contract arising out of agreement of sale of immovable property’ and in the plaint, there was no averment with regard to the actual use of such property.

30. This Court finds that the suit was filed in connection with two agreements i.e. exhibit 8 and 8/5. Exhibit 8 was essentially relating to pure commercial transaction arising out of payment of Rs. 21,00,000/- by the plaintiff to the concerned defendants and suit with respect to exhibit 8 was filed for realization of Rs. 53,75,000/- [Rs. 21,00,000/- plus Rs. 50,00,000/-(on account of salary and further expenses incurred by the plaintiff) quantified in the agreement (exhibit-8) minus Rs. 17,25,000/- (amount received by the plaintiff)]. Further, exhibit 8/5 was the agreement of sale of immoveable properties between the plaintiff and defendant no.3 for which the plaintiff claimed to have already paid Rs. 36,00,000/- and remaining Rs.1,05,000/- was to be paid and the plaintiff had filed the suit seeking specific performance of contract or in the alternative refund of the amount paid. The plaintiff also prayed for a decree of Rs. 20,00,000/- on account of mental agony and pain suffered by him. The suit was valued by the plaintiff at Rs.1,09,75,000/- . This Court finds that the suit was arising out of two agreements both signed by the plaintiff and defendant no.3 and it has come in evidence that exhibit 8/5 was the agreement of sale of land on which factory/ flour mill was situated and there can be no dispute that the dispute arising out of Exhibit 8 was certainly a ‘commercial dispute’ arising out of commercial transactions. Accordingly, the reliefs in connection with exhibit 8 and 8/5 having been clubbed in the suit, it cannot be said that the commercial court had no jurisdiction to decide the suit. With respect to exhibit -8, the relief was against defendant nos. 1 and 3 and with respect to exhibit -8/5 the relief was against defendant no.3 only. Defendant no.2 is the proprietorship firm of defendant no. 3. It is also important to note that no objection was ever taken by the defendants including the appellants (defendant nos. 1 to 3) with regards to the jurisdiction of the commercial court on the ground that the dispute was not a commercial dispute and accordingly the learned court has not returned any finding to this effect although other points with regards to maintainability of the suit were raised by the defendant nos. 4 to 6 (bank) and defendant nos. 1 to 3 during the course of arguments which have been decided against the defendants.

31. It is also important to note that no objection was ever taken by the defendants including the appellants (defendant no. 1 to 3) with regards to the misjoinder of cause of action before the learned court. No objection was ever taken by any of the defendants with regards to jurisdiction of the learned commercial court to try the suit in the light of the reliefs prayed for in the plaint with regards to joining two distinct causes of action, one arising out of exhibit 8 and another arising out of exhibit 8/5. Admittedly, both the agreements (exhibit- 8 and 8/5) were of the same date and was claimed to have been signed by the plaintiff and the defendant no.3 who is also said to be the director of defendant no.1 and proprietor of defendant no.2.

32. Order II of Code of Civil Procedure deals with frame of suit. Order II Rule 3 deals with joinder of the cause of action and Order II Rule 6 deals with power of Court to order separate trials and Order II Rule 7 deals with objection as to misjoinder of cause of action. The provision of Order II Rule 3, 6 and 7 are quoted as under:

“3. Joinder of causes of action.—(1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.

(2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit.

6. Power of Court to order separate trials.—Where it appears to the Court that the joinder of causes of action in one suit may embarrass or delay the trial or is otherwise inconvenient, the Court may order separate trials or make such other order as may be expedient in the interests of justice.

7. Objections as to misjoinder. —All objections on the ground of misjoinder of causes of action shall be taken at the earliest possible opportunity and, in all cases where issues are settled, at or before such settlement unless the ground of objection has subsequently arisen, and any such objection not so taken shall be deemed to have been waived.”

33. This Court finds that though Exhibits 8 and 8/5 were having distinct cause of action, but the common defendant against whom such relief arising out of Exhibits 8 and 8/5 was claimed was defendant no. 3. A relief was claimed jointly against defendant nos. 1 and 3 with respect to Exhibit- 8. Defendant no. 2 was the proprietorship firm of defendant no. 3. The records of the case including the impugned judgment wherein the entire stand and arguments of the defendant nos. 1 to 3 have been recorded [though they were debarred from filing their written statement] do not reveal that any objection with respect to misjoinder of cause of action was taken before the learned Court. The defendant no. 4 to 6, who had filed written statement, had raised other objections in connection with the maintainability of the suit by referring to bar under section 34 of SARFAESI Act, but in their written statement also, no objection was taken with regard to misjoinder of the cause of action. Such objection having not been taken, is deemed to have been waived by virtue of Order II Rule 7 of Code of Civil Procedure.

34. It is important to note that parties had no role to play in the matter of transfer of suit from learned Civil Judge (Senior Division) 1 st Class at Dhanbad to the learned Commercial Court and the suit was transferred in view of the fact that the provisions of Commercial Courts Act itself provided for transfer of pending suits to the Commercial Court having jurisdiction to try commercial suit above specified value. The suit was valued for more than Rs. 1 Crore.

35. It is also important to note that the suit was filed on 24.02.2016 before the learned Civil Judge (Senior Division) 1st Class at Dhanbad as a regular suit who certainly had the jurisdiction to decide the suit relating to both the agreements (exhibit-8 and 8/5) and thereafter upon constitution of the commercial court in the District of Dhanbad, the suit was transferred to the commercial court, tried and decided by the impugned judgement. Such transfer was apparently under section 15 of the Commercial Courts Act, 2015.

36. It is further important to note that the appellants (defendants) have not been prejudiced in any manner as the suit for all practical purposes has been tried as a regular suit based on evidences produced by the plaintiff and defendant nos. 4 to 6 and no part of the plaint has been treated as evidence as against the defendants and the plaintiff has not gained any unfair or undeserved advantage arising out of the transfer of case to the commercial court nor the defendants have suffered in any manner on account of such transfer of case to the Commercial Court.

37. The perusal of the plaint does not reveal that the immovable property which was subject matter of the agreement dated 20.12.2012 (exhibit- 8/5) was used exclusively in trade or commerce and there was no occasion for the plaintiff to make specific averment in the plaint to that effect so as to bring the case within the definition of Commercial Disputes as defined under Commercial Courts Act, 2015. This was so in view of the fact that the suit was filed before a regular Court at the time when the Commercial Court at Dhanbad was not constituted and the suit was transferred to the Commercial Court only after the constitution of Commercial Court.

38. Since no objection was raised by any of the parties before the Court on the point of consideration relating to the nature of dispute as commercial dispute or not, there was no occasion for the learned Commercial Court to go into such an issue. However, it is relevant to note from the evidences on record that the property involved in the present case in the agreement of sale of immovable property dated 20.12.2012 (exhibit- 8/5) was relating to flour mill and was certainly a commercial property. The plaintiff (P.W-1) has also stated in his evidence that the flour mill was running on the land of Amlatand and this was the land for which he had entered into agreement of sale (exhibit- 8/5) and thus the land under agreement was being used for 'commercial purpose' .

39. In view of the aforesaid findings, this Court is of the considered view that the impugned judgement does not call for any interference on the point of jurisdiction of the learned commercial court so far as it relates to objection with regards to definition of “commercial dispute”. The objection with regards to maintainability of the suit in view of section 34 of SARFAESI Act has been considered under point no. (b). The point of determination no. (a) is accordingly decided against the appellants (defendant nos. 1 to 3) and in favour of the respondent no.1 (the plaintiff).

Point of consideration no. (b)

40. Section 34 of the SARFAESI Act reads as under:

“34. Civil court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).”

41. The suit related to two agreements – Exhibit- 8 and 8/5. Exhibit – 8 had nothing to do with any immovable property much less any immovable property mortgaged with the defendant nos. 4 to 6. Further, it was the case of the defendant nos. 4 to 6 that part of the immovable property involved in the present case in Exhibit 8/5 [ the agreement of sale of immovable property between plaintiff and defendant no. 3] was mortgaged with the bank and therefore, the defendant nos. 4 to 6 had raised objection with regard to maintainability of the suit with respect to the extent it related to the property mortgaged with the bank [defendant no. 4 to 6] mortgaged properties.

42. It is not in dispute that the defendant nos. 4 to 6 had invoked the security interest created over the immovable properties after the filing of the suit. The part of the property involved in the agreement [exhibit 8/5 -dated 12.12.2012] was mortgaged with the bank on 14.02.2013 which is after the agreement of sale [ exhibit 8/5 dated 12.12.2012] The suit was filed on 24.02.2016 and the action under the SARFAESI Act was taken by the defendant nos. 4 to 6 after filing the suit . The defendant Nos. 4 to 6 had taken a specific stand in the written statement that ‘the defendant Nos. 3 and 1 cannot register the already mortgaged property with the bank against the loan amount already paid by the bank to them. However, the bank cannot have objection if the defendant registers the land to plaintiff rest of pieces of land mentioned in Schedule “A” of the Plaint.’ The plaintiff in the suit is neither mortgager nor guarantor nor has any concern with the loan taken by the defendant no.3 from the bank. The plaintiff was concerned with the enforcement of the unregistered agreement of sale [exhibit 8/5] which, inter alia, included mortgaged properties with the bank and was seeking specific performance of contract with regard to unregistered agreement of sale [exhibit 8/5]. The agreement of sale [exhibit-8/5] reveals that the possession of the property involved in the agreement was already given possession to the plaintiff and accordingly, in the suit the plaintiff did not seek any relief seeking possession of property. The defendant nos. 4 to 6 representing the bank were made parties as the plaintiff had come to know that defendant no. 3 had mortgaged, inter alia, the properties which were subject matter of unregistered agreement of sale dated 20.12.2012[exhibit 8/5].

43. Essentially, the point for consideration is whether the suit seeking specific performance of contract entered into between the plaintiff and the defendant no. 3 was maintainable before the Civil Court or the suit itself was barred by section 34 of the SARFAESI Act.

44. Meaning thereby, whether the jurisdiction of civil Court to decide all matters of civil nature including suit for specific performance of contract of sale of immoveable property (exhibit-8/5) filed by third party [other than the borrower/guarantor/mortgagor of the property] is barred by section 34 of SARFAESI Act, 2002 merely because a security interest has been created in favour of the bank ( defendant no. 4 to 6 - a secured creditor). In the present case, admittedly the security interest has been created over some of the property involved in the suit after the agreement of sale (exhibit-8/5) .

45. Under the provisions of section 13 of the SARFAESI Act, the statutory remedy to challenge the action of the bank under section 13(4) is available to any person which includes not only the borrower but also the guarantor or any other person who may be affected by the action taken by the secured creditor under section 13(4) or section 14 of the SARFAESI Act.

46. The perusal of section 34 of the SARFAESI Act clearly reveals that the jurisdiction of Civil Court to entertain, try and decide any suit or proceeding in respect of the property which is subject matter of security interest created in favour of bank is barred only to the extent of the matters which the Debt Recovery Tribunal or the appellate authority are empowered to determine by virtue of the powers conferred under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to DRT Act, 1993) and the SARFAESI Act. For that purpose, it is necessary to decide the nature of claim and proceedings which the Debt Recovery Tribunal is entitled to entertain and decide.

47. Upon perusal of section 9 of the Code of Civil Procedure, it is clear that it has been provided that the Courts shall have jurisdiction to try all the suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. The point regarding exclusion of jurisdiction of Civil Court has been elaborately considered by the Hon'ble Supreme Court and the principles have been laid down in the judgment passed in the case of “Dhulabhai etc. Vs. State of Madhya Pradesh and Another” reported in AIR 1969 SC 78. The principles which have been laid down by the Hon'ble Supreme Court in the case of Dhulabhai (Supra) with regard to exclusion of jurisdiction are as follows:

“(1) Where the statute gives a finality to the orders of the special Tribunals the civil courts’ jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure.

(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court.

Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not.

(3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals.

(4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.

(5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegality collected a suit lies.

(6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry.

(7) An exclusion of the jurisdiction of the civil court is not readily to be inferred unless the conditions above set down apply.”

48. The aforesaid judgment of the Hon'ble Supreme Court in the case of Dhulabhai (Supra) was subsequently considered in the judgment passed by the Hon'ble Supreme Court reported in (1985) 4 SCC 10 (State of Tamil Nadu Vs. Ramalinga Samigal Madam) and in paragraph 14 of the said judgment, it has been held that in order to exclude the jurisdiction of Civil Court, it is to be seen as to whether the Tribunal has the power to grant relief which the Civil Court would normally grant in a suit and if the answer is in negative, it would be difficult to imply or infer exclusion of jurisdiction of Civil Court.

49. In the present case, it was the claim of the plaintiff that the agreement of sale dated 20.12.2012 (exhibit-8/5) existed prior to creation of mortgage with the bank by the defendant no. 3 with respect to portion of the property involved in the agreement (exhibit- 8/5) and thereby, the plaintiff was trying to enforce his pre- existing right which existed prior to creation of mortgage.

50. Section 13 of the SARFAESI Act provides for various rights of the secured creditor against the borrower/mortgager for enforcement of security interest which are essentially for the purposes of recovery of amount due and payable by the borrower/guarantor and as per section 17 of the DRT Act, 1993, the Debt Recovery Tribunal exercises the jurisdiction and authority to entertain and decide applications from the banks and financial institutions for recovery of debt.

51. With regard to the relief in connection with specific performance of contract for sale of immovable property which was subject matter of suit, such relief cannot be granted by Debt Recovery Tribunal even if the plaintiff being a 3rd party could have challenged the action of the secured creditor bank as and when taken under section 13(4) of the SARFAESI Act. The Debt Recovery Tribunal has no jurisdiction to enforce specific performance of contract. It is also important to note that the enforcement of security interest by the bank/secured creditor is subject to conditions of the account being declared non-performing asset and there is complete uncertainty as to whether the bank would at all invoke measures provided under section 13 of the SARFAESI Act for recovery of its debt. It is also important to note that the relief with regard to specific performance of contract is as per the terms and conditions of the agreement and any violation or abrasion or delay over and above the conditions prescribed in the agreement of sale would defeat the right of the person seeking to enforce specific performance of contract. The jurisdiction of Debt Recovery Tribunal is restricted to the matters mentioned under section 17(1) of the DRT Act, 1993 and under section 13 and 17 of the SARFAESI Act and the restriction to approach the Civil Court is excluded only to the extent it relates to the jurisdiction of Debt Recovery Tribunal and the appellate tribunal.

52. Thus, the bar of the Civil Court under section 34 of SARFAESI Act applies only to such matters which can be adjudicated by Debt Recovery Tribunal including the action as and when taken for enforcement of security interest in terms of section 13(4) of the SARFAESI Act.

53. The section 34 of the SARFAESI Act was subject matter of consideration before the Hon'ble Supreme Court in the judgment reported in (2017) 1 SCC 622 [Robust Hotels (P) Ltd. and others Vs. EIH Ltd. and others] wherein the effect of express bar of the jurisdiction of civil court has been laid down in paragraph 33 of the said judgment and it has been held that the bar of the civil Court extends only to any suit or proceedings which the Debt Recovery Tribunal or the Appellate Tribunal is empowered to decide. Paragraph 33 of the aforesaid judgment is quoted as under:

“33. A perusal of Section 34 indicates that there is express bar of jurisdiction of the civil court to the following effect:

“(i) Any suit or proceeding in respect of any matter in which the Debts Recovery Tribunal or Appellate Tribunal is empowered by or under this Act to determine.

(ii) Further, no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.”

Thus the bar of jurisdiction of civil court has to correlate to the abovementioned conditions. For the purposes of this case, we are of the view that this Court need not express any opinion as to whether suits filed by EIH were barred by Section 34 or not, since the issues are yet to be decided on merits and the appeal by Robust Hotels has been filed only against an interim order.”

54. This Court is of the considered view that there may be numerous situations where the Debt Recovery Tribunal would not be in a position to grant relief. In the judgment passed by the Hon'ble Supreme Court in the case of “Vineeta Sharma Vs. Rakesh Sharma and others” reported in (2020) 9 SCC 1 the appellant before the Hon'ble Supreme Court was seeking to enforce her coparcenary right in connection with coparcenary property and the male members of the family had already created a security interest in favour of secured creditor on the coparcenary property. The Hon'ble Supreme Court held that the suit was maintainable seeking enforcement of her coparcenary right with respect to the coparcenary property irrespective of security interest having been created in favour of the bank.

55. This Court is of the considered view that in the present case where the defendant no. 3 is said to have entered into an agreement of sale of immovable property and accepted consideration prior to creation of mortgage by defendant no. 3 in favour of secured creditor bank, the plaintiff has a right to file a suit for specific performance of contract as such relief is time sensitive and such relief cannot be granted to the plaintiff by Debt Recovery Tribunal even if the plaintiff would file an application challenging the action of the secured creditor bank as and when they take action for recovery of the dues either under DRT Act, 1993 or under section 13 of the SARFAESI Act seeking enforcement of security interest over the immovable property.

56. In the case of “J.P. Builders and Another Vs. A. Ramadas Rao and another” reported in (2011) 1 SCC 429, while considering the question of specific performance of contract in which bank was also made party, it has been held as under:

“68. We are also satisfied that merely because for recovery of the loan secured by banks, a special Act, namely, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 has been enacted it is not a bar for the civil court to apply to other relief such as Section 56 of the TP Act. We are also satisfied that by issuing such direction on the application of Section 56 of the TP Act, the Division Bench has not modified or eroded the order passed by DRT. On the other hand, it is an admitted fact that the Bank has accepted the impugned verdict of the High Court and did not challenge the same before this Court by filing an appeal. We are also satisfied that by granting such a relief, the Bank is not prejudiced in any way by bringing other properties to sale first to satisfy the mortgage debt payable by Defendants 1 and 2. In fact, the High Court was conscious and also observed that if sale proceeds of other items of properties are not sufficient to satisfy the debt payable to the Bank by Defendants 1 and 2, in that event, Bank can proceed against the suit properties.”

57. Considering the aforesaid facts and circumstances, this Court is of the considered view that suit for specific performance of contract filed by the plaintiff was not barred by section 34 of the SARFAESI Act.

58. The records of the case also reveal that a petition under Order 7 Rule 10 for rejection of plaint was also filed by the bank [defendant nos. 4 to 6], inter alia, on the ground that the suit was not maintainable on account of bar under section 34 of the SARFAESI Act. The same was dismissed by a detailed order dated 09.10.2018.

59. It is important to note that the defendant bank who had raised the objection by referring to section 34 of the SARFAESI Act is not aggrieved by the impugned judgment in view of the fact that the security interest created in favour of the bank is not at all disturbed by the impugned judgment. The learned Court had refused to grant relief regarding specific performance of contract by holding that the agreement of sale of immovable property (Exhibit 8/5) was an unregistered agreement which could not be enforced and directed for refund of the paid portion of the total consideration money. Further, as per the agreement (exhibit-8/5) the property was given in possession to the plaintiff and the plaintiff did not even seek any relief with regards to possession of property. It is also important to note that even the plaintiff is not aggrieved by refusal to grant relief regarding specific performance of contract of sale of immoveable property (exhibit-8/5). Thus, neither the plaintiff nor the defendant bank (defendant no. 4 to 6) is aggrieved but the appellants (defendant nos. 1 to 3) having not filed any written statement, are trying to refer to section 34 of the SARFAESI Act to submit that the suit itself was barred by law and hence not maintainable.

60. Having held as aforesaid, this Court is of the considered view that the suit for specific performance of contract as such was not barred by section 34 of the SARFAESI Act, 2002. Accordingly, point nos. (b) is decided against the defendant nos.1 to 3 and in favour of the plaintiff.

Point of consideration no. (c)

61. Order 8 Rule 1 of the Code of Civil Procedure, 1908 reads as under:

“1. Written statement. —The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence:

62. Section 16 has amended the CPC in its application to commercial disputes covered under Commercial Courts Act, 2015. Proviso to Order VIII Rule 1 of the Code of Civil Procedure, 1908 has been amended. The amended Order VIII Rule 1 applicable to commercial disputes reads as under:

“1. Written statement. —The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence:

Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be specified by the court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record.”

63. In Desh Raj Vs. Balkishan reported in (2020) 2 SCC 708 the provisions of section 16 of the Commercial Courts Act, 2015 and Order VIII Rule 1 of CPC dealing with filing of written statement has been considered. Section 16 has amended the CPC in its application to commercial disputes and consequently, post coming into force of the aforesaid Act of 2015 there are two regimes of civil procedure. Whereas commercial disputes as defined under Section 2(c) of the Commercial Courts Act, 2015 are governed by CPC as amended by Section 16 of the said Act and all other non-commercial disputes fall within the ambit of the original provisions of CPC. It has been reiterated that mandatory nature of the timeline prescribed for filing of written statement and the lack of discretion with courts to condone any delay is applicable only to commercial disputes as defined under Section 2(c) of the Commercial Courts Act, 2015. It has also been held that as regards the timeline for filing of written statement in a non-commercial dispute, the unamended Order VIII Rule 1 of CPC continues to be directory and does not do away with the inherent discretion of courts to condone certain delays.

64. In the case of Desh Raj (supra) the Hon’ble Supreme Court held that although the unamended Order VIII Rule 1 of CPC is directory, it cannot be interpreted to bestow a free hand to on any litigant or lawyer to file written statement at their own sweet will and/or to prolong the lis. The legislative objective behind prescription of timelines under CPC must be given due weightage so that the disputes are resolved in a time-bound manner. Inherent discretion of courts, like the ability to condone delays under Order VIII Rule 1 of CPC is a fairly defined concept and its contours have been shaped through judicial decisions over the ages. Illustratively, extreme hardship or delays occurring due to factors beyond control of parties despite proactive diligence, may be just and equitable instances for condonation of delay.

65. The Hon’ble Supreme Court also considered as to whether the appellant before the Hon'ble Supreme Court had made out a case of exercising such discretionary jurisdiction after holding that the dispute was not a commercial dispute. The Hon’ble Supreme Court considered the entire sequence of events in connection with filing of written statement and found that the appellant was seeking condonation in filing the written statement in a casual manner and failed to give any cogent reason for the delay and was unable to satisfy due diligence on his part and dismissed the appeal filed by the defendant. However, the Hon’ble Supreme Court took a lenient view in the unique circumstances of the case and directed that the written statement be taken on record and it was also directed that such an order passed by the Supreme Court be not treated as a precedent.

66. In “Atcom Technologies Ltd. Vs. Y.A. Chunawala & Co.” reported in (2018) 6 SCC 639 it has been observed that it has to be borne in mind that as per the provisions of Order VIII Rule 1 of the Code of Civil Procedure, 1908, the defendant is obligated to present a written statement of his defence within thirty days from the date of service of summons. Proviso thereto enables the Court to extend the period up to ninety days from the date of service of summons for sufficient reasons.

It has been held that no doubt, the words “shall not be later than ninety days” do not take away the power of the court to accept written statement beyond that time and the nature of the provision is procedural and it is not a part of substantive law but at the same time, time can be extended only in exceptionally hard cases. It was also held that onus upon the defendant is of a higher degree to plead and satisfactorily demonstrate a valid reason for not filing the written statement within thirty days. The reason of the High Court condoning the delay “by balancing the rights and equities” was held to be far-fetched and the approach of the High Court was held to be erroneous in law. In the judgment passed by the Hon’ble Supreme Court in “Salem Advocate Bar Association Vs. Union of India” reported in (2005) 6 SCC 344 while holding that the provision of Order VIII Rule 1 of CPC providing for the upper limit of 90 days to file written statement is directory, it has been held in paragraph 21 that there is no restriction in Order VIII Rule 10 that after expiry of ninety days, further time cannot be granted. The court has wide power to “make such order in relation to the suit as it thinks fit” and it has been clarified that the order extending time to file written statement cannot be made in routine. The time can be extended only in exceptionally hard cases. While extending time, it has to be borne in mind that the legislature has fixed the upper time-limit of 90 days. The discretion of the court to extend the time shall not be so frequently and routinely exercised so as to nullify the period fixed by Order VIII Rule 1 of CPC.

67. Having considered the law relating to filing of written statement in commercial suits and also non-commercial suits, it is clear that though in commercial suits also the written statement has to be filed within 30 days of receipt of summons, but the same is extendable up to 120 days upon satisfactory explanation of delay and the maximum period of 120 days is full and final and non-extendable.

For non-commercial suits the written statement has to be filed within 30 days of service of summons and is extendable up to 90 days upon satisfactory explanation of delay; however, the upper limit of 90 days to file written statement is directory and there is no restriction in Order VIII Rule 1 of CPC that after expiry of ninety days, further time cannot be granted but the order extending time to file written statement cannot be made in routine and it can be extended only in exceptionally hard cases.

68. The records reveal that the case was initially filed before the learned Civil Judge, Senior Division, 1st Class at Dhanbad and after issuance of notice, it was transferred to the Commercial Court on 22^nd August 2016 pursuant to office order no. 399/16 dated 10th August 2016 upon constitution of commercial court in the district of Dhanbad which was received by the commercial court on 23.08.2016.

The defendant no. 3, 4, 5 and 6 appeared before the Commercial Court on 24.08.2016 and sought for time to file show-cause and written statement. The matter was adjourned to 27.09.2016 awaiting appearance of defendant nos. 1 and 2 and for filing written statement by defendant nos. 3 to 6.

On 27.09.2016 again the defendant nos. 3 to 6 prayed for time to file show-cause and written statement. The matter was adjourned to 10.11.2016 awaiting appearance of defendant nos. 1 and 2 and for filing written statement by defendant no. 3 to 6.

On 10.11.2016, defendant nos. 4 to 6 had filed their written statement and the defendant no. 3 prayed for and was granted time to file show-cause and written statement and the matter was also adjourned awaiting appearance of defendant nos. 1 and 2.

On 24.11.2016, the defendant nos. 1 and 2 appeared and prayed for time to file written statement. Defendant no. 3 again prayed for time to file written statement. The matter was directed to be posted on 07.12.2016 for filing written statement by defendant nos. 1 to 3.

On 07.12.2016, again prayer was made and time was granted to defendant nos. 1, 2 and 3 to file their written statement and show-cause and the matter was adjourned to 20.12.2016 for that purpose.

On 20.12.2016 again the matter was adjourned at the prayer of defendant nos. 1, 2 and 3 to file written statement and show cause fixing the next date as 11.01.2017.

On 11.01.2017, the learned Court rejected the time petition filed by defendant nos. 1 to 3 by recording that summons were served on the defendants on 19.07.2016 and more than 120 days had elapsed.

69. If counted from 19.07.2016 (the date of service of summons upon defendant nos. 1 to 3) the total period expired till 11.01.2017 [when further time was refused by the court] comes to about 172 days. From 24.11.2016 i.e. on the date the defendant nos. 1 and 2 appeared, 46 days had already elapsed but the defendant nos. 1 and 2 did not file their written statement and show-cause. So far as defendant no. 3 is concerned, from the date of appearance on 24.08.2016 more than 137 had expired. The date of service of summons on 19.07.2016 as recorded in order dated 11.01.2017 refusing to grant further time has not been disputed by the learned counsel appearing on behalf of the appellants (defendant nos. 1 to 3). Thus, as already recorded above if counted from 19.07.2016 the total period expired till 11.01.2017 with respect to defendant nos. 1, 2 and 3 comes to about 172 days.

70. The records further reveal that a petition dated 28.02.2017 was filed by defendant nos. 1, 2 and 3 seeking recall of order dated 11.01.2017 stating that the defendant no.3 remained sick from 26.11.2016 to 11.02.2017 and a prayer to admit the written statement was also made. The said petition dated 28.02.2017 was dismissed by the learned Commercial Court vide order dated 11.04.2017 by recording reasons.

71. This Court finds that if the matter regarding filing of written statement is taken from the point of view of the jurisdiction of commercial court to accept written statement beyond 120 days, the same has been conclusively decided by the Hon'ble Supreme Court as discussed above that the commercial court has no jurisdiction to accept written statement beyond a period of 120 days in terms of amendment to Order VIII Rule 1 of CPC through Section 16 of the Commercial Courts Act.

72. Even if this issue is taken up from the point of view of jurisdiction of a regular Court to accept the written statement, this Court finds that the period of 30 days from the receipt of summons which is the prescribed period for filing written statement as per Order VIII Rule 1 of CPC had expired long back but the learned Court repeatedly granted time to defendant nos. 1, 2 and 3 to file their written statement and ultimately , the period of 90 days as prescribed under Order VIII Rule 1 of CPC also expired on 19.10.2016. Further, on 11.04.2017 when the case was taken up, a plea was taken by the defendant no. 3 that he remained sick from 26.11.2016 to 11.02.2017 and such submission was made while consideration of the petition for recall of order dated 11.01.2017 filed on behalf of defendant nos. 1, 2 and 3 but no such plea with regard to the ill-health of defendant no. 3 was taken on 11.01.2017.

73. This Court is of the considered view that the prescribed period for filing written statement for non-commercial suit is extendable till 90 days from the date of service of summons but there was no explanation for not filing the written statement beyond the period of 90 days of service of summons till 26.11.2016. Otherwise also, even for extension of time for filing written statement beyond 30 days in non-commercial suit, some explanation or reason is required to be furnished for not filing the written statement within 30 days and to seek further time.

74. Considering the aforesaid order and the fact situation as narrated above, this Court is of the considered view that the appellants (defendant nos. 1 to 3) were not diligent in the matter of filing written statement and such lack of diligence is not permitted to be ignored or condoned in view of the aforesaid discussions made by the Hon'ble Supreme Court in various judgments. As held above, from the point of view of a commercial suit, the delay was not condonable beyond 120 days and from the point of view of a regular suit also, there was no explanation for not filing the written statement on or before 11.01.2017 and by this time, much time had elapsed from the date of service of summons which is 19.07.2016.

75. Accordingly, this Court is of the considered view that the learned Court has rightly refused to accept the written statement of defendant nos. 1, 2 and 3 both from the angle of the suit being a commercial suit and even from the point of view of non-commercial suit.

76. The point for consideration no. (c) is decided against the appellants (defendant nos. 1, 2 and 3) and in favour of the plaintiff.

77. Order VII Rule 14 of CPC is quoted as under:

“14. Production of document on which plaintiff sues or relies. —

(1) Where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint.

(2) Where any such document is not in the possession or power of the plaintiff, he shall, wherever possible, state in whose possession or power it is.

(3) A document which ought to be produced in court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the court, be received in evidence on his behalf at the hearing of the suit.

4) Nothing in this rule shall apply to document produced for the cross-examination of the plaintiff’s witnesses, or, handed over to a witness merely to refresh his memory.”

78. Order VII Rule 14 sub-rule (3) of CPC clearly provides that a document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit.

79. From the perusal of the records of this case, it is not in dispute that the documents which were relied upon by the plaintiff and mentioned in the plaint and also enlisted in the schedules to the plaint were not filed along with the plaint. However, the perusal of the order-sheet of the learned court reveals that on 10.12.2018, an affidavit was filed by the plaintiff regarding denial and acceptance of the documents and on that day, the defendants had also filed their appearance. On 07.01.2019, a petition was filed on behalf of the plaintiff in connection with the documents which was accepted by the Court. The records also reveal that the exercise regarding admission and denial of documents was duly undertaken and a detailed order in connection with each document filed by the plaintiff was drawn on 12.06.2019 and vide order dated 28.06.2019, the agreement of sale dated 20.12.2012 was also marked exhibit by observing that on 12.06.2019, the said document was not marked and hence it was marked on 28.06.2019. The other exhibits which were marked on 28.06.2019 were relating to the various signatures on the documents by the concerned witnesses.

80. This Court finds that though the documents were not accompanied with the plaint at the time of filing the suit but the details of the documents were certainly mentioned in the suit and its Schedule and the documents were produced and exhibited with the permission of the court and the exercise of admission and denial was duly undertaken by the court. In such circumstances, the arguments of the learned counsel appearing on behalf of the appellants (defendant Nos. 1 to 3) that the plaintiff did not seek the leave of the court to file documents is not correct.

81. This Court finds that under the aforesaid facts and circumstances there has been sufficient compliance of Order VII Rule 14 sub-rule (3) of CPC and therefore, this Court finds no reason to interfere with the impugned judgment on such ground.

82. It is further not in dispute that though the defendant Nos. 1, 2 and 3 did not file their written statement and on account of non-filing of written statement within time, their right to file written statement was closed, but they had duly participated in the suit at every stage including admission and denial of documents filed by the plaintiff and also had fully cross-examined the witnesses of the plaintiff.

The point of determination no. (d) is accordingly decided against the appellants (defendant nos.1 to 3) and in favour of the plaintiff.

The Point of determination no. (e)

83. Order VI, Rule 3-A of the Commercial Courts Act, 2015 provides that in a commercial dispute, where forms of pleadings have been prescribed under the High Court Rules or Practice Directions made for the purposes of such commercial disputes, pleadings shall be in such forms. Order VI, Rule 15-A of the Commercial Courts Act, 2015 provides that notwithstanding anything contained in Rule 15, every pleading in a commercial dispute shall be verified by an affidavit in the manner and form prescribed in the Appendix to this Schedule. It also provides that where a pleading is not verified in the manner provided, the party shall not be permitted to rely on such pleading as evidence or any of the matters set out therein and the court may strike out a pleading which is not verified by a Statement of Truth, namely, the affidavit set out in the Appendix to the Schedule.

Appendix I to the Commercial Courts Act, 2015 is as under:

APPENDIX I

STATEMENT OF TRUTH

(Under First Schedule, Order VI, Rule 15-A and Order XI, Rule 3)

I …… the deponent do hereby solemnly affirm and declare as under:-

1. I am the party in the above suit and competent to swear this affidavit.

2. I am sufficiently conversant with the facts of the case and have also examined all relevant documents and records in relation thereto.

3. I say that the statements made in ……paragraphs are true to my knowledge and statements made in ……paragraphs are based on information received which I believe to be correct and statements made in …paragraphs are based on legal advice.

4. I say that there is no false statement or concealment of any material fact, document or record and I have included information that is according to me, relevant for the present suit.

5. I say that all documents in my power, possession, control or custody, pertaining to the facts and circumstances of the proceedings initiated by me have been disclosed and copies thereof annexed with the plaint, and that I do not have any other documents in my power, possession, control or custody.

6. I say that the above-mentioned pleading comprises of a total of ……….pages, each of which has been duly signed by me.

7. I state that the Annexures hereto are true copies of the documents referred to and relied upon by me.

8. I say that I am aware that for any false statement or concealment, I shall be liable for action taken against me under the law for the time being in force.

Place:

Date:

Deponent

VERIFICATION

I, ………………………. do hereby declare that the statements made above are true to my knowledge.

Verified at……… [place] on this……… [date]

Deponent.

84. Upon going through the plaint, this Court finds that the plaint has not been filed in the manner prescribed under the Commercial Courts Act, 2015. This is primarily due to the reason that the plaint was originally filed before the regular court as a regular suit and amendment of the plaint was allowed vide order dated 15.06.2016 by the concerned court adding certain properties to the schedule A of the plaint. Thereafter, upon constitution of commercial court in the district of Dhanbad, the suit was transferred from regular court to the commercial court. This transfer was essentially in terms of section 15 of the Commercial Courts Act, 2015 which provides for transfer of pending suits and sub-section (3) of section 15 clearly provides that the provisions of the Commercial Courts Act, 2015 shall apply to those procedures that were not completed at the time of transfer. In view of the aforesaid provision the plaint having been filed as a regular suit there was no occasion for the plaintiff to file the suit as per Order VI, Rule 3-A, Order VI, Rule 15-A read with appendix -I to the Commercial Courts Act, 2015 and upon its transfer the said provisions were not required to be complied on the suit already filed as the Commercial Courts Act , 2015 was to apply only to those procedures which were not complete at the time of transfer. Accordingly, there was no illegality even if the suit was not verified and filed in terms of Order VI, Rule 3-A, Order VI, Rule 15-A read with appendix I as applicable to filing of suit /amendment to suit under the Commercial Courts Act, 2015. Thus, the suit was maintainable as filed. The point no. (e) is accordingly decided against the appellants (defendant nos. 1 to 3) and in favour of the plaintiff.

Point of determination no. (f) and (g)

85. The learned Court framed issue Nos. 2 and 4 as to whether the agreements dated 20.12.2012 (Exhibit 8 and 8/5) were valid, effective and binding upon defendant Nos. 1, 2 and 3 and whether the plaintiff was entitled to claim compensation for breach of promise to transfer share in defendant no. 1 Company as contained in agreement dated 20.12.2012.

The agreement dated 20.12.2012 (exhibit 8/5)

86. This Court finds that so far as the agreement dated 20.12.2012 (exhibit 8/5) is concerned, it is an unregistered agreement of sale of immovable property executed by the defendant No. 3 in favour of the plaintiff. The agreement was marked with objection. However, the plaintiff (examined as P.W-1) had fully supported the execution of the agreement and has also produced ample evidence regarding the payments made in connection with the agreement, the details of which has been given in Schedule B to the plaint and the payments were substantiated by adducing documentary and oral evidences produced by the plaintiff though marked with objection. The defendants in their cross-examination could not demolish the factum regarding payment of Rs. 36,00,000/- against the agreement dated 20.12.2012 (exhibit 8/5) and also could not demolish the execution of the agreement (exhibit 8/5). The plaintiff prayed specific performance of the agreement of sale of immovable property (Exhibit-8/5) but no relief was sought for by the plaintiff seeking possession of the property involved in exhibit 8/5.

87. Rajiv Ranjan Prasad - P.W. 2 has stated that there was an agreement dated 20.12.2012 in between Nabibulla Siddique and Arvind Singh for sale of 2.76 acres of land on payment of consideration amount of Rs. 37,00,500/-. Arvind Singh had paid Rs. 36,00,000/-. He is one of the signatory of the agreement. P.W. 2 further stated that Arvind Singh is in the business of sale and purchase of the land and used to sign in the agreement. He could not recall the date when the money was paid by Arvind Singh. He could not say who had prepared agreement dated 20.12.2012. This witness further deposed that Nabibulla Siddique had assured to pay Rs. 1,00,000/- per month as salary to Arvind Singh. Arjun Kumar Mandal- P.W. 3 has stated that there was an agreement for sale in between parties for 2.76 acres of land on payment of consideration amount of Rs. 37,00,500/-. Arvind Singh had paid Rs. 36,00,000/-. He further stated that he had signed on the agreement. Rajiv Kumar had also signed on the same. In the agreement of 2012 he, Raju Kumar, Rajiv Kumar Sinha- P.W. 2 along with other two persons were witnesses. It is important to note that the witnesses to the agreement of sale (Exhibit 8/5) namely, Rajiv Ranjan Prasad and Arjun Kumar Mandal had also duly deposed before the court as P.W. 2 and 3 and their signatures on exhibit 8/5 were marked as exhibit 8/8 for P.W. 2 and exhibit 8/9 for P.W. 3 though the same were marked with objection. Both P.W. 2 and 3 have also been duly cross-examined by the defendants, but their evidence in connection with the fact that they were witnesses to the agreement (exhibit 8/5) and payment was made remained intact.

88. This Court is of the considered view that the agreement of sale (Exhibit-8/5) which was admittedly an unregistered document could not have been enforced through the court of law and a detailed discussion in this regard has been made by the learned court who refused to grant the relief of specific performance of contract and the plaintiff is also not aggrieved by denial of relief regarding specific performance of contract. Accordingly, denial of relief regarding specific performance of contract by the learned Court has attained finality.

89. This Court finds that the transaction in connection with money which was given to the defendant No. 3 and recorded in the agreement of sale ( exhibit 8/5) were also duly proved by the plaintiff through oral as well as documentary evidences (marked with objection) produced on record which were primarily based on banking transactions. This aspect of the matter has been duly considered by the learned court while granting a decree amounting to Rs. 36,00,000/-as contained in Sl. No. 3 of the final order under the head “given as advance against consideration money for sale of land by the plaintiff to defendant no. 3”. However, the learned court committed serious mistake in the final order itself wherein interalia the said amount was directed to be paid by defendant Nos. 1, 2 and 3 within six months failing which a liberty was left with the plaintiff to take legal course of action for realization of the dues from defendant Nos. 1, 2 and 3.

90. This Court is of the considered view that the learned court while directing the defendant Nos. 1, 2 and 3 to make payment and on default realize the amount from the defendant Nos. 1, 2 and 3 has committed serious error, inasmuch as, the agreement of sale (exhibit-8/5) was between the plaintiff and the defendant No. 3 and the money was paid by the plaintiff to the defendant No. 3 arising out of agreement of sale (exhibit 8/5) and therefore, no liability could have been fastened upon the defendant No. 1 who is a Company and is certainly a separate legal entity. This assumes importance in view of the fact that even the plaintiff in the relief with regard to exhibit 8/5 did not pray for any decree against defendant Nos. 1 and 2 rather a prayer for decree was made only against defendant No. 3.

91. Accordingly, the final order in the judgement passed by the learned Commercial Court directing the defendant Nos. 1, 2 and 3 to return consideration amount of Rs. 36,00,000/- to the plaintiff arising out of agreement of sale (exhibit 8/5) calls for interference only to the extent that the direction to pay and also the liberty to take legal recourse on account of non-payment will now be confined only against defendant No. 3 and the amount will not be realizable from defendant Nos. 1 and 2. The defendant No. 2 has been said to be the proprietorship firm of defendant No. 3. However, the plaintiff did not seek any relief against defendant No. 2 and accordingly, no such relief could be granted by the learned court against the defendant no.2 also. Accordingly, the relief to the plaintiff in connection with refund of Rs. 36,00,000/- arising out of agreement of sale dated 20.12.2012 (exhibit-8/5) is confined only to defendant No. 3.

The agreement dated 20.12.2012 (exhibit 8)

92. So far as the agreement dated 20.12.2012 (exhibit 8) is concerned, the same was also marked with objection. However, the agreement was duly proved by the plaintiff who was examined as P.W. 1 and two witnesses, namely, Rajiv Ranjan Prasad and Arjun Kumar Mondal who were examined as P.W. 2 and P.W. 3 respectively. The P.W 2 and 3 also exhibited their signatures and had deposed that they were witnesses to the agreement (exhibit-8). Their signatures were marked as exhibit 8/3 and exhibit 8/4 respectively though with objection.

93. This Court also finds that various transactions of money were mentioned in the agreement and most of them were through bank whose details were also mentioned in Schedule C to the plaint amounting to Rs. 21,00,000/- with cheque details which were duly proved by the plaintiff. Schedule C was titled as ‘details of payments made by plaintiff to the defendant No. 3 for allotment of shares in defendant No. 1 Company’. This Court finds that the execution of the agreement dated 20.12.2012 (exhibit-8) and also the money transactions as reflecting therein was duly proved by the plaintiff supported by the witnesses.

94. It was the specific evidence of P.W.-1 (the plaintiff) that earlier an agreement dated 06.07.2010 was entered into between the plaintiff and defendant No. 3 according to which the defendant No. 3 was to make the plaintiff share holder in the defendant No. 1 Company to the extent of 54% and that the defendant No. 1 company would pay an amount of Rs. 1,00,000/- per month as salary. However, the said agreement dated 06.07.2010 was not produced by the plaintiff. It was further deposed by the plaintiff (P.W-1) that an agreement dated 20.12.2012 (exhibit-8) was entered into between the defendant No. 1 and plaintiff renewing the earlier agreement according to which the defendant No. 3 had acknowledged the receipt of Rs. 21,00,000/-. It was further deposed by P.W. 1 that it was agreed that in case the factory (mill) does not start, the defendant No. 3 would refund Rs. 21,00,000/- and further pay an amount of Rs. 50,00,000/- as liquidated damages. It was stated in evidence by the P.W-1 that defendant Nos. 1, 2 and 3 did not abide by their promise nor P.W-1 was provided 54% in the defendant No. 1 Company nor he was paid any amount on account of salary. It was the case of P.W. 1 (plaintiff) that the defendant No. 1 Company and defendant No. 2 proprietorship firm were owned by defendant No. 3 and an amount of Rs. 21,00,000/- was asked as financial help for establishing and running Sahzada Aata Mill “a flour mill” and for that purpose, the plaintiff had paid Rs. 21,00,000/- through three cheques to the defendant No. 1 Company and to defendant No. 3, the details of which has been mentioned in his evidence. During his evidence, he has clarified that in the plaint, there was a typing mistake in connection with Cheque No. 064596 dated 30.09.2011 and instead it was typed as 064590 dated 03.09.2012. The evidence in connection with the aforesaid three cheques is contained in exhibit 1/1 which was marked with objection. The aforesaid chart reveals that Rs. 16,00,000/- was paid through two cheques in the name of the defendant No. 1 Company and Rs. 5,00,000/- was paid by cash through bearer cheque to the defendant No. 3.

95. The plaintiff was cross-examined and he has stated that the date of cheque No. 064596 and 064590 was wrongly mentioned in the plaint, but he had not filed any petition for rectifying the error. He stated that Cheque No. 109426 was a bearer cheque and there is no mention of cheque No. 064596 and 064590 in the bank statement. He has stated in his cross-examination that he has not filed the agreement dated 06.07.2010. However, he has reiterated that in the agreement dated 06.07.2010, there was an agreement to give 54% share and Rs. 1,00,000/- per month as salary. He has further stated that original of the said agreement was taken back by the defendant No. 3 and thereafter the fresh agreement dated 20.12.2012 (exhibit-8) was entered into wherein the contents of the agreement dated 06.07.2010 were repeated. He has stated that the flour mill was started sometimes in the year 2012-13, but he did not remember the date and month. P.W-1 (plaintiff) has further stated that the machinery for running the flour mill was purchased from Kolkata and Rajasthan, but he did not remember the amount for purchase of machineries and he had no idea about the payment in connection with such purchase. He was completely unaware as to the amount utilized for establishing the flour mill. He has further stated in his cross-examination that till 20.12.2012, there was no production in the defendant no.1 Company. He has stated that as per the agreement, the money which was taken by the defendant No. 3 from the plaintiff was to be returned back to the plaintiff if the mill did not become operational. He has further stated that four cheques totalling to Rs. 45,75,000/- was issued to the plaintiff against salary and damages out of which two cheques were given back to the defendant No. 3 and two cheques had bounced in lieu of which the defendant No. 3 paid total of Rs. 17,25,000/-. He has further stated that the defendant No. 3 issued cheque No. 240333 dated 12.07.2011 of Punjab National Bank which was for the purposes of return of Rs. 5,00,000/-. He has further stated in the cross - examination that he was not aware that for the purposes of sale and purchase of share an application was to be filed before the registrar of the companies and that he had not filed any such application. He has reiterated that the defendant No. 3 had agreed to give 54% of his share to the plaintiff (P.W-1) . He has also stated that the flour mill was running on the land of Amlatand and this land for which he has entered into agreement of sale (exhibit- 8/5) belonged to defendant No. 3 and was not the property of defendant No. 1. The details of cheque/payment which was issued by the defendant No. 3 to the plaintiff has been exhibited all of which have been issued from the account of defendant No. 2 under the signature of defendant No. 3 showing himself as proprietor. The cheques are dated 28.02.2013, 25.02.2013, 26.02.2013 and 27.02.2013 for amount of Rs. 1,00,000/-23,50,000/-, Rs. 1,25,000/- and Rs. 20,00,000/- respectively all drawn on Punjab National Bank and the document regarding dishonour of these cheques have been exhibited vide Exhibit-4. It was also stated in the cross-examination by P.W. 1 that there are criminal cases between the parties and that the defendant Nos. 2 was made party as the defendant No. 3 is the proprietor of defendant No. 2, but plaintiff has not sought any relief against defendant No. 2.

96. The P.W. 2 in his evidence has stated that the defendant No. 3 is the owner of defendant Nos. 1 and 2 who had asked for a help of Rs. 21,00,000/- from the plaintiff (P.W-1) and in lieu of that the defendant no.3 had promised to give 54% share to the plaintiff in defendant No. 1 Company and salary of Rs. 1,00,000/- as Director of the Company; for that purpose, the agreement was entered into on 20.12.2012 (exhibit-8) which was duly signed by the plaintiff and the defendant No. 3 in his presence and he was one of the witnesses of such agreement (exhibit-8) and exhibited his signature on the agreement (exhibit- 8). He has further stated that out of the damages of Rs. 50,00,000/-, an amount of Rs. 17,50,000/- only was paid to the plaintiff. He has been fully cross-examined and, in his cross-examination, he has stated that the amount of Rs. 17,50,000/- was paid by the defendant No. 3 to the plaintiff in lieu of the salary which was payable @ Rs. 1,00,000/- per month.

97. P.W. 3 in his evidence has made similar statements as that of P.W. 2. This witness has also been cross-examined and he claimed to be the witness of the agreement. He has stated that the terms and conditions of the agreement were finalized in his presence in the year 2010 between the plaintiff and the defendant Nos. 3 and other persons including Rajiv Ranjan Prasad. As per the agreement, the plaintiff was to invest Rs. 21,00,000/- in the mill and 54% share was to be allocated to the plaintiff and further he was entitled to Rs. 1,00,000/- per month as salary.

98. This Court finds that the agreement of the year 2010 was not produced by the plaintiff and no such explanation for non-production of such document was given by the plaintiff in his examination-in-chief and even in the plaint, but during his cross-examination, he has stated that the agreement was taken back by the defendant No. 3 and in lieu of which another agreement dated 20.12.2012 was entered into narrating whatever had happened in the agreement of the year 2010. The P.W. 3 who claims to be the witness to the agreement of the year 2010 had stated that the agreement was entered into between the plaintiff and defendant No. 3 in the year 2010. P.W. 1 - the plaintiff has also stated that the agreement was entered into between him and the defendant No. 3 as back as on 06.07.2010. However, in his evidence with respect to the subsequent agreement dated 20.12.2012, he has stated that a fresh agreement was entered into between defendant No. 1 and the plaintiff in lieu of earlier agreement dated 06.07.2010.

99. With respect to the earlier agreement dated 06.07.2010, it was mentioned that it was defendant No. 1 who was to pay an amount of Rs. 1,00,000/- to the plaintiff as salary and it has come in evidence that the plaintiff would have been entitled for a salary of Rs. 1,00,000/- as a director of defendant No. 1. This Court finds that upon perusal of the agreement exhibit-8, the same is certainly not an agreement between the plaintiff and the defendant No. 1, but the same is an agreement between the plaintiff and the defendant No. 3 wherein the defendant no.3 had also stated that he was the Director of defendant No. 1. The plaintiff has not produced any material to show that the defendant no.3 was representing the defendant No. 1 in the matter of entering into the agreement and the said agreement would bind the defendant No. 1 in any manner whatsoever.

100. This Court finds that it has been proved that earlier one agreement dated 06.07.2010 was entered into between the plaintiff and the defendant No. 3 mentioning that the defendant No. 3 would give 54% share in the defendant no.1 Company and as the director of the defendant no.1, the plaintiff would be entitled to receive Rs. 1,00,000/- per month as salary from the defendant No. 1. The plaintiff, by referring to the agreement dated 20.12.2012 (exhibit-8), has stated that the said was an agreement between the defendant No. 3 and the plaintiff by which the defendant No. 3 had acknowledged payment of Rs. 21,00,000/- by the plaintiff and it was agreed that in case the factory (mill) did not commence production, the defendant No. 3 was to return an amount of Rs. 21,00,000/- and also to pay Rs. 50,00,000/-as liquidated damages. In cross examination, the P.W-1 (plaintiff) has stated that Out of Rs. 50,00,000/- earmarked for salary and compensation, Defendant no.3 handed him over four cheques total of Rs.45,75,000/- all of which bounced; two cheques were filed in the court and two were taken back by the defendant no.3 and in lieu of which defendant no.3 gave the plaintiff (P.W-1) a total of Rs 17,25,000/-. The suit was for Rs. 21,00,000/- plus Rs. 50,00,000/-minus Rs 17,25,000/-. As per P.W-1, Rs. 50,00,000/- had the component of salary and compensation which the plaintiff terms as liquidated damages in his evidence. The P.W-2 in his evidence during cross examination has stated that Rs 17,25,000/- was paid by the defendant no.3 as damages on account of salary which was @ Rs.1,00,000/- per month.

101. This Court finds that the entire transaction with respect to the agreement dated 20.12.2012 (exhibit-8) was between the plaintiff and the defendant no.3. It referred to earlier agreement dated 06.07.2010 by which 54% shares in defendant no.1 was to be transferred to the plaintiff by the defendant no.3 and the plaintiff had given Rs. 21,00,000/- and was to get salary @Rs.1,00,000/- per month in the capacity of director of the defendant no.1. However, the shares were not transferred to the plaintiff and ultimately the aforesaid agreement dated 20.12.2012 (exhibit- 8) was entered into between the plaintiff and the defendant no.3 by which the defendant no.3 was to return Rs. 21,00,000/- to the plaintiff and pay damages of Rs. 50,00,000/- to the plaintiff, interalia, for the loss of salary @ Rs.1,00,000/- per month till the date of agreement dated 20.12.2012 (exhibit- 8) and other expenses. In the plaint the plaintiff claimed that Rs. 50,00,000/- included other expenses but was exclusive of Rs. 21,00,000/- paid by the plaintiff. However, there is not even an iota of evidence, either oral or documentary from the side of the plaintiff as to the other expenses which the plaintiff had incurred and was claiming as damages as a part of total claim of damages of Rs. 50,00,000/-. Rather, the plaintiff (P.W-1) has been duly cross examined by the defendants with regards to any expenses in the form of purchase of machinery etc. but the plaintiff categorically denied having knowledge of the expenses incurred for such purpose. The only material relied upon to claim damages of Rs. 50,00,000/- so as to include other expenses apart for the loss on account of salary is the agreement dated 20.12.2012 (exhibit-8). In the plaint the amount of Rs. 50,00,000/- was claimed as damages but in the evidence the P.W-1 termed it as liquidated damages. So far as the component of loss of salary is concerned, the same was quantified @ Rs.1,00,000/- per month from 06.07.2010 to 20.12.2012 which comes to maximum of Rs. 30,00,000/- even if the month of 7/2010 and 12/2012 are included. It has come in evidence that Rs 17,25,000/- was paid by the defendant no.3 as damages on account of salary and thus the remaining amount under the head salary was only Rs.12,75,000/-. So far as remaining Rs. 20,00,000/- as damages is concerned there is no evidence or material to support such claim which was said to be on account of other expenses. Further, so far claim of refund of Rs. 21,00,000/- is concerned, the same was duly established by the plaintiff.

102. In the judgement of "Kailash Nath Associates Vs. DDA" reported in (2015) 4 SCC 136, the Hon’ble Supreme Court while dealing with the principles of liquidated damages has held that where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. The expression “whether or not actual damage or loss is proved to have been caused thereby” used in section 74 of the Indian Contract Act means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded. Paragraph 43 of the aforesaid judgement is quoted as under: -

"43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:

43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the court cannot grant reasonable compensation.

43.2. Reasonable compensation will be fixed on well-known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.

43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the section.

43.4. The section applies whether a person is a plaintiff or a defendant in a suit.

43.5. The sum spoken of may already be paid or be payable in future.

43.6. The expression “whether or not actual damage or loss is proved to have been caused thereby” means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.” (emphasis supplied)

103. This court finds that the claim of remaining amount of Rs. 20,00,000/- as damages was attributable to the alleged losses on account of expenses incurred by the plaintiff but there is no evidence on record, either oral or documentary with respect to such losses. Applying the law laid down by the Hon’ble Supreme Court in the case of Kailash Nath Associates (supra) this court is of the considered view that the plaintiff is not entitled to any damages termed as liquidated damages in the evidence to the extent it relates to Rs. 20,00,000/- for other expenses out of total claim of Rs. 50,00,000/- on account of damages, the remaining was apparently on account of loss of salary as discussed above. Thus, the plaintiff is entitled to Rs. 21,00,000/- on account of refund of the money given to the defendant no.3 and Rs.12,75,000/- being balance number of damages under loss of salary [Rs. 30,00,000/- minus Rs 17,25,000/- (already paid)]. Further, the amount is payable by the defendant no.3 only. The relief sought for in the plaint with respect to claim for damages and recovery of Rs. 21,00,000/- arising out of exhibit-8 was from defendant no.1 and 3 and no such relief was claimed against the defendant no.2. This court also finds that the agreement was essentially between the plaintiff and defendant no.3 and merely because the defendant no 3 had also stated that he was the director of defendant no. 1, the same will not entitle the plaintiff to have a decree against defendant no.1. There is no material even to suggest that the defendant no.3 had entered into the agreement with the plaintiff [exhibit-8] by or on behalf of the defendant no.1 company, rather the recital of the agreement reveals that the agreement was between the plaintiff and the defendant no.3.

104. This Court finds that it was argued by the appellants (defendant nos.1 to 3) before the learned Court that the details of amount of salary was not mentioned in the plaint and as per contract agreement dated 20.12.2012 the total amount recoverable is Rs. 50,00,000/-(Rupees Fifty Lakh) which includes salary plus damages hence the claim of the plaintiff is excessive. However, the learned Court totally ignored the said arguments and passed the judgement inclusive of the entire damages as claimed based on its mentioning in the agreement (exhibit-8). The grant of damages over and above any amount relating to loss on account of salary cannot be sustained in the eyes of law in absence of any evidence (oral or documentary) on account of losses relating to 'other expenses'. The claim on account of damages ought to have been confined to the amount of salary @ Rs.1,00,000/- per month for the total period of default. The impugned judgement granting full amount of damages as claimed cannot be sustained in law and hence it calls interference.

105. Accordingly, the final order in the judgement passed by the learned Commercial Court directing the defendant Nos. 1, 2 and 3 to pay Rs. 21,00,000/- to the plaintiff arising out of agreement dated 20.12.2012 (exhibit-8) being the financial help given by the plaintiff calls for interference only to the extent that the direction to pay and also the liberty to take legal recourse on account of non-payment will now be confined only against defendant No. 3 and the amount will not be realizable from defendant Nos. 1 and 2. The defendant No. 2 has been said to be the proprietorship firm of defendant No. 3. However, the plaintiff did not seek any relief against defendant No. 2 and accordingly, no such relief could be granted by the learned court against the defendant no.2 also. Further the plaintiff is held entitled to relief on account of damages relating to the head 'loss of salary' only to the extent of Rs.12,75,000/- [Rs. 30,00,000/- minus Rs 17,25,000/-] arising out of agreement dated 20.12.2012 (exhibit-8) payable only by defendant no.3 and so far as the remaining claim of damages to the extent of Rs.20,00,000/- on account expenses incurred by the plaintiff out of total claim of damages of Rs. 50,00,000/- is concerned, the same is rejected.

106. The point nos. (f) and (g) are accordingly decided in the aforesaid terms.

107. Pending interlocutory applications, if any, is dismissed as not pressed.

ORDERED

The defendant no. 3 shall pay the amount allowed and depicted hereinbelow to the plaintiff :-

s.no.	Head	Amount
1	Given as financial help by the plaintiff to the defendant no.3 (*agreement dated 20.12.2012 (exhibit-8)*	Rs. 21,00,000/-
2	Damages on account of loss of salary *agreement dated 20.12.2012 (exhibit-8)*	Rs.12,75,000/-
3	Return of consideration money arising out of *agreement of sale dated 20.12.2012 (exhibit-8/5)*	Rs. 36,00,000/-
4	Total	Rs. 69,75,000/-

Award of interest @ 12% as passed by the learned Commercial Court does not call for any interference.

With respect to appellant no.3 (defendant no 3) -The appeal is partly allowed only with respect to the amount at serial no.2 and confining the liability to pay only upon defendant no.3.

With respect to appellant nos. 1 and 2 (defendant nos. 1 and 2)- The appeal is allowed.

M/s S.S. Agro Bio-Tech Flour Mills (Pvt.) Ltd Vs Arvind Singh

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