EFCALON TIE UP PVT.LTD. vs WEST BENGAL FINANCIAL CORPORATION

This G.A.1966 of 2017 is at the instance of the plaintiff Efcalon Tie Up Private Limited, has been filed praying for an order for framing of preliminary issue to the extent whether the document dated 7th July, 2008 being a Memorandum of Understanding (MOU) has been adequately stamped as per the Indian Stamp Act, 1899 and required to be registered as per Indian Registration Act, 1908 and to decide the suit only on that issue considering it to be an issue of law.

Such an application has been made by the petitioner-plaintiff to advance an argument that the document (MOU) dated 7th July, 2008, executed by and between Efcalon Tie Up Private Limited and West Bengal Financial Corporation, is in accordance with law and is admissible in evidence.

According to the plaintiff, the only core issue is that whether the document has been executed in accordance with law and in consonance with the Indian Stamp Act, 1899 and the Indian Registration Act, 1908. The petitioner submits that this is an issue of law as to whether the document is admissible in evidence or not and if such an issue is decided as a preliminary issue, the suit need not be tried on evidence and no amount of evidence is required to prove the document.

In this context the relief sought for by the plaintiff is required to be noted. The plaintiff/petitioner has made the following prayers in the plaint : 1.a) Decree for an amount of Rs.2,64,67965.58 (Rupees Two Crore Sixty Four Lakhs Nine Hundred Sixty Five and Fifty Eight Paisa only) against the defendant in terms of paragraph 23 hereof; b) Interim interest and interest upon judgment at the rate of 18% per annum; c) Injunction; d) Receiver; e) Attachment; f) Costs; g) Further or other reliefs; In order to deal with the present issue involved in the petition filed by the petitioner/plaintiff reading of the plaint is necessary.

Paragraph 13 of the plaint says that the defendant entered into an amicable settlement with the plaintiff by executing a Memorandum of Understanding dated 7th July, 2008 whereby and where under the defendant agreed to settle the disputes by agreeing to withdraw the appeal of the defendant against the order dated 6th January, 2005 and also agreeing to transfer its entire claim against the company (in liquidation) and its ex-DirectORS.namely, Gouranga Sundar Das and Sunil Kumar Das in favour of the plaintiff. The Memorandum of Understanding is drawn on a Rs.500/- stamp and has been certified by a Notary Public.

The said MOU has been acted upon by both the parties and in furtherance thereof, the appeal preferred by the defendant against the order dated 6th January, 2005, was withdrawn. In terms of the MOU defendant also issued a Power of Attorney in favour of the representative of the plaintiff to continue the proceedings in T.A.No.41 of 2003 on behalf of the defendant so that the same may be taken to its logical conclusion.

The defendant also received the entire consideration in terms of the MOU and the plaintiff engaged some Advocates to proceed with the matter in T.A.No.41 of 2003 and conducted proceedings on behalf of the defendant and incurred the entire expenses for the same thereafter.

The said Memorandum of Understanding contained various terMs.the important portions of which are as follows : a) With the execution of the Memorandum of Understanding the fiRs.party (defendant) shall be deemed to have transferred, conveyed, assured and assigned all its claims against the company (in liquidation) and against the said Gouranga Sundar Das and Sunil Kumar Das to the second party (plaintiff) including its claims in T.A.No.41 of 2003 and the charge being claimed by it over and in respect of the premises of Biren Roy Road, at or for the consideration of Rs.53,70,000/- only. consequently, the fiRs.party (defendant) no longer be entitled in any manner either to enforce or to seek to enforce the same and the second party will alone be entitled to pursue and to enforce all claims of the fiRs.party against the company (in liquidation) and against the said Gouranga Sundar Das and Sunil Kumar Das.

b) Simultaneously, with the execution of the said Memorandum of Understanding the fiRs.party (defendant) shall, therefore, also execute in favour of the second party (plaintiff) a specific irrevocable Power of Attorney authorizing the second party (plaintiff) to do all acts, deeds and things on behalf of the fiRs.party (defendant) that the fiRs.party (defendant) would have done in the matter of pursuing its claims against the company (in liquidation) and against the said Gouranga Sundar Das and Sunil Kumar Das.

The pleadings in the plaint have been controverted by the defendant by filing a written statement. Said written statement, inter alia, contains the following pleadings: a) The Single Bench of this Honble Court by an order dated 6th January, 2005 confirmed sale of front portion and directed the Official Liquidator to execute conveyance in respect of the front portion of the Behala land ad measuring 3 bighas 10 cottahs in favour of the plaintiff and also directed the plaintiff to negotiate with Das Reprographics Limited (in liquidation) who had also obtained financial assistance from United Bank of India and had created a charge over its current assets in favour of United Bank of India.

b) The defendant filed an appeal being ACO No.60 of 2005 from the order of sale dated 6th January, 2005 and the said order was stayed. The appeal was pending.

c) The said two Das brothers through the plaintiff company wanted to settle the dispute regarding validity of sale of front portion of the said property.

d) In the above background the MOU was entered into in 2008.

e) It is denied that the plaintiff in terms of the MOU was to receive the said amount of Rs.2,38,72,006.94/- or any portion thereof or the defendant by reason of the said MOU was obliged to pay the aforesaid amount to the plaintiff.

The plaintiffs reliance on the said MOU is misplaced. Clause 6 of the said MOU expressly entitled the defendant to receive and retain the sale proceeds of rear portion of the Behala land. However, the payment of sale proceeds of the said rear portion of the Behala land was not received within one year from the date of execution of the said MOU.

f) In the event it is contended by the plaintiff that the said MOU dated 7th July, 2008 purported to transfer or assign all the claims of the defendant against the said company Das Reprographics Limited, the company in liquidation, the claims of the defendant were not only for money but also against the mortgaged immovable property which was security given to the defendant for all amounts financed by the defendant to the said company before its liquidation.

It was a claim secured by immovable property of the value of more than Rs.100/- and such rights and claims of the defendant cannot be assigned or transferred save and except by way of registered document duly stamped and registered. The MOU obtained by the plaintiff is grossly inadequately stamped and not registered.

In the premises, the said MOU will be void and cannot be looked into or admitted as evidence for the purpose of the contention if raised by the plaintiff that the said MOU has transferred and/or assigned all claims of the defendant which were claim secured by immovable property of value of more than Rs.100/- and the said MOU will be void to that extent.

The said MOU is divisible and severable and the aforesaid portions of the said MOU which according to the plaintiff purport to transfer or assign the claim of the defendant against the company in liquidation can be separated from the rest of the MOU. Defendant claims that the said MOU dated 7th July, 2008 as purportedly relied by the plaintiff in the plaint are incorrect and contrary to the tenor of the said MOU.

The said MOU is confined to and was entered into in the context of sale of the front portion of the Behala land only and had no relation to the rear portion of the Behala land which took place nearly six years after the said MOU dated 7th July, 2008. The plaintiff has received the possession of the front portion of the Behala land and all the moveable assets sold by and under the order of this Honble Court and the sale as confirmed by this Honble Court as mentioned hereinbefore.

It is further stated that the said power of attorney was not, however, registered and as such could not validly or at all confer any right on the said attorney in respect of any immovable property of the value of above Rs.100/-. The rear portion of the said Behala land was worth of more than Rs.100/- and no right to deal with or to affect the ownership or interest in respect of the said rear portion of the Behala land could be validly conferred on the said power of attorney holder.

If it be contended by the plaintiff that the said power of attorney conferred right on the power of attorney holder in respect of the rear portion of the said Behala land, then it would be submitted that the power of attorney would be inadmissible, inoperative and void insofar as the right in respect of the said immovable property at Behala. The plaintiff company did not acquire any legal right to deal with the rear portion of the Behala land by and under the said power of attorney or otherwise.

In the background of the aforesaid pleadings of the plaintiff and the counterpleadings of the defendant it is not the case that the defendant has admitted the contents of the MOU as claimed by the plaintiff, nor has the defendant admitted the claim made in the plaint, nor is it evident from anywhere on a scrutiny of the pleadings of the parties that the defendant has admitted the plaintiffs claim based on the MOU or the act performed by the constituted attorney on the basis of the power of attorney in question.

From the averment of the pleadings it appears that further scrutiny with regard to the admission of MOU and also the power of attorney is to be made and such scrutiny necessitates examination of pros and cons of the MOU but not on its face value only.

In order to deal with the question, whether the plaintiff is entitled to the amount claimed, can straightway be passed on the basis of the Memorandum of Understanding and whether the power of attorney was required to be registered or not and on the basis of the said power of attorney whether the attorney was entitled to transfer any immovable property or not needs investigation in detail.

These are the questions to be taken care of only after the evidence is forthcoming. Without trial on evidence Court cannot give answer to the questions raised by the plaintiff in the plaint vis-a-vis the objection raised by the defendant. In the application the petitioner has pointed out that the only core issue in the suit is whether the documents dated 7th July, 2008 executed by and between the plaintiff and the defendant is in accordance with law. Even assuming that this is the core issue according to the plaintiff, but whether this has been done in accordance with law or not, various other factors are involved or to be involved to come to a conclusion that a document is a valid and enforceable document.

Without the parties being given opportunity to adduce evidence in support of the said document Court cannot come to a conclusion simply on perusal of the document that the plaintiff is entitled to the decree as claimed, nor can it be held, as the plaintiff has submitted, that if a document is admissible in evidence the Court should not hesitate to pass a decree on the basis of such document. This Court cannot agree with such submission made on behalf of the plaintiff.

Even if a document is admissible in evidence and marked as an Exhibit, the same will not be sacrosanct for the Court to come to a conclusion that execution of the document is also admitted and there cannot be any dispute with regard to the contents of the document. Therefore, this is not a question of law on which a preliminary issue can be settled to decide the suit without calling for any evidence.

Provisions of Order 14, Rule 2 is relevant in the present case and those are set out below : R.2. Court to pronounce judgment on all issues.:

(1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall subject to the provisions of sub-rule (2) pronounce judgment on all issues.

(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue fiRs.if that issue relates to (a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue. Sub-Rule (2) of Rule 2 says that Court may try the issue of law provided, such issue relates to (a) jurisdiction of Court or (b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues only after that issue may be determined and may deal with suit in accordance with law on that issue.

This Court respectfully disagree with the submission made by Mr.Sabyasachi Chowdhury that in the present case Court can proceed on the basis of a preliminary issue for which the application has been filed. Whether the MOU and the power of attorney are legal valid and binding cannot be an issue of law. This is a question to be gone into only on consideration of the evidence to be adduced by the parties. The question that has been raised also does not come within the meaning of Sub-Rule (2)(a) and (b).Therefore, this Court is not in a position to settle the issue as an issue of law within the meaning of Order 14, Rule 2, SubRule (2) of the Code of Civil Procedure.

Mr.Jishnu Chowdhury is right in pointing out that the application itself is not maintainable because only the suggested issues have been offered by the parties and issues have not yet been settled. According to him, without the issues are settled question of settling of an issue of law does not or cannot arise. According to him, the issues have to be settled fiRs.and thereafter one can file an application by requesting the Court to postpone other issues if it is possible to give a judgment on the issue of law but the case here is totally different because the issue which has been raised does not appear to be issue on law only, it is an issue to be decided on evidence.

Mr.Jishnu Chowdhury has also contended that the application is misleading inasmuch as it does not say anything about the power of attorney under the garb of which title of a property is passing through and whether the power of attorney is a valid power of attorney or not, is yet to be decided. Mr.Chowdhury also submits that besides the issue of MOU there are other issues raised by the defendants which are not canvassed in the application before this Court. Therefore, the submission made on behalf of the plaintiff that only on a particular issue of MOU the suit can be decided is not the correct position.

Mr.Jishnu Chowdhury also draws attention of this Court to the order dated 20th December, 2016 whereby one of the Honble Judges of this Court while disposing of GA No.2693 of 2016, GA No.2691 of 2016 and GA No.2944 of 2016 directed the defendant to deposit a sum of Rs.2.38 crore with any nationalized bank and to make over the fixed deposit receipt to the Registrar, Original Side by January 15, 2017. Upon such exercise being completed, the defendant would be at liberty to file its written statement within four weeks thereof.

The documents were directed to be discovered within four weeks of the written statement being filed and inspection completed forthwith thereupon for the suit to be ready to be placed before the appropriate Bench in March, 2017.

It is submitted on behalf of the defendant that the said order has already been complied with by keeping the said sum in a fixed deposit and the original fixed deposit receipt to the Registrar, Original Side, High Court, Calcutta. Mr.Chowdhury further draws attention of this Court that in view of such order passed by the Honble Court and the same having not been appealed against, it cannot be contended by the plaintiff that the suit need not be tried on evidence.

I accept the submission made by Mr.Chowdhury and it is not possible to accept the argument advanced on behalf of the plaintiff that the suit may be disposed of without going for trial at all rather it can be disposed of only on consideration of an issue of law.

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

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