Texmaco Rail And Engineering Limited vs Simplex Castings Limited And Ors

The petitioner seeks a restraint on the respondents from interfering with the petitioner’s operations of and running a factory unit at Urla,

Chhattisgarh.

The claim is based on a Business Transfer Agreement (BTA) between the parties for transfer of a unit by the respondent no.1 to the petitioner for

manufacture of cast iron at a consideration price of Rs.87.5 crores. The admitted case is that the factory was transferred to the petitioner and is in the

petitioner’s possession. The petitioner has been running the factory since 2019. BTA was entered into on 26th April, 2019.

According to learned counsel appearing for the petitioner, there are several documents showing that the petitioner paid substantial money to the tune

of Rs.84.99 crores for transfer of the unit. The payment made is documented as are several letters written by the respondent no.1 to the statutory

authorities including to the unit of Bombay Stock Exchange. A Board resolution of the respondent no.1 of 26th April, 2019 records that Rs.87.50

crores is to be received from the petitioner for transfer of the unit under the terms of the BTA. The respondent no.1 resolved to hand over the Unit to

the petitioner on 26th April, 2019 under the terms of the BTA. A Completion Certificate was also issued by the respondent no.1 on 16th July, 2019

recording confirmation of the transfer of the Undertaking at completion of the same in accordance with the terms of the BTA. The Completion

Certificate further states that pursuant to such transfer, the petitioner is in sole and exclusive control of the unit w.e.f. 26th April, 2019. There are

further documents on record confirming the transfer in the form of an application for transfer of the  lease deed for the concerned land in favour of

the petitioner as would appear from a letter of the respondent no.1 to the Principal Secretary, Department of Commerce and Industries.

A further communication dated 9th September, 2019 from a representative of the respondent no.1 to the petitioner refers to a consent letter/No

Objection Certificate from the Department of Commerce confirming that the leasehold right in the entire land would be transferred in the name of the

petitioner. Letters written by the respondent no.1 to banks are further evidence of the intention of the respondent no.1 to transfer the unit to the

petitioner.

Counsel submits that despite the above material which evinced a clear intention on the part of the respondent no.1 to transfer the unit to the petitioner,

the petitioner received a legal notice from the respondents on 25th March, 2021 alleging that the BTA contained unfair bargaining terms, which

constrained the respondent to resile from the same. The communication alleges that the petitioner has taken undue advantage of the NOCs and other

certificates for the wrongful gain of the petitioner. It is submitted that the respondent has also written to several other authorities for cancelling the

factory license of the petitioner as late as in June, 2021.

Upon hearing learned counsel for the petitioner, this Court is satisfied prima facie that the petitioner has made out a case against the respondents. The

material on record shows that payments have been made by the petitioner and received by the respondents in April, 2019, pursuant to the BTA by

which the respondent no.1 agreed to transfer the unit at Chhattisgarh to the petitioner. The letters from the respondent no.1 to the various statutory

authorities and banks shows that the respondent no.1 never expressed any intention to resile from the agreement or expressed any doubt with regard

to the manner in which the agreement was entered into by the parties. The completion certificate also records the full and final satisfaction of the

respondent no.1 in respect of the transaction between the parties. There is no doubt that payments of approximately Rs.85 crores have been received

by the respondents in pursuance of the BTA. The sudden change of stand on the part of the respondent no.1 is therefore without any basis. The

ground taken of undue influence and unfair bargaining has not been substantiated in the letter which has in any event been written three years after

the respondent no.1 received almost the entire consideration money from the petitioner.

In view of the above, the petitioner is entitled to the protection as prayed for. There shall accordingly be an injunction restraining the respondents from

interfering with the operations of the Urla Unit by the petitioner and a further restraint on the respondents from writing to any statutory or licensing

authorities in respect of the Urla Unit.

The interim order shall remain in force for a period of three weeks from date. Since the respondent nos.2 and 3, being the Directors of the respondent

no.1, are based in Chhattisgarh, the petitioner is directed to serve a copy of this order along with all relevant papers on the respondents within 48 hours

from date.

List this matter after two weeks.