TaxTMI 
TaxTMI 
2002 (6) TMI 587
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....est in decrees passed against them and these applications are pending before this Court. 2. Sometime in November/December, 2000 K.F.S.L. and Vysya Bank Ltd. (V.B.L. for short) entered into an agreement whereby V.B.L. agreed to give a piece and parcel of land admeasuring 23,246 sq. meters situated at Chandivali, known as Killick Industrial Estate, for a period of 99 years on annual lease rent of Rs. 50,000/-. G.T.B. wanted to obtain sub-lease of this land from K.F.S.L. and pursuant to the proposal, negotiations took place and a Memorandum of Understanding was reached on 20.12.2000 whereby K.F.S.L. agreed to grant sub-lease for a period of 98 years in respect of the aforesaid land on an annual lease rent of Rs. 1 lakh along with a refundable interest free security deposit of Rs. 74 crores to be paid by G.T.B. to K.F.S.L. The lease was to commence not later than 30.4.2001. On the same day four other tripartite M.O.Us, were executed between K.F.S.L. and G.T.B. and some other companies, namely, K.N.L. Snowcem India Ltd., Sashak Noble Metals Ltd. and Triad Constructions Ltd. It was agreed that the proposed deposit of Rs. 74 crores payable by the G.T.B. was to be utilised in payment of....
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....ceable. K.F.S.L. has become creditor of G.T.B. in respect of Rs. 74 crores. Thereafter since parent company of K.F.S.L i.e. K.N.L. was indebted to D.M.L. and was in need of money, it was agreed between K.F.S.L. and K.N.L. that K.F.S.L. would advance amount of Rs. 49.37 crores payable to D.M.L. by K.N.L. and K.N.L. called upon K.F.S.L. to give a mandate to its debtor G.T.B. to pay the aforesaid sum of Rs. 49.37 crores to the Custodian in discharge of the liability of K.N.L. towards the aforesaid decrees. It was agreed that the amount would be debited by K.F.S.L. to respondent No. 3 - K.N.L. as interest free loan and K.N.L. would give credit to K.F.S.L. for the same and it was further agreed that the manner and time table of repayment by K.N.L. would be finalised by negotiations inter se at some later date and the repayment would be either by actual payment or by merger of K.F.S.L. with K.N.L. 4. In pursuance of this arrangement arrived at between K.F.S.L. and K.N.L.. K.F.S.L. by letter dated 4.1.2002 through their Advocate gave mandate to G.T.B. to pay out of the security deposit of Rs. 74 crores a sum of Rs. 49.37 crores to D.M.L. by making payment to the custodian in the attach....
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....t of sub-lease a notice dated 28.11.2001 was received by G.T.B. from the office of the Custodian (respondent No. 2) informing the Bank inter alia that by an order dated 18.8.2001 this Court had restrained K.N.L. and other group companies who were respondents in other petitions from disposing of their assets including shares pending further orders of the Court except in the usual course of business. The deed of release having been executed after the order dated 18.8.2001 was in violation of the Court's order and the lease dated 28.9.2001 in favour of K.F.S.L. by V.B.L. was consequent to and in consideration of the deed of release executed by K.N.L. A resolution dated 5.3.2001 was passed by the Board of Directors of V.B.L. This resolution clearly states that the proposed lease of the property to K.N.L. or it nominees is in lieu of K.N.L. agreeing to cancel the provision of buy-back. The deed of release is in violation of the Court's order and consequently the lease dated 28.9.2001 by V.B.L. in favour of K.F.S.L. is also void. It does not. create any right in favour of the K.F.S.L. and therefore, G.T.B. informed through the letter of their Advocate which was delivered on 14.1.....
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....ent and as a part of one time settlement, it was agreed that the said property which was to be taken on lease by the K.F.S.L. from V.B.L. would be sub-let to G.T.B. The amount of Rs. 74 crores which was to be security deposit for the sub-lease was to be adjusted/appropriated by G.T.B. to liquidate the dues payable by respondent No. 3 - K.N.L. and other entities namely Snoweem India Ltd., Sashak Noble Metals Ltd., and Triad Construction Pvt. Ltd., etc. The M.O.Us. dated 20.12.2000 were made subject to conditions of K.F.S.L. getting the lease of the property from V.B.L. on or about 10.1.2001. This obtaining of sub-lease of property by G.T.B. from K.F.S.L. was a part of the similar other transactions between G.T.B. and other companies including the third respondent K.N.L. K.F.S.L. could get the lease of the property from V.B.L. on 28.9.2001 and immediately thereafter sub-lease in favour of G.T.B. was entered into on the next day i.e. 29.9.2001. Thus the consideration of entering not sub-lease was the security deposit of Rs. 74 crores being appropriated in accordance with the M.O.U. Time limit specified was for the benefit of G.T.B. since it was part of one time settlement and G.T.B. w....
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....hus the amount of Rs. 74 crores was not payable immediately on execution of the agreement of sub-lease as contended but was to be adjusted towards the liabilities of the different entities. 10. The internal arrangement between D.M.L., K.F.S.L. and K.N.L. is not known to G.T.B. In any event any such arrangement is not binding on it and K.F.S.L. has no authority to issue any mandate as is claimed by them by letter dated 4.1.2002 and as such the mandate is not binding on the G.T.B. This mandate does not in any case constitute or create any privity of contract between D.M.L. and G.T.B. and on the contrary the right of K.F.S.L. to receive amount from respondents is conditional upon the agreement of sub-lease becoming binding and enforceable. G.T.B. is therefore not bound and liable to pay Rs. 74 crores and the application is liable to be dismissed. Moreover this Court has no jurisdiction as notified party is not at all involved in any of these transactions. 11. On behalf of respondent No. 3 K.N.L. an affidavit supporting the application is filed. Even thereafter affidavits-in-rejoinder and sur-rejoinder are filed and reference would be made to them if and when necessary. 12. Ea....
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....nd applicant K.F.S.L. 14. Before proceeding to consider the arguments, it is necessary to point out that although it is filed as a miscellaneous application as per the procedure evolved by this Court, the prayers made in the application clearly indicate that it is nothing short, of a suit claiming a decree of Rs. 49.77 crores calling upon the 1st Respondent - G.T.B. to pay the amount to the Custodian for satisfaction of decrees passed against respondent Nos. 3 to 15. It was specifically conceded before me that D.M.L. has 33% stake in the K.N.L. and it is the case of the applicant that K.F.S.L. is a wholly owned subsidiary of K.N.L. The other respondents and certain other parties to which reference has come in the above statement of facts are all group companies and the third respondent K.N.L. 15. No oral evidence has been led and none of the parties expressed desire to lead any oral evidence. Copies of documents which are produced on record by respective parties are not in dispute. The matter was heard on the basis of the documents and the affidavits. I would first refer in brief to the arguments advanced by the parties. A detailed reference to the arguments would be made at ....
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....uppressed and such suppression amounts to contempt. If the contract is voidable and inspite of opportunity to avoid it, it is accepted and willingness to abide by it is shown, then it becomes binding and cannot be avoided thereafter. The arrangement between K.F.S.L. and K.N.L. clearly gives right to K.F.S.L. to call upon their debtors to make payment as per their directions. All the conditions mentioned in the agreement of sub-lease have been complied with atleast by the date the matter become ripe for hearing. When G.T.B. realised that K.F.S.L. would move the Special Court for relief and will not be required to go to Civil Court as D.M.L. is notified party, it has invented defences and has suppressed material documents and facts. 17. In the earlier reply sent to the custodian, G.T.B. has clearly taken a contrary stand and therefore, it is clear that the defence is raised in order to avoid payment. The role of the custodian does not appear to be plain and impartial. In fact Custodian should be interested in recovery of decretal dues of the notified party and it is difficult to appreciate why the custodian is taking a stand which will delay the execution. 18. Mr. S.H. Doctor, ....
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....Contempt, if any, is committed by the applicant by suppression of material facts and documents. The applicants have intentionally not disclosed how K.N.L, went out of picture and in its place its nominee or its own subsidiary company came in. The release deed cannot be read in isolation. The so called mandate is a well planned strategy to bring the matter to this Court. This Court would not get jurisdiction if D.M.L. is not a party and that is why it is brought in picture although no interest in its favour is created and there is no privity of contract with it. It is joined as applicant as it is a notified party. The real dispute is only between K.F.S.L. and G.T.B. The M.O.Us, got merged in the agreement of sub-lease. Application is also premature and legally untenable. The remedy of K.F.S.L. is to claim damages for breach or termination of agreement if it is wrongful. The amount of security deposit was to be adjusted on debts payable to G.T.B. by group companies and so receipt was acknowledged in the agreement. 21. In view of the arguments advanced, the following points arise for my determination and my findings thereon are noted below for the reasons that follow : (1) Wheth....
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.... D.M.L. and G.T.B. and D.M.L. has no cause of action against G.T.B. (11) No. (12) Yes. (13) Yes. Cost as per final order. 22. Taking the issue of jurisdiction first it is necessary to point out that detailed arguments were advanced on behalf of the Applicants specially with reference to Section 9A of the Special Courts Act and that also with special reference to the terminology "in relation to any matter or claim". At the outset it needs to be made clear that it is an established principle of law that jurisdiction is to be decided on the basis of averments in the plaint. In the present case D.M.L. is a notified party. It cannot file an application or suit anywhere else. Even if it is found that its joinder to the application is superfluous or unnecessary I do not think that it will be a ground for holding that this Court has no jurisdiction. The Court does not advise a party as to how it should frame the application and as to how it should plead. If the pleadings of the Applicants are such that the Special Court alone can take cognizance then there is no alternative than to hold that this Court has jurisdiction. In view of the fact that I am not taking a view contrary to t....
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....urt alone has jurisdiction to entertain the application and no other Court can entertain the application. Even otherwise if the application had been returned to the applicants where else it could be presented. It would amount of holding that D.M.L. is unnecessarily joined and therefore K.F.S.L. alone should approach the Civil Court. It is not possible to take recourse to this and therefore, I find that there is no substance in the argument of Mr. Janak Dwarkadas, 24. Before I proceed to consider the application and the points involved it is necessary to point out that during the course of argument, the learned Counsel for the Custodian made reference to indenture of sale between V.B.L. and K.N.L. dated 26.4.2000 and contended that it is not a sale deed, but a mortgage by conditional sale. It was pointed out to the learned Counsel that this controversy cannot be gone into in the present proceedings. Thereafter also arguments were advanced at length on the same point by the learned Counsel for Custodian and learned Counsel for K.N.L. and also by Mr. Janak Dwarkadas appearing for G.T.B. However, as I clearly pointed out during the course of argument to all the learned Counsel for t....
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.....L. a lease of the said piece of land for a period of 99 years which will also give power to K.F.S.L. to sub-lease the whole or part there of and K.F.S.L. has agreed to grant sub-lease to G.T.B. Clause 3.4 of the M.O.U. reads as under : 3.4. It is clarified that the period of sub-lease of the said land in favour of the Bank shall commence only on and after execution and registration of the Deed of Sub-Lease and not before. Clause 4.1 of the M.O.U. reads as under : 4.1 This M.O.U. is subject to and conditional upon Killick Financial obtaining on or before 10th January, 2001 (time being the essence) from The Vysya Bank Limited a lease of the Schedule Property for a period of 99 years commencing from not later than 10th January, 2001 and further subject to the condition that the Lease Deed between The Vysya Bank Limited and Killick Financial is executed and Registered on or before 10th January, 2001, inter alia incorporating a covenant by The Vysya Bank Limited giving the right, power and authority to Killick Financial to sub-lease the whole or any portion of the property which is the subject of lease. It is pertinent to point out that this M.O.U. does not make any referen....
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....iated in the light of the following facts. On 29.9.1999 there was an agreement between V.B.L. and K.N.L. A perusal of this agreement shows that V.B.L. had advanced to the companies, viz. Geekay Exim (India) Ltd., Sahara Impex Ltd., and Viplav Trading Ltd. (all group companies of K.N.L.) diverse facilities under which debtors owed different sums of money to the Bank and the repayment of the debt was guaranteed by deed of 26.12.1997 and an equitable mortgage by K.N.L. which has been referred to as Killick Guarantee to the extent of Rs. 100 crores. Similarly there was other guarantee of the same date known as Avanti Guarantee by Avanti Development Corporation, another group company of K.N.L. which was also secured by mortgage similar to Killick guarantee and the liability under that guarantee was Rs. 127.50 crores and by an agreement, the liability of all the debtors was crystalised to Rs. 130.58 crores. After adjustment of the amount of Rs. 75 lakhs due by Geekay Exim by pledge or purchase of pledged shares remaining balance of Rs. 129.83 crores was to be adjusted as below : Clause 8, 9 & 10 show that Killick was to transfer property to the Bank and the Bank i. e, V.B.L. was to gr....
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....erein. For the first five years rental was Rs. 4.8 crores per year and for the next year was Rs. 9.6 crores per year and the total rent payable would be Rs. 43.20 crores. On the date of deed of release K.N.L. was already in arrears not having paid the rent for 18 months amounting to Rs. 7.2 crores. What was done had the effect of giving up the land which K.N.L. was holding as a lessee. It is not material whether the lease deed was executed, registered or not. K.N.L. was in possession as a lessee land having an area of 49,911 sq. meters. That was given up and in turn a lease was obtained by K.F.S.L. for a lesser area of 23,246 sq. meters. 28. K.F.S.L. being fully owned by K.N.L. the lease was obtained in the name of K.F.S.L, In the process K.N.L lost lease hold property of more area and it remained with V.B.L. Here in lies the mischief. K.N.L. being bound by Court order dated 18.8.2001 could not transfer any property on 29.9.2001 and therefore, lease was obtained in favour of K.F.S.L. and sub-lease agreement was entered into by K.F.S.L. with G.T.B. It was therefore rightly pointed out by Mr. Janak Dwarkadas, learned Counsel for respondent No. 1 that an ingenuous devise was found ....
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....d therefore, it is obvious K.N.L. and its group companies want to eat the cake and have it too. They went to take all the advantages of the M.O.Us. but at the same time want to contend that M.O.Us. have expired or become void and the agreement of sub-lease is an independent agreement not in any way concerned with the earlier M.O.Us. In my view as K.F.S.L. is 100% owned by K.N.L. this contention is raised through K.F.S.L. by K.N.L. and the group companies. It is thus clear that agreement of sub-lease is consequence of the M.O.Us and a sequel to the M.O.Us. and therefore, M.O.Us get merged in the agreement of sub-lease as rightly contended by the learned Counsel for respondent No. 1 Mr. Janak Dwarkadas. 31. This has to be considered on the background of the Minutes of the meeting of the Board of Directors of V.B.L. dated 5.3.2001. In respect of recovery of dues from Geekey Exim group account it was decided as part of one time settlement to lease out for a period of 99 years an area of 23,246 sq. meters of land out of 60,246 sq. meters to Killick or their nominees in lieu of Killick and Avanti agreeing for cancelling all the clauses in two registered sale deeds dated 26.4.2000 cont....
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....h K.F.S.L. hereby acknowledges and acquits, release and discharges the bank from such payment or every part thereof). (Underlining is mine) 'The argument is that though this receipt of Rs. 74 crores by way of security deposit was executed, as a matter of fact the amount was not received although it was payable simultaneously with the execution of the agreement i.e. on the very day. On behalf of the K.F.S.L. this agreement was signed by one of the Directors on 29.9.2001. The Applicants want the Court to believe that although the Director acknowledged the receipt of Rs. 74 crores, he left the place without getting any check or pay order for that amount from G.T.B. It is pertinent to point out that thereafter till 4.1.2002 there was not even a whisper from K.F.S.L. to the G.T.B. reminding them that though they have already passed a receipt, amount has not been paid. It is not a small amount. It is Rs. 74 crores. If one considers the interest to be charged at nominal rate of 10% per annum, the amount of interest cannot be said to be negligible. The sequence of events is that thereafter on 1.1..2002 there is an arrangement between K.F.S.L. and K.N.L. whereby K.F.S.L. agreed to advan....
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....erest free security deposit for a period of 98 years and therefore, the case made out that Rs. 74 crores become payable forthwith on execution of the agreement is on the face of it not only untenable but dishonest. 34. Another aspect of the matter is that as pointed out earlier the sublease was to commence only on execution and registration of deed of sublease. The sub lease is not to commence at once on execution of the agreement and therefore, if contention of the applicants is to be accepted, what is the consideration G.T.B. was getting, only a piece of paper termed as sub-lease agreement without even a document of deed of sub-lease much less possession of the land. To hold that G.T.B. was liable to pay Rs. 74 crores forthwith would mean that even without being assured of getting consideration for the same, it was liable to deposit that amount and if so, it does not explain as to what would happen to the dues which were outstanding towards K.N.L. and other group companies which were settled in consideration of sub-lease and therefore, the agreement of sub-lease can be understood properly only with reference to the M.O.U. and not otherwise. The M.O.Us. therefore get merged int....
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....eady made, and that adjusiment itself was to be treated as security deposit. On proper interpretation of the document, no other conclusion is possible and the claim made in the application that G.T.B. was liable to pay Rs. 74 crores forthwith on execution of the agreement of sub-lease is clearly unbelievable and is obviously a false and frivolous claim. 36. My further discussion is on the basis that even if it is found that the earlier finding on the second point is otherwise and the Bank was liable to pay Rs. 74 crores, on execution of the agreement even then the amount of Rs. 74 crores does not become a debt due from G.T.B to K.F.S.L. 37. There was agreement of sub-lease and according to the Applicants under the agreement Rs. 74 crores was payable on execution of the agreement. The amount was not paid. The question is what is the nature of the claim to that amount. It is an amount payable on the basis of an agreement of sub-lease. If payment as per the agreement is not made, there is a breach of agreement or breach of contract and such breach gives rise to a claim for damages. In this connection reliance is placed by Mr. Janak Dwarkadas on a judgment in the case of Union of....
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....e time of performance of the contract may be at a future date, and after time fixed for performance or otherwise after passage of reasonable period a suit for specific performance can be filed then even a suit for refund of consideration can also be filed at the same time. The claim for refund of consideration, even if made, without making a claim for specific performance, it cannot be treated as a claim for recovery of money simpliciter for which cause of action is payment. Cause of action for claiming refund is the same and therefore, limitation starts running even for claiming refund from the date of breach of contract or after laps of such reasonable period on which, it could be expected of the other side to perform its part of the contract. Another aspect of this is that Applicants in this case are simply claiming a decree for money without even expressing that they were always ready and willing to perform their part of the contract, but the respondents have committed breach. When questioned about this, learned Counsel for applicants conceded that such pleading is not there. He however stated that he is ready to make a statement at the Bar and his clients are ready to file an ....
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....is he who comes to the Court. This is of course in the normal course and therefore, in the normal course the assignee pleads as to how he is entitled to come to the Court as a claimant in place of the assignor who had a legal right and who assigned it to him. 41. In the light of this, let us examine the facts of the present case. The assignment is by arrangement between K. N.L. and K.F.S.L. which is arrived at on 1.1.2002. The arrangement as stated in the letter addressed by K.N.L. to K.F.S.L. is to the effect that as principle debtor and guarantor it is liable to pay to D.M.L. and the Custodian Rs. 49.37 crores as per the decrees, K.N.L. confirms the arrangement that K.F.S.L. will pay on behalf of K.N.L. to D.M.L. and the Custodian Rs. 49.37 crores out of the money receivable by K.F.S.L. from G.T.B. by giving a mandate to G.T.B. It is further states that this amount of Rs. 49.37 crores to be paid to the Custodian is to be treated by K.F.S.L. as interest free loan to K.N.L. and as regards repayment of the aforesaid debt due by them to K.F.S.L., the manner and time table for repayment, will be finalised by negotiations at a later date either by actual payment or by merger of K.F.....
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....ween the assignor and the assignee from the date of the assignment, notice being necessary only to bind the debtor. 4. must be made for value except where it is perfect and complete and operates as a gift (z), and the assignee cannot give a valid discharge unless expressly empowered by the assignment. The learned Counsel tried to bring his case in Sub-clause (4) which shows that it must be made for value except where it is perfect and complete and operates as a gift. In the present case what is assigned by K.F.S.L. cannot be said to be for value because K.F.S.L. has no liability towards K.N.L. Exception is when it operates as a gift. In this case it is not claimed nor it otherwise operates as a gift. Reliance was placed by the learned Counsel on a judgment of the Supreme Court in Seth Loon Karar Sethiya v. Ivan E. Joh . In this case the appellant was indebted to a Bank. He executed a Power of Attorney in favour of the Bank authorising the bank to execute the decree obtained by the debtor against third party and credit the money on realisation to the debtor's account. The bank levied execution of the decree, but the execution application was filed in the name of the appell....
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.... plaintiffs made repeated applications to him for payment of the debt. The Marquis represented that he was about to receive a large share of the Deccan prize money; promised that their demand should be paid out of that funds; and begged that, in the meantime, no proceedings might be taken against him or the assets of his surety. On February 6. 1826, Mr. Allen, the solicitor of the plaintiff, again waited on the Marquis, who then stated that he had directed Col. Francis Doyle, whom he had empowered to receive his share of the prize-money, to pay the debt and costs due to the executors of Mr. Sims; and at the same time the Marquis wrote and delivered to Mr. Allen a letter addressed to Col. Doyle directing him that the executors of Mr. Sims were claimants on that fund for a bond debt with interest. From these facts the Court of Chancery came to the conclusion that there was an equitable assignment in favour of the executors of Mr. Sims of a portion of the prize-money sufficient to meet the debts due to the estate of Mr. Sims by the Duke of Wellington. To the same effect is the decision in Burn v. Carvelho (1839) 41 E.R. 265. Therein the Court of Chancery held that in equity, an order ....
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....ade over to the bank the right to receive the purchase-money and requested the purchasers to sign an undertaking to remit the purchase-money to the bank and it was held that there was evidence of an equitable assignment of the debt to the bank with notice to the purchasers, and that the bank could recover the debt from the purchasers. Reliance was also placed on a judgment of the Bombay High Court in Jagabhai Lalluhhai v. Rustomji Nasarwanji IX I.L.R. Bom. 311. In that case before the Bombay High Court, a firm of Sowerby & Co. took a contract from Government on 12.11.1877 to construct a barrel house at Kirkee and on 28.11.1877 the plaintiff agreed to advance monies upto Rs. 15,000/- for the purpose of enabling the firm to carry out the contract. Under the agreement the plaintiff was to receive all sums to become due from the Government on the contractors' bills and to pay the balance to the firm after repaying himself all advances with interest. On the same day the firm executed a power of attorney to the Plaintiff authorising him to receive from the Government Engineer all such sums to become due to the firm under the contract which power of attorney was deposited in the offic....
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....cover the debt or to reduce the property into possession. In order to constitute an assignment of a debt or other chose in action in equity no particular form is necessary. Prosser v. Exmonds 1 Y. and C. 481 applied. In that case before the Calcutta High Court, one Eastern Machinery and Engineering Co. Ltd. sold a lathe to Diamond Drill Syndicate Ltd. through M/s. Kilburn & Co. at a price of Rs. 2,000/- and a sum of Rs. 200/- was to be deducted and Rs. 1,800/- were to be paid. This sum was claimed by the appellant. It was held that he had lent money to Eastern Machinery & Engineering Co. and that company had endorsed the bill in respect of the lathe and had handed over the bill to the appellant in order that he may collect money on account the debt due to him from Eastern Machinery & Engineering Co. The endorsement was in these words "M/s. Kilburn & Co. kindly remit to Babu. Kisen Gopal Bogree who will collect on our behalf. (Underlining is mine). The learned Judge came to the conclusion that the endorsement was not an assignment of debt which was owed by M/s. Kilburn & Co. to M/s. Eastern Machinery and Engineering Co. Ltd. and that it was nothing more than an order to pay. Anot....
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....observation that it is absolutely necessary to make out case of equitable assignment by pleading. 46. The so called mandate issued by K.F.S.L. to G.T.B. does not create any interest in favour of K.N.L. much less in favour of D.M.L. D.M.L. is only a beneficiary even according to the pleadings. It has no interest in the debt and so far as K.N.L. is concerned, there being no liability enforceable by K.N.L. against K.F.S.L, the direction or mandate would be only an order to pay to the party to whom K.F.S.L, wanted to advance loan and as such no case of equitable assignment whatsoever is made out. 47. Before I proceed to discuss other points, one more aspect of the same subject is required to be pointed out. The debt even according to K.F.S.L. was Rs. 74 crores out of which assignment in favour of K.N.L. is said to be for Rs. 49.37 crores. Thus there is a splitting up of the so-called debt and this further re-inforces the aspect referred to earlier that it is absolutely necessary to plead a case of equitable assignment. Even if there is an assignment of part of the debt, then it must be explained as to what is done regarding the remainder. At one stage learned Counsel for the appl....
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....ction between whole debt and part of a debt and both might be transferred by the transferee might find that what had been transferred to him was not an actionable claim. It may be noted that it was a case of a separate and distinct debt and the above observations of the learned Judges were in the nature of obiter dicta. The Lahore High Court has, however, dissented from the Patna case and held that a part assignment of a debt is valid in law and an action can be maintained thereon by the transferee provided he makes the transferor and any other transferee who may be concerned parties to the suit and that Order 2, Rule 2 of the C.P.C, has no bearing on the question. It may be mentioned that although a decree is not an actionable claim, it has been held that there cannot be transfer of part of a decree. In the case of Durga Singh v. Kesho Lal AIR l940 Pat. 170 question of assignment of part of debt was considered. Reference was made to 2 K.B. 636, wherein Bray J. refused to follow an earlier decision, viz. : But if an absolute assignment of part of a debt is valid under Section 25, Sub-section (6), the consequence is that the assignee is able to sue the debtor without joining t....
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....decree. The Division Bench of Patna High Court found that the principal point that arises in appeal is whether assignment of part of debt is valid in India. The Division Bench found that the point was somewhat difficult one and does not appear to have been fully discussed in any of the Indian authorities cited. The Division Bench referred to 42 I.C. 684 and stated that it made an observation to the effect that omission of the word "absolute" from Section 130 of the Transfer of Property Act, which deals with the assignment of actionable claim, was a deliberate departure from the rule of English law and indicated that an assignment of part of a chose in action can be given effect to under the Transfer of Property Act. Reference was made to 48 M.L.J. 432, judgment of Ramesam, J. who dissented from the above observation and after referring to certain English cases expressed view that assignment of part of the debt is not valid. (Underlining is mine) Thereafter in 52 Mad. 465, a Bench of two Judges of the same Court followed an earlier case of 1919 in preference to the decision of Ramesam, J. After referring to different authorities and a review of the entire case law, it is observed : ....
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....ther party by surprise. On this ground also the assignment is bad in law, even if it is found to be otherwise legal and valid. Even otherwise the case of assignment of part of debt is not made out. No statement is made in the application as required by Order 11, Rule 2 of the C.P.C. 50. This takes me to consider the most important part of the defence of respondent No. 1 that the agreement of sub-lease and the consequent sub-lease to be granted are void and non-est as it is in violation of the Court's order of injunction. In Execution Application No. 98 of 2001 in Misc. Petition No. 189 of 1995 this Court (Kapadia, J.) passed an order that pending hearing and final disposal of the petitions/misc, applications, K.N.L. is directed not to dispose of their assets (including shares) pending further orders, except in usual course of business. This order will apply also to other group companies who are respondents in the conjoint petitions, uyearlier discussion in respect of various transactions between V.B.L. and K.F.S.L. clearly show that lease was to be executed by V.B.L. in favour of K.N.L. and in fact K.N.L. which was in possession of the property and was to get it on lease for....
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....prevented by the aforesaid order from transferring or disposing of any property. The order was binding on all the parties who are respondents in the conjoint petitions against whom there are execution applications in pursuance of the consent decree passed against them. K.F.S.L. is not a respondent and that is why very ingeniously the lease is obtained in the name K.F.S.L., apparently create a show that the property is transferred not by K.N.L. and K.F.S.L. not being a party respondent, there is no violation of the order. The aforesaid background would clearly show that the property was in fact transferred by K.N.L. by obtaining the lease in the name of K.F.S.L. and in the process the lease hold right over the entire area was lost and therefore, there was violation of the order of this Court. This is undoubtedly a clever devise to keep the property out of reach of the Custodian. 51. Another aspect of the matter is that K.F.S.L. is wholly owned subsidiary of K.N.L. and any property belonging to the K.F.S.L. can be attached in execution of a decree against K.N.L. Therefore, although K.F.S.L. is not respondent in co-joint applications it is still covered by the order of 18.8.2001. ....
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....rom the Custodian dated 28.11.2001. It is true that in this reply G.T.B. has stated that they were intending to acquire property from K.F.S.L. and not from K.N.L. It is also stated in the letter that the entire deposit of Rs. 74 crores was to be adjusted and appropriated towards long outstanding dues of various group companies and sub-lease was to be acquired after receipt of N.O.C. from the Appropriate Authority. The sole objective of the proposed sub-lease from K.F.S.L. was to adjust and appropriate the deposit towards long outstanding dues in the said group account and no outflow of cash was involved. It is further stated that on making enquiries G.T.B. came to know that K.F.S.L. is not a company which is respondent in the proceedings before the Special Court as it does not appear in the list annexed to the order of 18.8.2001. It is difficult to understand as to how G.T.B. could be said to be interested in suppressing this document. The fact that this document was not filed along with reply does not lead to any inference of suppression of a material document. Suppression of a document or suppression of material fact from the Court is no doubt serious, but it is not the law that ....
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....on of the fact of executing release deed had resulted in passing of the decree and the decree was secured by such misstatement and suppression of facts. I therefore find that there is no substance in the argument of the learned Counsel for applicants that G.T.B. is guilty of suppression of material document and is in contempt. 55. On the contrary there is material on record to show that the applicants are guilty of suppression. I have already pointed out that in the application conveniently no reference is made as to how K.N.L. goes out and K.F.S.L. comes in and I have found that this is a very material aspect, because that leads to violation of the order and the applicants were interested in suppression this fact and therefore, if at all there is suppression it is suppression of material facts by the applicants and probably to cover up their own suppression, the applicants, have raised a hue and cry of suppression of letter dated 11.1.2002 by G.T.B. There is nothing in the letter which was required to be suppressed. It is rightly pointed out by the learned Counsel for respondent No. 1 that the letter was in response to the query of the Custodian and at that time on the basis of....
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.... 10.5 lacs/quarter. Liberal instalments extending to 7 years. Default provisions. 6. 10.3.1999 MA. 157/1999 Application by respondent No. 13 for ex- tension of time. Similar applications by other respondent Nos. 3 to 15. 7. 6.4.1999 EA. 98/2001 Order (a) Holding that respondent No. &nbs....
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....sp; of business. Appeal preferred to the Supreme Court. 11. 18.11.1999 Supplementary agreement between Killick Nixon and Vysya Bank during pendency of the order of Justice Rane, 12. 6.1.2000 MP. 44/1999 Appeal against order in 44/99 withdrawn unconditionally. 13. 3/2000 MP. 176/2000 Filed by respondent No. 13 for ....
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....sp; Order of injunction of Justice Kapadia. 57. On this background one has to consider whether the present application is bonafide. It is clear from the very recitals in the application and from the documents relieu upon that on the date of this application i.e. 11.1.2002 the applicants had no right to make any claim. It is already pointed out above that it is to be treated as suit for specific performance and it is filed before date on which the K.F.S.L. was in a position to grant lease as per the agreement, N.O.C. or the order from the Competent Authority, whatever we may call it, was not received. Therefore, K.F.S.L. cannot claim that it was in a position to grant sub-lease on the date of application. Therefore an ingenious strategy was devised of making only a money claim on allegations that the amount was immediately due on execution of the sub-lease agreement. A receipt was also passed for the said payment by G.T.....
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....gned this strategy to dupe one more bank (G.T.B.). It was a well-knit net to catch the fish (G.T.B.). Attempt was obviously to cough up Rs. 74 crores from G.T.B. and satisfy the decrees and then leave the G.T.B. to its remedy for recovery of debts from the various group companies. On behalf of respondent No. 3 criticism was levelled against Custodian and serious attack was made on the role of the Custodian. It was contended by respondent No. 3 and supported by the applicants that the Custodian should be anxious to see that decrees are executed. Application was filed for recovery of decretal dues and the Custodian should have supported the applicants. In my view the Custodian has taken the right stand and has not fallen prey to the evil design of the applicants and K.N.L. It is not the duty of the Custodian to see that somehow or the other money comes irrespective of the fact that in the process somebody is cheated. The entire claim even on facts is found to be not only untenable but false to the knowledge of applicants. It is vexatious and frivolous. It is a well designed plan to pick the pocket of G.T.B. with the help of a Court order by creating a show of honesty and anxiety on t....