TaxTMI 
TaxTMI 
2026 (7) TMI 1460
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....Mr. Rahul Theckedath for Defendant Nos. 5 and 6. Mr. Vishal Kanade a/w. Ms. Deepanjali Mishra for Defendant Nos. 7 to 10. JUDGMENT: 1. This suit is filed for a decree to recover Rs. 366,93,07,689/- alongwith interest jointly and severally from the defendants. The plaintiff has also prayed for a declaration that the dues payable as per the particulars of claim are secured by mortgaging properties and by deeds of guarantee executed by defendant nos. 5 and 6 and defendant nos. 2 and 3, respectively, which are valid, subsisting, and binding upon all the defendants. The plaintiff has also prayed for a decree for the redemption of the mortgage and for recovery of the due amount with interest. The plaintiff has further prayed for a decree against defendant no.10 to specifically perform its obligations and execute a pledge agreement in respect of the shares held by defendant no. 3 which are subject matter of the pledge created as per the Pledge Master Data dated 24th July 2025. 2. This interim application is filed seeking interim relief during the pendency of the suit, directing the defendants to secure the amount by depositing it in this court, disclosing their assets, and res....
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....plicant invoked the pledge agreement on 12th July 2023, calling upon defendants Nos. 6 to 9 to pay the outstanding amount. Since there was no response from the defendants, the plaintiff invoked the pre-institution mediation process under the provisions of the Commercial Courts Act, 2015 ("said Act"), on 25th July 2023. There were negotiations between the parties; however, a mediation failure report was submitted because they did not reach an amicable resolution. The plaintiff therefore filed the present suit. 5. Learned counsel for the plaintiff submitted that the defendants have not disputed that the amounts are due and payable. However, in the affidavit-in-reply, the defendants have raised an objection to the civil court's jurisdiction by relying on the provisions of The Companies Act, 1956 ['Companies Act']. He submits that the prayers in the present suit are composite prayers for redemption of the redeemable debentures and for invocation of the pledge agreement and the mortgage created by the defendants through various documents. Hence, a suit filed for composite prayers cannot be dealt with under the provisions of the Companies Act in any proceedings before the National....
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....issues that can be dealt with and decided by the NCLT. On a similar proposition regarding the plenary powers of the civil court under Section 9 of the CPC, learned counsel for the plaintiff relied upon the decision of the Apex Court in Shiv Kumar Chadha vs. Municipal Corporation of Delhi and Others (1993) 3 SCC 161. SUBMISSIONS ON BEHALF OF DEFENDANT NO.1 to 3 and 11: 9. Learned senior counsel for defendant nos. 1 to 3 and 11 raised a preliminary objection on the civil court's jurisdiction to try and entertain the prayers made on the basis of the terms and conditions of the Debenture Trust Deed. He submits that the issue of debenture redemption can be dealt with only by the NCLT. Section 11 of the said Act also bars the civil court's jurisdiction in respect of the prayers for redemption of the debentures. 10. Learned counsel for defendant nos. 1 to 3 and 11 referred to the particulars of claim and more particularly item nos. 5 and 6 in the particulars of claim, which are for the default interest on interest and the default interest on the Milestone Breach. He submits that such a prayer would be barred as it relates to the terms and conditions for redemption of the debentur....
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....ied upon the decision of the Apex Court in Industrial Credit & Investment Corporation of India Ltd. and Others vs. Karnataka Ball Bearings Corpn. Ltd. and Others (1999) 7 SCC 488. 14. Learned counsel for the defendants relied upon the relevant pleadings in the affidavit-in-reply of defendant nos. 1 to 3 and 11 and submitted that the recall notice was initially issued in 2021 and thereafter, for the first time, the plaintiff called upon the defendants to invoke guarantees on 27th April 2023. He submits that the suit filed in 2025 for a cause of action that arose in 2021, as per the plaintiff's pleadings the plaint is liable to be rejected under Section 12-A of the Commercial Courts Act. He submits that the plaintiff has suppressed the amounts already received from all the defendants, and in particular, defendant no. 11 was not a party to the pre-litigation mediation. Hence, the plaint is liable to be rejected as a whole against defendant no. 11 for non-compliance with the mandatory provisions under Section 12-A. He submits that in view of the suppression of fact regarding not initiating proceedings against defendant no. 11 and non-disclosure of the amount already received, the pl....
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....relief granted at the ad-interim stage. SUBMISSIONS OF DEFENDANT NOS. 5 AND 6 : 19. Learned senior counsel appearing for defendant nos. 5 and 6 supported the submissions already made on the bar of the civil court's jurisdiction. In addition to the said submissions, learned senior counsel submitted that these defendants have been added in the capacity of guarantors, as pleaded in the plaint. Hence, if any kind of breach of the Debenture Trust Deed, the plaintiff has to seek appropriate relief from the NCLT. Any breach of the terms and conditions of the Debenture Trust Deed would not warrant any recovery suit. The plaintiff must apply before the NCLT for redemption of the debentures. Hence, such a suit for recovery would not be maintainable. 20. Learned senior counsel appearing for the said defendants referred to the pleadings in paragraph 43 of the plaint and submitted that the suit is filed only on an apprehension expressed in paragraph 45 that the outstanding payable under the Debenture Trust Deed would not be sufficient in view of the financial position of defendant no. 1. He submits that on such apprehension expressed the suit for recovery of amount would not be maintai....
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....ntitled to any interim relief prayed in this interim application. SUBMISSIONS ON BEHALF OF DEFENDANT NO. 4: 25. Learned counsel for defendant no. 4 supported the submissions made on the bar of the civil court's jurisdiction and the relevant claim seeking invocation of the redemption of debentures maintainable only before the NCLT. He submitted that sufficient security is already provided by the execution of the guarantee and pledge agreements. Hence, in the absence of seeking any relief for redemption of debentures, the plaintiff would be entitled to maintain a suit for recovery. Learned counsel for defendant no. 4 opposed the grant of any relief in the interim application. Submissions In Rejoinder on Behalf of The Plaintiff: 26. In response to the preliminary objection raised on the civil court's jurisdiction and the bar under Section 12-A of the said Act qua defendant no. 11, he submits that defendant no. 11 is a partnership firm of defendant no. 6 and defendant no. 1, both of whom participated in the pre-litigation mediation process. It was only after the mediation failure report was filed that this suit was instituted. Hence, there is no substance in the objection r....
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....igations under the Debenture Trust Deed. The pledge agreement is executed by defendant nos. 6 to 9 by which 100% shareholding by defendant nos. 1 and 2 is pledged in favour of the plaintiff. Defendant nos. 6 to 8 are the heirs of one of the directors who had signed the pledge agreement. 29. The initial facts pleaded by the plaintiff regarding the execution of the personal guarantees, mortgage documents and the Debenture Trust Deed are not disputed. There is no dispute as to the terms and conditions of the Debenture Trust Deed, which sets out the specific redemption dates for the debentures. The default in payment, as per the legal notice, was never denied by the defendants through any reply. It is for the first time by filing an affidavit-in-reply that defendant no. 1 has contended that an amount was paid in the last five financial years. The pleadings in the reply would not mean that there is no default. Even as per the pleadings in the reply, there is no dispute that the amounts have become due and payable. Hence, partial payments, if any, would not disentitle the plaintiff from seeking relief to redeem the mortgage properties. Even in the affidavit-in-reply disclosing the tot....
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....rred and a provision seeking to bar the jurisdiction of a civil court requires strict interpretation. It is further held that the court would normally lean in favour of a construction that would uphold the retention of the civil court's jurisdiction and that the civil court's jurisdiction is not completely ousted under the Companies Act, 1956. In Shiv Kumar Chadha, the Apex Court held that while considering the bar over the power of the courts, under certain enactments, the court must examine whether the dispute falls within the ambit of the Act creating the bar; but once the court is satisfied that either the provisions of the Act are not applicable it shall have jurisdiction, to enquire and investigate while protecting the common law rights. 35. In Future Corporate Resources Pvt. Ltd., the appeal before the learned Division Bench of this court was filed against an ad-interim relief of injunction granted pending the interim application. This Court held that when the portion of the debt left uncovered by the security is shown, even the mere fact of the defendants being in financial doldrums would be enough to warrant wider or deeper orders of injunction or disclosure. Bu....
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....intiff against the injury by violation of his right for which he cannot be adequately compensated in damages in the recovery if the uncertainty were to be resolved at the trial. CONCLUSIONS: 39. In the present case, considering the terms and conditions of the Debenture Trust Deed, the plaintiff is required to protect the interests of the debenture holders. Since, according to the plaintiff, though the amounts became due and payable, a recall notice was issued, but defendant no. 1 failed to make any payment. The plaintiff has applied for the redemption of the mortgage in accordance with the mortgage documents executed by the defendants. The substantial prayers in the suit are for a declaration that the defendants are jointly and severally liable to pay the principal amount due together with interest, and that the deeds and guarantees executed by defendant no. 2 and 3 and 5 and 6, respectively, are valid, subsisting, and binding on the defendants. The plaintiffs have further prayed for redemption of the mortgage and for a direction to defendant no. 10 to specifically perform its obligations and execute a pledge agreement. The plaintiff has further prayed for a decree against th....
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....n process. There is no dispute that defendant no. 11 is a partnership firm of defendant no. 6 and defendant no. 1, both of whom participated in the pre-litigation mediation process. After the mediation failure report, this suit was instituted. Even otherwise, the plaintiff has filed this application for urgent interim relief. The reasons and findings recorded in this order clearly indicate that urgent interim relief was contemplated from the plaintiff's standpoint. Hence, in view of the well-settled legal principles, the bar under section 12A would not apply to this suit. 43. The plaintiff has raised satisfactory grounds to support the prayers made in the suit. So far as the amounts claimed by the plaintiff as mentioned in the particulars of claim are concerned, it is supported by the recall notice and the amounts mentioned in the recall notice. Hence, at this stage, in the absence of any serious dispute on the calculations made by the plaintiff, the prima facie case and the balance of convenience would fall in favour of the plaintiff. The grant of any further relief beyond what is granted at the ad-interim stage needs to be considered in the light of the legal principles as dis....