Interim Order 2

Order Details: Other
Pdf Text: Summons for Judgment No. 59/21 1 Order.
in Comm.Suit No. 32/21.
MHCC010041832021
Presented on : 02-06-2021
Registered on : 02-06-2021
Decided on : 01-04-2022
Duration : 0 years, 9 months, 30 days
IN THE BOMBAY CITY CIVIL COURT AT BOMBAY.
SUMMONS FOR JUDGMENT NO. 59 OF 2021
IN
COMMERCIAL SUIT NO. 32 OF 2021
Lodha Capital Market Limited )
A Company registered under the )
The Companies Act, 1956 and having its )
Register office at Herbert House, )
13/3 Strand Road, Kolakat – 700001 )
And at )
1501, Dost Ambrosia, Dosti Acres, )
Wadala, Mumbai400037 )...Plaintiffs
Versus
1. Atomberg Technologies Private )
Limited, is a company registered )
under the Companies Act, 2013 )
having its registered address at )
1205, 12th floor Rupa Solitaire, )
Millenium Business Park )
Mahape, Navi Mumbai 400710 )
2. Manoj Meena, )
Having his office address at )
1205, 12th floor Rupa Solitaire, )
Millenium Business Park )
Mahape, Navi Mumbai 400710 )
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Summons for Judgment No. 59/21 2 Order.
in Comm.Suit No. 32/21.
3. Sibabrata Das, )
Having his office address at )
1205, 12th floor Rupa Solitaire, )
Millenium Business Park )
Mahape, Navi Mumbai 400710 )...Defendants
CORAM : HIS HONOUR JUDGE SHRI R.R.BHAGWAT.
(COURT ROOM NO.31).
DATE : 1st APRIL, 2022.
Shri Shanay Shah, Advocate for the plaintiffs.
Shri Chirag Modi, Advocate for the defendants.
ORDER
1. The plaintiff had presented the suit for registration as a
summary suit for recovery of Rs.92,83,684/ alongwith further interest
at the rate of 18% p.a. from the date of filing of the suit till realization
with costs. After scrutiny of papers, the suit came to be registered as a
Commercial Suit No. 32/2021.
2. The plaintiff moved this Summons for Judgment on
06/03/2021. Perused summons for judgment, affidavit in reply,
affidavit in rejoinder and affidavit in surrejoinder. I have also gone
through the suit proceeding. Heard learned counsel Shri Shanay Shah
for the plaintiff and learned counsel Shri Chirag Modi for the
defendants.
3. Case of the plaintiff, in brief, is as under :
The plaintiff is a company registered under the
Companies Act, 1956 providing financial advisory services i.e. capital
raising, mergers, acquisitions, valuation and restructuring. Defendant
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Summons for Judgment No. 59/21 3 Order.
in Comm.Suit No. 32/21.
no.1 is also a company engaged in designing and manufacturing smart
and energy efficient appliances (henceforth referred as 'the Company').
Defendants no.2 and 3 are promoters, shareholders and directors of
defendant no.1. By an engagement letter / agreement dated
18/01/2018 (henceforth referred as, 'the Agreement') entered into
between the plaintiff and the defendants, the plaintiff agreed to provide
financial advisory services to defendant no.1 to raise fresh investment /
capital from investors because defendant no.1 and its shareholders were
interested in inviting fresh investment in the company. The plaintiff
sent signed copy of the Agreement from its work place in Mumbai to the
defendants through email on 19/01/2018. It was finalized, signed and
executed by the defendants and forwarded scanned copy of the
Agreement to the plaintiff via email on 22/01/2018.
4. The Agreement contained the clauses stating that the
defendants were payable to the plaintiff various amounts as per the
Agreement including fixed fee of Rs.3,00,000/, success fee of 2.7% of
gross consideration subject to minimum success fee of Rs.75,00,000/
and reimbursement of out of pocket expenses. Fixed fee of
Rs.3,00,000/ was paid to the plaintiff by defendant no.1 and it was to
be adjusted against the success fee installment. The success fee was to
be paid if the transaction was completed in respect of whether the
investor with whom the transaction was completed was introduced by
or contacted by or interacted with the plaintiff. The Agreement further
provided that if at any time within six months from the expiry of the
'Exclusivity Term' a transaction was completed, the plaintiffs fees would
be due and payable. The Agreement also provided that the said fees
would not be payable where during the 'Exclusivity Term', there was no
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Summons for Judgment No. 59/21 4 Order.
in Comm.Suit No. 32/21.
interaction or contact in relation to the transaction with the investor
with whom the transaction was completed.
5. By extension letter dated 27/07/2018, the Agreement was
renewed for a further period of six months from the time of the said
term terminated under the Agreement. The plaintiff was aware that the
defendants initiated contact with persons from the Hero / Suman
Munjal for the purpose of seeking an investment in the company. The
plaintiff believes that defendant no.1 shared material prepared by the
plaintiff such as information, memorandum, investor presentation,
business plan etc. with the Hero / Suman Munjal Group for the purpose
of seeking an investment. The plaintiff received whatsapp text
conversation between the plaintiff's employee Mr. Paras Shah and
defendant no.3 (Mobile No. 9892713247) that establishes that the
defendants had initiated contact with members of the Hero / Suman
Munjal Group since around March2018. Finally, the plaintiff came to
know in April2019 that a transaction had been completed between the
defendants and M/s. Survam Partners LLP (Survam) by which an
investment had been made by Survam in the company Suman Munjal is
a partner in Survam. The plaintiff obtained a copy of Board Resolution
dated 18/02/2019 passed by Board of Directors of defendant no.1
consenting to issuance of 691 Bridge II Compulsorily Cumulative
Convertible Preference Shares to Survam Partners LLP for an aggregate
amount of Rs.3,00,03,337/. On the basis of this Board Resolution, the
plaintiff further pleaded that the defendants concealed from the
plaintiff the fact that the said interaction between the defendants and
Survam had concluded in an investment. By pleading these basic
details, the plaintiff has claimed remaining success fee of
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Summons for Judgment No. 59/21 5 Order.
in Comm.Suit No. 32/21.
Rs.72,00,000/ and 18% GST Rs.12,96,000/ due to the said investment
made by Survam within period of six months from the date of the
'Exclusivity Term'. Accordingly, the plaintiff filed the suit for recovery
of Rs.92,83,684/ with 18% further interest on principal sum of
Rs.72,00,000/.
6. Learned counsel Shanay Shah for the plaintiff referred
contents in the plaint and pointed out details in documents annexed
thereto in the course of his arguments. According to him, the plaintiff is
exclusive financial advisor of the defendants and success fee was
payable in case of fresh investment in the company from an investor
either directly or indirectly through such investors, promoters,
shareholders etc. is made. He further submitted that the liability is
explained in email dated 11/06/2019 at page no.64 of the plaint and
proforma invoice of Rs.72,00,000/ with GST Rs.12,96,000/ was
forwarded to the defendants by the plaintiff. The defendants denied
responsibility to pay the said amount by email dated 13/06/2019 at
page no.66 of the plaint. He drew attention of the Court towards
whatsapp conversation at pages no.36 to 42 of the plaint and submitted
that reference of Hero Group and Mr. Munjal has come in the text chat
between the plaintiff's employee and defendant no.3. He further
submitted that the plaintiff had mentioned Hero group in list of
investors. He has also shown various documents annexed with
rejoinder in order to demonstrate endeavours of the plaintiff to attract
the investment in the company. He relied upon citation IDBI
Trusteeship Services Limited V/s. Hubtown Limited [(2017) 1
Supreme Court Cases 568] in which scope of Order XXXVII of the CPC
is elaborated by Hon'ble Supreme Court in para 17 which reads as
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Summons for Judgment No. 59/21 6 Order.
in Comm.Suit No. 32/21.
under:
“17. Accordingly, the principles stated in para 8 of
Mechelec case [Mechelec Engineers & Manufacturers v.
Basic Equipment Corpn., (1976) 4 SCC 687] will now
stand superseded, given the amendment of Order 37
Rule 3 and the binding decision of four Judges in
Milkhiram case [Milkhiram (India) (P) Ltd. v.
Chamanlal Bros., AIR 1965 SC 1698 : (1966) 68 Bom
LR 36] , as follows:
17.1. If the defendant satisfies the court that he has a
substantial defence, that is, a defence that is likely to
succeed, the plaintiff is not entitled to leave to sign
judgment, and the defendant is entitled to
unconditional leave to defend the suit.
17.2. If the defendant raises triable issues indicating
that he has a fair or reasonable defence, although not
a positively good defence, the plaintiff is not entitled to
sign judgment, and the defendant is ordinarily entitled
to unconditional leave to defend.
17.3. Even if the defendant raises triable issues, if a
doubt is left with the trial Judge about the defendant's
good faith, or the genuineness of the triable issues, the
trial Judge may impose conditions both as to time or
mode of trial, as well as payment into court or
furnishing security. Care must be taken to see that the
object of the provisions to assist expeditious disposal of
commercial causes is not defeated. Care must also be
taken to see that such triable issues are not shut out by
unduly severe orders as to deposit or security.
17.4. If the defendant raises a defence which is
plausible but improbable, the trial Judge may impose
conditions as to time or mode of trial, as well as
payment into court, or furnishing security. As such a
defence does not raise triable issues, conditions as to
deposit or security or both can extend to the entire
principal sum together with such interest as the court
feels the justice of the case requires.
17.5. If the defendant has no substantial defence
and/or raises no genuine triable issues, and the court
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Summons for Judgment No. 59/21 7 Order.
in Comm.Suit No. 32/21.
finds such defence to be frivolous or vexatious, then
leave to defend the suit shall be refused, and the
plaintiff is entitled to judgment forthwith.
17.6. If any part of the amount claimed by the plaintiff
is admitted by the defendant to be due from him, leave
to defend the suit, (even if triable issues or a
substantial defence is raised), shall not be granted
unless the amount so admitted to be due is deposited
by the defendant in court.”
7. Learned counsel Shanay Shah also relied upon the case of
Jyotsna K. Valia V/s. T.S.Parekh and Co. (2007(4) Mh.L.J. 517) in
which Hon'ble Bombay High Court has explained the concepts of Debt
and Acknowledgement in para 20 and 21. By relying upon
observations in this citation, learned counsel Shri Shanay Shah
submitted that the work started during exclusivity period and the deal is
finalized subsequently. The contract cannot be read abstractly. He also
referred Board Resolution dated 18/02/2019 passed for the investment
made by Survam Partners LLP. By relying upon all these documents
and whatsapp conversation, he submitted that the defendants do not
have substantial defence to raise and the plaintiff is entitled to summary
judgment. He prayed to allow summons for judgment and to decree the
suit.
8. On the contrary, learned counsel Shri Chirag Modi for the
defendants submitted that the plaintiff is relying upon part portion of
the Agreement. According to him, the Agreement prescribes for
preparation of information memorandum and also identity of potential
investors, contacting them, transaction structuring and assistance in
carrying out the final due diligence. He read out three phases in the
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Summons for Judgment No. 59/21 8 Order.
in Comm.Suit No. 32/21.
Agreement covering all these aspects. He further submitted that the
plaintiff failed to attract any investment. The plaintiff has not done
transaction structuring. There are several conditions in the agreement,
but the same are not complied with by the plaintiff. He relied upon
citation of Rakesh Kumar Singla V/s. Union of India (CRMM No.
23220 of 2020 (O&M) in which necessity of certificate under Section
65B of the Evidence Act to prove whatsapp messages is reiterated by
relying upon decision of Hon'ble Supreme Court in the case of Arjun
Panditrao Khotkar Vs. Kailash Kushanrao Gorantyal and others
(2020) 7 SCC 1. Learned counsel Shri Chirag Modi has also placed on
record copy of Arjun Khotkar's citation and read out relevant
observations in paras 61 and 73 for the submission that the plaintiff has
not brought on record sufficient evidence to read printouts of whatsapp
chat between the plaintiff's employee and defendant no.3.
9. Learned counsel Shri Chirag Modi further relied upon
observations of Hon'ble Supreme Court in the case of B.L. Kashyap and
Sons Ltd. V/s. JMS Steels and Power Corporation and Another
(2022 SCC OnLine SC 59) in which scope and ambit of Order XXXVII
of the CPC is discussed by placing reliance upon the citation of IDBI
(referred above) in paras 39, 40 and 41. According to him, the
defendant has substantial defence and there are several triable issues in
the matter. Learned counsel Shri Chirag Modi submitted that the
'amount admitted' means that there must be an unequivocal acceptance
by both sides of an amount due to the plaintiffs as per observations in
para 10 made by Hon'ble Bombay High Court in the case of Vinod
Kumar Sundarlal Kesarwani and Another V/s. Patel Developers and
Others (2019 SCC OnLine Bom 6923). By stating so, he prayed to
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Summons for Judgment No. 59/21 9 Order.
in Comm.Suit No. 32/21.
dismiss Summons for Judgment and to grant leave to defend to the
defendants.
10. After considering material on record and rival submissions,
it is explicit that the plaintiff and the defendants had entered into an
agreement on 18/01/2018 for attracting fresh investments in the
company. This Agreement was extended for further six months' period
as per extension letter dated 27/07/2018. Term of this Agreement
expired in the month of February2019. Survam Partners LLP made
investments in defendant no.1 company as referred in Board Resolution
dated 18/02/2019 and shares were issued in its favour. It means that
investment was made after the expiry of the Agreement period. The
plaintiff is relying upon the clause covering investments made within
period of six months after the expiry of the Agreement period. There
are two conditions in the said clause i.e. (i) this engagement continues
beyond the 'Exclusivity Term' and (ii) the said transaction should have
been completed after the 'Exclusivity Term' due to services provided by
LCM (the plaintiff). Furthermore, the clause of success fee has
reference of words if the transaction is completed as signified by the
finalization of definitive agreements and receipt of first tranche of gross
consideration, the plaintiff shall charge success fee of 2.7% of gross
consideration subject to minimum success fee of Rs.75,00,000/. If
these material clauses in the Agreement are read in the context of other
phases in the process of attracting investments, the plaintiff is not
absolved from playing his role in the process of attracting investments.
The plaintiff is harping upon his employee's conversation with
defendant no.3 through whatsapp text messages in which reference of
Mr. Munjal and Hero has come. The plaintiff has to bring on record
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Summons for Judgment No. 59/21 10 Order.
in Comm.Suit No. 32/21.
material in the form of its endeavours to attract investments by Hero or
Munjal Group in addition to this whatsapp chat. Ultimately, contact
with the investor and his solicitation for investments are relevant
factors.
11. In addition to it, discussion between parties to the
Agreement is not sufficient to demonstrate the services rendered by the
plaintiff had culminated in attracting the investments. The plaintiff was
rendering financial services to the defendants almost for one year, but
he is claiming success fees on the basis of sole transaction which is
entered into between defendant no.1 and the investor after termination
of the Agreement due to efflux of time. Therefore, there is prima facie
force in the contention of the defendants that the plaintiff could not
attract the investments. For all these reasons, the defendants have
succeeded in demonstrating that they have substantial defence and
there are triable issues involved in the matter. Case of the defendants is
covered by guidelines of Hon'ble Supreme Court in the cases of IDBI
and B.L. Kashyap (referred above). Therefore, the defendants are
entitled to get unconditional leave to defend. Hence, I pass the
following order :
ORDER
1. Summons for Judgment No. 59/2021 is dismissed.
2. Unconditional leave to defend is granted to all
defendants.
3. All defendants shall file written statement within 30 days
from the date of this order.
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Summons for Judgment No. 59/21 11 Order.
in Comm.Suit No. 32/21.
4. Proceeding of Summons for Judgment No. 59/2021 is
closed.
(R.R.BHAGWAT)
Judge,
City Civil Court,
(Court Room No.31)
Date : 01/04/2022. Mumbai.
1. Dictated online on : 01/04/2022.
2. Corrected on : 04/04/2022.
3. Signed on : 04/04/2022.
4. Delivered to Certified :
Copy Section on
“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
04/04/2022. 4.51 p.m. Miss M.A.Kulkarni.
Name of the Judge (with Court Room no.) HHJ Shri R.R.Bhagwat.
(Court Room No.31).
Date of Pronouncement of Judgment/Order 01/04/2022.
Judgment/Order signed by P.O. on 04/04/2022.
Judgment/Order uploaded on 04/04/2022.
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