M/S Empee Distilleries Limited vs M/S Gimpex Private Ltd

CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 9865 OF 2018 [Arising out of SLP (C) No.23737 of 2018]

M/s Empee Distilleries Limited & Ors. .. Appellant(s)

Versus

M/s Gimpex Private Ltd. & Anr. .. Respondent(s)

J U D G M E N T [

Abhay Manohar Sapre, J.

1. Leave granted.

2. This appeal is filed against the judgment and

order dated 04.06.2018 passed by the High Court of

Judicature at Madras in Original Side Appeal

(Commercial Division) No.155 of 2018 whereby the

Division Bench of the High Court dismissed the Signature Not Verified Digitally signed by ANITA MALHOTRA appeal filed by the appellants herein and confirmed Date: 2018.09.24 17:03:18 IST Reason:

the order dated 28.03.2018 passed by the Single

1 Judge of the High Court in Application No.2527 of

2018 in Application No.2215 of 2018 in C.S.

(Comm.Div.) No.161 of 2018.

3. Few facts need mention infra for the disposal of

this appeal, which involves a short point.

4. The appellants are defendant Nos. 1 and 2

whereas respondent No.1 is the plaintiff in the civil

suit out of which this appeal arises.

5. On 06.03.2018, respondent No. 1 filed a civil

suit being C.S. (Comm.Div.) No. 161/2018 against

appellant Nos. 1, 2 and one more defendant on the

original civil jurisdiction side before the High Court at

Madras. The suit is inter alia founded on certain

commercial transactions executed between the

plaintiff and defendant Nos. 1 and 2 in relation to

supply of coal. It is filed for the recovery of

Rs.19,54,29,693/­.

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6. Respondent No.1 (plaintiff), on 06.03.2018, filed

an application (A.No.2215/2018) along with the

plaint seeking prohibitory order against the Tamil

Nadu State Marketing Corporation (TASMAC)

(respondent No. 2 herein). In that application, it was

alleged that a sum of Rs.24,00,00,000/­ (Rs. Twenty

four crores) is payable by respondent No. 2 to the

appellants (defendant Nos.1 and 2) and, therefore,

prohibitory order be passed against respondent No.2

herein restraining them from paying money to the

appellants (defendant Nos. 1 and 2) to the extent of

Rs.19,54,29,693/­,i.e., the amount claimed in the

suit by the plaintiff.

7. On 13.03.2018, the Single Judge of the High

Court passed ex parte prohibitory interim order

against the appellants (defendant Nos. 1 and 2). The

appellants then filed an application on 20.03.2018

and sought vacation of the ex parte prohibitory

3 interim order dated 13.03.2018. By order dated

28.03.2018, the Single Judge, in substance, affirmed

the order dated 13.03.2018 and directed that it is

made applicable on TASMAC qua appellant Nos. 1

and 2 in relation to the supplies made up to

19.03.2018. In this way, both applications, i.e., one

filed by the plaintiff and the other filed by defendant

Nos. 1 and 2 were disposed of.

8. Defendant Nos. 1 and 2 (appellants herein) felt

aggrieved by the order dated 28.03.2018 filed appeal

(O.S.A. No. 155/2018) before the Division Bench. By

impugned order, the appeal was dismissed resulting

in upholding of the order dated 13.03.2018 and

28.03.2018, which gives rise to filing of this appeal

by way of special leave by defendant Nos. 1 and 2 in

this Court against the order of the Division Bench

dated 04.06.2018.

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9. Heard Mr. Mukul Rohtagi, learned senior

counsel appearing for the appellants and Mr. V. Giri,

learned senior counsel for the respondents.

10. Mr. Mukul Rohtagi, learned senior counsel

appearing for the appellants (defendant Nos. 1 and 2)

while assailing the legality and correctness of the

impugned order contended that it is not legally

sustainable inasmuch as it does not satisfy the

requirements of Order 37 Rule 5 of the Code of Civil

Procedure, 1908 (hereinafter referred to as “the

Code”) under which it was passed.

11. In the alternative and without prejudice to the

appellants’ rights to prosecute the suit on merits,

learned counsel also urged that in order to balance

the equities and to safeguard their rights, which are

subject matter of the suit and are not yet decided on

their merits, the Courts below at best could direct the

appellants to furnish adequate security to the extent

5 of the claim in the suit and such order would have

been in conformity with the requirements of Order 37

Rule 5 of the Code.

12. In reply, Mr. V. Giri, learned senior counsel

supported the impugned order.

13. Having heard the learned counsel for the parties

and on perusal of the record of the case, we are

inclined to accept the alternative submission of the

learned senior counsel for the appellants as, in our

opinion, it has force and, if accepted, it would be in

the interest of both the parties and would be in

conformity with the requirements of Order 37 Rule 5

of the Code.

14. We, therefore, do not consider it necessary to go

into the merits of the first submission of the learned

senior counsel for the appellants and nor consider it

proper to comment upon the merits and demerits of

the case at this stage.

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15. It is for the reasons that firstly, the suit is

pending; secondly, contesting defendant Nos. 1 and 2

(appellants herein) have not yet filed their written

statements disclosing their defense; and thirdly, the

trial in the suit on merits is yet to commence.

16. In such circumstances, any observations made

by this Court on facts would cause prejudice to the

rights of the parties while prosecuting the suit on

merits.

17. We also heard the learned counsel on the

alternative submission.

18. Having heard learned counsel for the parties, we

are inclined to dispose of the appeal by issuing the

following directions for ensuring its compliance by

the parties:

1. The appellants (defendant nos. 1 and 2) shall furnish Bank Guarantee for a sum of Rs.10 crores(Ten crores) of any Nationalized Bank.

7 2. The appellants shall also furnish solvent security for balance suit amount to the satisfaction of the concerned Court.

3. On ensuring compliance of condition Nos. 1 and 2 by the appellants, the impugned order stands set aside.

4. Let the compliance be done within a period of 3 months by the appellants as an outer limit.

19. The Court, which is seized of the suit, is

requested to dispose of the civil suit on merits in

accordance with law as expeditiously as possible

preferably within a period of one year without being

influenced by any of our observations made in this

order.

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20. In the light of the foregoing discussion and

directions, the appeal stands disposed of.

….….………………………………..J (ABHAY MANOHAR SAPRE)

………..………………………………J. (MOHAN M. SHANTANAGOUDAR) New Delhi, September 24, 2018

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