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Debt recovery from a public limited company

Page no : 2

Harinath (employee)     26 October 2017

I could clearly see arrogance of that company and police. They mock I'll have to run around courts for 20 years. Its like pouring gasoline on fire.

How to stop from more Vijay mallyas? Why only these guys have free run? How can they oppress small people? How are the small people different from rich guys? How can they run away with money? This is absolute banditry..in my case the MD, CFO, VP, operations ganged up and choose not pay me..they bribe police now..

The Courts, laws are also complex and myriad. They wont expect people to fight but beg. Its a sort of humiliation to fight for my basic money.. i dont know where my fight will take me but i intent to teach these idiots some manners.

Tushar Jha (Advisor)     26 October 2017

Basic rules of summary procedure under Order 37 of the Code of Civil Procedure says that your petition should have a statement contending "that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint". (Refer Clause (b) under Sub-Rule 1 of Rule 2 under Order 37 of the Code of Civil Procedure)

Hence for query no.2 & 3 you have to file a separate suit as the reliefs claimed fall outside the purview of 'summary procedure'. Even if you somehow include query no. 2&3 in the petition for summary suit, the judge may strike out the pleading or give a ruling that since the relief claimed is outside the purview of summary procedure a separate suit shall be filed claiming relief.

 

For query no. 2,3 & 4 a separate regular civil suit can be filed.

Disclaimer: My Answers or replies do not constitute as legal advice in any way.

1 Like

Harinath (employee)     26 October 2017

Sir, in simple terms - What is the difference between Summary suite and Ordinary/recovery suite?

----
In a summary suit, the defendant is not entitled as a right to defend the suit as he is in an ordinary suit and he must apply for leave to defend. If no leave is granted then the plaintiff is entitled to a decree. To obtain such a leave the defendant will have to state on affidavit such facts as it would make incumbent on the Plaintiff to prove consideration. 
-----

he must apply for leave to defend - what does this phrase mean?

2. What is the section for Ordinary/recovery suite?

Please point me to some materials to read. Thank you very much.

Tushar Jha (Advisor)     27 October 2017

Diferrence between Ordinary Civil Suit and Summary Civil Suit is given in the following links :-

1. https://www.linkedin.com/pulse/points-difference-between-summary-suit-ordinary-cheques-carl-patel

2. https://www.pathlegal.in/Difference-Between-Summary-suit-and-Ordinary-suit-blog-1202863

3. https://www.legalservicesindia.com/article/article/order-37-cpc-summary-suits-1514-1.html

 

Leave to Defend :  Simply means 'permission' to defend the suit. Under Summary Proceedings, the defendant has to take prior permission to defend the suit. If permission or leave to defend is not granted by the Court, then decree is pronounced in the case.

Conditions for Leave to Defend

Certain principles for the appearance of the defendant and his right to defend the suit should be in accordance with Rule 3 of Order XXXVII of the Code of Civil Procedure. These principles are to make sure that the defendant’s right to defend is not being taken away from him and the principle of audi alteram partem is being followed and described what can be considered as sufficient facts to entitle the defendant right to defend and the conditions are :-

  1. If the defendant satisfies the Court that he has a good defence to the claim on its merits.
  2. If the defendant raises a triable issue indicating that he has a fair defence.
  3. If the defendant discloses such facts as may be deemed sufficient to entitle him to defend

Hon'ble Bombay High Court has held in Eskay Enterprises Vs. Suresh P. Hinduja {2005 (3) BomCR 289} that,
"The difference between the procedure of a ordinary suit and of a summary suit is that in the former the defendant requires no leave of the Court to defend the suit and he is entitled to defend it as of right while in case of the latter the defendant is required to apply for leave to defend within ten days of the service of the summons for judgment. In a summary suit the defendant has no right to defend per se unless leave is granted to him by the Court to defend the suit. If the leave to defend is refused or if conditional leave is granted subject to his giving of a security and the defendant fails to give security within the time specified by the Court, the plaintiff is entitled to a judgment forthwith. If leave to defend is granted thereafter the procedure for trial of a summary suit would be the same as that of a civil suit instituted in ordinary courts exercising Ordinary Original Civil Jurisdiction only until the leave is granted the procedure is different."

1 Like

Harinath (employee)     07 January 2018

Dear Friends,

Well the developments so far in the criminal complaint under IPC420 and 406 r/w 34 case filed against the company by my father -

They have approached High Court for quash of the above criminal complaint before police could serve summons under Crpc 41. They also did not take station bails from the police station. Last month High Court had passed the below order -

“The 2nd respondent is manufacturer of Hydraulic Power Packs and Hydraulic Cylinders and that the petitioners placed orders for supplying of Hydraulic Cylinders and out of 18 cylinders 13 cylinders were supplied and that the balance of cylinders were not taken despite intimation as ordered by them. Thereby, the 2nd respondent sustained huge loss. At best the alleged act would not fall within Section 420 and 406 IPC and it is nothing but giving cloak of criminal offence for the civil litigation of recovery of amount and in view of law declared in G. Sagar Suri and another v State of U.P., I am of the view that it is a fit case to grant interim stay of all further proceedings. 

Therefore, there shall be stay of all further proceedings in Crime No.xxx of 2017 of xxx Police Station, Cyberabad, Ranga Reddy District for a period of two months from today. Post after two months.”

Next steps as advised by lawyers: We need to file counter to his quash next month asking the Judge to dismiss his quash petition.

My questions:

1. Company had filed 2 petitions before the High Court. One was the quash petition and second was Interim petition asking Court to pass directions to stop all proceedings regarding the FIR. And I'm made to understand that the above order is as per the interim petition filed by the company.

2. When i file my counter do I also have the provision to ask for interim relief asking the court to direct police to verify my complaint, investigate and file chargesheet? bcos as of now the FIR is in a limbo as police say they will not proceed unless the court orders them to do so?

3. How many months will it take for the High Court to decide on the company's quash petition? If it takes longer then how do I force the Judge to expedite my case? I'm informed by police that company will make attempts to drag the case by asking repeated adjournments and drag the case for years.

4. My father is party-in-person in the High Court.

As of now we did not file summary suit as the all the lawyers tell me that case falls under category of ordinary suit and not summary suit. Kindly advise.

Regards,

Tushar Jha (Advisor)     08 January 2018

Replying to your questions in point-wise manner -

Your questions:
1. Company had filed 2 petitions before the High Court. One was the quash petition and second was Interim petition asking Court to pass directions to stop all proceedings regarding the FIR. And I'm made to understand that the above order is as per the interim petition filed by the company.
My Opinion : You have an option to go in for appeals against both the petitions filed by the company. Please check appellate side rules of the High Court. Generally, there is an option to go in for an appeal against an order passed by a Single-judge bench of the High Court. This appeal would lie before a Division Bench presided over by 2 High Court Judges.

2. When i file my counter do I also have the provision to ask for interim relief asking the court to direct police to verify my complaint, investigate and file chargesheet? bcos as of now the FIR is in a limbo as police say they will not proceed unless the court orders them to do so?

My Opinion : Yes. In the appeal, you can pray for directions to the police to investigate the matter and continue the legal proceedings against the company and its directors.

3. How many months will it take for the High Court to decide on the company's quash petition? If it takes longer then how do I force the Judge to expedite my case? I'm informed by police that company will make attempts to drag the case by asking repeated adjournments and drag the case for years.
My Opinion : It can't be said with certainty as to how long will it take for High Court to decide on company's quashing petition. It may take anyhwere from 6 months to 2 years but that also depends on the pendency of cases of such nature before the High Court. Asking for adjournments is a common practice by Company advocates nothing new about that. The counter against this could be pleading before the court that Company is engaging in delaying tactics and cost should be imposed for seeking adjournments. 

4. My father is party-in-person in the High Court. As of now we did not file summary suit as the all the lawyers tell me that case falls under category of ordinary suit and not summary suit.

My Opinion : If the case falls under ordinary suit on perusal of your case files by lawyer then I have nothing further to say about that. As a Lawyer is in better position to go through your case-files and advise accordingly. Furthermore, you can't convert an ordinary suit into a Summary Suit, as simple as that. However, ordinary civil suit may take time to be settled but if you don't file any civil case and in the event criminal case is quashed by the High Court or Supreme Court, then your only chance to recover money will be gone. So my earnest advice would be that even if Summary Suit is not applicable in your case, then do file an ordinary civil suit against the company. That could be your only hope to recover your dues from the Company.
Also see this, if it is applicable to your case : https://www.mondaq.com/india/x/16715/Corporate+Commercial+Law/Inability+To+Pay+Debts+as+a+Ground+for+Winding+Up+the+Company​

Read more at: https://www.lawyersclubindia.com/forum/details.asp?mod_id=138414&offset=3

PS: I am not a Lawyer or a Law Student, my opinions do not constitute as legal advice in any way. My limited knowledge about Law and Indian Legal System is based on my experience and online reading of legal blogs/forum/websites/journal/judgments.

1 Like

Harinath (employee)     08 January 2018

Dear Tushar

Thanks for checking my post and replying to it.

Can we convert Summary suite to Ordinary suite at a later date? If yes, under what conditions can it be done by us?

Or if we file a Summary suite can the Court itself convert it to Ordinary suite, i.e., giving orders to re-register the Summary suits as Ordinary suits?

Regards

Tushar Jha (Advisor)     08 January 2018

Hon'ble Supreme Court of India has held in Neebha Kapoori Vs. Jayantilal Khandwala [Citation: 2008 (3) SCC 770] that, "Before recording a finding of granting leave to defend, the Court should assess the facts and come to the conclusion that if the facts alleged by the defendant in the affidavit are established, there would be a good or even a plausible defence on those facts".

What is covered under a summary suit is defined under Rule 1 of Order 37 of the Code of Civil Procedure, 1908. Any suit outside the scope and purview of Rule 1 of Order 37 is converted into an ordinary suit. Even if you don't convert a Summary Suit into an ordinary suit, the Court on its own motion can convert it into an ordinary suit or if the Opposite Party makes a strong case that it's an ordinary suit and you have filed it purposely under Summary Suit.
See this link: 
https://blog.ipleaders.in/debt-collection-money-recovery-india-challenges-solutions/​

 

Bombay High Court in the matter titled as Purnendu Shekhar Mal Jain Vs. ACG Associated Capsules Private Limited in Appeal (L) no. 98 of 2016 decided on 1st Feb, 2017 held that the words "special circumstances" in Order XXXVII Rule 4 CPC for setting aside ex-parte decree is different from expression "sufficent cause" an application under Order 9 Rule 13 of CPC. The expression "special circumstances" is not defined in the Civil Procedure Code nor is it capable of any precise definition by the court because problems of human beings are so varied and complex. In its ordinary dictionary meaning it connotes something exceptional in character, extraordinary, significant, uncommon. It is an antonym of common, ordinary and general. It is neither practicable nor advisable to enumerate such circumstances.

In an application under Order 37 Rule 4, the court has to determine the question, on the facts of each case, as to whether circumstances pleaded are so unusual or extraordinary as to justify putting the clock back by setting aside the decree; to grant further relief in regard to post-decree matters, namely, staying or setting aside the execution and also in regard to pre-decree matters viz. to give leave to the defendant to appear to the summons and to defend the suit.

See the link to the Judgment by Bombay High Court : 
https://indiankanoon.org/doc/84562536/

1 Like

Harinath (employee)     08 January 2018

Thank you very much Tushar Sir. You're very much GOD sent to me and I cannot thank you enough. My father has asked me to convery his regards to you.

The given information is very much helpful and gives us a ton of confidence to fight this case at merits. I'll keep you posted on the developments as they proceed. I hope other people reading this thread find it extremely useful. Thanks again.

Harinath (employee)     09 February 2018

Hello Friends,

My father have filed his counter petition opposing the quash petition filed by the company in stop criminal procedings in FIR. My father is party-in-person and in the counter we asked for 2 things: 

Point 1 - Dismiss the quash petition filed by the company and we relied on the judgement: Iridium India Telecom Ltd vs Motorola Incorporated & Ors on 20 October, 2010 which said - the High Court ought to have refrained from indulging in detailed analysis of very complicated commercial documents and reaching any definite conclusions.

Point 2 - Impose exemplary costs of the petitioners i.e., the company. We relied on 3 judgements:

1) Messer Holdings Ltd vs Shyam Madanmohan Ruia & Ors on 19 April, 2016 from Bench of Judges Justice: J. Chelameswar, Abhay Manohar Sapre  - have imposed exemplary costs quantified at Rs.25,00,000.00 to be paid by each of the three parties i.e. GGL, MGG and RUIAS. The said amount is to be paid to National Legal Services Authority as compensation for the loss of judicial time of this country and the same may be utilized by the National Legal Services Authority to fund poor litigants to pursue their claims before this Court in deserving cases.

2) Ramrameshwari Devi & Ors vs Nirmala Devi & Ors on 4 July, 2011 from the Bench of Judges - Justice: Dalveer Bhandari, Deepak Verma - have imposed costs, which we quantify as Rs.2,00,000/ We are imposing the costs not out of anguish but by following the fundamental principle that wrongdoers should not get benefit out of frivolous litigation.

Now my question is : the PP opposed us asking for imposing costs and found fault with the judgements I quoted as above., his contention is I cannot judgements from civil case proceedings to justify my Criminal Counter petition.

So please advise me... Have I used the right judgements asking for costs?? alternatively please quote me right judgements to use..I want to insist that the HC impose exemplary cost of this stupid, arrogant company. Thanks in advance.

Tushar Jha (Advisor)     10 February 2018

First of all, you are asking Courts to impose cost on the defendant company, which in my opinion is not sustainable in the eyes of law at the current stage of legal proceedings. Once the company and its directors have been found guilty, the courts can surely award compensation under Section 357 & 357A of the Cr.P.C.
However, as per Section 357 and 357A of the Code of Criminal Procedure (Cr.P.C.), the Court may order payment of compensation by the convict to the victim/next of kin of victim.


In Hari Singh v. Sukhbir Singh & Ors. [(1988) 4 SCC 551], Hon'ble Supreme Court lamented the failure of the Courts in awarding compensation to thevictims in terms of Section 357 (1) of the Cr.P.C. The Apex Court recommended to all Courts to exercise the power available under Section 357 of the Cr.P.C. liberally so as to meet the ends of justice. The Court said:

"Sub-section (1) of Section 357 provides power to award compensation to victims of the offence out of the sentence of fine imposed on accused. It is an important provision but Courts have seldom invoked it. Perhaps due to ignorance of the object of it.
It empowers the Court to award compensation to victims while passing judgment of conviction.
In addition to conviction, the Court may order the accused to pay some amount by way of
compensation to victim who has suffered by the action of accused. It may be noted that this power of Courts to award compensation is not ancillary to other sentences but it is in addition thereto. This power was intended to do something to reassure the victim that he or she is not forgotten in the criminal justice system. It is a measure of responding appropriately to crime as well of reconciling the victim with the offender. It is, to some extent, a constructive approach to crimes. It is indeed a step forward in our criminal justice system. We, therefore, recommend to all Courts to exercise this power liberally so as to meet the ends of justice in a better way."


But important point to note here is that the Courts have yet to decide the criminal case. All that the company has done at this stage is to get the FIR quashed against them. At this stage even if the High Court imposes cost on them, they will move to Hon'ble Supreme Court appealing against the High Court order. Section 357 & 357 A of the CrPC comes into picture only when the case has been decided and there is some guilty finding.
At this stage courts will not grant you any monetary compensation or impose cost on the defendant/accused company or its directors.

What I don't understand is why are you not filing a Winding-up petition against the Company in the High Court ?

As per law, there is no bar/limitation to pursue civil and criminal case simultaneously arising out of same instance or incident.
Hon'ble Supreme Court has held in
P. Swaroopa Rani v. M. Hari Narayana @ Hari Babu [AIR 2008 SC 1884], that :

"13. It is, however, well-settled that in a given case, civil proceedings and criminal proceedings can proceed simultaneously. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case.

Furthermore, Hon’ble Supreme Court has held in Devendra & Ors v. State of U.P. & Another [(2009) 7 SCC 495] that,
There cannot, however, be any doubt or dispute whatsoever that in a given case a civil suit as also a criminal proceeding would be maintainable. They can run simultaneously. Result in one proceeding would not be binding on the court determining the issue before it in another proceeding.

For more details: https://www.shareyouressays.com/knowledge/section-357-of-code-of-criminal-procedure-1973-cr-p-c-explained/114962

NOTE:-
My answers do not constitute as legal advice in any way. I don't vouch for the accuracy or veracity of the answers given by me.

1 Like

Harinath (employee)     11 February 2018

Dear Thushar,

Thanks to your reply. So basically my intent to ask costs was as litigation in High Court is costly. BUT there must be some way that High /Supreme courts follow that will discourage people imposing fines/costs coming to them with lies..this company has huge money power and can easily outspend me.. as I'm the guy facing the wrath I would want my expenses recovered..what is the best way? even if the chances of happening  from high court is negligible I would like to attempt it.. someone should build a record of abuse and I would like to be one...so my  message and intent are sent strong enough.

Regarding winding up petition we've not given it a thought but we are going to file summary suite even though all lawyers say it is ordinary suite. Somehow I tend to disagree with them as I have read many judgements from india kanoon and i guess i have a good shot with summary suite. I will revert on summary / ordinary suite within the next 3-4 weeks.

Thanks very much sir. Please keep checking my post. Though you put a disclaimer not being a lawyer I derive a ton of confidence from you. Regards,

Harinath (employee)     16 February 2018

Hello Friends,

Update on High Court proceedings today regarding the opposite party petition to quash FIR proceedings - 

1. We filed our Counter Petition
2. The opp party filed Extension Petition for stay proceedings

Result:

1. The opp party was given 1 month stay extension
2. My father is party in person
3. The Judge protested that this is a civil case and questioned my father - why did you go police station? neither me nor the police will help you get back your money..we cannot help you..and you should know the law before filing this counter petition.

He then asked my father- if you want your money then you should go to civil court and not to police..we cannot help you get your money.

We filed invoice copies also as proofs in our Counter Petition and the Judge said since you say that you have all invoices and proofs go to other court you will get your money with interest but we cannot help you.

My father tried to argue that he was running around for payments but that company denies any outstandings all together.. and stressed that it falls category of cheating and breach of trust..but the judge cut him short and said stay for another 1 month..

So my question - What should I do next? Can i file a counter petition again? If i can what should i write in my counter petition? please help me. Thank you.

Harinath (employee)     16 February 2018

How do i answer this question - Why did you go the police station if you want this company to pay you? please give me some pointer to confidently answer this question in the High Court. It seems the HC judge mindset is 420 and 406 does not apply bcos company did not pay its supplier and we filed 420 and 406 after getting impatient

Tushar Jha (Advisor)     18 February 2018

Why did you go the police station if you want this company to pay you ?
My reply: It seems that the High Court judge has already made his mind that the FIR is not tenable. I think he will most likely quash the FIR against the company. (Just my opinion based on your reply regarding events unfolded during the court-hearing).
If High Court dismisses the F.I.R. filed by you ? What next ?
Answer:- You will have to file a special leave petition (SLP) under Article 136 of the Constitution of India assailing the unfavourable High Court order. At Supreme Court, a good lawyer can easily convince the Apex Court based on Motorola case of 2010.

It has been held by Hon'ble Supreme Court in the case of Iridium India Telecom Ltd v. Motorola Incorporated & Ors. [(2011) 1 SCC 74] that,
"In such circumstances, in our opinion, the High Court ought to have refrained from indulging in detailed analysis of very complicated commercial documents and reaching any definite conclusions. In our opinion, the High Court clearly exceeded its jurisdiction in quashing the criminal proceeding in the peculiar facts and circumstances of this case. The High Court noticed that while exercising jurisdiction under Section 482 of Cr.P.C. "the complaint in its entirety will have to be examined on the basis of the allegations made therein. But the High Court has no authority or jurisdiction to go into the matter or examine its correctness. The allegations in the complaint will have to be accepted on the face of it and the truth or falsity cannot be entered into by the Court at this stage." Having said so, the High Court proceeded to do exactly the opposite.
We, therefore, allow the appeal and set aside the impugned judgment of the Bombay High Court. There shall be no order as to costs."

As evident from the above cited Motorola Inc. case that High Court had quashed the FIR but Hon'ble Supreme Court restored the FIR and ordered the continuation of criminal proceedings against the Company Directors in Motorola's case.
So, even if the High Court quashes the FIR filed by you, then you can move to Hon'ble Supreme Court for restoration of FIR and setting aside the unfavourable HC order.
I have already given you ample instances of Hon'ble Supreme Court judgments wherein it has been held that civil case and criminal case can proceed simultaneously.

My earnest advice will be to file a civil case (Summary Suit/Winding-up petition) against the Company before the time period of 3 years lapses.
Please remember that the objective of criminal case is different from that of Civil case.
The objective of civil litigation is to compensate the plaintiff for any injuries and to put the plaintiff back in the position that person held before the injury occurre
d.
Criminal law generally defines the rights and obligations of individuals in society. Some common issues in criminal law are the elements of specific crimes and the elements of various criminal defenses. The goal of a criminal prosecution is to punish the defendant. One consequence of the goal of punishment in a criminal prosecution is that fault is almost always an element in any criminal proceeding.
 
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