SANWARLAL AGRAWAL & ORS v ASHOK KUMAR KOTHARI & ORS
DATE OF ORDER:
FEBRUARY 21, 2023
HONOURABLE MR. JUSTICE S. RAVINDRA BHAT
Appellant: SANWARLAL AGRAWAL & ORS
Respondent: ASHOK KUMAR KOTHARI & ORS.
The Hon’ble Supreme Court (hereinafter referred to as ‘Supreme Court’ or ‘the Court’), has set aside the impugned order of the Bombay High Court and held that court failed in considering the separate settlement mechanism for loan amount. Also the lower court did go beyond in analysing the terms of the agreement.
Code of Civil Procedure, 1908
- Order XII Rule 6 – states the power of the Court to give order with respect to any oral or written submissions made by the parties anytime at the proceedings.
- There was a joint venture agreement between the parties regarding the operation of multi-speciality hospital. 50% of shareholding of the appellant was taken by the respondent through bidding. The same was reduced in written form via mail on 28th March 2019.
- Rs. 1,83,75,000/- (or 5%) was paid as a token amount where ₹ 1,25,000/- was not received by the appellant. The breakdown of the amount was explained through mail where the appellant did not accept the loan and conveyed the same via mail.
- Civil suit was filed by the respondent for specific performance and declaring that the agreement is binding on the appellant. Notice of motion was also filed for the admission of the order for the same.
- Appellant also filed the execution proceeding. The court held the decree to be ambiguous as the appellant did not file any written statement and any response to the notice of motion. Division bench upheld the order of single judge and said that the consideration amount included the loan amount. Therefore the present appeal has been preferred against the judgment of Bombay High Court.
Whether the consideration amount mentioned was inclusive in nature or was there any separation regarding the loan amount?
ARGUMENTS ADVANCED BY THE APPELLANT
- It was contended that the executing court went beyond its jurisdiction in analysing the pleadings.
- The agreement date mentioned above was entered orally and was facilitated through a mediator and on the same day it was drafted out by mail where there was no such inclusion of outstanding loan amount.
- The council only agreed with the terms of the mail and not any further correspondence emphasising that the parties entered into the agreement consciously.
- Accordingly respective mails were referred which stated that the consideration amount was ‘composite amount’ and nothing else was payable to the respondent.
- It was states that the High Court lacked in analysing the mails regarding the acceptance of the agreement and the consideration amount.
- It was contended that there was never any discussion between the parties regarding adjustment of the loan amount and the consideration amount was the amount for acquiring the 50% of shareholding.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The council argued that upon admission of the appellant the decree of specific performance was passed with respect to the terms of the agreement.
- The council elaborated the terms used which clearly pointed the segregation of the amount. The expression ‘all claims’ specified that settlement of the loan amount as the agreement was accepted. Therefore there was no such ambiguity and non-filing of the reply or written statement specified their acceptance of the allegations in the suit.
ANALYSIS BY THE COURT:
- The court noted that there was no mentioning of the separation of the loan amount and agreement only consisted of ‘sale of 50% of the shareholdings to the respondents’
- The decree was ambiguous in nature due to absence of the connectivity with the loan amount. It was noted that the High Court emphasised on the separation of the amount which was expressly denied by the appellant therefore there was no such consent from the appellant side.
- The court pointed out that both the lower courts interpreted the agreement in their own way with respect to the loan amount and passed the decree. It is impressive that such order was given without taking into consideration of the distinct mechanism regarding the settlement of the loan amount.
- The agreement clearly separated the repayment of the loan and the biddings process, therefore the appeal was allowed and no order to the cost.
In the present case it can be seen that only few mails cannot be taken into account while passing an order. Both the lower courts gave their order according to their own interpretation of the agreement including the loan amount. However they did not consider the separate clause mentioned for the settlement of the loan amount.
It is to be noted that the term ‘consolidated price’ cannot be said as inclusive of the loan amount as 50% of the shareholding was valuated and discussed by the parties. The expression ‘smooth transaction’ does not include any repayment of the loan amount.
It can be interpreted that the appellant’s silence was considered as acceptance with respect to the inclusion of the loan amount which is reasonable however does not justify the extension of the decree.
Click here to download the original copy of the judgement