O-57 GA No.1098 of 2015 CS No.81 of 2015 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction Original Side GBK RESOURCES PVT.LTD.Versus MATANG SINH BEFORE: The Hon'ble JUSTICE SANJIB BANERJEE Date : September 20, 2016.
Appearance: Mr.Samrat Sen, Senior Advocate Mr.Suman Dutta, Advocate Mr.Sukrit Mukherjee, Advocate Mr.Amritam Mandal, Advocate ...for the plaintiff.
Mr.Chayan Gupta, Advocate Mr.P.P.Dasgupta, Advocate ...for the defendant.
The Court : The matter of significance in this petition is not so much the claim but the defence put up by a maladroit businessman who doubles up as a member of the Parliament.
Since the exalted citizen is now a State guest, in addition to the decree that he suffers hereunder, the appropriate authorities should avail of his presence at the State facilities to conduct further enquiries as directed hereinafter.
The plaintiff company makes out a case that it had lent and advanced a total sum of Rs.9 crore between January and March, 2011 to the defendant upon formal requests being made by the defendant in such regard.
The plaintiff released the money by cheques or through RTGS and the money receipts were issued upon due receipt of the several tranches of payment.
Balance confirmations of accounts were signed by the defendant at the end of financial years 2010-11 and 2011-12.
The plaintiff also relies on the dishonoured cheques amounting to a total of Rs.9 crore, reflecting the principal amount of the loan, and the memoranda of dishonour in respect of such cheques.
None of these documents is questioned by the defendant.
Indeed, there are positive averments in the principal affidavit filed by the defendant that the request letters were issued by the defendant and the balance confirmations of accounts were signed by the defendant and even cheques for repayment were issued by the defendant.
However, the defendant claims that all of this was at the behest of one Shree Mohan Kothari who appears to be the principal person in control of the plaintiff and has verified the affidavit in support of the petition.
According to the defendant’s principal affidavit, a company under the control of the defendant proposed to go for an initial public offer around the time that the loans were obtained and, for the purpose of taking steps to organise the IPO, substantial funds were necessary and the said Kothari, among otheRs.offered to chip in with Rs.20 crore each towards the initial expenses for the IPO.
The written agreement of November 15, 2010 that the defendant has relied upon and a copy whereof is appended to his affidavit is an absolute revelation.
For want of time and propriety, the entirety of the agreement is not set out, but from the beginning to the end the agreement cries out for that which is not expressly stated therein to be read therefrom.
In an astoundingly blatant manner, the agreement provides for funds to be obtained by the defendant and his concerned company to window-dress its accounts and its affairs and present a package that would induce investors to participate in the IPO, whereupon the defendant and the persons aptly named as facilitators in the agreement, would plunder the loot.
There is an express clause to the effect that the initial money brought in by the facilitators would come out of the proceeds of the IPO.
The damaging aspect is not so much in such an agreement being executed.
There are several of them executed probably on a daily basis for unwary investors to be hoodwinked and the real operations to be somewhat different than presented.
The more startling feature is the arrogance with which a completely illegal agreement is flaunted as a defence to a claim in a Court.
The defendant, as claimed by Advocate on his behalf, is now under judicial custody in connection with the unsavory ponzi business of the Sarada group of companies.
The defendant has even cited a statement made under Section 161 of the Criminal Procedure Code, 1973 by the said Kothari in connection with the Sarada investigation conducted by the Central Bureau of Investigation.
The defendant seeks to rely on such statement to detract from the case run in the plaint.
The substance of the defence is this: never mind that the defendant had issued cheques to the plaintiff which were dishonoured or that the defendant had planned to hoodwink the public in organising a scam of an IPO, the plaintiff must not succeed since the agreement which has been pleaded in the plaint and the petition was not the agreement under which the payment was made by the plaintiff to the defendant; the statements of Kothari before the CBI corroborate that the transaction was as is evident from the agreement of November 15, 2010 relied upon by the defendant.
There is another way of reading Kothari’s statement under Section 161 of the Criminal Procedure Code than the childish interpretation proffered on behalf of the defendant.
The plaintiff goes by the name of GBK.
Shree Mohan Kothari has verified the affidavit as being the son of one Gopi Ballabh Kothari.
It is plain to see that Shree Mohan Kothari is the principal person in control of the plaintiff company by the name of GBK and GBK were the initials of the plaintiff’s father.
Since the documents relied upon by the plaintiff, including the balance confirmations of accounts, the cheques and the memoranda of dishonour are not questioned by the defendant, the only matter that has to be assessed is whether the plaintiff’s reliance on an oral agreement which is at variance with the written agreement appended to the affidavit-in-opposition would result in the admission contained in the documents relied upon by the plaintiff to be wished away or the decree claimed against the defendant to be denied to the plaintiff.
It is here that a few of the terms of the agreement of November 15, 2010 referred to by the defendant require to be looked into.
The borrower shall pay to the lenders interest at the rate of 15% per month out of which 20 lakh will be paid every month and rupees 10(Ten) lakh payable out of the interest amount will be paid and the time of full and final payment from the IPO proceeds or within one year which were will be earlier (30 Lakh rupees per month) “2.
20 Cr (the loan amount to the Company) is personally guaranteed by the borrower (Ms.& the borrower will pledge 50% equity of the company to the lenders as collateral in case the outstanding number of shares is increased the pledged shares should increase in the proportion of the increase in the share capital & it should always be 50% of the outstanding equity shares of the Company “3.
The loan has been made for a period of 1 year from the date of disbursement and should be duly repaid to the lenders by the borrower at the end of 1 year from the date of disbursement or out of the IPO proceeds when received, which ever is earlier” ..“6.
In case the IPO is not successfully completed within the duration of 1 year from the date of this MOU & the borrower fails to refund the borrowed amount within the stipulated period the lenders will have the right to sell the shares pledged by the borrower in the open market & the borrower should facilitate the sale of the shares so that the money which has been lent by the lenders is duly recovered” Even if the agreement is taken at face value and the legality or the heinous design behind the same is not questioned, it is evident that the defendant was obliged to refund the amount brought in by the said Kothari within the time stipulated in the agreement.
There is no dispute that the IPO did not happen.
What remains is for the defendant to establish whether the agreement that the defendant has relied on was acted upon or the defendant discharged his obligations thereunder.
There is no mention of the defendant having pledged or made over any pledged shares to either Kothari or the entities through which Kothari arranged the loans for the defendant or his relevant company.
The defendant cannot, also, indicate how the defendant attempted to discharge his obligation of repayment under the agreement that he cites despite a period of much more than a year having elapsed from the lapse or the failure of the IPO.
Most importantly, the defendant does not take into account the cheques that were issued in favour of the plaintiff and made over to the plaintiff.
There is an admission, inter alia, at the foot of page 15 of the defendant’s principal affidavit, of the defendant having made over the cheques to Kothari.
If the cheques were made over to Kothari for transmission to the plaintiff in purported discharge of the defendant’s obligation to repay the plaintiff, the circumstances of the transaction become utterly irrelevant.
On the state of the affidavit evidence, what is undeniable is that the defendant obtained a principal loan of Rs.9 crore from the plaintiff which was arranged by the said Kothari and the defendant made over cheques covering the principal amount which were dishonoured upon presentation.
In addition, the defendant executed the balance confirmations of accounts and also paid a total amount of approximately Rs.52 lakhs in partial discharge of the interest obligation in respect of the loan.
Since the documents relied upon by the plaintiff remain undisputed and the balance confirmations of accounts or the signature of the defendant in the relevant documents have not been questioned, the plaintiff is entitled to a judgment on the admission of the defendant to the extent of the amount indicated in the balance confirmation of accounts for the period ended March 31, 2012.
The figure in the relevant document is of Rs.9,88,46,191/-.
The plaintiff admits to have received a sum of Rs.20 lakh subsequent to the execution of the balance confirmation of accounts dated April 1, 2012.
Accordingly, the plaintiff is entitled to at least a sum of Rs.9,68,46,191/- on the direct admission of the defendant in such regard.
The plaintiff, however, would not be satisfied with such amount and seeks more.
The plaintiff demonstrates from the balance confirmations of accounts for the periods ended March 31, 2011 and March 31, 2012 that the agreed rate of interest would appear therefrom to be 12% per annum.
Against this, the plaintiff refers to the written agreement relied upon by the defendant which provides for interest at the rate of about 18% per annum.
The plaintiff, however, says that the plaintiff is satisfied with the rate of interest as demanded by the plaintiff and at the rate which is evident from the balance confirmations of accounts.
The plaintiff also refers to the admissions galore in the principal affidavit filed by the defendant including in the statement under Section 161 of the Criminal Procedure Code made by the said Kothari claiming to be the principal person in control of the plaintiff which the defendant has cited without any reservation.
The plaintiff says that since the defendant has relied on the relevant statement and the figure of Rs.12,83,46,191/- indicated therein without expressing any reservation as to the quantum, the plaintiff is entitled to such sum.
The claim in the petition also appears to be for the exact sum which is indicated in the statement under Section 161 of the Code by the said Kothari.
Accordingly, there will be a decree in favour of the plaintiff on the admission of the defendant as referred to above on the basis of the various documents including as to the rate of interest as evident from the balance confirmations of accounts aforesaid in the sum of Rs.12,83,46,191/- together with interest at the rate of 12% per annum on the principal sum of Rs.9 crore from March 1, 2015 till full realisation.
The plaintiff will also be entitled to costs of the suit and the present application assessed at Rs.3 lakh.
The costs will cover the expenses incurred on account of Court fees and the costs will carry interest at the rate of 9% per annum from today, if not paid within a month from date.
Since the decree passed herein covers the entire claim of the suit, CS No.81 of 2015 stands disposed of along with GA No.1098 of 2015.
In the light of the brazen attempt by the defendant to window-dress the accounts and prospects of his relevant company in which the IPO had been planned, it is necessary that a copy of this order along with a copy of the affidavit affirmed on August 10, 2016 by the defendant and used in these proceedings are forwarded by Advocate for the plaintiff to the Securities and Exchange Board of India both at its Mumbai and Kolkata offices for SEBI to take appropriate steps in accordance with law in respect of the matters which are evident from the memorandum of understanding of November 15, 2010, a copy whereof is appended to the defendant’s affidavit.
Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(SANJIB BANERJEE, J.) sg.