TMI Blog2020 (2) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction is in conformity with all the norms? Can the plaintiff be permitted to recover the loan amount along with interest at the agreed rate at 16% p.a., with additional interest, penal interest, delayed payment interest at 2% p.a., each, de hors the circumstances in which the transactions were entered into? These are the questions, which warrant adjudication. The defence of alleged in-action on the part of the plaintiff in not invoking the shares at a specified time, despite agreeing to do so, resulting in loss to the defendants also raises an issue which requires consideration. It would be appropriate to direct the defendants to deposit the amount which was actually disbursed to the 'borrower company' in each of the suits. Hence, the defendants are entitled to conditional leave to defend the suit; subject to deposit of the principal amount which came to be disbursed in each of the transactions. Leave to defend the suit is granted to defendant nos. 1 to 8 subject to deposit of a sum of Rs. 2,33,16,04,691/- in the Court within eight weeks from today - Summon disposed off. - Summons for Judgment No. 84 of 2019 in Comm. Summary Suit No. 887 of 2019 N.J. Jamad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28th September, 2015 (the Loan Agreement) came to be executed under which the plaintiff extended ITL Facility upto 250 Crores. The Loan Agreement incorporated the terms and conditions of the ITL facility. 6. In addition, defendant no. 1 furnished security by creating charge over its certain assets in favour of the plaintiff. Defendant nos. 2 to 6 executed five separate letters of guarantee of even date in favour of the plaintiff and unconditionally agreed, undertook and guaranteed to pay on demand the amounts payable by defendant no. 1 in accordance with the terms of the Loan Agreement. Defendant no. 7 also executed a personal guarantee to pay on demand the amount payable by defendant no. 1. 7. Furthermore defendant no. 1 pledged its 3,93,90,826 shares held in Reliance Defence and Engineering Limited (RDEL) by executing a pledge agreement dated 28th September, 2015. Another entity, Infrastructure Investment Trust also executed a Pledge Agreement to pledge 36,25,000 shares of RDEL. Defendant no. 8 executed a Pledge Agreement to pledge the shares held in defendant no. 1-company. Apart from the undertakings executed by defendant nos. 1 and 7 and a group concern, Gujarat-Dwarka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the plaintiff was constrained to institute this suit for recovery of the outstanding amount of Rs. 3,14,19,51,918/- as of 15th February, 2019, along with further interest in accordance with the terms of Loan Agreement. SJ 37 of 2019 in Comm. Summ. Suit No. 886 of 2019 12. This commercial division summary suit is instituted for recovery of a sum of Rs. 3,21,46,29,047/- along with interest. Defendant no. 1 Gujarat-Dwarka Portwest Limited, a SKIL Group entity, is the borrower. The loan of Rs. 250 Crore was offered in terms of sanction letter dated 17th September, 2015. Loan Agreement came to be executed on 28th September, 2015. Defendant nos. 2 to 7 are the corporate guarantors. Defendant nos. 2 to 7 have executed the letters of guarantee on 28th September, 2015. Defendant no. 8 has executed a personal guarantee. Defendant no. 9, a partnership firm, is also a guarantor. Defendant nos. 2 and 9 and another SKIL Group entity Infrastructure Investment Trust have pledged the shares of Pipavav Defence and Offshore Engineering Company Ltd. (now Reliance Naval and Engineering Limited) and SKIL Infrastructure Limited by executing the Pledge Agreements dated 28th September, 2015. Defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave to defend the suit. Defendant nos. 2; 3, 4, 5 and 6; and 7 and 8 have also filed affidavits-in-reply adopting the contentions raised by defendant no. 1. 18. The defence in all the suits proceeds on identical grounds. 19. The substance of the defence sought to be put-forth by the defendants can be stated as under: Claim based on insufficiently stamped instrument: (A) The defendants contend that the Loan Agreement dated 28th September, 2015, under which the purported loan was advanced, and the Letters of Guarantee dated 28th September, 2015 and the Pledge Agreements whereunder the loan was secured have not been stamped with the duty chargeable on those instruments in accordance with the provisions contained in the Maharashtra Stamp Act, 1958 ('the Stamp Act, 1958'). It is contended that all these instruments indicate that a stamp-duty of Rs. 150/- only is paid on each of these instruments. However, in accordance with the provisions contained in the Stamp Act, 1958 stamp-duty of 0.2% of the monetary value of the instruments is required to be paid. Thus, each of these instruments are chargeable with a duty of Rs. 50,00,000/-. Indisputably, the instruments on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 and 3rd November, 2016, was returned to the plaintiff on the day of disbursement or immediately thereafter by the SKIL Group companies. Thus, there was no outstanding amount, in true sense, under the transaction in question. Failure of the plaintiff to sale the pledged shares and realise the loan amount at an opportune time:- (D) It is the case of the defendants that as of 17th September, 2005, when the purported loan of Rs. 250 Crore was sanctioned, the total liability of SKIL group (including defendant no. 1) towards the plaintiff was approximately 575 Crores. The said exposure consisted of the prior loans advanced by the plaintiff to defendant no. 1 and its group companies namely Gujarat Dwarka Portwest Ltd., SKIL Shipyard Holdings Pvt. Ltd. and Grevek Investment and Finance Pvt. Ltd. Against the aforesaid exposure of 575 Crores, the plaintiff had at its disposal as of 17th September, 2015, pledged shares worth Rs. 317 Crores. The prices of the pledged shares appreciably increased in the intervening period. In the month of December, 2015, the approximate value of the pledged shares was about 501 Crores. Defendant no. 1 and its promoters on several occasions verbally cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have the statutory force. The loan was advanced by the plaintiff in furtherance of an object prohibited by law. Thus, the contract is void under Section 23 of the Indian Contract Act, urged Mr. Seervai. 22. As a second limb of this submission, it was urged with a degree of vehemence that in such a scenario where a party has resorted to an unlawful and fraudulent device, the policy of law is to let the loss fall where it rests. In the case at hand, according to Mr. Seervai, the situation is further accentuated by the fact that it is not the defendant who alleges the fraud but SFIO, a specialized investigative agency, constituted under the Companies Act, 2013, in a well documented report concluded that the top officials of the plaintiff indulged in nefarious and fraudulent activities in the matter of advancing loans including the loans to the SKIL Group. This report of SFIO by itself furnishes a justifiable ground to grant an unconditional leave to defend the suit. 23. To buttress the aforesaid submissions, Mr. Seervai drew the attention of the Court to the communication dated 13th September, 2015, addressed by the officer of the plaintiff to the defendants wherein the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which were funded from the borrowing from market. ... LOANS TO GROUP COMPANIES THROUGH THIRD PARTIES: 1.25. IN extending fresh loans to other group companies of the defaulting borrowers, the intent of the coterie was to postpone/avoid recognition of the asset as Non-Performing Asset and thereby avoiding consequent provisioning as mandated by RBI. This provisioning would have negatively affected the top line, led to adverse raring and consequent inability to borrow further. 1.26. This modus operandi, led IFIN to project his asset quality and recognition of high revenues. Suppression of NPA and non-provisioning for NPA further led to show a rosy picture of the financial statement of IFIN. The fraudulent/fabricated financial statements were used for the purpose of accessing the funds of public. IMPACT ON THE FINANCIAL STATEMENT: 1.32. IFIN had fraudulently avoided creation of provisioning for the stressed assets and its eventual writing off. They had self-funded the interest obligation from the borrowers and also various fees charged to the group entities. In this manner they had created a rosy top line of the financials of the company were fudged up and not reflect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure Limited and Himachal SKIL Limited were all returned to the IFIN either directly or through the group companies. Under the heading, Loans given for funding repayment of principal/interest by existing borrowers during last five years , which included the SKIL Group of companies, are collated under paragraph 4.46.1. Relevant entries are as under: The report concludes that aforesaid instances of lending for funding repayment of principal/interest by the existing borrowers are nothing but fraudulent repayment of the principal and interest of defaulting loans with the sole purpose of avoiding provisioning/NPA. 27. In the backdrop of the aforesaid report of the SFIO, Mr. Seervai would submit that the fresh loans in the instant case were thrust on the defendants to paint a rosy financial picture. As the SFIO has categorically observed that such dubious device was adopted merely to avoid the categorisation of bad debts and/or NPA, which the plaintiff, under the directives of RBI, was enjoined to report, the transaction suffers from the vice of being prohibited by law. 28. The edifice of aforesaid submission was built on the premise that the directives issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action which is ex-turpi-causa, the learned Senior Counsel placed reliance on the judgments in the cases of Bharat Barrel Drum Mfg. Co. Pvt. Ltd. vs. Hindustan Petroleum Corporation Ltd. others AIR 1989 Bom 170, Life Insurance Corporation vs. Devendrappa Bujjappa Kadabi [India Law Reporters 1986 Karnataka, 3759], Bhaskarrao Jageshwarrao Buty and others vs. Smt. Sara Jadhaorao Tumble and others AIR 1978 Bom 322 and in an Arbitration between Mahmoud and Ispahani [C.A. 1921 King's Bench Division, 716]. 32. There can be no quarrel with the proposition that the Court should not lend its assistance to a party who rests his claim on an illegal or unlawful act. In such a case, the policy of law is to allow the loss to fall where it rests, irrespective of the justice of the claim. The crucial question which, in the instant case, wrenches to the fore is whether the transactions in question are tainted with such an illegality or unlawfulness which dissuades the court from enforcement of the liability incurred thereunder? 33. Dr. Saraf would urge that the submission sought to be advanced on behalf of the defendants based on the alleged investigation into the affairs IL FS, does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impact of illegality on the enforceability of the contract. At p.428, it was observed as follows: The weighing of considerations of public policy in this case and the decision in favour of enforcing the contract is influenced by the from of the particular legislation. In this case the Act, as I have mentioned, is to a large extent directed to aiding the Government in executing its fiscal policy rather than regulating the relationship between banker and customer per se, a feature which lends support for the view that the provision of a large recurrent penalty for offences against Section 8 is Parliament's determination of the consequences of breach of the section and as the only legal consequences thereof. There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished-see my judgment in Jackson Vs. Harrison, (1978) 138 C.L.R. 438, at P. 452. See also the suggestions that the principle cannot apply to all statutory offences (Beresford Vs. Royal Insurance Co. Ltd. in the Court of Appeal (1937) 2 K.B. 197, at p 22, per Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the directions which are being violated. To give an example if the Reserve Bank by confidential circulars fixes the limit in excess of which the banks cannot give any loan but, without informing the third party, the bank while exceeding its limit gives a loan which is then utilised by the bank's customer. It will be inequitable and improper to hold that as the directions of the Reserve Bank had not been complied with by the bank, the grant of loan cannot be regarded as valid and, as a consequence thereof, the customer must return the amount received even though he may have utilised the same in his business. Yet another instance may be where the bank advances loan by charging interest at a rate lower than the minimum which may have been fixed by the Reserve Bank, in a direction issued under Section 36 (1)(a). As far as the customer is concerned, it may not be aware of the direction fixing them minimum rate of interest. Can it be said, in such a case, that the advance of loan itself was illegal or that the bank would be entitled to receive the higher rate of interest? In our opinion it will be wholly unjust and inequitable to hold that such transactions entered into by the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff went on to advance loan to other group companies so that the earlier loan could be repaid and the financial statements of the plaintiff could be shown in better health. 39. First and foremost, the purpose for which the loan was advanced. The offer letter annexed with the letter dated 17th September, 2015 (Exhibit-A to the plaint) indicates the purpose of the loan facility. It reads as under: The funds provided under the Facility would be utilized for any of the below specified purposes: (a) SEZ development associated infrastructure facilities. (b) Refinance of loans. (c) Loans and Advances to Group Companies. (d) General Corporate Purposes. 40. The debtor was to utilise the facility made available for any of the aforesaid purposes. Evidently, refinance of loans and loans and advances to group companies were the purposes for which the facility could be utilised. Clause 11 of the said offer letter notes the existing facilities extended to SKIL Group. Two inferences become deducible. One, the parties were aware of the existing exposure of the plaintiff to SKIL Group companies. Two, the stated purposes for which the loan facility was to be utilised we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The submission appears attractive at the first blush. However, on judicious scrutiny, the submission does not merit countenance. It is indubitable that the fresh loan facility came to be extended to the defendants under the loan agreement. Disbursement and receipt of the said loan amount are incontestable. The fact that the said loan amount was utilised by the defendants in repayment of existing liabilities either of the defendants or its group companies does not negate the underlying consideration, since the purpose of the loan was refinance of the existing loans and extension of loans and advances to the group companies. The end use of the said loan amount thus cannot constitute a failure of consideration. If the submission on behalf of the defendants is taken to its logical conclusion, then the plaintiff can enforce neither the liability incurred by the defendants and/or group companies in respect of the previous debts nor under the transactions in question. Defence based on non-invocation of pledged shares at an opportune time: 45. It is the case of the defendants that the pledged shares were commanding optimum price in the month of December 2015. The shares of Pipavav D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (India) Ltd. vs. National Securities Clearing Corporation Ltd. (2017) 2 AIR Bom R 284, wherein it was inter alia observed that the pledgor cannot compel the pledgee to exercise power of sale of the pledged goods in order to discharge any debt or liability which may have crystalised. The pledgor's right, in such circumstances extends only to the following: (i) in case the Pledgee exercises the power of sale, to insist that it should be honestly and properly done and the sale proceeds applied to the debt; (ii) in case the pledgee does not exercise the power of sale, then the Pledgor can redeem the pledge on payment of the debt or such part of it that has remained unpaid; and (iii) in case the sale was improperly exercised, to get damages caused thereby. 49. Mr. Seervai, the learned Senior Counsel for the plaintiff fairly submitted that he has no qualms about the aforesaid proposition. However, according to Mr. Seervai, in the instant case, the situation is exacerbated by the fact that on the one hand the plaintiff did not invoke the shares of RNEL despite having given approval for the takeover at a time when the price of the share of RNEL was high. On the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 19 and 34 of the Stamp Act, 1958 are clearly attracted. Laying emphasis on the bar incorporated in Section 34 of the Stamp Act, 1958, it was urged that the prohibition is not only against admission of insufficiently stamped instruments in evidence but also 'acting upon' such instruments. In view of the proscription contained in Section 34, this Court cannot act upon the instruments and pass an order on the summons for judgment. 53. Elaborating the submission, Mr. Seervai would urge that the Court is enjoined to impound the document first, send it for adjudication of the deficit stamp-duty along with penalty, as may be applicable, and act upon the instruments only when the plaintiff complies with Clause (a) of the proviso to Section 34. The insufficiency of stamp, according to Mr. Seervai, goes to the root of the matter and precludes the Court from looking into the instruments even while appreciating the question of grant of leave, upon summons for judgment being taken out by the plaintiff. 54. Per contra, Dr. Saraf stoutly submitted that the endeavour of the defendants to press into service the ground of insufficiency of stamp on the instruments in question, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 40 provides the procedure for instruments being impounded, sub-section (1) of Section 42 provides for certifying that an instrument is duly stamped, and sub-section (2) of Section 42 enacts the consequences resulting from such certification. (emphasis supplied) 56. Dr. Saraf submitted that the pronouncement of the Supreme Court in the case of Hindustan (supra) has been relied upon in a number of judgments of this Court to reject the prayer of the defendants to grant leave to defend the suit on the basis of insufficiency of stamps. Reliance was placed on the judgment of a learned Single Judge in the case of Rupinder Singh Arora vs. Kapil Puri. 2016 SCC Online Bom 12517 In the said case, unconditional leave to defend the summary suit was sought on the ground that the settlement agreement on which the suit claim was based, was not stamped. Repelling the contention, the learned Single Judge observed that the grievance of insufficiency of stamp-duty on the instrument can be addressed if the instrument is impounded and sent for adjudication. The learned Single Judge drew support from the judgments which take the view recorded in Hindustan (supra). Paragraphs 10 and 11 are rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognise the legal principle that the Stamp Act is a fiscal measure enacted with an object to secure revenue for the State on certain classes of instruments and it is not enacted to arm a litigant with a weapon of technicality to meet the case of the opponent. Adverting to the said principles of law, the learned Single Judge directed that the document be impounded and sent for adjudication and the technical defect alleged by the appellant can be taken care of. We find that the said approach of the learned Single Judge is completely in consonance with law requiring no interference. (emphasis supplied) 58. Reliance was also placed on another judgment of a Division Bench of this Court in the case of Morpheus Media Ventures Private Limited and others vs. Anthony Maharaj and others (2017) 2 Bom CR 459. In the said case also, the refusal to grant an unconditional leave to defend the summary suit, on the ground that the documents were unstamped, by the learned Single Judge, was challenged in appeal. A submission was made that the plaintiff could not have been permitted to rely upon unstamped documents. In support of the said submission reliance was placed on the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance to the plaintiff. The position which is expounded in the aforesaid judgments cannot be said to be correctly laid, in view of the recent pronouncement of the Supreme Court in the case of Garware Wall Ropes Ltd. Vs. Coastal Marine Constructions and Engineering Ltd. Amplifying the submission, Mr. Seervai would urge that the approach adopted by the learned Single Judges of refusing to grant leave on the count of insufficiency of stamp on the instruments in question, and instead impound and send them for adjudication simultaneously with passing a conditional order for leave to defend, on other counts, and which has been approved by the Division Benches in the judgments referred to above, is no longer a legally sustainable option. In view of the pronouncement of the Supreme Court in the case of Garware (supra) in clear and explicit terms that the contract contained in a document which is insufficiently stamped is unenforceable in law, the insufficiency of the stamps on the instrument in question cannot be relegated to the stage post consideration of leave to defend. The instrument which is insufficiently stamped cannot be simply acted upon. 62. A strong reliance was placed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion enunciated in the case of Garware (supra) apply with equal force to all the instruments which are chargeable with duty under the Stamp Act, 1958 or Indian Stamp Act, 1899. Mr. Seervai would thus urge that the judgments on which reliance is placed on behalf of the plaintiff, especially, the pronouncement in the case of Morpheus (supra) is of little assistance as the Supreme Court did not approve the view of the Full Bench of this Court in the case of Gautam Landscapes Pvt. Ltd. Vs. Shailesh Shah in which the judgment in the case of Morpheus Media (supra) was extensively referred to. 64. In the case of Gautam Landscapes (supra) this Court has considered the following questions in the backdrop of the objection that the document containing arbitration clause is either unstamped or insufficiently stamped. Sr. NO Question Answer 1 Whether a court, under the Arbitration and Conciliation Act, 1996, can entertain and grant any interim or ad-interim relief in an application under Section 9 of the said Act when a document containing arbitration clause is unstamped or insufficiently stamped? In the Affirmative 2. Whether, inter alia, in view of Section 11(6A) of the Arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11 application. The question is whether Section 11(6A), which has been introduced by way of the Arbitration and Conciliation (Amendment) Act, 2015 [ Amendment Act, 2015 ], has removed the basis of the judgment, so that the stage at which the instrument is to be impounded is not by the Judge hearing the Section 11 application, but by an arbitrator who is appointed under Section 11, as has been held by the impugned judgment. (emphasis supplied) 68. Dr. Saraf further submitted that the proposition expounded in Garware (supra) is restricted to an application under Section 11 becomes explicitly clear if the observations of the Supreme Court in paragraph 26 are considered. Paragraph 26 reads as under: 26 . It will be seen that neither in the Statement of Objects and Reasons nor in the Law Commission Report is there any mention of SMS Tea Estates (supra). This is for the very good reason that the Supreme Court or the High Court, while deciding a Section 11 application, does not, in any manner, decide any preliminary question that arises between the parties. The Supreme Court or the High Court is only giving effect to the provisions of a mandatory enactment which, no doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation Act, 1996 and not in a proceeding under Section 9 of the Act. The decision of the Full Bench in the case of Gautam Landscapes (supra) holds field so far as the application under Section 9 of the Act. 70. Reliance was also placed on the judgment of another learned Single Judge in the case of IREP Credit Pvt. Ltd. Vs. Tapasvi Mercantile Pvt. Ltd. Anr. (G. S. Patel, J.) dated 20th December, 2019, in Comm Arbitration Petition (L) No. 1501 of 2019, wherein the judgment in the case of Saifee Developers (supra) was followed. In the case of IREP Credit (supra) the learned Single Judge, inter alia, observed that, I do not believe the decision of the Supreme Court was meant to arm dishonest borrowers to delay legitimate recovery actions in this fashion . 71. In order to properly appreciate the ratio and import of the judgment of the Supreme Court in the case of Garware (supra), of necessity, it is imperative to consider the controversy which arose in SMS Tea (supra) and the law laid down therein. In the case of SMS Tea (supra) the dispute arose out of termination of long term lease in respect of Tea Estate. The Lease Deed therein contained an arbitration clause. When the less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instrument is not duly stamped, it has to impound the document and deal with it as per Section 38 of the Stamp Act. 73. The Supreme Court also summed up the procedure to be adopted, if the document containing the arbitration clause is not duly stamped. 22. We may therefore sum up the procedure to be adopted where the arbitration clause is contained in a document which is not registered (but compulsorily registrable) and which is not duly stamped: 22.1. The court should, before admitting any document into evidence or acting upon such document, examine whether the instrument/document is duly stamped and whether it is an instrument which is compulsorily registrable. 22.2. If the document is found to be not duly stamped, Section 35 of the Stamp Act bars the said document being acted upon. Consequently, even the arbitration clause therein cannot be acted upon. The court should then proceed to impound the document under Section 33 of the Stamp Act and follow the procedure under Sections 35 and 38 of the Stamp Act. 22.3. If the document is found to be duly stamped, or if the deficit stamp duty and penalty is paid, either before the court or before the Collector (as contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In Garware (supra), the Supreme court was principally dealing with the question as to whether the decision in SMS Tea (supra) has also been done away by the expression, notwithstanding any judgment, decree or order of any Court , contained in Section 11(6A). 78. In paragraph 26, the Supreme Court, after adverting to the provisions of the Amendment Act, 2015, concluded that introduction of Section 11(6A), does not in any manner deal with or get over the basis of the judgment in SMS Tea (supra) and the said judgment continues to apply even after the amendment of Section 11 (6A). The Supreme Court, inter alia, observed that the Supreme Court or the High Court when impounding an unstamped or insufficiently stamped document which contains an arbitration clause is only giving effect to the provisions of a mandatory enactment which, no doubt, is to protect the revenue. 79. Undoubtedly, the Supreme Court, in paragraphs 27 to 29, considered the enforceability of an agreement contained in an unstamped or insufficiently stamped instrument through the prism of the provisions contained in the Indian Contract Act and ruled that even on a plain reading of Section 11(6A) when read with Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the provisions contained in Order XXXVII of the Code. Even in the case of Garware (supra) the Supreme Court adverted to the principle of harmonious construction. The Supreme Court thus observed in paragraph 37 as under: 37. One reasonable way of harmonising the provisions contained in Section 33 and 34 of the Maharashtra Stamp Act, which is a general statute insofar as it relates to safeguarding revenue, and Section 11(13) of the 1996 Act, which applies specifically to speedy resolution of disputes by appointment of an arbitrator expeditiously, is by declaring that while proceeding with the Section 11 application, the High Court must impound the instrument which has not borne stamp duty and hand it over to the authority under the Maharashtra Stamp Act, who will then decide issues qua payment of stamp duty and penalty (if any) as expeditiously as possible, and preferably within a period of 45 days from the date on which the authority receives the instrument. As soon as stamp duty and penalty (if any) are paid on the instrument, any of the parties can bring the instrument to the notice of the High Court, which will then proceed to expeditiously hear and dispose of the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to above, of impounding the document and sending it for adjudication simultaneously with the passing of order of grant of leave, cannot be said to be unsustainable. Nor it would cause any prejudice to the defendants. 86. Undoubtedly, Section 34 of the Act precludes the Court from even acting upon unstamped or insufficiently stamped instrument. However, the fact that the measure is indisputably for protection of the revenue as the recovery of the stamp-duty on the instrument and penalty for its non-payment, where-ever chargeable is practicable, where the Court or authority before which the instrument is tendered holds seisin of the matter, cannot be lost sight of. 87. In a summary suit, while deciding a summons for judgment, the options which the Court exercises, equip the court to ensure that the requisite stamp-duty is recovered, wherever the instrument is either unstamped or insufficiently stamped. If the Court grants an unconditional leave to defend, the Court can very well direct that the instrument be impounded and the procedure prescribed under Section 37 of the Act be resorted to. Even when the Court grants conditional leave, the Court can issue such directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit under the provisions of sub-rule (2) of Rule 1 of Order XXXVII. In this view of the matter, the consideration on the aspect of the summons for judgment cannot be deferred on the count that few of the documents are insufficiently stamped. Even if those documents are eschewed from consideration, at this stage, still the summons for judgment would be sustainable on the basis of the demand promissory note, balance confirmation letter and the acknowledgment of the liability. 91. In the aforesaid view of the matter, the submission that an unconditional leave be granted on the ground of insufficiency of the stamp on the instruments in question, does not merit acceptance. However, the instruments are undoubtedly required to be impounded and sent for adjudication. 92. The conspectus of the aforesaid consideration is that in the backdrop of the material on record, including the SFIO Report, the extent to which the plaintiff would be entitled in law to enforce the liabilities, especially as regards the quantum of interest, when the creditworthiness of the debtor was in a serious doubt, warrants consideration. Whether the infraction on the part of the plaintiff is totally immaterial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (I) (i) Leave to defend the suit is granted to defendant nos. 1 to 8 subject to deposit of a sum of Rs. 2,33,16,04,691/- in the Court within eight weeks from today. (ii) In the event of deposit of the aforesaid amount, the defendant nos. 1 to 8 shall file the written statement, within four weeks of the deposit. (iii) If the defendants do not deposit the aforesaid amount within said period, the suit be listed for directions after 10 weeks. (iv) The plaintiff has tendered the original Loan Agreement dated 28th September, 2015, the letters of guarantee dated 28th September, 2015 and the Pledge Agreement dated 28th September, 2015. These documents are hereby impounded. Summons for Judgment 37 of 2019 in Comm Summary Suit No. 886 of 2019: (II) (i) Leave to defend the suit is granted to defendant nos. 1 to 9 subject to deposit of a sum of Rs. 2,39,69,86,301/- in the Court within eight weeks from today. (ii) In the event of deposit of the aforesaid amount, the defendant nos. 1 to 9 shall file the written statement, within four weeks of the deposit. (iii) If the defendants do not deposit the aforesaid amount within said period, the suit be listed for directions afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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