CAMBRIDGE SOLUTIONS LTD Vs. GLOBAL SOFTWARE LTD

JUDGEMENT

(1.) THE first defendant M/s. Cambridge Solutions Limited formerly known as M/s. Scandent Solutions Corporation Limited filed this application seeking rejection of the plaint invoking the provision under Order VII Rule 11 of the Code of Civil Procedure.

(2.) THE applicant/first defendant would contend that the applicant was to pay Rupees 15 crores to the third respondent M/s. DSQ Software Limited on account of the terms of certain assignment. The said consideration was by way of issuing 15 lakh debentures at Rs. 100/= each. The applicant and the third respondent also entered into an agreement on 1. 8. 2008. It transpires that the second respondent instituted O. A. No. 505 of 2002 on the file of the fourth respondent for the recovery of Rs. 6,65,75,390/=. A joint compromise memo dated 21st March 2003 was filed before the fourth respondent. The liability of the third respondent was fixed at Rs. 5,31,55,000/=. The second respondent agreed to receive the same in full and final settlement of its claim. In terms of the said compromise, the third respondent was to deliver 2,75,000/= debentures of the applicant to the second respondent. The third respondent defaulted in complying with the terms of the joint compromise memo. A demand notice was issued by the fifth respondent. By order dated 13th October 2004, the debentures were attached. But, by order dated 12. 7. 2005, the fifth respondent directed the applicant to issue duplicate debentures. It did not come to light that the first respondent/plaintiff viz. , Global Software Limited has purchased the said debentures. The applicant came to know of the proceedings of the Debts Recovery Tribunal only on 13th October 2004 when the order of attachment was passed. The first respondent filed a Miscellaneous Application seeking to implead itself as third respondent in the appeal preferred by the applicant. The said application has been reserved for orders. The order dated 13th October 2004 relates to attachment of debentures and the order dated 12th July 2005 relates to issuance of duplicate debentures. An appeal would lie as against the aforesaid orders before the Debts Recovery Tribunal. The first respondent cannot invoke the jurisdiction of this court having chosen an alternative forum to agitate its rights. If any valuable consideration has been passed between the first and third respondent, it is always open to the first respondent to institute recovery proceedings of the amount paid as against the third respondent. The third respondent cannot, through its associate company viz. , the first respondent herein, dislodge a legal decision on the ground of fraud. The first respondent has no locus standi to institute the present suit representing the interest of the third respondent. There is no cause of action available to the first respondent to institute a suit. The suit is not maintainable in law inasmuch as the first respondent cannot invoke the jurisdiction of this court to set aside a lawful order passed by the Debts Recovery Tribunal. Hence, the applicant has sought for rejection of the plaint.

(3.) EXCEPT the first respondent, no other respondent chose to file counter. The first respondent, in its counter, has contended that there is a specific allegation in the plaint that the orders were obtained from the fifth respondent by committing fraud and collusion. A bar of jurisdiction of any court found either in the Recovery of Debts due to Banks and Financial Institutions Act, 1996 (RDB Act) or the SARFAESI Act, 2002 would not apply to a suit where the actions of the banks and other parties are assailed as fraudulent. The claim of collusion is obviously made only to escape the liability in the suit. The first respondent is entitled to the claim on debentures even without registration. The orders passed by the fifth respondent is a nullity having been tainted by fraud. No case has been made out for rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure. Therefore, the first respondent would submit that the application is liable to be rejected.