Interim Relief Under The A&C Act Obtained Without Disclosing Material Evidence, Calcutta High Court Imposes Cost Of Rs. 50 Thousand On Each Petitioner

The High Court of Calcutta has held that a party approaching the Court for relief must do so with clean hands and is under an obligation to disclose all material facts that have bearing on the adjudication of the issues in the case.The bench of Justice Shekhar B. Saraf held that the doors of justice would be closed for litigants approaching the court with a case built on falsehood, fraudulent concealment or suppression of material facts. The Court recalled its earlier order wherein it had granted interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 to a party that concealed material facts of the dispute from the Court at the time of seeking such relief. The Court imposed cost of Rs. 50 thousand on each of the petitioners.FactsThe petitioner no. 1 is an LLP Firm. The petitioner nos. 2-5, respondent nos. 3 & 6 were purported partners in the firm. Respondent No. 4 & 5 were the founding partners. Respondent nos. 1 & 2/applicant were also partners in the firm. In the year August 2021, the respondent nos. 4 & 5 approached the petitioners to offer them the partnership in the firm and transfer the firm to them on receipt of capital contributions and settlement of dues to the erstwhile creditors of the firm. Accordingly, supplementary agreements were prepared to include the petitioners as incoming partners and for retirement of the respondent nos. 4 & 5. However, as the petitioner failed to make any arrangement for capital infusion and discharge of existing debts of the company, the documents could not be executed and the originals of the agreements was retained by the respondent nos. 4-5. Accordingly, the respondent nos. 4-5 issued a letter of cancellation dated 28.10.2022 to the petitioners.Thereafter, the respondent no. 4-5 approached the applicants and offered to them their stakes in the partnership firm. Accordingly, the parties executed supplementary agreements dated 12.03.2022 and 14.03.2022 by way of which the applicants were inducted as partners and respondent nos. 4-5 retired from the partnership. However, in June 2022, the petitioners allegedly entered the office of the father of the applicants and took away the original undated and non-executed supplementary agreement that were made between the petitioners and respondent nos. 4-5. When they filed these documents with the Registrar of Companies (RoC), they were informed that the partnership already stood transferred in favour of applicants. Accordingly, they approached the Court under Section 9 of the A&C Act for interim reliefs. The Court allowed the petition under Section 9 and directed the applicants to maintain status quo in respect of the assets of the firm.Aggrieved by the order, the applicants filed an interlocutory application against the impugned order and prayed for vacation or recalling of the impugned order with costs.Contention of the ApplicantThe applicant made the following submissions in favour of the application:The petitioner nos. 2-5 have obtained the interim relief by suppressing material facts from the court. The petitioners are not the partners in the firm as the agreements regarding their inclusion could not be executed due to their failure to make arrangements for the infusion of funds and discharge of debts of the firm which led the respondent nos. 4-5 to approach the applicants for the same purpose. Moreover, the petitioners have not informed the court regarding the cancellation letter dated 28.10.2022 issued by the respondents to the petitioners.The petitioners fraudulently executed the supplementary agreements after forcefully obtaining them from the office of the father of the applicant. The stamp paper on which these supplementary agreements were drawn dates back to 21.08.2021, however, they were executed only in the June 2022 which shows the fraud committed on behalf of the petitioners.The applicants were duly made the partners and the respondent nos. 4-5 retired from the firm vide agreements dated 12.03.2022 and 14.03.2022, therefore, any question of respondents executing any subsequent agreement with the petitioner does not arise as they were not the owner/partners of the firm.The Court erred in passing the impugned order on the premise that the petitioners were the partners in the firm, therefore, it must be recalled.Analysis by the CourtThe Court observed that upon a careful perusal of the supplementary agreements filed by the petitioners, it appears that the stamp paper on which these were drawn dates back to August 2021 while these were executed only in June 2022, therefore, the Court observed that it was “undeniably odd that crucial documents such as supplementary agreements modifying the partnership composition itself were executed on stamp papers which were bought more than nine months back from date.”The Court also took note of the fact that the respondents issued a letter of cancellation on 28.10.2021 regarding the cancellation of the undated signed agreement for want of receipt of...

Interim Relief Under The A&C Act Obtained Without Disclosing Material Evidence, Calcutta High Court Imposes Cost Of Rs. 50 Thousand On Each Petitioner

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