IN THE HIGH COURT OF DELHI AT NEW DELHI

SUBJECT : CODE OF CIVIL PROCEDURE

Reserved on: 17th February, 2011
Date of decision: 21st February, 2011
IA Nos.16915-16916/2010 & IA No.1218/2011 in CS(OS) No.2528/2010

DEEPALI DESIGNS & EXHIBITS PRIVATE LIMITED

..... Petitioner
Through: Mr. Sandeep Sethi, Sr. Adv. With Mr.
Rakesh Mukhija, Adv.

versus

PICO DEEPALI OVERLAYS CONSORTIUM & ORS. ... Respondents

Through Mr. V.P. Singh, Sr. Adv. with
Mr. Dharmendra Rautra, Adv. & Ms. T.
Shahani, Adv. Mr. Saumyen Das, Adv.
for D-4/HSBC

CORAM:

HON'BLE MS. JUSTICE GITA MITTAL

GITA MITTAL, J

1. The plaintiff has filed the above suit for recovery, declaration,
dissolution & rendition of accounts and mandatory injunction. Alongwith
the plaint, the application seeking interim reliefs being IA No.16915/2010
has been filed under Order 39 Rules 1 & 2 CPC seeking the following ad
interim ex-parte injunction orders:-
“i. Thereby directing the defendant no.5 not to release any payment in
favour of defendant no.1 till the pendency of the present suit;
ii. Restraining the defendant No.1 and 2 or their agents, servants,
representatives, etc. from operating the bank account bearing
no.166189464001, with the Barakhamba Road Branch of H.S.B.C. Bank, till
the final disposal of the accompanying suit.

iii. Restraining defendant No.3 or their agents, servants, representatives

etc. from operating the bank account bearing no.051-827889-001, with the
Barakhamba Road Branch of H.S.B.C. Bank, till the final disposal of the
accompanying suit.

iv. Restraining Defendant No.1 from transferring any amount to the

account of Defendant No.3.

v. Restraining Defendants from opening any other bank account in the

name of Defendant No.1;

vi. Restraining defendants from remitting any amount overseas directly

or indirectly, from any of their bank accounts in India.”

2. IA no.16916/2010 has been filed under Order 38 Rule 5 CPC praying

for an order of attachment before judgment in the following terms:-
“A) Direct the defendant to furnish security as deem fit by this Hon’ble
Court to secure the suit amount with interest;

B) If the Defendants fails to furnish the security then following bank

accounts of the defendants may be attached:

i. Money lying in Defendant No.1’s bank account bearing

no.166189464001, with the Barakhamba Road Branch of HSBC Bank.

ii. Money lying in Defendant No.3’s bank account bearing no.051-

827889-001, with the Barakhamba Road Branch of HSBC Bank.”

3. As against this, the defendants have filed IA No.1218/2011 under

Order 39 Rule 4 of the CPC praying for vacation of the order which was
passed on 14th December, 2010.

4. These applications raise similar, almost identical, questions of law and

fact and are accordingly taken up together for disposal by this order.
5. The PICO Deepali Overlays Consortium, the first defendant
(hereinafter referred to as “PDOC” for brevity) is a compendium of the
PICO Hong Kong Limited-defendant no.2 herein (hereinafter referred to as
“PHK” for brevity) and PICO Event Marketing (India) Private Limited-
defendant no.3 herein (hereinafter referred to as “PEMI” for brevity).

6. The defendant no.2 is a company incorporated under the laws of Hong

Kong having its registered office at Hong Kong while the defendant no.3 is a
company incorporated under the provisions of the Indian Companies Act,
1956.

7. The Pico Event Marketing (India) Pvt. Limited-defendant no.3 herein

is stated to be a subsidiary of the Pico India Exhibits Contractor Pvt. Ltd.
(PIEC), which is a Singapore based company. The defendant no.3, is stated
to have been incorporated in November, 2009 under the Indian Companies
Act, 1956.

8. So far as the relationship between the plaintiff and the defendants is

concerned, the plaintiff relies on a Consortium Agreement dated 19th
December, 2009 in terms whereof it was agreed to incorporate a joint
venture company in which the plaintiff and the defendant nos.2 & 3 would
have shareholdings percentage ratio of 20%, 60% and 20% respectively. It
is the case of the plaintiff that it was agreed that all profits and losses would
be shared by the parties in such ratio.

9. It is an admitted position that the first defendant was specifically

incorporated in terms of the said compendium for the purposes of bidding
and execution of the overlays tenders floated by the Organising Committee,
Common Wealth Games 2010 Delhi. It is the plaintiff's stand that though
the defendant no.1 has been styled as a consortium and incorporated as a
company under the Companies Act, 1956, but in terms of operations, it is
really in the nature of an unregistered partnership between the plaintiff,
defendant no.2 and the defendant no.3.

10. On the 29th December, 2009, this consortium of the plaintiff and
defendant nos.2 & 3 submitted its Expression of Interest (EOI) under the
name of PICO Deepali Overlays Consortium-defendant no.1 to the
Organising Committee Commonwealth Games arrayed as defendant no.5 in
these proceedings. This was followed with a Request of Proposal (`ROP’
hereafter) submitted on 5th February, 2010 under the name of the defendant
no.1. In the first week of March, 2010, the defendant no.1 was declared to
be the lowest bidder in respect of cluster nos.1 to 6 in which the EOI has
been invited.

11. The consortium is maintaining an account in the name of the

defendant no.1 with the Hongkong Shanghai Banking Corporation (`HSBC’
hereafter), Barakhamba Road, New Delhi arrayed as the defendant no.4
herein.

12. The plaintiff has pointed out that on 1st June, 2010, the Addendum to
the Consortium Agreement was executed between the parties to the suit
which provided that in case of inconsistency between the Consortium
Agreement and the Addendum, the provisions of the Addendum would
prevail. In the Consortium Agreement and the Addendum, the plaintiff is
referred to as the `Deepali ’ whereas the defendant nos.1 to 3 are referred to
as `JV’, ‘PHK’ & ‘PEMI’ respectively. Inasmuch as the instant case relates
to the claim by the plaintiff against the defendants in respect of work
undertaken by it pursuant to the said Consortium Agreement and the
Addendum, reference requires to be made to the scope of plaintiff’s work
which was outlined in para 2.1 & 2.2 of the Addendum which reads as
follows:-
“2. Scope of Work

(1) After the assignment of the works to each member if there are any
profits and assets earned and retained in the JV, Deepali shall not be entitled
to any share of such profits and assets.

(2) Each party shall participate in the works tendered to the CWGOC
Delhi 2010. The scope of work are assigned to members as follows:

Deepali: Works confirmed by CWGOC Delhi 2010, listed in Appendix 2

PHK & PEMI: All other works confirmed by CWGOC Delhi 2010, listed in
Appendix 3.

(3) Amount received by the JV on contracts with the CWGOC Delhi

2010 in respect of work performed by Deepali, within the scope of work
described in Appendix 2 (including any variations), minus 23% shall be paid
to Deepali and the remainder shall belong to PHK. The net amount after
deduction of the 23% is inclusive of the 10.3% service tax but excludes any
tax deducted at source, Deepali shall provide PHK on demand any tax
certificates reasonably required by PHK (including but not limited to
anything related to the 10.3% Service Tax).”

13. So far as the payments are concerned, Clause 2(3) aforenoticed sets
out that the plaintiff would be entitled to the work performed by it within the
scope of work described in Appendix 2 (including any variations) minus
23% while the remainder would belong to defendant no.2. The net amount
after deduction of 23% was inclusive of 10.3% service tax but excluded any
tax deducted at source. The plaintiff was also required to provide the
defendant no.2 on demand any tax certificates which may be required
including but not limited to anything related to the 10.3% Service Tax. The
manner in which the consortium would work was set out in clause 2.4
wherein the full and sole authority was vested in the defendant no.2 with
regard to all several important facets of the working of the consortium.

14. The payment was to be effected on these terms with the stipulations
contained in appendix 3.3 Article 8.2 which reads as follows:-

“8.2 The invoiced amount shall be paid to the relevant JV member by the
JV after each respective payment by Delhi 2010 and within ten (10) days
after the aforementioned payment is effected by Delhi 2010 and deposited
into the JV bank account”

The parties acted in terms of the said Addendum. It is also admitted

by all parties that these terms bind their dealings.

15. The defendants have disclosed that a contract was awarded by the
defendant no.5 to the defendant no.1 on the 2nd June, 2010 which was to
commence with effect from the same date and was required to be completed
on 10th September, 2010 with the total value of Rs.209,052,790/- crores.
The defendant no.1 is stated to have executed works worth
Rs.172,75,96,635/- (certified value of Rs.173 crores) under the tender
awarded to it by the Organising Committee-defendant no.5.
The defendants have further disclosed that this amount of
Rs.172,75,96,635/- had been based on quantities duly certified by it which
included 10.3% service tax after deduction of TDS.

16. It is the plaintiff’s contention that the defendants have siphoned off
money owed to the plaintiff by transferring the same for their own use and
that the defendants were intending to siphon off the funds lying in the bank
account of the defendant no.1 with the HSBC Bank-defendant no.4 so as to
defeat the claims of the plaintiff. It has been suggested that the defendants
would try and remit the amount overseas as well as to the accounts of Indian
subsidiaries to defeat the plaintiff’s claim. The plaintiff claims entitlement
to the amount of Rs.6,99,24,861/- out of moneys already received from the
defendant no.5. The plaintiff has expressed an apprehension that if the
money is remitted outside India and siphoned off, the tax authority may
recover the tax amount from the plaintiff company.

17. In the suit, the plaintiff has made the following prayers:-
“(i) Pass a decree of recovery of money of Rs.6,99,24,861/- in favour of
the plaintiff company and against the defendant no.1 to 3;

(ii) Pass a decree of declaration that the defendant no.1 was formed for
the specific purposes and the compendium/consortium/Partnership Concern
of the plaintiff, defendant no.2 and 3 have come to an end from the date of
filing of the present suit before this Hon’ble Court;

(iii) Pass a decree of dissolution thereby dissolving the defendant no.1;

(iv) Pass a decree of mandatory injunction thereby directing the defendant

no.4 to provide the entire details of the bank account having
No.166189464001, with the Barakhamba Road Branch, H.S.B.C. Bank;

(v) Pass a decree of mandatory injunction thereby directing the defendant

No.5 to provide the details of total payments made by the defendant no.5 in
favour of the defendant no.1 along with the bills/details for respective
payment;

(vi) Pass a decree of mandatory injunction thereby directing the defendant

No.3 to provide the details of payments received by defendant No.3 from
defendant No.1;

(vii) Pass a decree for rendition of accounts in favour of the plaintiffs and
against defendant no.1;

(viii) Pass order awarding costs of the present suit in favour of the plaintiff
company and against the defendants.”
18. Along with the suit, the plaintiff filed the applications seeking interim
reliefs which included IA No.16915/2010 and IA No.16916/2010. The
plaintiff has also filed IA No.16917/2010 under Order 40 of the CPC
seeking appointment of a receiver. These applications were considered by
the court on 14th December, 2010 when it was urged that defendant no.2
was not based in India and was operating accounts and receiving amounts
from the Organising Committee-defendant no.5 in India. The plaintiff had
also contended that unless the plaintiff’s interest was secured, the defendant
no.1 to 3 would withdraw amounts given to them to satisfy its claims. In
this background, the following ex-parte order of injunction dated 14th
December, 2010 was passed:-

“xxx
I.A. Nos.16915/2010 (Under Order 39 Rule 1 & 2), 16916/2010 (Under
Order 38 Rule 5) & 16917/2010 (Under Order 40)
Issue notice to the defendants, returnable on 10.02.2011; service
through Regd. Post and e-mail as well, if the plaintiffs provide the same
within two days.
The plaintiff seeks recovery of Rs. 6,99,24,861/- with interest. It is
claimed that the plaintiff entered into a Consortium Agreement with the
Defendant Nos. 2 and 3 on the one hand and Defendant No.5 (Organizing
Committee of the Commonwealth Games referred to as the ?Organizing
Committee?). Initially, the plaintiff was entitled to amounts in proportion to
what was defined in the original Consortium Agreement dated 19.12.2009. It
is submitted that the parties entered into a subsequent addendum which
redefined the scope of the plaintiff’s work, on 01.06.2010; a copy of the
addendum has been placed on record as also the copy of the original
agreement. In these, the plaintiff’s scope of work was confined to what was
outlined in paras 2.1 and 2.2. In terms of this agreement, the plaintiff was
entitled to receive the entire proceeds of the consideration payable as part of
its scope of work and was obliged to release 23% to the Defendant Nos. 2
and 3, inclusive of taxes. The plaintiff contends that the defendants have
received about Rs. 90 crores, of which it is entitled to Rs.30,35,40,044/- to
the first defendant on account of the scope of work for which the payment
has to be received by it (the plaintiff). The plaintiff contends that it is
entitled to, under the said terms of 01.06.2010 Rs. 23,37,25,833/-. It is
further stated that the plaintiff has till date received Rs.16,38,00,972/- and,
therefore, is entitled to the amount of Rs. 6,99,24,861/-.
 The plaintiff submits that unless its interests are secured, Defendant
Nos. 1 to 3 would withdraw the amounts given to them which have to satisfy
its claims. It, therefore, seeks appropriate injunctive relief.
The Court has considered the materials on record, which include
copies of the original agreement of 19.12.2009 as well as the addendum
dated 01.06.2010. Clauses 2.1 and 2.2 clarify that the plaintiff’s scope of
work as well as the share or proportion of consideration payable to it. The
plaintiff has placed reliance on e-mail communication exchanged with the
defendants by which clarity is sought as to the amounts received but the
latter have apparently not disclosed details and particulars. Having regard to
the circumstances that the Defendant No.2 is not based in India and is
operating accounts and receiving amounts from the Organizing Committee
in India, it would be appropriate that this Court, in order to secure the
interests of justice, makes and interim order. Accordingly, the first three
defendants are hereby restrained from operating the accounts, withdrawing
any amount received by them to the extent of the suit claim. The defendants
are also hereby restrained from operating further amount without
permission of the Court in order to receive the amounts disbursed hereafter
by the Organizing Committee in satisfaction of any bills which form part of
the scope of work and Appendix-II dated 01.06.2010, till the next date of
hearing.
Provisions of Order 39 Rule 3 shall be complied within seven days.
Order and notice dasti.”

19. Aggrieved by this order of injunction, the defendants have filed IA

No.1218/2011 under Order 39 Rule 4 praying for vacation of the order of
injunction. The pleadings of the parties in this application have been treated
as their pleadings in the two other applications. The parties have
respectively pressed the applications under consideration.

20. Mr. Sandeep Sethi, learned senior counsel for the plaintiff has
strongly urged that the plaintiff has sought a decree and order for rendition
of accounts. It is submitted that the plaintiff strongly apprehends that the
defendants have not met the statutory liabilities and that they would flee the
boundaries of the country in order to avoid not only liability to the plaintiff
but also escape criminal action for failure to meet statutory dues including
income tax dues. It has been urged that the defendants have not deposited
the tax deductible at source by the defendant no.1. The contention is that
with this intent, the monies would be remitted oversees bank accounts of the
defendants or accounts of other Indian affiliates or defendants.
21. Unfortunately, these assertions are not substantiated by any material
pleadings.

22. The percentage value of the payment and deductions in terms of

payments which the plaintiff is entitled to in terms of the Consortium
Agreement dated 19th December, 2009 and the Addendum dated 1st June,
2010 are undisputed.

23. On the issue of the receipt of payments, defendant no.1 has disclosed
receipt of Rs.943,574,429 (Rs.94.35 crores) against the said works till date.
It is also stated on affidavit that the defendant no.1 has lastly received a
payment on 18th October, 2010 of Rs.119,603,838/- including 10.3%
service tax but excluding TDS of 2% which was deducted by the defendant
no.5. A tabulation of the payments which have been received has been
placed on record. The plaintiff admits that the defendant has received
payment of an amount of Rs.943,574,429/- only and also of the fact that
after 18th October, 2010, no payment has been received.

24. The defendants have contended that therefore only 55% of the total
billed amount has been received by it from the defendant no.5 till date. The
plaintiff has also stated the same to be equivalent to 60% of the scope of
work.

25. The plaintiff has filed a reply on affidavit vaguely disputing the
assertions by the defendants . In para 6 of IA No.1218/2011 of the reply
filed by it, the plaintiff has replied as follows:-
“6. However it is submitted that to the information and knowledge of the
plaintiff company the Consortium/Compendium/defendant no.1 has received
approximately total of Rs.94,35,74,431/- out of total payment of about
Rs.180 Crore from the Commonwealth Games Organizing Committee. That
out of the said amount of Rs.94,35,74,431/- an approximate amount of
Rs.30,35,40,044/- has been paid by the Organizing Committee to the
defendant no.1 on account of the work falling within the scope and ambit of
the plaintiff company, which was duly completed by it. After deducting
23%, the total amount payable to the Plaintiff Company would be
Rs.23,37,25,833. Till date, the total payment received by the Plaintiff
Company in respect of the Commonwealth Games project is
Rs.16,38,00,972. Therefore, as on date, the total amount due to the plaintiff
company from the defendants is to the tune of Rs.6,99,24,861/ The
Defendants are jointly and severally liable to pay the aforesaid amount to the
Plaintiff Company.”

26. In the first year of the operation of the Pico Event Marketing (India)
Pvt. Ltd.-defendant no.3 in the financial year ending on 31st October, 2010
it had a turnover of approximately Rs.8.8 crores. The defendant no.3 has
further disclosed that it is currently executing contracts worth approximately
1.7 crores. It is stated that the defendant no.3 is currently working in several
projects in India some of which are Aero India-2011 (Bangalore), TV
Today, Siat India (Pune), Rubber Expo (Chennai), IRAI Expo-2011, EFY
Expo-2011 etc.
The defendants have disclosed that defendant no.3 had an Indian
presence for more than 15 years it had been carrying on business in India
through a franchisee. The defendant no.3 was incorporated to take over the
Indian business of the franchises under Indian laws. So far as the
shareholding of defendant no.3 till 4th December, 2010 is concerned, apart
from the 4.23% shareholding held by the franchisee, PICO Event Marketing
(India) Pvt. Ltd.-defendant no.3 owns the remaining shareholding.
27. The plaintiff has itself stated that the defendant no.3 is having its
registered office at the PICO Bhawan, A 27/15, Khanpur Extension, New
Delhi. The defendants have submitted that it is operating from a leased
factory premises in Faridabad of a total space of 35000 sq. ft. since January,
2010.

28. The defendants have further stated that Pico Far East Holdings
Limited (hereinafter referred to as “PFE” for brevity) is the holding
company of the defendant no.3 which is a listed company in Hong Kong
with an annual turnover of HK$ 2.226 billion and profit of HK$ 124 billion
for the year 2009. The annual turnover of the Pico Far East Holdings
Limited for the current financial year ending 31st October, 2010 has been
disclosed to be of the tune of Rs.HK$3.075 billion with a profit of HK$192
million.
The Organising Committee of the Commonwealth Games-defendant
no.5 is stated to have relied on the track record and financial strength of PEE
the said holding company of the defendant no.3 in assessing the credibility
of and for award contract to defendant no.1.

29. The defendant no.2 and other subsidiaries of the Pico Far East
Holdings Limited are stated to have successfully completed overlays work
for the Commonwealth Game at Melborne; the Olympics Games in Athens,
the Olympics Games in Beijing and many other world events. An audited
financial result of the PICO Far East Holding for the year ending 31st
October, 2010 has been placed before this court. In fact, the said Pico Far
East Holdings Limited has furnished an undertaking to the defendant no.5 to
ensure completion of the project work on behalf of the consortium.

30. The defendants have also disclosed ownership of assets in India. It is

stated that the defendant no.3 has assets consisting of fixed assets, motor
vehicles, office furniture, fixtures and equipments and operating supplies
worth Rs.2,55,40,361.82 within India and an office in Mumbai as well.

31. It is important to note that the plaintiffs have not disputed these
assertions of the defendants. It has been stated that these submissions by the
defendants “need no reply being matter of records”.

32. The extensive averments by the defendants with regard to their

financial status remain uncontroverted. The only basis for the plaintiff’s
apprehensions is premised on the fact that the defendant no.2 is a foreign
company. On the other hand, the defendants have urged that a decree passed
by this court could be executed against the defendant no.2 even in Hong
Kong. Even otherwise, it has been pointed out that the defendants are
financially sound. As noticed above, the defendant no.3 has an extensive
Indian presence.
33. Coming to the allegations with regard to payments to foreign parties
are concerned, the defendants have stated that to ensure completion of the
works contracted to the defendant no.1 by the defendant no.5, within the
scheduled date of completion on 10th September, 2010, suppliers in foreign
jurisdiction were engaged which included the Asia Tent International Sdn.
Bhd (Malaysia) and Pakar Trading (Malaysia) through the defendant no.2. It
is pointed out that against the total contract value of Rs.209 crores
approximately, the total payments to these parties minuscule. Invoices in
this regard have been placed on record. Nothing has been placed by the
plaintiff on record to enable this court to arrive at a contrary conclusion.

34. So far as the payments to defendant no.2 are concerned, details

thereof have been placed in para 14 of the IA No.1218/2011. The defendant
no.2 is stated to have issued the bonds towards the 10% bid security money,
10% of the of the first Advance Performance Bond and 10% of the Second
Advance Performance Bond on behalf of the Consortium-defendant no.1
which was required by the defendant no.5 under the tender documents. It
has been explained that an amount of USD 6,928.81 and USD 51,732 has
been reimbursed to the defendant no.2 towards bank charges/fees paid to the
HSBC Hong Kong for issuance of such bonds in favour of the Overseas
Committee-defendant no.5. The averments in respect of these payments are
supported with documents placed on record. There is no denial by the
plaintiff to specific averments in IA No.1218/2011 made by the defendants.
No challenge is laid to the annexure placed by the defendants on record.

35. It is stated by the defendants in IA No.1218/2011 that the defendant

no.2 does not have any bank account in its name in India.

36. So far as the payments of the plaintiff are concerned, the defendants
submit that under the Consortium Agreement and the practice followed by
the parties, until final accounting, the plaintiff’s work was deemed to be
20% of the certified value while the defendant’s work was deemed to be
80% of the certified value. On this basis, out of the total billing claim of
Rs.1,727,596,635/-, the value of the plaintiff’s work assessed at 20% of the
certified value would be worth Rs.345,519,327/- whereas the value of the
defendant’s work at 80% of the certified value would be equivalent to
Rs.1,382,077,308/-. Out of the amount of Rs.94,35,74,429/- received from
the defendant no.5, value of the 20% work executed by the plaintiff has been
computed by the defendants at Rs.188,714,886/-. The defendants have
contended that upon deduction of management fee of 23% of the amount
received from the defendant no.5 in terms of the agreement between the
parties, the plaintiff was entitled to payment of only Rs.145,310,462/-.

37. It is an admitted position before this court that the plaintiff had
addressed e-mails dated 31st October, 2010; 22nd November, 2010 and 1st
December, 2010 to the defendant no.1 seeking payment. The defendant no.1
has admittedly responded to the same by way of e-mail dated 31st October,
2010 pointing out that the defendant no.5 had so far paid only about 50% to
60% to it till date. This e-mail also records that there are many suppliers and
contractors whose payments are to be settled. The plaintiff was called upon
to work with the representatives of the defendants to impress upon the
defendant no.5 to make the balance payment.

38. The defendants have complained that faced with harassment and
pressure from the plaintiff by e-mails and communications demanding more
payments, even though no amounts had been released by the defendant no.5
after 18th October, 2010, the defendants were pressurised into releasing an
additional amount of Rs.2.00 crores to the plaintiff on 26th December, 2010
with the understanding that the same would be adjusted in the future
payments with the plaintiff. It is the submission of the defendants that this
amount is excess payment having regard to the fact that the defendants have
not received any such payment from the defendant no.5.

39. It is noteworthy that in an e-mail sent as late as on 22nd November,

2010, the plaintiff has nowhere suggested that the defendants were siphoning
off funds or were running away with monies to avoid making payment to the
plaintiff.
On the contrary, the plaintiff admits a second e-mail dated 1st
December, 2010 that as late as on 1st December, 2010, it has received
payment of a sum of Rs.2.00 crores from the defendant no.1. While
aknowledging the receipt of the said amount, the plaintiff makes not even a
remotest suggestion that the defendants are siphoning off funds or are
running away from this country. Merely because the plaintiff has expressed
urgency for its claimed payments would not ipso facto manifest any mala
fide on the part of the defendants.

40. Perusal of the Consortium Agreement dated 19th December, 2009 and
the Addendum dated 1st June, 2010 would show that the plaintiff and
defendant nos.2 & 3 were entitled to the stated amounts in the
shareholdings/percentage/ratio of 20%, 60% and 20% respectively. The
plaintiff has admittedly received amounts towards its share, though there is a
dispute on totals. The plaintiff does not state that defendant nos.2 & 3
would not be entitled to their percentage share out of the amount received
from defendant no.5.

41. Apart from a bald allegation that sums of money have been
transferred from the bank account of the defendant no.1 to the account of
defendant no.3, no details at all have been furnished by the plaintiff on
record. The plaintiff has nowhere stated that amounts paid to defendant
nos.2 & 3 from the account of defendant no.1 are beyond their entitlement
under the Consortium Agreement dated 19th December, 2009 and the said
Addendum.

42. In any case, the plaintiff in para 7 of IA No.16916/2010 has stated that
the amounts have been paid by the plaintiff and defendant no.1 to the
defendant no.3- a company incorporated under Indian laws.
43. It is an admitted position that the plaintiff has received the amount of
Rs.165,310,467/-. The defendants have submitted that based on the above
accounting, the plaintiff has already been overpaid to the extent of
Rs.20,000,005/- (being a sum of Rs.2.00 crores).

44. The suit claim is premised on calculations effected by the plaintiff and
a decree for recovery of the amount of Rs.6,99,24,861/- has been sought.

45. The defendants have contended that the plaintiff has no absolute
entitlement to the suit claim or to the claim of further amounts from the
defendants. The plaintiff was required to satisfactorily execute the work
which was assigned to it. It has been vehemently urged that plaintiff has
failed to complete the work successfully and that the defendant no.5 has not
made further payments to the defendants on account of complaints with
regard to the generators supplied by the plaintiff having been faulty which it
has alleged has caused loss and damage to the lighting equipment and
installations supplied by third party. It is submitted that in this background,
an amount of Rs.7,84,022,206/- has been withheld by the defendant no.5 of
which 80% would be falling within the defendant’s scope of work.

46. Apart from the complaint with regard to the quality of work
performed by the plaintiffs, the defendants have urged that the plaintiff is
also in breach of Section 13.3 of the Consortium Agreement which prohibits
the members of the consortium in terms that “No JV member will be
permitted to negotiate directly or indirectly with Delhi 2010 without the
prior written consent of the members of the board of the JV. Such
negotiations to be solely carried out by the Common Representatives, who
shall have to report to the Board of JV”. The plaintiff is stated to have
ignored this restriction and has contracted directly with the defendant no.5
for tentage in August & September and entered into a contract for the value
of Rs.5.00 crores. The defendants have contended that as a result of the
contract bid by the plaintiff, it had undercut the defendant no.1 in its bid for
obtaining such contract.

47. A grievance has been made on behalf of the defendants that despite
the admitted non-receipt of a large trench of over Rs.78 crores from the
defendant no.5; amounts admittedly being due to third parties; complaints
against the plaintiff’s work by the defendant no.5, the plaintiff was still paid
the sum of rupees two crores which it was not entitled to. It is urged that on
1st of December, 2010, the present suit was filed by the plaintiff on 10th
December, 2010 on vague and unsubstantiated pleas without any cause to do
so. The defendants have expressed strong grievance in respect of filing of
the present suit by the plaintiff on the 10th December, 2010 even though
there is no variation in position with regard to receipt of payments from the
defendant no.5.

48. As on date the plaintiff claims the amount of Rs.6,99,24,861/- while

the defendants are claiming excess payment to the plaintiff of Rs.2.00 crores
and are disputing its entitlement to the suit claim. The plaintiff is entitled to
receipt of payment only upon and out of payments being made to the
defendant no.1 by the defendant no.5.

49. Mr. Sandeep Sethi, learned senior counsel for the plaintiff, however,
submits that the defendant no.1 has huge liability of tax. It is contended that
the order dated 14th December, 2010 requires to be confirmed.

50. In regard to the tax liability, the defendants have stated that they have
duly paid service tax on 10.3% on the total amount received from the
defendant no.5. It has also been stated that the TDS which was deducted on
payments made to the plaintiff by the defendants stands deposited with the
Government authorities. The tax receipt/challans, showing payment of the
service tax and deposits of TDS have been placed on record which supports
the deposits. The plaintiff has generally denied these averments and
challenged documents on the plea that they are specious and incorrect. It is
vaguely stated that tax has “not been paid in toto” without stating as to what
is the payable tax liability.

51. The plaintiff has placed a statement of what it considers to be total

liabilities of the defendant no.1. The information set out by the plaintiff
notices that tax stands deducted at source by the CWGOC-defendant no.5
herein, to the extent of Rs.2.00 crores before its payments to the plaintiff.
The plaintiff pleads that the consortium was in the nature of a partnership,
does not dispute active involvement with its business and affairs, yet all its
pleadings are eloquent by their silence on all material and essential details.
No basis or details to support the contention that amounts are due from the
defendant no.1 towards Income Tax or Advance Tax is disclosed.

52. On the contrary, the defendant no.3 have placed before this court
documentation to support payment of Rs.1.00 crore towards advance tax in
December, 2010. It is stated that further advance tax would be payable on
15th March, 2011 and the income tax return as per law would require to be
filed in October, 2011. It is explained that in case the balance amount of
Rs.78.00 crores is not received from the defendant no.5, the defendant no.1
would have suffered a loss of Rs.78.00 crores. The submission is that in
such an eventuality, the defendant no.1 would be filing a loss return. Then,
instead of tax liability even the advance tax which has been deposited, would
be required to be refunded to the defendant no.1

53. So far as dues of income tax authorities are concerned, the plaintiff is
stated to have informed the Income Tax department by letter dated 16th
November, 2010 that the plaintiff company should not be made liable for tax
liability on account of profits made by the defendant no.1 consortium. No
action by the tax authorities despite receipt of this communication is pointed
out.

54. The plaintiff has also made a bald statement that certain payments are
expected to be made towards vendors and sub-contractors. There is not even
a whisper to suggest specific dues on this count anywhere in the plaint. The
plaintiff has also not placed a single claim on record.
It is admitted that an amount of Rs.78.00 crores of the defendant no.1
is lying in the hands of defendant no.5. The defendants state that this
amount could be utilised to discharge any liability qua third parties.
55. I also find substance in the contentions of Mr. V.P. Singh, learned
senior counsel on behalf of the defendant nos.1 & 3 that their bona fide are
made out from the fact that they have made payments of Rs.14.00 crores and
odd as well as the payment on 1st December, 2010 to the tune of Rs.2.00
crores to the plaintiff from the amounts received so far from the defendant
no.5. So far as the suit claim is concerned, the same is yet to be adjudicated
upon.

56. So far as the grant of injunction is concerned, the principles thereof

are well settled. Three essential ingredients have to be satisfied for grant of
ad interim injunction under Order 39 of the CPC. The plaintiff is required to
establish a prima facie case; that grave and Irreparable loss and damage
would enure to it in case interim protection was not granted and that balance
of convenience, interests of justice and equity are in its favour.

57. The term “prima facie case”, is not statutorily defined. The same,
however, has been construed by this court in authoritative and judicial
pronouncements. In the pronouncements of H.L. Anand, J on 23rd May,
1973 reported at 1973 RLR 542 Gopal Krishan Kapoor Vs. Ramesh
Chander, the court considered several prior judicial pronouncements and
observed as follows:-

“9. The terms "prima facie" and "prima facie case" are not defined in any
statute and although no attempt has been made to encase these terms within
the confines of a judicially evolved definition or to evolve an inflexible
formula for universal application, the terms have been judicially interpreted
to mean a case which is not bound to fail on account of any technical defect
and needs investigation.

xxx xxx xxx

18. On a consideration of the ordinary meaning of the term 'prima facie'

and the trend of judicial pronouncement it appears to me that "prima facie
case" would mean a case which is not likely to fail on account of any
technical defect and is based on some material which if accepted by the
tribunal would enable the plaintiff to obtain the relief prayed for by him and
would, thereforee, justify an investigation.

19. The function of the Court when called upon to consider if the plaintiff
has a prima facie case for the grant of an interim protection or not is to
determine the limited question if the material placed before the Court would
require investigation but it is not open to the Court to either subject the
material to closer judicial scrutiny for the purpose of deciding if on account
of any inherent characteristics of the situation or the probabilities, the
plaintiff may not succeed in his contention. Such an investigation would be
clearly a transgression of the limits of the functions of the Court and would
be both unreasonable and unfair because the suit being at a preliminary
stage, the plaintiff has had no opportunity to support his contention by
evidence and reinforce the material brought by the plaintiff to the Court by
additional evidence and to do that would amount to pre-judging the case of
the plaintiff.”

58. The question of balance of convenience and equity were considered

by the learned Judge in a later pronouncement reported at 1976 RLR 1
Gurmukh Singh Vs. M/s Inderprasth Finance Co., in which the court
observed that:-
“11. xxx The proceedings in the court of law do not merely involve the
high sounding principles and provisions of law but human element as well
and such an element must be given its due weight in considering the
question of balance of convenience and equities.”

59. The only premise for the reliefs of injunction in the present case as
well as the order of attachment before judgment prayed for by the plaintiff is
that it has “reason to believe” and “apprehension that the defendants would
siphon off funds” without anything more.

60. The claim of the plaintiff so far as the payment already received from
the defendant no.5 is concerned, the same is determinate. The plaintiff has
prayed for a determined sum of money. In this background, it is not possible
to hold that the plaintiff shall suffer irreparable loss and damage in case
interim protection was not granted.

61. It is also trite that a suit cannot be decreed by an interim order. As

noticed above, no cause of action qua amount not received by the defendant
no.1 has arisen and obviously cannot form the subject matter of the present
suit. I, therefore, find substance in the contentions of Mr. V.P. Singh,
learned Senior Counsel for the defendants that the plaintiff has failed to
make out any of the requirements for grant of an order of interim injunction.

62. It is now necessary to consider the prayer made by the plaintiff for the
order of attachment of the defendant’s assets before judgment. An order of
attachment before judgment is a serious matter and is not to be lightly made.
Mr. V.P. Singh, learned senior counsel for the defendants has in this regard,
placed reliance on the pronouncement in 2005 (2) ARBLR 404 (Delhi)
Uppal Engineering Limited Pvt. Ltd. Vs. Cimmco Birla Limited wherein the
following principles have been laid down:-
“12. Now coming to the question as to whether the petitioner has been able
to make out a prima facie case entitling him for relief claimed by him it may
be noticed at once that the relief sought by the plaintiff is in the nature of
attachment before judgment or pre-award attachment. No doubt that such a
pre-award attachment in arbitration is common to many legal systems. In
French law it is known as saisie conservatoire which literally means a
'conservative seizure' or 'a seizure of assets so as to conserve them for the
creditor in case he should afterwards get judgment.' In UK, Lord Denning
gave this procedure a fashionable name- Mareva injunction. In the parlance
of arbitration law, it is usually called 'pre-award attachment.' This remedy
has been available in India from the inception of the Code of Civil Procedure
1908. The order of attachment, before judgment, is passed to ensure the
availability of such property at the time of execution of a decree. The
procedure relating to 'attachment before judgment' is contained in Order 38,
Rule 5 to 13 in the First Schedule to the Code of Civil Procedure. Before a
person is entitled to an order of attachment before judgment Rule 5 requires
the plaintiff to prove that the following circumstance exists:
(i) the defendant is about to dispose of the whole or any part of his property.
(ii) the defendant is about to remove the whole or any part of his property
from the local limits of the jurisdiction of the Court;
(iii) the defendant is intending to do so to cause obstruction or delay in the
execution of any decree that may be passed against him. Vague and general
allegations that the defendant is about to dispose of the property."
13. It is well led that an order of attachment before judgment is a drastic
remedy and the power has to be exercised with utmost care and caution as it
may be likely to ruin the reputation of the parties against whom the power is
exercised. The Court must act with utmost circumspection before issuing an
order of attachment and unless it is clearly established that the defendant,
with intent to obstruct or delay the execution of the decree that my be passed
against him, is about to dispose of whole or any part of his property. An
attachment before judgment is not a process to be adopted as a matter of
course because the suit is yet to be tried and the defense of the defendant is
yet to be tested. At that juncture the relief which is extraordinary, could be
granted only if the conditions for its grant stands satisfied.”

63. On the issue of an order of attachment before judgment under Order

38 Rule 5 of the CPC, in (2008) 2 SCC 302 Raman Technology and Process
Engineering Co. & Anr. Vs. Solanki Traders, the Supreme Court has held as
follows:-
“4. The object of supplemental proceedings (applications for arrest or
attachment before judgment, grant of temporary injunctions and appointment
of receivers) is to prevent the ends of justice being defeated. The object of
Order 38 Rule 5 CPC in particular, is to prevent any defendant from
defeating the realization of the decree that may ultimately be passed in
favour of the plaintiff, either by attempting to dispose of, or remove from the
jurisdiction of the court, his movables. The Scheme of Order 38 and the use
of the words 'to obstruct or delay the execution of any decree that may be
passed against him' in Rule 5 make it clear that before exercising the power
under the said Rule, the court should be satisfied that there is a reasonable
chance of a decree being passed in the suit against the defendant. This would
mean that the court should be satisfied that the plaintiff has a prima facie
case. If the averments in the plaint and the documents produced in support of
it, do not satisfy the court about the existence of a prima facie case, the court
will not go to the next stage of examining whether the interest of the plaintiff
should be protected by exercising power under Order 38 Rule 5 CPC. It is
well-settled that merely having a just or valid claim or a prima facie case,
will not entitle the plaintiff to an order of attachment before judgment,
unless he also establishes that the defendant is attempting to remove or
dispose of his assets with the intention of defeating the decree that may be
passed. Equally well settled is the position that even where the defendant is
removing or disposing his assets, an attachment before judgment will not be
issued, if the plaintiff is not able to satisfy that he has a prima facie case.
5. The power under Order 38 Rule 5 CPC is a drastic and extraordinary
power. Such power should not be exercised mechanically or merely for the
asking. It should be used sparingly and strictly in accordance with the Rule.
The purpose of Order 38 Rule 5 is not to convert an unsecured debt into a
secured debt. Any attempt by a plaintiff to utilize the provisions of Order 38
Rule 5 as a leverage for coercing the defendant to settle the suit claim should
be discouraged. Instances are not wanting where bloated and doubtful claims
are realised by unscrupulous plaintiffs, by obtaining orders of attachment
before judgment and forcing the defendants for out of court settlements,
under threat of attachment.
6. A defendant is not debarred from dealing with his property merely
because a suit is filed or about to be filed against him. Shifting of business
from one premises to another premises or removal of machinery to another
premises by itself is not a ground for granting attachment before judgment.
A plaintiff should show, prima facie, that his claim is bonafide and valid and
also satisfy the court that the defendant is about to remove or dispose of the
whole or part of his property, with the intention of obstructing or delaying
the execution of any decree that may be passed against him, before power is
exercised under Order 38 Rule 3 CPC. Courts should also keep in view the
principles relating to grant of attachment before judgment (See -- Prem Raj
Mundra v. Md. Maneck Gazi MANU/WB/0033/1951 : AIR1951Cal156 , for
a clear summary of the principles.)”

64. For the purposes of passing an order of attachment before judgment

under Order 38 Rule 5 of the CPC, in AIR 2008 SC 1170 Rajendran & Ors.
Vs. Shankar Sundaram & Ors., it was held that the court is required to form
a prima facie opinion at the stage of consideration of the prayer by the
plaintiff. It was observed that the court need not go into the correctness or
otherwise of all the contentions raised by the parties.

65. It is, therefore, well settled that the order for attachment for judgment
is not to be made simply because a suit is filed. The present case is also not
one in which the defendants are not raising issues which would require
adjudication. In any case, there would be no warrant for attachment of the
bank accounts of defendant nos. 2 & 3 inasmuch as the plaintiff is seeking
relief of payments from the defendant no.1.
66. The expressed apprehensions of the plaintiff are based on the solitary
plea that the defendant nos.2 & 3 are foreign companies and are siphoning of
monies abroad. In this regard, a reference can usefully be made to the
pronouncement of this court reported at 139 (2007) Delhi Law Times 55
(DB) Rite Approach Group Ltd. Vs. Rosoboronexport relevant paras
whereof read as follows:-
“4. Learned Single Judge has noted that the number of helicopters and their
models and that the supplies made to the Ministry of Home Affairs did not
tally with the agreement between the appellant and M/s Russian
Technologies, which was in respect of 16 helicopters to be supplied to
Ministry of defense. Moreover, the Ministry of defense had in the agreement
specifically stipulated that there shall be no agent for the purpose of
intercession, facilitation or for in any way recommendation to the
Government of India or any of the functionaries of the Government. Learned
Single Judge further noticed that the respondent is a State owned
undertaking of the Government of Russia and thereforee has sufficient assets
to satisfy any decree in favor of the appellant. Lastly, it was observed that
provisions of Order 38 Rule 5 of the Code of Civil Procedure, 1908
(hereinafter referred to as the Code, for short) or conditions stipulated
therein can be read into Section 9 of the Act but the strict preconditions
specified in the said provision were not satisfied in the present case. Learned
Single Judge relied upon the case of Global Co. v. National Fertilizers Ltd.
reported in 76(1998) DLT 908 = AIR 1988 Delhi 397 and an unreported
judgment of the Bombay High Court in the case of National Shipping Co. v.
Sentrans Industries Limited, in Appeal No. 852/2003.
xxx xxx xxx
6. The appellant is based in Singapore and Austria. The respondent is a
company operating and having its registered office in Russia. Without
examining and going into the question whether injunction can be issued on
an application under Section 9 of the Act by the Courts in India, it may be
noticed that the Court of Appeal in the case of Mareva v. International
Bulkcarriers (supra) had held that freezing injunction should not be granted
unless a person has a legal or equitable right, it appears that a debt is due and
owed and there is danger that the debtor may dispose of his assets before the
judgment is passed so as to defeat the decree which may be passed.
Injunction order even as per the Court of Appeal can be issued in
extraordinary circumstances. Mareva or freezing injunction is passed when
there is evidence or material to show that the debtor is acting in a manner or
is likely to act in a manner to frustrate subsequent order/decree of the court
or tribunal. The Court thereforee freezes the assets of the debtor to prevent
the assets from being dissipated, to prevent irreparable harm to the creditor.
It prevents a foreign defendant from removing his assets from the
jurisdiction of the court. It is like and akin to "attachment before judgment"
and conditions mentioned in the said provision should be satisfied before
freezing junction order is passed. (See Formosa Plastic Corporation Ltd. v.
Ashok Chauhan reported in 76(1998) DLT 817 and Uppal Eng. Co. (P) Ltd.
v. Cimmco Birla Ltd. reported in 121(2005)DLT539. The respondent-
company is owned by Russian Government and there is no such allegation
that the respondent company is trying to defeat and play a fraud by
moving/transferring its assets. We agree with the reasoning given by the
learned single judge.”

67. It is well settled that the mere fact that a party to a suit is a foreign
litigant without anything more, would ipso facto not entitle the other side to
an order of injunction or attachment before judgment. It is trite that no order
of injunction or attachment would be granted unless there is a real danger
that assets would be disposed of before the judgment is passed so as to
defeat any decree in the case.

68. The IA No.16917/2010 filed by the plaintiff seeking appointment of a

receiver with the direction to take over the custody, possession, management
and affairs of the defendant no.1 does not disclose any substantive material
other than a plea that defendant no.1 was liable to be dissolved. On the
other hand, the plaintiff itself has admitted that these amounts are yet to be
received by the defendant no.1 from the defendant no.5.

69. In this background, it is apparent that the question of dissolution

would arise after settlement of accounts between the defendant no.1 and
defendant no.5 and clearance of liabilities claimed by the defendant no.1
from the defendant no.5. Merely because the prayer for dissolution has
been made, the same would by itself not entitle the plaintiff to any such
relief.

70. In Raman Technology and Process Engineering Co. & Anr. (supra),
the Supreme Court has held that merely having a just or valid claim or a
prima facie case would also not entitle the plaintiff to an order of attachment
before judgment unless he also establishes that the defendants are attempting
to remove or dispose of its assets with the intention of defeating the decree
that may be passed. It is equally well settled that even where the defendants
are removing or disposing its assets, an order of attachment before judgment
will not necessarily be passed.

71. The defendants have complained that the order dated 14th December,
2010 is being treated by their bankers as an order prohibiting them from
operating their bank accounts. Given the nature of claim of the plaintiff and
the rival contentions, coupled with the fact that payments have been received
by the plaintiff barely a week before filing of the suit and large amounts are
yet to be received by the defendant no.1 from the defendant no.5, it has to be
held that the plaintiff has also failed to make out a case for an order of
attachment before judgment.

72. At this stage, the plaintiff has quantified its claim against the
defendants at Rs.6,99,24,861/-. No cause of action has accrued in respect of
any other amount which have not been received by the defendant no.1 from
the defendant no.5. No court fee on any such claim has been affixed on the
plaint.

73. Even with regard to the amount which the plaintiff is claiming and
payable from the payment already received, the defendants have pointed out
that disputes have been raised by the defendant no.5 with regard to the
nature of the work which was the responsibility of the plaintiff and payments
are blocked.

74. The Consortium Agreement and the Addendum certainly does not
permit the plaintiff to be a beneficiary of only payment without sharing any
of the liabilities.

75. The defendant nos.2 & 3 have urged at length that they have no
intention of absconding from justice or evading due process of law. These
defendants have placed material with regard to their standing and assets.
There is nothing to support the bald and vague averments in this regard set
up by the plaintiff.

76. The plaintiff has also not been able to support its allegations to the
effect that the defendants are likely to siphon off with funds or transfer their
assets with the intention of frustrating or defeating any decree which may be
passed by this court.

77. Undoubtedly, disputes have arisen and large sums of monies are
involved. A quantified amount cannot be asserted as irreparable loss and
damage justifying an interim injunction. Equities are required to be
balanced. While balancing the interest of the plaintiff, the functioning of the
defendants cannot be brought to a halt

78. It is noteworthy that so far as the suit claim is concerned, the plaintiff
does not even make a prayer for grant of interest on the amounts claimed.

79. The defendants have placed before this court statement of account of
the defendant no.1 maintained by the HSBC Bank-defendant no.4 herein as
on 31st December, 2010 which shows that the defendant no.1 had the
following holdings with the HSBC Bank:-
Deposits
&
Investments
Curr-ency Unit
Account
Number
Credit Limit
Balance
(DR-Debit)
INR
Equivalent
(DR-Debit)
Current
Account
INR
166-189464-001

183,222,009.71
183,222,009.71
Fixed
Deposits
INR
166-189464—060

45,262,510.18
45,262,510.18
TOTAL DEPOSITS AND INVESTMENTS
228,484,519.89

80. The defendant no.4-HSBC has filed communication dated 3rd

January, 2010 disclosing the following amounts:
Account Name
Account Number
Available Balance (INR)
M/s Pico Deepali Overlays Consortium
166-189464-001
69,924,861.00
M/s Pico Event Marketing Ind. Pvt.Ltd.
051-827889-001
22,271,941.92

81. The defendants have vehemently opposed grant of any interim order
in favour of the plaintiff. It has however been submitted by Mr. V.P. Singh,
learned senior counsel for the defendants on instructions that without
prejudice to their rights and contentions, the defendants are willing to suffer
an injunction to the extent that fixed deposit receipt in their account with the
defendant no.4 would not be encashed without further orders of this court.

82. In view of the above discussion, it is directed as follows:-

(i) The defendant no.1 shall remain bound by the statement made on its
behalf and shall not withdraw the amount lying in the Fixed Deposit
Account No.166-189464—060 with the H.S.B.C. Bank-defendant no.4
herein with all accruals thereon till further orders of this court.
(ii) The order of injunction dated 14th December, 2010 shall stand
modified in terms of the direction at serial no.(i) above.
(iii) IA Nos.16915-16916/2010 & IA No.1218/2011 shall stand disposed
of in terms of the above directions.

Sd/-
GITA MITTAL, J