Hassad Food Company Q.S.C. v. Bank of India, 2019 SCC OnLine Del 10647

SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd.
Stage- prior to completion of pleadings

Page 1 Friday, September 30, 2022 and framing of issues.
Printed For: Tanya Bhutani, Delhi University Law School
SCC Online Web Edition: http://www.scconline.com
Documents so voluminous that plea of
© 2022 EBC Publishing Pvt.Ltd., Lucknow. administrative oversight valid.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
I.A. 3250/2019
Hassad Food Company Q.S.C. v. Bank of India
2019 SCC OnLine Del 10647
In the High Court of Delhi at New Delhi

(BEFORE MUKTA GUPTA, J.)
Hassad Food Company Q.S.C. and Another .…. Plaintiffs;

v.
Bank of India and Others .…. Defendants.
I.A. 3250/2019 in CS(COMM) 9/2018
Decided on October 15, 2019, [Reserved on: 5th September, 2019]
Advocates who appeared in this case :
Mr. Jayant Mehta, Mr. Samar Singh Kachwaha, Ms. Smiti Verma, Mr. Aayush
Marwah, Advs.
Mr. Adhish Rajvanshi, Ms. Shreyuss Shanbarjoshi, Ms. Kamna, Mr. V. Seshagiri,
Advs. for D-1, 3, 5 & 6.
Mr. Priya Mohan Roy, Adv. for D-4/Allahabad Bank.
Ms. Jagriti Ahuja, Adv. for D-7/HSBC
Mr. B.L. Wali, Adv. for D-8/Kotak Mahindra Bank.
Ms. Usha Singh, Ms. Nidhi Saini, Advs. for D-9.
Mr. Saumyen Das, Adv. for D-10/DBS Bank.
The Judgment of the Court was delivered by
MUKTA GUPTA, J.:—
I.A. 3250/2019 (u/S 151 CPC for filing additional documents by P.)
1. By this application under Section 151 CPC plaintiffs seek leave to place on record
additional documents.
2. Plaintiffs have filed the present suit, inter alia, seeking a decree declaring that
the invocation of the Corporate Guarantee dated 16th May, 2013 issued by plaintiff No.
1 herein by the BOI consortium members is vitiated by fraud and/or misrepresentation
under Sections 17, 18, 142 & 143 of the Contracts Act and is therefore invalid in law
entitling the plaintiffs to seek consequential relief including a money decree in favour
of the plaintiff No. 1 and against the defendant No. 1 for a sum of Rs. 1,43,22,00,000/
-; against defendant No. 2 for a sum of Rs. 30,07,00,000/-; against defendant No. 3
for a sum of Rs. 40,06,82,247/-; against defendant No. 4 & 12 jointly and severally for
a sum of Rs. 91,11,00,000/-; against defendant No. 5 for a sum of Rs. 13,12,00,000/-
; against defendant No. 6 for a sum US$ 1,434,957.59; against defendant No. 7 for a
sum US$5,806,272.73; against defendant No. 8 & 10 jointly and severally for a sum of
Rs. 35,93,00,000/-, declaring the purported action of the defendants under the deed
of Guarantee dated 16th May, 2013 seeking balance dues as null and void etc.
3. Case of the plaintiffs is that the plaintiffs are companies 100% owned and
controlled by Government of Qatar entity called the ‘Qatar Investment Authority’ and
the plaintiff No. 2 invested on 28th March, 2013 about US$ 120.34 millions in Indian
company called Bush Foods Overseas Pvt. Ltd. (in short Bush Foods) and acquired
69.5% shareholding in the said company from its promoters and Standard Chartered
Private Equity Limited (in short SCPE) a private equity investor. Bush Foods had
availed large working capital loans from a 9 member consortium of banks led by
Page 2 Friday, September 30, 2022
© 2022 EBC Publishing Pvt.Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
defendant No. 1 Bank of India (in short BOI consortium). As per the lending
agreement between the banks and Bush Foods, NOC was required from the BOI
consortium bank members to consent to the share transfer transaction. Pursuant to
the NOC given by the banks on the condition that the plaintiff No. 1 furnishes a
Corporate Guarantee, guaranteeing 70% of the working capital loans availed by Bush
Foods which was approximately Rs. 650 crores, the plaintiff No. 2 invested the money
and plaintiff No. 1 also furnished a Corporate Guarantee dated 16th May, 2013 in
favour of BOI consortium members to the extent of 70% of Rs. 650 crores loan facility
availed by Bush Foods. On papers as projected by the bank, Bush Foods was supposed
to be a financially healthy, profit making company with annual gross revenue of Rs.
1,267 crores with a rice and paddy inventory allegedly worth Rs. 1,000 crores (against
hypothecation of which the Banks had extended very large loans to the company). The
plaintiffs became victim of serious fraud and cheating including that of the Banks
when it realized that Bush Foods was nearly a bankrupt company and its turnover and
inventory was a total fabrication and the company was indulging in circular paper
transactions to bloat its turnover and profits, and against bogus inventories kept on
borrowing large sums. In extending the loans, bogus book keeping and fabrication of
records, the complicity of the banks was writ large. Since Bush Foods was in reality a
sick company, it was unable to meet its debt obligation towards the banks and the
banks therefore invoked the Corporate Guarantee given by the plaintiff at the various
points of time. The banks made no effort to proceed for recovery from the alleged
inventory of Bush Foods which was shown to be in excess of Rs. 1,000 crores, being
the principal security and encashed the Corporate Guarantee of the plaintiff No. 1.
Thus, the plaintiffs not only lost their investments but also the corporate guarantees
amounting to a net loss of Rs. 1,300 crores approximately by investing in an Indian
Company due to an egregious fraud. Despite the forgery and fabrication by Bush
Foods, no Police complaint was lodged by the banks and thus the plaintiff was finally
constrained to file a complaint before the Economic Offences Wing of the Delhi Police
wherein during investigation it was revealed that the stocks and inventories produced
were forged and fabricated. Having engaged independent professional agency,
plaintiffs have been able to unearth a vast number of e-mails between the BOI
consortium members, defendant No. 8 and Bush Foods which would show that Bush
Foods was financially in dire straits and was constantly being reprimanded by the
State Bank for failing to meet its loan obligations. Penal interest was levied or
threatened to be levied and NPA threats were also being extended by the banks just
prior to the transaction whereby the plaintiff No. 2 was induced to invest in the Bush
Foods and plaintiff No. 1 to execute a Corporate Guarantee. Plaintiffs' inquiry also
revealed that the banks were aware of and privy to the fact that Bush Foods was using
the borrowed cash for circular loans but all these facts were concealed from the
plaintiffs.
4. Plaintiffs along with the suit filed the documents as also filed I.A. 107/2018
under Section 151 CPC by which plaintiffs had sought exemption from filing original
documents and typed and marginated copies of the documents produced. The
plaintiffs also undertook to file copies of the original documents at a later stage if
directed. IA 107/2018 was allowed vide order dated 4th January, 2018 exempting the
plaintiffs from filing original documents till further orders.
5. Summons in the suit were issued to the defendants. In the course of the
proceedings the defendants were served and the defendants filed their written
statements as also the applications for exemption from filing admission/denial
affidavits. Finally on 27th March, 2019 the learned Joint Registrar noted that the
plaintiffs had filed replications to the written statements of all the defendants and
affidavit of admission/denial of documents along with separate applications for
condonation of delay in filing replications. The suit was thus listed for completion of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
pleadings on 12th April, 2019. On 27th March, 2019 the present application being I.A.
3250/2019 filed by the plaintiffs to place on record additional documents came up for
hearing. In the application, the plaintiffs claim that they filed voluminous documents
with the plaint, however considering the extent of fraud and volume of documents,
some of the documents which are essential and substantial like the monthly
investment statements sent by Bush Foods to the banks, the attachments with the
emails have been inadvertently left out. Along with I.A. 3250/2019 plaintiffs also filed
I.A. 3251/2019 under Section 151 CPC seeking exemption from filing original
documents and typed and marginated copies of dim documents to which no reply was
filed despite notice and the application was allowed subject to just objections on 12th
April, 2019.
6. By this application the plaintiffs seek to place the following documents on record
to further substantiate their claim against the defendants.
“(i) Monthly inventory statements submitted by Bush Foods to the banks, from
April, 2011 - October 2013, marked and annexed herewith as A-1(Colly). It is
submitted that some inventory statements pertaining to some of the Defendant
Banks had already been filed with the plaint and are on record. It has now been
realized, that due to an administrative oversight, some of the inventory
statements were not filed earlier and are sought to be placed on record by way of
the present application.
(ii) E-mail dated 25th June, 2015 from GPW to the plaintiffs, along with relevant
portions of the attached spreadsheet, and other attachments, giving details of
relevant correspondence between Bush Foods and the Defendant Banks, thereto
marked and annexed herewith as A-2. It is submitted that GPW's detailed report
dated 25th June, 2015 referred to in the same email has already been filed with
the plaint and is presently on record, however, due to an administrative
oversight the covering e-mail dated 25th June, 2015 from GPW to the plaintiffs,
along with the attached spreadsheet was not filed and is now sought to be
placed on record, along with its attachments.
(iii) E-mail dated 26th June, 2015 from GPW to the plaintiffs, marked and annexed
herewith as A-3. Along with plaint, the attachments from the said e-mail dated
26th June, 2015 were attached, however, due to an administrative oversight, the
e-mail dated 26th June, 2015 was not filed, and is now sought to be placed on
record.
(iv) E-mail dated 14th July, 2015 from GPW to the plaintiffs, marked and annexed
herewith as A-4. Along with the plaint, the attachments from the said e-mail
dated 14th July, 2015 was not filed and it now sought to be placed on record.
(v) Documentary evidence (SWIFT statements) to prove payments made to
defendant No. 1, 2, 3, 4, 5, 6, 7 & 8 are marked and annexed herewith as A-5
(Colly). In its written statement some defendants have put the plaintiffs to strict
proof regarding the said payment, and hence documentary proof in this regard is
being filed. These were not filed earlier due to administrative oversight and are
now being sought to be put to record.
(vi) Copy of Orders dated 8th August, 2016 and 31st August, 2016 of Court of ACMM,
Saket in FIR No. 136/2014 are marked and annexed as A-6(Colly). It is
submitted that due to an administrative oversight, these were not filed and are
now being sought to be put on record.
(vii) Copy of Minutes of meeting of Board of Directors of Bush Foods Overseas
Private Limited held on 4th July, 2013 is marked and annexed as A-7. It is
submitted that due to an administrative oversight, this document was not filed
and is now being sought to be put on record.”
7. Case of the plaintiffs is that these documents could not be filed earlier at the
-----------------------------------------------------------------------------------------------------------------------------------------------------------
time of institution of the present suit due to an administrative oversight on the part of
the plaintiffs, given the large volume of documents filed at that point of time. Plaintiffs
on realizing the omission have preferred the present application at the earliest. It is
also claimed that the documents being sought to be placed on record by way of this
application are closely related to the documents already on record and no new case is
being sought to be set up and the present documents are being filed to bring
completeness and context to the facts and documents already on record. The
application also notes that the pleadings are yet to be completed and issues have not
been settled by this Court. Even till date when this application was heard, the
replications of the plaintiffs have not been taken on record and issues had not been
settled by the Court. Learned counsel for the plaintiffs relies upon the decision of the
Division Bench of the Gujarat High Court according to which under the Commercial
Courts Act even if Order VII Rule 14(3) CPC was not applicable, however Order XI Rule
1(5) of CPC being applicable the plaintiffs can be permitted to rely upon the
documents not disclosed along with the plaint with the leave of the Court subject to
compliance of the conditions mentioned under Order XI Rule 1(5) as applicable to the
Commercial Suits.
8. Learned counsel for the plaintiffs also relies upon the decision of this Court in I.A.
269/2019 in CS(COMM) 519/2017 dated 24th January, 2019 titled as ‘Fankaar Interiors
Pvt. Ltd. v. Shreem Spa & Resorts Ltd.’; 2017 SCC OnLine Del 10039 ‘Sadhu Forging
Limited v. Continental Engines Ltd.’ and 2019 SCC OnLine Del 9656 ‘Tullio Glusi Spa v.
House of Trims Pvt. Ltd.’
9. Learned counsel for the plaintiffs submits that to the averments of the plaintiffs
that monthly inventories of the Bush Foods were given to the banks, the reply in the
written statements is a bald denial which is no denial in the eyes of law, as held by
this Court in Tullio Glusi Spa (supra). The plaintiffs having filed these documents at
the time of filing replication are entitled to have these documents placed on record.
10. Learned counsel for the defendant No. 1, 2, 3, 5 & 6 relying upon the decision
of this Court in I.A. 9/2019 in CS(COMM) 1215/2016 titled as ‘Nitin Gupta v. Texmaco
Infrastructure and Holdign Limited’ decided on 29th April, 2019 contends that in the
application it is stated that the documents were left due to oversight and inadvertence
which are not the grounds permissible even under Order XI Rule 1 & 5 CPC for filing of
additional documents. Learned counsel for the defendant No. 7 referring to Delhi High
Court (Original Side) Rules Chapter VII Rule 14 submits that no documents can be
filed after completion of pleadings. Learned counsel for the defendant No. 9 referring
to the decision of this Court in FAO(OS) 502/2009 titled as ‘Lt. Col. S.D. Surie v.
Paramount Enterprises’ decided on 19th September, 2011 contends that an application
under Section 151 CPC is not maintainable for filing additional documents.
11. Rebutting the arguments of learned counsel for the defendants, learned counsel
for the plaintiffs submits that as per Order XI Rule 1 sub-Rule (c) CPC the plaintiffs
can use these documents for cross-examination of the defendants' witnesses by taking
them for surprise, however by filing it in advance the plaintiffs are giving the
defendants opportunity to look into the documents before they are cross-examined on
this aspect, hence the filing of these documents cannot be denied to the plaintiffs.
Order XI Rule 1 sub-Rule (5) CPC is a standalone provision and if the plaintiff is able
to demonstrate that the documents are relevant for the purposes of cross-examination
of the defendant's witnesses, they would be required to be confronted with the same
and taken on record. In the decision of Nitin Gupta (supra) relied upon by learned
counsel for the defendants No. 1, 2, 3, 5 & 6 this Court disallowed the documents on
the ground that the plaintiff therein had actually pleaded a case contrary to what
emerged from the additional documents sought to be filed and for the reason that the
plaintiff therein was changing its case, this Court disallowed the filing of the additional
documents.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
12. The relevant extract from Order XI Rule 1 of the Commercial Courts Act, 2015
as amended and applicable to commercial suits reads as under:—
“DISCLOSURE, DISCOVERY AND INSPECTION OF DOCUMENTS IN SUITS BEFORE
THE COMMERCIAL DIVISION OF A HIGH COURT OR A COMMERCIAL COURT
1. Disclosure and discovery of documents.—(1) Plaintiff shall file a list of all
documents and photocopies of all documents, in its power, possession, control
or custody, pertaining to the suit, along with the plaint, including:
(a) documents referred to and relied on by the plaintiff in the plaint;
(b) documents relating to any matter in question in the proceedings, in the
power, possession, control or custody of the plaintiff, as on the date of filing
the plaint, irrespective of whether the same is in support of or adverse to
the plaintiff's case;
(c) nothing in this Rule shall apply to documents produced by plaintiffs and
relevant only--
(i) for the cross-examination of the defendant's witnesses, or
(ii) in answer to any case set up by the defendant subsequent to the filing
of the plaint, or
(iii) handed over to a witness merely to refresh his memory.
(2) The list of documents filed with the plaint shall specify whether the
documents in the power, possession, control or custody of the plaintiff are
originals, office copies or photocopies and the list shall also set out in brief,
details of parties to each document, mode of execution, issuance or receipt
and line of custody of each document.
(3) The plaint shall contain a declaration on oath from the plaintiff that all
documents in the power, possession, control or custody of the plaintiff,
pertaining to the facts and circumstances of the proceedings initiated by him
have been disclosed and copies thereof annexed with the plaint, and that the
plaintiff does not have any other documents in its power, possession, control
or custody.
Explanation.--A declaration on oath under this sub-rule shall be contained in the
Statement of Truth as set out in the Appendix.
(4) In case of urgent filings, the plaintiff may seek leave to rely on additional
documents, as part of the above declaration on oath and subject to grant of
such leave by Court, the plaintiff shall file such additional documents in Court,
within thirty days of filing the suit, along with a declaration on oath that the
plaintiff has produced all documents in its power, possession, control or
custody, pertaining to the facts and circumstances of the proceedings initiated
by the plaintiff and that the plaintiff does not have any other documents, in its
power, possession, control or custody.
(5) The plaintiff shall not be allowed to rely on documents, which were in the
plaintiff's power, possession, control or custody and not disclosed along with
plaint or within the extended period set out above, save and except by leave
of Court and such leave shall be granted only upon the plaintiff establishing
reasonable cause for non-disclosure along with the plaint.”
xxx xxx xxx
12. Duty to disclose documents, which have come to the notice of a party, shall
continue till disposal of the suit.
13. Perusal of Order XI as noted above reveals that the plaintiff is bound to file all
documents in its power, possession, control or custody with the plaint and in case of
urgent filing of a suit if some additional documents are to be filed under sub-rule (1)
of Rule 1 of Order XI, the plaintiff may seek leave of the Court to rely on additional
-----------------------------------------------------------------------------------------------------------------------------------------------------------
documents which additional documents are required to be filed within 30 days of filing
of the suit. Under sub-rule (5) of Rule 1 of Order XI, the plaintiff shall not be allowed
to rely on documents which were in the plaintiff's power, possession, control or
custody and not disclosed along with the plaint or within the extended period save and
except by leave of the Court which leave can be granted only if the plaintiff establishes
reasonable cause for non-disclosure along with the plaint. The language used in the
sub-rule (5) is that the plaintiff is required to show “a reasonable cause” and not a
“sufficient cause” as is ordinarily provided in other provisions.
14. While dealing with Order XIII Rule 2 CPC wherein the words used are: “unless
good cause is shown”, the Supreme Court in the decision reported as (2002) 1 SCC
535 Madanlal v. Shyamlal, noted the distinction between “good cause” and “sufficient
cause” and held that “good cause” requires a lower degree of proof as compared to
“sufficient cause” and thus the power under Order XIII Rule 2 CPC should be exercised
liberally. Sub-Rule (5) of Rule 1 of Order XI of the Commercial Courts Act, 2015 uses
the phrase “reasonable cause” which would require even a lower degree of proof as
compared to “good cause”.
15. Thus it is to be seen in the present case whether the plaintiff who is required to
file voluminous documents inadvertently misses out certain documents which are in
line with the documents already filed and further the case of the plaintiffs and does
not set up of a contrary case, would be a reasonable cause permitting the plaintiffs to
file additional documents at this stage when pleadings are not complete as yet for the
reason the replications of the plaintiffs have not been taken on record as yet. The
plaintiffs along with suit has filed more than 2000 documents, the nature of the suit is
commercial wherein the plaintiff No. 1 furnished corporate guarantee and plaintiff No.
2 invested money with Bush Foods pursuant to the representations of the BOI
consortium who are the defendants. By these additional documents, the plaintiffs want
to further demonstrate the conduct of the defendant banks which would show
correspondence between Bush Foods and defendant Banks and that to the knowledge
of the defendant banks the financial condition of Bush Foods was not healthy and the
said facts were concealed from the plaintiffs rather representations were made that
Bush Foods have assets justifying the investment inducing plaintiff No. 1 which was
made to execute a corporate guarantee and plaintiff No. 2 to invest the money. The
plaintiffs have thus made out a case of egregious fraud against the defendant banks.
16. The additional documents sought to be filed, as mentioned at serial No.(ii), (iii)
and (iv) are the attachments with the e-mails which e-mails have already been filed,
and inadvertently the attachments were not filed. Documents sought to be filed, as
mentioned at serial No.(i) are the monthly inventory statements most of which have
already been filed, however with regard to some of the defendant banks the same
were not inadvertently filed. Documents sought to be filed, as mentioned at serial No.
(v) are the SWIFT statements regarding the payments made and the same are
required to be filed as the defendant banks have put the plaintiffs to strict proof
regarding the payments. The documents sought to be filed, as mentioned at serial No.
(vi) are the orders by the Court of learned ACMM in FIR No. 136/2014 registered
against Bush Foods and others. The documents sought to be filed, as mentioned at
serial No.(vii) are the copy of the minutes of meeting of the Board of Directors of Bush
Foods Overseas Private Limited held on 4th July, 2013.
17. Learned counsel for the defendants have relied upon the decision of this Court
in Nitin Gupta (supra) to contend that the additional documents cannot be permitted
to be filed in a commercial suit. The two main reasons why a co-ordinate Bench of this
Court declined to permit additional documents to be filed were, firstly that the issues
had been settled, and secondly, that the additional documents sought to be filed by
the plaintiff therein pleaded a case contrary to what had been pleaded in the plaint.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
18. In the pleas taken in the present application the defendants neither dispute the
relevancy of the documents nor that the documents sought to be filed do not relate to
them and the only objection taken is that the plaintiffs cannot be allowed to file the
documents at the belated stage. As noted above in the present suit the pleadings are
not complete as yet as the replications are yet to be taken on record and hence it
cannot be said that the plaintiffs have filed the present application so belatedly that it
cannot be allowed. Further the plaintiffs have very fairly taken the plea of
administrative oversight which can occur when the number of documents is
voluminous. Thus the plaintiffs have made out a reasonable cause for not filing the
documents with the plaint.
19. There is yet another fact which needs consideration. Most of the documents now
sought to be filed by the plaintiffs relate to the defendant banks which even the
defendant banks were required to disclose on affidavit along with their written
statements. However, without giving the complete disclosure of the facts and the
documents, the defendants have put the plaintiffs to strict proof of the same. By the
present application, the plaintiffs are neither setting up a new case nor withdrawing
any admission. In similar situation, a Single Bench of this Court in Fankaar's case
(supra) has permitted additional documents to be placed on record. Consequently, the
application is allowed. The plaintiffs are permitted to place additional documents on
record subject to payment of costs in sum of Rs. 10,000/- to be deposited with the
Delhi High Court Legal Services Committee within two weeks.
20. Application is disposed of.
———
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/
notification is being circulated on the condition and understanding that the publisher would not be liable in any manner by reason of any mistake
or omission or for any action taken or omitted to be taken or advice rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/
rule/ regulation/ circular/ notification. All disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The
authenticity of this text must be verified from the original source.

Hassad Food Company Q.S.C. v. Bank of India, 2019 SCC OnLine Del 10647

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Hassad Food Company Q.S.C. v. Bank of India, 2019 SCC OnLine Del 10647

Uploaded by

Copyright:

Available Formats

SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd.

Stage- prior to completion of pleadings

Hassad Food Company Q.S.C. v. Bank of India

2019 SCC OnLine Del 10647

In the High Court of Delhi at New Delhi

Hassad Food Company Q.S.C. and Another .…. Plaintiffs;

You might also like