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Non-reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CIVIL) No.36711 OF 2014

Calcutta Stock Exchange          … Petitioner

Versus

BLB Limited … Respondent

J U D G M E N T

Chelameswar,  J.

1. This  special  leave  petition  is  filed  by  the  unsuccessful

petitioner aggrieved by an order dated 03.11.2014 of the High

Court of Delhi passed in OA No.11 of 2013 in CS (OS) No.272

of 2004.

2. Both the parties, the petitioner and the respondent, are

companies registered under the Companies Act,  1956.  The

petitioner company is a “Stock Exchange” within the meaning

of the expression “stock exchange” defined under Section 2(j)1

1 Section 2(j). “stock exchange” means – (a) anybody of individuals, whether incorporated or not, constituted before corporatisation

and demutualization under sections 4A and 4B, or (b) a body corporate incorporated under the Companies Act, 1956 (1 of 1956), whether under

a scheme of corporatisation and demutualization or otherwise,  for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in

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of the Securities Contracts (Regulation) Act, 1956.

3. The respondent instituted Original Suit being C.S. (O.S.)

No.272 of 2004 on the file of the High Court of Delhi praying

for  a  decree  for  the  recovery  of  an  amount  of

Rs.11,89,86,525/- along with interest etc.   In the said suit,

the petitioner herein filed an Interlocutory Application No.6903

of 2012 under Order XVI Rule 1 CPC seeking to summon the

record of  business  transactions of  the  respondent  company

(hereinafter referred to as “the plaintiff”). The said application

was dismissed by the Joint Registrar of the Delhi High Court

in exercise of his powers under the Delhi High Court (Original

Side) Rules, 1967 by an order dated 06.12.2012.

4. Aggrieved by the order dated 06.12.2012, the petitioner

herein  carried  the  matter  by  way  of  Chamber  Appeal  (O.A.

No.11 of 2013) under Rule 4 read with Chapter II of the Delhi

High Court (Original Side) Rules, 1967 unsuccessfully.   The

appeal  was  dismissed  by  the  impugned  order  dated

03.11.2014.

5. It  appears,  in  the  month  of  March  2001,  the  Stock

Market all over the country had crashed and as a consequence securities.

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certain members of the defendant who were required to make payment to the defendant

(petitioner) were failing to discharge their obligation to the defendant from Settlement

No.2001148 onwards.  The defendant as a clearing house was not in a position to make

payments which it is liable to take under the System to many members including the

plaintiff.2  

6. According to the averments in the plaint, it appears, the

petitioner fell short of Rs.28 crores approximately. Initially, the

petitioner tried to collect the shortfall  from all  the members

proportionately but realized that it was not possible, therefore,

according to the plaintiff, the petitioner called a meeting of a

few financially sound members of the Exchange including the

plaintiff.  The relevant part of the plaint reads as follows:

“Thereafter Defendant called a meeting of a few financial sound members of the Exchange including the Plaintiff wherein various options to deal with the crisis  were discussed out  of which one option reposed by the deponent  was  to  reverse  the  transactions  of  Himachal  Futuristic Communication Ltd. and DSQ Software of all those members, who had a net  delivery  position  in  Settlement  No.2001148 of  more  than  1,00,000 shares.  The Defendant then showed a draft letter dated 22.03.2001 to the Plaintiff and others present at separate meetings and arbitrarily accused the members including the Plaintiff of collusive transactions and informed the members present in the basis of reversal of transaction, with a draft reply from the Plaintiff to the Defendant.   The Plaintiff did not acceded to this mode/option of dealing with the crisis.3”

7. Eventually, an amount of Rs.8,76,89,708/- was paid by

the plaintiff which according to averments in the plaint, the

plaintiff is under no legal obligation to pay.  According to the

2 Para 17 of the Plaint 3 Para 23 of the Plaint

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plaintiff,  the  said  amount  was  paid  under  protest.   The

relevant part of the plaint reads as follows:

“While  issuing the second cheque of  Rs.1,89,708/-  dated 23.03.2001 it was made clear to the Defendant in the covering letter to the cheque that the Plaintiff is making the payment of Rs.8.76 crores under protest and subject to the conditions that the same shall be refunded to the Plaintiff, as the Plaintiff has entered into all bonafide transactions and acted within the Rules and Bye-laws of the defendant.4

The above payment was therefore made by the Plaintiff to tide over the payment crisis and under protest with a request to Defendant to refund the same as and when the same is recovered from the defaulting members and or out of the funds being collected in the Settlement Guarantee Fund or through any other mode.5”  

8. It  is  further  the  case  of  the  plaintiff  that  thereafter

repeated requests, both oral and in writing, were made to the

petitioner for refund of the said amount.  Since the petitioner

did not make the payment, civil suit (No.272 of 2004) came to

be filed.

9. In the said suit, the petitioner herein filed Interlocutory

Application No.6903 of 2012 praying as follows:

“It is, therefore, most respectfully prayed that this Hon’ble Court is prayed to:

(a) allow  the  application  for  summoning  record  of  the  business transaction of the plaintiff company mentioned in para no.2;

(b) pass any order and/or orders as this Hon’ble Court may deem fit and proper of the facts of the case.”

4  Para 27 of the Plaint 5  Para 28 of the Plaint

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In  para  no.2  of  the  said  application,  list  of  documents6 is

given.   The  said  application  was  dismissed  by  the  Joint

Registrar by his order dated 06.12.2012.

10. Before we deal with the merits of the instant petition, it is

necessary to take note of few more facts.   

The  petitioner  herein  had  earlier  filed  two  Interlocutory

6  Para 2.  The concerned official from the BLB Ltd. (Plaintiff’s company) 4764/23A, Ansari Road, Darya  Ganj, New Delhi to produce the following records regarding the business transaction at Calcutta Stock  Exchange, Kolkata for the period from 01.04.2000 to 30.04.2001:

I. General Ledger, Party Ledger and Member’s Ledge from 01.04.2000 to 31.04.2001. II. Settlement wise Daily Transaction Report, C Form, Balance Sheet, Delivery Statement,

Auction Report from 01.09.2000 to 31.04.2001. III. Sauda Books, Documents Register (should include particulars of shares and securities

received and delivered) from 01.09.2000 to 31.04.2001. IV. Difference Bills issued to clients, Badla Accounts from 01.09.2000 to 31.04.2001. V. (a) Bank  Book  and  Bank  Statements  (with  reconciliation)  from  01.04.2000  to

31.04.2001. (b) D/P statements (pool & beneficiary a/c) from 01.09.2000 to 31.04.2001. (c) Settlement Account/s with reconciliation from 01.09.2000 to 31.04.2001. (d) Details of bank account/s from 01.04.2000 to 31.04.2001.

VI. Counter foils & duplicate copies of Contract Notes issued to clients from 01.09.2000 to 31.04.2001.

VII. Written consent of clients in case of transactions done on principal to principal basis from 01.04.2000 to 31.05.2001.

VIII. Documents/Delivery Register, settlement wise delivery statement, indicating clearly the following whether shares having mark to market loss, against which temporary reprieve has been claimed by members in a settlement, from payment of MTM margin money shortfall, have been actually delivered at the end of the settlement from 01.09.2000 to 31.04.2001.

IX. Margin Report (date wise) together with full particulars of payment of Margins as per the given format from 01.09.2000 to 31.04.2001.

X. Produce the following:

Business Volume handled by you in the following format:

(a) Dealings in top 20 securities in descending order of volume. (b) Dealings  with  top  20  brokers  so  far  as  off  market  deals  are  concerned  in

descending order of volume from 01.09.2000 to 30.04.2001. (c) List of top 20 clients separately in terms of number of transactions and the value

of transactions from 01.09.2000 to 30.04.2001. (d) List of top 20 clients separately in terms of number of transactions and the value

of  transactions  as  far  as  off  market  transactions  are  concerned  from  01.09.2000  to 30.04.2001.

(e) Details of defaults in payment/delivery in 2 years 1999-2001. (f) Fund borrowed  if  any  on  short  term or  long  term basis  during  the  2  years

1991-2001.

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Applications Nos.5120 of 2007 and 15164 of 2007 in C.S. (OS)

No.272 of 2004.  Both the applications were dismissed with

costs by the learned Single Judge by order dated 19.01.2009.

11. It appears from the order dated 19.01.2009, I.A. No.5120

of  2007  was  filed  calling  upon  the  plaintiff  to  “disclose”  a

certain documents mentioned in certain letters7.

12. The  learned  Single  Judge  of  the  High  Court  while

dismissing the said I.A. held that the letters dated 14.08.2003,

26.09.2003 and 03.11.2003 are not the subject matter of the

suit  but  were  subject  matter  of  another  suit  filed  by  the

plaintiff before the High Court of Calcutta bearing Suit No.219

of  2007.   After  recording  the  abovementioned  finding,  the

learned Single Judge held as follows:

“Para  8.   The  suit  filed  by  the  plaintiff  is  merely  for  recovery  of  the amount, no issue in this regard has been framed.  The application by the defendant under Section 151 of the CPC is otherwise belated which has been filed when the part cross-examination of plaintiff is already recorded. In  case  the  defendant  wishes  to  prove  his  case  on  the  basis  of  these documents, the defendant is at liberty to summon the same in accordance with law.   Therefore, the application being I.A. No.5120 of 2007 is totally misconceived and is not maintainable and it appears to have been filed to delay progress of the suit.”

13. It  appears from the order  of  the  Joint  Registrar  dated

7 Para No.2.  In IA No.5120/2007, a prayer is made that the direction be issued to the plaintiff to disclose all the documents mentioned in the letters dated 14 th August, 2003, 26th September, 2003 and 3rd November, 2003 and in failure to comply with the said requirements, the suit shall be dismissed and in the meanwhile, further proceedings in the suit shall be stayed.

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06.12.2012 (supra) that the order dated 19.01.2009 (supra) of

the learned Single Judge was confirmed by a Division Bench

by  its  order  dated  03.03.2009.   The  Joint  Registrar  in  his

order dated 06.12.2012 rightly framed the question, “What is to be

seen is  as  to  whether  the  documents  sought  to  be  summoned  would  be  relevant  for

effective disposal of the present suit and if so, the defendant deserves to be granted relief

as sought” and recorded a conclusion, “Once the Hon’ble Single Judge came

to the conclusion that the documents sought to be produced were not relevant for the

adjudication of the suit and the order was also upheld by the Hon’ble Division Bench, the

issue of relevance cannot be reopened by the Joint Registrar.”

14. In the appeal against the order dated 06.12.2012 passed

by the Joint Registrar, the learned Single Judge of the Delhi

High Court by impugned order recorded various reasons for

not interfering with the order of the Joint Registrar8.

15. It is rather unfortunate that the categoric finding by the

8 Para 10. (a) Firstly, it appears that the present suit is a simple suit for recovery of the amount which was paid by the plaintiff to the defendant.  It also appears from the averments made in the application as well as the grounds raised in the appeal that the defendant seeks production of the documents for investigation which is pending against various parties in collateral proceedings.  The power of investigation, if any, under Section 11C of the Securities and Exchange Board of India Act, 1992 is with Securities Exchange Board of India.

(b) The operation of  the  letters  issued  by  the defendant  has  already been  stayed  by  the Calcutta High Court.

(c) It is also a matter of fact that under Order XLIII Rule 1 of the Code of Civil Procedure, 1908, the impugned order is not an appealable order. Order XLIII CPC does not contemplate an appeal against the order passed in application under Order XVI Rule 1 CPC.

(d) It also appears from the record that the defendant has attempted on many dates to delay the completion of the trial on one pretext or the other.  The suit filed by the plaintiff is merely a suit for recovery of the amount. The said fact has not been denied.  The said documents cannot be summoned from the plaintiff at the time of cross examination of the defendant’s witnesses. It is evident that those documents are actually required by the defendant for pending investigation for the purposes of collateral proceedings.  

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Joint Registrar that the documents sought to be summoned

are  not  relevant  for  the  disposal  of  the  suit  has  not  been

adverted  to  by  the  learned  Single  Judge  in  the  impugned

order.   Interestingly,  the  abovementioned  conclusion  of  the

Joint Registrar is based on an observation made earlier by the

very same learned Judge in his order dated 19.01.2009.

16. The learned counsel for the petitioner strenuously argued

that the various reasons assigned by the learned Single Judge

in  the  impugned  order  for  dismissing  the  appeal  are

untenable.   

17. We do not  wish to  examine the elaborate  submissions

made by the learned counsel in this case for the reason that

the jurisdiction under Article 136 of the Constitution of India

is discretionary.  If this Court is convinced that the impugned

order could be sustained by proper and valid reasons, the fact

that the reasons recorded by the High Court for its conclusion

are  untenable  need  not  necessarily  call  for  exercise  of  the

discretion of this Court under Article 136.

18. In the instant case, the order of the Joint Registrar which

was confirmed by the learned Single Judge in the impugned

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order correctly identified the question whether the documents

sought to be summoned by the petitioner are relevant having

regard to the nature of the suit and recorded conclusion that

the  documents  are  not  relevant.   Such a conclusion of  the

Joint Registrar is itself based on an earlier finding recorded by

the High Court in its order dated 19.01.2009 which became

final.   Even otherwise,  to  satisfy  ourselves  that  there is  no

miscarriage  of  justice  in  the  instant  case,  we  have

meticulously examined the written statement.  We are satisfied

that the matter does not call for interference in exercise of our

jurisdiction under Article 136.  Any further elaboration of the

reasons for our satisfaction could have adverse impact on the

case.   Therefore,  we  desist.   Special  Leave  Petition  is

dismissed.  

….………………………….J.                                                        (J. Chelameswar)

…….……………………….J.    (Abhay Manohar Sapre)

New Delhi; December 11, 2015  

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