M/s.HMA Data Systems Private Limited v. M/s.SSI Limited

"That HMA Data Systems Pvt., Ltd., therespondent herein, its agents, or successorinterest, be and are hereby restrained by anorder of temporary injunction till 17.6.2005 fromtransferring, or alienating or encumbering in anymanner or shares held by the respondent herein,in India Switch Company Pvt., Ltd., or in thebusiness of India Switch Company Pvt., Ltd." (e) The appellant/defendant appeared before this Court on29.4.2005 on being informed in the earlier proceeding before theCity Civil Court, about the interim order dated 28.4.2005 passed bythis Court and gave an affidavit of undertaking on certain terms.The learned single Judge, after hearing parties by order dated29.4.2005 passed the following modified order pursuant to theaffidavit of undertaking dated 29.4.2005 given by the presentappellant/defendant:-"That the order of temporary injunctiongranted in pursuance of the order dated 28.4.2005made in O.A.No.519 of 2005 restraining therespondent therein, its agents, or successor ininterest, from transferring, or alienating orencumbering in any manner of shares held by therespondent herein, in India Switch Company Pvt.,Ltd., or in the business of India Switch CompanyPvt., Ltd., shall stand suspended until furtherorders of this Court." (f) The defendant in C.S.No.431 of 2005, the appellant herein,also filed an application A.No.4901 of 2005 praying to vacate theabove modified order dated 29.4.2005 passed in O.A.No.519 of 2005.The defendant filed another application A.No.3216 of 2005 praying toreject the plaint in C.S.No.431 of 2005. (g) The learned Single Judge, after hearing the contention oneither side, by order dated 20.1.2006, passed the following commonorder:-"15. The modified order passed by this Court,wherein the bank guarantee was furnished, has tostand till the disposal of the suit. So far asthe question as to the point of limitation isconcerned, this Court is unable to agree with thelearned Senior counsel for the defendant, sincethe scope of the suit, now pending before thisCourt, is as to whether any default has beencommitted by the plaintiff, forfeitingRs.4,36,30,000/-, which was given as advance money https://hcservices.ecourts.gov.in/hcservices/ and the same is to be decided only on theevidence. The question of point of limitationwould not arise for consideration. Under thecircumstances, the contentions put forth by thelearned Senior counsel for the plaintiff have gotto be accepted and the defendant's sidecontentions have got to be rejected. Hence, themodified order is to be sustained till thedisposal of the suit.16. The application Nos.3216 and 4901 of 2005are dismissed and the Application No.2171 of 2005and O.A.No.519 of 2005 are disposed ofaccordingly."Aggrieved by the above said common order dated 20.1.2006, theappellant/defendant filed all the three appeals. No appeal is filedin respect of A.No.2171 of 2005. 5. The facts that led to the filing of the suit by therespondent/plaintiff is as hereunder:- (a) On 19.4.2000, the respondent/plaintiff M/s.SSI Limited enteredinto an arrangement with the appellant/defendant M/s.HMA Data SystemsPrivate Limited through a letter of intent for purchase of 80% ofequity shares of M/s.India Switch Company Private Limited (ISC), theTarget Company, a company registered under the Indian Companies Act,1956, by way of transfer of the shares of the Target Company fromM/s.HMA Data Systems Private Limited, the appellant/defendant toM/s.SSI Limited, the respondent/plaintiff. On completion of thetransaction, it was agreed that the Target Company M/s.ISC will issuethe shares in favour of the respondent/plaintiff. The price agreedfor acquisition of the shares by the respondent/plaintiff from theappellant/defendant is around US $ 43 Million. The letter of intentdated 19.4.2000 for the above transaction was subject to duediligence clause. M/s.SSI Limited agreed to make earnest moneydeposit of US $ 1 Million on signing the letter of intent and onM/s.HMA Data Systems Private Limited accepting the letter of intent.(b) The further clause is that the earnest money will not berefunded if the share purchase agreement is not executed by M/s.SSILimited on or before the stipulated date. As per the terms of theletter of intent, M/s.SSI Limited should complete the detailedaccounting, legal and business due diligence in respect of the TargetCompany and the proposed acquisition on or before 30th April 2000 orsuch other date as may be agreed upon in writing by the parties at alater date. The further terms is that the appellant M/s.HMA DataSystems Private Limited shall co-operate fully towards due diligenceby M/s.SSI Limited within the stipulated period by providing all https://hcservices.ecourts.gov.in/hcservices/ necessary information sought for by M/s.SSI Limited during suchaccounting, legal and business due diligence. As far as refund ofearnest money deposit is concerned, in terms of letter of intent, itcan be claimed in the following circumstances:-(i) If the sale is not proceeded with on account of withdrawal byM/s.HMA, or (ii) If M/s.SSI is compelled to withdraw from acquisition or deferthe execution of the share purchase agreement on or before thestipulated period as a result of the failure of M/s.HMA to providenecessary information to M/s.SSI, or (iii) On account of any legal or other impediment on the transfer ofshares from M/s.HMA to M/s.SSI which is not overcome by M/s.HMAwithin 30 days or any additional period which may be mutuallyagreed upon between the parties, or (iv) If the liabilities of the Target Company, on due diligence arediscovered to be in excess of US $ 2 Million and M/s.SSI andM/s.HMA do not reach agreement on the consequential priceadjustment, or (v) If the due diligence revealed any previously undisclosed factor(s) adversely affecting the future course of business.(c) The further clause in the letter of intent is that HMA shallrefund the earnest money deposit without interest within seven daysfrom the date of receipt of communication of such withdrawal inwriting. One other clause which may be relevant is as follows:-"This Letter of Intent is only a basis forcontinued discussions between the parties and isnot an offer or a commitment to consummate thetransaction described above. This Letter ofIntent is not intended to create a binding orenforceable contract of commitment between SSI andHMA and the same may not be relied upon by anyperson or entity as the basis for a contract orcommitment. However, this will not affect theright of HMA to appropriate the earnest moneydeposit as provided in this Letter of Intent evenif the Letter of Intent does not fructify into abinding contract." (emphasis supplied)(d) Consequent to the letter of intent, the respondent/plaintiffmade a payment of Rs.4,36,30,000/- on 20th April, 2000. Thereafter,the respondent/plaintiff conducted due diligence and a report was https://hcservices.ecourts.gov.in/hcservices/ submitted by its law firm on 29th April, 2000. Thereafter, it appearsthat the transaction did not conclude in the form of a contract asenvisaged by the letter of intent. The matter was kept in abeyancefor more than five years. (e) On 5th April, 2005, (i.e.) after nearly five years, theEnglish Newspaper, The Hindu, reported a news item about the purchaseof the Target Company M/s.ISC by US based company called asM/s.EFunds International India Private Limited. Based on thisreport, on 6th April, 2005, plaintiff M/s.SSI writes a letter toM/s.EFunds International India Private Limited informing them aboutthe execution of document for acquiring 80% of the equity shares ofM/s.ISC from M/s.HMA, the appellant/defendant. This was followed alegal notice dated 6.4.2005 by the respondent/plaintiff to theappellant/defendant. In the notice it is stated that due diligencewas conducted, but due to non-furnishing of documents by M/s.HMA, thedue diligence was not completed. The respondent/plaintiff in thenotice to the appellant/defendant stated as follows:-"In this respect we would like to state thatyour action in dealing with M/s.efundsInternational Pvt. Ltd., while the agreement withSSI Limited is in subsisting and you are stillholding the amount (Rs.4,36,30,000/-) receivedfrom SSI Limited is a criminal breach and grossviolation of the contract. Further, you have sofar neither returned the earnest money ofRs.4,36,30,000/- to our client nor terminated theLetter of Intent executed by yourself and ourclient.We therefore, advice you not to enter intoany negotiations with any other person other thanour client for the sale of shares or the businessof M/s.India Switch Co. Private Limited, while theLetter of Intent executed by our client andyourself is still subsisting." (emphasis supplied)(f) Thereafter, on 8th April 2005, the respondent/plaintiff filedO.S.No.2245 of 2005 before the VII Assistant City Civil Court,Chennai for permanent injunction restraining M/s.HMA Data SystemsPrivate Limited, the appellant herein from entering into anynegotiation with any other person other than the plaintiff for thesale of shares or the business of M/s.ISC. It appears on 11th April,2005, ex parte order of interim injunction was granted in I.A.No.7946of 2005 by the City Civil Court. After notice and on 15.4.2005,M/s.HMA filed I.A.Nos.8410, 8411 and 8412 of 2005 before the CityCivil Court to reject the plaint; to vacate the interim injunctionand for advance hearing of the injunction application. On 20.4.2005, https://hcservices.ecourts.gov.in/hcservices/ it is stated that all the above applications in the suit O.S.No.2245of 2005 were heard by the City Civil Court and posted for orders on28.4.2005. It is further averred by the appellant/defendant that on28.4.2005 two applications were filed one for reopening the hearingof I.A.No.7946 of 2005 and the other to receive additional documents.In the meanwhile on the same day, a memo was filed before the CityCivil Court stating that this Court in C.S.No.431 of 2005 hasstayed the proceedings in the suit pending before the City CivilCourt. That respondent/plaintiff obtained an order of interiminjunction in O.A.No.519 of 2005 in C.S.No.431 of 2005 on 28.4.2005as set out earlier.(g) It is further averred by the appellant/defendant that afterpassing order on 28th April 2005 in O.A.No.519 of 2005 in C.S.No.431of 2005 restraining the appellant/defendant from transferring oralienating or encumbering the shares of the Target Company, and inview of closing of the court for summer vacation, an affidavit ofundertaking was filed by the present appellant M/s.HMA on 29th April2005 before this Court. The affidavit of undertaking was filed byMr.D.Balajichandran, son of Mr.T.Dakshinamoorthy, working as ChiefFinancial Officer in M/s.HMA Data Systems Private Limited, No.5,Mezzanine Floor, Thappar House, New No.37, Old No.44, Montieth Road,Egmore, Chennai-8. Paragraphs 2 and 3 of the affidavit read thus:-“2. I undertake on behalf of the respondentthat the respondent shall, immediately uponreceipt of sufficient consideration fromM/s.EFunds International India Pvt. Ltd., or anyother party for the sale of shares constitutingcontrolling interest in India Switch Company Pvt.Ltd., or transfer of undertaking of India SwitchCompany Pvt. Ltd., furnish a Bank Guarantee to atune of Rs.4,36,30,000/- (Rupees Four Crores,thirty six lakhs and thirty thousand only), whichis the suit claim herein, to the satisfaction ofthe Hon’ble High Court. This undertaking isvalid till this Hon’ble High Court disposes ofthe Applications for furnishing security inApplication No.2171 of 2005 and O.A.No.519 of2005 in the above suit. This undertaking isgiven without prejudice to the rights of therespondent to contest the suit proceedings or anyapplication therein before this Hon’ble Court,or any proceeding under O.S.No.2245 of 2005 thatthe plaintiff seeks to transfer to the file ofthis Hon’ble Court from the VII Assistant CityCivil Court.3. I respectfully submit that thisundertaking is given subject to and based on the https://hcservices.ecourts.gov.in/hcservices/ understanding entered into by the parties to thissuit in open Court today that the plaintiffagrees for the immediate suspension of the ordersof injunction dated 11.4.2005 granted by the VIIAssistant City Civil Court, at Chennai inI.A.No.7946 of 2005 in O.S.No.2245 of 2005, onaccount of the impending summer vacation of thisCourt.”Based on the above affidavit, the modified order was passed on29.4.2005 and the order dated 28.4.2005 was suspended until furtherorders. The order of interim injunction granted by the City CivilCourt in I.A.No.7946 of 2005 in O.S.No.2245 of 2005 was alsosuspended until further orders of this court. The suit filedbefore the City Civil Court is transferred to this Court andrenumbered as Tr.C.S.No.533 of 2005. Thereafter based on theundertaking given before this court on 29.4.2005, a bank guaranteewas executed on 22.6.2005 jointly by M/s.State Bank of India andM/s.India Switch Company Private Limited (M/s.ISC) signed byMr.D.Balajichandran, Chief Financial Officer, authorised signatoryand duly constituted attorney in the presence of Mr.S.Suryakumar,Company Secretary. The address of M/s.India Switch Company is shownas No.5, Mezzanine Floor, Thapper House No.37, Montieth Road,Egmore, Chennai-8. This guarantee is issued in favour of theRegistrar, High Court, Madras. The clauses "B" and “E” of theguarantee which are relevant reads as follows:-"B. The guarantor is aware of the terms andconditions contained with these presents inrespect to the application No.OA No.519 of 2005in C.S.431 of 2005."“E. The Guarantee contained in this Deed isirrevocable, unconditional and unqualified and acontinuing one and shall remain in force untilthe disposal of the application No.OA No.519 of2005 in CS 431 of 2005 and be payable to thebeneficiary subject to the decision of theapplication No.OA No.519 of 2005 in CS 431 of2005 of High Court of Judicature, Madras andirrespective of any instructions by ISC to theGuarantor to withhold payment thereof on anyground whatsoever.”(h) Thereafter on 25.7.2005, the appellant/defendant filed thefollowing two applications:-(1)I.A.No.3216 of 2005 for rejection of the plaint and(2)I.A.No.4901 of 2005 to vacate the modified order dated 29.4.2005. https://hcservices.ecourts.gov.in/hcservices/ The respondent/plaintiff filed counter and contested the matters andthe impugned common order was passed by the learned single Judge on20.1.2006 in O.A.No.519 of 2005; A.No.2171 of 2005, A.No.3216 of 2005and A.No.4901 of 2005. It was specifically stated that the ordergoverns all the above applications. Learned single Judge came to theconclusion that the suit does not require rejection and the orderpassed on 29.4.2005 does not require modification and the reasonsgiven are as hereunder:-(i) The cause of action for the first suit O.S.No.2245 of 2005filed before the City Civil Court was, based on the paperpublication which revealed the intention of theappellant/defendant to sell the shares of M/s.ISC, the TargetCompany, to M/s.EFunds International India Private Limited,whereas the cause of action in the present suit C.S.No.431 of2005 filed before this court was based on the plaintiff’sknowledge that the appellant/defendant had entered into anagreement with third party for sale of the shares and therefore,the plaintiff was constrained to seek recovery of advance moneyof US $ 1 Million = Rs.4,36,30,000/-, held that the first suitO.S.No.2245 of 2005 before the City Civil Court was for a bareinjunction against the appellant/defendant from alienating theshares and the second suit C.S.No.431 of 2005 before this courtis for recovery of advance money on coming to know of theagreement. The learned single Judge held that the cause ofaction in both the suits is entirely different anddistinguishable and therefore, the first contention of theappellant/defendant that the suit is barred in view of Order IIRule 2 CPC was rejected. (ii) The next issue that was considered by the learned single Judgewas with regard to the ex parte order dated 28.4.2005 and thesubsequent modified order passed on 29.4.2005 based onundertaking dated 29.4.2005 given by the appellant/defendant.The learned single Judge came to hold that the order dated28.4.2005 granting ex parte injunction against alienation orencumbering of shares of M/s.ISC was modified on 29.4.2005 byway of suspension only on the basis of the undertaking given bythe appellant/defendant by furnishing bank guarantee for thesuit claim. The leaned single Judge came to hold that the bankguarantee furnished is to the extent of the money claim madein the suit and has to be kept pending till the suit is decided.The plea of the appellant/defendant that the bank guarantee wasfor the limited period (i.e.) till the disposal of theI.A.No.519 of 2005 and I.A.No.2171 of 2005, was rejected. Theleaned single Judge accepted the plaintiff’s plea that therelease of the bank guarantee furnished would again take theparties to the original position as if no order was passed infavour of the plaintiff and the amount what is covered in the https://hcservices.ecourts.gov.in/hcservices/ suit will remain unsecured. On this premise, the learnedsingle Judge ordered that the bank guarantee furnished has tostand till the disposal of the suit. (iii) The appellant/defendant took a plea that the suit is barredby limitation and also sought for rejection of the plaint. Thisplea was rejected by the learned single Judge holding that thescope of the suit pending before this court is whether anydefault has been committed by the plaintiff, forfeitingRs.4,36,30,000/- which was given as advance money and that willbe decided only on evidence. Therefore, the limitation issueraised at the interlocutory stage was not accepted. The plea forrejection of plaint under Order VII Rule 11 CPC was rejected.The plea that the suit C.S.No.431 of 2005 is hit by Order IIRule 2 CPC was also negatived.Under these circumstances, the present appeals have been filed.6. The contentions of the learned counsel for theappellant/defendant are as follow:- (i) The letter of intent was entered into on 19.4.2000 and theearnest money deposit of US $ 1 Million equivalent toRs.4,36,30,000/-was paid on certain terms and a time limit was fixedfor respondent/plaintiff to complete the acquisition of the shares,viz., 30th April 2000, unless such date is extended on mutualagreement in writing. Due diligence was undertaken by therespondent/plaintiff in April, 2000. Thereafter for more than fiveyears no step or action has been taken by the respondent/plaintiffeither to acquire the shares or to seek for recovery of the earnestmoney deposit. Consequent to the letter of intent, no agreement hasbeen signed between parties. There is no fault attributed on thepart of the appellant/defendant and there is no material to state so.Since no action has been taken by the present respondent/plaintifffor more than five years, the suit C.S.No.431 of 2005 filed beforethis court is barred by limitation. Hence, the appellant/defendantsought for rejection of the plaint in terms of Order VII Rule 11C.P.C. (ii) The second contention of the learned counsel for theappellant/defendant is that having filed the suit for bare injunctionbefore the City Civil Court, Chennai on 8th April, 2005, therespondent/plaintiff is not entitled to maintain the present suitC.S.No.431 of 2005 for recovery of money under the very same cause ofaction. Referring to Order II Rule 2 CPC, it was submitted thatsubsequent suit C.S.No.431 of 2005 for recovery of money paid asearnest money deposit is not maintainable. In other words therespondent/plaintiff abandoned/relinquished their right claimed inthe present suit while instituting the first suit. https://hcservices.ecourts.gov.in/hcservices/ (iii) During the course of argument in appeal, the learnedcounsel for the appellant/defendant referred to the affidavit dated8.1.2007 filed before this court on 27.9.2007, which reads asfollows:-“2. It is submitted that what has beentransferred to eFunds is only a part of businessof India Switch Company Private Limited namelythe business of ATM outsourcing managed services,Transaction/Switch Processing and Debit Cardproduction and issuance. HMA Data SystemsPrivate Limited has not sold or transferred anyequity share of India Switch Company Pvt. Ltd.,to eFunds.3. It is also submitted that HMA DataSystems Pvt. Ltd., along with its associatecompanies continues to hold more than 80% of thepaid up equity capital of India Switch CompanyPvt. Ltd.4. India Switch Company Pvt. Ltd., continuesto pursue lines of business such as softwaredevelopment, technical consultancy and networkingfor non-financial applications. The Company hasalso commenced new lines of business in the fieldof real estate. The net worth of the IndiaSwitch Company Private Limited as on date ispositive and substantial.”In support of the above affidavit, a copy of 12th annual report forthe year 2006-2007 is filed. In the course of further hearing on17.4.2009, the appellant/defendant undertook to furnish the annualreport for the subsequent period and accordingly the annual reportfor the period 2007-2008 is also furnished and the statement in theaffidavit filed earlier was reconfirmed by the learned counsel forthe appellant/defendant as holding good still. It was contended bythe learned counsel for the appellant/defendant that the apprehensionof the respondent/plaintiff that they will lose the suit claimsbecause of the transaction between the appellant/defendant and theM/s.EFunds International India Private Limited, has no basis. TheM/s.ISC is a company registered under the Indian Companies Act 1956and therefore, subject to law of this land. It is a running companyand therefore, there is no basis for the respondent/plaintiff toapprehend that their suit claim will in any way be affected orprejudice will be caused. Learned counsel for theappellant/defendant, further pleaded that the net worth of thecompany M/s.ISC is sound and the appellant/defendant is still holdingthe majority shares. Respondent/defendant has not made out a case forfurnishing of security as envisaged under Order XXXVIII Rule 5 CPC. https://hcservices.ecourts.gov.in/hcservices/ In any event, the shares of the Target Company, which is the subjectmatter of the letter of intent, are available. The amount depositedis only pending the disposal of the application on merits. In viewof the serious legal infirmity in the case of therespondent/plaintiff, the respondent/plaintiff having failed toestablish and make out a prima facie case against theappellant/defendant for furnishing security by way of bank guaranteein respect of the suit claim, the leaned single Judge ought to havevacated the order of injunction and released the bank guarantee. Therespondent/plaintiff should prove their case for return of theamount. In any event, the suit C.S.No.431 of 2005 filed before thiscourt is barred by limitation and is also hit by the provision ofOrder II Rule 2 CPC and therefore, the bank guarantee should bereleased. He pleaded that the balance of convenience is only infavour of the appellant/defendant. No case has been made out forgrant of injunction and in any event the bank guarantee need not bekept alive till the disposal of the suit C.S.No.431 of 2005 as thebank guarantee is given only on full deposit. Further, the company,the shares which is the subject matter of letter of intent is verymuch in operation subject to law of our country. He pleaded thatgreat prejudice is caused to the appellant/defendant by the order ofthe learned single Judge directing the appellant/defendant to keepthe bank guarantee live till disposal of the suit. The Annual Reportfor the two consecutive years and the affidavit filed will prove thatthe financial position of the Target Company is sound. Therespondent/plaintiff has to prove their case for refund and in anyevent the hurdle of limitation and bar of second suit is a seriouslegal issue which tilts the balance in favour of theappellant/defendant. On this premise the appeal is canvassed.7. Learned senior counsel Shri R.Krishnamoorthy appearing forthe respondent/plaintiff on the other hand submitted his contentionsas follows:-(i) The common order was passed in O.A.No.519 of 2005, seekinginterim injunction not to transfer the shares of M/s.ISC; A.No.2171of 2005, seeking to furnish bank guarantee or attachment beforejudgment of the shares of M/s.ISC; A.No.3216 of 2005, seekingrejection of the plaint and A.No.4901 of 2005, seeking to vacate themodified order dated 29.4.2005. The appeals have been filed againstthe order passed in O.A.No.519 of 2005, A.No.3216 of 2005 andA.No.4901 of 2005. No appeal is filed against A.No.2171 of 2005.Since the appellant/defendant failed to pursue the matter with regardto furnishing of bank guarantee based on the undertaking, noadjudication is called for in the other appeals and the appeals arenot maintainable as the appellant/defendant has agreed to the terms.The nature of order passed by the learned single Judge is only withregard to furnishing of bank guarantee so as to furnish the securityto the suit claim and that having been passed in A.No.2171 of 2005which is not under challenge, the only course of action for the https://hcservices.ecourts.gov.in/hcservices/ appellant/defendant is to pursue the suit and not the appeals. (ii) As far as the plea with regard to Order II Rule 2 CPC isconcerned, learned senior counsel for the respondent/plaintiffcontended that the suit O.S.No.2245 of 2005 filed before the CityCivil Court was based on a letter of intent dated 19.4.2000 whichaccording to the respondent/plaintiff was subsisting. Therefore,interim injunction was sought for. After filing of the suit beforethe City Civil Court, the appellant/defendant filed I.A.Nos.8410,8411 and 8412 of 2005 in O.S.No.2245 of 2005 and paragraph 3 of thecommon affidavit dated 15.4.2005 is as follows:-"3) As per the terms contained in paragraph 5of the Letter of Intent, the Earnest Money Depositof U.S. $1 Million paid to the petitioner hereinhas been forfeited by the petitioner in accordancewith the terms of the Letter of Intent, to theknowledge of the 1st respondent. Even on a mereperusal of the Letter of Intent, it was clear that,time was the essence of the contract and since the1st respondent herein did not fulfill hisobligations and proceed further for the purchase ofthe shares from the petitioner herein, thepetitioner had suffered loss and the Earnest Moneywas forfeited, to the knowledge of the 1strespondent. The 1st respondent has not for nearly 5years made any attempt to even claim back thismoney from the petitioner, as the 1st respondentknew very well about the forfeiture." This statement is repeated in paragraph 9, and it reads as follows:- "As submitted earlier it was the 1strespondent who did not proceed further with thetransaction under the Letter of Intent dated 19-04-2000 that led to the forfeiture of U.S. $1million. The falsity of the averment is clearlyseen from the fact that the 1st respondent has notproduced a scrap of paper to show that a demandhas been made after having paid a sum of US $ 1million."Therefore, in view of the above statement in the affidavit, therespondent/plaintiff was forced to file the subsequent suitC.S.No.431 of 2005 before this court for refund of the earnest moneydeposit. Learned senior counsel for the respondent/plaintiff alsoreferred to the letter dated 16.4.2005 which was issued by thecounsel for the appellant/defendant. Paragraph 3(ii), (iii), (iv)and (v) of the notice reads thus:- https://hcservices.ecourts.gov.in/hcservices/ "ii) Under the LOI, you were to acquire shares ofIndia Switch Company Pvt. Ltd., ("ISC"), from HMAfor a total consideration of USD.43 million(equivalent to Rs.1,876,090,000/-) at the relevanttime), by April 30, 2000 or such other date as maybe agreed upon in writing.iii) You paid an earnest money deposit of USD.1million (Rs.43,630,000/-), on or around April 20,2000, in consideration of HMA refraining fromentering into negotiations for sale of its sharesin ISC with any party other than SSI, whichearnest money deposit would be forfeited if theshare purchase agreement was not executed by youon or before the stipulated date on account ofwithdrawal by you from the acquisition.iv) You completed the due diligence process and wererequired to execute the definitive Share PurchaseAgreement and make payment of the balanceconsideration amount of USD.42 million(Rs.1,832,460,000/-). You however failed to doso, and instead informed us that you did not wishto proceed with and were abandoning theacquisition. v) Accordingly and as envisaged by the LOI, ourclient forfeited the earnest money deposit withyour concurrence. This is clear from the factthat in January/February 2001, you expresslyadmitted and acknowledged to our client that thetransaction had not been consummated due to itsown internal issues, and that the earnest moneydeposit had been validly forfeited." (emphasis supplied)Therefore, learned senior counsel for the respondent/plaintiffcontended that two suits are based on independent cause of action andsubsequent events and therefore, Order II Rule 2 CPC is notattracted. He relied upon the decision of the Apex Court in KunjanNair Sivaraman Nair – vs. Narayanan Nair reported in 2004(3) SCC 277and other decisions and contended that the cause of action, whichlead to the filing of the two suits, is not the same. (iii) As far as limitation is concerned, learned senior counselfor the respondent/plaintiff contended that the earnest money depositmade pursuant to the letter of intent is in the nature of deposit andnot an advance. The limitation for the same will start only when thecontract which forms the basis of deposit comes to an end. It issubmitted by the learned senior counsel for the respondent/plaintiff https://hcservices.ecourts.gov.in/hcservices/ that only in April 2005 the appellant/defendant clearly stated thatthe amount was forfeited and the process of acquisition of the shareswas abandoned. It was, therefore, contended that this specificstatement by the appellant/defendant would save the limitation.Referring to the various clauses in the letter of intent,particularly, clauses relating to refund of earnest money deposit, itwas submitted that in a full-fledged trial it can be establishedthat the payment of amount is only by way of deposit and it is not inthe nature of a loan or an advance. He relied upon the followingdecisions:-(1) Annamalai – vs. - Veerappa reported in A.I.R. 1956 SupremeCourt 12 (para 9) and(2) Videocon Properties Ltd., - vs. - Dr.Bhalchandra Laboratoriesreported in 2004(3) SCC 711 (para 14).(iv) On the plea for rejection of plaint it was contended by thelearned senior counsel for the respondent/plaintiff that since theOrder II Rule 2 CPC is not attracted to the facts of the present caseand the question of limitation has also to be decided by way ofevidence based on the nature of transaction, pleading of the partiesand the legal notice issued in April 2005, the suit cannot berejected at the threshold by rejecting the plaint. (v) Learned senior counsel for the respondent/plaintiff contendedthat the appellant/defendant has admitted the receipt of the earnestmoney deposit and the execution of the letter of intent. There is nospecific evidence to support the plea of forfeiture of the earnestmoney deposit and therefore, on a mere hyper-technical plea oflimitation, by invoking Order VII Rule 11 CPC, the plaint should notbe rejected. (vi) It was further contended by the learned senior counsel forthe respondent/plaintiff that the appellant/defendant is liable tofurnish security for the suit claim, since by selling away the sharesof M/s.ISC, the Target Company, the valuable rights of therespondent/plaintiff will be affected. The furnishing of bankguarantee should be read as having been given pending suit and notpending the application. 8. The next contention of the learned counsel for theappellant/defendant is with regard to rejection of plaint. This ison the plea that the suit is barred by limitation. The first causeof action that arose for the filing of the suit is the letter ofintent dated 19.4.2000 and the payment of amount as earnest moneydeposit. Though the appellant/defendant’s plea that the suitC.S.No.431 of 2005 for recovery of money is barred by limitation, canbe accepted on the first blush, the plea of forfeiture is brought tolight in the affidavit filed before the City Civil Court in https://hcservices.ecourts.gov.in/hcservices/ O.S.No.2245 of 2005 and in the advocate's notice dated 16.4.2005.This is a relevant factor which has to be considered in this lis.The date of forfeiture of the earnest money deposit and the so-calledconfirmation by respondent/plaintiff is not the date as set out inthe letter of intent, but on a subsequent date, viz.,January/February, 2001 and this is evident from a perusal of thelegal notice dated 16.4.2005 which is extracted earlier. Therespondent/plaintiff’s plea is that it is only after the paperpublication in The Hindu on 5.4.2005 and after the institution of theinjunction suit O.S.No.2245 of 2005 before the City Civil Court thatthe respondent/plaintiff came to know about the forfeiture of theamount and therefore, the present suit for recovery of money will notbe barred by limitation. 9. In Videocon Properties Ltd., - vs. - Dr.BhalchandraLaboratories reported in 2004(3) SCC 711 (cited supra), in para 14,as to what is the nature of an earnest money deposit, was consideredand it was held as follows:-"14. The further aspect that requires to benoticed is as to the nature and character ofearnest money deposit and in that context thedistinguishing features, which help to delineatethe differences, if any. The matter is not, atany rate, res integra. In (Kunwar) ChiranjitSingh v. Har Swarup it was held that the earnestmoney is part of the purchase price when thetransaction goes forward and it is forfeited whenthe transaction falls through, by reason of thefault or failure of the purchaser. This statementof law had the approval of this Court in Maula Buxv. Union of India. Further, it is not thedescription by words used in the agreement onlythat would be determinative of the character ofthe sum but really the intention of parties andsurrounding circumstances as well, that have to belooked into and what may be called an advance mayreally be a deposit or earnest money and what istermed as "a deposit or earnest money" mayultimately turnout to be really an advance or partof purchase price. Earnest money or deposit also,thus, serves two purposes of being part-payment ofthe purchase money and security for theperformances of the contract by the partyconcerned, who paid it." In view of the affidavit filed by the appellant/defendant before theCity Civil Court giving details of forfeiture and coupled with thelegal notice dated 16.4.2005, which also speaks of forfeiture afternearly five long years, there is some force in the plea of the https://hcservices.ecourts.gov.in/hcservices/ respondent/plaintiff on the question of limitation. The forfeitureand its actual date has to be resolved for the purpose of decidingthe plea on limitation. This is an issue to be decided based onevidence to be let in by both parties. The plea of limitation,therefore, will have to be decided only in a full-fledged trial andnot at the interlocutory stage. The rejection of plaint under OrderVII Rule 11 CPC canvassed by the appellant/defendant cannot becountenanced at this point of time and is, therefore, rejected. Asin the Apex Court case of Videocon Properties Ltd., reported in 2004(3) SCC 711 (cited supra), in this case also it has to beestablished, when the transaction failed and when the forfeiture wasmade. The intention of the parties consequent to the letter ofintent and the circumstances which led to the forfeiture has to belooked into to ascertain if it is a deposit or advance on thepurchase of shares and the rival claims will have to be adjudged onsuch evidence that may be let in. Whether the earnest money depositstill remains without forfeiture is a nebulous question which is tobe addressed at the time of trial of the suit.10. The second contention of the learned counsel for theappellant/defendant is that the first suit O.S.No.2245 of 2005 filedbefore the City Civil Court for bare injunction and the subsequentsuit C.S.No.431 of 2005 filed before this Court arose under the samecause of action. Therefore, the second suit C.S.No.431 of 2005 forrefund of the earnest money deposit is not maintainable in terms ofOrder II Rule 2 CPC. Order II Rule 2 C.P.C. reads as follows:- “2. Suit to include the whole claim.(1) Every suit shall include the whole ofthe claim which the plaintiff is entitled to makein respect of the cause of action; but aplaintiff may relinquish any portion of his claimin order to bring the suit within thejurisdiction of any Court. (2) Relinquishment of part of claim-where aplaintiff omits to sue in respect of, orintentionally relinquishes, any portion of hisclaim he shall not afterwards sue in respect ofthe portion so omitted or relinquished. (3) Omission to sue for one of severalreliefs - A person entitled to more than onerelief in respect of the same cause of action maysue for all or any of such reliefs; but if heomits, except with the leave of the Court, to suefor all such reliefs, he shall not afterwards suefor any relief so omitted. https://hcservices.ecourts.gov.in/hcservices/ Explanation - For the purposes of this rule anobligation and a collateral security for itsperformance and successive claims arising underthe same obligation shall be deemed respectivelyto constitute but one cause of action."It is not in dispute that the cause of action in both the cases aroseout of the letter of intent dated 19.4.2000. As far as the suitO.S.No.2245 of 2005 filed before the City Civil Court is concerned,the various dates referred to in the plaint relating to cause ofaction is with regard to the payment of earnest money deposit, therequest for documents for purpose of due diligence and the press notedated 5.4.2005 which relates to signing of agreement entered intobetween the appellant/defendant and M/s.EFunds International IndiaPrivate Limited. It does not speak of forfeiture. As far as thepresent suit C.S.No.431 of 2005 filed before this court is concerned,it is stated that in the common affidavit of the appellant/defendantdated 15.4.2005 filed in support of the applications I.A.Nos.8410,8411 and 8412 of 2005 in O.S.No.2245 of 2005 before the City CivilCourt it is clearly revealed the intention to sell the shares ofM/s.ISC to M/s.EFunds International India Private Limited andtherefore, refund was sought for. It is the appellant/defendant’splea that the respondent/plaintiff has abandoned the transaction andtherefore, by the terms of the letter of intent, the amount wasforfeited to the knowledge of the respondent/plaintiff. In thecommon affidavit dated 15.4.2005 filed in support of the applicationsI.A.Nos.8410, 8411 and 8412 of 2005 in O.S.No.2245 of 2005 before theCity Civil Court, there is a clear mention about the forfeiture.There appears to be no material relating to forfeiture earlier tothis date. At the time of argument, the notice ofappellant/defendant’s counsel dated 16.4.2005 was also pointed out tostate that the respondent/plaintiff was put on notice aboutforfeiture only then. The cause of action for the second suit aroseonly because of the plea of forfeiture as stated in the affidavitfiled before the City Civil Court. 11. According to the appellant/defendant, the forfeiture hadtaken place in 2001 and this is disputed. According to therespondent/plaintiff, the question of omitting or relinquishing anyportion of the claim did not arise at the time of filing of thefirst suit O.S.No.2245 of 2005 before the City Civil Court, as thefirst suit is for injunction not to deal with shares which is thesubject matter of the letter of intent. It is only on an affidavitfiled by the appellant/defendant before the City Civil Court, theappellant/defendant and in the statement of the advocate's noticedated 16.4.2005, the question of forfeiture came to light.12. In terms of Order II Rule 2 C.P.C., the issue that has to beconsidered in this case is as to whether the respondent/plaintiffomitted to sue in respect of, or intentionally relinquished any https://hcservices.ecourts.gov.in/hcservices/ portion of their claim. A Constitution Bench of Apex Court inGurbux Singh -vs. - Bhooralal reported in AIR 1964 Supreme Court1810 had the occasion to deal with Order II Rule 2 CPC in the abovecase. Para 6 of the judgment is as follows:-"6. In order that a plea of a bar under Order2 Rule 2(3), Civil Procedure Code should succeedthe defendant who raises the plea must make out(1) that the second suit was in respect of thesame cause of action as that on which theprevious suit was based; (2) that in respect ofthat cause of action the plaintiff was entitledto more than one relief; (3) that being thusentitled to more than one relief the plaintiff,without leave obtained from the court omitted tosue for the relief for which the second suit hadbeen filed. From this analysis it would be seenthat the defendant would have to establishprimarily and to start with, the precise cause ofaction upon which the previous suit was filed,for unless there is identity between the cause ofaction on which the earlier suit was filed andthat on which the claim in the later suit isbased there would be no scope for the applicationof the bar. No doubt, a relief which is soughtin a plaint could ordinarily be traceable to aparticular cause of action but this might, by nomeans, be the universal rule. As the plea is atechnical bar it has to be establishedsatisfactorily and cannot be presumed merely onbasis of inferential reasoning. It is for thisreason that we consider that a plea of a barunder Order 2 Rule 2, Civil Procedure Code can beestablished only if the defendant files inevidence the pleadings in the previous suit andthereby proves to the court the identity of thecause of action in the two suits." (emphasis supplied)This has been followed in the decision of the Apex Court in KunjanNair Sivaraman Nair – vs. Narayanan Nair reported in 2004(3) SCC 277.13. The Apex Court in Kunjan Nair's case cited above has alsodealt with the issue relating to "cause of action" and itsimplication in terms of Order II Rule 2 CPC. In paras 16 and 17,the Apex Court held as follows:- "16. The expression "cause of action" hasacquired a judicially settled meaning. In therestricted sense cause of action means the https://hcservices.ecourts.gov.in/hcservices/ circumstances forming the infraction of the rightor the immediate occasion for the action. In thewider sense, it means the necessary conditions forthe maintenance of the suit, including not onlythe infraction of the right, but the infractioncoupled with the right itself. Compendiously theexpression means every fact which would benecessary for the plaintiff to prove, iftraversed, in order to support his right to thejudgment of the court. Every fact which isnecessary to be proved, as distinguished fromevery piece of evidence which is necessary toprove each fact, comprises in "cause of action".17. In Halsbury's Laws of England (4th Edn.)it has been stated as follows:" 'Cause of action' has been defined asmeaning simply a factual situation the existenceof which entitles one person to obtain from thecourt a remedy against another person. The phrasehas been held from earliest time to include everyfact which is material to be proved to entitle theplaintiff to succeed, and every fact which adefendant would have a right to traverse. 'Causeof action' has also been taken to mean thatparticular act on the part of the defendant whichgives the plaintiff his cause of complaint, orthe subject-matter of grievance founding theaction, not merely the technical cause of action." (emphasis supplied)In the present case, as narrated above, the second suit for recoveryof money, filed by the respondent/plaintiff is consequent to thestatement in affidavit and legal notice of the appellant/defendantthat the earnest money deposit is forfeited. This, as statedearlier, is an act on the part of the appellant/defendant which gavea cause of action to the respondent/plaintiff for this suit. Thisfact has to be established by the appellant/defendant. 14. The plea of appellant/defendant that in both suits the causeof action is the same and therefore Order II Rule 2 CPC will beattracted cannot be accepted as such tested on the above saiddecision interpreting the provisions of Order II Rule 2 CPC. Thesecond suit is based on a distinct and subsequent cause of action asis evident from the facts narrated above and as set out in theplaint. 15. As far as both parties are concerned, there appears to be noclear statement as to how the parties acted upon after the letter of https://hcservices.ecourts.gov.in/hcservices/ intent after it was signed and earnest money deposit was paid.Except certain documents relating to due diligence, the entiretransaction appears to have fallen into an abyss. Both parties areunable to show in clear terms as to how the transaction was concludedor closed. While the terms of the letter of intent is based on thecertain dates and events, to happen within a time frame, the noticeof the appellant/defendant’s counsel dated 16.4.2005 refers totransaction in the month of January/February, 2001 stating that therespondent/plaintiff has expressed their inability to consummate thetransaction and hence forfeiture took place. This date is wellbeyond the date stated in the letter of intent. Further, in theletter of intent, the clause relating to refund of earnest moneydeposit, it is stated that extension of time can be done mutually.There is no material to show what happened for several years afterthe parties signed the letter of intent. Therefore, the issue as tohow the letter of intent was acted upon by both parties has to bedecided only in a full-fledged trial. Both the parties will have tolet in evidence as to how the transaction proceeded consequent to theletter of intent and if the forfeiture, as stated by theappellant/defendant was effected, under what circumstances and onwhat terms it was done will have to be decided only on properevidence. The respondent/plaintiff in their apprehension to stop thetransaction filed a suit O.S.No.2245 of 2005 for bare injunctionbefore the City Civil Court. There was no forfeiture of the amountrevealed at that time. The pleading in the common affidavit dated15.4.2005 filed by the appellant/defendant in support of theapplications I.A.Nos.8410, 8411 and 8412 of 2005 in O.S.No.2245 of2005 before the City Civil Court coupled with the letter of thecounsel dated 16.4.2005 and its import in terms of Order II Rule 2CPC has to be decided only in the trial. Therefore, the plea thatOrder II Rule 2 C.P.C., will get attracted cannot be countenanced atthis point of time. This contention has to be decided by oral ordocumentary evidence that may be let in by parties. If the firstsuit of respondent/plaintiff on the basis of the letter of intent isfor safeguarding the shares and stop the transfer, the question ofrefund will not arise then. Therefore, prima facie, the applicationof Order II Rule 2 C.P.C., at this stage, cannot be considered as arelevant plea.16. The plea of the learned senior counsel for therespondent/plaintiff that no appeal has been filed against A.No.2171of 2005 and therefore, all appeals are not maintainable cannot beaccepted, because a common order has been passed in all theapplications. In any event, the bank guarantee has been furnished inO.A.No.519 of 2005 and not in A.No.2171 of 2005. The relevant portionis extracted and respondent/plaintiff has accepted it. In fact thefurnishing of security was not specifically ordered in A.No.2171 of2005 and there is no discussion or finding on that application. Thelearned single Judge has passed the said common order in O.A.No.519of 2005 while disposing two of the applications and dismissing https://hcservices.ecourts.gov.in/hcservices/ others. The plea of res judicata, therefore, will not arise. Inany event, this Court is of the view that the order under challengerequires modification and we state the reasons hereunder.17. The next contentious issue which both the parties are atlogger heads is with regard to furnishing of security. On 28.4.2005,this court passed an order of interim injunction against theappellant/defendant from transferring, encumbering or in any waydealing with the shares of M/s.ISC, the Target Company. On29.4.2005, the appellant/defendant furnished an undertaking statingthat the appellant/defendant is willing to furnish security till thedisposal of the application A.No.2171 of 2005 in O.A.No.519 of 2005in the above suit. Based on this undertaking, subsequent order waspassed on 29.4.2005 suspending the order of interim injunction dated28.4.2005. However, the bank guarantee submitted by the Bank andM/s.ISC and clauses "B" and "E" which have already been extractedabove, is a qualified bank guarantee stating that it will remain inforce until the disposal of O.A.No.519 of 2005 in C.S.No.431 of 2005subject to the decision of the application in O.A.No.519 of 2005 inC.S.No.431 of 2005 and it is accepted. The appellant/defendant doesnot refer the application A.No.2171 of 2005 in the bank guarantee.The appellant/defendant’s contention is that the suit O.S.No.2245of 2005 filed before the City Civil Court, and the present suit arebarred by limitation and the subsequent suit C.S.No.431 of 2005 filedbefore this court for recovery of money is not maintainable in termsof Order II Rule 2 C.P.C. Since the undertaking is given onlypending disposal of the application, O.A.No.519 of 2005, the learnedsingle Judge ought not to have passed the present order stating thatthe bank guarantee should remain in force till the disposal of thesuit. It is contended by the learned counsel for theappellant/defendant that prima facie, the respondent/plaintiff hasnot made out a case for furnishing such security pending disposal ofthe suit. None of the ingredients of Order XXXVIII Rule 5 CPC havebeen made out in the present case. Order XXXVIII Rule 5 CPC readsthus:- “5. Where defendant may be called upon tofurnish security for production of property(1) Where, at any stage of a suit, the Courtis satisfied, by affidavit or otherwise, that thedefendant, with intent to obstruct or delay theexecution of any decree that may be passed againsthim,—(a) is about to dispose of the whole or anypart of his property, or (b) is about to remove the whole or any partof his property from the local limits of the https://hcservices.ecourts.gov.in/hcservices/ jurisdiction of the Court,the Court may direct the defendant, within a timeto be fixed by it, either to furnish security, insuch sum as may be specified in the order, toproduce and place at the disposal of the Court,when required, the said property or the value ofthe same, or such portion thereof as may besufficient to satisfy the decree, or to appear andshow cause why he should not furnish security. (2) The plaintiff shall, unless the courtotherwise directs, specify the property requiredto be attached and the estimated value thereof. (3) The Court may also in the order directthe conditional attachment of the whole or anyportion of the property so specified. (4) If an order of attachment is madewithout complying with the provisions of sub-rule(1) of this rule such attachment shall be void.”The appellant is a registered company under the Indian Companies Act,1956. The balance sheet has been filed showing the financialstability of the company, the supporting affidavit, clearly statesthat the appellant along with associate companies continues to hold80% of the paid up equity capital of the M/s.India Switch CompanyPrivate Limited, the Target Company and the business is continuing.Therefore, there can be no apprehension on the part of therespondent/plaintiff that the appellant/defendant is about to removewhole or any part of the property from the local limits of thejurisdiction of the court and that the appellant/defendant isintending to cause obstruction or delay the execution of any decreethat may be passed against them. The ingredients of Order XXXVIIIRule 5 CPC is not attracted to the facts of the present case so as tofurnish security for the entire amount. The respondent/plaintiff hasnot made out a case for furnishing security for the suit claim in itsentirety. The learned single Judge did not consider this plea onprima facie case before ordering the bank guarantee to be keptpending the suit. In any event, the affidavit dated 29.4.2005 isfiled specifically giving an undertaking till disposal of theapplication. This is a relevant factor that should be consideredwhich finally disposing off the application.18. On the other hand, the appellant/defendant is a company,registered in India and holds shares of the M/s.ISC, the TargetCompany. The balance sheet of the Target Company for two consecutiveyears is filed to show its financial stability. As far as therespondent/plaintiff is concerned, after tendering the earnest money https://hcservices.ecourts.gov.in/hcservices/ deposit based on the letter of intent dated 19.4.2000 and in spite ofdue diligence in April, 2000, no concrete steps have been takeneither to proceed on the basis of letter of intent and conclude thecontract for purchase of the shares or make a request for return ofearnest money deposit. In such circumstances, it is clear that therespondent/plaintiff at no point of time for more than five years hasshown any interest with regard to the earnest money deposit. It isonly based on the subsequent development which happened after fiveyears, the present suit has been filed for recovery of money beforethis court. The appellant/defendant has been able to establish thatthey continued to hold the 80% of the equity shares of theM/s.India Switch Company Private Limited, the Target Company and acopy of 12th Annual Report 2006-2007 and the 13th Annual Report forthe year 2007-2008 have also been furnished. The shares of thisTarget Company is the subject matter of the letter of intent dated19.4.2000. The said company is a registered under the IndianCompanies Act 1956 and the appellant/defendant M/s.HMA Data System isalso a company registered under the Indian Companies Act, 1956.Therefore, the apprehension of the respondent/plaintiff that theirclaim will be defeated, if the security furnished is not retainedtill the disposal of the suit is a mere fallacy. Therespondent/plaintiff has to establish their case in the trial thatthey are entitled to seek recovery of the amount. Mere apprehensionon the part of the respondent/plaintiff that the suit claim will bedefeated, if the security is not furnished, does not apply as thenature of transaction in its inception is for transfer of sharesbased on letter of intent. The company continues as such.Appellant/defendant has filed the affidavit dated 27.9.2007 about theshare holdings. The balance sheet has been provided to this court.None of the ingredients of Order XXXVIII Rule 5 CPC is attracted tofurnish security for the entire suit claim. 19. There is enough material to suggest that theappellant/defendant and the respondent/plaintiff have mulled over theissue and allowed it to pass for more than five years without anyactivity. Suddenly, in April, 2005, there is a great flurry ofactivity on either side. Prima facie, both the appellant/defendantand the respondent/plaintiff have contributed to the stalemate bytheir inaction in concluding the issue, which has resulted in thepresent suits. Therefore, the question for furnishing full securityfor the entire suit claim does not arise. 20. The respondent/plaintiff has to establish his prima faciecase for recovery of the earnest money deposit. Having not expressedany apprehension with regard to the earnest money deposit made formore than five years, the respondent/plaintiff cannot wake upsuddenly and state that security should be furnished for the entiresuit claim. On the other hand, it is for the appellant/defendant, toshow that the forfeiture has been made to the knowledge of therespondent/plaintiff consequent to the failure on the part of the https://hcservices.ecourts.gov.in/hcservices/ respondent/plaintiff, to conclude the letter of intent by way ofcontract. There is some force in the appellant/defendant's plea thatthe appellant/defendant holds 80% of the shares of the Target Companywhich is the subject matter of the letter of intent and for which theearnest money deposit was made. Coupled with the affidavit filedbefore this Court in appeal, the plea of the appellant/defendant formodification of the order directing furnishing of security by way ofbank guarantee can be considered to some extent. 21. Keeping in mind the prima facie case of either side and inorder to protect the equitable interest of both the parties andtaking into consideration the financial status of the Target Company,viz., M/s.ISC and the annual reports coupled with the affidavit filedby the Chief Financial Officer of M/s.HMA Data Systems PrivateLimited, where it is stated that the appellant/defendant is the 80%share holder of the M/s.ISC, this court is of the view that pendingsuit the appellant/defendant will be entitled to partial relief inthe following manner:- (1) The earnest money deposit is for a sum of Rs.4,36,30,000/-.The appellant/defendant will furnish a bank guarantee for a sum ofRs.1,36,30,000/- (Rupees One Crore, Thirty Six Lakhs and ThirtyThousand only). (2) Pending suit, as in the case of the Bank Guarantee alreadyfurnished, the appellant/defendant will furnish a security bond forthe balance amount of Rs.3,00,00,000/- (Rupees Three Crores only) tobe signed both by M/s.HMA Data Systems Private Limited and M/s.IndiaSwitch Company Private Limited (ISC).(3) The appellant/defendant will file periodical annualfinancial report of the Target Company M/s.ISC before the TrialCourt, (4) Since both the parties agreed for early disposal of thesuit, the suit itself to be taken up for early disposal at an earlydate. Accordingly, O.S.A.No.76 of 2006 stands partly allowed.O.S.A.Nos.77 and 78 of 2006 stand dismissed. No costs.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.ts https://hcservices.ecourts.gov.in/hcservices/ To1. The Sub-Assistant Registrar, Original Side, High Court, Madras.2. The Record Keeper, V.R. Section, High Court, Madras.+ 3 CC To Mr.H.Karthik Seshadri, Advocate SR NO.22797 Common Judgment in O.S.A.Nos.76 to 78 of 2006KA {CO}TP/18.6.2009.