Court Cannot Vacate Interim Relief Without Securing The Plaintiff's Interests: Calcutta HC Denies Vacating Bank Freeze Order

Calcutta High Court in G.A. (Com) No. 1 of 2023 and G.A. (Com) No. 2 of 2024 upheld an interim order freezing a sum of Rs. 38.6 lakh in the bank account of defendant Surender Kumar Goyal, known as Surender Agarwal. The Court, presided over by Justice Krishna Rao, dismissed the defendant’s plea to vacate the freeze and directed him to secure the amount with the Registrar to ensure any potential decree is enforceable.

The dispute arose from a business relationship between Skipper Limited and the defendant, Surender Kumar Goyal. Skipper Limited supplied PVC pipes and fittings, raising invoices that left an outstanding balance of Rs. 2.69 crore by March 2022. While some payments and returns of goods were made, a principal sum of Rs. 38.6 lakh remained unpaid. The plaintiff moved the High Court, seeking a judgment based on admissions and an interim order freezing the defendant's bank account to secure the outstanding amount. The defendant contested the claim, arguing that no clear admission of liability was made, and sought to vacate the interim freeze.

The key issue was whether the interim freeze on the defendant's bank account should be lifted. Justice Krishna Rao emphasized that the plaintiff had established a prima facie case based on account statements and emails. The defendant, in his correspondence, failed to deny the outstanding balance and requested more time to pay. This supported the plaintiff’s apprehension that the defendant might siphon off assets to evade any decree.

The Court also noted discrepancies in the defendant's financial statements, particularly his inability to provide sufficient funds in his account, raising concerns that any decree might be difficult to enforce without securing the funds in advance.

Justice Rao held that vacating the interim freeze would prejudice the plaintiff's ability to recover the dues, especially given the defendant’s financial difficulties. The Court, referencing precedents from the Supreme Court, ruled that the interim order would remain in place, requiring the defendant to secure the sum of Rs. 38.6 lakh with the Court Registrar. The funds would be invested in an interest-bearing account pending the outcome of the case.

The Court dismissed the defendant's application to vacate the interim order and disposed of the plaintiff's application seeking judgment based on admissions, concluding that the matter required further trial.

The Calcutta High Court upheld its earlier interim order, ensuring that the sum of Rs. 38.6 lakh would remain secured pending the final outcome of the case. The decision underscores the Court's cautious approach in balancing the interests of both parties, particularly in commercial disputes involving large sums.

Date of Decision: September 27, 2024

Skipper Limited v. Surender Kumar Goyal