SUZUKI PARASRAMPURIA SUITINGS PVT. LTD. vs. THE OFFICIAL LIQUIDATOR OF MAHENDRA PETROCHEMICALS LTD (IN LIQUIDATION) AND ORS.

Case Type: Civil Appeal

Date of Judgment: 08-10-2018

Preview image for SUZUKI PARASRAMPURIA SUITINGS PVT. LTD. vs. THE OFFICIAL LIQUIDATOR OF MAHENDRA PETROCHEMICALS LTD (IN LIQUIDATION) AND ORS.

Full Judgment Text

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION   CIVIL APPEAL   NO.  10322  OF 2018 (arising out of S.L.P.(C)No.12073 of 2017)   SUZUKI PARASRAMPURIA  SUITINGS PVT. LTD.     ...APPELLANT(S) VERSUS THE OFFICIAL LIQUIDATOR OF  MAHENDRA PETROCHEMICALS LTD.  (IN LIQUIDATION) AND OTHERS ...RESPONDENT(S) JUDGMENT NAVIN SINHA, J. Leave granted. 2. The appellant is an assignee  of  debt by the  Industrial Finance Corporation   of   India   Ltd.   (hereinafter   called   as   “IFCI”)   for   the outstandings   of   M/s.   Mahendra   Petrochemicals   Ltd.   (hereinafter referred to as “M/s. MPL”).   It is aggrieved by the appellate order dated 02.09.2016 in O.J. Appeal No.4 of 2016, declining to interfere with the orders of the Company Judge dated 31.07.2015 in Company Application Signature Not Verified Digitally signed by R NATARAJAN Date: 2018.10.08 17:00:10 IST Reason: 1 No.248 of 2014, and also the order dated 07.09.2015, in OJMCA No.170 of 2015 declining to recall/review the order dated 31.07.2015. 3. It is not considered necessary to set out and deal with the entirety of   the   facts   and   circumstances   of   the   case,   except   to   the   extent necessary for the purposes of the present order, in the limited nature of the controversy arising in the present appeal.  4. Company Petition No.150 of 1996 was filed for winding up of M/s. MPL.  The company was also referred for rehabilitation to the Board for Industrial   and   Financial   Reconstruction   (hereinafter   referred   to   as “BIFR”) in Reference No.385 of 2000.   During pendency of the same, without permission or knowledge of the BIFR, M/s. MPL entered into an unregistered memorandum of understanding (hereinafter referred to as the   ‘MOU’)   with   the   sister   concern   of   the   appellant,   M/s.   Suzuki Parasrampuria Suitings Pvt. Ltd. for leasing out its properties to the appellant for 20 years for repayment of its debts.  The MOU was also not brought to the attention of the company court till the winding­up order was passed on 19.04.2010.  The IFCI, Bank of Baroda – respondent no.3 and   the   Punjab   National   Bank   –   respondent   no.4   were   secured 2 creditors,   who   had   filed   original   applications   against   M/s.   MPL   for recovery of their debts before the Debt Recovery Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”).     IFCI   held   first   charge   over   the   assets   of   M/s.   MPL   for outstandings   of   Rs.160   crores   and   the   Bank   of   Baroda   with   an outstanding of approximately Rs.4,68,00,000/­ held second charge.  On 28.07.2010 after the winding­up order, IFCI assigned its dues to the appellant   for   a   sum   of   Rs.85   lacs   only   and   informed   the   official liquidator thereafter.  5.   The appellant then filed Company Application No.248 of 2014 with a prayer for substitution in place of IFCI as a secured creditor of M/s. MPL.     The   Company   Judge   rejected   the   application   on   31.07.2015 holding that the appellant was neither a Bank or Banking company or a financial   institution   or   securitization   company   or   reconstruction company and therefore could not be substituted in place of IFCI as a secured creditor for the purpose of the  SARFAESI Act.  In the nature of the   relief   sought   for   substitution   as   a   secured   creditor   under   the 3 SARFAESI Act, the Company Judge held that the appellant could not draw any benefit for the purpose from Section 130 of the Transfer of Property Act.  All other contentions were left open to be raised before the appropriate   court/forum   in   appropriate   proceedings.     The   appellant then filed OJMCA No.170 of 2015 invoking the inherent powers of the Company Court under Rule 9 of the Companies (Court) Rules, 1959 for recall/review of order dated 31.07.2015 contending that the appellant had never sought substitution as a secured creditor and simply desired substitution as a transferee of an actionable claim under Section 130 of the Transfer of the Property Act (hereinafter referred to as “the T.P. Act”). The recall/review application was rejected holding that an entirely new case was sought to be made out in the application. The appeal against the same has been rejected by the impugned order. 6. Shri   Harin   P.   Raval,   learned   senior   counsel   for   the   appellant, assailing  the   impugned   order   dated   02.09.2016,   contended   that  the appellant had never sought the status of a secured creditor in lieu of the IFCI.     The   finding   to   that   effect   is   erroneous   and   completely misconceived.     The   appellant   had   simply   desired   to   be   adjudged   a 4 transferee from IFCI of an actionable claim under Section 130 of the T.P. Act.   The rights and claims of the appellant under the latter was the only issue, and has not been considered at all.  The deed of assignment dated 28.07.2010 was subsisting and was challenged by none.  The lack of any status of the appellant under the SARFAESI Act was a wholly irrelevant consideration to reject its action for transfer of an actionable claim under Section 130 of the T.P. Act.   The inherent power of the Company   Court   under   Rule   9   of   the   Companies   (Court)   Rules   was wrongly declined to be exercised in the facts of the case. 7. Learned   counsel   for   the   respondents   opposed   the   application submitting that the appellant cannot be permitted to make a  volte face after the rejection of its only claim by the Company Judge and take shifting stands at different times according to its convenience in the same proceedings. 8. We have considered the submissions on behalf of the parties.  That the unregistered MOU was without permission of the BIFR, it was not disclosed to the Company Court till the winding­up order was passed on 5 19.04.2010, the assignment of debt of Rs.160 crores by IFCI for Rs.85 lacs are admitted facts.   The order dated 31.07.2015 passed by the Company Judge makes it very explicit that the appellant in Company Application No.248 of 2014 had specifically sought substitution in place of IFCI as a secured creditor holding first charge consequent to the deed of assignment in its favour dated 28.07.2010 from IFCI.  In support of the   relief   sought,   reliance   was   also   placed   on   the   pursis   dated 21.11.2011 filed by IFCI in OA No.452 of 2000 before the Debt Recovery Tribunal,   Ahmedabad   reaffirming   the   assignment   in   favour   of   the appellant.  The submissions made before the Company Judge leaves no doubts   that   as   an   assignee   of   debts   from   the   IFCI,   the   appellant essentially   sought   substitution   as   a   secured   creditor   under   the SARFAESI Act and for that purpose sought to draw sustenance from the provisions of Section 130 of the Transfer of Property Act.  Therefore, the Company Judge opined that Section 130 of the Transfer of the Property Act was not applicable in the facts of the case leaving it open for the parties   to   take   all   available   contentions   before   the   appropriate court/forum   in   appropriate   proceedings.     In   the   nature   of   the controversy sought to be raised by the appellant in the present appeal 6 we consider it proper to set out the following extracts from the order of the Company Judge: “23.   The   only   question   which   is   required   to   be considered   in   this   application   is   as   to   whether   the applicant can be permitted to be substituted for and in place   of   IFCI   Limited   as   the   secured   creditor   of   the company in liquidation?   For deciding this  question, certain provisions of the SARFAESI Act are required to be considered. 25. Thus, in view of the aforesaid provisions contained in the SARFAESI Act, I am of the view that when the applicant   company   is   not   a   bank   or   banking   or financial   institution   or   securitization   company   or reconstruction   company,   the   applicant   cannot   be permitted to be substituted in place of IFCI as secured creditor for the purpose of SARFAESI Act. 27.     The   aforesaid   provisions   of   Section   130   of   the Transfer of Property Act are not applicable to the facts of   the   present   case   as   the   IFCI   has   transferred   the debts of the company in liquidation in favour of the applicant by deed of assignment and therefore the case of the applicant is that it may be permitted to proceed against   the   company   in   liquidation   under   the SARFAESI Act as secured creditor.  The applicant is not entitled to get any benefit under the SARFAESI Act and cannot   be   termed   as   secured   creditor.     Hence   the reliance   placed   by   the   learned   advocate   for   the applicant   on   the   provisions   of   Section   130   of   the Transfer of Property Act, is misconceived.” 9. The relevant extract of the pleadings by the appellant in Company Application No.248 of 2014 noticed by the Company Judge in his order dated 07.09.2015 are also noticeable:  7
“8. I say and submit that earlier, IFCI also filed a<br>purshis dated 21.11.2011 before the Debts Recovery<br>Tribunal, Ahmedabad in Original Application No.452 of<br>2000 reaffirming that the IFCI Ltd. Has assigned its<br>dues in favour of the applicant. I beg to annex a copy<br>of purshis dated 21.11.2011 filed before the Debts<br>Recovery Tribunal, Ahmedabad in Original Application<br>No.452 of 2000 at Annexure­III.
10. I say and submit that apropos to the Deed of<br>Assignment, the Applicant has become the secured<br>creditor of the Company in Liquidation and all the<br>rights of IFCI Ltd. in relation to the financial facilities<br>extended to the Company in Liquidation and the<br>underlying security interests therein vests in the<br>Applicant vis­à­vis the Company in liquidation.”
10. The appellant initially took a conscious and considered stand<br>before the Company Judge, staking a claim for being substituted as a<br>secured creditor under the SARFAESI Act consequent to the assignment<br>of debt to it by the IFCI. That the claim was not simply with regard to<br>assignment of an actionable claim under Section 130 of the T.P. Act is<br>evident from its own pleadings and the pursis filed by the IFCI before<br>the Debt Recovery Tribunal. No material has been placed before us<br>with regard to the orders that may have been passed by the Tribunal on<br>such application. After the claim of the appellant of being a secured<br>creditor was rejected by the Company Judge, and the appellant realised
8
the unsustainability of its claim in the law, it made a complete volte face<br>from its earlier stand and surprisingly, contrary to its own pleadings,<br>now contended that it had never sought the status of a secured creditor<br>under the SARFAESI Act.
11. The contention of the appellant that it had never sought<br>substitution as a secured creditor under the SARFAESI Act is<br>additionally belied from the recitals contained in the order dated<br>07.09.2015. Time and again this court has held that the recitals in the<br>order sheet with regard to what transpired before the High Court are<br>sacrosanct. The learned Single Judge, in the review jurisdiction, has<br>reiterated that the arguments addressed before him in Company<br>Application No. 248 of 2014 were made specifically under the SARFAESI<br>Act observing as follows:
“It is also required to be noted that learned<br>advocate for the applicant in the said application, at the<br>time of arguments, submitted that the applicant be<br>substituted as secured creditor and given the benefit<br>under the SARFAESI Act and therefore, learned<br>advocate Mr. Rao appearing for the Bank of Baroda<br>submitted in detail, after relying upon the provisions<br>contained in SARFAESI Act, that the applicant cannot<br>be substituted as secured creditor and permitted to<br>proceed under the provisions of SARFAESI Act.”
9 12. A litigant can take different stands at different times but cannot take   contradictory   stands   in   the   same   case.     A   party   cannot   be permitted   to   approbate   and   reprobate   on   the   same   facts   and   take inconsistent shifting stands.  The untenability of an inconsistent stand in the same case was considered in  Amar Singh vs. Union of India, (2011) 7 SCC 69, observing as follows:  “50. This Court wants to make it clear that an action at law is not a game of chess. A litigant who comes to Court and invokes its writ jurisdiction must come with clean   hands.   He   cannot   prevaricate   and   take inconsistent positions.” 13.   A similar view was taken in  Joint Action Committee of Air Line (2011) 5 SCC 435, Pilots’ Assn. of India vs. DG of Civil Aviation,   observing: “12.  The doctrine of election is based on the rule of estoppel—the principle that one cannot approbate and reprobate   inheres   in   it.   The   doctrine   of   estoppel   by election is one of the species of estoppels in pais (or equitable estoppel), which is a rule in equity….. Taking inconsistent   pleas   by   a   party   makes   its   conduct   far from satisfactory. Further, the parties should not blow hot and cold by taking inconsistent stands and prolong proceedings unnecessarily.”  10 14. Resultantly   we   find   no   merit   in   the   appeal.   The   appeal   is dismissed.   …………...................CJI. [RANJAN GOGOI] …………...................J. [NAVIN SINHA] …………...................J. [K.M. JOSEPH] NEW DELHI OCTOBER 08, 2018. 11