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.”
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. Vs THE OFFICIAL LIQUIDATOR OF
MAHENDRA PETROCHEMICALS LTD.
(IN LIQUIDATION) AND OTHERS
NAVIN SINHA, J.
Dated:OCTOBER 08, 2018.
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
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
purshis dated 21.11.2011 before the Debts Recovery
Tribunal, Ahmedabad in Original Application No.452 of
2000 reaffirming that the IFCI Ltd. Has assigned its
dues in favour of the applicant. I beg to annex a copy
of purshis dated 21.11.2011 filed before the Debts
Recovery Tribunal, Ahmedabad in Original Application
No.452 of 2000 at AnnexureIII.
10. I say and submit that apropos to the Deed of
Assignment, the Applicant has become the secured
creditor of the Company in Liquidation and all the
rights of IFCI Ltd. in relation to the financial facilities
extended to the Company in Liquidation and the
underlying security interests therein vests in the
Applicant visàvis
the Company in liquidation.”
10. The appellant initially took a conscious and considered stand
before the Company Judge, staking a claim for being substituted as a
secured creditor under the SARFAESI Act consequent to the assignment
of debt to it by the IFCI. That the claim was not simply with regard to
assignment of an actionable claim under Section 130 of the T.P. Act is
evident from its own pleadings and the pursis filed by the IFCI before
the Debt Recovery Tribunal. No material has been placed before us
with regard to the orders that may have been passed by the Tribunal on
such application. After the claim of the appellant of being a secured
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
from its earlier stand and surprisingly, contrary to its own pleadings,
now contended that it had never sought the status of a secured creditor
under the SARFAESI Act.
11. The contention of the appellant that it had never sought
substitution as a secured creditor under the SARFAESI Act is
additionally belied from the recitals contained in the order dated
07.09.2015. Time and again this court has held that the recitals in the
order sheet with regard to what transpired before the High Court are
sacrosanct. The learned Single Judge, in the review jurisdiction, has
reiterated that the arguments addressed before him in Company
Application No. 248 of 2014 were made specifically under the SARFAESI
Act observing as follows:
“It is also required to be noted that learned
advocate for the applicant in the said application, at the
time of arguments, submitted that the applicant be
substituted as secured creditor and given the benefit
under the SARFAESI Act and therefore, learned
advocate Mr. Rao appearing for the Bank of Baroda
submitted in detail, after relying upon the provisions
contained in SARFAESI Act, that the applicant cannot
be substituted as secured creditor and permitted to
proceed under the provisions of SARFAESI Act.”
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
Pilots’ Assn. of India vs. DG of Civil Aviation, (2011) 5 SCC 435,
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.
Print Page
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.”
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. Vs THE OFFICIAL LIQUIDATOR OF
MAHENDRA PETROCHEMICALS LTD.
(IN LIQUIDATION) AND OTHERS
NAVIN SINHA, J.
Dated:OCTOBER 08, 2018.
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
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
purshis dated 21.11.2011 before the Debts Recovery
Tribunal, Ahmedabad in Original Application No.452 of
2000 reaffirming that the IFCI Ltd. Has assigned its
dues in favour of the applicant. I beg to annex a copy
of purshis dated 21.11.2011 filed before the Debts
Recovery Tribunal, Ahmedabad in Original Application
No.452 of 2000 at AnnexureIII.
10. I say and submit that apropos to the Deed of
Assignment, the Applicant has become the secured
creditor of the Company in Liquidation and all the
rights of IFCI Ltd. in relation to the financial facilities
extended to the Company in Liquidation and the
underlying security interests therein vests in the
Applicant visàvis
the Company in liquidation.”
10. The appellant initially took a conscious and considered stand
before the Company Judge, staking a claim for being substituted as a
secured creditor under the SARFAESI Act consequent to the assignment
of debt to it by the IFCI. That the claim was not simply with regard to
assignment of an actionable claim under Section 130 of the T.P. Act is
evident from its own pleadings and the pursis filed by the IFCI before
the Debt Recovery Tribunal. No material has been placed before us
with regard to the orders that may have been passed by the Tribunal on
such application. After the claim of the appellant of being a secured
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
from its earlier stand and surprisingly, contrary to its own pleadings,
now contended that it had never sought the status of a secured creditor
under the SARFAESI Act.
11. The contention of the appellant that it had never sought
substitution as a secured creditor under the SARFAESI Act is
additionally belied from the recitals contained in the order dated
07.09.2015. Time and again this court has held that the recitals in the
order sheet with regard to what transpired before the High Court are
sacrosanct. The learned Single Judge, in the review jurisdiction, has
reiterated that the arguments addressed before him in Company
Application No. 248 of 2014 were made specifically under the SARFAESI
Act observing as follows:
“It is also required to be noted that learned
advocate for the applicant in the said application, at the
time of arguments, submitted that the applicant be
substituted as secured creditor and given the benefit
under the SARFAESI Act and therefore, learned
advocate Mr. Rao appearing for the Bank of Baroda
submitted in detail, after relying upon the provisions
contained in SARFAESI Act, that the applicant cannot
be substituted as secured creditor and permitted to
proceed under the provisions of SARFAESI Act.”
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
Pilots’ Assn. of India vs. DG of Civil Aviation, (2011) 5 SCC 435,
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.
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