Ashok Bhushan, J.— Leave granted. These appeals along with connected appeals although emanates from two different suits filed by the same plaintiff, but the parties being common and sequence of facts being inter-related, we have heard the appeals together and they are being decided by this common judgment.
Civil Appeals Nos. 11886-87 of 2016 [arising out of SLPs (C) Nos. 23410-11 of 2011]
2. These appeals have been filed against the judgment and order dated 26-7-2011 passed by the High Court of Madras in EIH Ltd. v. Balaji Hotels and Enterprises Ltd. Civil Misc. Appeal No. 798 of 2011 arising out of CS No. 257 of 2005 renumbered as OS No. 12159 of 2010. Brief facts of the case, necessary to be noted for deciding the appeal are: the EIH Ltd., Respondent 1 (hereinafter referred to as “EIH”) to the appeal is a company which operates a chain of luxury hotels. The Oberoi Hotels (P) Ltd., Respondent 2 owns a brand name “Oberoi”.
3. On 26-10-1988 EIH entered into Technical Services Agreement (for short “TSA”) with one Balaji Construction (P) Ltd., predecessors-in-interest of the third respondent Balaji Hotels & Enterprises Ltd. (for short “BHEL”). The Agreement provided that EIH would provide its technical knowledge and skill required for operation of hotel, which was being constructed by BHEL. Another agreement on 12-1-2000 was entered into between BHEL and EIH, wherein it was recorded that on the request of BHEL, EIH paid Rs 9 crores to BHEL by way of financial accommodation which was used for construction of the hotel. By supplemental agreement dated 10-6-2000, it was recorded that in total Rs 15 crores 12 lakhs have been received by BHEL, repayment of which is to be made within 24 months from the date of the principal agreement dated 12-6-2000. It appears that amount could not be repaid hence another agreement was entered into between EIH and BHEL on 4-2-2002. The agreement recorded that, it has now been mutually agreed upon by BHEL and EIH that EIH will no longer participate in the hotel operations hence the Technical Services Agreement will be terminated. EIH further stipulated that no-objection certificate to BHEL shall be given for selling, leasing or otherwise transferring the hotel unit to any other company whether subsidiary or not, or to any other company or entity either directly or indirectly or otherwise. It was further agreed that BHEL shall refund the amount of Rs 15.12 crores along with interest.
4. Relevant Clauses F and G of the Agreement, are as follows:
F. It is also agreed by and between the parties that BHEL shall refund the said amount of Rs 15.12 crores as mentioned in Clause D above along with interest as applicable on the above amounts on the terms and conditions hereinafter contained.
G. It is also agreed by and between the parties that BICL will execute an irrevocable guarantee in favour of EIH guaranteeing the payment of the said sum of Rs 15.12 crores along with interest as applicable and in consideration of such guarantee, EIH has agreed to give BHEL time up to 31-12-2002 to repay the said sum of Rs 15.12 crores with interest as applicable.
5. On the same day, a letter of guarantee was issued by Balaji Industrial Corporation Ltd. (BICL), the fourth respondent in this appeal, unconditionally, absolutely and irrevocably guaranteeing the payment of Rs 15.12 crores, in the event, BHEL did not pay the subject amount of Rs 15.12 crores within 31-12-2002.
6. BHEL had obtained financial assistance from IFCI, the seventh respondent and Tourism Finance Corporation of India Ltd., the eighth respondent. EIH came to know that Tourism Finance Corporation of India Ltd. (for short “TFCI”) had issued advertisement inviting offer for takeover (joint venture) sale of hotel project of BHEL. EIH wrote to TFCI on 8-9-2002 informing about the agreements entered into between EIH and BHEL and further stating that till sum of Rs 15.12 crores along with interest is not refunded, EIH would have the exclusive right to operate the hotel. BHEL on 8-6-2004 acknowledged and confirmed the principal sum of Rs 15.12 crores being outstanding as per books of accounts of 31-3-2004 with interest. A suit in the High Court of Madras being CS No. 257 of 2005 was filed by EIH against BHEL and others praying for the following reliefs:
“The plaintiff prays for a judgment and decree for:
(a) Declaration that the Technical Services Agreement dated 26-10-1988 and the Project Consultancy Agreement and Royalty Agreement both dated 26-10-1988 and the agreements dated 12-1-2000, 10-6-2000 and 4-2-2002 are valid, legal and subsisting and are binding and enforceable on Defendants 3 to 7 and/or its assigns.
(b) Permanent injunction restraining Defendants 3 to 7 whether by itself, its servants, agents and/or assigns or otherwise howsoever from selling, encumbering and/or disposing of in any manner howsoever, the schedule property of Defendant 1 situated at Mount Road, Chennai, in favour of any persons without disclosing and/or recognising the rights of the plaintiff to operate and manage the hotel as provided for under the Technical Services Agreement dated 26-10-1988 and the Project Consultancy Agreement and Royalty Agreement both dated 26-10-1988 and the agreements dated 12-1-2000, 10-6-2000 and 4-2-2002.
(c) Costs.
(d) Such further and other reliefs.”
(emphasis supplied)
7. An application was also filed by EIH and Oberoi Hotels (P) Ltd. who were Plaintiffs 1 and 2, for grant of temporary injunction. The learned Single Judge had issued temporary injunction on 18-3-2005.
8. After the grant of temporary injunction, it appears that in the year 2007 proceedings were initiated by IFCI by issuing notice under Section 13 sub-section (2), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002 demanding amount due from BHEL.
9. Proceedings under the Sarfaesi Act, 2002 proceeded and the hotel asset of BHEL was transferred in favour of one Robust Hotels (P) Ltd. {the appellant in CAs Nos. 11886-87 of 2016 [arising out of SLPs (C) Nos. 23410-11 of 2011]}. A transfer deed dated 5-7-2007 was issued by IFCI and TFCI in favour of Robust Hotels (P) Ltd. (hereinafter referred to as “the Robust Hotels”). All the land, together with erections, plant and machinery were transferred to the Robust Hotels. EIH filed an application in November 2009 for impleadment of Robust Hotels in CS No. 257 of 2005 although the impleadment was opposed but was allowed by the learned Single Judge vide judgment dated 23-3-2010. Appellants 1 to 4 in SLPs (C) Nos. 23410-11 of 2011 were impleaded as Defendants 8-11 in CS No. 251 of 2005. The letters patent appeal filed against the said judgment was also dismissed by the Division Bench on 22-10-2010 2010 SCC OnLine Mad 5337, (2010) 6 CTC 192. The Robust Hotels unsuccessfully challenged the order of the Division Bench before this Court by filing an SLP, which was also dismissed on 7-1-2011 SLP (C) No. 35936 of 2010.
10. CS No. 257 of 2005 was renumbered as OS No. 12159 of 2010. An IA was filed by EIH being IA No. 22846 of 2010. By the aforesaid IA No. 22846 of 2010 the plaintiff prayed for an order, restraining the Robust Hotels from having the construction of the hotel unit or from doing, acting or taking steps contrary to or in derogation of the rights of the plaintiff under the Technical Services Agreement and other agreements. The application was rejected by the learned Single Judge vide judgment and order dated 9-3-2011, challenging the aforesaid order dated 9-3-2011, an appeal being CMA No. 798 of 2011 was preferred. The Division Bench of the Madras High Court decided the appeal being CMA No. 798 of 2011 and MP No. 1 of 2011 and issued certain directions vide its judgment and order dated 26-7-2011 Civil Misc. Appeal No. 798 of 2011. CAs Nos. 11886-87 of 2016 [arising out of SLPs (C) Nos. 23410-11 of 2011] have been filed against the aforesaid Division Bench judgment and order dated 26-7-2011 Civil Misc. Appeal No. 798 of 2011 by the Robust Hotels and other three defendants.
CAs Nos. 11888-89 of 2016 [arising out of SLPs (C) Nos. 17742-43 of 2012]
11. These appeals have been filed by EIH Ltd. and Oberoi Hotels against the judgment and final order dated 13-3-2012 passed by the High Court of Madras in EIH Ltd. v. Balaji Hotels and Enterprises Ltd. While noticing the facts in the appeals filed by the Robust Hotels, we in the proceeding paragraphs have noted the facts which are also relevant for understanding the issues raised in the present appeals. The appellants EIH and Oberoi Hotels filed a suit, being CS No. 164 of 2011 before the High Court of Madras praying for a declaration that deed of transfer dated 5-7-2007 entered into between IFCI Ltd. and TFCI on one part and the Robust Hotels (P) Ltd. on another part, and the certificate of sale of immovable property dated 6-7-2007 are illegal and null and void and of no effect and not binding. A perpetual injunction was also prayed for, restraining the defendants whether by themselves, their servants, agents or otherwise howsoever from purporting to act, to give effect to or taking any steps in furtherance of the purported deed of transfer dated 5-7-2007 and the certificate of sale of movable and immovable property also dated 5-7-2007 or from enforcing the same in any manner whatsoever.
12. It was pleaded that the cause of action for instituting the suit was the sale of hotel unit at Mount Road, Chennai by the financial institutions contrary to the order passed by this High Court dated 18-3-2005. The counter-affidavit was also filed in OA No. 233 of 2011 in CS No. 164 of 2011 by the Robust Hotels. A contempt petition was also filed for violation of order dated 18-3-2005, passed in OA No. 300 of 2005 in CS No. 257 of 2005.
13. OA No. 233 of 2011 in CS No. 164 of 2011 filed by EIH and Oberoi Hotels praying for injunction was dismissed by the learned Single Judge vide order dated 8-8-2011. By the same order, the learned Single Judge also dismissed Contempt Petition (C) No. 647 of 2011 filed by EIH and Oberoi Hotels. Challenging the order passed by the learned Single Judge dated 8-8-2011 the letters patent appeal was filed by EIH and Oberoi Hotels being OSA No. 419 of 2011. The Division Bench by the order dated 13-3-2012 dismissed the appeal, challenging which order CAs Nos. 11888-89 of 2016 [arising out of Special Leave Petitions (C) Nos. 17742-43 of 2012] have been filed by EIH and Oberoi Hotels.
14. We have heard Shri K.K Venugopal, learned Senior Counsel and K.V Viswanathan, learned Senior Counsel for Robust Hotels, Shri Jaideep Gupta, learned Senior Counsel and Shri Siddharth Mitra, learned Senior Counsel have appeared on behalf of EIH and Oberoi Hotels.
15. Shri K.K Venugopal, in support of his appeal, contends that the Division Bench of the Madras High Court erred in passing an interim order on 26-7-2011 Civil Misc. Appeal No. 798 of 2011 whereas there was no case made out by EIH and another for grant of any interim order. The Robust Hotels has purchased the hotel unit under the Sarfaesi Act, 2002 and the property has been conveyed to the Robust Hotels free from any encumbrance. The proceedings under the Sarfaesi Act, 2002 cannot be made the subject-matter of challenge before a civil court. Section 34 of the Sarfaesi Act, 2002 completely ousts the jurisdiction of the civil court. He contends that entitlement to recover the amount of Rs 15.12 crores by EIH if at all was against the Balaji Hotels & Enterprises Ltd. and Balaji Industrial Corporation Ltd., for which it was open for EIH to take appropriate proceedings. The Robust Hotels having acquired the assets under Sarfaesi proceeding has no liability to make any payment to EIH and the order passed by the Division Bench issuing such direction is unsustainable. It is submitted that Robust Hotels cannot be held liable for any breach of order dated 18-3-2005 and in view of the subject-matter, order dated 18-3-2005 was also hit by Section 34 of the Sarfaesi Act, 2002.
16. Shri Venugopal further submitted that CAs Nos. 11888-89 of 2016 [arising out of Special Leave Petitions (C) Nos. 17742-43 of 2012] filed by EIH deserved to be dismissed since both the learned Single Judge and the Division Bench have rightly held that the transfer made on 5-7-2007 in favour of the Robust Hotels could not have been challenged in CS No. 164 of 2011 in view of Section 34 of the Sarfaesi Act, 2002.
17. Shri Jaideep Gupta and Siddharth Mitra, learned Senior Counsel, appearing for EIH have vehemently opposed the submissions raised by Shri K.K Venugopal. It is contended by the learned Senior Counsel appearing for EIH and another that the order passed by the Division Bench on 26-7-2011 Civil Misc. Appeal No. 798 of 2011 is perfectly in accordance with law, which needs no interference by this Court in exercise of jurisdiction under Article 136 of the Constitution. It is submitted that interim order has been issued by the Division Bench of the Madras High Court being fully satisfied on prima facie case of the EIH Ltd., the balance of convenience and irreparable loss being in favour of the plaintiffs. It is contended that injunction order dated 18-3-2005 issued in CS No. 257 of 2005, has been violated by the financial institutions. Any action taken, in breach of interim injunction order, is to be set aside and no party can be allowed to take benefit of its wrong committed in breach of an order of the Court. It is contended that financial institutions and erstwhile owners of the hotel unit were made aware of the interim injunction order dated 18-3-2005 and despite the said injunction order, they transferred the unit without taking into consideration the right of the EIH flowing from the contracts entered into between EIH and erstwhile owner as noted above.
18. One of the conditions of the last agreement dated 4-2-2002 was to make payment of an amount of Rs 15.12 crores by the erstwhile owner before transferring the right in the hotel unit including the right to run the hotel in favour of any entity.
19. The order passed by the Division Bench dated 26-7-2011 Civil Misc. Appeal No. 798 of 2011 does complete justice between the parties, and the Division Bench has exercised its discretionary jurisdiction in granting the relief which needs no interference by this Court in exercise of jurisdiction under Article 136 of the Constitution.
20. Coming to appeal, filed by EIH against the order dated 13-3-2012, it is contended that all actions in breach of an interim injunction have to be set aside and the Court is fully competent to restore status quo ante. It is contended that in event where an action is taken in disregard of any interim injunction passed by a court, the question of prima facie case, balances of convenience and irreparable loss have not to be looked into and the Court has to undo the wrong done in breach of the court's order.
21. It is submitted that Section 34 of the Sarfaesi Act, 2002 does not protect the Robust Hotels in the facts of the present case. It is submitted that the appeal filed by EIH, deserved to be allowed setting aside all actions taken in breach of the injunction order dated 18-3-2005.
22. The learned Senior Counsel for both the parties have also relied on various judgments of this Court in support of their respective submissions, which shall be referred to while considering their submissions in detail.
23. First, we take up the appeal of Robust Hotels, the appeal has been filed against an interim order passed by the High Court, disposing of CMA No. 798 of 2011.
24. The interim directions issued by the Division Bench are in the following three parts:
“(i) This Court without prejudice, directs the 1st and 2nd respondents/erstwhile owners/BH and EL and another or the eighth respondent/the present owner/Robust Hotels (P) Ltd. to deposit a sum of Rs 15.12 crores into the credit of OS No. 12159 of 2010 on or before 31-8-2011.
(ii) After such deposit has been made the learned trial Judge shall dispose of the case within a period of three months on merits, without being influenced by this Court's findings.
(iii) If the condition of deposit as ordered by this Court, is not complied with by either of the parties, the interim injunction, restraining the 8th respondent/Robust Hotels (P) Ltd., from acting or taking any steps contrary to and/or in derogation of the rights of the petitioners under the Technical Services Agreement, the Projects Consultancy Agreement and the Royalty Agreement all dated 26-10-1988, entered into between the petitioners/EIH and another and Respondents 1 and 2.BHEL and BICL will come into effect from 1-9-2011.”
25. As noted above, the agreement dated 4-2-2002 Annexure P-4 between Balaji Hotels Enterprises Ltd. and its successor Balaji Industrial Corporation Ltd. with EIH contemplated that EIH will no longer participate in the hotel unit and Technical Services Agreement will be terminated and BHEL shall refund the amount of Rs 15.12 crores for which time was extended by EIH to BHEL by 31-12-2002. When the EIH came to know that Tourism Finance Corporation India Ltd. has issued an advertisement for inviting offers for takeover/joint venture, sale of hotel brought at Mount Road, Chennai it immediately wrote to Tourism Finance Corporation India Ltd. informing about its agreement with BHEL. EIH has also informed in writing vide letter dated 15-7-2004 Annexure P-8 to the Asset Reconstruction Company (India) Ltd. about their advance of Rs 15.12 crores which it had made to BHEL.
26. Subsequently, suit, namely, CS No. 257 of 2005 was filed by the EIH Ltd. and Oberoi Hotels, plaint of which suit has been brought on record by Annexure P-14.
27. Interim injunction was issued by the learned Single Judge of the High Court in the aforesaid suit to the following effect:
“That: (1) Assets Reconstruction Company (India) Limited, (2) ICICI Bank Limited (3) IFCI Limited (4) Tourism Finance Corporation of India Limited, and (5) Anand Rathi Securities Private Limited, Respondents 3 to 7 herein, whether by itself, its servants, agents and/or assigns or otherwise howsoever be and are hereby restrained by an order of interim injunction until further orders of this Court from dealing with, disposing of, selling and/or encumbering in any manner howsoever the hotel unit of Respondent 1 situated at Mount Road, Chennai in favour of any person without disclosing the rights of the applicants to operate and manage the hotel in terms of the Technical Services, Project Consultancy and Royalty Agreements dated 26-10-1988 and the agreements dated 12-1-2000, 10-6-2000 and 4-2-2002.”
28. The essence of interim injunction issued by the Court was that Respondents 3 to 7 of that suit were restrained by an order of injunction from dealing with, disposing of, selling and/or encumbering in any manner howsoever the hotel unit of Balaji Hotels & Enterprises Ltd. (BHEL), in favour of any person without disclosing the rights of the applicants to operate and manage the hotel in terms of the Technical Services, Project Consultancy and Royalty Agreements dated 26-10-1988 and the agreements dated 12-1-2000, 10-6-2000 and 4-2-2002.
29. Thus, the injunction ordained that while dealing with the hotel unit the rights of the applicant be disclosed. The subsequent facts, as noted above indicate that even after the aforesaid injunction the IFCI Ltd. and Tourism Finance Corporation of India Ltd. by deed of transfer dated 5-7-2007 transferred the hotel unit to the Robust Hotels without disclosing the rights of the applicant as provided by the agreement mentioned therein. The agreement dated 4-7-2002 clearly provided that the BHEL was required to repay the amount of Rs 15.12 crores to EIH by 31-12-2002 whereafter, EIH had nothing to do with the operation of the hotel.
30. The learned Senior Counsel for the appellants have placed much reliance on Section 34 of the Sarfaesi Act, 2002. Section 34 of the Sarfaesi Act, 2002 provided as follows:
“34. Civil court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).”
31. The scope and ambit of Section 34 of the Sarfaesi Act, 2002 have been considered by this Court in several cases. It is sufficient to refer to the judgment of this Court in Nahar Industrial Enterprises Ltd. v. Hong Kong & Shanghai Banking Corpn. (2009) 8 SCC 646 This Court held that the jurisdiction of the civil court is plenary in nature, unless the same is ousted, expressly or by necessary implication, it will have jurisdiction to try all types of suits.
32. Following was laid down in paras 110-111: (Nahar Industrial case (2009) 8 SCC 646)
“110. It must be remembered that the jurisdiction of a civil court is plenary in nature. Unless the same is ousted, expressly or by necessary implication, it will have jurisdiction to try all types of suits.
111. In Dhulabhai v. State of M.P AIR 1969 SC 78, this Court opined: (AIR p. 89, para 32)
‘32. … The result of this inquiry into the diverse views expressed in this Court may be stated as follows:
(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court.
Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not.’”
33. A perusal of Section 34 indicates that there is express bar of jurisdiction of the civil court to the following effect:
“(i) Any suit or proceeding in respect of any matter in which the Debts Recovery Tribunal or Appellate Tribunal is empowered by or under this Act to determine.
(ii) Further, no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.”
Thus the bar of jurisdiction of civil court has to correlate to the abovementioned conditions. For the purposes of this case, we are of the view that this Court need not express any opinion as to whether suits filed by EIH were barred by Section 34 or not, since the issues are yet to be decided on merits and the appeal by Robust Hotels has been filed only against an interim order.
34. The submissions, which have been much pressed by the learned Senior Counsel for EIH are on the effect and consequence of acting in breach of injunction order dated 18-3-2005. At the time, when injunction order was issued by the learned Single Judge, Robust Hotels was not in picture, however, subsequently, it has also been impleaded in the suit and the challenge to the impleadment of Robust Hotels has failed up to this Court. There can be no doubt that IFCI and Tourist Finance Corporation which had executed the deed of transfer in favour of Robust Hotels and were parties to suit, were bound by the said interim injunction. The interim injunction was only to the effect that the liability of BHEL to repay the amount of Rs 15.12 crores up to particular date was to be communicated and recognised to any subsequent purchaser. The recognition of right of the plaintiff of receiving of Rs 15.12 crores was with the object that anyone purchasing the hotel unit should be aware of the liability and the said liability should also be adverted to and taken care of.
35. The learned Senior Counsel for EIH has referred to and relied on the judgment of the Full Bench of the Madras High Court in Century Flour Mills Ltd. v. S. Suppiah AIR 1975 Mad 270, 1975 SCC OnLine Mad 73 and another judgment in Clarke v. Chadburn (1985) 1 All ER 211, (1985) 1 WLR 78, for the proposition that any action taken in disobedience or disregard in injunction order, becomes void and illegal.
36. The Madras High Court in Century Flour Mills Ltd. AIR 1975 Mad 270, 1975 SCC OnLine Mad 73 stated the following in para 8: (SCC OnLine Mad)
“8. In our opinion, the inherent powers of this Court under Section 151 CPC are wide and are not subject to any limitation. Where in violation of a stay order or injunction against a party, something has been done in disobedience, it will be the duty of the court as a policy to set the wrong right and not allow the perpetuation of the wrong doing. In our view, the inherent power will not only be available in such a case, but it is bound to be exercised in that manner in the interests of justice. Even apart from Section 151, we should observe that as a matter of judicial policy, the court should guard against itself being stultified in circumstances like this by holding that it is powerless to undo a wrong done in disobedience of the court's orders. But in this case it is not necessary to go to that extent as we hold that the power is available under Section 151 CPC.”
37. The judgments of the Madras High Court in Century Flour Mills Ltd. v. S. Suppiah AIR 1975 Mad 270, 1975 SCC OnLine Mad 73 and Clarke v. Chadburn (1985) 1 All ER 211, (1985) 1 WLR 78 had been relied on and approved by this Court in DDA v. Skipper Construction Co. (P) Ltd. (1996) 4 SCC 622
38. Another judgment relied upon is Anita International v. Tungabadra Sugar Works Mazdoor Sangh (2016) 9 SCC 44. In the aforesaid case, in a company petition, filed in the Madras High Court for winding up of Deve Sugars Ltd., an order of winding up was passed. An Official Liquidator was directed to take possession of the property of the company. State Bank of Mysore had extended some loan to the Deve Sugars Ltd. and on default having been committed, an OA was filed before the Debts Recovery Tribunal by the Bank for the recovery of the amount. The recovery certificate was issued for a sum of Rs 8.40 crores. State Bank of Mysore filed a company application in the pending company petition before the High Court of Madras, seeking leave to proceed before the Debts Recovery Tribunal (DRT), Bangalore.
39. The High Court, while granting leave to State Bank of Mysore passed an order that no coercive steps are to be taken against the assets of the company during or after concluding all the proceedings before the Tribunal. The order passed by the Madras High Court has been extracted in para 3 of the judgment which is to the following effect: (Anita International case (2016) 9 SCC 44)
“3. The Company Court in the High Court of Madras, while granting leave to State Bank of Mysore, passed the following order on 10-3-2000 (while disposing of Company Applications Nos. 1251-53 of 1999):
‘This company application, praying to this Court to grant leave to the applicant Bank to proceed and prosecute further OA No. 1300 of 1997 filed by them against the respondent Company in the Debts Recovery Tribunal at Bangalore.
Company applications coming on this day before this Court for hearing in the presence of Mr R. Varichandran, Advocate for the applicant, herein and the Official Liquidator, High Court, Madras, the respondent, appearing in person, and upon reading the Judge's summons and affidavit and report of the Official Liquidator filed herein, the court made the following orders:
Leave is granted subject to the condition that the Official Liquidator is impleaded and no coercive steps are taken against the assets of the company during or after the conclusion of the proceedings before the Tribunal.’”
(emphasis in original)
40. A perusal of the above order reveals that leave was granted subject to the condition that the Official Liquidator was impleaded before the DRT, Bangalore, and further that no coercive steps would be taken against the assets of the Company Deve Sugars Ltd., during or after the conclusion of proceedings before the DRT, Bangalore.
41. It appears that in the recovery proceedings, the assets were auctioned and Anita International was the auction-purchaser. The issue was raised before the High Court that in view of the order of the Madras High Court dated 10-3-2000, proceedings for recovery as well as confirmation of the auction were invalid. It was also contended before the High Court that the Company Court had no jurisdiction, the arguments raised before the Court that the Company Court has no jurisdiction and it was a Debts Recovery Tribunal which has exclusive jurisdiction, was rejected (2016) 9 SCC 44 by this Court. It is useful to refer to paras 49 and 51 of the judgment which is to the following effect: (Anita International case (2016) 9 SCC 44)
“49. In order to support their claim, it was submitted on behalf of the appellants that jurisdiction in matters of recovery agitated by banks and financial institutions under the RDB Act has been repeatedly expounded by this Court. The Debts Recovery Tribunals concerned, before whom recovery proceedings are initiated, have exclusive jurisdiction in the matter. It was also pointed out that this Court has clearly declared that even the jurisdiction of Recovery Officers in matters of execution of recovery certificates was likewise exclusive. It was the pointed contention of the learned counsel for the appellants that in matter wherein banks and financial institutions approach a Debts Recovery Tribunal, which on due consideration issues a recovery certificate, the same can be executed only through a Recovery Officer. It was submitted that a Company Court has no jurisdiction in the matter. The learned counsel for the appellants substantiated the above assertion on the basis of the decisions rendered by this Court in Allahabad Bank (2000) 4 SCC 406, M.V Janardhan Reddy (2008) 7 SCC 738, Andhra Bank (2005) 5 SCC 75, Rajasthan State Financial Corpn. (2005) 8 SCC 190 and Official Liquidator (2013) 4 SCC 381 cases.
51. It is not possible for us to accept the contentions advanced on behalf of the appellants. In this behalf it would be relevant to mention that in M.V Janardhan Reddy case (2008) 7 SCC 738 the Company Court by an order dated 13-8-1999 required that its permission should be obtained before the Recovery Officer finalised the sale. Thereafter, the Company Court by an order dated 25-3-2005 directed that sale by the Recovery Officer was subject to confirmation by the Company Court. In the above sequence of facts, this Court clearly held that the condition imposed by the Company Court could not be violated by the Recovery Officer. It was concluded that the sale made by the Recovery Officer in violation of the orders passed by the Company Court was without the authority of law, the same was accordingly set aside. The explanation tendered by the learned Senior Counsel representing the appellants was that even in the above judgment, this Court had not disturbed the exclusive jurisdiction of a Recovery Officer in executing the recovery certificate. In our considered view, the above contention is immaterial to the issue under consideration. The issue under consideration is whether or not an order passed by the Company Court (in the present case the order dated 10-3-2000) was binding on the Recovery Officer? And, whether the proceedings conducted by the Recovery Officer in violation of the above order were sustainable in law? We have no hesitation in concluding that in M.V Janardhan Reddy case (2008) 7 SCC 738, an order passed by the Company Court was held to be binding on the Recovery Officer. Based on exactly the same consideration, we are of the view that the acceptance of the bid of Anita International by the Recovery Officer on 11-8-2005 and the confirmation of the sale in its favour on 12-9-2005 were clearly impermissible and therefore, deserve to be set aside.”
42. This Court further held that it is not open either to a party to the lis or to any third party to determine at their own that an order passed by a court is valid or void. A party to the lis or the third party who considers an order passed by a court as voidable or non est, must approach the court of competent jurisdiction to have the said order set aside on such grounds, as may be available in law. This Court held that the order of the Company Court of the Madras High Court was to be complied with and sale held in violation of the said order was to be set aside.
43. The entitlement of EIH to receive Rs 15.12 crores, which was the condition of the agreement dated 4-2-2002 was to be reflected in any future transaction by virtue of the injunction order dated 18-3-2005 dealing with the property, has rightly been taken note of by the Division Bench of the High Court and we do not find any error in the directions issued by the Division Bench of the High Court, directing first and second respondents i.e erstwhile owner and eighth respondent Robust Hotels to deposit the sum of Rs 15.12 crores.
44. We, however, are of the view that it was not necessary for the High Court to presume that the conditions of deposit, as ordered by the court shall not be complied with. Orders of the court are issued to be complied with and a court does not lack power to ensure the compliance by appropriate proceedings. Thus, further directions of the High Court that “if the condition of deposit as ordered by this Court has not been complied with by either of the parties.…”, interim injunction, restraining the eighth respondent was uncalled for. The interim order passed by the High Court, directing for deposit of Rs 15.12 crores has done substantial justice between parties, which needs no interference by this Court in exercise of its jurisdiction under Article 136. We, however, are of the view that the directions issued by the Division Bench in para 38 need to be affirmed only to the following extent:
“(a)(i) This Court without prejudice, directs the first and second respondents/erstwhile owners/BHEL and another or the eighth respondent/the present owner/Robust Hotels Pvt. Ltd. to deposit a sum of Rs 15.12 crores into the credit of OS No. 12159 of 2010 on or before 31-8-2011.”
45. It goes without saying that the trial Judge has to expeditiously proceed to decide the suit. The deposit was to be made under the order of the High Court till 31-8-2011. This Court passed an interim order on 29-8-2011 due to which no deposit was made, we thus extend the time for deposit of the amount till 31-1-2017. The appeals filed by Robust Hotels are disposed of as above.
46. Now, we come to the appeals filed by EIH. EIH filed an appeal against the order of the Division Bench dated 13-3-2012 by which order, the Division Bench has dismissed the appeal filed against the order dated 8-8-2011, passed by the learned Single Judge. Order dated 8-8-2011 was passed in EIH Ltd. v. Balaji Hotels and Enterprises Ltd. by which application, the plaintiff has prayed for interim injunction, restraining the defendants from purporting to act or to give effect to or taking any step in furtherance of the purported deed of transfer dated 5-7-2007 and the certificate of sale of movable and immovable property dated 5-7-2007 or from enforcing the same in any manner whatsoever pending the suit.
47. The learned Single Judge passed an order, refusing the interim order as prayed for in OA No. 233 of 2011. The Division Bench, while dismissing the appeal made the following observations in para 62 at p. 50:
“62. The maintainability of suits, which are pending on the file of the City Civil Court as well as on the file of this Court in CS No. 164 of 2011, can be adjudicated in the course of trial and this Court finds some force in the submission made by the learned Senior Counsel appearing for the appellants that the said findings may definitely prejudice their case. Hence, this Court expunges the observations made by the learned Judge with regard to the maintainability of the suit in OS No. 12159 of 2010, pending on the file of the IIIrd Additional Judge, City Civil Court, Chennai and CS No. 164 of 2011 pending on the file of this Court.”
48. The Division Bench as well as the learned Single Judge have already noted that the hotel has already commenced its operation and contracts have been made with third parties for the operation of the hotel and bookings are also being taken from the customers. We have already noticed the directions issued by the Division Bench, directing Defendants 1, 2 and 8 to the suit CS No. 257 of 2005 to deposit an amount of Rs 15.12 crores which order had done substantial justice between the parties. Taking into consideration the overall circumstances, specially when issues raised in CS No. 164 of 2011 are yet to be adjudicated, the orders passed by both the learned Single Judge and the Division Bench, refusing to grant interim injunction in view of the facts as noted above cannot be faulted.
49. In result, the appeals of Robust Hotels and others are disposed of by modifying the order of the Division Bench as above. The appeals of EIH Ltd. and others are dismissed.