Madras High Court
Asset Reconstruction Company India vs M/S Sri Devi Hospital on 19 November, 2019
Author: M.M.Sundresh
Bench: M.M.Sundresh
O.S.A.Nos.57 and 58 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 25.06.2021
Delivered on : 08.07.2021
CORAM :
THE HONOURABLE MR. JUSTICE M.M.SUNDRESH
AND
THE HONOURABLE MS. JUSTICE R.N.MANJULA
O.S.A.Nos.57 & 58 of 2020
& C.M.P.Nos.1879, 1909, 3496 & 3505 of 2020
Asset Reconstruction Company India
Limited (ARCIL),
Rep., by its Authorised Representative and
Chief Manager Manjula Balaji,
The Ruby, 10th Floor, No.29,
Senapathi Bapat Marg,
Dadar (W), Mumbai-400 028. .. Appellant in
both OSAs
vs
1.M/s Sri Devi Hospital,
Represented by its sole Proprietor
Dr.K.Senthil Nathan,
No.1620A, 16th Main Road,
Anna Nagar, Chennai-600 040.
2.M/s ARCIL-SBPS-008-I Trust,
Represented by its Managing Trust,
Chief Manager Manjula Balaji,
The Ruby, 10th Floor, No.29, Senapathi Bapat Marg,
Dadar (W), Mumbai-400 028.
3.Indian Overseas Bank,
Arumbakkam Branch,
Chennai-600 106. ..Respondents
in both OSAs
https://www.mhc.tn.gov.in/judis/
Page 1 of 56
O.S.A.Nos.57 and 58 of 2020
Original Side Appeals filed under Order XXXVI of Rule 1 of
Original Side Rules read with Clause 15 of the Letters Patent against
the order and decreetal order dated 19.11.2019 passed in
Application No.8576 of 2019 and O.A.No.954 of 2019 in C.S.No.612
of 2019.
For Appellant
(in both OSAs) : Mr.Om Prakash, Senior Counsel
for Mr.V.V.Sivakumar
For Respondents
(both OSAs) : Mr.G.Rajagopalan, Senior Counsel
for Mr.S.Sundaresan
COMMON JUDGMENT
M.M.SUNDRESH, J.
These two appeals arise out of a common order passed by the learned Single Judge, allowing the application filed seeking an order of injunction pending disposal of the suit while rejecting the application for rejection of plaint. Aggrieved by the aforesaid orders, these appeals are filed by the first defendant.
2. For the sake of convenience, the parties are referred to as per their ranks in the suit.
3. We have heard learned Senior Counsel for the parties and perused the documents filed, judgments produced and the written arguments of the first respondent.
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4. Facts:
4.1. We believe an appropriate factual narration would substantially take care of the issues raised in these appeals.
4.2. A credit facility was extended by the third defendant – Indian Overseas Bank in favour of the plaintiff with its own Scheme of re-payment and terms and conditions attached. It was followed by a sanction letter which indicates collateral security as well. The reasons for granting of loan have also been indicated in the aforesaid communication.
4.3. An assignment agreement was entered into between the appellant/first defendant and the third defendant. Accordingly, the third defendant becomes the assignor and the appellant is the assignee. The agreement was signed on 31.08.2010 and duly registered on the file of the Sub-Registrar of Anna Nagar. The appellant is a Company incorporated under the Companies Act and registered as a Securitization and Asset Reconstruction Company pursuant to Section 3 of the SARFAESI Act. The debts of the borrower, namely, the plaintiff in the suit are accordingly assigned.
The assignment deed also indicates the details of financial https://www.mhc.tn.gov.in/judis/ Page 3 of 56 O.S.A.Nos.57 and 58 of 2020 documents pertaining to the plaintiff, which in turn, includes the agreement relating to the deposit of title deeds, confirmation letter for supplementary mortgage given for the properties situated in Bangalore along with its confirmation letter. Needless to state, the term loan originally given includes the utilization of the fund for the Bangalore project as well.
4.4. After the said assignment, the plaintiff executed a term- sheet dated 27.09.2010 admitting and acknowledging its liability and due for a sum of Rs.50.63 crores as on 31.08.2010. It was further agreed that the dues would be cleared within a period of two years. A deed of undertaking dated 11.10.2010 was executed by the plaintiff confirming to comply with the conditions stipulated thereunder. A deed of guarantee along with the memorandum of deposit of title deeds were also executed.
4.5. The plaintiff failed to comply with the terms and conditions stipulated under the term sheet dated 27.09.2010 though certain amount of payment was made in instalments only in the month of September, 2011.
https://www.mhc.tn.gov.in/judis/ Page 4 of 56 O.S.A.Nos.57 and 58 of 2020 4.6. Under those circumstances, the appellant filed O.A.No.288 of 2014 under Section 19(1) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the plaintiff in the present suit and others being the guarantors.
4.7. When the matter was pending before the Debts Recovery Tribunal I at Chennai in O.A.No.288 of 2014, a strange incident occurred. The document executed by the plaintiff/respondent in favour of the appellant was presented before the Sub-Registrar of Bengaluru, State of Karnataka by an entity viz., “Anti Corruption Council of India” and on that, an order was passed to impound the document by way of a communication to the District Registrar, Bengaluru. The surprise element is compounded by the fact that neither the plaintiff nor the appellant was put on notice nor a copy marked, though it has been taken note of, filed and used as a sheet anchor by the plaintiff. This was put to challenge by the appellant before the High Court of Karnataka and the matter is stated to be pending with an interim order.
4.8. The drama unfolded did not end there. Taking umbrage under the said order and quoting certain judgments relating to https://www.mhc.tn.gov.in/judis/ Page 5 of 56 O.S.A.Nos.57 and 58 of 2020 deeds of declaration and cancellation were unilaterally prepared, signed and registered at Bengaluru by the plaintiff on 03.10.2016.
4.9. The following is the operative portion of the order of impounding passed by the Sub-Registrar, Bengaluru and the deed of declaration:
“With reference to the above, an instrument of Agreement of conveyance is presented before me by the Anti-Corruption Council of India which is described as agreement of conveyance Sri Devi Hospital (Resolution Plan and Board terms and conditions) which is executed on 27.09.2020 by Sri Devi Hospitals, No.1620-A, 16th main road, Anna Nagar, Chennai – 600 040 in favour of Assets Reconstruction Company (ARCIL) India Ltd., No.29, The Ruby 10th Floor, Senapati Bapt Marg, Dadar West, Mumbai – 400 028.
Whereas, on my perusal the instrument in question involves an actual contract of conveyance and liability of stamp duty to be borne by Arcil Trusts (i.e., Arcil and its Trust) there by violating the provisions of Sec 59, 59-A and 59-B of the Karnataka Stamp Act 1957 i.e., it attracts, “penalty for executing etc, instrument not duly stamped”. And they have executed the instruments with an intention to defraud the State Govt revenue by also violating the essential basic provisions of Karnataka https://www.mhc.tn.gov.in/judis/ Page 6 of 56 O.S.A.Nos.57 and 58 of 2020 Stamp Law i.e., Sec 34 instruments not duly stamped inadmissible in evidence etc., And whereas, the tenor and contents of the said instruments clearly shows that there is a huge investments, security and liability aspects and the financial institution's and the Arcil Trusts have not once bothered to obtain an adjudication or opinion of the Deputy Commissioner under the Karnataka Stamp Act 1957 or not even also bothered to register the document which is a subject matter of conveyance's and transfer's and without any registration's the immovable properties are encumbered by merely executing such documents, and by making such deviations the immovable properties are being subjected to release and relinquishment's of their respective share, right title and interest therein. This instrument involves evasion of proper stamp duty under the several articles of the schedule to the Karnataka Stamp Act 1957 and failure to adhere to the provisions of Sec 28, Facts affecting duty to be set forth in instrument” by the concerned Bank's or financial instruction's Arcil and its Trust and IOB Chennai Br. The Govt. of Karnataka department of registration and Stamp's has lossed huge amount of revenue due to non levy of proper stamp duty on this instrument.
https://www.mhc.tn.gov.in/judis/ Page 7 of 56 O.S.A.Nos.57 and 58 of 2020 Hence, in exercise of the power conferred to me under Section 33 of the Karnataka Stamp Act, 1957 I hereby impound this document for further action u/s 37 with a request to take suitable action for violating the provisions of stamp law and also committing criminal breach of trust on the part of Arcil and its Trust and concerned IOB, Chennai, Br.” “And now the declarant hereby declare, state and affirms that the Deed of Assignment Agreement dated 31.08.2010 executed and registered as Document No.3413/2010-11 in Book-I dated 21.10.2020 in the office of the Sub-Registrar Annanagar, Chennai unless recognized by the law stands null and void and any person or the Indian Overseas Bank or its agency ARCIL is ceased to Act in any manner whatsoever, upon the execution of the declaration of the declarant made herein. I Dr.K.Senthilnathan Declarant being the legal owner of the Schedule A to D immovable properties herein do hereby proclaim, revoke and cancel the illegal claims made by way of Deed of Assignment Agreement dated 31.08.2010 registered as document No.3413/2010-11, in Book-I, registered on 21.10.2010 which is registered in the office of the Sub-Registrar, Annanagar, Chennai by the IOB and ARCIL and the execution of the said Assignment Agreement is without my consent and the said schedule immovable properties is vested with the declarant and in exercise of his legal ownership https://www.mhc.tn.gov.in/judis/ Page 8 of 56 O.S.A.Nos.57 and 58 of 2020 rights, title and interest over the schedule 'A' to 'C' properties herein which is inconsistent with law and with an intention to protect my fundamental rights as guaranteed in the Indian Constitution.
Whereas there is no registered mortgage Agreement entered between the Indian Overseas Bank and Sridevi Hospital with respect to Bangalore property.
Whereas in the alleged assignment agreement, the ARCIL have illegally included the FARM house with land admeasuring 2.5 Acres of land at Keelanur, Thiruvellore-Redhills Highways, Thiruvellore District, Tamilnadu which is morefully described in the Schedule-D hereunder, which belonged to Mr.Pandurangadu, who was guarntor to the Declarant's loan. The said ARCIL is also claiming false right over the said property also and same is illegal and same is against to law.
Whereas a petition is filed against Declarant, having come to know about the same the declarant has filed necessary application along with citations and ARCIL have filed objections to the application of the Declarant and same is pending for consideration.
Whereas, the declarant has made
representations before the concerned Sub-
Registrar's office at Chennai and the Declarant has https://www.mhc.tn.gov.in/judis/ Page 9 of 56 O.S.A.Nos.57 and 58 of 2020 also filed Protest Memo cum complaint on 16.09.2016 before the Inspector General of Registration, Santhome, Chennai seeking following relief/s:-
a) conduct enquiry against IOB and ARCIL officials and others so involved and register a criminal case against them for cheating, misappropriation, fraud, false evidence, suppression of facts, criminal conspiracy and violation of various stamp act rules for illegally registering the Assignment Agreement i.e., Bangalore Property assigned in Chennai which is not hypothecated to any financial institution.
b) To cancel the Assignment Agreement dated 31.08.2010 executed and registered as Document No.3413/2010-11 in Book-I, registered on 21.10.
in the office of the Sub-Registrar, Annanagar, Chennai entered between Indian Overseas Bank and ARCIL, as the same is not in accordance with law.
c) Restrain specifically the Indian Overseas Bank (IOB) and Assets Reconstruction Company Indit Ltd., Mumbai (ARCIL) officials or anybody claiming through or behalf of them for creating any encumbrance or issuing any Sale Certificate based on the alleged Assignment Agreement dated 31.08.2010 Document No.3413/2010-11 in Book-I, registered on 21.10.2010 which stands null and void for all future transactions in respect of my below mentioned schedule “A” and “B” properties in any manner whatsoever.
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d) To enter my protest memo in the encumbrance of my schedule properties after considering the same, the Inspector General of Registration has ordered for enquiry in this regard. The said ARCIL and Indian Overseas Bank authorities have cheated the Declarant.
Whereas, the Declarant has requested the concerned Authorities of Chennai to exercise inherent power as per section 82 and 83 of Registration Act, 1908, Later the Declarant has executed a Deed of Declaration presented the same before the Sub-Registrar, Annanagar, Chennai and requested to register the document and initiate action under Section 82 and 83 of Registration Act, 1908 for which the Sub-Registrar, Annanagar, Chennai has verified the document and approved the same, but later verified the alleged fradulent Assignment Agreement and stated that Bangalore property mentioend in the document which is not within the jurisdiction of Sub-Registrar, Annanagar, Chennai and directed the declarant to approach this Court at Chennai. Later the declarant has approached the Advocate at Chennai for filing the suit. Later the Hon'ble Court advised the declarant that Bangalore property does not come within the jurisdiction of Hon'ble Court at Chennai, hence the declarant was directed to approach Bangalore authorities. When the Declarant approached the legal experts opinion for opinion. The declarant was https://www.mhc.tn.gov.in/judis/ Page 11 of 56 O.S.A.Nos.57 and 58 of 2020 given opinion that the subject is not with respect to jurisdiction of properties and subject is with respect to Assignment Agreement is registered by playing fraud, coercion and suppression of facts etc., by the IOB and ARCIL. Hence jurisdictional Sub-Registrar at Bangalore and Chennai have ample inherent powers to register the cancellation of alleged Assignment Agreement dated 31.08.2010, which is registered before the Sub-Registrar Annanagar, Chennai on 21.10.2010 by relying the abovesaid citations stated supra and as per Section 82 and 83 of Registration Act, 1908. Hence forth the IOB and ARCIL shall have no rights to claim any rights, title and interest over the Schedule A to D properties.
Whereas, in support of the same, the
declarant has executed a registered Deed of
Declaration dated 28.09.2016 which is duly
Notarised on 30.09.2016 before the Notary at Chennai and the copy of the said Deed of Declaration has been sent to the Sub-Registrar, Annanagar, Chennai by HAND. In the said Deed of Declaration, the Declarant has narrated the fraud, suppression, misappropriation made by the ARCIL to the concerned authorities and In the said alleged Assignment Agreement the Indian Overseas Bank and ARCIL have mentioned 3 properties i.e., Bangalore, Annanagar and Koyembedu property. https://www.mhc.tn.gov.in/judis/ Page 12 of 56 O.S.A.Nos.57 and 58 of 2020 The declarant hereby declare, state and affirms that the Deed of Assignment Agreement dated 31.08.2010 executed and registered as Document No.3413/2010-11, in Book-I registered on 21.10.2010 in the office of the Sub-Registrar, Annanagar, Chennai by playing fraud, without due process of law etc., wherein Bangalore property does not come within the jurisdiction of sub- registrar Annanagar, Chennai. Thus the Indian Overseas Bank and ARCIL have played fraud and got registered a Assignment Agreement in the Chennai Sub-Registrar Office, including Bangalore property which is highly illegal and abuse of process of law. Thus the ARCIL have misguided the Chennai Revenue authorities and got registered Assignment Agreement and making false claim over the declarant's properties.
Whereas, I, Dr.Senthilnathan state, affirm and declares that, the said alleged documents based on which the ARCIL is claiming false right is invalid, inadmissible in evidence. Therefore, the Indian Overseas bank and ARCIL have no right to claim against my schedule A to D properties.
Whereas, despite having no legal right over the schedule properties ARCIL are claiming rights over the schedule properties illegally. Notwithstanding the above, even the above said documents are invalid.
https://www.mhc.tn.gov.in/judis/ Page 13 of 56 O.S.A.Nos.57 and 58 of 2020 Whereas, moreover, the hospitals at Koyambedu and Annanagar is run and managed by Sridevi Health and Educational Charitable Trust is having many inpatients who are Pregnant ladies, cancer patients, and other inpatients who are suffering from various ailments. Due to the said illegal acts of ARCIL, it is greatly affected principles of natural justice and against Human Rights and violation of fundamental rights.
Whereas, in order to establish and protect his right, title and interest over the schedule properties, the declarant has lodged complaint against the Indian Overseas Bank and ARCIL authorities before the following authorities:
1.Jurisdictional police stations
2.Commissioner of Police, Chennai.
3.Deputy Commissioner of Police, Chennai.
4.State Human Rights Commissioner, Chennai.
5.Health Department, Government of Tamilnadu, Chennai.
6.Principal Secretary, Government of Tamilnadu, Chennai.
7.Chief Secretary Government of Tamilnadu, Chennai.
https://www.mhc.tn.gov.in/judis/ Page 14 of 56 O.S.A.Nos.57 and 58 of 2020 And the jurisdictional police have directed the declarant to approach the competent court of law as the matter is civil dispute and issued CSR endorsement to the Declarant.
Whereas, I Dr.Senthilnathan state, affirm and declare that, the ARCIL have played fraud, coercion and suppressed before the Chennai courts and Chennai Authorities and obtained order against the Declarant by playing fraud on the Court, without due process of law.
Whereas, exercising the declarant's legal ownership rights, title and interest over the Schedule 'A' to 'D' properties herein and exercising my fundamental rights legally, I declare, state and affirms that the Deed of Assignment Agreement dated 31.08.2010 executed and registered as Document No.3413/2010-11, in Book-I, registered 21.10.2010 in the office of the Sub-Registrar, Annanagar, Chennai stands null and void and any subsequent documents created by the IOB and ARCIL, stands null and void, and any person or the Indian Overseas Bank or its agency ARCIL shall have no right to Act in any manner whatsoever in respect of the Schedule A to D properties, upon the execution of this Deed of declaration of the declarant made herein and acts of the IOB and ARCIL is not in accordance with law.” https://www.mhc.tn.gov.in/judis/ Page 15 of 56 O.S.A.Nos.57 and 58 of 2020 4.10. It is interesting to note that not only the property situated in Bengaluru but also the others within the city of Chennai were also included in the aforesaid documents under Schedule A to C. Though there is no controversy over the same, we would like to reproduce the same hereunder:
"Schedule-A All that piece and parcel of the vacant land bearing Plot No.ML-8D, admeasuring 1.46 Acres of land (63,875 sq.ft/5,936.34 sq.mts) belonging to the Sellers being a portion of 77 acres 20 guntas of land situated in plot No.MYS357, Survey No.2, in Peenya Plantation, Yeshwanthapura Hobli, Bangalore North Taluk, Bangalore, and also presently forming part of Municipal No.5, HMT Main Road, Bangalore and bounded on North by Central Water Commission Property South by HMT Road and Vijay Bank property East by Defence Land West by HMT Road Schedule - B All that piece and parcel of land situated in the sanctioned plan of West Madras Neighbourhod Scheme, Plot No.1620-A, at Aringnar Anna Nagar, Survey No.222, part of Koyambedu Village (Now https://www.mhc.tn.gov.in/judis/ Page 16 of 56 O.S.A.Nos.57 and 58 of 2020 Thirumangalam Village) and measuring 2 grounds and 538 square feet, comprising of building and bounded on North by 40 feet Road South by Plot No.1564 East by Plot No.1620 and Plot No.1618 West by 30 Feet Road Schedule - C All that piece and parcel of property bearing Old Sy.No.134/7 and 133/1, New Sy.No.134/2 and 3, South Chennai Registration District, Anna Nagar, Sub-Registration District, Nungambakkam, Egmore Taluk, within the limits of Chennai Corporation, Koyambedu Village, Old Sy.No.134/7, 133/1, New Sy.No.134/2 and 3, Chennai Koyambedu, Karungaleeswarar Koil Street, Door No.30, measuring 7200 square feet, comprising of building and bounded on the North by Poramboke land of Vandipatti South by Sy.No.133/2 East by Kurungaleeswarar Temple Street West by Sy.No.134/6"
The same was reiterated in the deed of cancellation. 4.11. By the order dated 31.10.2017, the Debts Recovery Tribunal, Chennai, allowed the application by holding that the https://www.mhc.tn.gov.in/judis/ Page 17 of 56 O.S.A.Nos.57 and 58 of 2020 appellant is entitled to recovery of amount for a sum of Rs.33,74,74,361/- as on 31.08.2014 under the various term loans. Incidentally, it was ordered that on default, the appellant is entitled to sell the schedule mentioned properties. The operative portion of the aforesaid order is extracted hereunder:-
"(a) The applicant is entitled to recover a total sum of Rs.33,74,74,361/- due as on 31.08.2014, consisting of a sum of Rs.1,36,02,614/- due under Term Loan-Hospital Equipment, Rs.2,00,80,048/-
due under Term Loan-Hospital Infrastructure & Equipment, Rs.25,40,62,955/- due under Term Loan-Bangalore Project, Rs.2,07,27,792/- due under Term Loan-Bangalore Project, 3,80,00,952/- due under Cash Credit-Hospital Working Capital, with future interest at 22% per annum with monthly rests from 1.9.2014 till the date of realization in full form the defendants jointly and severally.
(b) It is further ordered that in case of default of payment by the defendants, the Applicant is at liberty to sell the schedule mentioned properties and appropriate the sale proceeds towards the decreetal dues"
4.12. Though the aforesaid order is stated to have put to challenge, there is no progress as the condition precedent qua the deposit of mandatory amount of money is not complied with. It is the case of the plaintiff that a revision has also been filed on that https://www.mhc.tn.gov.in/judis/ Page 18 of 56 O.S.A.Nos.57 and 58 of 2020 issue. Suffice it to state that the order passed by the Debts Recovery Tribunal, Chennai stands as of now.
4.13. The said order referred above has been passed after the so-called impounding order by the Sub-Registrar, Penya, Karnataka, followed by the deeds executed unilaterally by the plaintiff. A plea was also taken that the transactions were vitiated by fraud and coercion. A further plea has been taken that the mortgage being not a registered one, the appellant cannot proceed against the properties. Incidentally, a plea of discharge was also taken.
However, upon considering all the materials including the numerous documents filed, the Tribunal passed the order referred above.
4.14. On 03.09.2018 Dr.K.Senthilnathan, who is the proprietor of the plaintiff sent a communication to the appellant seeking One Time Settlement, without prejudice to his other contentions. The said request made was rejected by a communication sent on 06.09.2018. Thereafter, sale notices were issued by the appellant.
4.15. Two applications were filed by the plaintiffs one before the Debts Recovery Tribunal, Chennai and another before the Debts https://www.mhc.tn.gov.in/judis/ Page 19 of 56 O.S.A.Nos.57 and 58 of 2020 Recovery Tribunal, Bengaluru against the proceedings initiated by the appellant under the SARFAESI Act. The following are the averments made in the aforesaid application filed before the Debts Recovery Tribunal, Chennai, which are verbatim the same raised in the plaint:
"3. The Applicants submit that the 3rd respondent's bank officials had different intentions to knock off the valuable properties and misused the blank signed unfilled printed documents which was given by the applicants during the sanction of loan to suit their convenience and created documents in the form of Demand Promissory Note, Equitable Mortgage Deeds and other loan documents and further misdirected the applicants to execute a documents in favour of the present 1st respondent ARCIL and without knowing the malafide intentions of the 3rd respondent's bank officials who are colluded with 1st respondent has signed the document by the 1st applicant. The applicants further submit that the applicants without knowing the terms of the document is void, since, it is affected by doctrine of non est factum. It is pertinent to point out that the supported documents based on which the alleged claim was made by the 1st respondent i.e., resolution plan and broad terms and conditions said to have been executed on 27.09.2010 has been impounded by the Sub- Registrar, Peeniya, Bengaluru for non-stamping and https://www.mhc.tn.gov.in/judis/ Page 20 of 56 O.S.A.Nos.57 and 58 of 2020 declared the same as inadmissible in evidence by its order dated 28.02.2015. Despite the order passed by the jurisdictional registrar by ordering impounding of the document, the 3rd respondent's bank and the 1st respondent herein are claiming rights over the property illegally through that impounded document which has no evidentiary value. There is no document subsisting as on date like mortgage deed pertaining to the properties situated at Chennai and Bangalore which is the subject matter of the sale. The applicant further submit that the 1st respondent has challenged the said order in W.P.No.28962/2015 before the Karnataka High Court - Bangalore and the same is pending for admission. But, during the notice of motion they have obtained stay of the said order in that writ petition. They have also challenged the cancellation of the assignment deed dated 03.10.2016 in W.P.No.9193 of 2017 before the Hon'ble Karnataka High Court and the same is also not admitted and only in notice stage and thus both the documents are subject matter of lis and sub judice. The 1st respondent has no right to bring the property for sale before the Hon'ble Karnataka High Court has decided the issue in those writ petition filed by them and the 1st respondent is claiming right only through those documents. They have also not obtained permission from Karnataka High Court in the pending litigation.
x x x https://www.mhc.tn.gov.in/judis/ Page 21 of 56 O.S.A.Nos.57 and 58 of 2020
6. The Applicants submit that the respondents cannot take law in to their hands. The said Indian Overseas bank namely 3rd respondent herein and ARCIL the 1st respondent herein have entered into Deed of Assignment Agreement dated 31.08.2010 executed and registered as Document No.3414/2010-11, in Book-I, registered on 21.10.2010 in the office of the Sub-Registrar Anna Nagar, Chennai in respect of the Koyambedu, Anna Nagar and Bangalore property without the consent and knowledge of the Applicants and not made the Applicants as a party to the Deed. Even though the Applicants have not mortgaged the properties. The Indian Overseas Bank namely the 3rd respondent without following the legal procedural aspects executed a registered deed of assignment to a private financial agency i.e., ARCIL, Mumbai that is in favour of respondents 1 and 2, which is engaged in teh practices of acquiring immovable properties by way of obtaining assignment deeds by violating the orders of the Recovery Tribunals an SARFEASI Act and the rules made thereunder after acquiring and selling this kind of immovable properties. This agency is engaged in making huge profits by restoring to illegal activities without the recognition and permission of the RBI and the RBI Governing rules and guidelines. This agency namely respondents 1 and 2 is playing at the instigation of land mafias and this agencies namely respondent 1 and 2 are managed by some retired managers and https://www.mhc.tn.gov.in/judis/ Page 22 of 56 O.S.A.Nos.57 and 58 of 2020 officials of the bank who are well experienced in restoring to such practices.
7. The Applicants submit that, after knowing all these nephorious activities of the Indian Overseas Bank namely 3rd respondent as well as its agencies by name ARCIL respondents 1 and 2 are engaged in such unlawful practices, the applicants with a view to safeguard his fundamental rights as guaranteed in the Constitution of India in the interest of justice and equity, the Applicants herein has declared that they have neither executed any agreement on proper stamp duty nor given any consent for any assignment agreement in Chennai and in the interest of justice and equity the assignment deed and the broad terms and conditions dated 31.08.2010 and 27.09.2010 has to be set aside.
x x x
10. The Applicants submit that, the respondents in the deed of assignment agreement dated 31.08.2010 executed and registered as document No.3413/2010-11, in Book-I, dated 21.10.2010 in the office of the Sub-Registrar Anna Nagar, Chennai, clandestinely included Bangalore property in Schedule C property is mentioned. The Bangalore property does not come within the jurisdiction of sub-registrar, Anna Nagar, Chennai. The said authority has no right to register any document pertaining to Bangalore property, without mortgaging the same at Bangalore. The respondents https://www.mhc.tn.gov.in/judis/ Page 23 of 56 O.S.A.Nos.57 and 58 of 2020 have suppressed the material facts and misguided the authority and got the Assignment Agreement registered and hence the said alleged assignment agreement is not in accordance with law and the same is null and void as the said document is registered against the Provisions of Indian Registration Act."
4.16. The application filed by the plaintiff in S.A.No.379 of 2018 was dismissed as infructuous by order dated 18.03.2019. Once again, an auction notice was issued by the appellant with respect to the properties situated in Bangalore dated 30.10.2019. There also appears to be an order obtained from the Madras High Court in I.P.No.55 of 2013 declaring Dr.K.Senthilnathan carrying on business under the name and style of Sri Devi Hospital as insolvent. It was also notified on 21.06.2017 in the Official Gazette.
4.17. With the above said factual background, the plaintiff filed a suit on 20.08.2019, after the conclusion of the proceedings before the Debts Recovery Tribunal I, Chennai, dated 31.10.2017 and the initiation of the auction to bring the properties for sale under the SARFAESI Act. In the suit, the plaintiff sought for the following prayers:
"(i) Declare that the assignment deed dated 31.08.2010 and the broad terms and conditions https://www.mhc.tn.gov.in/judis/ Page 24 of 56 O.S.A.Nos.57 and 58 of 2020 dated 02.09.2010 have no evidentiary value and non-est in the eye of law and it will not enure any right in favour of 1st defendant to proceed against the suit schedule properties either under Section 13(4) of SARFAESI Act or by enforcing any other provisions by bringing the property for sale since it is not a secured asset.
(ii) Permanent injunction restraining the 1st defendant from proceeding against the properties either by way of sale by public auction or e-auction.
(iii) Mandatory injunction directing the 1st defendant to accept the One Time Settlement offer given by the plaintiff.
(iv) To award cost of the suit."
4.18. Thus, the assignment deed entered into between the third defendant – Indian Overseas Bank and the appellant and the subsequent term sheet dated 27.09.2010 are put to challenge on the very same grounds raised or available to be raised in the earlier proceedings between the same parties. An indirect prayer was also sought for against the proceedings initiated under the SARFAESI Act. The decree for mandatory injunction was also sought for, directing the first defendant to accept the One Time Settlement offer made by the plaintiff.
4.19. In the application filed seeking to invoke Order VII Rule 11 of CPC to strike off the plaint and in the application filed seeking https://www.mhc.tn.gov.in/judis/ Page 25 of 56 O.S.A.Nos.57 and 58 of 2020 injunction by the plaintiff in A.No.857 of 2009, the appellant contended that the application filed by the plaintiff challenging the proceeding initiated under the SARFAESI Act is posted for arguments in S.A.No.175 of 2019 and the averments are same coupled with the bar contained under Section 34, the suit as filed is not maintainable.
4.20. On merit, it is stated that the term sheet merely records the deposit of title deeds made earlier and thus does not warrant any registration. Having signed the documents and having suffered an order before the Debts Recovery Tribunal I, Chennai, there is absolutely no merit in the application for injunction and the suit.
4.21. The learned Single Judge while granting an order of injunction in favour of the plaintiff, rejected the application filed in O.A.No.954 of 2019 for the rejection of the plaint on the ground that the larger question with respect to the authority of the appellant to initiate proceedings is required to be gone into and the issue of fraud can be raised in the suit and hence the suit is maintainable. Incidentally, it is held that the exorbitant demand shocks the conscience of the Court and the appellant is not a secured creditor which makes the bar under Section 34 of the https://www.mhc.tn.gov.in/judis/ Page 26 of 56 O.S.A.Nos.57 and 58 of 2020 SARFAESI Act, not applicable. We would only quote the following paragraphs of the order passed by the learned Single Judge:
"28. In the instant case, though the applicant had obtained an order before the Debt Recovery Tribunal in O.A.No.288 of 2014 against the plaintiff, in the present plaint, the very right of the first defendant to initiate action against the plaintiff has been taken and it is alleged that suppressing the material facts, the proceedings have been initiated as if the assignment deed has been issued in favour of the first defendant, by playing fraud.
29. It is to be further noted that by the assignment agreement, dated 31.08.2010, the first defendant was assigned the rights of receivables under the loan documents in favour of the applicant/first defendant for a sale consideration of Rs.15,45,07,125/-. On the basis of the assignment agreement, O.A.No.288 of 2014 was filed before the Debt Recovery Tribunal-I, Chennai for recovery of Rs.33,74,74,361/-. Admittedly, for recovering the amount, a sale notice dated 01.10.2018 was issued under Section 13(4) of the SARFAESI Act for recovery of outstanding of Rs.74,41,38,503/-. In June 2019, the outstanding was increased to Rs.87,59,48,253/- and in the sale notice, dated 30.10.2019, it is mentioned as Rs.120,19,80,634/-. According to the plaintiff, the first defendant has charged 88% interest. In fact, the exorbitant https://www.mhc.tn.gov.in/judis/ Page 27 of 56 O.S.A.Nos.57 and 58 of 2020 demand shocks the conscience of this Court.
30. It is settled principle that an issue of fraud can be raised at any stage of the proceedings and an order obtained by playing fraud is a nullity.
x x x
31. In this case what is to be seen whether the first defendant is having any authority to initiate proceedings against the plaintiff, which goes to the root of the matter and that requires appreciation of evidence to be adduced by the parties. In the considered opinion of this Court, the principles stated in the decision Mardia Chemicals (supra), is squarely applicable to the case and hence, the suit maintainable.
32. In the light of the above discussion, the first defendant is not a secured creditor and hence the suit is not barred under Section 34 of SARFAESI Act. The applicant has not made out any grounds for rejection of plaint under Order VII Rule 11 of C.P.C. I respectfully agree with the dictum laid down in the decisions cited by the learned counsel for the applicant/first defendant, but they do not help the case of the applicant, as they are factually distinguishable. In such view of the matter, Application No.8576 of 2019 is dismissed as devoid of merits."
https://www.mhc.tn.gov.in/judis/ Page 28 of 56 O.S.A.Nos.57 and 58 of 2020 4.22. An incidental finding has been given that the injunction is warranted which if not granted would create a third party right. Now, these two appeals are filed by the appellants to set aside the aforesaid orders passed by the learned Single Judge.
5. Submissions of the Appellant/First Defendant:
Learned Senior Counsel appearing for the first defendant submitted that the bar under Section 34 of the Act would get attracted. The plaintiff raised the very same plea before the Debts Recovery Tribunal, Chennai and in any case, such plea if not taken could have been taken at the first instance. The order passed in O.A.No.288 of 2014 has become final. The plaint is liable to be rejected on the ground of delay, laches, acquiescence and estoppel.
Having executed the document in the year 2010, the plaintiff seeks to set aside the same through the suit filed in the year 2019, after receiving adverse orders. A suit cannot be filed to set aside the order passed by the jurisdictional Court. There is no need to register the term sheet. The assignment agreement merely transfers the right as the lender. Therefore, there is no transfer of title per se involved. The plaintiff has not come out with clean hands. It is the https://www.mhc.tn.gov.in/judis/ Page 29 of 56 O.S.A.Nos.57 and 58 of 2020 plaintiff who is committing fraud and misusing the Court to avoid payment. The assignment deed is in accordance with Section 5(1)(b) of the SARFAESI Act. The first defendant is a Company registered under Section 3 of the Companies Act. Though, it is an Asset Reconstruction Company, it comes within the purview of Section 3 of the Act. The appellant is entitled to maintain the appeal being the first defendant in the suit. Injunction order is against the first defendant and, therefore, the appeal is maintainable. Intra-
Court appeal is maintainable under Clause 15 of Letters Patent. In support of the contention, learned Senior Counsel made reliance upon the following judgments:- (i) ICICI Bank Limited vs. Official Liquidator of APS Star Industries Limited reported in (2010) 10 SCC 1, (ii) Jagdish Singh v. Heeralal reported in (2014) 1 SCC 479, (iii) Authorised Officer, State Bank of India v. Allwyn Alloys Pvt. Ltd and ors reported in (2018) 8 SCC 120, (iv) Sree Anandhakumar Mills Ltd v. Indian Overseas Bank and ors reported in (2019) 14 SCC 788,
(v) State Bank of Travancore v Mathew K C reported in (2018) 3 SCC 85, (vi) V.Thulasi v. Indian Overseas Bank reported in 2011 (3) CTC 801, (vii) Sumathi v. Sengottaiyan and others reported in 2010 (3) CTC 53, (viii) State Bank of India v. Jigihaben B Sanghavi and Others reported in Manu/MH/1745/2010, (ix) Nikhil Armod Buchke and others v. Bank of Maharashtra reported in 2017 SCC Online https://www.mhc.tn.gov.in/judis/ Page 30 of 56 O.S.A.Nos.57 and 58 of 2020 Bom 3337, (x) Tamil Nadu Industrial Investment Corporation Limited v. Millenium Business Solutions Private Limited and another reported in 2005 (1) LW 58, (xi) Alka Gupta v. Narendr Kumar Gupta reported in (2010 ) 10 SCC 141, (xii) Satya Prakash Gupta v.
Vikas Gupta reported in 2011 SCC Online Del 4963, (xiii) Punjab National Bank v. O.C.Krishnan and Ors reported in MANU/SC/0452/2001, (xiv) Canara Bank v. P.Selathal reported in 2020 SCC Online SC 245 and (xv) Cambridge Solutions Limited v. Global Software Limited reported in MANU/TN/2388/2016.
6. Submissions of first respondent/plaintiff:
Learned Senior Counsel appearing for the first respondent/plaintiff made the following submissions:
The appeal is not maintainable under Clause 15 of the Letters Patent. The aggrieved person if any would be the second defendant and, therefore, the appellant/first defendant cannot maintain the appeals, especially when there was an exparte order and decree against the second defendant. The proceedings are pending before the High Court of Karnataka. Until and unless the appellant/first defendant succeeds there, no order can be passed. The document requires registration and the property being situated outside the https://www.mhc.tn.gov.in/judis/ Page 31 of 56 O.S.A.Nos.57 and 58 of 2020 State, the deed of assignment and the term sheet cannot be relied upon. Though the term sheet has been signed it was done through fraud, coercion and undue influence. When there are prima facie materials to support the allegations, a suit can be maintainable. The pendency of the proceedings and the order passed by the Debts Recovery Tribunal, I Chennai in O.A.No.288 of 2014 will not take away the right of the plaintiff to get the relief. Buttressing the submissions, learned Senior Counsel made reliance upon the decisions referred hereunder:- (i) Mardia Chemicals Ltd and ors vs. Union of India and others reported in AIR 2004 SC 2371, (ii) State of Haryana & Ors v Navir Singh and Another report in (2014) 1 SCC 105, (iii) Elumalai Chetti & Anr v. P.Balakrishna Mudaliar reported in 1920 XIV LW 379, (iv) Mindapore People's Co-op Bank Ltd and Ors Vs. Chunilal Nanda & Ors reported in (2006) 5 SCC 399 and (v) Elsamma and others v. The Kaduthuruthy Urban Co-operative Bank Ltd., and others reported in AIR 2019 Ker 23.
7. We have already indicated that narration of facts would demonstrate the scenario leading to the filing of the suit. Accordingly, the facts have been placed on record. Now, let us consider the rival contentions made.
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8. On the question of maintainability, we do not find any merit in the submission made by the learned Senior Counsel appearing for the first respondent/plaintiff. These two appeals have been preferred against the order granting injunction pending suit and dismissing the application filed to reject the plaint. The term 'judgment' as referred under Clause 15 of Letters Patent cannot be interpreted in a narrow and technical understanding. It would include a matter which will affect the valuable rights of the parties. The law on this subject is quite settled. Therefore, we do not wish to reiterate the same except by recording the relevant passages in the precedents placed on our hand.
9. In Mindapore Peoples' Co-Op. Bank Ltd and Ors v. Chunilal Nanda and ors the Apex Court after taking note of the decision rendered in Shah Babulal Khimji v. Jayaben D.Kania and another reported in AIR 1981 SC 1796, defines the word 'judgment' in the following manner:
"The term 'judgment' occurring in clause 15 of the Letters Patent will take into its fold not only the judgments as defined in section 2(9) CPC and orders enumerated in Order 43 Rule 1 of CPC, but also other orders which, though may not finally and conclusively determine the rights of parties with regard to all or any matters in controversy, may https://www.mhc.tn.gov.in/judis/ Page 33 of 56 O.S.A.Nos.57 and 58 of 2020 have finality in regard to some collateral matter, which will affect the vital and valuable rights and obligations of the parties. Interlocutory orders which fall under categories (i) to (iii) above, are, therefore, 'judgments' for the purpose of filing appeals under the Letters Patent. On the other hand, order falling under categories (iv) and (v) are not 'judgments' for purpose of filing appeals provided under the Letters Patent."
10. In P.S.Sathappan (Dead) By Lrs vs Andhra Bank Ltd and others reported in (2004) 11 SCC 672, the Apex Court, held as under:
17. Thus in Shah Babulal Khimji's case (supra) this Court was concerned with an order passed by a single Judge on the original side of the High Court, which, if it amounted to a judgment, was admittedly appealable under Clause 15 of the Letters Patent.
The only question, therefore, which arose before this Court was whether the order of the learned single Judge refusing to grant an injunction or appoint a receiver on the Interlocutory Application of the appellant was a judgment, and consequently whether an appeal against the order of the learned single Judge to the Division Bench of the High Court was competent and maintainable under Clause 15 of the Letters Patent. This Court took the view that the word 'judgment' in the Letters Patent should receive https://www.mhc.tn.gov.in/judis/ Page 34 of 56 O.S.A.Nos.57 and 58 of 2020 a much wider and more liberal interpretation than the word 'judgment' used in the Code of Civil Procedure. It was held that the word 'judgment' has undoubtedly a concept of finality in a broader and not a narrower sense. Their Lordships came to the conclusion that the order passed by a single Judge on the original side refusing to appoint a receiver and grant an injunction amounted to a judgment and was therefore appealable under Clause 15 of the Letters Patent.
x x x
19. Much emphasis is sought to be put on the sentence, i.e. "Once Section 104 applies and there is nothing in the Letters Patent to restrict the application of Section 104 to the effect that even if one appeal will lie to the Single Judge, no further appeal will lie to the Division Bench" and it is submitted that the Court was laying down that a further appeal will not lie even if Letters Patent permitted. The sentence cannot be read in isolation. It must be read in the context of all that is stated before it. It is already held that Section 104 read with Order 43 Rule 1 C.P.C. confers additional powers of appeal to a larger Bench within the High Court. When read in context the sentence only means that in case of Orders not covered by Letters Patent a further appeal will not lie. This is also clear from the subsequent sentence that there is nothing https://www.mhc.tn.gov.in/judis/ Page 35 of 56 O.S.A.Nos.57 and 58 of 2020 else in Letters Patent which permits a further appeal barred by Section 104(2) C.P.C. As set out above, Section 104(2) only bars appeals against Order passed in appeal under the Section. Thus Section 104(2) does not bar appeals permitted by any law in force. Also to be noted that principle in Ram Sarup's case (supra), that Section 104 did not bar a Letters Patent appeal was specifically accepted. It is also accepted that Letters Patent is a special law. However on the wordings of the concerned Letters Patent as noticed, it was held that the Letters Patent did not permit a second appeal. Had the Letters Patent permitted a second appeal, on the ratio laid down earlier, a Letters Patent Appeal would have been held to be maintainable. In our case it is an admitted position that the concerned Letters Patent permits an appeal.
x x x
21. We are of the opinion that in reaching this conclusion the Court missed the relevant portion of Clause 15 of the Letters Patent of the Bombay High Court. Reliance cannot, therefore, be placed on this judgment for the proposition that under Clause 15 of the Letters Patent of the Bombay High Court no appeal to a Division Bench from the order of the Single Judge in exercise of appellate jurisdiction is maintainable."
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11. In Liverpool and London S.P. & I Association Ltd. v. M.V.Sea Success I and another reported in (2004) 9 SCC 512, the Apex Court held as follows:-
"117. The right of appeal which is provided under Clause 15 of the Letters Patent cannot be said to be restricted.
118. In Subal Paul v. Malina Paul and Anr. MANU/SC/0149/2003 : [2003]1SCR1092 this Court held:
"While determining the question as regards Clause 15 of the Letters Patent the court is required to see as to whether the order sought to be appealed against is a judgment within the meaning thereof or not. Once it is held that irrespective of the nature of the order, meaning thereby whether interlocutory or final, a judgment has been rendered, Clause 15 of the Letters Patent would be attracted.
The Supreme Court in Shah Babulal Khimji's case (supra) deprecated a very narrow, interpretation on the word 'judgment' within the meaning of Clause 15. This Court said:
"a court is not justified in interpreting a legal term which amounts to a complete distortion of the word 'judgment' so as to deny appeals even against unjust orders to litigants having genuine grievances https://www.mhc.tn.gov.in/judis/ Page 37 of 56 O.S.A.Nos.57 and 58 of 2020 so as to make them scapegoats in the garb of protecting vexatious appeals. In such cases, a just balance must be struck so as to advance the objection of the statute and give the desired relief to the litigants, if possible."
In Shah Babulal Khimji's case (supra), this Court in no uncertain terms referred to the judgment under the Special Act which confers additional jurisdiction to the High Court even in internal appeal from an order passed by the Trial Judge to a larger Bench. Letters Patent has the force of law. It is no longer res integra. Clause 15 of the Letters Patent confers a right of appeal on a litigant against any judgment passed under any Act unless the same is expressly excluded. Clause 15 may be subject to an Act but when it is not so subject to the special provision the power and jurisdiction of the High Court under Clause 15 to entertain any appeal from a judgment would be effective.
The decision of this Court in Shah Babulal Khimji's case (supra) has been considered in some details by a Special Bench of the Calcutta High Court in Tanusree Art Printers and Anr. v. Rabindra Nath Pal MANU/WB/0195/2000 : (2000)3CALLT412(HC) . It was pointed out:
"If the right of appeal is a creature of a statute, the same would be governed by the said statute. Whether an appeal under Clause 15 of the Letters https://www.mhc.tn.gov.in/judis/ Page 38 of 56 O.S.A.Nos.57 and 58 of 2020 patent will be maintainable or not when the matter is governed by a Special Statute will also have to be judged from the scheme thereof. (e.g. despite absence of bar, a Letters Patent appeal will not be maintainable from a judgment of the learned Single Judge rendered under the Representation of People Act.)"
It was pointed out that in Shah Babulal Khimji's case (supra) this Court posed three questions namely:
"1) Whether in view of Clause 15 of the Letters Patent an appeal under Section 104 of the Code of civil Procedure would lie? 2) Whether Clause 15 of the Letters Patent supersedes Order 43, Rule 1 of the Code of civil Procedure? 3) Even Section 104 of the CPC has no application, whether an order refusing to grant injunction or appoint a receiver would be a judgment within the meaning of Clause 15 of the Letters Patent?"
The Apex Court answered each of them from a different angle:
a) Section 104 of the Code of civil Procedure read with Order 43, Rule 1 expressly authorizes a forum of appeal against orders falling under various clauses of Order 43 Rule 1 to a Larger Bench of a High Court without at all disturbing interference with or overriding the Letters Patent jurisdiction.
b) Having regard to the provisions of Section 117 and Order 49 Rule 3 of the Code of civil Procedure https://www.mhc.tn.gov.in/judis/ Page 39 of 56 O.S.A.Nos.57 and 58 of 2020 which excludes various other provisions from the jurisdiction of the High Court, it does not exclude Order 43 Rule 1 of the CPC.
c) There is no inconsistency between Section 104 read with Order 43 Rule 1 and the appeals under Letters Patent, as Letters Patent in any way does not exclude or override the application under Section 104 read with Order 43 Rule 1 which shows that these provisions would not apply in internal appeals within the High Court."
In Prataprai N. Kothari v. John Braganza MANU/SC/0316/1999 : AIR1999SC1666 , even in a suit for possession only not based on title, a letters patent appeal was held to be maintainable. The decision of this Court in Sharda Devi v. State of Bihar MANU/SC/0184/2002 : [2002]2SCR404 is also to the same effect, wherein in para 9 it was held:
"A Letters patent is the charter under which the High Court is established. The powers given to a High Court under the Letters Patent are akin to the constitutional powers of a High Court. Thus when a Letters Patent grants to the High Court a power of appeal, against a judgment of a Single Judge, the right to entertain the appeal would not get excluded unless the statutory enactment concerned excludes an appeal under the Letters Patent."
https://www.mhc.tn.gov.in/judis/ Page 40 of 56 O.S.A.Nos.57 and 58 of 2020 Section 54 of the Land Acquisition Act, 1894 provides for an appeal before the High Court and thereafter to the Supreme Court and despite the same it was held that a letters patent appeal under Clause 15 would be maintainable."
119. The view taken by the Calcutta and Bombay High Count that an order passed in terms of Order 37 of the Code of civil Procedure granting leave to defend would not be a judgment within the meaning of Clause 15 of the Letters Patent may not be of much relevance.
127. Clause 15 of the Letters Patent is not a special statute. Only in a case where there exists an express prohibition in the matter of maintainability of an intra court appeal, the same may not be held to be maintainable. But in the event there does not exist any such prohibition and if the Order will otherwise be a 'judgment' within the meaning of Clause 15 of the Letters Patent, an appeal shall be maintainable.
128. What would be a judgment is stated in Shah Babulal Khimji (supra) as under:
"We think, that "judgment" in Clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final, or preliminary, or interlocutory, the difference between them being https://www.mhc.tn.gov.in/judis/ Page 41 of 56 O.S.A.Nos.57 and 58 of 2020 that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.
81. An analysis of the observations of the Chief Justice would reveal that the following tests were laid down by him in order to decide whether or not an order passed by the Trial Judge would be a judgment :
(1) a decision which affects the merits of the question between the parties;
(2) by determining some right or liability; (3) the order determining the right or liability may be final, preliminary or interlocutory, but the determination must be final or one which decides even a part of the controversy finally leaving other matters to be decided later.
129. In Lea Badin v. Upendra Mohan Roy MANU/WB/0167/1934 : AIR1935Cal35 , the Calcutta High Court held that an order refusing to appoint a receiver is determinative of a right of the plaintiff and would accordingly be a judgment.
130. Yet again in Chittaranjan Mondal v. Sankar Prosad Sahani MANU/WB/0101/1972 :
AIR1972Cal469 the Calcutta High Court held that an order refusing to grant an injunction restraining https://www.mhc.tn.gov.in/judis/ Page 42 of 56 O.S.A.Nos.57 and 58 of 2020 execution of the judgment-debtor was a judgment within the meaning of Clause 15.
131. As by reason of an order passed under Order 7, Rule 11 of the Code of civil Procedure, the rights conferred upon the parties are determined one way or the other, stricto sensu it would not be an interlocutory order but having regard to its traits and trappings would be a preliminary judgment."
12. Thus, in light of the aforesaid categorical pronouncements of the Apex Court, which took into consideration of the decisions rendered, in Shah babulal Khimji (supra), paragraph 8 is reproduced hereunder:-
"8. Similarly, in the case of State of Uttar Pradesh v. Dr. Vijay Anand Maharaj, this Court noticed the divergence of judicial opinions on the subject and observed as follows:
The scope of the expression "judgment" came under the judicial scrutiny of the various High Courts, there is a cleavage of opinion on that question. The foregoing brief analysis of judgment shows that the definition given by the Madras High Court is wider than that given by the Calcutta and Nagpur High Courts. It is not necessary in this case to attempt to reconcile the said decision or to give a definition of our own, for on the facts of the present case the order of Mehrotra, J., would be a judgment https://www.mhc.tn.gov.in/judis/ Page 43 of 56 O.S.A.Nos.57 and 58 of 2020 within the meaning of the narrower definition of that expression."
13.We would like to profitably quote the decision of ICICI Bank Limited v. Official Liquidator of APS Star Industries Limited reported in (2010) 10 SCC 1, wherein it has been held as follows:
"46. As stated above, an outstanding in the account of a borrower(s) (customer) is a debt due and payable by the borrower(s) to the bank. Secondly, the bank is the owner of such debt. Such debt is an asset in the hands of the bank as a secured creditor or mortgagee or hypothecatee. The bank can always transfer its asset. Such transfer in no manner affects any right or interest of the borrower(s) (customer). Further, there is no prohibition in the BR Act, 1949 in the bank transferring its assets inter se. Even in the matter of assigning debts, it cannot be said that the banks are trading in debts, as held by the High Court(s). The assignor bank has never purchased the debt(s). It has advanced loans against security as part of its banking business. The account of a client in the books of the bank becomes Non Performing Asset when the client fails to repay. In assigning the debts with underlying security, the bank is only transferring its asset and is not acquiring any rights of its client(s). The bank transfers its asset for a particular agreed price and is no longer entitled to recover anything from the borrower(s). The moment ICICI Bank Ltd. transfers https://www.mhc.tn.gov.in/judis/ Page 44 of 56 O.S.A.Nos.57 and 58 of 2020 the debt with underlying security, the borrower(s) ceases to be the borrower(s) of the ICICI Bank Ltd. and becomes the borrower(s) of Kotak Mahindra Bank Ltd. (assignee).
47. At this stage, we wish to once again emphasize that debts are assets of the assignor bank. The High Court(s) has erred in not appreciating that the assignor bank is only transferring its rights under a contract and its own asset, namely, the debt as also the mortgagee's rights in the mortgaged properties without in any manner affecting the rights of the borrower(s)/mortgagor(s) in the contract or in the assets. None of the clauses of the impugned Deed of Assignment transfers any obligations of the assignor towards the assignee.
14.In Jagdish Singh v Heeralal, reported in (2014) 1 SCC 479, the Apex Court upheld the objection to the maintainability of the suit with respect to the measures taken by the secured creditor after taking note of the earlier decisions rendered, by (2004) 4 SCC 311, the following paragraphs would be apposite:
"21. Section 34 of the Securitisation Act ousts the civil court jurisdiction. For easy reference, we may extract Section 34 of the Securitisation Act, which is as follow:
34. Civil Court not to have jurisdiction -No civil court https://www.mhc.tn.gov.in/judis/ Page 45 of 56 O.S.A.Nos.57 and 58 of 2020 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).
22. The scope of Section 34 came up for consideration before this Court in Mardia Chemicals Ltd. (supra) and this Court held as follow:
50. It has also been submitted that an appeal is entertainable before the Debts Recovery Tribunal only after such measures as provided in Sub-section (4) of Section 13 are taken and Section 34 bars to entertain any proceeding in respect of a matter which the Debts Recovery Tribunal or the Appellate Tribunal is empowered to determine. Thus before any action or measure is taken under Sub-section (4) of Section 13, it is submitted by Mr. Salve, one of the counsel for the Respondents that there would be no bar to approach the civil court. Therefore, it cannot be said that no remedy is available to the borrowers. We, however, find that this contention as advanced by Shri Salve is not correct. A full reading of Section 34 shows that the jurisdiction of the civil https://www.mhc.tn.gov.in/judis/ Page 46 of 56 O.S.A.Nos.57 and 58 of 2020 court is barred in respect of matters which a Debts Recovery Tribunal or an Appellate Tribunal is empowered to determine in respect of any action taken "or to be taken in pursuance of any power conferred under this Act". That is to say, the prohibition covers even matters which can be taken cognizance of by the Debts Recovery Tribunal though no measure in that direction has so far been taken under Sub-section (4) of Section 13. It is further to be noted that the bar of jurisdiction is in respect of a proceeding which matter may be taken to the Tribunal. Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under Sub-section (4) of Section 13.
23. Section 13, as already indicated, deals with the enforcement of the security interest without the intervention of the court or tribunal but in accordance with the provisions of the Securitisation Act.
24. Statutory interest is being created in favour of the secured creditor on the secured assets and when the secured creditor proposes to proceed against the secured assets, Sub-section (4) of Section 13 https://www.mhc.tn.gov.in/judis/ Page 47 of 56 O.S.A.Nos.57 and 58 of 2020 envisages various measures to secure the borrower's debt. One of the measures provided by the statute is to take possession of secured assets of the borrowers, including the right to transfer by way of lease, assignment or realizing the secured assets. Any person aggrieved by any of the "measures" referred to in Sub-section (4) of Section 13 has got a statutory right of appeal to the DRT Under Section
17. The opening portion of Section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding "in respect of any matter"
which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression 'in respect of any matter' referred to in Section 34 would take in the "measures" provided under Sub-section (4) of Section 13 of the Securitisation Act. Consequently if any aggrieved person has got any grievance against any "measures" taken by the borrower under Sub- section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil court. Civil Court in such circumstances has no jurisdiction to entertain any suit or proceedings in respect of those matters which fall under Sub-section (4) of Section 13 of the Securitisation Act because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent https://www.mhc.tn.gov.in/judis/ Page 48 of 56 O.S.A.Nos.57 and 58 of 2020 with the provisions of that Act, which takes in Section 9 Code of Civil Procedure as well.
25. We are of the view that the civil court jurisdiction is completely barred, so far as the "measure" taken by a secured creditor under Sub- section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal. to determine as to whether there has been any illegality in the "measures" taken. The bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of Respondent Nos. 6 to 8 have been crystalised, before creating security interest in respect of the secured assets."
15.A similar view has also been expressed on the rigour of Section 34 of the SARFAESI Act in Authorised Officer, State Bank of India v. Allwyn Alloys Pvt Ltd and others reported in (2018) 8 SCC 120, the Apex Court held as under:-
"6. After having considered the rival submissions of the parities, we have no hesitation in acceding to the argument urged on behalf of the Bank that the mandate of Section 13 and, in particular, Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the 2002 Act"), clearly bars filing https://www.mhc.tn.gov.in/judis/ Page 49 of 56 O.S.A.Nos.57 and 58 of 2020 of a civil suit. For, no civil court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under this Act to determine and no injunction can be granted by any Court or authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act."
16. We have no hesitation in holding that the appeals are maintainable.
17. The appeals are also maintainable for the reason that the appellant is arrayed as the first defendant and the assignment agreement was also between the appellant and the third defendant. Therefore, merely because an exparte order was obtained against the second defendant, it cannot be stated that the appeals at the instance of the first defendant are not maintainable. In fact, the plaintiff had all the transactions with the first defendant and the proceedings were initiated including under the SARFAESI Act. It is only at the instance of the first defendant, an order was passed by the Debts Recovery Tribunal. Thus, it is too late in the day to contend that the appeals are not maintainable. https://www.mhc.tn.gov.in/judis/ Page 50 of 56 O.S.A.Nos.57 and 58 of 2020
18. On the question of fraud as alleged by the plaintiff, we do not find any basis for the same. It is too late in the day to take such a plea and that too after suffering an order preceded by communication between the parties. A document signed in the year 2010 is sought to be challenged on the ground of fraud after nearly a decade. The assignment deed does not deal with the transfer of property. The deposit of title deed was made by the plaintiff on the earlier occasion which was transferred in favour of the first defendant. This was also acknowledged and reiterated by the plaintiff subsequently. Thus, the contention raised on that ground is also liable to be rejected.
19. The real cause of action for the plaintiff is the action taken by the first defendant. The suit itself is vexatious on the face of it. What cannot be done directly cannot be done indirectly. The plaintiff did contest the matter before the Debts Recovery Tribunal and thereafter filed applications challenging the action initiated for bringing the properties for sale under the SARFAESI Act. We do not find as to how the wisdom dawned on the plaintiff to file the present suit raising the very same allegations and averments. This is nothing but a misuse of process of law.
https://www.mhc.tn.gov.in/judis/ Page 51 of 56 O.S.A.Nos.57 and 58 of 2020
20. Arguments have been made on the first defendant being not a secured creditor. This argument is also be liable to be rejected.
21. Section 5(1)(b) speaks of an agreement can be entered into for the purpose of acquiring financial assets of bank or any financial institution. The assignment deed also refers to the aforesaid provision. This is a matter between the third defendant and the first defendant. It does not concern the plaintiff/first respondent. Section 5 of the Act merely facilitates such an arrangement. The non obstante clause is meant to take care of a possible embargo in any other enactment. Though sub-section (1-A) came into being subsequently, the appellant being the securitization company, the objection raised cannot be sustained. We may note, that such a plea was already taken in the earlier proceedings. Even otherwise, the plaintiff is estopped from raising it and that too by way of suit which is barred. When the forum itself is not available, the question of raising the plea would not arise especially when there was an adjudication process prior to the filing of the suit.
22. We also find the facts to be very disturbing. It is very strange to say the least that an order of impounding came to be https://www.mhc.tn.gov.in/judis/ Page 52 of 56 O.S.A.Nos.57 and 58 of 2020 passed by a Government Authority on a complaint made by an unknown entity enclosing the copy of the document without indicating the source from where it was procured. The said order is not even an order but a communication sent to the higher authority indicating the decision made unilaterally. It is also surprising as to how the plaintiff caught hold of the said order and had taken advantage of the same. We do not wish to say anything on the deed of declaration and cancellation. A perusal of the aforesaid deeds would throw light on the intention of the plaintiff. There is a series of such strange activities, which could be seen in this case. If Order VII Rule 11 CPC is not to be exercised in this case, it can never be done in any other case.
23. Virtually, the plaintiff has got stay of the order passed by the Debts Recovery Tribunal and the action for sale initiated under the SARFAESI Act. In such view of the matter, the order of injunction can never be sustained. If Dr.Senthilnathan, being the sole proprietor could represent the plaintiff and negotiate seeking for One Time Settlement, we do not know under what circumstances the order was passed in the Insolvency Proceedings. In any case, the plaintiff cannot take advantage of the same. It is contended by the learned Senior Counsel appearing for the first https://www.mhc.tn.gov.in/judis/ Page 53 of 56 O.S.A.Nos.57 and 58 of 2020 respondent/plaintiff that the order passed by the Debts Recovery Tribunal, Chennai in O.A.No.288 of 2014 is non est in law. The said argument can never be accepted especially when the plaintiff himself has filed the appeals but could not proceed in view of the rigour imposed by the statute towards conditional payment while entertaining the appeal.
24. The reason assigned by the learned Single Judge, in the light of the discussions, cannot be sustained. A finding that the first defendant is not a secured creditor cannot be given after holding that its authority to initiate proceedings on the basis of an assignment deed followed by term sheet requires consideration.
25. We have already discussed about the aforesaid documents and therefore we do not wish to reiterate the same. Suffice it to state that the orders passed cannot be sustained both on law and on facts.
26. The learned Senior Counsel appearing for the first respondent/plaintiff made reliance upon certain judgments to press hold the point that the suit is maintainable when a fraud is alleged and the document of term sheet requires registration. While there is https://www.mhc.tn.gov.in/judis/ Page 54 of 56 O.S.A.Nos.57 and 58 of 2020 no difficulty with respect to the law laid down in the aforesaid judgments, a term sheet does not require registration and there were already documents evidencing deposit of title deeds along with the confirmation letters.
27. In the light of the aforesaid discussion, we have no hesitation in holding that the suit as filed is a clear abuse of process of law and also not maintainable. Accordingly, the order passed by the learned Single Judge stands set aside. The application filed by the first respondent/plaintiff in O.A.No.954 of 2019 in C.S.No.612 of 2019 stands dismissed and consequently, the application filed by the appellant/first defendant in A.No.8576 of 2019 stands allowed.
28. In the result, these two original side appeals are accordingly allowed with costs of Rs.25,000/- payable by the first respondent to the appellant. Consequently, connected miscellaneous petitions are closed.
(M.M.S., J.) (R.N.M., J.)
08.07.2021
Index:Yes/No
ssm
To
The Sub-Assistant Registrar,
Original Side,
High Court, Madras.
https://www.mhc.tn.gov.in/judis/
Page 55 of 56
O.S.A.Nos.57 and 58 of 2020
M.M.SUNDRESH, J.
and
R.N.MANJULA,J.
(ssm)
PRE-DELIVERY JUDGMENT IN
O.S.A.Nos.57 and 58 of 2020
08.07.2021
https://www.mhc.tn.gov.in/judis/
Page 56 of 56