Calcutta High Court
Excel Dealcomm Pvt. Ltd vs Asset Reconstuction Company (India) ... on 6 April, 2016
Author: Harish Tandon
Bench: Harish Tandon
GA No. 1912 of 2013
CS No. 74 of 2007
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
EXCEL DEALCOMM PVT. LTD.
Versus
ASSET RECONSTUCTION COMPANY (INDIA) LTD. & ORS.
BEFORE:
The Hon'ble JUSTICE HARISH TANDON
Date : 6th April, 2016.
Appearance Mr. Asit Dey, Adv.
Mr. Sabyasachi Chowdhury, Adv.
Mr. Subhankar Nag, Adv.
Mr. T. Dey, Adv.
Mr. Bimal Chatterjee, Sr. Adv.
Mr. Rudraman Bhattacharya, Adv.
Mr. Pratik Ghosh, Adv.
The Court : In an application seeking revocation of leave under Clause 12 of the Letters Patent, the defendant asserts that the suit is not only liable to fail being a suit for land but because of the Forum Selection Clause, this Court lacks jurisdiction and it is a Court/ Tribunal at Mumbai which is competent to entertain the disputes raised in the instant suit.
The plaint case proceeds that the defendant no. 1, a securitisation company under the Securitisation and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002, of which the defendant no. 2 is the 2 Vice-President. The said defendant no. 2 as an authorised officer represented that the defendant no. 1 acquired financial assets of the defendant no. 2 and secured assets of the defendant no. 4 charged with ICICI Bank Limited and intend to conduct the sale on private treaty basis under Rule 8(5)(d) of Security Interest (Enforcement) Rules, 2002 read with Section 13(4) of the SARFAESI Act. The plaintiff agreed to buy the properties at and for a consideration of Rs.141 crores and the terms and conditions have been recorded and reduced in writing in the form of an agreement dated February 13, 2007. One of the clauses in the said agreement clearly provides that the defendant no. 1 shall deliver possession of the properties mentioned therein upon receipt of the full consideration free from charges of the secured lenders, including the security interest, pledges and guarantees. It is further alleged that a substantial amount has already been paid in terms of the said agreement and the balance is required to be paid at the execution and registration of the deed but the defendants have failed to perform their obligation under the agreement though the plaintiff is all along ready and willing to perform its obligation. A suit for specific performance of an agreement for sale is filed for the following reliefs:-
"a) A decree for Specific Performance of the Agreement for Sale recorded in the document dated February 13, 2007 being Annexure 'A' hereto by directing the Defendant Nos. 1 and 2 to issue in favour of the Plaintiff Sale Certificate in respect of assets mentioned in Schedule I to Annexure 'A' hereto and on as is where is basis against payment of the balance sum of Rs.134 crores.
b) Injunction;
c) Receiver;
3
d) Costs;
e) Further and other Reliefs."
For the purpose of leave under Clause 12 of the Letters Patent, it is averred that some of the defendants are outside the aforesaid jurisdiction and part of the cause of action have arisen within the jurisdiction of this Court. It is manifest from the reliefs claimed in the said suit that a decree for specific performance of an agreement for sale is sought by directing the defendant nos. 1 and 2 to issue a sale certificate in respect of an asset mentioned in the schedule appended to the said agreement. According to the petitioner, since the plaintiff agreed to purchase the properties mentioned in the aforesaid agreement in terms of the SARFAESI Act and the Rules framed thereunder, the sale certificate can only be issued in the manner prescribed thereunder which clearly depicts that the possession is also required to be given to the purchaser. According to the petitioner, if the possession is required to be given on the specific performance of an agreement, it partakes the character of a suit for land and, therefore, this Court is denuded of its jurisdiction to entertain such suit.
The attention of this Court is drawn to the judgment of the Supreme Court rendered between the same parties in a similar and identical suit filed before this Court wherein the application for revocation was allowed by the Hon'ble Single Bench and affirmed by the Division Bench. On perusing the said judgment delivered in Civil Appeal No. 3272 of 2015 on April 1, 2015, two points were raised before the Supreme Court. The first point relates to the nature of the suit as suit for land and the other relating to an exclusive jurisdiction because of the 4 Forum Selection Clause in the agreement. The relief in the said suit was verbatim what has been claimed in the instant suit and one can safely say that one is a reproduction of the another. A point was urged before the Supreme Court on the basis of another judgment of the Apex Court rendered in Adcon Electronics Pvt. Ltd. Vs. Daulat & Anr., reported in (2001) 7 SCC 698 that if in a suit for specific performance of an agreement the relief relating to title or delivery of possession of the land is not sought, it would not be treated as a suit for land. The Apex Court after noticing Rule 9(6) of the Security Interest (Enforcement) Rules, 2002 and the form appended thereto arrived at the conclusion that though no relief is specifically sought for delivery of possession but the moment the sale certificate is issued in the format prescribed under the Rule, such relief is in- built and, therefore, the suit is a suit for land and because of the embargo under the Letters Patent, the Original Side of this Court is not competent to decide the same.
After noticing the judgment of the Supreme Court rendered directly on the above issue, there is no justification in proceeding to deal with the other points but since Mr. Chatterjee, learned Senior Counsel, has raised certain issues, this Court feels that those are required to be dealt with, vis-à-vis, the judgment of the Apex Court rendered above.
The sheet-anchor of the argument advanced by Mr. Chatterjee is based on the provisions contained under Section 21 of the Code of Civil Procedure. It would be apt to quote the aforesaid provision which runs thus:- 5
"21. Objections to jurisdiction. - [(1)] No objection as to the place of suing shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice.
[(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and, in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.
(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.]"
On the meaningful reading of the aforesaid provision, an objection as to the place of suing shall not be allowed to be taken up by the Appellate or the Revisional Court, if such objections were not taken in a Court of first instance at an earliest possible opportunity and in all probability at or before the settlement of issues. The exception which could be seen is the case of failure of justice.
Sub-Section (2) relates to an objection as to pecuniary jurisdiction of the Court and Sub-Section (3) to an executing Court. By placing the aforesaid provision, Mr. Chatterjee would contend that the defendants are precluded and/or estopped from raising an objection as to pecuniary, territorial or a jurisdiction over the subject matter after submitting their defence, i.e., filing of 6 the written statement. According to him, if such objection is not raised before filing the written statement, it amounts to waiver thereof and the Court should not permit the defendants to raise such objection at a later stage of the proceeding.
To buttress the aforesaid submission, reliance is placed upon a Division Bench judgment of this Court in Sm. Nandarani Bose & Anr. Vs. Ranchhoddas Muldas Ramanuj & Anr., AIR 1981 Calcutta 275. By placing paragraph 9 of the said report, Mr. Chatterjee submits that even if the provisions contained under Section 21 of the Code does not apply, the waiver can still be applied independent of the said provision. In the said report, an ex-parte money decree was passed by a subordinate Judge of Alipore and subsequently transferred to the Original Side of this Court for execution. An objection to the executability to the decree was raised under Section 47 of the Code basically on the ground that the Court which passed the decree inherently lacks jurisdiction to entertain the suit. It was sought to be contended that the decree passed by the Court lacking inherent jurisdiction is a nullity. The Division Bench did not overturn the general proposition but held that such proposition is subject to an exception embodied under Section 11 of the Suits Valuation Act and Section 21 of the Code of Civil Procedure. If the parties by their conduct or otherwise have not raised an objection as to the jurisdiction promptly, there is no legal bar to apply the principles of waiver and in the special facts of the said case it was held that the objector to the decree have, in fact, waived the objection as to the territorial jurisdiction of the Court which passed the decree.
7In case of Bahrein Petroleum Co. Ltd. Vs. P.J. Pappu & Anr., reported in AIR 1966 Supreme Court 634, a point of waiver was taken under Section 21 of the Code as the defendant filed the written statement in the suit. In the said suit, the defendant from the very inception was taking an objection as to the jurisdiction of the Court to entertain the suit in an application under Section 34 of the Indian Arbitration Act, 1940. The matter went upto the High Court of Kerala and it was held that the defendant therein had waived the objection as to territorial jurisdiction and directed the Trial Court to try the suit on merits. It appears that before the matter could be taken up by the Supreme Court against the order of the High Court, the defendant filed the written statement and a specific objection was taken as to the jurisdiction of the Court to entertain the suit. Though the Apex Court held that the defendant can waive the right to object on a jurisdiction under Section 21 but since the defendant was all along raising the issue as to the jurisdiction even in the written statement subsequently filed, ultimately held that such conduct may not amount to a waiver of objection as to the jurisdiction of the Court. It would be profitable to quote paragraphs 5 and 6 of the said judgment which runs thus:-
"(5) At the earliest opportunity and before taking any steps in the suit, the defendants applied for stay of the suit under S.34 of the Indian Arbitration Act, 1940. In the petition for stay, they protested against the jurisdiction of the Court to try the suit. In paragraph 5 of the petition, they clearly pleaded that the Cochin Court had no jurisdiction to entertain the suit. They objected to the trial of the suit on the merits, pressed for a stay order before the Cochin Court and fought up to the appellate and revisional Courts. Having failed to obtain the stay 8 order, they were compelled to apply to the Court for permission to file their written statement, and on the permission being granted, they filed it objecting to the jurisdiction and also pleading on the merits. Throughout, the defendants protested against the jurisdiction of the Court to try the suit. They lodged their protest at the earliest opportunity, and persisted in their objection thereafter. At no stage they waived or abandoned their objection.
(6) The High Court was of the view that the effect of Ss.2(c), 34 and 39 of the Indian Arbitration Act was that by filing the appeal under S.39 against the order of the Cochin Court refusing to stay the suit, the defendants must be deemed to have conceded that the Cochin Court was a Court having jurisdiction to try the suit. An application under S. 34 lies to the judicial authority, before which the suit is pending. Section 39(I) permits an appeal from an order of a Court under S.34. Section 2(c) defines a "Court" as a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit. On a combined reading of Ss.2(c), 34 and 39, the High Court concluded that by filing the appeal under S.39(I), the defendants conceded that the Cochin Court before which the application under S.34 was made was a Court as defined in S.2(c), and, therefore, a Court having jurisdiction to try the suit. We are unable to accept this line of reasoning. Even substituting the word "Court" for the words "judicial authority" in S.34, it would appear that the general definition of "Court" in S.2(c) cannot be imported into S.34. An application for stay of a suit must be made to the Court before which it is pending. That Court may or may not be the Court having jurisdiction to decide the questions forming the subject-matter of the reference, if the same had been the subject-matter of a suit. Still, the application must be made to the Court and to no other. An application to the Court before which the suit is pending for stay of the suit under S.34 is in no way a recognition that the Court has jurisdiction to try the suit, nor can an appeal from an order of the Court under S.34 have that effect. We, therefore, hold that the 9 defendants did not waive their objection as to the territorial jurisdiction of the Cochin Court."
The waiver is essentially the mixed question of fact and law. In the instant case, the defendant since its appearance is raising an objection as to the jurisdiction and such objection shall also find place in the written statement filed subsequently. It cannot be said that the conduct of the defendant leads to a presumption of waiver as to the objection over the territorial jurisdiction. On whatever angle this Court looks at the submissions advanced by Mr. Chatterjee, this Court does not find that those have any manner of applicability in the facts of the instant case. Since the Supreme Court in an other suit of like nature have held that it is a suit for land and, therefore, the leave under Clause 12 of the Letters Patent should be revoked. This Court finds that the ratio laid down therein directly and substantially applies to the facts of the instant case.
In view of the above, the application seeking revocation of leave under Clause 12 is allowed.
The leave under Clause 12 of the Letters Patent is hereby revoked. The suit is thus dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs.
After the delivery of the order in the open Court, the learned Advocate for the plaintiff prays for stay of the operation of this order. 10
After considering the same, this Court does not find that this is a fit case where this order should be stayed. The prayer is refused.
(HARISH TANDON, J.) sg.