Gujarat High Court
Anyonya Co Op Bank Ltd In Liquidation vs Vajra Bearings Pvt In Liquidation on 25 January, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/CRA/526/2022 ORDER DATED: 25/01/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CIVIL REVISION APPLICATION NO. 526 of 2022
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ANYONYA CO OP BANK LTD IN LIQUIDATION
Versus
VAJRA BEARINGS PVT IN LIQUIDATION
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Appearance:
MR BHARGAV HASURKAR(5640) for the Applicant(s) No. 1
MR MAHMOOD A MADNI(5092) for the Opponent(s) No. 2
MS BHAVNA V SHAH(11047) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 25/01/2023
ORAL ORDER
1.Heard learned advocate Mr. Bhargav Hasurkar for the petitioner and learned advocate Mr. Vishwas K. Shah for the opponent.
2.By this Civil Revision Application, the petitioner has challenged order dated 24.09.2021 passed by the Additional Senior Civil Judge, Vadodara in Regular Civil Suit No.2853/2015 (Old No.396/2014) whereby application Exh.25 filed by the petitioner Page 1 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined under Order VII Rule 11 of the Code of Civil Procedure, 1908 ( For short "the Code") is rejected.
3.Brief facts of the case are that the petitioner is the Official Liquidator of Anyonya Cooperative Bank Limited (In Liquidation). The petitioner commenced securitisation action against respondent no.1-M/s. Vajra Bearings Limited (In Liquidation).
3.1) The petitioner bank filed a suit for recovery of the outstanding amount from M/s. Vajra Bearings Limited (In Liquidation) before the Board of Nominees at Vadodara. 3.2) Respondent no.2 -Advance Electronic System, a partnership firm, entered into a tri-party agreement being Memorandum of Understanding (MoU) between the petitioner Page 2 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined and respondent no.1 on 26.08.2013 for purchase of hypothecated property for an amount of Rs.3,27,40,653/-. 3.3) As per the MoU, respondent no.1 had to withdraw SLP No.17365/2010 before the Hon'ble Supreme Court so as to enable to implement the MoU.
3.4) Respondent no.1 borrower being aggrieved by order of winding up dated 29.01.2010 passed by this Court in Company Petition No.36/2004 preferred OJ (Appeal) no.218/2009 which was dismissed by the Division Bench and thereafter, SLP No.17365/2010 was filed before the Supreme Court wherein by order 12.07.2010, the Supreme Court directed to maintain the status-quo in respect of properties of respondent no.1 company. Therefore, SLP was required to be withdrawn so as to implement Page 3 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined MoU.
3.5) As per the terms of MoU, respondent no.2 deposited Rs. 25 lakhs with the petitioner, out of which Rs. 15 lakhs was deposited in the loan account of respondent no.1 and Rs. 10 lakhs was deposited in the account of the Official Liquidator of the petitioner and was kept as interest free deposit.
3.6) Respondent no.1 thereafter filed Civil Suit No.396/2014 for declaration and specific performance under section 34 of the Specific Relief Act, 1963 for implementation of MoU by the applicant and respondent no.2 which was valued at Rs. 3 lakhs as respondent no.1 claimed the said amount along with interest at the rate of 24% from the date of issuance of notice for cancellation of MoU. Page 4 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023
NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined 3.7) The petitioner thereafter filed an application Exh.25 under Order VII Rule 11 of the Code on the ground that suit filed by respondent no.1 was not maintainable being barred by law. It was contended by the petitioner in the said application that the suit filed by respondent no.1 Original plaintiff is not maintainable as the petitioner is subjected to the process of liquidation and therefore, as per the provisions of section 112 of the Gujarat Cooperative Societies Act, 1961 (For short "the Act, 1961"), no suit is maintainable without the sanction of the Registrar. 3.8) Reliance was also placed on section 278, 279 and 280 of the Companies Act, 2013, which provides for effect of winding up order, stay of suit etc. on winding up order and jurisdiction of the Tribunal as respondent no.1 company is already in Page 5 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined liquidation.
3.9) The trial Court however, by impugned order dated 24.09.2021 rejected the application filed by the petitioner relying upon the observations made by this Court in order dated 16.06.2014 passed in Special Civil Application No.5355/2014 filed on behalf of respondent no.1 by one Vijay Krishnalal Doshi against the petitioner wherein it is observed in paragraph no.5 as under:
"5. Having regard to the fact that the dispute involved in the petition pertains to a purely contractual matter and considering the nature of the reliefs prayed for in the petition, this court is of the view that this petition under Article 226 of the Constitution of India is not maintainable. The petition is accordingly dismissed as not maintainable, leaving it open for the petitioner to approach the civil court in respect of the reliefs claimed in the present petition."
4.Learned advocate Mr. Bhargav Hasurkar for the Page 6 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined petitioner submitted that learned trial Judge relying upon the order passed in Special Civil Application No.5355/2014 has committed an error by rejecting the application filed by the petitioner under Order VII Rule 11 of the Code.
4.1) It was submitted that in view of winding up of the petitioner cooperative bank, Special Civil Suit No.396/2014 cannot proceed further as the petitioner bank is represented by the Liquidator in view of provisions of section 112 of the Act, 1961. 4.2) It was submitted that as per the provisions of section 112 of the Act, 1961 in case of winding up of the cooperative society, there is a bar of Civil Suit, except by the leave of the Registrar and subject to such terms as he may impose.
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NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined 4.3) It was further submitted that in view of provisions of section 278, 279 and 280 of the Companies Act, the suit cannot be permitted to be continued or proceeded with as it is a suit against the society being managed/represented by the Liquidator and as such, there is an apparent bar of law requiring the rejection of the plaint with cost.
4.4) It was submitted that the observations were made by learned trial Court that no further facts are required to be ascertained with regard to the averments made in the plaint as the suit is filed for recovery of expenditure of Rs. 3 lakhs alleged to be recovered from the personal assets of the responsible officer of the petitioner bank. It was submitted that no such suit would lie on bare perusal of the averments of the plaint.
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5.On the other hand, learned advocate Mr. Vishwas K. Shah for the respondent no.1 submitted that the petitioner has preferred a Company Application in the pending winding up proceedings for stay of further proceedings of the suit and thereafter application under Order VII Rule 11 of the Code was preferred. It was therefore, submitted that the petitioner cannot file two proceedings simultaneously and therefore, this petition is required to be dismissed.
5.1) Learned advocate Mr.Shah referred to and relied upon the following averments made in the affidavit in reply filed on behalf of the respondent no.1:
"i. Undisputedly there was a Memorandum of Understanding (in short "MoU") dated 26.08.2013 between the parties to the captioned Application. It is submitted that Applicant did not abide by its terms as per the said MoU on account of which the ex-director of Respondent herein approached this Hon'ble Court by Page 9 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined virtue of filing Special Civil Application no. 5355 of 2014 for inter alia seeking relief of direction to Applicant bank to implement said MOU. The copy of MOU dated 26.08.13 is annexed herewith and marked as ANNEXURE R/1.
ii. That by virtue of order dated 16.06.2014 passed in said Special Civil Application no. 5355 of 2014, this Hon'ble Court disposed off said Petition leaving it open for Respondent herein to approach Civil Court in respect for relief(s) claimed. It is submitted that in light of this observation by this Hon'ble Court the Respondent herein approached Hon'ble Civil Court, Vadodara by way of filing Regular Civil Suit no. 2853 of 2015. The copy of order dated 16.06.14 passed in Special Civil Application No. 5355 of 2014 is annexed herewith and marked as ANNEXURE R/2.
iii. It is submitted that undisputedly on account of aforesaid MoU, the Respondent herein inter alia other terms mentioned in MoU, which has been elaborated by Applicant itself in its Civil Revision Application, withdrew earlier proceedings (prior to said MoU) filed by it before Hon'ble Supreme Court of India as well as one Special Civil Suit no. 152 of 2005 filed by answering Respondent against Applicant came to be withdrawn. Hence, Applicant deceived Respondent to withdraw its proceedings against it by way of this MoU and then chose to not implement the same, thus gaining unjust and unfair advantage over the Respondent. This in itself shows the conduct of Applicant and in order to run away from its Page 10 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined liabilities and wrong doings, Applicant is now using cunning tactics over the Respondent by way of present proceedings. The copy of order withdrawing SLP in light of MOU is annexed herewith and marked as ANNEXURE R/3.
iv. Thus, the said MoU once entered into and not being implemented by Applicant has caused great hardships to the Respondent herein for which it has preferred the regular civil suit. Thus, without appreciation of evidence the said civil suit cannot be rejected at the outset under Order 7 Rule 11 as otherwise the Respondent herein will have no other forum to pursue its remedy of implementation of MoU, in light of which and in the interest of justice, the order impugned by Applicant requires to be upheld and captioned Civil Revision Application requires rejection.
v. The Hon'ble Civil Court has rightly rejected the Order 7 Rule 11 Application preferred by the Applicant herein as there needs to be appreciation and examination of evidences in the said civil suit. Moreover, neither in the entire Application nor the suit, has Applicant refuted its liability to implement the said MoU, which shows that Applicant is using the vague and baseless tactics in order to sway away from its legal obligations."
5.2) It was further submitted that the Page 11 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined petitioner has played fraud with the Court by way of filing of this petition as there is suppression of proceedings filed by the petitioner being Company Application No.29/2021 which is pending before this Court. It was therefore, submitted that despite there being two proceedings filed for the same cause of action, the petitioner has suppressed the same before this Court and the petitioner cannot ride on two horses since bar of res sub-judice will apply as the adjudication for same relief between the same parties is pending before this Court in another proceeding. In support of his submission, reliance was placed on the decision of the Apex Court in case of S.P. Chengalvaraya Naidu v. Jagannath reported in (1994) 1 SCC 1 wherein in paragraph no.6, it is held as under :
"6.....Non-production and even non- mentioning of the release deed at the trial is tantamount to playing fraud on the court. We do not agree with the Page 12 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined observations of the High Court that the appellants- defendants could have easily produced the certified registered copy of Ex. B-15 and non- suited the plaintiff. A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party."
5.3) It was therefore, submitted that the petition deserves to be dismissed on the ground of suppression only and there being no infirmity in the impugned order passed by the trial Court, no interference is required to be made while exercising jurisdiction under section 115 of the Code.
6.Having heard the learned advocates for both the sides and having considered the facts of the case, it is not in dispute that respondent no.1 company is ordered to be wound up by the order of this Court and therefore, no company in liquidation can file Page 13 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023 NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined a suit with a prayer which is made by respondent no.1.
7.Reliance placed on provisions of section 112 of the Act, 1961 as well as provisions of section 278 to 280 of the Companies Act also would bar the proceedings of the Civil Suit filed by respondent no.1.
8.In such circumstances, though the petitioner has preferred Company Application No.29/2021 for staying further proceedings of the Civil Suit, the petitioner also has the right to challenge the order passed by the trial Court rejecting the application under Order VII Rule 11 of the Code. Therefore, the contention raised on behalf of the respondent no.1 of applying the principle of res sub- judice is not tenable and the same would not apply in facts of the case.
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9.In view of above, it is clear that learned Judge has committed an error while rejecting the application preferred by the petitioner under Order VII Rule 11 of the Code as the Civil Suit filed by respondent no.1 is barred by law for want of permission from the Registrar of the Cooperative Societies and further it is barred as no permission is taken of this Court for filing such suit by respondent no.1 company which is in liquidation. It is further required to be noted that it is only Official Liquidator who can file such suit with permission of this Court and the ex-Director of the Company in Liquidation has no locus standi to file such Civil Suit for implementation of MoU dated 26.08.2013.
10. On perusal of the averments made in the plaint, it is clear that the suit is filed by respondent no.1 through Managing Director. Page 15 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023
NEUTRAL CITATION C/CRA/526/2022 ORDER DATED: 25/01/2023 undefined When the company is ordered to be wound up by the order of this Court, the Managing Director of the erstwhile company cannot file any litigation as the Official Liquidator is appointed by this Court vide order dated 29.01.2010 and therefore, the Official Liquidator can only file any litigation with the permission of the Court.
11. In view of the foregoing reasons, petition deserves to be allowed and is accordingly allowed. The impugned order dated 24.09.2021 passed by the Civil Court, Vadodara is hereby quashed and set aside and the Regular Civil Suit No.2853/2015 filed by respondent no.1 is held to be barred by law.
12. Civil Revision Application is accordingly disposed of.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 16 of 16 Downloaded on : Sun Sep 17 21:10:15 IST 2023