REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL    NO.  10322  OF 2018 (arising out of S.L.P.(C)No.12073 of 2017)

 SUZUKI PARASRAMPURIA  SUITINGS PVT. LTD.     ...APPELLANT(S)

VERSUS THE OFFICIAL LIQUIDATOR OF  MAHENDRA PETROCHEMICALS LTD.  (IN LIQUIDATION) AND OTHERS ...RESPONDENT(S)

JUDGMENT

NAVIN SINHA, J.

Leave granted.

2. The  appellant is  an  assignee  of  debt  by the Industrial  Finance

Corporation of India Ltd. (hereinafter called as “IFCI”) for the

outstandings of M/s. Mahendra Petrochemicals Ltd. (hereinafter

referred to as “M/s. MPL”).   It is aggrieved by the appellate order dated

02.09.2016 in O.J. Appeal No.4 of 2016, declining to interfere with the

orders of the Company Judge dated 31.07.2015 in Company Application

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No.248 of 2014, and also the order dated 07.09.2015, in OJMCA No.170

of 2015 declining to recall/review the order dated 31.07.2015.

3. It is not considered necessary to set out and deal with the entirety

of the facts and circumstances of the case, except to the extent

necessary for the purposes of the present order, in the limited nature of

the controversy arising in the present appeal.  

4. Company Petition No.150 of 1996 was filed for winding up of M/s.

MPL.  The company was also referred for rehabilitation to the Board for

Industrial and Financial Reconstruction (hereinafter referred to as

“BIFR”)  in Reference No.385 of 2000.   During pendency of the same,

without permission or knowledge of the BIFR, M/s. MPL entered into an

unregistered memorandum of understanding (hereinafter referred to as

the ‘MOU’) with the sister concern of the appellant, M/s. Suzuki

Parasrampuria Suitings Pvt.  Ltd. for leasing out  its  properties to the

appellant for 20 years for repayment of its debts.  The MOU was also not

brought to the attention of the company court till the winding­up order

was passed on 19.04.2010.  The IFCI, Bank of Baroda – respondent no.3

and the Punjab National Bank – respondent no.4 were secured

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creditors, who had filed original applications against  M/s.  MPL for

recovery  of their  debts  before the  Debt  Recovery  Tribunal  under the

Securitisation and Reconstruction of Financial Assets and Enforcement

of Securities Interest Act,  2002 (hereinafter referred to as “SARFAESI

Act”).  IFCI held first charge over the assets of M/s. MPL for

outstandings of Rs.160 crores and the Bank of Baroda with an

outstanding of approximately Rs.4,68,00,000/­ held second charge.  On

28.07.2010 after the winding­up order,  IFCI assigned its dues to the

appellant for a sum of Rs.85 lacs only and informed the official

liquidator thereafter.  

5.   The appellant then filed Company Application No.248 of 2014 with

a prayer for substitution in place of IFCI as a secured creditor of M/s.

MPL.   The Company Judge rejected the application on 31.07.2015

holding that the appellant was neither a Bank or Banking company or a

financial institution or securitization company or reconstruction

company and therefore could not be substituted in place of IFCI as a

secured creditor for the purpose of the SARFAESI Act.  In the nature of

the relief sought for substitution as a secured creditor under the

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SARFAESI Act, the Company Judge held that the appellant could not

draw any benefit for the purpose from Section 130 of the Transfer of

Property Act.  All other contentions were left open to be raised before the

appropriate court/forum in appropriate proceedings.   The appellant

then filed OJMCA No.170 of 2015 invoking the inherent powers of the

Company Court under Rule 9 of the Companies (Court) Rules, 1959 for

recall/review of order dated 31.07.2015 contending that the appellant

had never sought substitution as a secured creditor and simply desired

substitution as a transferee of an actionable claim under Section 130 of

the Transfer of the Property Act (hereinafter referred to as “the T.P. Act”).

The recall/review application was rejected holding that an entirely new

case was sought to be made out in the application. The appeal against

the same has been rejected by the impugned order.

6. Shri Harin P. Raval, learned senior counsel for the appellant,

assailing the impugned  order dated  02.09.2016, contended that the

appellant had never sought the status of a secured creditor in lieu of the

IFCI.   The finding to that effect is erroneous and completely

misconceived.   The appellant had simply desired to be adjudged a

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transferee from IFCI of an actionable claim under Section 130 of the T.P.

Act.   The rights and claims of the appellant under the latter was the

only issue, and has not been considered at all.  The deed of assignment

dated 28.07.2010 was subsisting and was challenged by none.  The lack

of any status of the appellant under the SARFAESI Act was a wholly

irrelevant consideration to reject its action for transfer of an actionable

claim under Section 130 of  the T.P.  Act.  The  inherent power of  the

Company  Court  under  Rule 9 of the  Companies (Court) Rules  was

wrongly declined to be exercised in the facts of the case.

7. Learned counsel for the respondents opposed the application

submitting that the appellant cannot be permitted to make a volte face

after the rejection of its only claim by the Company Judge and take

shifting stands at  different  times according  to  its  convenience  in  the

same proceedings.

8. We have considered the submissions on behalf of the parties.  That

the unregistered MOU was without permission of the BIFR, it was not

disclosed to the Company Court till the winding­up order was passed on

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19.04.2010, the assignment of debt of Rs.160 crores by IFCI for Rs.85

lacs  are  admitted  facts.  The order  dated 31.07.2015 passed by the

Company Judge makes it very explicit that the appellant in Company

Application No.248 of 2014 had specifically sought substitution in place

of IFCI as a secured creditor holding first charge consequent to the deed

of assignment in its favour dated 28.07.2010 from IFCI.   In support of

the relief sought, reliance was also placed on the pursis dated

21.11.2011 filed by IFCI in OA No.452 of 2000 before the Debt Recovery

Tribunal, Ahmedabad reaffirming the assignment in favour of the

appellant.  The submissions made before the Company Judge leaves no

doubts that as an assignee of debts from the IFCI, the appellant

essentially sought substitution as a secured creditor under the

SARFAESI Act and for that purpose sought to draw sustenance from the

provisions of Section 130 of the Transfer of Property Act.  Therefore, the

Company Judge opined that Section 130 of the Transfer of the Property

Act was not applicable in the facts of the case leaving it open for the

parties to take all available contentions before the appropriate

court/forum in appropriate proceedings.   In the nature of the

controversy sought to be raised by the appellant in the present appeal

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we consider it proper to set out the following extracts from the order of

the Company Judge:

“23. The only question which is required to be considered in this application is as to whether the applicant can be permitted to be substituted for and in place of IFCI Limited as the secured creditor of the company in liquidation?  For  deciding this  question, certain provisions of the SARFAESI Act are required to be considered. 25. Thus, in view of the aforesaid provisions contained in the SARFAESI Act, I am of the view that when the applicant company is not a bank or banking or financial institution or securitization company or reconstruction company, the applicant cannot be permitted to be substituted in place of IFCI as secured creditor for the purpose of SARFAESI Act. 27.   The aforesaid provisions of Section 130 of the Transfer of Property Act are not applicable to the facts of the present case as the IFCI has transferred the debts  of the  company  in liquidation  in favour  of the applicant by deed of assignment and therefore the case of the applicant is that it may be permitted to proceed against the company in liquidation under the SARFAESI Act as secured creditor.  The applicant is not entitled to get any benefit under the SARFAESI Act and cannot be termed as secured creditor.   Hence the reliance placed by the learned advocate for the applicant on the provisions of Section 130 of the Transfer of Property Act, is misconceived.”  

9. The relevant extract of the pleadings by the appellant in Company

Application No.248 of 2014 noticed by the Company Judge in his order

dated 07.09.2015 are also noticeable:  

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“8.   I say  and submit that earlier, IFCI also filed a purshis  dated  21.11.2011  before the  Debts  Recovery Tribunal, Ahmedabad in Original Application No.452 of 2000  reaffirming that the IFCI  Ltd.  Has  assigned its dues in favour of the applicant.  I beg to annex a copy of purshis dated 21.11.2011 filed before the Debts Recovery Tribunal, Ahmedabad in Original Application No.452 of 2000 at Annexure­III.

10. I say and submit that apropos to the  Deed of Assignment, the Applicant has become the secured creditor of the Company in Liquidation and all the rights of IFCI Ltd. in relation to the financial facilities extended to the Company in Liquidation and the underlying security interests therein vests in the Applicant vis­à­vis the Company in liquidation.”

10. The appellant initially took a conscious and considered stand

before the Company Judge, staking a claim for being substituted as a

secured creditor under the SARFAESI Act consequent to the assignment

of debt to it by the IFCI.  That the claim was not simply with regard to

assignment of an actionable claim under Section 130 of the T.P. Act is

evident from its own pleadings and the pursis filed by the IFCI before

the Debt Recovery Tribunal.   No material has been placed before us

with regard to the orders that may have been passed by the Tribunal on

such application.   After the claim of the appellant of being a secured

creditor was rejected by the Company Judge, and the appellant realised

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the unsustainability of its claim in the law, it made a complete volte face

from its earlier stand and surprisingly, contrary to its own pleadings,

now contended that it had never sought the status of a secured creditor

under the SARFAESI Act.

11. The contention of the appellant that it had never sought

substitution as a secured creditor under the SARFAESI Act is

additionally belied from the recitals contained in the order dated

07.09.2015.  Time and again this court has held that the recitals in the

order sheet with regard to what transpired before the High Court are

sacrosanct.   The learned Single Judge, in the review jurisdiction, has

reiterated that the arguments addressed before him in Company

Application No. 248 of 2014 were made specifically under the SARFAESI

Act observing as follows:

“It is also required to be noted that learned advocate for the applicant in the said application, at the time of arguments, submitted that the applicant be substituted as secured creditor  and given  the benefit under the SARFAESI Act and therefore, learned advocate  Mr.  Rao appearing for the  Bank of  Baroda submitted  in  detail,  after relying  upon the  provisions contained in SARFAESI Act, that the applicant cannot be substituted as secured creditor and permitted to proceed under the provisions of SARFAESI Act.”

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12. A litigant can take different stands at different times but cannot

take contradictory stands in the same case.   A party cannot be

permitted to approbate and reprobate on the same facts and take

inconsistent shifting stands.  The untenability of an inconsistent stand

in the same case was considered in  Amar Singh vs. Union of India,

(2011) 7 SCC 69, observing as follows:  

“50. This Court wants to make it clear that an action at law is  not  a game of  chess.  A  litigant  who comes to Court and invokes its writ jurisdiction must come with clean hands. He cannot prevaricate and take inconsistent positions.”

13.  A similar view was taken in Joint Action Committee of Air Line

Pilots’ Assn. of India vs. DG of Civil Aviation,  (2011) 5 SCC 435,

observing:

“12.  The doctrine  of election  is  based on  the  rule  of estoppel—the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election  is  one of the species of  estoppels  in pais  (or equitable estoppel), which is a rule in equity….. Taking inconsistent  pleas  by  a  party  makes its conduct far from satisfactory. Further, the parties should not blow hot and cold by taking inconsistent stands and prolong proceedings unnecessarily.”  

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14. Resultantly we find no merit in the appeal. The appeal is

dismissed.  

…………...................CJI. [RANJAN GOGOI]

…………...................J. [NAVIN SINHA]

…………...................J. [K.M. JOSEPH]

NEW DELHI OCTOBER 08, 2018.

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