TMI Blog2009 (8) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 3. The applicant filed the suit for the very same relief for declaration and permanent injunction. The suit was admitted on 30.04.2009. When the matter came up on 30.04.2009, in this application, this Court granted an ad-interim injunction till 8.6.2009. The said interim order was not continued thereafter. On notice from this Court, both respondents have filed their respective counter affidavits. 4. The applicant is a private limited company represented by its Director Mrs. S. Shalini. In the affidavit in support of the application it was stated that the company was sanctioned a loan to the tune of Rs. 16 Crores by the first respondent Bank on 27.12.2004 as against the rent receivables from its properties, i.e. the land measuring 10.34 acres situated in R.S. No. 1222/1 at Udhagamandalam as well as the building measuring 72,220 sq.ft. situated in that land. It was stated that the land and building were leased out to M/s. Merit International Education Foundation and the loan was to be repaid in 84 monthly instalments. The lease amount was to be deposited in an escrow account with the first respondent Bank. The company also executed security documents in favour of the Bank. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt company. When the applicant made an enquiry under the Right to Information Act regarding the genuineness of the documents registered with the Sub Registrar's Office, they were informed that the sale deeds produced by the company are genuine and certified copies of such sale deeds were also issued by the Sub Registrar. Therefore, it was stated that a fraud had been played upon by the Bank as if the applicant company had created an equitable mortgage. No equitable mortgage can be created by deposit of forged title deeds. Therefore, the bank is not entitled to proceed under Section 13 of the SARFAESI Act. But, the first respondent Bank had classified the account as a non performing asset (NPA) account and issued a notice under Section 13(2) of the SARFAESI Act on 10.09.2005. The said notice was also published in the newspapers on 4.1.2006. 8. The erstwhile Director Harshavardhan received the notice and sent a reply on behalf of the other two Directors, who were not in India at the relevant point of time. The reply given by the erstwhile Director was without any authority and he was not the Director at that time. Likewise, the application filed by the erstwhile Director befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk found certain irregularities in the mortgage deed in respect of Chennai property and the same was intimated to the applicant. On 21.09.2005, the Bank also addressed a letter to the applicant. It was found that the documents of title in respect of the Chennai property was forged and hence it had complained to the CBI. 11. On 29.09.2005, the applicant company sent a reply to the Bank through its Director Ritesh Ranka. The bank having left with no alternative recalled the outstanding amount and called upon the Directors to pay back the entire amount. The Managing Director of the Company Harshavardhan sent a reply stating that the Udhagamandalam properties were duly mortgaged. He also disputed the recall letter issued by the Bank. On 11.11.2005, the applicant company through its Director disputed the allegation of forgery. On 16.11.2005, the Bank was constrained to issue a notice under Section 13(2) of the SARFAESI Act. On 23.1.2006, the three Directors sent a legal notice and admitted the creation of mortgage over the Udhagamandalam property as well as the forged documents submitted regarding the Chennai property. 12. It was at this juncture, Harshavardhan and Merit Internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o filed a criminal Revision Petition being Crl.R.C. No. 407 of 2009 before this Court, challenging the delivery of possession, but that revision petition was also dismissed by this Court. 15. The said Shalini filed an another writ petition in W.P. No. 9700 of 2009 before this Court, challenging the order passed by the Sessions Court, but no interim order was granted by this Court. The applicant also moved the Supreme Court in SLP No. 11505 of 2009, challenging the order of this Court in W.P. No. 27309 of 2008, dated 17.4.2009. The said SLP was dismissed on 14.5.2009. It was claimed by the first respondent Bank that all the pleas raised herein were raised in S.A. No. 109 of 2007 before the DRT and it has become final and binding on the applicant. It was also stated that the sale process culminated in issuing a sale certificate which formed part of the steps by which the secured creditor was entitled to take recovery of his dues under Section 13(4) of the SARFAESI Act. The applicant having availed the loan on 27.12.2004 by creating an equitable mortgage in respect of the building and land at Udhagai cannot resile from those transactions. The contention that Harshavardhan resigned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the petitioner has been dismissed on the ground of want of jurisdiction. Thereafter, on reconsidering the matter and taking legal advice, with reference to the contentions of the respondent, the petitioner has now proceeded on the basis that an arbitration agreement exists between the parties. If, on account of mistake or wrong understanding of law, a party takes a particular stand (that is, there is no arbitration agreement), he is not barred from changing his stand subsequently or estopped from seeking arbitration. [See U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd. where the contention based on estoppel was negatived while considering a reserve (sic reverse) situation.] 19. The learned Senior Counsel also placed reliance upon the judgment of the Full Bench decision of this Court in Lakshmi Shankar Mills (P) Ltd. v. The Authorised Officer/Chief Manager, Indian Bank and Ors. reported in 2008 (2) CTC 529 for the purpose of contending that the proceedings under Section 17 of the SARFAESI Act are available in lieu of a civil suit and such remedies are ordinarily available, but for the bar under Section 34 of Securitisation Act. It was stated that once possession of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee. The consequences of the authority vested in DRT under Sub-section (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13(4) of the Act. The Legislature by including Sub-section (3) in Section 17 has gone to the extent of vesting the DRT with authority to even set aside a transaction including sale and to restore possession to the borrower in appropriate cases. Resultantly, the submissions advanced by Mr. Gopalan and Mr. Altaf Ahmed that the DRT has no jurisdiction to deal with a post 13(4) situation, cannot be accepted. The dichotomy in the views expressed by the Bombay High Court and the Madras high Court has, in fact, been resolved to some extent in the Mardia Chemicals Ltd.'s case (supra) itself and also by virtue of the amendments effected to Sections 13 and 17 of the principal Act. The liberty given by the learned Single Judge to the appellants to resist S.A. No. 104 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bids a court from trying any suit or issue, which is res judicata, recognising both cause of action estoppel and issue estoppel . There are two issues that we need to consider, one, whether the doctrine of res judicata, as a matter of principle, can be applied to public interest litigations and second, whether the issues and findings in Somashekar Reddy constitute res judicata for the present litigation. Therefore, the applicant having had full round of litigation before the DRT, DRAT, High Court and having moved the Supreme Court, cannot institute the present suit urging the very same issue. 25. The learned Advocate General also stressed the fact that the applicant while filing the suit had suppressed to mention about the filing of his proceedings before the other forums and since they have not come to this Court with clean hands, no equitable relief should be granted in their favour. In this context, it is necessary to refer to the decision of the Supreme Court vide its judgment in Prestige Lights Ltd. v. State Bank of India reported in (2007) 8 SCC 449. The said decision was rendered in the context of proceedings under Article 226 of the Constitution. It is necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated or are suppressed or are distorted, the very functioning of the writ courts would become impossible. It must be stated that what applies to writ jurisdiction will also apply to the applications filed under Order 39 Rule 1 CPC since orders are granted on such applications on the basis of pleadings filed by the parties in the form of affidavits. 26. In any event, the documents produced by the Bank including the Board resolution shows that Harshavardhan was very much the Director of the company when the mortgage deed was executed. Considering that the company has no other Directors other than the husband, wife and the son team, the contentions raised by the applicant will have to be viewed with suspicion. Even the CBI investigation had not questioned the genuineness of the title deed regarding the Udhagai property. At this stage, this Court is only has to consider whether any prima facie case exists and whether the balance of convenience was in their favour to continue the interim order. 27. As to when an injunction can be granted under Order 39 Rule 1 C.P.C. has been propounded by the Supreme Court in several decisions. One such case by the Supreme Court is in Dalpat K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the burden is on the plaintiff by evidence aliunde by affidavit or otherwise that there is a prima facie case in his favour which needs adjudication at the trial. The existence of the prima facie right and infraction of the enjoyment of his property or the right is a condition for the grant of temporary injunction. Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a substantial question raised, bona fide which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that non-interference by the Court would result in irreparable injury to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely one that cannot be adequately compensated by way of damages. The third ..... X X X X Extracts X X X X X X X X Extracts X X X X
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