SUZUKI PARASRAMPURIA SUITINGS PVT. LTD.versusTHE OFFICIAL LIQUIDATOR OF MAHENDRA PETROCHEMICALS LTD. (IN LIQUIDATION) AND OTHERS

906                      [2018]REPORTS
               SUPREME COURT    12 S.C.R. 906              [2018] 12 S.C.R.


A            SUZUKI PARASRAMPURIA SUITINGS PVT. LTD.
                                          v.
            THE OFFICIAL LIQUIDATOR OF MAHENDRA
       PETROCHEMICALS LTD. (IN LIQUIDATION) AND OTHERS
B                             OCTOBER 08, 2018
                        (Civil Appeal No. 10322 of 2018)
               [RANJAN GOGOI, CJI, NAVIN SINHA AND
                        K.M. JOSEPH, JJ.]
             Securitisation and Reconstruction of Financial Assets and
C
      Enforcement of Securities Interest Act, 2002 – Company Petition
      filed for winding up of one M/s. MPL – M/s. MPL was also referred
      for rehabilitation to the Board for Industrial and Financial
      Reconstruction (BIFR) – During pendency of the same, without
      permission or knowledge of the BIFR, M/s. MPL entered into an
D     MOU with the sister concern of the appellant for leasing out its
      properties to the appellant for 20 years for repayment of its debt –
      Industrial Finance Corporation of India Ltd. (IFCI) was secured
      creditor of M/s. MPL and held first charge over the assets of
      M/s. MPL for outstandings of Rs.160 Crores – After the winding-up
      order, IFCI assigned its dues to the appellant for a sum of
E
      Rs.85 lacs – Appellant filed Company Application for substitution
      in place of IFCI as a secured creditor of M/s. MPL – Company
      Judge rejected the application on 31.07.2015 holding that the
      appellant was neither a Bank/Banking company/financial institution/
      securitization company/reconstruction company and therefore could
F     not be substituted in place of IFCI as secured creditor for the purpose
      of the SARFAESI Act– Challenged by appellant for recall/review of
      said order contending that it never sought the status of a secured
      creditor in lieu of the IFCI but had simply desired to be adjudged a
      transferee from IFCI of an actionable claim u/s.130 of the T.P. Act –
      Held: Appellant in Company Application specifically sought
G
      substitution in place of IFCI as a secured creditor consequent to
      the deed of assignment in its favour from IFCI – After the claim of
      the appellant of being a secured creditor was rejected by the
      Company Judge, and the appellant realised the unsustainability of
      its claim in the law, it made a complete volte face from its earlier
H     stand, contrary to its own pleadings, and contended that it had
                                    906
SUZUKI PARASRAMPURIA SUITINGS P. LTD. v. OFFICIAL LIQUIDATOR             907
            OF MAHENDRA PETROCHEMICALS LTD.


never sought the status of a secured creditor under the SARFAESI         A
Act – A litigant cannot take contradictory stands in the same case –
No merit in the appeal – Transfer of Property Act, 1882 – s.130.
      Practice & Procedure – Inconsistent stands in the same case
– Untenability of – Held: A party cannot be permitted to approbate
and reprobate on the same facts and take inconsistent shifting stands.   B
       Dismissing the appeal, the Court
       HELD: 1.1 That the unregistered MOU was without
permission of the BIFR, it was not disclosed to the Company
Court till the winding-up order was passed on 19.04.2010, the
assignment of debt of Rs.160 crores by IFCI for Rs.85 lacs are           C
admitted facts. The order passed by the Company Judge makes
it very explicit that the appellant in Company Application 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. The submissions made           D
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 Securitisation and
Reconstruction of Financial Assets and Enforcement of Securities
Interest Act, 2002 (SARFAESI Act) and for that purpose sought
to draw sustenance from the provisions of Section 130 of the             E
Transfer of Property Act. [Para 8] [910-G-H; 911-A-B]
      1.2 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         F
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. After the claim of the appellant of being a
secured creditor was rejected by the Company Judge, and the              G
appellant realised 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. [Para 10] [912-D-F]
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908            SUPREME COURT REPORTS                         [2018] 12 S.C.R.


A           1.3 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. No merit is found in
      the appeal. [Paras 12, 14] [913-C, G]
B           Amar Singh v. Union of India (2011) 7 SCC 69 :
            [2011] 6 SCR 403 ; Joint Action Committee of Air Line
            Pilots’ Assn. of India v. DG of Civil Aviation
            (2011) 5 SCC 435 : [2011] 5 SCR 1019 – relied on.


C                              Case Law Reference
              [2011] 6 SCR 403              relied on            Para 12
              [2011] 5 SCR 1019             relied on            Para 13
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 10322
D     of 2018
            From the Judgment and Order dated 02.09.2016 of the High Court
      of Gujarat at Ahmedabad in O.J. Appeal No. 4 of 2016 in Company
      Application No. 248 of 2014 in Company Petition No. 150 of 1996.
            Harin P. Raval, Sr. Adv., Ms. Monisha Handa, Mohit D. Ram,
E     Advs. for the Appellant.
            Deepak Jain, Ms. Jaspreet Aulakh, Ms. Prabhleen Kaur, Tanpreet
      Gulati, Ms. A. Sumathi, Puneet Jain, Ms. Christi Jain, Abhinav Gupta,
      Harsh Jain, Ms. Vineeta, Anip Sachthey, Ms. Anjali Chauhan, Ms. Ria
      Sachthey, Advs for the Respondents.
F           The Judgment of the Court was delivered by
            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
G     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 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.
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SUZUKI PARASRAMPURIA SUITINGS P. LTD. v. OFFICIAL LIQUIDATOR                  909
    OF MAHENDRA PETROCHEMICALS LTD. [NAVIN SINHA, J.]


       3. It is not considered necessary to set out and deal with the         A
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             B
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        C
appellant for 20 years for repayment of its debts. The MOU was also
not brought to the attention of the company court till the winding-up
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
creditors, who had filed original applications against M/s. MPL for           D
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          E
28.07.2010 after the winding-up 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      F
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            G
relief sought for substitution as a secured creditor under the 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
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910             SUPREME COURT REPORTS                          [2018] 12 S.C.R.


A     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.
B
      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
C     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 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
D     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
E     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
F     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 winding-up order was passed
      on 19.04.2010, the assignment of debt of Rs.160 crores by IFCI for
G     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
H     of the relief sought, reliance was also placed on the pursis dated 21.11.2011
SUZUKI PARASRAMPURIA SUITINGS P. LTD. v. OFFICIAL LIQUIDATOR                     911
    OF MAHENDRA PETROCHEMICALS LTD. [NAVIN SINHA, J.]


filed by IFCI in OA No.452 of 2000 before the Debt Recovery Tribunal,            A
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
                                                                                 B
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 we consider it proper to set out the following   C
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        D
       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                E
       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       F
       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          G
       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:                                  H
912            SUPREME COURT REPORTS                            [2018] 12 S.C.R.


A           “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
B
            2000 at Annexure-III.
            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
C           security interests therein vests in the Applicant vis-à-vis 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
D     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
E     such application. After the claim of the appellant of being a secured
      creditor was rejected by the Company Judge, and the appellant realised
      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.
F
             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
G     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:

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SUZUKI PARASRAMPURIA SUITINGS P. LTD. v. OFFICIAL LIQUIDATOR                      913
    OF MAHENDRA PETROCHEMICALS LTD. [NAVIN SINHA, J.]


       “It is also required to be noted that learned advocate for the             A
       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,
                                                                                  B
       that the applicant cannot be substituted as secured creditor and
       permitted to proceed under the provisions of SARFAESI Act.”
       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            C
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                    D
       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:
                                                                                  E
       “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         F
       taking inconsistent stands and prolong proceedings unnecessarily.”
      14. Resultantly we find no merit in the appeal. The appeal is
dismissed.

                                                                                  G
Divya Pandey                                                  Appeal dismissed.




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