Apricorn Oils Ltd. Vs Om Prakash Agarwal

I.P. Mukerji, J.@mdashThis is the third interim application taken out by the plaintiff in this suit. It challenges a sale notice dated 27th February, 2014 published by Canara Bank. It is issued under Rules 8(6) and (9) of the Security Interest (Enforcement) Rules 2002. It proposes to sell the properties mentioned in column F thereof being a parcel of land in Burdwan. The name of the borrower is mentioned in the notice as M/s. Capricorn Oils Ltd. of 20 N.S. Road, 2nd floor, Kolkata. One clause in the notice is very important. It states as follows:-

"In view of order dated 10th January, 2014 passed by the Hon''ble High Court, Calcutta and without prejudice, the bank''s right to recover its dues in respect of the credit facilities granted to Capricorn Oils Limited subsequent to 25.11.2009 with further interest accrued thereon till realization is not included in this notice."

The liability of the borrower is stated to be Rs. 2,65,25,263.57. Interest is claimed till 25th November, 2009 together with "unapplied interest with effect from 26th November, 2009".

2. At the outset, Mr. Ajoy Krishna Chatterjee, learned senior counsel appearing for the bank, takes the point of maintainability. He argues that the suit is completely barred u/s 34 of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SICA). He cites Jagdish Singh v. Heeralal and Others in a judgment of the Hon''ble Supreme Court reported in Jagdish Singh Vs. Heeralal and Others, I quote a passage from that judgment--"We are of the view that the civil court jurisdiction is completely barred, so far as the ''measure'' taken by a secured creditor under sub-section (4) of section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal, to determine as to whether there has been any illegality in the ''measures'' taken. The bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of respondents Nos. 6 to 8 have been crystalised, before creating security interest in respect of the secured assets. In such circumstances, we are of the view that the High Court was in error in holding that only civil court has jurisdiction to examine as to whether the ''measures'' taken by the secured creditor under sub-section (4) of section 13 of the Securitisation Act were legal or not. In such circumstances, the appeal is allowed and the judgment of the High Court is set aside. There shall be no order as to costs."

3. Mr. Chatterjee also cited another judgment Shiv Kumar Chadha and Others Vs. Municipal Corporation of Delhi and Others, a Axis Bank Ltd. Vs. MPS Greenery Developers Ltd., Sri Athmanathaswami Devasthanam Vs. K. Gopalaswami Aiyangar, Calcutta Cosmopolitan Club Ltd. Vs. Bhanwarlal Bhandari and Others, and T.K. Lathika Vs. Seth Karsandas Jamnadas, These judgments hold that a point of maintainability which of course covers jurisdiction has to be decided by the court, at the threshold with reasons and only if the Court prima facie comes to the conclusion that the suit is maintainable, it can pass interim orders.

4. A substantial question has been raised by Mr. Chatterjee but I am not called upon in this application to answer the question. This is for the simple reason that in the earlier interim applications, entertained by this court, it was open for the bank to make submissions about dismissal of the suit on the ground that this Court did not have jurisdiction, but there is nothing on record, in the orders or otherwise to show that this point was even raised in Court. The principles of constructive res judicata, applies at the interim stage also. If a point was available and not taken, it is deemed to be refused in the order. This is the principle of constructive res judicata. I would apply this principle at this stage. Although I refuse to entertain the point now, it is open for the bank to take this point at an appropriate stage.

5. Now, I come to the merits of the matter.

6. It appears from the submissions made before me that the question of creating a charge or mortgage of the above immovable property was the subject matter of a litigation before the Company Law Board. It passed an interim order on 8th May, 2007 directing status quo to be maintained with regard to, inter alia, the above property. The Board passed its final order on 30th October, 2009 vacating that interim order. On an appeal to this Court u/s 10F of the Companies Act 1956, this Court by an interim order dated 25th November, 2009 restored the above interim order. But this order of 25th November, 2009 clearly stated that the status quo as on the date of that order was to be maintained.

7. It is alleged on behalf of the plaintiff that certain third parties who took control of the company and availed of further credit facilities by the bank by creating an additional charge in May and August, 2010. Therefore, in view of the interim order, they were bad. Thus, the impugned notice, was bad, as it is based on that charge.

8. Reference may be made to the order of Patherya, J. in an earlier interim application, passed on 1st July, 2013. Her ladyship opined that the charge which had been created in violation of the said interim order directing maintain of status quo was to be treated as invalid.

9. From this order bank preferred an appeal before a Division Bench of this High Court which disposed of the appeal on 10th January 2014. The following part of the order of the Hon''ble Division Bench is most important:-

"We clarify, the order of injunction must not create any impediment for the bank to proceed in respect of their claims covered by the said notices to the limit of the mortgage as on the date of the order of injunction. The judgment and order stands modified.

The appeal and applications are disposed of, after treating the same as on day''s list, without any order as to costs."

10. It is also significant that Mr. Chatterjee''s submission was noted by the Hon''ble Court: that the mortgage was created in 2004. On 18th March, 2014 the said order was clarified on a review application. The order simply mentioned that the order of injunction was passed by the Company Law Board on 8th May, 2007 and that the High Court continued the same in appeal by an order passed on 25th November, 2009.

11. An interpretation is put to this order by learned counsel for the plaintiff as if the order of injunction operated from 8th May, 2007 right upto 25th November, 2009 and thereafter continued by this Court. Or the Hon''ble Appeal Court while reviewing its order had given the order of 25th May, 2009 retrospective effect, by implication. I do not accept this submission. The records clearly show that the order of injunction dated 8th May, 2007 was vacated at the time of final disposal of the Company Law Board petition on 30th October, 2009. It was only reinstated with prospective effect from 25th November, 2009. Furthermore, it is sought to be submitted that the charge was not created in 2004 as recorded in the order of the Hon''ble Appeal Court but was created in May and August, 2010.

12. At the time of seeking review of the order of the Appeal Court dated 10th January 2014 it was open for the plaintiff to seek clarification of this point also. But they chose not to do it. The language and intent of the order of the Hon''ble Appeal Court suggest that the mortgage was created in 2004.

13. On the basis of my findings as above, I do not find any infirmity in the sale notice issued by the bank. I hold that this sale notice has been issued according to the said orders of the Hon''ble Appeal Court.

14. No affidavits are invited since all the relevant papers are before the Court. There is no merit in this interim application.

15. This application is dismissed. As affidavits were not invited, the allegations contained in the petition are deemed not be admitted.

Urgent certified photocopy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.