Industrial
Investment Bank of India Ltd Vs. Marshal's Power & Telecom (I) Ltd.& Anr
[2006] Insc 761 (8 November 2006)
H.K.
Sema & P.K. Balasubramanyan
(Arising
out of SLP(C) No.2962 of 2005) P.K. BALASUBRAMANYAN, J.
Leave
granted.
Heard
both sides.
1. Defendant
No.1 in C.S. No. 644 of 2003 filed on the Original Side of the High Court of
Madras is the appellant.
The
appeal challenges the grant of an interim injunction by the Division Bench of
the High Court in favour of the plaintiff, respondent No.1 herein, pending the
suit. The suit was filed by the plaintiff for a mandatory injunction
restraining defendants 1 and 2 jointly or severally from taking possession of
or interfering with the use of or exercising any right of lien, charge or from
issuing notice in any form or from creating any kind of disturbance or from
attaching otherwise or raising a claim in respect of certain capacitor banks
systems allegedly supplied by the plaintiff and installed at various
substations of Transmission Corporation for Andhra Pradesh (for short,
'APTRANSCO') and for award of the costs of the suit. In that suit, the
plaintiff filed O.A. No. 806 of 2003 under Order XXXIX Rules 1 and 2 of the
Code of Civil Procedure seeking an interim injunction along the same lines to enure
during the suit. The suit was filed when defendant No. 1 issued a notice to the
plaintiff and defendant No. 2 in the suit seeking repayment of the amounts
advanced by the first defendant to the second defendant, the repayment of which
was secured by hypothecation and charge created by the plaintiff.
2.
According to the plaint, no valid charge or hypothecation was created in favour
of the first defendant and the first defendant was not entitled to claim any
amount as against the plaintiff and was not entitled to enforce the charge or
hypothecation as against the plaintiff.
3. The
trial court granted an ad interim ex parte order of injunction after
entertaining the suit. Meanwhile, the first defendant filed its claim for
recovery of the amounts allegedly due to it from defendants 1 and 2 before the
Debts Recovery Tribunal. The first defendant also appeared in the suit filed by
the plaintiff and in addition to filing an objection to the interim application
for injunction also filed Application No. 4726 of 2003 praying for vacating the
interim order of injunction granted by the court. The first defendant pleaded
that substantial amounts were due to it; that certain assets had been
hypothecated to it and a charge created for securing the loan by the plaintiff
and that the charge and the hypothecation were legally enforceable and there
was no ground for granting an interim order of injunction as sought for. It was
also submitted that the plaintiff had no cause of action for filing such a suit
and it was for the plaintiff to put forward its case or its defence before the
Debts Recovery Tribunal.
4. The
learned single judge after hearing both sides vacated the interim order of
injunction earlier granted.
Thus,
he allowed the application filed by the first defendant for vacating the
injunction and dismissed the application filed by the plaintiff for interim
injunction.
The
learned single judge essentially took the view that since the first defendant
had initiated a proper proceeding for enforcement of its rights before a
Tribunal exclusively competent to deal with such a claim, it was not for the
Civil Court to intervene with an interim order of injunction as sought for by
the plaintiff. The plaintiff filed an appeal before the Division Bench. The
Division Bench of the High Court allowed the appeal taking the view that the
suit in the Civil Court was maintainable and since the suit
was filed earlier, the court was competent to entertain the suit and grant an
interim order of injunction. Without properly considering whether on the facts
and in the circumstances of the case and the nature of the suit filed by the
plaintiff an interim order of injunction was warranted or justified, it granted
an order of injunction presumably as prayed for by the plaintiff but clarifying
that the deed of hypothecation executed on the subject matter in question shall
be in force and the proceedings before the Debts Recovery Tribunal may go on,
but restraining the execution of any order that may be passed by the Debts
Recovery Tribunal. Feeling aggrieved, the first defendant has filed this
appeal.
5. We
think that the Division Bench has not properly adverted to or considered the
question whether in the nature of the pleadings in the case and the nature of
the relief claimed in the suit, an order of injunction as the one granted by it
should be granted. Prima facie, it appears that the plaintiff had executed a
hypothecation and created a charge to secure the loan advanced by the first
defendant to the second defendant. The loan was advanced to enable the second
defendant to fulfil the terms of a contract it had entered into with APTRANSCO.
The
second defendant had sub-contracted a part of the work to the plaintiff. The
first defendant had advanced monies to the second defendant for the work and
the plaintiff had prima facie secured the loan by hypothecation and a charge.
An order has been claimed against the plaintiff before the Debts Recovery
Tribunal in enforcement of its rights by the first defendant. The Division
Bench did not ask itself the question whether it was open to it on the facts
and in the circumstances of the case, to issue an order of injunction
restraining one of the contracting parties from enforcing as against the other
contracting party, the obligations arising out of that contract. The Division
Bench also did not ask itself the question whether the plaintiff had made out a
prima facie case for the grant of what it called an interim mandatory
injunction --- though it appears to us to be a case of prohibitory injunction
--- and whether the balance of convenience is in favour of the grant of an
interim order of injunction. On the facts and in the circumstances of the case,
we are prima facie satisfied that this is not a fit case for exercise of
discretion by the court to grant any interim injunction as sought for by the
plaintiff.
6. We
also find that the Division Bench has clearly acted illegally in purporting to
pass an interim order of injunction restraining the enforcement of any order
that may be passed by the Debts Recovery Tribunal. The Debts Recovery Tribunal
is a special forum created by a special enactment for the purpose of
enforcement of special types of claims arising in favour of financial
institutions. Thus, competent proceedings are instituted before such a Tribunal
by a financial institution seeking to enforce its claimed rights. Whatever defences
the plaintiff herein may have against the claims of the first defendant before
the Debts Recovery Tribunal, have to be put forward by the plaintiff before the
Debts Recovery Tribunal. The mere fact that the plaintiff chose to rush to the
Civil Court on receipt of a notice from the first defendant in an attempt to
thwart the enforcement of the obligations it has allegedly incurred, does not
justify the grant of an interim order of injunction restraining the enforcement
of the rights arising out of an alleged hypothecation and a charge created by
the plaintiff in favour of the first defendant. That apart, to grant an
injunction restraining the enforcement of orders passed by the Tribunal having
jurisdiction to pass such orders cannot normally be granted unless it is a case
of fraud or the existence of some such vitiating factor is established or prima
facie made out. Even then, the order of injunction as now granted could be granted
only in exceptional cases.
7. We
had recently occasion to consider the scope of the raising of a counter claim
before the Debts Recovery Chemicals Ltd. & Anr. [2006 (10) SCALE 150]. It
appears to us that the claims sought to be put forward by the plaintiff in the
present suit is something that is really in the nature of a defence to the
action initiated by the first defendant before the Debts Recovery Tribunal or
which could be put forward by way of a counter claim, if necessary. This aspect
also had to be borne in mind before deciding whether a case for passing of an
interim order of injunction has been made out or not. This aspect has also been
ignored by the Division Bench.
8. In
the result, we allow the appeal and setting aside the order of the Division
Bench, restore the order of the learned single judge dismissing the application
for interim injunction. We make it clear that it is open to the plaintiff to
put forward all its contentions before the Debts Recovery Tribunal and if it is
thought appropriate, to get the suit filed by it transferred to the Debts
Recovery Tribunal to be tried as a cross suit or counter claim against the
claim of the first defendant before the Debts Recovery Tribunal. The first
defendant appellant, would be entitled to its costs in this Court.
Back
Pages: 1 2