Coronation Infrastructure Pvt. ... vs Srei Equipment Finance Limited
2023 Latest Caselaw 830 Cal/2

                                                                               1

                        IN THE HIGH COURT AT CALCUTTA

                         CIVIL APPELLATE JURISDICTION

                                      ORIGINAL SIDE

                                  (Commercial Division)

  Present:

  THE HON'BLE JUSTICE HARISH TANDON
           &
  THE HON'BLE JUSTICE SHAMPA DUTT (PAUL)

                                       APOT 135 of 2022
                                            with
                                        AP 371 of 2021
                                        IA GA 1 of 2022

                         Coronation Infrastructure Pvt. Ltd. & Ors.

                                       Vs.
                           SREI Equipment Finance Limited

  Appearance:

  For the Petitioner          :       Mr. Surajit Nath Mitra, Sr. Adv.
                                       Mr. Rupak Ghosh, Adv.
                                       Mr. Vivek Basu, Adv.
                                       Mr. Arnab Sardar, Adv.


  For the Respondent              :    Mr. Swatarup Banerjee, Adv.

Mr. Paritosh Sinha, Adv.

Mr. Saubhik Choudhury, Adv.

   Judgment On                :        30.03.2023



  Harish Tandon, J.:

The defaulting litigant has filed the instant appeal assailing an order

dated 18th July, 2022 passed by the Single Bench appointing receiver with the

APOT 135/22

direction to immediately take possession of the assets, make an inventory and

file report on the returnable date. Simultaneously, the Single Bench rejected

the application being IA no GA 1 of 2021 holding that the security so offered by

the appellant cannot be accepted or extended to the loans being the subject

matter of the instant litigation.

The facts unfurled would reveal that the Appellant no. 1 being a mining

contractor entered into several loan agreements with the respondents for

acquiring diverse machines required for mining purposes. The aforesaid loan

agreements involved schedule of payments by way of the installments on

monthly basis keeping those assets /machines mortgaged in order to secure

the loan amount. Admittedly, there is a default in making the payment in

terms of the aforesaid loan agreements and a notice was issued by the

respondent to cancel the aforesaid agreements by recalling the entire loan and

calling upon the appellants to clear entire balance amounts within a stipulated

time.

The genesis of the disputes arose from the aforesaid act of the

respondents in recalling the loan and demanding the entire dues and the

proceedings were initiated to protect the assets and the properties mortgaged

with the respondent. Undisputedly, a sum of Rs. 6 crores have been deposited

by the appellant in terms of the various orders passed in the proceedings and

despite several opportunities having been given no further amount could be

deposited to show the bona fide. The aforesaid observations would be fructified

from the stand of the appellant in the various applications filed in the litigation

APOT 135/22

and the order passed therein. However, the appellant took a stand that

immoveable property situated at Mehrauli, Tehsil Mehrauli, New Delhi,

comprising of 1.70 acres can be taken as a security or mortgage in connection

with the aforesaid agreements to secure and protect the interest of the

respondent and, therefore, the assets being the subject matter of the instant

loan agreements should not be taken physical possession by the receiver as it

would impede the mining activities and the functioning of the appellants.

Initially an order was passed on 18th November, 2021 by the Single

Bench directing the receiver to take physical possession of the subject assets

which was assailed by the appellant in APOT 199 of 2021. It was contended by

the appellant that there is no intention to deprive the respondent of their dues

and the immoveable property which is valued at more than 60 crores is

sufficient enough to stand as a security for the claim of the respondent and,

therefore, there is no necessity of appointing the receiver and taking physical

possession thereof in respect of the assets covered under the said loan

agreements. The said appeal came up on 14th December, 2021 and disposed of

with the categorical observation that whether the said immoveable property is

sufficient or not to stand as a security cannot be gone into by the Appellate

Court in absence of sufficient evidence and an opportunity was given to the

appellant to take out an appropriate application offering the security for the

dues towards the respondent and in the event the said application is taken out

the same would be decided on merit including the question whether the

receiver should be directed to take the actual physical possession or not. It was

APOT 135/22

further clarified that in absence of any order to the contrary the receiver will

take physical possession of the assets as directed by the Single Bench after

14th December, 2021.

Pursuant to the aforesaid leave having granted by the Division Bench the

appellant took out an application for mortgaging the said Meherauli property as

security towards the subject loans upon recalling the order appointing receiver

and the receiver may be directed to return the assets if already taken in

possession thereof. By the impugned order the aforesaid application is

dismissed and the instant appeal has been filed against the said order.

It is contended by the learned Advocate for the appellant that the

immoveable property worth more than 60 crores has been offered by the

appellant as security towards the dues and, therefore, there is no necessity of

appointing the receiver and taking possession of the assets being the subject

matter of the instant litigation. The Single Bench dismissed the said

application on the score that the said Meherauli property had already been

mortgaged under the other loan agreements and, therefore, such mortgaged

property cannot be permitted to be remortgaged or extended to cover the loan

amounts under the subject loan agreements. The Single Bench further found

that several opportunities were given to the appellant to make a lumpsum

payment of the dues that had fallen due yet no efforts have been shown in this

regard and the security of the said immoveable property does not appear to be

unencumbered.

APOT 135/22

The concept of creating a mortgage of a property is to secure the loan

amount and a speedy recovery thereof in the event any default has occurred. It

is intended to satisfy the wisdom of the commercial entities that the money

advanced as a loan is sufficiently secured in the event any default occurred

and capable of being realized from the mortgaged property. The value of the

property may be one of the factors for the satisfaction of the lender that the

money is secured and capable of being reimbursed. The moment the parties

have consciously taken a decision to create a mortgage of an immoveable

property towards securing the loan amount even if the value of the property is

more than the amount advanced as a loan, it is not open to the borrower to

extend the mortgage property to be included in other loan agreements as it

fetches more value than the loan amount for which the mortgage was created.

The commercial wisdom is paramount and if the parties have

consciously taken a decision and mortgaged the immoveable property to secure

the loan amount under different loan agreements unless it is shown that the

said agreements have been duly complied with and the loan amount has been

disbursed resulting into a release of the mortgage, the Court cannot compel the

contracting parties to accept the said mortgaged property to be remortgaged or

extended to an other loan agreement. There is no evidence forthcoming that the

loan agreements wherein the said immoveable property has been mortgaged

have been duly satisfied upon payment of the entire amount in terms of the

aforesaid loan agreements. The Court cannot rewrite an agreement nor can

create a contract for the parties but must travel within the circumference of the

APOT 135/22

contract and the terms and conditions mentioned therein being the subject

matter of the litigation.

Undeniably, the Meherauli property is not free from any encumbrances

as its is mortgaged with the respondent towards the security of the loan

amount covered under the several other loan agreements and, therefore,

cannot be said to be unencumbered. Admittedly there is a default committed

by the appellant and the assets covered in the subject loan agreements is the

only security available to the appellant and, therefore, we do not find any

infirmity in the order of the Trial Court in appointing the receiver and directing

the same to be taken possession of.

The appeal is thus dismissed.

The connected applications are also dismissed.

No costs.

Urgent Photostat certified copies of this judgment, if applied for, be made

available to the parties subject to compliance with requisite formalities.

  I agree.                                                  (Harish Tandon, J.)



(Shampa Dutt (Paul), J.)




                                                                        APOT 135/22