Cochin International Airport ... vs Presiding Officer & Others
2011 Latest Caselaw 3205 Del

            THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Judgment delivered on: 08.07.2011

+             R.A. No.198/2010 in W.P. (C) 6531/2008

COCHIN INTERNATIONAL AIRPORT LTD.                           ... Petitioner

                                     Versus

PRESIDING OFFICER & OTHERS                                  ... Respondents

Advocates who appeared in this case:

For the Petitioner : Mr T.R. Andhyarujina, Sr Advocate with Mr S. Sukumar, Mr I.S. Bakshi, Mr Anand Sukumar, Mr Soumich Ghoshal and Mr Bhupesh Pathak For the Respondent No.2 : Mr A.S. Chandhiok, ASG with Mr Atul Sharma, Mr Nilesh Jain and Mr Sandeep Sethi

CORAM:-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MS JUSTICE VEENA BIRBAL

1. Whether Reporters of local papers may be allowed to see the judgment ? Yes

2. To be referred to the Reporters or not ? Yes

3. Whether the judgment should be reported in Digest ? Yes

BADAR DURREZ AHMED, J

1. This review application has been filed by Housing & Urban

Development Corporation Limited (hereinafter referred to as „HUDCO‟),

which was arrayed as respondent No.2 in the Writ Petition (Civil)

No.6531/2008, which had been filed by Cochin International Airport

Limited (hereinafter referred to as „CIAL‟) in which the judgment and /

R. A. 198/10 in W.P.(C) No.6531/08 Page No.1 of 19 or order dated 23.12.2009 was delivered by this Bench. HUDCO seeks a

review of the said judgment dated 23.12.2009 by way of the present

application. HUDCO had filed a special leave petition before the

Supreme Court being SLP (Civil) 3836/2010 seeking special leave to

appeal from the said judgment dated 23.12.2009. However, the said

special leave petition was dismissed by the Supreme Court on 15.02.2010

by a non-speaking order. Notwithstanding the dismissal of the said

special leave petition, HUDCO has filed the present review application

alongwith an application for condonation of delay which has been

condoned by our order dated 07.05.2010.

2. The plea taken by Mr A.S. Chandhiok, the learned Additional

Solicitor General, appearing on behalf of HUDCO, was that the

application (O.A. No.10/2006) filed by HUDCO under Section 19 of the

Recovery of Debts Due to Banks and Financial Institutions Act, 1993

(hereinafter referred to as „the said Act‟) contained three prayers. The

first prayer was with regard to delivery of shares. In the alternative,

recovery of a sum of ` 780 crores representing the value of shares was

sought. The third prayer was for a decree / certificate in favour of

HUDCO and against CIAL for an amount of ` 2,28,64,566/- allegedly

representing the balance amount plus interest and penal interest thereon

R. A. 198/10 in W.P.(C) No.6531/08 Page No.2 of 19 till 28.02.2006 and interest thereon @ 11% per annum with quarterly

rests from 01.01.2006 till the date of payment and additional interest

from 01.03.2008. According to Mr Chandhiok, while the impugned

order decided the issue with regard to the first prayer by holding that debt

as defined in Section 2(g) of the said Act, did not include a claim to share

certificates, the impugned judgment failed to address the aspects covered

by the second and third prayers in the said O.A. 10/2006 and thus there

was a mistake and / or error apparent on the face of the record in

dismissing the entire O.A. No.10/2006 (HUDCO v. Cochin International

Airport Limited) pending before the Debts Recovery Tribunal

(hereinafter referred to as „DRT‟) as being not maintainable. It was

contended that while the impugned decision conclusively dealt with the

issues and aspects covered under prayer (a) of O.A. No.10/2006, prayers

(b) and (c), which were in money terms, had not been considered by this

court inasmuch as the same were not brought to the notice of this court.

It was contended by Mr Chandhiok that prayers (b) and (c) of O.A.

No.10/2006 were independent of prayer (a) which pertained to the

delivery of shares and, therefore, the application (O.A. No.10/2006),

even though it was not maintainable insofar as prayer (a) was concerned,

could be maintained in respect of the remaining prayers, namely, prayers

R. A. 198/10 in W.P.(C) No.6531/08 Page No.3 of 19

(b) and (c). Thus, according to Mr Chandhiok, this was a fit case for

review of the impugned judgment dated 23.12.2009.

3. Mr Chandhiok also submitted that even though the Supreme

Court had dismissed the special leave petition filed by HUDCO against

the impugned judgment dated 23.12.2009, the present review petition

was permissible and maintainable provided the grounds for review are

made out. He submitted that the dismissal of the special leave petition by

the Supreme Court did not amount to a merger of the judgment of this

court dated 23.12.2009 with the order of dismissal of the Supreme Court

dated 15.02.2010. Consequently, he submitted that notwithstanding the

dismissal of the special leave petition by the Supreme Court, it is

permissible for this court to entertain the present review petition. In

support of this contention, Mr Chandhiok referred to the following two

decisions of the Supreme Court:-

i) V.M. Salgaocar and Bros Pvt Ltd v. Commissioner of Income-tax: 2000 (5) SCC 373;

ii) Kunhayammed & Ors v. State of Kerala & Anr: 2000 (6) SCC 359.

4. Mr Chandhiok then referred to paragraphs 49 and 50 of the

judgment dated 23.12.2009 which read as under:-

"49. So, while "debt" has to be considered in its widest amplitude, it cannot transcend the boundaries R. A. 198/10 in W.P.(C) No.6531/08 Page No.4 of 19 specified in section 2(g) itself. The said section describes "debt" as any "liability" etc.,. We have seen that shares cannot be considered as liabilities. Therefore, a claim to issuance of shares or delivery of shares cannot be regarded as an action seeking the recovery of a "debt" as defined in section 2(g) of the said Act.

50. Recapitulating the facts of the present case, we find that a sum of Rs 175.07 crores was admittedly due from the petitioner to HUDCO as on 31.12.2002. Part of this "debt" was re-worked and re-scheduled as a Package Loan by virtue of the Package Loan Agreement of 07.03.2003. The balance, a sum of Rs 52 crores was agreed to be converted into equity, representing 26% of the equity of the petitioner. Thus, if the agreement were to be worked through, "debt" to the extent of Rs 52 crores would stand converted into equity. It would, then, no longer remain "debt". But, as the shares have not been issued / delivered, HUDCO filed the OA seeking, inter alia, the issuance / delivery of the shares. HUDCO can either have a claim to the "debt" or to the shares, not to both. If they insist on maintaining their claim for shares then their claim would not be a claim for recovery of a "debt" but, would be one seeking performance of a contractual obligation. Their remedy would, therefore, lie elsewhere and, not before the Debts Recovery Tribunal."

5. Referring to the said paragraphs, Mr Chandhiok submitted

that it is clear that a claim to issuance of shares or delivery of shares

cannot be regarded as an action seeking the recovery of "a debt" as

defined in Section 2 (g) of the said Act. He submitted that in the present

review application that part of the decision is not under challenge. He

further submitted that in paragraph 50 of the said judgment dated

R. A. 198/10 in W.P.(C) No.6531/08 Page No.5 of 19 23.12.2009 itself, it has been mentioned that "HUDCO" can either have a

claim to the "debt" or to the "shares", not to both. He, therefore,

contended that once the claim to the shares has been held to be outside

the purview of "debt" as appearing in Section 2(g) of the said Act, the

application filed on behalf of HUDCO before the DRT could be

considered de hors the prayer in respect of shares. He further submitted

that, therefore, the application before the DRT ought not to have been

thrown out log, stock and barrel as being not maintainable.

6. Mr Andhyarujina, the learned senior counsel appearing on

behalf of CIAL, submitted that the arguments raised by Mr Chandhiok

were clearly untenable. He submitted that prayer (b) of O.A. No.10/2006

filed by HUDCO before the DRT was not independent of prayer (a). He

submitted that while prayer (a) sought delivery of 520 lakh shares of ` 10

each, prayer (b), in the alternative, sought a decree / certificate to the tune

of ` 780 crores being the value of the said 520 lakh shares calculated @

150 per share as on 31.01.2006 plus dividend or any other right from the

date of issue alongwith interest at the rate of State Bank of India Prime

Landing Rate with quarterly rests. Clearly, according to Mr

Andhyarujina, prayer (b) was not independent of prayer (a) and was

compensation in substitution of the alleged non-delivery of shares

R. A. 198/10 in W.P.(C) No.6531/08 Page No.6 of 19 claimed under prayer (a). Thus, according to him, prayer (b) was just

another face of prayer (a) and that, by virtue of prayer (b), HUDCO was

asking for nothing but the market value of the shares which it had sought

delivery of in prayer (a).

7. Mr Andhyarujina further submitted that insofar as prayer (c) is

concerned, the claim was for an amount of ` 2,28,64,566/- representing

the balance amount plus interest. He submitted that the petitioner, as

would be apparent from paragraph 8 of the judgment dated 23.12.2009,

had already deposited with the DRT a sum of ` 73 crores which had

represented the entire balance plus interest upto 27.06.2006 and,

therefore, the entire liability of CIAL towards HUDCO stood totally

discharged.

8. Mr Andhyarujina also took the plea that it was not fair on the

part of HUDCO to have filed the present review application when these

very pleas had been taken before the Supreme Court by HUDCO and,

particularly, in grounds IX and XII of the special leave petition filed by

it. Mr Andhyarujina also referred to the affidavit dated 28.05.2010

affirmed by Mr R. Venkiteswaran, who is the Executive Director

(Finance) and Company Secretary of CIAL. In the said affidavit, it has

been stated in paragraph 3, that in SLP No.3836/2010, HUDCO had R. A. 198/10 in W.P.(C) No.6531/08 Page No.7 of 19 contended that prayer 6(b) and (c) of O.A. No.10/2006 before the DRT

could not be excluded from the jurisdiction of the DRT and that the fact

that HUDCO had raised this contention, was evident from the various

paragraphs of the special leave petition and, particularly paragraphs (ix)

and (xii) and ground IX thereof. It was also stated in paragraph 3 of the

said affidavit that this contention was specifically raised and argued by

the counsel for the applicant at the time of admission of the special leave

petition and that the deponent was present in the Supreme Court when

the special leave petition was argued. It was contended by Mr

Andhyarujina that in the rejoinder affidavit filed on behalf of CIAL, it

has been admitted that HUDCO in its special leave petition had, inter

alia, contended that prayers 6 (b) and (c) of O.A. No.10/2006 before the

DRT could not be excluded from the jurisdiction of the DRT. HUDCO

has also not specifically denied the statement made by the said Mr

Venkiteswaran that the contention had been specifically raised and

argued by the counsel for HUDCO at the time of admission of the special

leave petition. Thus, it was contended by Mr Andhyarujina that not only

is the review petition without any merit, but that once such arguments

had been raised before the Supreme Court and the special leave petition

was dismissed, it was not fair on the part of HUDCO to have filed the

present review petition. In any event, it was submitted that there is no R. A. 198/10 in W.P.(C) No.6531/08 Page No.8 of 19 mistake or error apparent on the face of the record or existence of any

other sufficient reason for review of the judgment dated 23.12.2009 and,

consequently, the review application ought to be dismissed with costs.

9. The first issue which arises is - whether a review is

permissible after the dismissal of a special leave petition by the Supreme

Court ? Insofar as this aspect is concerned, although such a practice may

be distasteful leading to multiplicity of proceedings, it is not strictly

impermissible in law. The decisions relied upon by Mr Chandhiok [V.M.

Salgaocar and Bros (supra) and Kunhayammed & Ors (supra)] are

clear on this aspect of the matter. The logic is that the exercise of

jurisdiction conferred on the Supreme Court by Article 136 of the

Constitution of India consists of two steps - (1) granting special leave to

appeal; and (2) hearing the appeal. While hearing the petition for special

leave to appeal, as observed in Kunhayammed & Ors (supra), the

Supreme Court is called upon to see whether leave is to be granted or not

and, in doing so, the Supreme Court does not exercise its appellate

jurisdiction, but it merely exercises its discretionary jurisdiction to grant

or not to grant leave to appeal. A dismissal of the special leave petition

is merely an expression of opinion by the Supreme Court that a case for

invoking the appellate jurisdiction of the Supreme Court was not made

R. A. 198/10 in W.P.(C) No.6531/08 Page No.9 of 19 out. Therefore, the order of the High Court, which is impugned before

the Supreme Court in the special leave petition, in such a case, does not

merge with the in limine order of dismissal passed by the Supreme Court

at the stage of admission of the special leave petition. In V.M. Salgaocar

& Bros (supra), the Supreme Court held that the doctrine of merger does

not apply in the case of the dismissal of the special leave petition under

Article 136 of the Constitution of India. This was re-affirmed in

Kunhayammed & Ors (supra). In the latter decision, it was also

conclusively held as under:-

"34. The doctrine of merger and the right of review are concepts which are closely interlinked. If the judgment of the High Court has come up to this Court by way of a special leave, and special leave is granted and the appeal is disposed of with or without reasons, by affirmance or otherwise, the judgment of the High Court merges with that of this Court. In that event, it is not permissible to move the High Court by review because the judgment of the High Court has merged with the judgment of this Court. But where the special leave petition is dismissed - there being no merger, the aggrieved party is not deprived of any statutory right of review, if it was available and he can pursue it. It may be that the review court may interfere, or it may not interfere depending upon the law and principles applicable to interference in the review. But the High Court, if it exercises a power of review or deals with a review application on merits - in a case where the High Court's order had not merged with an order passed by this Court after grant of special leave - the High Court could not, in law, be said to be wrong in exercising statutory jurisdiction or power vested in it."

R. A. 198/10 in W.P.(C) No.6531/08 Page No.10 of 19

10. Thus, we agree with Mr Chandhiok that notwithstanding the

dismissal of HUDCO‟s special leave petition on 15.02.2010 by the

Supreme Court, it is permissible for this court to entertain the present

review application and that there is no bar in doing so.

11. This takes us to the next aspect and that is - whether HUDCO

has made out a case for review or not ? It is obvious that the judgment

would be reviewed only if HUDCO is able to point out some mistake or

error apparent on the face of record or if there exists any other sufficient

reason for reviewing the same. For this purpose, it would be necessary to

set down the factual backdrop. In O.A. No.10/2006 filed under Section

19 of the said Act, HUDCO, inter alia, claimed the following reliefs:-

"a) To direct the defendant No.1 to deliver/issue share certificates of 520,00,000 shares of Rs. 10/- each (equivalent to 26% equity of the authorized capital of the defendant No.1 company) alongwith all other benefits accrued out of such shares since the said agreement for which the entire agreed consideration of Rs. 52 crores has been paid to the defendant No.1 company as on 31.12.2002 as per the Package Loan Agreement dated 07.03.2003;

b) In alternative to pass a decree/certificate to the tune of Rs.780,00,00,000 (Rupees Seven Hundred and Eighty Crores Only) being the value of 520,00,000 shares (being 26% of the equity in defendant No.1) @ Rs.150/- as on 31.01.2006 plus dividend or any other right from the date of issue along with interest at the rate of SBI PLR with quarterly rest against the defendants;

R. A. 198/10 in W.P.(C) No.6531/08 Page No.11 of 19

c) Pass a decree/certificate in favour of the applicant and against the defendant No.1 for an amount of Rs.2,28,64,566/- (Rupees Two Crores Twenty Eight Lakh Sixty Four Thousand Five Hundred and Sixty Six only) (being the balance amount plus interest and penal interest thereon till 28.02.2006) and interest thereon @ 11% p.a. with quarterly rests from 01.03.2006 till the date of payment and additional interest from 01.03.2006."

12. CIAL had filed an application being I.A. No.458/2006 in the

said O.A. No.10/2006 before the DRT, wherein it had taken the

following pleas:-

"(a) the DRT at Delhi lacked territorial jurisdiction;

(b) no cause of action had accrued to the respondent inasmuch as the entire loan amount stood paid on account of exercise of the right of foreclosure; and

(c) the application under Section 19 of the said Act for delivery of shares was not maintainable inasmuch as the said relief did not amount to recovery of a debt as defined in Section 2(g) of the said Act."

13. It was also contended on the part of CIAL that HUDCO only

had the right of recovery of a sum of ` 175.07 crores as per the Package

Loan Agreement of 07.03.2003 between the parties and since CIAL had

tendered the entire balance due on account of the loan transaction, the

respondent had no subsisting right under the loan agreement. The

application filed by CIAL was dismissed by the DRT by virtue of its

R. A. 198/10 in W.P.(C) No.6531/08 Page No.12 of 19 order dated 12.02.2008. The contentions raised by CIAL with regard to

territorial jurisdiction, the cause of action and maintainability were

rejected. Being aggrieved by the said order dated 12.02.2008, CIAL

filed the said writ petition [WP(C) 6531/2008] in which the main ground

urged was with regard to the scope and meaning of the word "debt" as

defined in Section 2(g) of the said Act. The detailed facts, which

surround the Package Loan Agreement dated 07.03.2003, are set out in

the judgment dated 23.12.2009 and need not be repeated herein. It would

be sufficient to note that the rights and liabilities of HUDCO and CIAL

got crystallized in the said Package Loan Agreement of 07.03.2003. It

was an admitted position that as on 31.12.2002, a sum of ` 175.07 crores

was outstanding towards HUDCO. It was agreed that the said

outstanding amount would be converted into a package loan for ` 175.07

crores with interest at 11% per annum to be repaid from the quarter

ending 31.03.2003 till 30.06.2011 in 34 quarterly installments. The first

installment was of ` 70 crores and fell due on 31.03.2003. The other 33

installments were of ` 318.04 lakhs each. After the execution of the

Package Loan Agreement, CIAL remitted an amount of ` 120 crores to

HUDCO in March 2003 itself which represented the payment of the first

installment of ` 70 crores as also the value of the next 16 quarterly

installments of ` 3.184 crores each. In other words, by the payment of ` R. A. 198/10 in W.P.(C) No.6531/08 Page No.13 of 19 120 crores, in March 2003 itself, the package loan of ` 175.07 crores

stood repaid upto the 17 th installment, which, as per the repayment

schedule was payable only by 31.03.2007. According to CIAL, as per

clause 3 of the Package Loan Agreement, a sum of ` 52 crores had been

earmarked by it towards the proposed equity participation by HUDCO in

the share capital of CIAL. In this manner, according to CIAL, as on

March 2003 itself, only an amount of ` 3.07 crores was outstanding

towards the total dues of a sum of ` 175.07 crores and was chargeable to

interest @ 11% in terms of the said agreement.

14. According to CIAL, because HUDCO failed to comply with

the statutory requirement with regard to obtaining the requisite

permission and clearance from the Government and the Governmental

agencies, by a letter dated 16.09.2004 it informed HUDCO that the offer

of the petitioner for conversion of part of loan amount to the extent of `

52 crores into equity stood withdrawn. Consequently, CIAL tendered an

amount of ` 63,49,00,508 to HUDCO in the following manner:-

"1) Demand Draft No. 112472 dated 16.09.2004 for Rs 30,00,00,000/- drawn on the Union Bank of India, Service Branch, New Delhi;

2) Cheque No. 425111 dated 16.09.2004 for Rs 33,49,00,508/- drawn on Punjab National Bank."

R. A. 198/10 in W.P.(C) No.6531/08 Page No.14 of 19

15. The said amount of Rs 63,49,00,508/- was towards settlement

of the outstanding loan with interest. HUDCO, however, declined to

accept the same and returned the said draft and cheque by their letter

dated 23.09.2004. According to CIAL, on tendering the total amount of

` 63,49,00,508/- by CIAL on 16.09.2004, the entire liability of CIAL

towards HUDCO stood discharged, although the petitioner had ample

time upto June, 2001 to repay the entire outstanding loan in terms of the

Package Loan Agreement and, thus, CIAL had time, in exercise of its

right to foreclose the loan in terms of clause 12 of the Package Loan

Agreement.

16. It is in this backdrop that HUDCO filed the petition under

Section 19 of the said Act before the DRT claiming, inter alia, delivery /

issuance of share certificates in respect of 520 lakh shares in CIAL. It

may also be relevant to note that during the pendency of the application

filed by CIAL being I.A. No.458/2006 before the DRT, CIAL had

deposited an amount of ` 73,31,49,763/- through a demand draft bearing

No.383217 dated 23.06.2006 before the DRT representing the entire

balance amount (inclusive of the said amount of ` 52 crores) plus interest

upto 27.06.2006.

R. A. 198/10 in W.P.(C) No.6531/08 Page No.15 of 19

17. In the first instance, HUDCO, in prayer (a) of O.A.

No.10/2006 had sought the delivery / issuance of 520 lakh shares.

Insofar as that prayer is concerned, the judgment dated 23.12.2009 makes

it clear that it does not fall within the purview of "debt" as appearing in

Section 2(g) of the said Act and, therefore, the HUDCO‟s application to

that extent was clearly not maintainable. In the alternative, HUDCO in

para (b) of the said O.A. No.10/2006 had sought a decree / certificate to

the extent of ` 780 crores representing the value of the said 520 lakh

shares plus dividends etc. It is obvious that this alternative prayer is

nothing but the other side of the coin. This alternative prayer seeking `

780 crores is merely the alleged money value of the 520 lakhs shares.

When HUDCO cannot have a claim to the shares in proceedings under

the said Act, it cannot also have a claim to the money value of the shares

in the same proceedings. As pointed out in the judgment dated

23.12.2009, HUDCO has already been granted liberty to pursue its

remedy with regard to shares / their money value for alleged breach of

contract / obligation before the appropriate forum in accordance with

law. Both the prayers (a) and (b) go together. It is obvious that prayer

(b) has reference to the shares which are mentioned in prayer (a) and,

therefore, prayer (b) cannot be divorced from prayer (a). Consequently,

the plea taken by Mr Chandhiok on behalf of HUDCO that prayer (b) is R. A. 198/10 in W.P.(C) No.6531/08 Page No.16 of 19 independent of prayer (a) and can be maintained even though prayer (a)

is not maintainable before the DRT in debts recovery proceedings under

the said Act, is not tenable.

18. Insofar as prayer (c) is concerned, that, once again, represents

"the balance amount". This also is not an independent prayer and is

dependent on the result of prayers (a) and (b). By its very nature, it

represents „a balance amount‟ and, therefore, has a connection with the

amounts claimed under prayers (a) and (b). Therefore, we do not agree

with the submission of Mr Chandhiok that the prayers (b) and (c) are

distinct and independent from prayer (a). When Mr Chandhiok referred

to paragraphs 49 and 50 of the said judgment dated 23.12.2009, in order

to advance his point that even this court recognized that HUDCO could

either have a claim to the „debt‟ or to the „shares‟ and not to both, what

Mr Chandhiok was submitting was that since this court had taken the

view that the claim to the shares was not maintainable before the DRT, at

least the claim to the debt would have been maintainable and, therefore,

the entire O.A. No.10/2006 ought not to have been thrown out and ought

to have been continued insofar as prayers (b) and (c) were concerned,

because they were in money terms. This argument may, at first blush,

appear to be very attractive, but on deeper consideration, it has a flaw

R. A. 198/10 in W.P.(C) No.6531/08 Page No.17 of 19 and, that is, that HUDCO has not given up its claim to the shares, neither

in the original writ petition nor in the review application. Without giving

up its claim to the shares, it cannot maintain its claim to an alleged „debt‟

separately.

19. There is also another reason as to why review of the impugned

judgment dated 23.12.2009 is not called for in the present case. The

main point urged before us at the time of the arguments of the writ

petition was, as noted in paragraph 1 of the judgment dated 23.12.2009

itself, as to whether "debt" as defined in Section 2(g) of the said Act

would include a claim to share certificates. Even in its written arguments

filed before us, the plea with regard to prayers (b) and (c) had not been

stressed upon. Once a decision has gone against HUDCO on the main

plea of delivery of shares not being covered within the expression "debt"

as appearing in Section 2(g) of the said Act, it appears to us that HUDCO

is making a last ditch effort by way of this review application to save its

O.A. No.10/2006, which has been held by us to be not maintainable.

Unfortunately for HUDCO, no mistake or error apparent on the face of

the record has been pointed out insofar as the judgment dated 23.12.2009

is concerned. Nor have they been able to show any other sufficient

reason for us to review the judgment dated 23.12.2009.

R. A. 198/10 in W.P.(C) No.6531/08 Page No.18 of 19

20. For all these reasons, the review application is dismissed with

costs in favour of CIAL and against HUDCO.

BADAR DURREZ AHMED, J

VEENA BIRBAL, J

JULY 08, 2011 dutt

R. A. 198/10 in W.P.(C) No.6531/08 Page No.19 of 19