Madras High Court
R.Ravinderkumar vs M/S.Indostar Capital Finance on 8 March, 2021
OSA.No.131 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : Delivered on :
24.3.2021 29/3/2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Original Side Appeal No.131 of 2021 & CMP.No.5926 of 2021
R.Ravinderkumar, rep.by his
power of attorney R.Nihhaal ...Appellant
Vs
1.M/s.Indostar Capital Finance
Ltd., having regd. Office at
One Indiabulls Centre, 20th
Floor, Senapati Bapat Marg,
Mumbai-13 and
Branch office
at Nos.22 & 23, 2nd Floor,
Sakithyan Annex Building,
Venkatnarayana Road,
T.Nagar, Chennai-17 rep.by
its Authorized Officer
2.Mrs.K.Ponnammal
3.Mr.A.P.Ravi
4.Mrs.R.Manju ...Respondents
1/15
http://www.judis.nic.in
OSA.No.131 of 2021
APPEAL under Order XXXVI Rule 1 of the Original Side Rules
read with Clause 15 of the Letters Patent and under Section 13 of the
Commercial Courts Act, 2015 against the order dated 08.3.2021
made in Appln.No.653 of 2021 in C.S.(Comm.Div.) No.733 of 2019.
For Appellant: Mr.Mukund Rao for
M/s.Eswar Kumar & Rao
JUDGMENT
T.S.SIVAGNANAM,J
This appeal filed by the plaintiff in C.S.(Comm.Div.)No.733 of
2019 is directed the order dated 08.3.2021 in A.No.653 of 2021 in
C.S.(Comm.Div.) No.733 of 2019.
2. We have elaborately heard Mr.Mukund Rao, learned counsel
appearing for M/s.Eswar, Kumar and Rao, learned counsel on record
for the appellant.
3. The appellant filed the said suit in December 2019 against
respondents 2 to 4 herein seeking judgment and decree
(i) directing the defendants to jointly and severally pay the
plaintiff a sum of Rs.1,28,84,072/- along with further interest at the
rate of 2.70% per month on Rs.80,00,000/- from the date of filing the
http://www.judis.nic.in
OSA.No.131 of 2021
suit until the actual date of realization;
(ii) directing the defendants to jointly and severally pay the
plaintiff a sum of Rs.90,80,880/- along with further Interest at 2.70%
per month on Rs.50,00,000/- from the date of filing the suit until the
actual date of realization;
(iii) directing the defendants to jointly and severally pay the
plaintiff a sum of Rs.1,39,09,077/- along with further interest at the
rate of 2.90% per month on Rs.1,05,00,000/- from the date of filing
the suit until the actual date of realization;
(iv) directing the defendants to jointly and severally pay
damages to the plaintiff a sum of Rs.25,00,000/- along with further
interest at the rate of 2.70% per month from the date of filing the
suit until the actual date of realization; and
(v) directing the defendant to pay costs of the suit.
4. In the said suit, the appellant/plaintiff filed two applications
namely (i) O.A.No.1171 of 2019 to grant an order of interim
injunction to restrain respondents 2 to 4 herein/defendants or their
agents from alienating or encumbering in any manner their properties
mentioned in the schedule to the Judges summons pending disposal
of the suit; and (ii) A.No.9876 of 2019 to direct respondents 2 to 4
http://www.judis.nic.in
OSA.No.131 of 2021
herein/defendants to jointly and severally furnish security for a sum
of Rs.3,83,74,028/-, failing which, for an order of attachment before
judgment of immovable properties belong to respondents 2 to 4
herein/defendants more fully described in the schedule to the Judges
summons.
5. The learned Single Judge, by two separate orders, both
dated 30.12.2019, (i) in A.No.9876 of 2019, directed the second
respondent herein/first defendant to furnish security to the tune of
the suit claim for a sum of Rs.3,83,74,028/- on or before 13.1.2020
and directed the application to be listed on 13.1.2020; and (ii) in
O.A.No.1171 of 2019, granted an order of interim injunction
restraining respondents 2 to 4 herein/defendants from alienating the
schedule mentioned properties till 13.1.2020 and ordered notice to
the respondents returnable by 13.1.2020. Subsequently, both the
applications came up for hearing on 13.1.2020 and the order of
injunction granted on 30.12.2019 was extended till 22.1.2020 and
both the applications were directed to be listed on 22.1.2020. Further
on 22.1.2020, the order of interim injunction granted in O.A.No.1171
of 2019 was extended until further orders of this Court and both the
applications were directed to be listed on 19.2.2020.
http://www.judis.nic.in
OSA.No.131 of 2021
http://www.judis.nic.in
OSA.No.131 of 2021
6. By order dated 19.2.2020 in A.No.9876 of 2019, the learned
Single Judge granted an order of attachment before judgment of A
schedule property belonging to the first defendant/second respondent
herein, who was stated to be the principal borrower.
7. In the meantime, the first respondent herein filed an
application in A.No.2756 of 2020 seeking to implead themselves as a
party to the said suit. Subsequently, they also filed A.No.653 of 2021
seeking to raise the order of attachment dated 19.2.2020 in
A.No.9876 of 2019. The learned Single Judge, by the impugned order
dated 08.3.2021, allowed A.No.653 of 2021 filed by the first
respondent herein and raised the attachment in respect of A schedule
property. Aggrieved by that, the plaintiff is before us by way of this
appeal.
8. We have carefully perused the material papers placed before
this Court. We are of the firm view that the learned Single Judge was
right in raising the order of attachment. We support our conclusion
with the following reasons :
As mentioned earlier, the appellant/plaintiff laid the said suit
before the Commercial Division of this Court sometime during
December 2019 stating that the defendants/respondents 2 to 4 herein
http://www.judis.nic.in
OSA.No.131 of 2021
are due and liable to pay him various amounts. The first defendant/
second respondent herein is stated to be the principal borrower and
defendants 2 and 3/respondents 3 and 4 herein are stated to be the
guarantors. The appellant/plaintiff pleads that there were financial
transactions between the plaintiff and the first defendant/second
respondent for several years and several mortgages were done in
respect of different properties. The loans were settled, the mortgage
deeds were canceled and the financial dealings were going on for a
considerable period of time and in the last of such borrowals, the first
defendant/second respondent herein defaulted in repayment, which
necessitated the appellant to approach this Court and file a suit.
9. It is the further case of the appellant/plaintiff that if the
attachment is raised, then he would be put to great prejudice and he
would be unable to realize the fruits of the decree in the event of
success in the suit. The first respondent herein, which had filed the
application to raise the attachment, is taking effective steps to bring
the property in question to sale and consequent to the impugned
order, the entry in the office of the Sub-Registrar concerned would be
canceled and the appellant/plaintiff would be put to irreparable
hardship. He ultimately prayed for restoring the order of attachment.
http://www.judis.nic.in
OSA.No.131 of 2021
http://www.judis.nic.in
OSA.No.131 of 2021
10. We have carefully considered the submissions of the
learned counsel for the appellant/plaintiff and perused the stand
taken by the first respondent herein before the learned Single Judge.
11. The first respondent herein is a financial organization with
registered office at Mumbai. They would state that respondents 2 to 4
herein namely the defendants approached the first respondent on
23.8.2017 for a loan against properties situated in Tiruvanmiyur
village described in the schedule for a sum of Rs.2.60 crores. The
third respondent herein agreed to stand as a guarantor as he is the
owner of the schedule mentioned property. Thereafter, the first
respondent herein sanctioned the loan vide letter dated 23.8.2017
and as per the terms and conditions of the said sanction letter,
documents were executed in favour of the first respondent to secure
the loan transaction. In terms of the sanction, they were required to
repay the loan along with interest as per the guidelines of the
Reserve Bank of India and the third respondent herein executed an
agreement for deposit of title deeds, which were duly registered
before the Sub-Registrar, Neelankarai as doc.No.6521 of 2017
creating equitable mortgage pertaining to the schedule property and
all other documents were executed by the borrower and the
http://www.judis.nic.in
OSA.No.131 of 2021
guarantors including indemnity bond, demand promissory note, etc in
favour of the first respondent herein.
12. Thus, the first respondent herein stated that the title deeds
of the property are with them and by virtue of the equitable mortgage
executed in their favour, a security interest has been created over the
property in question in favour of the first respondent in the year 2017
itself. It has been further stated that after availing the loan, the
second respondent herein namely the borrower was irregular in
repayment of instalments and failed to fulfill the repayment
schedule.
13. Consequently, their loan account became a Non Performing
Asset (NPA) and the first respondent herein issued a notice dated
09.10.2019 under Section 13(2) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for brevity, the SARFAESI Act) calling upon the
borrowers to pay a sum of Rs.2,69,45,232/-. The said notice was also
published in two leading English and vernacular newspapers on
22.10.2019. After issuance of the said notice and following due
procedure, symbolic possession of the schedule property was taken.
Further the possession notice dated 30.12.2019 under Section 13(4)
http://www.judis.nic.in
OSA.No.131 of 2021
of the SARFAESI Act was issued and the same was affixed in the
schedule property. Further, the said possession notice was published
in two leading English and Vernacular newspapers on 05.1.2020. As
on 14.9.2020, respondents 2 to 4 herein namely the defendants are
liable to pay a sum of Rs.2,82,87,830/-.
14. It has been further stated by the first respondent herein
that at the time of execution of the loan agreement, it was confirmed
that three was no encumbrance or charge, lien mortgage on the
schedule property and that after verification of all related documents,
the loan amount was disbursed. Furthermore, respondents 2 to 4
herein indemnified the first respondent herein that they would not
encumber or create any litigation over the schedule property with any
third parties. They also undertook to safeguard the interest of the
first respondent.
15. It was the case of the first respondent herein that all these
facts were suppressed, the said suit had been laid and an order of
attachment was ordered, which caused great prejudice to the first
respondent herein. The civil court has no jurisdiction to entertain the
suit in the light of the bar under Section 34 of the SARFAESI Act. The
first respondent relied upon the decision of the Hon'ble Supreme
http://www.judis.nic.in
OSA.No.131 of 2021
Court in the case of State Bank of Patiala Vs. Mukesh Jain
[reported in 2016 (6) CTC 330].
16. The learned Single Judge, after taking into consideration of
all these facts, noted that the said suit had not been filed on the
basis of any agreement of sale, but only with respect to advancing
the loan to the first defendant, that the said suit was also not based
on execution of mortgage deed, but on the strength of promissory
notes and that the said suit was not based on land. Considering these
facts and balancing the right of the existing mortgagee and also the
fact that what is required to be examined is as to whether the
transaction between the plaintiff and the defendants was bona fide or
whether there was any suppression, the learned Single Judge raised
the order of attachment by the impugned order.
17. Mr.Mukund Rao, learned counsel appearing for the appellant
referred to the mortgage deed dated 18.7.2017, which, according to
the plaintiff, was the first mortgage deed and the second mortgage
deed was dated 11.9.2017. The third mortgage deed was dated
11.1.2019.
18. They are all registered documents in respect of other
properties. However, the schedule property in the present application
http://www.judis.nic.in
OSA.No.131 of 2021
is without any encumbrance and the first respondent herein verified
the same from the concerned Sub-Registrar Office and having been
satisfied that there was no encumbrance of the property in question,
the first respondent herein advanced the loan amount. What is to be
noted is that the said suit has been laid for recovery of money. It is
not a suit based on money nor it is a suit based on land.
19. In paragraph 21 of the plaint, the cause of action was
stated to be certain promissory notes executed by the defendants.
Curiously enough, the second respondent herein, who is the first
defendant in the said suit and who is the borrower, though entered
appearance through a counsel, did not contest the application for
interim injunction namely O.A.No.1171 of 2019 nor the application for
attachment before judgment namely A.No.9876 of 2019. We were
informed by the learned counsel for the appellant that a notice was
served and the second respondent herein/first defendant entered
appearance through counsel, yet she did not object. Therefore, the
conduct of the second respondent/first defendant needs to be
examined.
20. To be noted, the original title deeds of the property in
dispute have been mortgaged in favour of the first respondent herein
http://www.judis.nic.in
OSA.No.131 of 2021
by way of deposit of title deeds and other documents were also
executed. The defendants failed to repay the loan and proceedings
have already been initiated under the SARFAESI Act and possession
was taken under Section 13(4) of the SARFAESI Act. As could be seen
from the affidavit filed by the first respondent in the present
application, notices issued under the SARFAESI Act were duly
published in the newspapers and admittedly, the deposit of title
deeds was in the year 2017. Hence, we are of the considered view
that the learned Single rightly raised the order of attachment. We find
no grounds to interfere with the impugned order.
21. For the foregoing reasons, the above original side appeal is
dismissed. Consequently, the connected CMP is also dismissed.
29.3.2021
Speaking Order
RS
http://www.judis.nic.in
OSA.No.131 of 2021
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
RS
OSA.No.131 of 2021 &
CMP.No.5926 of 2021
29.3.2021
http://www.judis.nic.in
