Dismissed

Rentworks India Pvt. Ltd. v. Small Industries Development Bank of India

Bombay HC6 Mar 2012APP/239/2013

Case brief

AI extract

What is this about?

The Division Bench held that when a bank files an original application before the DRT, the debtor can raise all grounds, including those in a accompanying civil suit, as defenses. Consequently, no interim relief was granted, and the suit does not oust the DRT's jurisdiction. The notice of motion was disposed of.

What did the court decide?

No interim relief granted; notice of motion dismissed.

Rentworks India Pvt. Ltd. Vs Small Industries… — Civil Procedure and Limitation | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY.

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ORDINARY ORIGINAL CIVIL JURISDICTION

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APPEAL LODGING NO.109 OF 2012 WITH NOTICE OF MOTION NO.576 OF 2012 IN NOTICE OF MOTION NO.2010 OF 2011 IN SUIT NO.647 OF 2011

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Retworks India Private Limited. ..Appellant Versus Small Industries Development Bank of India. ...Respondent

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Mr. Janak Dwarkadas and Mr. Atul Rajyadhaksha, Senior Advocate with Mr. Astad Banderia and Mr. Hussain Somji i/b. Dave & Girish & Co., for the appellant.

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Mr. Jay Choksi with Mr.Sumit Putui i/b.Suruchi Kasliwal for the Respondent.

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CORAM: MOHIT S. SHAH, C.J. & RANJIT MORE, J. DATED : 06 March 2012.

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P.C.

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The appellant has filed Suit No.647 of 2011 praying for the following reliefs:-

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“The Plaintiff therefore prays:

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(a) that the Hon'ble Court be pleased to order and declare that the Deed of Indemnity dated November 1, 2007 is unenforceable, null and void;

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(b) that the Hon'ble Court be pleased to order and declare that the Tax Undertaking dated November 1, 2007 is unenforceable, null and void;

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(c) that the Hon'ble Court be pleased to order and declare that the Deed of Hypothecation dated November 1, 2007 is unenforceable, null and void;

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(d) that the Defendant by itself, its servants, agents, or assigns be directed by a mandatory order and injunction of this Hon'ble Court to deliver up to this Hon'ble Court the said Deed of Indemnity dated November 1, 2007 for cancellation by this Hon'ble Court, and upon the same being delivered to this Hon'ble Court this Hon'ble Court be pleased to order and direct the cancellation thereof.”

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Prayer clauses (e) and (f) are for the reliefs in similar terms for the Tax Undertaking dated November 1, 2007 and the Deed of Hypothecation dated November 1, 2007. Prayer (g) is for a permanent injunction to restrain the respondent bank from acting in pursuance of or taking any steps on the aforesaid three documents. Prayer (h) is for temporary injunction in the same terms during the pendency of the suit.

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In the Notice of Motion in the said suit the appellant has also prayed for the following interim relifs:-

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“(a) that, pending the hearing and final disposal of the Suit, the Defendant by itself, its servants, agents or assigns, be restrained by a temporary order of injunction of this Hon'ble Court from acting in pursuance of and/or taking any steps under, and/or relying upon, the Deed of Indemnity dated November 1, 2007, Tax Undertaking dated November 1, 2007, and Deed of Hypothecation dated November 1, 2007.”

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The aforesaid suit has been filed by the appellant before the learned Single Judge of this Court on 1 February 2011. However, prior thereto the respondent bank had already filed Original Application No.101 of 2011 before the Debts Recovery Tribunal, Mumbai on 1 December 2010 for recovery of Rs.7,53,00,000/- with interest thereon.

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The learned Single Judge passed the following order on 18 July 2011 in Notice of Motion No.2010 of 2011:-

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“The plaintiff is always at liberty to defend itself in any proceedings that the defendant may adopt for recovering its dues. There is no warrant for granting any ad-interim reliefs which in effect will restrain the defendant from adopting or prosecuting any proceedings. The notice of motion to be heard in normal course.”

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The appellant being aggrieved by the above order preferred Appeal No.582 of 2011, which came to be disposed of by another Division Bench of this Court on 4 October 2011 in the following terms:-

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“On a motion made by the learned counsel appearing for appellants, appeal is permitted to be withdrawn, however, the learned Single Judge is requested to hear and dispose off the motion at an early date. Notice of motion No.2691 of 2011 is disposed off.”

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The learned counsel for the appellant submits that the learned Single Judge is not in a position to take up the Notice of Motion on account of pendency of heavy board and that in the meantime the respondent bank will be proceeding with the Original Application before the Debt Recovery Tribunal (DRT) and the appellant's suit will become infructuous.

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In response to a specific query from the Court as to why the appellant cannot take up, by way of defences in the above numbered Original Application of the respondent bank, all the grounds which the appellant has raised in the present suit, the learned Counsel for the appellant has invited our attention to the following observations in paragraph 85 and 118 of the judgment of the Supreme Court in Nahar Industrial Enterprises Limited v. Hong Kong and Shanghai Banking

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Corporation, (2009) 8 SCC 646:-

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“85. If the Tribunal was to be treated to be a civil court, the debtor or even a third party must have an independent right to approach it without having to wait for the bank or financial institution to approach it first. The continuance of its counterclaim is entirely dependent on the continuance of the applications filed by the bank. Before it no declaratory relief can be sought for by the debtor. It is true that claim for damages would be maintainable but the same have been provided by way of extending the right of counterclaim.

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The liabilities and rights of the parties have not been created under the Act. Only a new forum has been created. The banks and the financial institutions cannot approach the Tribunal unless the debt has become due. In such a contingency, indisputably a civil suit would lie. There is a possibility that the debtor may file pre-emptive suits and obtain orders of injunction, but the same alone, in our opinion, by itself cannot be held to be a ground to completely oust the jurisdiction of the civil court in the teeth of Section 9 of the Code. Recourse to the other provisions of the Code will have to be resorted to for redressal of his individual grievances.”

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When the learned counsel for the respondent bank submitted that the respondent bank will not raise any objection about the jurisdiction of the DRT to consider the merits of the grounds urged by the appellant in the present suit which may be raised as defences in the Original Application before the DRT, the learned counsel for the appellant has submitted that consent cannot confer jurisdiction when none exists under the law.

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In view of the above, we have considered the apprehension voiced on behalf of the appellant that the Tribunal will not be able to grant the reliefs prayed for by the appellant in the present suit.

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It is true that the Supreme Court has held in the case of Nahar Industrial Enterprises Limited (supra) that the debtor cannot seek declaratory relief before the DRT. However, all that it means is that if the respondent bank had not filed any Original Application before the DRT, the appellant on its own could not have moved the DRT for declaratory reliefs prayed in the present suit. However, when the bank has filed Original Application for recovery of its dues, it is open to the appellant to raise all grounds available to it by way of defence including the grounds urged in the present suit for the reliefs that the bank should not act upon the three documents in question. In our view, therefore, the apprehension voiced by the learned counsel for the appellant has no basis.

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The appellant is at full liberty to raise all grounds of defence in the Original Application filed by the respondent-Bank before DRT, including the grounds raised by the appellant in the present suit for cancellation of the three documents in question.

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In view of the above, it is not necessary to grant any adinterim relief to the appellant. In case the Debt Recovery Tribunal holds that it has no jurisdiction to permit the appellant to raise by way of defences to the Original Application filed by the respondent-Bank the grounds urged in the present suit, it will be open to the appellant to move the learned Single Judge for expeditious hearing of the Notice of Motion and in that case the learned Single Judge will take up the Notice of Motion for ad-interim/interim relief at the ad-interim/interim stage; and for that purpose the Debt Recovery Tribunal shall grant reasonable time to the appellant to move the learned Single Judge of this Court.

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Hence appeal is disposed of accordingly with a clarification that we may not be treated to have expressed any opinion on the merits of the contentions raised in the suit.

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In view of the disposal of the appeal, the Notice of Motion does not survive. Notice of Motion accordingly stands disposed of.

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CHIEF JUSTICE

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(RANJIT MORE, J.)

Rentworks India Pvt. Ltd. v. Small Industries Development Bank of India

Case brief

What is this about?

What did the court decide?

Rentworks India Pvt. Ltd. v. Small Industries Development Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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