Dismissed

Ifci Limited v. Madhucon Infra Limited

DRAT4 Aug 2022REGULAR APPEAL/48/2021

Case brief

AI extract

What is this about?

This is an appeal under the SARFAESI Act where the Appellants challenged an interim order staying physical possession of mortgaged property until they deposited Rs. 3 crore. The Tribunal dismissed the appeal holding that since the Appellants accepted the deposited amount before filing the challenge, they could not approbate and reprobate the order.

What did the court decide?

Appeal dismissed; the interim order restraining physical possession remains valid but the challenge to its merits is barred.

Ifci Limited versus Madhucon Infra Limited — Execution and Attachment | DRAT (2022)

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Appeal No. 48 of 2021-DRAT-Kolkata IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No. 48 of 2021)

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(Arising out of T.S.A. 858 of 2017 in DRT-2, Hyderabad)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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IFCI Limited, 5-9-13, Taramandal Complex, 8^th Floor, Saifabad, Hyderabad – 500 004.

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The Authorised Officer, IFCI Limited, IFCU Tower, 61, Nehru Place, New Delhi – 110 033.

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… Appellants

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-Versus-

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M/s. Madhucon Infra Limited, represented by its Director Sri Madhu Malampati, at Madhucon House, Plot No. 1129/A, Road No. 36, Jubilee Hills, Hitech City Road, Hyderabad – 500 033;

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Nama Seethaiah, Son of Nama Muttaiah, at Madhucon House, Plot No. 1129/A, Road No. 36, Jubilee Hills, Hitech City Road, Hyderabad – 500 033.

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… Respondents

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Counsel for the Appellants	…	Mr. Debasish Chakrabarti with Ms. Sharmistha Pal
Counsel for Respondent No. 1/Bank	…	Mr. Nemani Srinivas
JUDGMENT	:	4^thAugust, 2022

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THE APPELLATE TRIBUNAL :

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The instant Appeal has arisen out of the order dated 26^th October, 2021 passed by the Learned DRT-2, Hyderabad in I.A. 1756 of 2021 arising out of S.A. 858 of 2017 whereby the Learned DRT restrained the Appellants from taking physical possession of the schedule property through Court Receiver appointed in Case No. 898 of 2021 on the file of Learned Additional Chief Metropolitan Magistrate-01, New Delhi, District, Patiala House Courts, New Delhi subject to petitioners (Appellants) Respondents in this matter, depositing Rs.3.00 crore in two instalments. 2. So far as facts are concerned, they are neither disputed nor are very much relevant in disposal of the present appeal. However, in brief

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Appeal No. 48 of 2021-DRAT-Kolkata the facts are that the Respondents are the borrowers of the Appellants and have taken Rs.200.00 crore for purchasing Fully Convertible Debentures which was duly granted by the Appellant Bank. Subsequently, since the amount was not regularly repaid, the account was declared as N.P.A. on 13^th June, 2016. The Appellants proceeded under the SARFAESI Act. Even thereafter no payment was received. Then an order was obtained from the Additional Chief Metropolitan Magistrate for appointment of Receiver for taking over physical possession over the mortgaged property which was under challenge before the Learned DRT. A prayer for interim relief was made wherein the Learned DRT passed the following order :

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“ Admittedly, the petitioners are defaulters. However, having regard to the facts and circumstances of the case, considering the value of the property to be taken possession and in the interest of justice, intern relief can be granted on certain conditions. Accordingly, there shall be an interim stay of taking physical possession of the petition schedule property by the Respondents through Court Receiver appointed in Case No.898/2021 on the file of Ld. Additional Chief Metropolitan Magistrate 01, New Delhi District, Patiala House Courts, flew Delhi, subject to the Petitioners-Applicants depositing Rs.3,00,00,000/- (Rupees Three Crores only) in two instalments - first instalment of Rs.1,00,00,000/- is directed to be deposited within one week from the date of this order and the second instalment of Rs.2,00,00,000/- is directed to be deposited within two weeks thereafter, directly with the Respondent Company. In the event of failure of compliance of any of the aforesaid conditions, the interim stay shall stand vacated and the Respondents shall be at liberty to proceed against the secured asset as per law, but subject to outcome of the SA.”

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Feeling aggrieved by the impugned order the Appellants preferred the instant appeal.

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Appeal No. 48 of 2021-DRAT-Kolkata 3. Learned Counsel for Appellants submits that the impugned order is bad in law as there are no reasons assigned by the Learned DRT to arrive at any finding and to pass the interim order. It is further submitted that as far as merits are concerned, they have relied upon on the SARFAESI Application but it is settled legal proposition that an order passed by a judicial authority should be a reasoned order. For want of reasoned order, the impugned order could not sustain.

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4. Learned Counsel for Respondents submits that this order was passed on 26^th October, 2021 while the appeal was filed on 22^nd November, 2021. In compliance of the orders of the Learned DRT, Appellants have accepted an amount of Rs.3.00 crore which fact, although, is not disclosed in the Memo of Appeal but it is disclosed in the rejoinder affidavit. Learned Counsel places reliance upon State of Punjab & Others -vs- Dhanjit Singh Sandhu 2014 (4) ICC 48 and judgment of The Hon’ble Apex Court in Civil Appeals No. 2491 - 2492 of 2021 (Union of India & Others -vs- N. Murugesan) decided on 7^th October, 2021. On the strength of these judgments, Learned Counsel submits that the Appellants cannot be permitted to approbate and reprobate since they have already accepted an amount of Rs.3.00 crore in compliance of the orders of the Learned DRT. Now they cannot challenge the order.

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5. Learned Counsel for Appellants has placed reliance upon a Division Bench judgment of Hon’ble Calcutta High Court passed on 1^st November, 2017 in Allahabad Bank -vs- SPS Steels Rolling Mills Learned, in APO No. 431 of 2017, GA No. 3148 of 2017 in CS No. 182 of 2017.

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6. In the case of State of Punjab (supra) The Hon’ble Apex Court, in para 22, has held as under :

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“22. The doctrine of “approbate and reprobate is only species of estoppels, it implies only to the conduct of parties. As in the case of estoppels it cannot operate against the provisions of a statute.

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Appeal No. 48 of 2021-DRAT-Kolkata

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It is proposition of law that once an order has been passed, it is complied with, accepted by the other party and derived the benefit out of it, he cannot challenge it on any ground. (Vide Maharashtra State Road Transport Corporation -vs- Balwant Regular Motor Service, Amravati & Ors., AIR 1969 SC 329). In R.N. Gosain -vs- Yashpal Dhir, AIR 1993 SC 352, this Court has observed as under "Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage."

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7. Further in the case of Union of India (supra) The Hon’ble Apex Court, in para 26, held as under :

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“ 26. These phrases are borrowed from the Scott's law. They would only mean that no party can be allowed to accept and reject the same thing, and thus one cannot blow hot and cold. The principle behind the doctrine of election is inbuilt in the concept of approbate and reprobate. Once again, it is a principle of equity coming under the contours of common law. Therefore, he who knows that if he objects to an instrument, he will not get the benefit he wants cannot be allowed to do so while enjoying the fruits. One cannot take advantage of one part while rejecting the rest. A person cannot be allowed to have the benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. This principle has to be applied with more vigour as a common law principle, if such a party actually enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. An element of fair play is inbuilt in this principle. It is also a species of estoppel dealing with the conduct of a party. We have already dealt with the provisions of the Contract Act concerning the conduct of a party, and

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Appeal No. 48 of 2021-DRAT-Kolkata his presumption of knowledge while confirming an offer through his acceptance unconditionally.”

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8. In the case of State of Punjab (supra) it was further held by The Hon’ble Apex Court that where one knowingly accepts the benefits of a contract or conveyance or an order, is stopped to deny the validity or binding effect on him of such contract or conveyance or order.

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9. In view of the law laid down by The Hon’ble Apex Court, judgment of the Hon’ble High Court could not help the Appellants. In this matter, admittedly, in the impugned order, Learned DRT passed an interim order subject to payment of Rs.3.00 crore although in two instalments. It is also not in dispute rather admitted by the Appellants that an amount of Rs.3.00 crore was received by the Appellants in compliance of the orders of Learned DRT. It is admitted in para 5 (i) of the rejoinder filed by the Appellants that Respondents had made payment of Rs.1.00 crore on 2^nd November, 2021 and Rs.2.00 crore on 15^th November, 2021 and the same was accounted for in the loan amount of the Appellants. It is no where stated that this amount was received by the Appellants under protest. When the amount was received by the Appellants in compliance of the orders of the Learned DRT now they cannot challenge the order in view of the law laid down in the State of Punjab as well as in the Union of India (supra). They cannot be permitted to approbate and reprobate. They cannot be allowed to accept the amount and thereafter challenge the order. 10. In such circumstance, without going into the merits of the impugned order, I find that since the Appellants have accepted the amount of Rs.3.00 crore in compliance of the orders of the Learned DRT before filing of the appeal, the appeal could not succeed and is liable to be dismissed.

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O R D E R E D

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The appeal is dismissed.

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Copy of the order be supplied to Appellants and the Respondents and a copy be also forwarded to the concerned DRT.

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Appeal No. 48 of 2021-DRAT-Kolkata

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File be consigned to Record room.

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