A guarantor challenged a bank's possession notice and sought directions concerning a one-time settlement. The court denied equitable writ relief for forum shopping and suppression of material facts, dismissed the petition with costs, and closed the connected miscellaneous petitions.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.07.2017
CORAM:
THE HONOURABLE MR.JUSTICE S.MANIKUMAR
and THE HONOURABLE TMT.JUSTICE V.BHAVANI SUBBAROYAN
W.P.No.11984 of 2017
and
WMP Nos.12867, 12868 & 18229 of 2017
Sheik Mohammed Nizar ... Petitioner
versus
1.Kamal Gupta
Managing Director
R.V. Steels & Power Pvt. Ltd.,
Flat No.A1 Vrindhavan Enclave
189, Lloyds Road, Gopalapuram
Chennai - 600 086
2.The Authorised Officer
Axis Bank Ltd.,
Southern Recovery Cell
2nd Floor Kammuthu Nilayam
No.192, Anna Salai
Chennai - 600 002
3.The Manager
SME Centre, Axis Bank Ltd.
Chennai - 600 001 ... Respondents
Writ Petition filed under Article 226 of the Constitution of India, praying for a Writ of Certiorarified Mandamus, to call for the entire records of possession Notice dated 17.12.2016 issued under Rule 8(1) and Section 13(2) read with Rule 9 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Security Interest Enforcement Rules, 2002, pursuant to the demand notice dated 16.09.2016 and quash the same in as far as this petitioner is concerned to the property in S.F.No.46 Mathur Village Ambathur Taluk, Tiruvallur District in Patta No.1703 situated in Madhavaram, Chennai - 600 060 and consequently, direct the petitioner herein to proceed with OTS settlement by directing the 2nd respondent to permit the petitioner to purchase 50% of the share of the property belonging to the 1st respondent Kamal Gupta upon the consideration agreed to between the petitioner and 2nd respondent bank on 27.03.2017 and letter dated 15.04.2017 towards OTS settlement and balance consideration to
Mr.Kamal Gupta 1st respondent.
For Petitioner : Mr.K.Balakrishnan for Mr.P.Sivamani For Respondents : Mr.O.S.Karthikeyan for R2 & R3
O R D E R
(made by S.MANIKUMAR, J.)
Material on record discloses that, earlier, the guarantor/mortgagor, has filed W.P.No.773 of 2017, challenging a notice dated 17.12.2016 issued under Section 13(2) of the SARFAESI Act, 2002 and the consequential notice issued under Section 13(4) of the Act r/w Rules 8(1) and 9 of the SARFAESI Rules, 2002, in respect of a property bearing land and building comprised in Survey Nos.46/2A1A1, 46/2A1A2, 46/2A1A3 and 46/2A1A4 (as per Patta Nos.1700, 1701, 1702, 1703 of No.46, Mathur Village, Ambattur Taluk, Tiruvallur District, situated in 200 ft. inner ring road, Madhavaram, ad measuring a total extent of 204 cents (88740 sq.ft.) with equally undivided share thereto absolutely owned and possessed by the petitioner.
"Notice to the respondents returnable in two weeks. Private Notice is also permitted. There shall be an order of interim stay on condition that the petitioner paying a sum of Rs.50,00,000/- (Rupees fifty lakhs only) directly to the Bank, without prejudice to the rights of the parties, within a period of two weeks from today, failing which, interim stay granted shall stand automatically vacated without any further reference to this court."
"SA No.24/2017 22.05.2017
Ld. counsel for the respondent bank is present. This SA is filed challenging the possession Notice dated 17.12.2016 issued by the respondent bank for recovery of sum of Rs.5,68,34,887/-.
No representation on behalf of the appellant. One counsel by name Mr.P.Sivamani, has submitted that the bundle has been handed over to him today in the morning and would like to file change of vakalat by day after tomorrow if time is granted and that if
further time is granted, he would be able to proceed in the matter.
This is a matter which is heard at length and it is posted today for disposal while Ld. counsel appearing for the appellant has conceded to that there are no infirmities in the issuance of the subject impugned possession notice which fact has been evidenced by the actions of the respondent bank filed through its counter and typed set of documents. Ld. counsel appearing for the respondent bank has also demonstrated its actions as warranted under law and submits that there are no infirmities and the matter is posted to day only as a last opportunity to the appellant to go and negotiate with the respondent bank and look for some settlement. Whereas the appellant had not approached the respondent bank for any settlement, but had contemplated to change his counsel.
In the circumstances, as there are no merits in the appeal, the same is liable to be dismissed.
Accordingly, this SA stands dismissed, however without costs."
"Considering the averments stated and to give a final opportunity, time granted by this court on 05.05.2017 is extended by a further period of four weeks from today.
on the file of the Debts Recovery Tribunal - IIII, Chennai, in the supporting affidavit to W.P. No.11984 of 2017, and thirdly, the learned counsel, who appeared before the DRT in S.A.No.24 of 2017, ought to have brought to the notice of this court about the finality of the proceedings, stated supra.
Heard the learned counsel for the parties and perused the materials available on record.
a reference to the orders passed by the the Tribunal in the SARFAESI Appeal preferred.
petitioner is aggrieved over the interim order, passed by the Tribunal, remedy lies before the appellate authority, under the statute. There is absolutely no bonafide on the part of the writ petitioner/guarantor. Remedy under Article 226 of the Constitution of India is equitable in nature, and not to be extended to a person, who has indulged in forum shopping, suppression of material facts and thus abuse of process of law.
18.1. In Arunima Baruah v. Union of India reported in 2007 (6) SCC 120, the Hon'ble Apex Court, held as follows:
"12. .......It is also trite that a person invoking the discretionary jurisdiction of the court cannot be allowed to approach it with a pair of dirty hands. But even if the said dirt is removed and the hands become clean, whether the relief would still be denied is the question.
"When one asks on what principle this is supposed to be based, one receives in answer the maxim that anyone coming to equity must come with clean hands. I think the expression “clean hands” is used more often in the textbooks than it is in the judgments, though it is occasionally used in the judgments, but I was very much surprised to hear that when a contract, obtained by the giving of a bribe, had been affirmed by the person who had a primary right to affirm it, not being an illegal contract, the courts of equity could be so scrupulous that they would refuse any relief not connected at all with the bribe. I was glad to find that it was not the case, because I think it is quite clear that the passage in Dering v. Earl of Winchelsea [(1787) 1 Cox Eq Cas 318: 2 Bos & P 270], which has been referred to, shows that equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for." 14. In Halsbury’s Laws of England, 4th Edn., Vol. 16, pp. 874-76, the law is stated in the
following terms:
“1303. He who seeks equity must do equity.—In granting relief peculiar to its own jurisdiction a court of equity acts upon the rule that he who seeks equity must do equity. By this it is not meant that the court can impose arbitrary conditions upon a plaintiff simply because he stands in that position on the record. The rule means that a man who comes to seek the aid of a court of equity to enforce a claim must be prepared to submit in such proceedings to any directions which the known principles of a court of equity may make it proper to give; he must do justice as to the matters in respect of which the assistance of equity is asked. In a court of law it is otherwise: when the plaintiff is found to be entitled to judgment, the law must take its course; no terms can be imposed. * * * 1305. He who comes into equity must come with clean hands.—A court of equity refuses relief to a plaintiff whose conduct in regard to the subject-matter of the litigation has been improper. This was formerly expressed by the maxim ‘he who has committed iniquity shall not have equity’, and relief was refused where a transaction was based on the plaintiff’s fraud or misrepresentation, or where the plaintiff sought to enforce a security improperly obtained, or where he claimed a remedy for a breach of trust which he had himself procured and whereby he had obtained money. Later it was said that the plaintiff in equity must come with perfect propriety of conduct, or with clean hands. In application of the principle a person will not be allowed to assert his title to property which he has dealt with so as to defeat his creditors or evade tax, for he may not maintain an action by setting up his own fraudulent design.
The maxim does not, however, mean that equity strikes at depravity in a general way; the cleanliness required is to be judged in relation to the relief
sought, and the conduct complained of must have an immediate and necessary relation to the equity sued for; it must be depravity in a legal as well as in a moral sense. Thus, fraud on the part of a minor deprives him of his right to equitable relief notwithstanding his disability. Where the transaction is itself unlawful it is not necessary to have recourse to this principle. In equity, just as at law, no suit lies in general in respect of an illegal transaction, but this is on the ground of its illegality, not by reason of the plaintiff’s demerits."
18.2. In Udayami Evam Khadi Gramodyog Welfare Sanstha v. State of U.P., reported in 2008 (1) SCC 560, the Hon'ble Apex Court held as folllows:
"15. A writ remedy is an equitable one. A person approaching a superior court must come with a pair of clean hands. It not only should not suppress any material fact, but also should not take recourse to the legal proceedings over and over again which amounts to abuse of the process of law. In Advocate General, State of Bihar v. M/s.Madhya Death Khair Industries and Anr. [1980 (3) SC 311, this Court was of the opinion that such a repeated filing of writ petitions amounts to criminal contempt."
18.3. In Amar Singh vs. Union of India & Others reported in 2011(7) SCC 69, on the aspect of a litigant approaching the court, with unclean hands, at, paragraphs 53 to 57, and at, paragraph 59, considered several judgments. Finally at paragraph No.60, extracted a paragraph from Dalip Singh's case: "53. Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts. Courts held that such litigants have come with "unclean hands" and are not entitled to be heard on the merits of their case.
"It is the duty of a party asking for an injunction to bring under the notice of the Court all facts material to the determination of his right to that
injunction; and it is no excuse for him to say that he was not aware of the importance of any fact which he has omitted to bring forward."
"A plaintiff applying ex parte comes under a contract with the Court that he will state the whole case fully and fairly to the Court. If he fails to do that, and the Court finds, when the other party applies to dissolve the injunction, that any material fact has been suppressed or not property brought forward, the plaintiff is told that the Court will not decide on the merits, and that, as has broken faith with the Court, the injunction must go."
"...If there is an important misstatement, speaking for myself, I have never hesitated, and never shall hesitate until the rule is altered, to discharge the order at once, so as to impress upon all persons who are suitors in this Court the importance of dealing in good faith with the Court when ex parte applications are made."
"and it has been for many years the rule of the Court, and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts- facts, now law. He must not misstate the law if he can help it - the court is supposed to know the law. But it knows nothing about the facts, and the applicant must state fully and fairly the facts, and the penalty by which the Court enforces that obligation is that if it finds out that the facts have been fully and fairly stated to it, the Court will set aside any action which it has taken on the faith of the imperfect statement."
Papayya Sastry and others v. Government of A.P. and others - JT 2007 (4) SC 186: (2007) 4 SCC 221, Prestige Lights Limited v. SBI - JT 2007(10) SC 218: (2007) 8 SCC 449, Sunil Poddar and others v. Union Bank of India - JT 2008(1) SC 308: (2008) 2 SCC 326, K.D.Sharma v. SAIL and others - JT 2008 (8) SC 57: (2008) 12 SCC 481, G. Jayashree and others v. Bhagwandas S. Patel and others - JT 2009 (2) SC 71 : (2009) 3 SCC 141, Dalip Singh v. State of U.P. and others - JT 2009 (15) SC 201: (2010) 2 SCC 114.
"For many centuries Indian society cherished two basic values of life i.e. "satya"(truth) and "ahimsa (non-violence), Mahavir, Gautam Budha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice-delivery system which was in vogue in the pre- independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-Independence period has seen drastic changes in our value system. The materialism has overshadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings.
In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving
their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final."
18.4. In Kishore Samrite vs. State of U.P. & Others reported in 2013(2) SCC 398, at paragraphs 32 to 36, the Hon'ble Supreme Court held as follows:
"32. With the passage of time, it has been realised that people used to feel proud to tell the truth in the Courts, irrespective of the consequences but that practice no longer proves true, in all cases. The Court does not sit simply as an umpire in a contest between two parties and declare at the end of the combat as to who has won and who has lost but it has a legal duty of its own, independent of parties, to take active role in the proceedings and reach at the truth, which is the foundation of administration of justice. Therefore, the truth should become the ideal to inspire the courts to pursue. This can be achieved by statutorily mandating the Courts to become active seekers of truth. To enable the courts to ward off unjustified interference in their working, those who indulge in immoral acts like perjury, prevarication and motivated falsehood, must be appropriately dealt with. The parties must state forthwith sufficient factual details to the extent that it reduces the ability to put forward false and exaggerated claims and a litigant must approach the Court with clean hands. It is the bounden duty of the Court to ensure that dishonesty and any attempt to surpass the legal process must be effectively curbed and the Court must ensure that there is no wrongful, unauthorised or unjust gain to anyone as a result of abuse of the process of the Court. One way to curb this tendency is to impose realistic or punitive costs.
the court, a litigant must state correct facts and come with clean hands. Where such statement of facts is based on some information, the source of such information must also be disclosed. Totally misconceived petition amounts to abuse of the process of the court and such a litigant is not required to be dealt with lightly, as a petition containing misleading and inaccurate statement, if filed, to achieve an ulterior purpose amounts to abuse of the process of the court. A litigant is bound to make “full and true disclosure of facts”. (Refer : Tilokchand H.B. Motichand & Ors. v. Munshi & Anr. [1969 (1) SCC 110]; A. Shanmugam v. Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam & Anr. [(2012) 6 SCC 430]; Chandra Shashi v. Anil Kumar Verma [(1995) SCC 1 421]; Abhyudya Sanstha v. Union of India & Ors. [(2011) 6 SCC 145]; State of Madhya Pradesh v. Narmada Bachao Andolan & Anr. [(2011) 7 SCC 639]; Kalyaneshwari v. Union of India & Anr. [(2011) 3 SCC 287)].
Ors. [(2008) 12 SCC 481].
18.5. In Tilokchand and Motichand & Others v. H.B.Munshi and another reported in 1969 (1) SCC 110, the Hon'ble Apex Court held that the court would not ordinarily permit a party to pursue two parallel remedies, in respect of the same single matter.
18.6. In Prestige Lights Ltd. v. State Bank of India reported in 2007 (8) SCC 449, at paragraph Nos.33 to 35, the Hon'ble Apex Court, held as follows:
and the penalty by which the Court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the Court will set aside, any action which it has taken on the faith of the imperfect statement". (emphasis supplied)
(i) In Roxann Sharma vs. Arun Sharma reported in (2015) 8 SCC 318, at paragraph No.19, the Hon'ble Apex Court, observed that Forum shopping or court shopping requires to be firmly dealt with.
"We also take serious note of the Father, without notifying or taking the permission of the Civil Judge, leaving its jurisdiction along with Thalbir. Prima facie this undermines the authority of the court and it may even tantamount to contempt of court. Section 26 of the G and W Act has been violated and that too by a person who has not been appointed as the guardian. Relocation is now a wellknown legal concept. Since movement of persons from one place to another or one State to another State of the country or even from one country to another country of the globe is no longer a rarity. Very often it becomes necessary because the parent having custody of the child finds a more suitable employment somewhere else. The entitlement of the left behind spouse has, therefore, to be jurally investigated. The Mother may want to relocate to the United States where she can be very gainfully employed as against the Father who has not been able to disclose any income or sources of regular income. But this is not the case or stage before us. Here, the Father ought not to have left the jurisdiction of the court in Goa which was discharging its duties as parens patriae. This seems to have been completely lost sight of and instead the learned Single Judge has given premium to the unauthorised relocation. We have already mentioned Criminal Petition No.87 of 2013 which was disposed of by permitting the Mother to meet Thalbir; but keeping in view the pendency of proceedings in Goa, the court rightly did not interfere with or alert or modify any of the orders passed by the court in Goa. Forum shopping or court shopping requires to be firmly dealt with. The second learned Single JUdge ought to have kept in mind that it was the Father who has started proceedings in Goa where the Mother was also then residing having, prima facie, been constrained to give up her employment in California, US to be in a position to look after her infant son Thalbir. The coordinate Benches must respect prior orders."
(ii) In Tamil Nadu Mercantile Bank Shareholders Welfare Association vs. S.C.Sekar & Ors. reported in 2009 (2) SCC 784,
at paragraph No.51, the Hon'ble Apex Court, held as follows: "51. The superior courts of this country must discourage forum shopping. A person seeking equity must do equity. A party cannot take recourse to a machination which amounts to abuse of process of court."
(iii) In Chetak Construction Ltd. vs. Om Prakash and others reported in (1998) 4 SCC 577, at paragraph No.16, the Hon'ble Apex Court observed as follows:
"We certainly, cannot approve of any attempt on the part of any litigant to go "forum shopping". A litigant cannot be permitted choice' of the forum' and every attempt at "forum shopping" must be crushed with a heavy hand."
Taking note of the conduct of the petitioner who has indulged in forum shopping and the decisions of the Hon'ble Supreme Court, while dismissing the writ petition, we impose a cost of Rs.15,000/- on the petitioner to be paid to Sivananda Gurukulam, GST Road, Kattankolathur, within a period of three weeks from the date of receipt of a copy of this order, failing which, the District Collector, Chennai, would initiate proceedings under the Revenue Recovery Act for enforcement of order. Consequently, the connected Writ Miscellaneous Petitions are closed.
Sd/Assistant Registrar(CO) //True Copy// Sub Assistant Registrar asr
To
+1 cc to Mr.P.Sivamani Advocate sr 47776 +1 cc to Mr.O.R.Santhanakrishnan Advocate sr 47415
W.P.No.11984 of 2017
and
WMP Nos.12867, 12868 & 18229 of 2017
kgk(co)
aa03/08/2017
1 issue framed by the court
Was the guarantor entitled to equitable writ relief against the possession notice despite forum shopping and suppression of material facts?
Colour shows how this judgement treated each authority
Precision Fastenings v. State Bank of MysoreReferred¶16
Precision Fastenings v. State Bank of Mysore, reported in 2010(2) LW 86
Union Bank of India v. Satyawati TondonReferred¶16
Union Bank of India v. Satyawati Tondon reported in 2010(5) LW 193 (SC)
Saraspathy Sundararaj v. Authorised Officer and Assistant General Manager, State Bank of IndiaReferred¶16
Saraspathy Sundararaj v. Authorised Officer and Assistant General Manager, State Bank of India reported in (2010) 5 LW 560
Arunima Baruah v. Union of IndiaRelied on¶52
Arunima Baruah v. Union of India reported in 2007 (6) SCC 120 · Who else cites this
Udayami Evam Khadi Gramodyog Welfare Sanstha v. State of U.P.Relied on¶62
Udayami Evam Khadi Gramodyog Welfare Sanstha v. State of U.P., reported in 2008 (1) SCC 560 · Who else cites this
Amar Singh vs. Union of India & OthersRelied on¶64
Amar Singh vs. Union of India & Others reported in 2011(7) SCC 69 · Who else cites this
Kishore Samrite vs. State of U.P. & OthersRelied on¶83
Kishore Samrite vs. State of U.P. & Others reported in 2013(2) SCC 398 · Who else cites this
Tilokchand and Motichand & Others v. H.B.Munshi and anotherRelied on¶93
Tilokchand and Motichand & Others v. H.B.Munshi and another reported in 1969 (1) SCC 110 · Who else cites this
Prestige Lights Ltd. v. State Bank of IndiaRelied on¶94
Prestige Lights Ltd. v. State Bank of India reported in 2007 (8) SCC 449 · Who else cites this
Roxann Sharma vs. Arun SharmaRelied on¶103
Roxann Sharma vs. Arun Sharma reported in (2015) 8 SCC 318 · Who else cites this
Tamil Nadu Mercantile Bank Shareholders Welfare Association vs. S.C.Sekar & Ors.Relied on¶105
Tamil Nadu Mercantile Bank Shareholders Welfare Association vs. S.C.Sekar & Ors. reported in 2009 (2) SCC 784 · Who else cites this
Chetak Construction Ltd. vs. Om Prakash and othersRelied on¶108
Chetak Construction Ltd. vs. Om Prakash and others reported in (1998) 4 SCC 577 · Who else cites this
2 provisions across 2 enactments
Sheik Mohammed Nizar
Kamal Gupta
The Authorised Officer, Axis Bank Ltd., Southern Recovery Cell
The Manager, SME Centre, Axis Bank Ltd.
S.MANIKUMAR
V.BHAVANI SUBBAROYAN
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
