TaxTMI 
TaxTMI 
2017 (1) TMI 1165
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....of Madras in C.M.A. No. 798 of 2011 and MP No. 1 of 2011 arising out of C.S. No. 257 of 2005 renumbered as OS No. 12159 of 2010. Brief facts of the case, necessary to be noted for deciding the appeal are: The EIH Ltd., Respondent No. 1 (hereinafter referred to, as EIH) to the appeal is a company which operates a chain of luxury hotels. The Oberoi Hotels Private Ltd., Respondent No. 2 owns a brand name 'Oberoi'. 4. On 26.10.1988 EIH entered into 'Technical Services Agreement' (for short TSA) with one Balaji Construction (P.) Ltd. Predecessors-in-interest of the 3rd Respondent Balaji Hotels & Enterprises Ltd. (for short, BHEL). The agreement provided that EIH would provide its technical knowledge and skill required for operation of hotel, which was being constructed by BHEL. Another agreement on January 12, 2000 was entered between BHEL and EIH, where it was recorded that on the request of BHEL, EIH paid Rs. 9 Crores to the BHEL by way of financial accommodation which was used for construction of hotel. By supplemental agreement dated June 10, 2000, it was recorded that in total Rs. 15 Crores 12 Lacs have been received by BHEL, repayment of which is to be made w....
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....ipal sum of Rs. 15.12 Crores being outstanding as per books of accounts of March 31st, 2004 with interest. A suit in the High Court of Madras being C.S. No. 257 of 2005 was filed by EIH against BHEL and others praying for following reliefs: " The plaintiff prays for a Judgment and Decree for: (a) Declaration that the Technical Services Agreement dated 26th October, 1988 and the Project Consultancy Agreement and Royalty Agreement both dated 26th October, 1988 and the Agreements dated 12th January, 2000, 10th June, 2000 and 4th February 2002 are valid, legal and subsisting and are binding and enforceable on the Defendant No. 3 to 7 and /or its assigns. (b) Permanent injunction restraining the Defendant Nos. 3 to 7 whether by itself, its servants, agents and /or assigns or otherwise howsoever from selling, encumbering and/or disposing of in any manner howsoever, the schedule property of the Defendant No. 1 situated at Mount Road, Chennai, in favour of any persons without disclosing and/or recognizing the rights of the plaintiff to operate and manage the hotel as provided for under the technical services agreement dated 26th October, 1988 and the Project Consultancy Agreement ....
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....ferred. The Division Bench of this Court decided the appeal being C.M.A. NO. 798 of 2011 and M.P. No. 1 of 2011 and issued certain directions vide its judgment and order dated 26th July, 2011. C.A.Nos.......of 2016 (arising out of SLP(C) No.2341011 of 2011) have been filed against aforesaid Division Bench judgment and order dated 26th July, 2011 by the Robust Hotels and other three defendants. C.A.Nos.1188811889 of 2016 (arising out of SLP (C) No. 1774243 of 2012 12. These appeals have been filed by EIH Ltd. and Oberoi Hotels against judgment and final order dated 13th March, 2012 passed by the High Court of Madras in O.S.A. No. 419 of 2011 and M.P. No. 1 of 2011. While noticing the facts in the appeals filed by Robust Hotels, we in the proceedings paragraphs have noted the facts which are also relevant for understanding the issues raised in present appeals. The appellants EIH and Oberoi Hotels filed a suit, being C.S. No. 164 of 2011 before the High Court of Madras praying for a declaration that Deed of Transfer dated 5th July, 2007 entered into between IFCI Ltd. and TFCI on one part and the Robust Hotels (P.) Ltd. on another part, and the certificate of sale of immovable....
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....t be made subject matter of challenge before a Civil Court. Section 34 of Sarfaesi Act, 2002 completely oust the jurisdiction of Civil Court. He contends that entitlement to recover the amount of Rs. 15.21 Crores by EIH if at all was against the Balaji Hotels & Enterprises Ltd. and Balaji Industrial Corporation Ltd., for which it was open for EIH to take appropriate proceedings. The Robust Hotels having acquired the assets under Sarfaesi proceeding has no liability to make any payment to EIH and the order passed by the Division Bench issuing such direction is unsustainable. It is submitted that Robust Hotels cannot be held liable for any breach of Order dated 18.03.2005 and in view of the subject matter, order dated 18.03.2005 was also hit by Section 34 of Sarfaesi Act, 2002. Shri Venugopal further submitted that C.A.Nos....of 2016 (arising out of Special Leave Petition (C) Nos. 1774243 of 2012) filed by EIH deserved to be dismissed since both learned Single Judge and Division Bench have rightly held that the transfer on 5th July 2007 made in favour of Robust Hotels could not have been challenged in C.S. No. 164 of 2011 in view of Section 34 of Sarfaesi Act, 2002. 17. Shri Jaideep ....
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.... 21. It is submitted that Section 34 of the Sarfaesi Act, 2002 does not protect the Robust Hotels in facts of the present case. It is submitted that the appeal filed by the EIH, deserved to be allowed setting aside all actions taken in breach of the injunction order 18th March, 2005. 22. Learned senior counsel for both the parties have also relied on various judgments of this Court in support of their respective submissions, which shall be referred to while considering their submissions in detail. 23. First, we take up the appeal of Robust Hotels, the appeal has been filed against an interim order passed by the High Court, disposing of the CMA No. 798 of 2011. 24. The interim directions issued by Division Bench are in following three parts: "(i). This Court without prejudice, directs the 1st and 2nd respondents / erstwhile owners / BH and EL and another or the 8th respondent / the present owner / Robust Hotels Private Limited to deposit a sum of Rs. 15.12 Crores into the credit of O.S. No. 12159 of 2010 on or before 31st August 2011. (ii). After such deposit has been made the learned trial judge shall dispose the case within a period of three months on merits, with....
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....n without disclosing the rights of the Applicants to operate and manage the hotel in terms of the Technical Services, Project Consultancy & Royalty Agreement dated 26th October 1988 and the Agreements dated 12th January 2000, 10th June, 2000 and 4th February 2002." 28. The essence of interim injunction issued by the Court was that Respondent Nos. 3 to 7 of that suit were restrained by an order of injunction from dealing with, disposing of, selling and/or encumbering in any manner howsoever the hotel unit of Balaji Hotels & Enterprises Ltd.(BHEL), in favour of any person without disclosing the rights of the applicants to operate and manage the hotel in terms of the Technical Services, Project Consultancy & Royalty Agreement dated 26th October, 1988 and the Agreements dated 12th January 2000, 10th June, 2000 and 4th February, 2002. 29. Thus, the injunction ordained that while dealing with the hotel unit the rights of the applicant be disclosed. The subsequent facts, as noted above indicate that even after the aforesaid injunction the IFCI Ltd. and Tourism Finance Corporation of India Ltd. by deed of transfer dated 5th July, 2007 transferred the hotel unit to Robust Hotels witho....
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....e latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not." 32. A perusal of Section 34 indicates that there is express bar of jurisdiction of the Civil Court to the following effect: "(i) Any suit or proceeding in respect of any matter in which Debt Recovery Tribunal or Appellate Tribunal is empowered by or under this Act to determine. (ii) Further, no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993." Thus the bar of jurisdiction of Civil Court has to correlate to the above mentioned conditions. For purposes of this case, we are of the view that this Court need not express any opinion as to whether suits filed by EIH were barred by Section 34 or no....
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....s to undo a wrong done in disobedience of the court's orders. But in this case it is not necessary to go to that extent as we hold that the power is available under Section 151, C.P.C." 36. Judgment of Madras High Court in Century Flour Mills Ltd. Versus S. Suppiah and Others and Clarke and Others Versus Chadburn and Others (Supra) had been relied and approved by this Court in Delhi Development Authority Versus Skipper Construction Co. (P) Ltd. and Another (1996) 4 SCC 622. 37. Another judgment relied upon is Anita International Versus Tungabadra Sugar Works Mazdoor Sangh and Others (2016) 9 SCC 44. In the aforesaid case, in a Company Petition, filed in the Madras High Court for winding up of Deve Sugars Ltd., an order of winding up was passed. An Official Liquidator was directed to take possession of the property of the company. State Bank of Mysore had extended some loan to the Deve Sugar Ltd. and on default having been committed, an O.A. was filed before the Debt Recovery Tribunal by the Bank for the recovery of the amount. The Recovery Certificate was issued for a sum of Rs. 8.40 Crores. State Bank of Mysore filed a Company Application in the pending Company Petition ....
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.... It is useful to refer para 49 and 51 of the judgment which is to the following effect: "(49.) In order to support their claim, it was submitted on behalf of the appellants that jurisdiction in matters of recovery agitated by banks and financial institutions under the RDB Act has been repeatedly expounded by this Court. The Debts Recovery Tribunals concerned, before whom recovery proceedings are initiated, have exclusive jurisdiction in the matter. It was also pointed out that this Court has clearly declared that even the jurisdiction of Recovery Officers in matters of execution of recovery certificates was likewise exclusive. It was the pointed contention of the learned counsel for the appellants that in matter wherein banks and financial institutions approach a Debts Recovery Tribunal, which on due consideration issues a recovery certificate, the same can be executed only through a Recovery Officer. It was submitted that a Company Court has no jurisdiction in the matter. The learned counsel for the appellants substantiated the above assertion on the basis of the decisions rendered by this Court in Allahabad Bank, M.V. Janardhan Reddy, Andhra Bank, Rajasthan State Financial Cor....
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.... and sale held in violation of the said order was to be set aside. 42. The entitlement of EIH to receive Rs. 15.21 Crores, which was the condition of the agreement dated 4th February, 2002 was to be reflected in any future transaction by virtue of the injunction order dated 18th March, 2005 dealing with the property, has rightly been taken note by the Division Bench of the High Court and we do not find any error in the directions issued by Division Bench of the High Court, directing 1st and 2nd Respondent, i.e., erstwhile owner and 8th Respondent Robust Hotels to deposit the sum of Rs. 15.12 Crores. 43. We, however, are of the view that it was not necessary for the High Court to presume that the conditions of deposit, as ordered by the court shall not be complied with. Orders of the court are issued to be complied with and a court does not lack power to ensure the compliance by appropriate proceedings. Thus, further directions of the High Court that 'if the condition of deposit as ordered by this court has not complied with by either of the parties....', interim injunction, restraining the 8th Respondent' was uncalled for. The interim order passed by the High Cour....