Supreme Court of India
ROBUST HOTELS PVT. LTD. & ORS.versusEIH LIMITED & ORS.
- Citation
- 2016 INSC 1107
- Decided
- 7 December 2016
- Disposal
- Disposed off
- Bench
- PINAKI CHANDRA GHOSE
Holding
The Supreme Court upheld the High Court’s interim injunction and the order directing a deposit of Rs 15.12 crore, affirming that court orders cannot be deemed void without a proper application to a competent court and that the sale of the hotel unit in breach of the injunction was impermissible.
Summary
EIH Ltd. entered into a Technical Services Agreement with Balaji Hotels (BHEL) for operating a hotel, and paid Rs 15.21 crore as financial accommodation. BHEL later obtained financial assistance from IFCI and TFCI, which sold the hotel unit to Robust Hotels under SARFAESI proceedings despite an interim injunction that required any sale to disclose EIH's rights. EIH sought declaration of the agreement’s validity and a permanent injunction; Robust Hotels challenged the High Court’s interim order directing a deposit of Rs 15.12 crore. The Supreme Court held that the High Court’s injunction and deposit direction were valid, that parties cannot deem a court order void without approaching a competent court, and that the sale in breach of the injunction was impermissible. The Court modified the deposit deadline to 31 January 2017 and dismissed the appeals of both Robust Hotels and EIH.
Issues considered
- Whether the interim injunction restraining the sale of the hotel unit is enforceable notwithstanding Section 34 of the SARFAESI Act, 2002.
- Whether the High Court’s direction for the parties to deposit Rs 15.12 crore is valid and should be affirmed.
- Whether the transfer of the hotel unit to Robust Hotels under SARFAESI proceedings violated the injunction and is liable to be set aside.
- Whether a party can declare a court order void or non‑est without approaching a court of competent jurisdiction.
- Whether the High Court erred in granting or refusing interim relief in the circumstances.
Legislation cited
Subjects
Technical Services AgreementInterim injunctionSARFAESI ActCivil court jurisdictionTransfer of propertyDeposit orderHotel projectSupreme Court
Judgment
[2016] 8 S.C.R. 43 7
ROBUST HOTELS PVT. LTD. & ORS. A
v.
EIH LIMITED & ORS.
(Civil Appeal Nos, 11886-11887 of2016)
DECEMBER 07, 2016 B
[PINAKI CHANDRA GHOSE AND ASHOK BHUSHAN, JJ.]
Interlocutory order - Breach of - Technical Services
Agreement between EIH-respondent no. 1 and BHEL wherein EIH
was to provide technical knowledge and skill required for operation
of hotel constructed by BHEL - ElH paid BHEL, Rs. 15.21 Crores
c
by way of financial accommodation - Termination of the said
agreement, and BHEL to refund the said amount - BHEL took
financial assistance from IFCl and TFCl - Issuance of advertisement
by TFCI for sale of hotel project of BHEL - ElH informing TFCI
about the agreements between EIH and BHEL that till the said D
amount was not refunded, ElH would have exclusive right over the
hotel - Thereafter, suit by EIH against BHEL and others seeking
declaration that Technical Services Agreement is valid, legal and
subsisting as also sought permanent injunction restraining BHEL
and others from selling - Meanwhile, grant of temporary injunction
E
to ElH and OB hotels by the High Court - Two years later, on
initiation of proceeding by lFCl under SARFAESl Act, RB Hotels
purchased the hotel unit of BHEL - Thereafter, impleadment of RB
hotel - Interim application by ElH, seeking restraining of RB from
having construction of hotel unit or taking steps in derogation of
rights of EIH under Technical Services Agreement - Single Judge F
dismissed the application, however. Division Bench issued certain
directions - Thereafter, suit as also interim applications filed by
ElH and OB Hotels praying for a declaration that Deed of Transfer
entered into between the financial institutions and RB Hotels, and
the certificate of sale of immovable property as illegal and, null G
and void; as also for perpetual injunc_tion - Dismissal of interim
application by the High Courts, however, suit by ElH and OB Hotels
pending - On appeal, held: It is not open either a party to the /is or
to any third party to determine at their own that an order passed by
a Court is valid or void - Party to the lis or the third party who
H
437
438 SUPREME COURT REPORTS [2016] 8 S.C.R.
A considers an order passed by a court as voidable or non est, ll(USI
approach the court of competent jurisdiction for setting aside the
said order - Injunction ordained that while dealing with the hotel
unit the rights of the applicant be disclosed - However, the financial
institutions sold the hotel contrary to the order passed by the High
Court witholll disclosing the rights of the applicant as provided by
B
the Agreement - Financial institutions who had executed the deed
of transfer in favour of R Hotels and were parties to suit, were
bound by the said interim injunction which was only to the effect
that the liability of BHEL to repay the amount of Rs. 15.21 Crores
up to particular date was to be communicated and recognised to
C any subsequent purchaser - Object was that anyone purchasing
the hotel unit should be aware ofthe liability and said liability should
also be adverted and taken care of - There is no error in the
directions issued by Division Bench of the High Court - l/lferim
order passed by the High Court, directing for deposit of Rs. 15. 12
Crores has done substantial justice between parties, which need no
0
interference by this Court in exercise of its jurisdiction u!Art. 136 -
Furthermore, the Hotel has already commenced its operation and
contracts have been made with third parties for the operation of
the hotel and bookings are also made - Taking into consideration
the overall circumstances as also that the last suit by EIH and OB
E hotels, are yet to he adjudicated, orders passed by the Single Judge
and Division Bench, refusing to grant interim injunction, cannot be
faulted - Constitution of India - Art. 136 - Code of Civil Procedure,
1908.
Dis1>osing of C.A. No. 11886-11887 and dismissing C.A.
F No. 11888-11889, the Court
HELD: 1.1 One of the conditions of last agreement dated
4 hFebruary, 2002 was to make payment of an amount of Rs. 15.21
1
Crores by erstwhile owner before transferring the 1·ight in the
hotel unit including right to run the hotel in favour of any entity.
G The Order passed by Division Bench dated 26'h July, 2011 does
complete justice between parties, and Division Bench bas
exercised its discretionary jurisdiction in granting the relief which
need 110 interference by this Court in exercise of jurisdiction
under Article 136 of the Constitution. [Paras 18, 19)(447-G-H;
448-A-B)
H
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 439
1.2 The essence of interim injunction issued by the Court A
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 BHEL,
in favoul' of any pel'son without disclosing the rights of the
applicants to operate and manage the hotel in terms of the
8
Technical Services, Pl'oject Consultancy & Royalty Agreement
dated 261h Octobe1; 1988 and the Agl'eements dated 12•h January
2000, to•h June, 2000 and 4•h February, 2002. Thus, the injunction
ordained that while dealing with the hotel unit the rights of the
applicant he disclosed. The subsequent facts, indicate that even
after the said injunction the IFCI Ltd. and Tourism Finance C
Corporation of India Ltd. by deed of transfer dated 5•h July, 2007
transferred the hotel unit to R Hotels without disclosing the rights
of the applicant as provided by the Agreement mentioned therein.
The Agreement dated 4'h July, 2002 cleal'ly provided that the
BHEL was required to repay the amount of Rs. 15.21 Crores to D
the EIH by 31" December, 2002 whereafter, Elli had nothing to
do with the opel'ation of the hotel. [Paras 28, 29)(450-C-F]
1.3 A 1>erusal of Section 34 indicates that there is express
bar of jurisdiction of the Civil Coul't to the stated effect. Thus the
bal' of jurisdiction of Civil Cout has to cOl'l'elate to the stated
conditions. For purposes of the instant case, this Court need not E
ex1>ress any opinion as to whether suits filed by EIH were barred
by Section 34 or not, since the issue are yet to be decided on
merits and the appeal by RH Hotels have been filed only against
an intel'im 01·der. [Pam 32)(452-A, C-D]
1.4 At the time, when in.junction order was issued by Single F
Judge, R Hotels was not in picture, however, subsequently, it
was also impleaded in the suit and the challenge to the
impleadment of R Hotels failed up to this Court. There can be no
doubt that IFCI and Tourist Finance Corporation who had
executed the deed of transfel' in favour of R Hotels and were G
parties to suit, were bound by the said interim injunction. The
intel'im injunction was only to the effect that the liability ofBHEL
to repay the amount of Rs. 15.21 Crol'es up to particular date
was to be communicated and recognised to any subsequent
purchaser. The recognition of right of the plaintiff of receiving of
H
440 SUPREME COURT REPORTS [2016] 8 S.C.R.
A Rs. 15.21 Crores was with the object that anyone purchasing the
hotel unit should be aware of the liability and said liability should
also be adverted and taken care of. [Para 33)(452-E-G]
1.5 It has been held in Anita lllternational liers us Tungabadra
Sugar Works Mazdoor Sangh and Others that it is not open either
B a party to the tis or to any third party to determine at their own
that an order passed by a Court is valid or void. A party to the tis
or the third party who considers an order passed by a court as
voidable or non est, must approach the court of competent
jurisdiction to have the said order set- aside on such grounds, as
may be available in law. [Para 41][456-F]
c
1.6 The Division Bench of the High Court rightly took not
of the entitlement of EIH to receive Rs. 15.21 Crores, which was
the condition of the agreement was to be reflected in any future
transaction by virtue of the injunction order dated 18'h March,
2005 dealing with the property. There is no error in the directions
D issued by Division Bench of the High Court, directing 1'' and 2•d
Respondent, i.e., erstwhile owner and s•h Respondent to deposit
the sum of Rs. 15.12 Crorcs. However, it was not necessary for
the High Court to presume that the conditions of deposit, as
ordered by the court would not be complied with. The orders of
E the court arc issued to be complied with and a court docs 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 s•h
Respondent' was uncalled for. The interim order passed by the
F High Court, directing for deposit of Rs. 15.12 Crorcs has done
substantial justice between parties. However, the directions
issued by the Division Bench need to be affirmed. The time is
extended for deposit of the amount till 31" January, 2017. (Para
42, 43 and 44)(456-G-H; 457-A, B-FJ
G 1.7 The Division Bench as well as Single Judge has already
noted that hotel has already commenced its operation and
contracts have been made with third parties for the operation of
the hotel and bookings arc also being taken from the customers.
This Court has noticed the directions issued by Division Bench,
H directing the defendant Nos. 1, 2 and 8 to the suit C.S. No. 257 of
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 441
2005 to deposit an amount of Rs. 15.21 Crores which order had A
done substantial justice between parties. Taking into
consideration the overall circumstances, specially when issues
raised in C.S. No. 164 of 2011 are yet to be adjudicated, the orders
passed by both Single Judge and Division Bench, r~fusing to grant
interim injunction in view 'of the facts, cannot be faulted. [Para
8
47)(458-E-F)
Nahar Industrial Enterprises Limited v. Hong Kong &
Shanghai Banking Corporation (2009) 8 SCC 646 :
2009 (12) SCR 54; Century Flour Mills Ltd. v. S.
Suppiah and Others AIR 1975 Madras 270; Delhi
Development Authority v. Skipper Construction Co. (P) c
Ltd. and Another (1996) 4 SCC 622 : 2009 (12) SCR
54; Anita International v. Tungabadra Sugar Works
Mazdoor Sangh and Others (2016) 9 SCC 44 -
referred to.
Clarke and Others v. Chadburn and Others 1985 of All D
ER 211 - referred to.
Case Law Reference
2009 (12) SCR 54 referred to Para 30
AIR 1975 Madras 270 referred to Para34 E
2009 (12) SCR 54 referred to Para 36
(2016) 9 sec 44 referred to Para 37
CIVILAPPELLATE JURISDICTlON: Civil Appeal Nos. 11886-
11887 of2016. F
From the Judgment and Order dated 26.07.2011 of the High Court
of Judicature at Madras in C. M.A. No. 798 of 2011 and M. P. No. 1 of
2011.
WITH
G
C. A. Nos. 11888-11889of2016.
K. K. Venugopal, K. V. Vishwanathan, Sr. Advs, Manu Nair, lshan
Gaur, S. S. Shroff, Advs. for the Appellants.
Jaideep Gupta, Siddhartha Mitra, Sr. Advs, Ms. Roopaseth Mitra,
H
442 SUPREME COURT REPORTS (2016) 8 S.C.R.
A S. Patra (For. Mis. Khaitan & Co.), Rakesh K. Sharma, A. G. Garg,
Rakesh Garg, M. N. Singh, Ms. Shweta Garg, Advs. for the Respondents.
The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. i. Leave granted.
B 2. These appeals along with connected appeals although emanates
from two different suits tiled by the same plaintiff, but the parties being
common and sequence of facts being inter-related, we have heard the
appeals together and they are being decided by this common judgment.
Civil Appeal Nos.11886-ll887 Of 2016
C (Arising Out of SJ,PCC)Nos. 23410-11 of 2011)
3. These appeals have been filed against the judgment and order
dated 261h July, 2011 passed by High Court of Madras in C.M.A. No.
798 of201 I and MP No. I of201 I arising out ofC.S. No. 257 of2005
renumbered as OS No. 12159 of20 I 0. Brieffacts of the case, necessary
D to be noted for deciding the appeal are:
· The EIH Ltd., Respondent No. I (hereinafter referred to, as EIH)
to the appeal is a company which operates a chain ofluxury hotels. The
Oberoi Hotels Private Ltd., Respondent No. 2 owns a brand name
'Oberoi'.
E 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 Jrd Respondent Balaji Hotels & Enterprises Ltd. (for short,
BHEL). The agreement provided that Ell-I would provide its technical
knowledge and skill required for operation of hotel, which was being
F 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 I0, 2000, it was recorded that in total Rs. IS
Crores 12 Lacs have been received by BHEL, repayment of which is to
G be made within 24 months from the date of the principal agreement
dated 12111 June, 2000. It appears that amount could not be repaid hence
another agreement was entered between EIH and BHEL on 4111 February.
2002. The agreement recorded that, it has now been mutually agreed by
the BHEL and EIH that EIH will no longer participate in the hotel
H operations hence the Technical Service Agreement will be terminated.
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 443
[ASHOK BHUSHAN, J.]
EIH, further stipulated that No-Objection to BHEL shall be given for A
selling, leasing or otherwise transferring the hotel unit to any other
company whether subsidiary or not, or to any other company or entity
either directly or indirectly or otherwise. It was further agreed that BHEL
shall refund the amount of Rs. 15.12 Crores alongwith interest.
5. Relevant Clauses F and G of the Agreement, are as follows: B
F. It is also agreed by and between the parties that BHEL shall
refund the said amount of Rs. I 5.12 Crores as mentioned in clause D
above along with interest as applicable on the above amounts on the
terms and conditions hereinafter contained.
G. It is also agreed by and between the parties that BICL will C
execute an irrevocable guarantee in favour of EIH guaranteeing the
payment of the said sum of Rs/ 15.12 Crores along with interest as
applicable and in consideration of such guarantee, EIH has agreed to
give BHEL time up to 31 11 December, 2002 to repay the said sum of Rs.
IS .12 Corers with interest as applicable. o
6. On the same day, a Letter of Guarantee was issued by Balaj i
Industrial Corporation Ltd. the 41h Respondent in this appeal,
unconditionally, absolutely and irrevocably guaranteeing the payment of
Rs. 15.12 Crores, in the event, BHEL did not paid the subject amount of
Rs. I 5.12 Crores within 31 11 December 2002. E
7. The BHEL had obtained financial assistance from IFCI, the
71h Respondent and and Tourism Finance Corporation oflndia Ltd., the
81h Respondent. EIH came to know that Tourism Finance Corporation
India Ltd. (for short TFCI) had issued advertisement inviting offer for
take over (joint venture) sale of hotel project of BHEL. The EIH wrote F
to TFCI on S•h September, 2002 informing about the agreements entered
between EIH and BHEL and further stating that till sum of Rs. I 5.12
Crores along with interest is not refunded EIH would have the exclusive
right to operate the hotel. BHEL on s•h June, 2004 acknowledged and
confirmed the principal sum of Rs. I 5. I2 Crores being outstanding as
per books of accounts of March 31 ", 2004 with interest. A suit in the G
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
H
444 SUPREME COURT REPORTS [2016) 8 S.C.R.
A dated 26'" Octobe1; 1988 and the Project Consultancy
Agreement and Royalty Agreement both dated 26'"
October, 1988 and the Agreements dated 12'" January,
2000, 10'" June, 2000 and 4'" February 2002 are valid.
legal and subsisting and are binding and enforceable
on the Defendant No. 3 to 7 and /or its assigns.
B
(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.
c 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 26'" October, 1988 and the Project Consultancy
D Agreement and Royalty Agreement both dated 26'"
October, 1988 and the agreements dated 12'" January,
2000, 10'" June, 2000 and 4'" February 2002.
(c) Costs
(d) Such further and other reliefs. "
E
8. An application was also filed by the EIH and Oberoi Hotels (P)
Ltd. who were PlaintiffNos. I and 2, for grant of temporary injunction.
The learned Single Judge had issued temporary injunction on 18.03 .2005.
9. After the grant of temporary injunction, it appears that in the
year 2007 proceedings were initiated by IFCI by issuing notice under
F
Section 13 sub Section (2), Securitisation and Reconstruction ofFinancial
Assets and Enforcement of Security Interest (SARFAESI) Act, 2002
demanding amount due from BHEL.
I 0. Proceeding under Sarfaesi Act, 2002 proceeded and the hotel
G asset of BHEL was transferred in favour of one Robust Hotels (P.)
Ltd.(the appellant in C.A.Nos ..... of 2016 (arising out of SLP © No.
23410-11 of201 I). A transfer deed dated 51h July, 2007 was issued by
IFCI and TFCI in favour of Robust Hotels (P) Ltd. (hereinafter referred
to as Robust Hotels). All the land, together with erections, plant and
machinery were transfe1Ted to Robust Hotels. EIH filed an application
H
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 445
[ASHOK BHUSHAN, J.]
in November, 2009 for impleadmentofRobust Hotels in C.S. No. 257 of A
2005 although the impleadment was opposed but was allowed by learned
Single Judge vide judgment dated 23'd March, 20 I 0. The Appellant
Nos.! to 4 in SLP (C) No. 23410-11 of 2011 were impleaded as
Defendant Nos. 8 - 11 in C.S. No. 25 I of2005. Letters Patent Appeal
against the said judgment was also dismissed by Division Bench on 22"d B
October, 2010. The Robust Hotels unsuccessfully challenged the order
of the Division Bench before this Court by filing an S.L.P., which was
also dismissed on 7t 11 January, 2011.
11. C.S. No. 257 of 2005 was renumbered as O.S.No. 12159 of
20 I0. An lA was filed by EIH being IA No. 22846 of 2010. By the
aforesaid IA No. 22846 of 20 l 0 the plaintiff prayed for an order, C
restraining Robust Hotels from having the construction of the hotel unit
or from doing, acting or taking steps contrary to or in derogation of the
rights of the plaintiff under the Technical Services Agreement and other
agreements. The application was rejected by learned Single Judge vide
judgment and order dated 9th March, 2011, challenging the aforesaid D
order 9th March, 2011, an appeal being C.M.A. No. 798 of 2011 was
preferred. The Division Bench ofthb 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 ....... of2016 (arising out ofSLP(C) No.23410-11 of2011) have
been filed against aforesaid Division Bench judgment and order dated E
26t 11 July, 2011 by the Robust Hotels and other three defendants.
C.A.Nos.11888-11889 of 2016
(arising out of SLP (C) No. 17742-43 of 2012)
12. These appeals have been filed by El H Ltd. and Oberoi Hotels F
against judgment and final order dated IJth March, 2012 passed by the
High Court of Madras in 0.S.A. No. 419 of201 l 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 G
EIH and Oberoi Hotels filed a suit, being C.S. No. 164of2011 before
the High Court of Madras praying for a declaration that Deed ofTransfer
dated 5t11 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 property dated 6th July, 2007 are illegal and null &
H
446 SUPREME COURT REPORTS (2016] 8 S.C.R.
A void and of no effect and not binding. A perpetual injunction was also
prayed lor, restrnining the defendants whether by themselves, their
servants, agents or otherwise howsoever from purporting to act, to give
effect to. or taking any steps in furtherance of _the purported deed of
transfer dated July 5. 2007 and the certificate of sale of movable and
immov1tble property also dated July 5, 2007 or from enforcing the same
8
in any mnnner whatsoever.
13. It was pleaded that the cause of action for instituting the suit
was the sale of hotel unit at Mount Road, Chennai by the financial
institutions contrary to the order passed by this High Court dated 18'"
March, 2005. The counter affidavit was also filed in O.A. No. 233 of
C 2011 in C.S. No. 164 of 2011 by Robust Hotels. A Contempt Petition
was also filed for violation of Order dated 18'11 March, 2005, passed in
O.A. No. 300 of2005 in C.S. No. 257 of2005.
14. O.A. No. 233 of201 I in C.S. No. 164 of201 I flied by EIH
and Oberoi Hotels praying for injunction was dismissed by learned Single
D Judge vide Order dated 8111 August 2011. By the same order, learned
Single Judge also dismissed the Contempt Petition (C)No. 647of2011
filed by EIH and Oberoi Hotels. Challenging the order passed by the
learned Single Judge dated 8111 August, 2011 Letters Patent Appeal was
filed by EIH and Oberoi Hotels being O.S.A. No. 419 of 2011. The
E Division Bench by the Order dated 13'11 March,2011 dismissed the appeal,
challenging which order the C.A. Nos ..... of2016 (arising out of Special
Leave Petition (C) Nos. 17742-43 of 2012) has been filed by EIH and
Oberoi Motels.
15. We have heard Shri K. K. Venugopal learned senior counsel
and K. V. Vishawanathan learned senior counsel for Robust Hotels,
F Shri Jaidcep Gupta learned senior counsel and Shri Siddharth Mitra learned
senior counsel have appeared on behalf of the EIH and Oberoi Hotels.
16. Shri K. K. Venugopal, in support of his appeal, contends that
the Division Bench of Madras High Court erred in passing an interim
order on 26'" July, 2011 whereas there was no case made out by the
G EIH and Another for grant ofany interim order. The Robust Hotels has
purchased the hotel unit under Sarfaesi Act, 2002 and the property has
been conveyed to the Robust Hotels free from any encumbrance. The
proceedings under Sarfaesi Act, 2002 cannot be made subject matter of
challenge before a Civil Court. Section 34 of Sarfaesi Act, 2002
H completely oust the jurisdiction of Civil Court. He contends that
ROBUST HOTELS PVT. LTD. & ORS. v. Ell-I LIMITED & ORS. 447
[ASHOK BHUSHAN, J.]
entitlement to recover the amount of Rs. I 5.21 Crores by EIH if at all A
was against the Balaji Hotels & Enterprises Ltd. and Balaji Industrial
Corporation Ltd., for which it was open for Ell-I to take appro)lriate
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. B
1t 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 furthe.r submitted that C.A.Nos ....of 2016 (arising out of
Special Leave Petition (C) Nos. 17742-43 of20l 2) filed by EIH deserved
to be dismissed since both learned Single Judge and Division Bench C
have rightly held that the transfer on 5'h July 2007 made in favour of
Robust Hotels could not have been challenged in C.S. No. 164 of201 I
in view of Section 34 of Sarfaesi Act, 2002.
17. Shri Jaideep Gupta and Siddharth Mitra learned senior counsel,
appearing for EIH have vehemently opposed the submissions raised by D
Shri K. K. Venugopal. It is contended by learned senior counsel appearing
for EIH and Another that the order passed by the Division Bench on
26•h July, 2011 is perfectly in accordance with law, which need no
interference by this Court in exercise ofjurisdiction under Article 136 of
the Constitution. It is submitted that interim order has been issued by
Division Bench of Madras High Court being folly satisfied on prima E
facie case of the Ell-I Ltd., the balance of convenience and irreparable
loss being in favour of the plaintiffs. It is contended that injunction order
dated I81h March, 2005 issued in C.S. No. 257 of 2005, has been
violated by the financial institutions. Any action taken, in bre11ch of
interim injunction order, is to be set aside and no party can be allowed to F
take benefit of its wrong committed in breach of an order of the Court.
It is contended that financial institutions and erstwhile owners of the
hotel unit were made aware of the interim injunction order dated l 81h
March, 2005 and despite the said injunction order, they transferred the
unit without taking into consideration the right of the EIH flowing from
the contracts entered between EIH and erstwhile owner as noted above. G
18. One of the conditions of last agreement dated 4'11 February,
2002 was to make payment ofan amount of Rs. I 5.21 Crores by erstwhile
owner before transferring the right in the hotel unit including right to run
the hotel in favour of any entity.
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448 SUPREME COURT REPORTS [2016] 8 S.C.R.
A 19. The Order passed by Division Bench dated 26'h July, 2011
does complete justice between parties, and Division Bench has exercised
jts discretionary jurisdiction in granting the relief which need no
interference by this Court in exercise ofjurisdiction under Article 136 of
the Constitution.
B 20. Coming to appeal, filed by EIH against the Order dated 13 1h
March, 2012, it is contended that all actions in breach of an interim
injunction have to be set aside and the Court is fully competent to restore
status quo ante. It is contended that in event where an action is taken in
disregard of any interim injunction passed by a coUJ1, the question of
prima facie case, balances of convenience and irreparable loss have
C not to be looked into and the Court has to undo the wrong done in breach
of court's order.
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
D actions taken in breach of the injunction order I 8'h 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.
E
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 of201 l.
24. The interim directions issued by Division Bench are in following
F three parts:
·'(i). This Court without prejudice, directs the I st and 2""
respondents I erstwhile owners I BH and EL and another
or the 8'" respondent I the present owner I Robust Hotels
Private Limited to deposit a sum of Rs. 15.12 Crores into
the credit ofO.S. No. 12159 of20 I 0 on or before 31st August
G
2011.
(ii). After such deposit has been made the learned trial judge
shall dispose the case within a period of three months on
merits, without being influenced by this Court's findings.
H
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 449
[ASHOK BHUSHAN, J.]
(iii) If the Condition of deposit as ordered by this Court, is A
not complied with by either of the parties, the interim
injunction, restraining the 81h respondent/Robust Hotels
Private Limited, from acting or taking any steps contrary to
and/or in derogation of the rights of the petitioners under
the technical service agreement, the projects consultancy
8
agreement and the Royalty agreement all dated October
26, 1988, entered into between the petitioners /EJH and
another and the respondents 1 and 2/B.H. and EL and BICL
will come into effect from 01.09.2011."
25. As noted above the agreement dated 4•h February, 2002
Annexure P. 4 between Balaji Hotels Enterprises Ltd. and its successor
c
Balaji Industrial Corporation Ltd. with EIH contemplated that EIH will
no longer participate in the hotel unit and Technical Service Agreement
will beterminated and BHEL shall refund the amount of Rs. 15.12 Crores
for which time was extended by EIH to BHEL by 31st December 2002.
When the EIH came to know that Tourism Finance Corporation India D
Ltd. has issued an advertisement for inviting offers for take over I joint
venture, sale of hotel brought at Mount Road, Chennai it immediately
wrote to Tourism Finance Corporation India Ltd. informing about its
agreement with BHEL. The Ell-I has also informed in writing vide letter
dated 15th July, 2004 Annexure P. 8 to the Asset Reconstruction Company
(India) Ltd. about their advance of Rs. 15.12 Crores which it had made E
to BHEL.
26. Subsequently, suit, namely, C.S. No. 257 of2005 was filed by
the Ell-I Ltd. and Oberoi Hotels, plaint of which suit has been brought on
record by annexure P. 14.
F
27. Interim injunction was issued by the learned Single Judge of
the High Court in the aforesaid suit to the following effect:
"That 1. As.w:ts Reconstruction Company (India) Limited,
2. JCJCJ Bank Limited 3. JFCJ Limited 4. Tourism Finance
Corporation of India Limited, and 5. Anand Rathi
G
Securities Private Limited, the respondents 3 to 7 herein,
whether by itself. its servants, agents and/or assigns or
otherwise howsoever be and are hereby restrained by
an order of interim injunction until further orders of
this court ji·om dealing with, disposing of selling and/
1-1
450 SUPREME COURT REPORTS (2016] 8 S.C.R.
A or encumbering in any manner how.soever the hotel unit
of the Respondent No. 1 situated at Mount Road,
Chennai in favour of any person without disclosing the
rights of the Applicants to operate and manage tire hotel
in terms of the Technical Services, Project Consultancy
& Royalty Agreement dated 26th October 1988 and the
B
Agreements dated 1211' January 2000, 1O'" June. 2000
and 4'" Februmy 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
i1tjunction from dealing with, disposing of, selling and/or encumbering in
c any manner howsoever the hotel unit of Balaji Hotels & Enterprises
Ltd .(Bl-IEL ), 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 26 111 October,
1988 and the Agreements dated 12 111 January 2000, I 0'11 June, 2000 and
D 4111 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
E dated 5111 July, 2007 transferred the hotel unit to Robust Hotels without
disclosing the rights of the applicant as provided by the Agreement ·
mentioned therein. The Agreement dated 4111 July, 2002 clearly provided
that the BHEL was required to repay the amount of Rs. 15.21 Crores to
the EIH by 31" December, 2002 whereaftcr, EIH had nothing to do with
the operation of the hotel.
F
19. Learned senior counsel for the appellants have placed much reliance
on the Section 34 of the Sarfaesi Act, 2002. Section 34 of the Sarfaesi
Act, 2002 provided as follows:
"34. Civil court not to have juri.sdictio11. - No civil court
shall have jurisdiction to entertain any .suit or
G
proceeding in respect of any matter which a Debts
Recovery Tribunal or the Appellate Tribunal is
empowered by or under this Act to determine and no
inj1111ctio11 shall be granted by any court or other
authority in respect of any action taken or lo be taken
H
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 451
[ASHOK BHUSHAN, J.]
in pursuance of any power conferred by or under this A
Act or under the Recovery of Debts Due lo Banks and
Financial Institutions Act, 1993 (51 of 1993). ,;
30. The scope and ambit of Section 34 ofSarfaesi Act, 2002 have
been considered by this Court in several cases. It is sufficient to refer
the judgment of this Court in Nt1lwr lmlustri<tl Enterprises Limite<I B
Versus Hong Kong & Sltattglwi Banking Corporation (2009) 8 SCC
646. This Court held that the jurisdiction of the Civil Court is plenary in
nature, unless the same is ousted, expressly or by necessary implication,
it will have jurisdiction to try all types of suits.
31. Following was laid down in para 110 -111 :- c
"l 10. It must be remembered that the jurisdiction of a
civil court is plenary in nature. Unless the same is
ousted, expressly or by necessary i111plicatio11, it will
have jurisdiction to t1y all types of suits.
111. In Dhulabhai v. State of MP., this Court opined: D
{AIR pp. 89-90, para 32)
"32. ... The result of this inquiry illto the diverse
views expressed in this Court may be stated as follows:
(2) Where there is an express bar of the jurisdiction of
E
the court, an examination of the scheme of the particular
Act to find the adequacy or the sufficiency of the
remedies provided may be relevant but is not decisive to
smtain the jurisdiction of the civil court.
Where there is no express exclusion the examination
F
of the remedies and the scheme of the particular Act to
find out the intendment becomes necessary and the result
of the inquiry may be decisive. In the latter case ii is
necessmy 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 G
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. "
H
452 SUPREME COURT REPORTS [2016] 8 S.C.R.
A 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.
B (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."
c Thus the bar of jurisdiction of Civil Cou1t 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 ElH were barred by Section 34 or not, since the issue are yet to
be decided on merits and the appeal by Robust Hotels have been filed
D only against an interim order.
33. The submissions, which have been much pressed by learned
senior counsel for ElH is on the effect and consequence of acting in
breach of injunction order dated 18'" March, 2005. At the time, when
injunction order was issued by learned Single Judge, Robust Hotels was
E not in picture, however, subsequently, it has also been impleaded in the
suit and the challenge to the impleadment of Robust Hotels has failed up
to this Court. There can be no doubt that IFCl and Tourist Finance
Corporation who had executed the deed of transfer in favour of Robust
Hotels and were parties to suit, were bound by the said interim injunction.
The interim injunction was only to the effect that the liability ofBHEL to
F repay the amount of Rs. 15.21 Crores up to particular date was to be
communicated and recognised to any subsequent purchaser. The
recognition of right of the plaintiff of receiving of Rs. 15.21 Crores was
with the object that anyone purchasing the hotel unit should be aware of
the liability and said liability should also be adverted and taken care of.
G 34. Learned senior counsel for the ElH has referred to and relied
on the judgment of the Full Bench of Madras High Court in Century
Flour Mills Ltd. Versus S. Suppiah mu/ Others AIR 1975 Madras
2 70 and another judgment reported in 1985 of All E11gla11d Report
211 Clarke and Others Versus Chadburn amt Others, for the
proposition that any action taken in disobedience or disregard in injunction
H
ROBUST HOTELS PVT. LTD. & ORS. v. E~H LIMITED & ORS. 453
[ASHOK BHUSHAN, J.]
order, becomes void & illegal. A
35. Madras High Court in Century Flour Mills Ltd. stated
following in para 9:
"In our opinion, the inherent powers of this court under
Section 151 C.P. C. are wide and are not subject to any
limitation. Where in violation of a stay order or B
injunction against a party, something has been done in
disobedience, it will be the duty of the court as a policy
to set the wrong right and not allow the perpetuation of
the wrong doing. In our view, the inherent power will
not only be available in such a case. but it is bound to c
be exercised in that manner in the interests of justice.
Even apart from Section 151, we should observe that
as a matter of judicial policy, the court should guard
against itself being stultified in circumstances like this
by holding that it is powerless to undo a wrong done in
disobedience of the court :1· orders. But in this case ii is D
not necessmy 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. S11ppia/i and Others and Clarke mu/ Others Versus
Chadburn mu/ Others (Supra) had been relied and approved by this E
Court in Delhi Development Authority Versus Skipper Construction
Co. (P) Ltcl mu/ Another (1996) 4 SCC 622.
37. Another judgment relied upon is Anita International Versus
Tungabadra Sugar Works Mazdoor Sangh am/ Others (20I6) 9 SCC
44. In the aforesaid case, in a Company Petition, filed in the Madras F
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
0.A. was filed before the Debt Recovery Tribunal by the Bank for the G
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 before the High Court of
Madras, seeking leave to proceed before Debt Recovery Tribunal (DRT),
Bangalore.
H
454 SUPREME COURT REPORTS [2016] 8 S.C.R.
A 38. The High Court, while granting the leave to the State Bank of
Mysore passed an order that no coercive steps are to be taken against
the assets of the company during or after concluding all the proceeding
before the tribunal. The order passed by Madras High Court has been
extracted in para 3 of the judgment which is to the following effect:
B '"(3) The Company Court in the High Court of Madras,
while granting leave to State Bank of Mysore, passed
the following order on 10.. 2000 (while disposing of
Company Applications Nos. 1251-53 of 1999):
This company application, praying to this Court to
c grant leave to the applicant Bank to proceed and
prosecute further OA No. 1300 of 1997 filed by them
against the respondent Company in the Debts Recovery
Tribunal at Bangalore.
Company applications coming on this day before
D this Court for hearing in the presence of Mr. R.
Varichandran, Advocate for the applicant, herein and
the Official Liquidator, High Court, Madras, the
respondent, appearing in person, and upon reading the
Judges summons and affidavit and report of the Official
Liquidator filed herein, the court made the following
E orders:
Leave is granted subject to the condition that the
Official Liquidator is impleaded and no coercive steps
are taken against the assets of the Company during or
after the conclusion of the proceedings before the
F Tribunal. "
39. A perusal of the above order reveals that leave was granted
subject to the condition that the Official Liquidator was imp leaded before
ORT, Bangalore, and further that no coercive steps would be taken
against the assets of the Company Deve Sugars Ltd., during or after the
G conclusion of proceedings before DRT, Bangalore.
40. It appears that in the recovery proceedings, the assets were
auctioned and Anita Internationals were the auction purchaser. The issue
was raised before the High Court that in view of the order of Madras
High Court dated I0.03.2000, proceedings for recovery as well as
H
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 455
[ASHOK BHUSHAN, J.]
confirmation of the auction were invalid. It was also contended before A
the High Court that the Company Court had no jurisdiction, the arguments
raised before the Court that Company Court has no jurisdiction and it
was a Debt Recovery Tribunal which has exclusive jurisdiction, was
rejected by this Court. It is usefulto refer para 49 and 51 of the judgment
which is to the following effect:
B
"(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 c
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 D
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 Office1:
It was submitted that a Company Court has no
jurisdiction in the matter. The learned counsel for the E
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 Corpn. and Official
Liquidator cases. F
(51.) It is not possible for us to accept the contentions
advanced on behalf of the appellants. In this behalf it
would be relevant to mention that in M V. Janardhan
Reddy case the Company Court by an order dated
13.8.1999 required that its permission should be G
obtained before the Recovery Officer finalised the safe.
Thereafter, the Company Court by an order dated
25.03.2005 directed that sale by the Recovery Officer
was subject to confirmation by the Company Court. Jn
the above sequence offacts, this Court clearly held that
H
456 SUPREME COURT REPORTS [2016] 8 S.C.R.
A the condition imposed by the Company Court could not
be violated by the Recove1y Officer. It was concluded
that the sale made by the Recovery Officer in violation
of the orders passed by the Company Court was without
the authority of laH\ the same was accordingly set aside.
The explanation tendered by the learned Senior Counsel
B
representing the appellants was that even in the above
iudg111e11t, this Court had not disturbed the exclusive
iurisdiction of a Recovery Officer in executing the
recovery certificate. In our considered view, the above
contention is immaterial to the issue under
c consideration. The issue under consideration is whether
or not an order passed .by the Company Court(in the
present case the order dated 10.3.2000) was binding
on the Recovery Officer? And, whether the proceedings
conducted by the Recove1:v Officer in violation of the
above order were sustainable in law? We have no
D
hesitation in concluding that in M V. Janardhan Reddy
case, an order passed by the Company Court was held
to be binding on the Recove1y Officer. Based on exactly
the same consideration, we are of the view that the
acceptance of the bid of Anita International by the
E Recovery officer on 11.8.2005 and the confirmation of
the sale in its favour on 12.9.2005 were clearly
impermissible and therefore. deserve to be set aside. "
41. This Court further held that it is not open either a party to the
/is or to any third pa11y to determine at their own that an order passed by
F Coui1 is valid or void. A party to the /is or the third party who considers
a
an order passed by a cou11 as voidable or non est, must approach the
court of competent jurisdiction to have the said order set- aside on such
grounds, as may be available in law. This Court held that the order of the
· Company Court of Madras High Coui1 was to be complied with and
sale held in violation of the said order was to be set aside.
G
42. The entitlement of EIH to receive Rs. 15.21 Crores, which
was the condition of the agreement dated 41h February, 2002 was to be
reflected in any future transaction by virtue of the injunction order dated
I 81h 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
H
ROBUST HOTELS PVT. LTD. & ORS. v. EIH LIMITED & ORS. 457
[ASHOK BHUSHAN. J.]
the directions issued by Division Bench of the High Court, directing I st A
and 2nd Respondent, i.e., erstwhile owner and gt1i 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 B
comp Iied with and a court does not lack power to ensure the compliance
by appropriate proceedings. Thus, fmiher directions of the High Comi
that 'if the condition of deposit as ordered by this court has not complied
with by either of the parties .... ', interim injunction, restraining the gt1i
Respondent' was uncalled for. The interim order passed by the High
Comi, directing for deposit of Rs. 15.12 Crores has done substantial c
justice between parties, which need no interference by this Court in
exercise of its jurisdiction under A1iicle 136. We, however, are of the
view that the directions issued by the Division Bench in para 38 need to
be affirmed only to the following extent:
"'(a) (i). This Court without prejudice, directs the 1" and D
2'"1 respondents I erstwhile owners I Bil and EL and
another or the 8'" respondent I the present owner I
Robust Hotels Private Limited to deposit a sum of Rs.
15.12 Crores into the credit of O.S. No. 12159of2010
on or before 31" August 2011." E
44. It goes without saying that the trial judge has to expeditiously
proceed to decide the suit. The deposit was to be made under the order
of the High Cou1i till 3 l't August, 2011. This Comi passed an interim
order on 29th August, 2011 due to which no deposit was made, we thus
extend the time for deposit of the amount till 31st January, 2017. The F
appeals filed by Robust are disposed of as above.
45. Now, we come to appeals filed by EIH. EIH filed an appeal
against the order of the Division Bench dated 13t1r March, 2012 by which
order, the Division Bench has dismissed the appeal against the order
dated gth August, 2011, passed by the learned Single Judge. Order dated G
gt1r August, 2011 was passed in O.A. No. 233of2011 by which application,
the plaintiff has prayed for interim injm1ction, restraining the defendants
from purporting to act or to give effect to or taking any step in furtherance
of the purported deed of transfer dated 5i1r July, 2007 and the certificate
of sale of movable and immovable property dated 5'h July, 2007 or from
H
458 SUPREME COURT REPORTS [2016] 8 S.C.R.
A enforcing the same in any manner whatsoever pending the suit.
46. The learned Single Judge passed an order, refusing the interim
order as prayed for in O.A. No. 233of2011. The Division Bench, while
dismissing the appeal made following observations in Para 62 at page
50:
B "62. The maintainability of suits, which are pending on
the file of the City Civil Court as well as on the file of
this Court in C.S. No. 164 of 2011, can be adjudicated
in the course of trial and this Court finds some force in
the submission made by the learned senior counsel
c appearing for the appellants that the said findings may
definitely prejudice their case. Hence, this Court
expunge the observations made by the learned Judge
with regard to the maintainability of the suit in 0. S.
No. 12159 of 2010, pending 011 the file the 111 Addi.
Judge, City Civil Court, Chennai and C.S. No. 164 of
D 2011 pending 011 the file of this Court."
47. The Division Bench as well as learned Single Judge has already
noted that hotel has already commenced its operation and contracts have
been made with third parties for the operation of the hotel and bookings
are also being taken from the customers. We have already noticed the
E directions issued by Division Bench, directing the defendant Nos. I, 2
and 8 to the suit C.S. No. 257 of2005 to deposit an amount of Rs. 15.21
Crores which order had done substantial justice between parties. Taking
into consideration the overall circumstances, specially when issues raised
in C.S. No. 164of2011 are yet to be adjudicated, the orders passed by
F both learned Single Judge and Division Bench, refusing to grant interim
injunction in view of the facts as noted above cannot be faulted.
48. In result, the appeals of Robust Hotels & ors. are disposed of
by modifying the order of the Division Bench as above. The appeals of
EIH Ltd. and ors. are dismissed.
G
Nidhi Jain Appeals disposed of.
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