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SUPREME COURT OF INDIA
RANJAN GOGOI, ABHAY MANOHAR SAPRE, JJ.
Om Aggarwal – Appellant
VERSUS
Haryana Financial Corporation and Others – Respondents
CIVIL APPEAL No.4942 OF 2007
Decided on : 23-02-2015
(b) Code of Civil Procedure, 1908 – Order VII Rule 11(d) and section 21 r/w Section 2(b)(c)(d) and 3 of the Haryana Public Moneys (Recovery of Dues) Act, 1979 – Jurisdiction of civil court – Section 3(4) takes away jurisdiction of civil court – Power given to Managing Director – Sum determined by Managing Director recoverable by Collector as arrears of land revenue. (Para 24)
(1998) 5 SCC 170 – Referred
(c) Haryana Public Moneys (Recovery of Dues) Act, 1979 – Section 2(c) – Plaintiff a defaulter – Nature of plaint being "financial assistance" – Demand fell under Section 3(4)(a) and (b) of the Act – Suit was not maintainable – Order VII, Rule 15 does not apply. (Para 25, 26)
(2003) 2 SCC 455; (1998) 5 SCC 170 – Distinguished
(d) Administration of Justice – Jurisdiction of court and adjudication – Held, civil court has no jurisdiction – No necessary to examine legality and correctness of demand on merits at this stage. (Para 33)
Facts of the case:
The plaintiff is one of the promoters of the limited company known as "M/s Indo Britain Agro Farms Limited Hisar" engaged in the manufacture of ordinary white buttons "Mushroom" at Hisar (Haryana).
Respondent No.1/defendant No.1-Haryana Financial Corporation is a "Corporation" under Section 2 (b) of the Haryana Public Moneys (Recovery of Dues) Act, 1979.
The plaintiff had taken various kinds of financial assistance from defendant No.1 for running his business.
In May 1995, defendant No.1 purchased 3 lacs equity shares of the said company at the rate of Rs.10/- per share and, accordingly, invested a sum of Rs.30 Lacs. This investment led the parties to enter into further business transactions. After several rounds of negotiations and correspondence between the parties, the plaintiff entered into an agreement styled as "Buy Back Agreement" with defendant No.1 on 16.07.1996.
In terms of the aforesaid agreement, the plaintiff's company was to enhance its equity share capital by issuing further shares to the extent of Rs.485.59 lacs whereas defendant No.1 was to subscribe Rs. 30 lacs towards the share capital of the plaintiff's Company by way of financial assistance for augmenting the business. The agreement, inter-alia, provided the terms specifying therein, the manner in which the plaintiff was to secure the investment made by defendant No.1, right of the plaintiff to purchase/buy-back the shares of defendant No.1 Corporation at the specified rates, right of defendant No.1 to nominate its nominee directors in the Board of Directors of the plaintiff's Company to monitor its affairs, right of defendant No.1 to recover their investment including a right to claim damages sustained in the transaction as arrears of land revenue from the plaintiff by taking recourse to the provisions of the Act for making recovery in the event of any default committed by the plaintiff of any term of the aforesaid agreement etc.
The plaintiff filed a suit for declaration against the defendants for a declaration that the Buy-back agreement dated 16.07.1996 be declared null and void and in alternative the recovery sought to be made by defendant No.1 by issuance of notice of demand for recovery of Rs.18.03 lacs pursuant to the said agreement is also bad in law and be set aside.
The trial Court allowed the application filed by defendant No.1 and, in consequence, dismissed the suit.
The High Court dismissed the revision in limine and upheld the order of the trial court.
Finding of the Court:
Civil court does not have jurisdiction in the matter.
Result: Appeal dismissed.
JUDGMENT
Abhay Manohar Sapre, J.
1. This civil appeal is filed by the appellant/plaintiff (hereinafter referred to as "the plaintiff) against the judgment/order dated 03.03.2005 passed by the High Court of Punjab & Haryana at Chandigarh in Civil Revision No. 3127 of 2004 which arises out of order dated 26.03.2004 passed by the Additional District Judge, Hisar in Civil Appeal No. 87/2003/2004.
2. In order to appreciate the issue involved in the appeal, few relevant facts need to be mentioned in brief.
3. The plaintiff is one of the promoters of a limited company known as "M/s Indo Britain Agro Farms Limited Hisar" which is engaged in the manufacture of ordinary white buttons "Mushroom" at Hisar (Haryana).
4. Respondent No.1/defendant No.1-Haryana Financial Corporation (hereinafter referred to as "defendant No.1"), established under the State Financial Corporation Act, 1951 is a "Corporation" under Section 2 (b) of the Haryana Public Moneys (Recovery of Dues) Act, 1979 (for short "the Act").
5. The plaintiff had taken various kinds of financial assistance from defendant No.1 for running his business.
6. In May 1995, defendant No.1 with a view to extend financial assistance to the plaintiff's Company purchased 3 lacs equity shares of the said company at the rate of Rs.10/- per share and, accordingly, invested a sum of Rs.30 Lacs. This investment led the parties to enter into further business transactions. After several rounds of negotiations and correspondence between the parties, the plaintiff entered into an agreement styled as "Buy Back Agreement" with defendant No.1 on 16.07.1996 (Annexure P-6).
7. In terms of the aforesaid agreement, the plaintiff's company was to enhance its equity share capital by issuing further shares to the extent of Rs.485.59 lacs whereas defendant No.1 was to subscribe Rs. 30 lacs towards the share capital of the plaintiff's Company by way of financial assistance for augmenting the business. The agreement, inter-alia, provided the terms specifying therein, the manner in which the plaintiff was to secure the investment made by defendant No.1, right of the plaintiff to purchase/buy-back the shares of defendant No.1 Corporation at the specified rates, right of defendant No.1 to nominate its nominee directors in the Board of Directors of the plaintiff's Company to monitor its affairs, right of defendant No.1 to recover their investment including a right to claim damages sustained in the transaction as arrears of land revenue from the plaintiff by taking recourse to the provisions of the Act for making recovery in the event of any default committed by the plaintiff of any term of the aforesaid agreement etc.
8. Defendant No.1, however, found that the plaintiff has failed to ensure compliance of the terms of the aforesaid agreement. They were, therefore, constrained to invoke the terms of the agreement and got the notice issued through Tahsildar against the plaintiff for recovery of Rs.18.03 Lacs under the Act as arrears of land revenue on 28.02.2002 (Annexure P-14).
9. It is with the aforesaid facts of the case, which were pleaded in the plaint, the plaintiff filed a suit for declaration being Civil Case No. 328-C of 2002 in the Court of Civil Judge at Hisar (Annexure P-15) against the defendants for a declaration that the Buy-back agreement dated 16.07.1996 be declared null and void and in alternative the recovery sought to be made by defendant No.1 by issuance of notice of demand for recovery of Rs.18.03 lacs (Annexure P-14) pursuant to the said agreement is also bad in law and be set aside.
10. The reliefs claimed in the plaint reads as under:
"It is, therefore, prayed that a decree for declaration to the effect that the Buy-back Agreement dated 16.7.1996 executed by the plaintiff at Hisar with defendant No. 1 is null and void ab initio and is liable to be set-aside and in the alternative for declaration to the effect that the recovery of defendant No. 1 on the basis of this agreement has become time barred and tha
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