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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
Hanudev Investments Pvt. Ltd., Represented by its Director, Shobana Ravi, Chennai - Appellant
Versus
Oriental Bank of Commerce, Chennai & Another - Respondents
O.A. No. 199 of 2019 & A. Nos. 1637 & 1639 of 2019 in C.S. (Comm.Div) No. 636 of 2018
Decided on : 30-04-2019
The court held that the re-auction notice did not violate the court's previous order, as it made it clear that the plaintiff's pari passu charge would be recognized and that the sale proceeds would be distributed accordingly. The court also held that the reduction in the reserve price was not a violation of the order, as it was done in accordance with the SARFAESI Rules and was necessary to ensure that the auction was successful.
Fact of the Case:
The plaintiff, a company, had a pari passu charge over certain properties that were being auctioned by the defendant, an asset reconstruction company (ARC). The plaintiff filed a suit to protect its pari passu charge, and the court issued an order restraining the defendant from conducting the auction. The defendant then issued a re-auction notice, which the plaintiff claimed violated the court's order. The plaintiff filed three applications, seeking to restrain the auction and to have the re-auction notice declared void.
Finding of the Court:
The court found that the re-auction notice did not violate the court's previous order, as it made it clear that the plaintiff's pari passu charge would be recognized and that the sale proceeds would be distributed accordingly. The court also held that the reduction in the reserve price was not a violation of the order, as it was done in accordance with the SARFAESI Rules and was necessary to ensure that the auction was successful.
Issues: Whether the re-auction notice violated the court's previous order;Whether the reduction in the reserve price was a violation of the order.
Ratio Decidendi: The court held that the re-auction notice did not violate the court's previous order, as it made it clear that the plaintiff's pari passu charge would be recognized and that the sale proceeds would be distributed accordingly. The court also held that the reduction in the reserve price was not a violation of the order, as it was done in accordance with the SARFAESI Rules and was necessary to ensure that the auction was successful.
Final Decision: The court dismissed all three of the plaintiff's applications.
1. This common order will dispose of these three applications.
2. In the main suit, there is a sole plaintiff and there are two defendants. All these three applications have been taken out by the plaintiff in the main suit arraying Defendants 1 and 2 in the main suit as Respondents 1 and 2 respectively in the three applications. In this order, from hereon, parties to these three applications shall be referred to by their respective ranks in the main suit for the sake of convenience and clarity. In other words, sole applicant in these three applications, namely 'Hanudev Investments Pvt. Ltd.,' shall be referred to as 'Applicant'. Respondent No.1 in these three applications, namely 'Oriental Bank of Commerce' shall be referred to as 'Defendant No.1' and Respondent No.2 in these three applications, namely 'JM Financial Asset Reconstruction Co. Ltd.,' shall be referred to as 'Defendant No.2'. 'Respondents 1 and 2' in these three applications shall be collectively referred to as 'Defendants'.
3. Pivotal to these three applications is an e-auction notice dated 06.02.2019 for auction/sale on 01.03.2019 being a re-auction notice issued by the second defendant post common order dated 20.12.2018 made by this Court in O.A.Nos.854 and 855 of 2019.
4. As far as the instant three applications are concerned, A.No.1639 of 2019 has been taken out inter alia under Order XXXIX Rule 2-A of 'The Code of Civil Procedure, 1908' (' CPC' for brevity) alleging that the re-auction notice is in breach of common order dated 20.12.2018 made by this Court in O.A.Nos.854 and 855 of 2018. In other words, plaintiff's complaint is that the second defendant has disobeyed the said order of this Court in issuing the re-auction notice. In the light of such a complaint of breach/disobedience of the common order of this Court in issuing the re-auction notice, O.A.No.199 of 2019 has been taken out with a prayer inter-alia for an interim injunction restraining the auction/sale on 01.03.2019 and A.No.1637 of 2019 has been taken out with a prayer for stay of auction/sale on 01.03.2019.
5. Notwithstanding the nature of these three applications and the pivotal complaint therein, plaintiff has not chosen to file the common order of this Court dated 20.12.2018 made in O.A.Nos.854 and 855 of 2018 as part of the typed-set of papers filed in support of the instant three applications. Likewise, second defendant, who is defending the compliant of disobedience/breach of the said order, has also not chosen to file the said order dated 20.12.2018 along with the common counter affidavit dated 06.03.2019. To be noted, plaintiff has filed a common reply affidavit in these three applications dated 12.03.2019.
6. When this was pointed, learned counsel on both sides, namely Mr.Vineet Subramani, counsel on record for the plaintiff and Mr.Srinath Sridevan, learned counsel for the second respondent requested this Court to refer to the said order dated 20.12.2018 that is available as part of the case file before this Court.
7. To be noted, Mr.E.Venkatesh Babu, learned counsel for first defendant submitted that he has no role in the instant applications and has therefore, not filed any pleadings. It was the specific submission of learned counsel for first defendant that as the lead bank of Consortium of Banks, which had lent monies to a borrower company, which goes by the name 'RR Info Park Private Limited', the first defendant, has no role as it has admittedly assigned the entire loan to the second defendant and received the agreed consideration in full from the second defendant. It was submitted by learned counsel for first defendant that such assignment was in favour of second defendant and other asset reconstruction entities, which go by the name Edelweiss and Arcil. It was submitted that such assignment was on 07.03.2014 after ceding pari passu charge qua the property, which is subject matter of the instant applications and the main suit on 29.04.2014 in favour of the plaintiff, owing
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