Pil Industries Limited Vs Deccan Chronicle Holdings Ltd and Others - Citation 1102921 - Court Judgment

Judgment:

Oral Judgment:

Mentioned. Not on Board. Taken on Board.

2. By an order dated 23rd August 2012, this Court (Coram: Smt. R.S. Dalvi, J.) granted Leave under Clause XII of the Letters Patent Act, 1866 to the Plaintiff, to file the above suit before this Court. The Defendant No.1 - Deccan Chronicle Holdings Limited - has now taken out the above Chamber summons praying that the said leave granted on 23rd August 2012 be revoked.

3. Briefly set out, the relevant facts are as under:

4. The Plaintiff is a Company duly incorporated and registered under the Companies Act, 1956 and having its Registered Office at Mumbai. The Plaintiff inter alia renders financial services including providing short term loans to its customers. The Defendant No.1 is a Listed Company, incorporated under the provisions of the Companies Act, 1956 and having its Registered Office at Secunderabad, Andhra Pradesh. The Defendant No.1 interalia carries on business of publishing and distributing of news papers. The Defendant No.1 had availed of certain short term facilities from Defendant No.7 - Future Capital Holdings Ltd. The said facilities have been fully disbursed and advanced to the Defendant No.1 by the Defendant No.7. The Defendant Nos.2, 3 and 4 are individuals and the Directors of Defendant No.1. The Defendant Nos.2 to 4 are being sued as Personal Guarantors, as also to enforce the securities provided by them for repayment of the short term facilities given to Defendant No.1. The Defendant No 5 is a Private Limited Company and a subsidiary of Defendant No.1. Defendant No.5 inter alia carries on the business of air transport services and chartered aviation services. The Defendant No.6 is a Depository Participant under the Depositories Act, 1996. Certain shares of Defendant No.1 which were /are owned and held by Defendant Nos.2 to 4 and have been provided as security for repayment under the loan facilities advanced to Defendant No.1 are held by Defendant No.6 as the Depository Participant. Defendant No.7 is a Company incorporated under the Companies Act, 1956 and also provides financial services.

5. The loan facilities, for which recovery is sought in the present suit, were originally provided to Defendant No.1 by Defendant No.7. However, under a Deed of Assignment dated 3rd August 2012 , the said loan facilities and all the receivables, rights and benefits of the Defendant No.7 thereunder and in respect of all guarantees and securities, have been duly and validly assigned to the Plaintiff and according to the Plaintiff, it is entitled in its own right to all the reliefs claimed in the suit. However, without prejudice and in the alternative, the Plaintiff has submitted that the reliefs be granted to the Plaintiff and/or Defendant No.7 as this Court deems fit.

6. Since Defendant No.1 has failed and neglected to pay the amounts due to the Plaintiff in relation to the Loan Facility Agreement dated 11th July 2012, the present suit is filed by the Plaintiff, inter alia, for the following reliefs:

"(a)This Hon'ble Court be pleased to declare that a sum of Rs.125,00,73,845/- (Rupees One hundred and twenty five crores seventy three thousand Eight hundred and forty five) as per the particulars at "Exhibit ZZ" hereto is outstanding, due and payable to the Plaintiff or alternatively to Defendant No.7 or such of them jointly or severally as this Hon'ble Court may find entitled thereto by the Defendant No.1 to 5 jointly and severally, along with further interest thereon @ 20% per annum from the date hereof till payment or realization thereof.

(b) This Hon'ble Court be pleased to order and decree the Defendant No.1 to 5, jointly and severally to pay to the Plaintiff or alternatively to Defendant No.7 or such of them as this Hon'ble Court may find entitled thereto, a sum of (One hundred and twenty five crores seventy three thousand Eight hundred and forty five) as per the particulars of claim at Exhibit "ZZ" hereto along with further interest @ 20% per annum thereon till payment or realization thereof.

(c) This Hon'ble Court be pleased to declare that there exists a valid and subsisting mortgage by deposit of title deeds created by the Defendant No.1 and 2 in favour of the Plaintiff of the properties described at Exhibit "Q-1" hereto, and that the repayment of the amounts claimed herein are duly secured by such mortgage.

(d) This Hon'ble Court be pleased to declare that there exists a valid and subsisting mortgage of the properties to the Defendant No.5 described in Exhibit GG hereto and repayment of the amount claimed herein are duly secured by such mortgage.

(g) Without prejudice and in the alternative to prayer (c) above, and only in the event that it is held that a valid effective mortgage by deposit of title deeds has not been created on any of the properties at Exhibit Q-1 above, then this Hon'ble Court be pleased to order and decree Defendant Nos.1 and 2 specifically to perform the Agreement to create a mortgage in favour of the Plaintiff by deposit of the original title deeds with respect to the properties against their respective names described at Exhibit Q-1.

(h) Without prejudice and in the alternative to prayer (d) above, and only in the event that it is held that a valid and effective mortgage by deposit of title deeds has not been created in respect of any of the properties as described in Exhibit Q-1 then this Hon'ble Court be pleased to order and decree Defendant No.5 to specifically to perform the Agreement to create a mortgage in favour of the Plaintiff by perfecting its title to the said properties at Exhibit Q-1 hereto and depositing the original title deeds thereof with the Plaintiff by way of equitable mortgage of the properties at Exhibit GG hereto.

(i) That on such mortgages being created as per prayers (c) and (d) above, this Hon'ble Court be pleased to declare that the amounts claimed herein are duly secured by the said mortgages;

(j) That the said mortgages referred to in prayers (c) and (d) above or, on the mortgages referred to in prayers (e) and (f) above being created of the properties described at Exhibit "Q-1" and "G-G" hereto, the same be enforced against the Defendant Nos.1, 2 and 5 by sale of the said properties described at Exhibit "Q-1" and "GG" hereto under the orders and directions of this Hon'ble Court and the net sale proceeds thereof be paid over to the Plaintiff in or towards satisfaction of the amounts claimed herein;

(k) That without prejudice and strictly in the alternative to the prayers (c) and (d) and in the event of specific performance being refused, this Hon'ble Court may be pleased to order and decree the Defendant Nos.1, 2 to 5 to pay to the Plaintiff damages quantified at Rs.300,00,00,000/-;

(l) That in the event of specific performance being refused, this Hon'ble Court be pleased to declare that the Plaintiff has a valid and subsisting first charge upon the properties set out at Exhibit "Q1" and

"GG" hereto belonging to the Defendant Nos.1, 2 and 5 for payment of the amounts claimed herein;

(m) That this Hon'ble Court be pleased to enforce such charge by sale of such properties at Exhibit "Q-1" and "GG" hereto under the orders and directions of this Hon'ble Court, and the net sale proceeds thereof be paid over to the Plaintiff in or towards satisfaction of its claims herein;

(n) .. . .

(o) .. . .

(p) .. .. .

q) .. . ...

(r) That if, on the sale of the mortgaged properties the amount realized is not sufficient to satisfy the Plaintiff's claim herein and there is any deficiency in such amount realized, then a personal decree be passed against the Defendant Nos.1 to 5 jointly and severally for payment of such deficient amount;

(t) That pending the hearing and final disposal of the suit,

(i) This Hon'ble Court be pleased to appoint the Court Receiver of this Hon'ble Court as Receiver of the properties set out at Exhibits Q-1 and GG hereto as well as the shares described at Exhibit WW hereto, with all powers under Order XL of the CPC including the power to take possession of and sell the same, realize the sale proceeds thereof and pay over the sale proceeds to the Plaintiff in or towards satisfaction of the Plaintiff's dues claimed herein;

(ii) This Hon'ble Court be pleased to restrain the Defendant Nos.1 to 5 by an order and injunction from in any manner dealing with, disposing of, selling, alienating, parting with possession of or creating any encumbrances or third part, right, title or interest in the properties set out at Exhibits Q-1, and GG hereto and the shares set out at Exhibit WW hereto or any thereof;

(iii) This Hon'ble Court be pleased to pass an order and injunction restraining Defendant No.6 from allowing any transfer, sale, creation of any encumbrance or third party right, title or interest in respect of the said shares set out at Exhibit KKK hereto or any part thereof;

(iv) That Defendant No.6 be ordered and directed to provide the Plaintiff with the full and complete details of the number of shares of the Defendant No.1 available in the DP Accounts of the Defendant Nos.2 to 4 herein and of any shares transferred out from their accounts"

7. After filing of the above suit, the Plaintiff filed a Petition before this Court seeking leave under Clause 12 of the Letters Patent, to enable the Plaintiff to file the above suit against the Defendants and others before this Court. In support of its contention namely that the Plaintiff is entitled to file the suit before this Court with leave under clause 12 of the Letters Patent granted to them by this Court, the Plaintiff in clause 5 of the Petition stated as under:

"5. The Plaintiff states that, in terms of the Loan Agreements under which the interest and amounts are presently outstanding and due to the Plaintiff, repayment of the loan amounts was to be made and agreed to repayment amounts were/are to be deposited/paid. The Defendants hereto before on various occasions have received the principal loan amount in mumbai and the Plaintiff has also received the same in Mumbai. As per clause 25.1

(e) of the Facility Agreement dated 17th January 2012, all payments are to be made to such accounts as specified by the Facility Agent. The Facility Agent is Defendant No.7 who has specified the Defendant No.1 to make payments under the Facility Agreement dated 17th January 2012 in Mumbai from time to time by raising invoices which clearly prescribes that the remittance has to be made to the account of Defendant No.7 in HDFC Bank in Worli, Mumbai. It is submitted that this clearly establishes that even under the Facility Agreement dated 17th January 2012, payment has been made by Defendant No.1 and received by the Plaintiff in Mumbai and hence the said Facility Agreement dated 17th January 2012 has been performed in Mumbai. This material part of the cause of action has arisen in Mumbai, and with leave of this Hon'ble Court being granted under Clause XII of the Letters Patent, this Hon'ble Court has jurisdiction to entertain, try and dispose of the present suit since Defendant Nos.1 to 5 are not in Mumbai."

This Court by its order dated 23rd August 2012, granted leave under clause 12 of the Letters Patent to file the above suit in this Court.

8. The Defendant No.1 is the only Defendant who has taken out the above Chamber Summons praying that the ex parte order passed by this Court dated 23rd August 2012, granting leave under clause 12 of the Letters Patent to the Plaintiff to file the suit in this Court be revoked.

9. Mr. Sawant, the learned Advocate appearing for the Defendant No.1 has submitted that on a plain and meaningful reading of the averments in the plaint it is evident that the same is for determination of right, title and interest in and possession of immovable properties situated outside the territorial jurisdiction of this Court. It is submitted that the Plaintiff has sought relief in respect of immovable properties and possession through Court Receiver, which are admittedly situated outside the territorial jurisdiction of this Court. The Plaintiff on the basis of averments in the plaint is in substance seeking the relief of possession and sale of immovable properties, appointment of Court Receiver, deposit of title deeds and creation of charge in respect thereof. It is submitted that since the Plaintiff avers that they have come to know that certain properties claimed by the Plaintiff are encumbered , the relief sought in the Plaint therefore also relates to title and rights of third parties. It is submitted that though the Plaintiff has sought specific performance for creation of mortgage in respect of the immovable properties, however the relief in substance read along with the averments is in the nature primarily and substantially to seek an adjudication upon the title to the said immovable properties and/or a determination of their right and interest therein. It is therefore submitted that a reading of the plaint shows that it is in the nature of a suit relating to "suit for land". It is submitted that therefore the averments in the plaint show that the Plaintiff is seeking determination of the Plaintiff's title to the land and its possession under the purported mortgage created in respect of the said immovable properties. It is submitted that if the reliefs claimed by the Plaintiff are granted, the same would directly affect the title to or possession of land, as the Plaintiff has sought a relief for sale of immovable properties. It is submitted that the reliefs sought by the Plaintiff are only against Defendant Nos.1 to 5 who are admittedly situated and carrying on business outside the territorial jurisdiction of this Court.

10. It is further submitted on behalf of Defendant No.1 that under the Loan Agreement dated 11th July 2012 executed by and between Defendant Nos.1 to 4 and the Defendant No.7 there is a specific clause (clause No.25), whereunder the parties have agreed in case of dispute to submit only to the jurisdiction of the Court in the City of Hyderabad. It is submitted that the Plaintiff claims that under a purported Deed of Assignment dated 3rd August 2012 from Defendant No.7 all right, title and interest of Defendant No.7 under the said Loan Agreement are assigned to the Plaintiff. If that be so the Plaintiff will have to submit to the jurisdiction of the Court in the City at Hyderabad. It is submitted that the Plaintiff in its plaint and in the application seeking leave under Clause 12 of the Letters Patent has suppressed the fact that they are seeking substantial relief in respect of land/immovable properties which are situated outside Mumbai and are beyond the territorial jurisdiction of this Court. The Plaintiff has also failed to disclose that there was no complete or valid assignment in favour of the Plaintiff particularly at the time when leave was sought, more so when the alleged document of assignment was neither adequately stamped as per the laws of Maharashtra nor registered; there was no consideration paid under the said Deed of Assignment and the Defendant No.1 had not been informed by Defendant No.7 or the Plaintiff of any assignment as alleged. The Plaintiff therefore cannot rely upon clause 25(1)(e) of the Facility Agreement dated 17th January 2012, for payments to be made into the Account of Defendant No.7 in HDFC Bank, Worli, Mumbai, because that account does not belong to the Plaintiff and there is no other nominated account of the Plaintiff in Mumbai for payment.

It is therefore submitted that the Plaintiff has wrongly invoked the provisions of Clause 12 of the Letters Patent and has further wrongly obtained leave under clause 12 of the Letters Patent from this Court. It is therefore submitted that the leave granted to the Plaintiff under clause 12 of the Letters Patent by an order of this Court dated 23rd August 2012, be revoked.

11. In support of his contention that the present suit is a "suit for land", the learned Advocate for Defendant No.1 has relied on the decision of the Hon'ble Supreme Court in the case of Adcon Electronics Pvt. Ltd. vs. Daulat and another (2001) 7 SCC 698 wherein it is held that a "suit for land" is a suit in which the relief claimed relates to title to or delivery of possession of land or immovable property; whether a suit is a "suit for land" or not has to be determined on the averments in the plaint, with reference to the reliefs claimed therein; in cases where the relief relates to adjudication of title to land or immovable property or delivery of possession of the land or immovable property, it will be a "suit for land". In a suit for specific performance of an agreement for sale of the suit property, wherein relief of delivery of the suit property has not been specifically claimed, as such it cannot be treated as a "suit for land". The learned Advocate for the Defendant No.1 has also relied on a decision of the Hon'ble Division Bench of this Court in the case of Wimco Ltd., Mumbai vs. Matoshree Shelters Pvt. Ltd., Mumbai and another 2009 (5) Mh.L.J. 615 wherein the Division Bench has reiterated the above findings of the Hon'ble Supreme Court in Adcon Electronics Pvt. Ltd. (supra).

12. Mr. Virag Tulzapurkar, the learned Senior Advocate appearing for the Plaintiff has submitted that whilst deciding an application seeking revocation of leave granted under Clause 12 of the Letters Patent, the merits of the case are irrelevant. It is further submitted that the present suit is not a "suit for land", as the suit is for recovery of debt/loan and for enforcement of Defendant No.1's mortgage of the immovable properties created by the Defendants. It is submitted that there is no relief for possession of any immovable property claimed in the plaint and the interim prayer is for the Court Receiver being appointed to take possession of the mortgaged properties and to sell the same which were misconstrued to mean that the suit is a suit for land. It was further argued that merely because there is an interim prayer for the Receiver to take possession of the mortgaged property, it does not mean that the same is a suit for land. In support of this contention the Learned Senior Advocate for the Plaintiff relied on the decision of the Full Bench of this Court in the case of Hatimbhai Hassanally vs. Framroz Dinshaw 1927 BLR XXIX 498.

13. It was further submitted on behalf of the Plaintiff that clause 25 of the Loan Agreement dated 11th July 2012 specifies that the Court and Tribunal of Hyderabad have non-exclusive jurisdiction to hear the disputes arising out of the Loan Agreement. In view thereof, there is no bar against the Plaintiff to institute the suit in a Court of competent jurisdiction which is the Bombay High Court. Relying on the decision of the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. and another vs. A.P. Agencies, Salem (1989) 2 SCC 163 it is submitted that a material part of the cause of action has arisen in Mumbai and therefore the Plaintiff has rightly sought and obtained leave under Clause 12 of the Letters Patent.

14. The learned Senior Advocate appearing for the Plaintiff has further submitted that the common law principle of the 'debtor seeks the creditor' would apply to the facts and circumstances of this case. In support of his contention he relied on the decision of the learned Single Judge of the Calcutta High Court in A.K. Raha (Engineers) Ltd. v. State of Punjab AIR 1961 Calcutta 166 wherein it is held that the debtor must seek the creditor and pay him at his residence and in absence of a contract specifying the place of payment, the place of payment must be deemed to be the place where the creditor resides and the Court at that place has jurisdiction to entertain the suit. It is therefore submitted on behalf of the Plaintiff that this Court has jurisdiction to hear and entertain the present suit with leave granted under Clause 12 of the Letters Patent. It is submitted that leave was correctly granted and the Chamber Summons filed for revocation of leave granted under Clause 12 be dismissed.

15. I have considered the submissions advanced on behalf of the Plaintiff as well as the submissions advanced on behalf of Defendant No.1. I am in agreement with the submission advanced on behalf of the Plaintiff that in deciding an application seeking revocation of leave granted under Clause 12 of the Letters Patent to the Plaintiff, the merits of the case are irrelevant and am therefore not dealing with the same as to whether the Deed of Assignment executed by Defendant No.7 in favour of the Plaintiff is valid or not. The same is also not relevant since the Plaintiff has sought reliefs in the plaint in its favour or in the alternative in favour of Defendant No.7 who has originally granted facilities to Defendant No.1, and in whose favour the Agreements including the security agreements have been executed by the Defendants. The finance/term loan agreement dated 11th July 2012 executed by and between the Plaintiff - Future Corporate Resources Ltd. (FCH) as "lender" and the Defendant No.1 Deccan Chronicle Holdings Limited. as "borrower" is annexed and marked as Exhibit-R to the Plaint. Clause 5 of the said agreement pertains to repayment of loan and payment of interest. Clause 5.1 of the said agreement provides that Defendant No.1 (borrower) shall repay to the Plaintiff (FCH/lender) at the place and on the dates stipulated in the Schedule annexed to the Agreement. In Schedule II of the said agreement, the terms and conditions of the loan facility are set out. The relevant condition pertaining to place, at which payment is to be made as agreed under the said Schedule is reproduced hereunder:

"Place at which payment is to be made - Mumbai"

Clause 25 of the said agreement pertains to jurisdiction and is reproduced hereunder:

"25. Parties irrevocably agree that only the Courts and tribunals of competent jurisdiction at Hyderabad, India shall have non-exclusive jurisdiction in relation to any dispute or difference between the parties including any question as to whether or not any dispute or difference shall have arisen."

16. From the aforesaid facts, it is clear that the monies were due and payable by Defendant No.1 in Mumbai and that invoices were raised by Defendant No.7 designating the account in Mumbai into which the monies were payable. As per clause 25.1 (e) of the Facility Agreement dated 17th January 2012 all payments are to be made to such accounts as specified by the Facility Agent. The Plaintiff is the assignee of Defendant No.7 the original lender and the Plaintiff has thus stepped into the shoes of Defendant No.7. Thus, the 1st Defendant has to make payment to the Plaintiff in Mumbai. As held by the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. and another vs. A.P. Agencies, Salem, (1989) 2 SCC 163, a part of the cause of action arises where the money is expressly or impliedly payable under a contract. Since Defendant No.1 has, under clause 25 of the Term Loan Agreement agreed that in the event of any dispute, courts and tribunals of competent jurisdiction at Hyderabad shall have non-exclusive jurisdiction, since a material part of the cause of action has arisen in Mumbai, the Plaintiff has rightly sought and obtained leave under clause 12 of the Letters Patent.

17. The Learned Advocate for the Plaintiff also correctly submitted that the Common Law principle of the 'debtor seeks the creditor' applied in the facts and circumstances of the case and reliance was placed on the decision of the learned Single Judge of the Calcutta High Court in A.K. Raha (Engineers) Ltd. v. State of Punjab AIR 1961 Calcutta 166 wherein the learned Judge in paragraph 7 held as follows:

"The other ground, however, taken by Mr. Deb has substance. It has been held by Lord Williams, J. in the case of Srilal Singhania v. Anantlal, AIR 1940 Cal. 443, that in the case of a promissory note payable on demand but silent as to the place of payment, the common law rule applies and it being necessary for the debtor to seek out his creditor and pay him at his residence, in the absence of any agreed place of payment, the place of payment must be deemed to be the place where the creditor resides and the court at that place has jurisdiction to entertain the suit on the promissory note. That this common law rule applies to India has also been recognised in a decision of this Court in the case of Smt. Tulsimani Bibi v. Abdul Latif, 40 Cal WN 392 : (AIR 1936 Cal 97), in the decisions of the Bombay High Court in the case of Dhunji Shah v. A.B. Forde, ILR 11 Bom 649 at p. 656, in the case of Motilal v. Surajmal, ILR 30 Bom 167, in a decision of the Madras High Court in the case of Ramlinga Iyer v. Jayalakshmi, AIR 1941 Mad. 695 and in the decision of the Rangoon High Court in the case of Annamalai Chettyar v. Daw Hnin U, AIR 1936 Rang 251. In the absence of any agreed place of payment, it must be held that the common law rule applies and the plaintiff's dues are payable at the Plaintiff's Calcutta office. This Court has, in consequence, jurisdiction to entertain the suit, provided previous leave under clause 12 of the Letters Patent has been obtained. In the instant case, previous leave under clause 12 of the Letters Patent has been obtained."

The learned Single Judge of the Calcutta High Court has therefore held that the debtor must seek the creditor and pay him at his residence, and in absence of the contract specifying the place of payment, the place of payment must be deemed to be the place where the creditor resides and the Court at that place has jurisdiction to entertain the suit. It was further held in the said case that Common Law rule was applicable and leave under Clause 12 of the Letters Patent was rightly granted. In the present case not only is the place of payment stated to be in Mumbai, but even if that were not so, on Common Law principle of debtor seeking the creditor, the Court would have jurisdiction to entertain this suit, with leave under Clause 12 of the Letters Patent.

18. In response to the submission of Defendant No.1 that a reading of the plaint in the present suit and the reliefs claimed therein shows that it is in the nature of a suit relating to "suit for land", Mr. Tulzapurkar, the Learned Senior Counsel for the Plaintiff whilst refuting the said allegation of Defendant No.1 has relied upon a Full Bench judgment in the case of Hatimbhai Hassanally vs. Framroz Dinshaw 1927 BLR XXIX 498, wherein a Seven Judge Bench of this Court (five concurring and two dissenting) held by majority that where there is a mortgage of immovable property which is sought to be enforced by the Suit, such suit is not a suit for land but is for the recovery of a debt. It was further held that the suit by the mortgagee of land to enforce his mortgage by sale is not a suit for land within the meaning of Clause 12 of the Letters Patent, and that a suit can be maintained in the High Court by seeking leave under Clause 12 even when the mortgaged properties are situated outside the limits of the Bombay High Court, if a part of the cause of action has arisen within its jurisdiction. The relevant paragraphs of the said judgment are reproduced hereunder:

"Per Marten C.J.

"75. Summarising, then, my conclusions on the whole case, I would hold that just as the primary element in a mortgage is the debt and not the security, so the primary or substantial object of a mortgage suit is the payment of the debt, and that the sale sought for is merely ancillary to the main or final end, viz. The payment of the mortgage debt. Consequently, in my judgment a mortgage suit of that nature is not a suit for land within the meaning of cl. 12 of the Letters Patent, any more than an administration suit is. If that opinion, which is in accordance with the past practice of this Court for some fifty-four years prior to India Spinning and Weaving Co. Ltd. v. Climax Industrial Syndicate, is in fact erroneous, then I am content to err in company with Sir Charles Sargent, Sir Charles Farran and Sir Basil Scott in this Court, and I believe in company with Sir Lancelot Sanderson in the High Court of Calcutta. Further, as it would seem to me, the judgments of Sir Lawrence Jenkins and Sir Victor Coutts-Trotter support that practice, rather than the reverse"

Per Blackwell J.

"The first question submitted in this appeal for the consideration of this Full Bench is whether a suit brought by a mortgage of land to enforce his mortgage by sale is "a suit for land" within the meaning of cl. 12 of the Letters Patent. The second and third questions submitted involve (inter alia) a further consideration, namely, whether this Court has an equity jurisdiction arising independently of cl. 12 of the Letters Patent.".. ..... ..... ..

"The next question arising in this appeal is, what is the true nature of a suit to enforce a mortgage by sale? In regard to this question, I have had the advantage of reading the judgment of the learned Chief Justice. If I may say so, he has dealt with the matter so fully, and to admirably, that I feel that I could not usefully add one word. I, therefore, content myself by saying that I agree with his judgment upon this part of the case."

Per Patkar, J.

"In view of the importance of the questions submitted for decision to the Full Bench and in deference to the lengthy arguments at the bar I would make a few observations. The first question to be decided is "Whether a suit brought by a mortgagee of land to enforce his mortgage by sale is a 'suit for land' within the meaning of cl. 12 of the Letters Patent". It would, therefore, be necessary to determine the intrinsic nature of the suit brought by the mortgagee of land to enforce his mortgage by sale. The mortgagee's interest in such a suit comprises (1) the right to sue the mortgagor personally for the mortgage debt, and (2) the right to realise the debt by sale of the mortgaged property. In Halsbury's Laws of England,Vol. XXI, para 124, a mortgage is said to consist of two things: "It is a personal contract for a debt and an estate pledged as a security for the debt. Every mortgage implies a debt and a personal obligation by the mortgagor to pay it". For the purposes of the Civil Procedure Code mortgage debt according to the trend of judicial opinion in the different High Courts is considered to be a debt within the meaning of Order XXI, rule 46, and not immovable property within the meaning of Order XXI, rule 54. See Tarvadia Bholanath v. Bai Kashi(1901)I.L.R. Bom. 305 s.c. Bom. L.R. 18; Karim-un-nissa v. Phul Chand (1893) I.L.E. 15 All. 134; Kasinath Das v. Sadasiv Patnaik (1893) I.L.R. 20 Cal. 805; Nataraja Iyer v. The South Indian Bank of Tinnevelly (1911) I.L.R. 37 Mad. 51. When the mortgagee's rights are attached as debt under Order XXI, rule 46, and eventually sold, the rights of the auction-purchaser of the mortgage debt in execution of a decree against the mortgagee are the same as those of the judgment-debtor mortgagee, viz. The right to sue the mortgagor for a personal decree against him and also the right to realise the debt by sale of the mortgaged property."

"What then was the conception of a mortgage suit when cl. 12 of the Letters Patent was enacted? Regulation IV of 1827, s. 26, says : "The law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government applicable to the case; in the absence of such Acts and Regulations, the usage of the country in which the suit arose; if none such appears, the law of the defendant; and, in the absence of specific law and usage, justice, equity, and good conscience" Macpherson in his Law of Mortage, 7th Edition at pp.1 and 3, has referred to the several authorities and laid down that the Mahomedan law and Hindu Law recognized no distinction between mortgagees of land and pledges of other property. The principles of justice, equity and good conscience are interpreted to mean principles of English law applicable to a similar state of circumstances: Waghela Rajsanji v. Shekh Masludin (1887) L.R. 14 I.A. 89, 96; Shivrao v. Pundlik (1902) I.L.R, 26 Bom. 437, 441 s.c. Bom. L.R. 90; Kripa Sindhu Mukherjee v. Annada Sundari Debi (1907) I.L.R. 36 Cal. 34, 58 F.B.; Maharaja of Jeypore v. Rukmini Pattamahadevi (1919) 21 Bom. L.R. 655, 663 P.C."

"At the time of enactment of cl. 12 of the Letters Patent, the principles of English law would apply, and if the principles of English law applied it is clear that the right of a mortgagee is not a right in rem but can be enforced by the personal obedience of the mortgagor. But normally that would be a common law action. The mortgagee in the suit for foreclosure may, after decree absolute is made, get the land; but in a suit for sale, with which we are concerned in this case, he has to apply to the Court for leave to bid which may be refused, his right to bring the property to sale may be defeated by payment by the mortgagor, and generally it is the stranger auction-purchaser who gets the land. The mortgagee gets his money and the surplus is paid to the mortgagor. Their Lordships of the Privy Council in the case of Anundo Moyee Dossee v. Dhonendro Chunder Mookerjee (1871) 14 M.L.A. 101, 109 thus described the effect of the decree for sale (p. 109):..."

Per Taleyarkhan, J.

"I have had the advantage of perusing - if I may say so - the able and exhaustive judgment of my Lord the Chief Justice, and I agree with him in answering the first question referred to the Full Bench in the negative.

"But, though I hold that a suit for sale of mortgaged property is not a suit for land within the meaning of cl. 12 of the Letters Patent, I do not do so on either of the two grounds on which that conclusion was based in Holkar vs. Dadabhai (1890) I.L.R. 14 Bom. 353".. .... ... ..

"I prefer to rest my opinion on the broad ground that a suit by a mortgagee for the realisation of the monies advanced by him to the mortgagor by the sale of the mortgaged property is substantially a suit for the recovery of the mortgaged debt, and as such it is not a suit for land within the meaning of cl. 12 of the Letters Patent"... .. .. ..

"It follows from my answer to question No.1, namely, that a suit brought by a mortgagee of land to enforce his mortgage by sale is not a suit for land within the meaning of cl. 12 of the Letters Patent, that questions Nos.2 and 3 should be answered in the affirmative."

19. I have gone through the averments in the present suit and the reliefs prayed for. In fact, the reliefs have been set out hereinabove. From the said reliefs it is clear that the Plaintiff has first sought a declaration that a sum of Rs.125,00,73,845/- (Rupees One hundred and twenty five crores seventy three thousand Eight hundred and forty five) along with interest thereon is due and payable to the Plaintiff by Defendant Nos.1 to 5 jointly and severally and has also sought a decree as per the particulars of claim at Exhibit-ZZ to the Plaint. The Plaintiff has thereafter sought a declaration that there exists a valid and subsisting mortgage by deposit of title deeds, and that repayment of the amounts claimed in the suit are duly secured by such mortgage. Without prejudice and in the alternative, the Plaintiff has prayed that in the event it is held that a valid effective mortgage by deposit of title deeds has not been created, then in that event, the Defendants be ordered and decreed to specifically perform the agreement to create a mortgage in favour of the Plaintiff by deposit of the original title deeds with respect to the properties and that on such mortgages being created, the Court be pleased to declare that the amounts claimed in the plaint are duly secured by the said mortgages, and the said mortgages be enforced against the Defendants by sale of the properties under the order and directions of the Court. In the event of specific performance being refused, this Court be pleased to declare that the Plaintiff has a valid and subsisting first charge upon the properties for payment of the amounts claimed in the suit and that the Court be pleased to enforce such charge by sale of such properties. If on such sale the amounts realized is not sufficient to satisfy the Plaintiff's claim, then a personal decree be passed against the Defendants jointly and severally for payment of such deficient amount. The Plaintiff has pending the hearing and final disposal of the suit sought appointment of Court Receiver with power to take possession of and sell the mortgaged property and pay the sale proceeds so realized to the Plaintiff in or towards satisfaction of the Plaintiff's dues claimed therein.

20. From the reliefs as prayed, it is therefore clear that the above suit is filed by the Plaintiff only for recovery of debt. For the purpose of recovering the said debt, the Plaintiff has sought to enforce the mortgage if already created and in the event of the Court coming to the conclusion that the mortgage needs to be created, then directing the Defendants to specifically perform the agreement to create a mortgage and for the purpose of enforcing the mortgage to sell the properties and pay the sale proceeds to the Plaintiff so that the said payment may be appropriated towards the claim amount. There is no issue of determination of title pertaining to the suit properties raised in the present suit and/or possession of the properties. Seeking an interim relief pending the suit i.e. appointment of a Court Receiver to take possession only for the purpose of selling the mortgaged properties and handing over the sale proceeds to the Plaintiff for appropriation towards their dues cannot be said to be a suit for possession of the immovable property. In view thereof, the decisions in the case of Adcon Electronics Pvt. Ltd. (supra) and Wimco Ltd., Mumbai (supra) are of no assistance to Defendant No.1 in the facts and circumstances of the present case and the present suit as filed cannot be termed as a "suit for land". Full Bench decision of this Court in Hatimbhai Hassanally (supra) squarely applies to the facts and circumstances of the present case. As stated earlier, the decision of the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. (supra) would also apply to the facts and circumstances of the present case. Since it is clearly established that a part of the cause of action has arisen in Mumbai and therefore this Court with leave granted under Clause 12 of the Letters Patent to the Plaintiff to file the present suit, would have jurisdiction to try and entertain the above suit. The question therefore of revoking the leave under clause 12 of the Letters Patent granted by this Court to the Plaintiff by its order dated 23rd August 2013 does not arise. The Chamber Summons is therefore dismissed.

Court	Mumbai High Court
Decided On	Feb-04-2013
Case Number	Chamber Summons (L) No.139 of 2013 In Suit No.40 of 2013
Judge	S.J. KATHAWALLA
Appellant	Pil Industries Limited
Respondent	Deccan Chronicle Holdings Ltd. and Others

Pil Industries Limited Vs. Deccan Chronicle Holdings Ltd. and Others - Court Judgment