EXCEL DEALCOMM PVT. LTD. Vs. ASSET RECONST. COMPANY (INDIA) LTD. & OR

Supreme Court of India (Division Bench (DB)- Two Judge)

3272 of 2015, Judgment Date: Apr 01, 2015

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 3272 OF 2015
                (Arising out of S.L.P.(C)  No.15900 of 2013)


EXCEL DEALCOMM PRIVATE LIMITED                                   ...APPELLANT

                                      :Versus:

ASSET RECONSTRUCTION COMPANY (INDIA)
LIMITED & ORS.                                               ....RESPONDENTS


                                    J U D G M E N T

Pinaki Chandra Ghose, J.

Leave granted.

This appeal has  been  preferred  against  the  judgment  delivered  by  the
Division Bench of the Calcutta High Court on March 8, 2013 in A.P.O.  No.180
of 2012 whereby the High Court while holding that the  Calcutta  High  Court
does not have jurisdiction to try civil suit, assumed jurisdiction for  non-
suiting the appellant and also held that the Agreement  dated  13.2.2007  is
not concluded and thus not enforceable, and dismissed Civil Suit  No.299  of
2007 filed by the appellant. The facts of the case necessary to  dispose  of
this appeal are briefly narrated below.
Uniworth Apparel Limited (hereinafter  referred  to  as  'Uniworth'),  being
Respondent No.3 herein, was a company registered in  Maharashtra  under  the
Companies Act, 1956.  It  had  an  industrial  unit  in  Thane  District  of
Maharashtra. It availed credit facilities from ICICI  Bank.  Uniworth  could
not clear the Bank's dues, as a result the  Bank  assigned  their  claim  in
favour of Asset Reconstruction Company India Limited  (hereinafter  referred
to as 'ARCIL'), being Respondent No.1 herein, a company  incorporated  under
Companies Act, 1956 and registered with the  Reserve  Bank  of  India  as  a
Company  under  Section  3  of  the  Securitization  and  Reconstruction  of
Financial Assets Enforcement of Security  Interest  Act,  2002  (hereinafter
referred to as the 'SARFAESI Act'). ARCIL took steps  under  Section  13  of
the SARFAESI Act and took possession of the  assets.   Allegedly  the  ARCIL
entered into  a  Private  Treaty  Agreement  dated  13.02.2007  (hereinafter
referred to as 'the Agreement') with the appellant Excel Dealcomm Pvt.  Ltd.
(herein after referred to as 'Excel'), for sale of the said  properties  for
a consideration of Rs.7.50 Crores. This was to be a sale under SARFAESI  Act
wherein the sale was to be conducted by execution  of  sale  certificate  by
the ARCIL in favour of Excel. The Excel alleges that it had  even  issued  a
cheque of Rs. 9.5 Crores  dated  March  1,  2007  to  the  ARCIL.  In  reply
thereto, Mr. Sanjoy Gupta, Vice President of the  ARCIL  (Respondent  No.  2
herein) had vide letter dated  20-03-2007  informed  Excel  to  collect  its
cheque since the deal could not be materialised as the management  of  ARCIL
did not approve such a proposal. Thus, the sale could not  get  through  and
the present appellant brought out a suit for  specific  performance  of  the
Agreement against ARCIL, being C.S. No.299 of 2007, in  the  High  Court  of
Calcutta in December 2007. Initially, there were  three  Defendants  in  the
said suit, namely, ARCIL, Mr. Sanjoy Gupta (Vice  President  of  ARCIL)  and
Uniworth.  However, later on it was found  that  ARCIL  had  sold  the  suit
property to one Webtech Industries Pvt. Ltd.  (hereinafter  referred  to  as
'Webtech'), Respondent No.4 herein, on 10.02.2011. So Webtech was  impleaded
as Defendant No.4 in the said suit after the  application  for  impleadment,
being G.A. No.3574 of 2010 was allowed on 06-01-2011.  It  is  to  be  noted
that the suit property  was  the  one  mentioned  in  the  Schedule  of  the
Agreement and included both movable and immovable  properties  as  mentioned
below:
Mortgage on immovable properties of the Uniworth situate at Plot  No.  A606,
TTC Industrial Area, MIDC, Shil Mahape Road, New Mumbai, Maharashtra.
Hypothecation of the whole of movable assets of  Uniworth  situate  at   TTC
Industrial Area, MIDC, Shil Mahape Road, New Mumbai,  Maharashtra  including
the movable plant and machinery, machinery spare tools and  accessories  and
other movables both present and future (save and except book debts).

ARCIL filed an application, being G.A. No.1225 of 2011,  for  revocation  of
leave granted under Clause 12  of  Letters  Patent  by  the  High  Court  of
Calcutta to the Excel and asking return of the  plaint  in  C.S.  No.299  of
2007 to be filed before the Court having jurisdiction to try the  same.  The
said application was based on following grounds:
The suit was effectively a "suit for land" and the  immovable  property  was
situate in New Mumbai, Maharashtra. Therefore, as per clause 12  of  Letters
Patent the suit should be filed in a Court having  territorial  jurisdiction
over the immovable property.
That the alleged Private  Treaty  Agreement  between  ARCIL  and  Excel  was
entered into pursuant to Section 13(4) of the  SARFAESI  Act  and  even  the
sale was to be conducted by execution of sale  certificate  as  provided  in
Security Interest (Enforcement) Rules,  2002  (hereinafter  referred  to  as
"Rules"). Therefore, the jurisdiction of civil court is excluded.
That the Private Treaty Agreement provided  that  Mumbai  Court  would  have
exclusive jurisdiction.

The  learned  Single  Judge  of  the  Calcutta  High  Court  under  Original
jurisdiction, vide his judgment and order  dated  22.12.2011  dismissed  the
application for revocation of leave and refused to  return  the  plaint  for
the following reasons:
The suit was not a suit for land as the Private  Treaty  Agreement  required
creation of security or charge of the assets mentioned in the schedule  i.e.
"mortgage  of  immovable   properties"   and   "hypothecation   of   movable
properties"; the nature of this security was not mentioned in the  agreement
and  thus,  any  security  could  be  created  on  the  said   mortgage   or
hypothecation. Therefore, the learned High  Court  came  to  the  conclusion
that the enforcement of terms of agreement would not lead to the  decree  in
suit for land.
With respect to Forum Selection Clause, the High Court held that  the  ARCIL
had waived its right to object to the lack of jurisdiction by  participating
in application for impleadment  of  Respondent  No.4,  wherein  orders  were
passed on 06.01.2011. The learned High Court noted that ARCIL  had  made  no
objection to the jurisdiction while the impleadment application was  argued.

On the question of the jurisdiction of  Civil  Court  being  ousted  by  the
SARFAESI Act, the High Court found that  the  breach  of  present  agreement
would not fall under Section  17  of  the  SARFAESI  Act  wherein  the  Debt
Recovery Tribunal is given the jurisdiction to rule only  that  whether  the
sale was a correct measure adopted and conducted properly.  In  the  present
case, even if it is assumed that ARCIL was  the  assignee  of  ICICI  and  a
third party sued for specific performance against such  assignee,  the  case
would not fall under Section 17 of the SARFAESI Act.

Aggrieved by the judgment and order dated 22.12.2011 passed by  the  learned
Single Judge of the Calcutta High  Court,  dismissing  the  application  for
revocation of leave granted under Clause 12 of Letters Patent,  ARCIL  filed
an appeal before the Calcutta High Court, being A.P.O. No.180 of  2012.  The
High Court in this appeal, analysed  the  judgment  of  the  learned  Single
Judge in the Original Jurisdiction of the High Court of Calcutta.  The  High
Court came to following conclusion while allowing the appeal:
The Private Treaty Agreement was not to be considered a  concluded  contract
as it was subject to the approval of the Board of Directors  of  the  ARCIL.
Since, the approval was not given and even the cheque supplied by Excel  was
made available for return, the said agreement was at best a term sheet.
On the point of suit for land the High  Court  found  the  alleged  sale  of
assets was to take place by issuing "sale  certificate"  in  terms  of  Rule
5(6) of the Rules which pre-supposes the handing over of the possession.
In view of above two conclusions, the High Court found it was not  necessary
to answer the question regarding forum selection clause.

On the basis of these conclusions, the Division  Bench  of  the  High  Court
reversed the order of the learned single Judge  holding  that  the  contract
could not be specifically enforced as it was not a concluded  one  and  also
that it would be a suit for land if,  at  all,  the  suit  is  maintainable.
Therefore, the Division Bench revoked the leave granted under Clause  12  of
the Letters Patent.

In  the  above  factual  backdrop,   following  questions  arise   for   our
consideration:
Whether the suit for specific performance filed by Excel  was  a  "suit  for
land"?
Whether the Private Treaty Agreement conferred an exclusive jurisdiction  on
the Court of Mumbai and if so, Whether or not ARCIL waived  this  clause  by
participating in impleadment application without protest?
Whether the jurisdiction of civil Court is barred in  the  present  case  by
virtue of Section 17 of SARFAESI Act?

Suit for land
Clause 12 of the Letters Patent of the High Court of Calcutta reads:
"12. And we do further ordain that the said  High  Court  of  Judicature  at
Fort William in Bengal in  the  exercise  of  its  ordinary  original  civil
jurisdiction shall be empowered to  receive,  try  and  determine  suits  of
every description, if, in the case of suits  for  land  or  other  immovable
property, such land or property shall be situated, or, in all  other  cases,
if the cause of action shall have arisen  either  wholly,  or  in  case  the
leave of the Court shall have been  first  obtained,  in  part,  within  the
local limits of the ordinary original jurisdiction of the said  High  Court,
or if the defendant at the time of the commencement of the suit shall  dwell
or carry on business, or personally  work  for  gain,  within  such  limits;
except that the said High Court shall  not  have  original  jurisdiction  in
cases falling within the jurisdiction of the Small Cause Court at  Calcutta,
in which the debt or damage, or value of the  property  sued  for  does  not
exceed one hundred rupees."


A plain reading of the  provision  suggests  that  ordinary  original  civil
jurisdiction of the High Court of Calcutta will extend in following cases:
 In a suit for land or other immovable property-
where  such  land  or  property  is  wholly  situated  in  the   territorial
jurisdiction of the High Court of Calcutta;
where such land or property  is  situated  in  part  only  within  the  said
territorial jurisdiction of the Court, if the leave of the Court shall  have
been first obtained.
in suits other than suit for land
if the cause of action has arisen wholly within the said limits;
where the cause of action has arisen in part only within  the  said  limits,
if the leave of the Court shall been first obtained;
If the defendant at the time of the  commencement  of  the  suit  dwells  or
carries on business or personally works for gain within such limits.

In the present case, a suit was filed for the specific  performance  of  the
Agreement which contemplated the sale of property, as has been described  in
para 1 under Section 13 of SARFAESI Act in terms of the Rules. The  question
with respect to Clause 12 of Letters Patent in  the  present  case  is  that
whether the present suit is suit for land.

The suit for land is a suit in which  the  relief  claimed  relates  to  the
title or delivery of possession of land or immovable property,  [See:  Adcon
Electronics Pvt. Ltd. vs. Daulat and Anr., (2001) 7 SCC 698]. Further it  is
an established rule that to determine whether it is a  suit  for  land,  the
Court will look into barely  the  Plaint  and  no  other  evidence,  [Indian
Mineral & Chemicals Co. and Others vs. Deutsche Bank, (2004)  12  SCC  376].
If by the averments in the plaint and prayers therein, it appears  that  the
suit is one for land, it shall be so held and if  it  does  not  so  appear,
then the suit shall continue under leave granted under  clause  12.  In  the
present case, the prayer in the plaint was couched in following words:

"A decree for specific performance of the agreement  for  sale  recorded  in
the document dated February 13, 2007 being Annexure "A" hereto by  directing
the Defendant no. 1  and  2  to  issue  in  favour  of  the  plaintiff  Sale
Certificate in respect of assets mentioned  in  Schedule  1  to  Annexure  A
hereto and on as is where is basis in terms of the said agreement"


The learned counsel for the Respondent has  very  emphatically  argued  that
this prayer is in effect a prayer for  possession  of  the  said  properties
since the procedure under the Rules for execution of the  sale  certificate,
the transfer of possession is pre-requisite.  Therefore,  he  has  submitted
that although, the possession is not asked for  in  direct  words  but  that
would be the obvious corollary to granting of the prayer.  Further,  another
point which has been emphasized on behalf of respondent is that  the  prayer
requires sale to be effected in terms of the Agreement, and  therefore,  the
entire agreement may be read as a part of the prayer.
On the question of suit for specific performance of  an  agreement  to  sell
being a suit for land, this Court has laid down a clear principle  in  Adcon
Electronics Pvt. Ltd. vs. Daulat Ram and Anr., (2001)  7  SCC  698,  that  a
suit for specific performance simplicitor without a prayer for  delivery  of
possession is not a suit for land as Section 22 of the Specific Relief  Act,
1963 categorically bars any Court to grant such relief of  possession  in  a
suit for specific performance unless specifically sought. In  view  of  this
judgment, in the present case, the only question for  our  determination  in
the plaint is whether a prayer for delivery of possession is sought  or  not
? The prayer sought is issuance of sale certificate  which  is  provided  in
Appendix V to the Rules under SARFAESI Act. The sale  certificate  reads  as
follows:
"Whereas   the   undersigned   being   the   authorised   officer   of   the
............................   (name   of   the   institution)   under   the
Securitization and Reconstruction of Financial  Assets  and  Enforcement  of
Security Interest Act, 2002 and in exercise of the  powers  conferred  under
Section 13 read with Rule 12 of the  Security  Interest  Enforcement  Rules,
2002  sold  on  behalf  of  the  ...........................  (name  of  the
secured creditor/institution) in favour of the  ............................
(purchaser), the immoveable property shown in the schedule below secured  in
favour of the ............................ (name of  the  secured  creditor)
by  ........................  (the  names  of  the  borrowers)  towards  the
financial facility .............................  (description)  offered  by
.............................   (secured    creditor).    The    undersigned
acknowledge the receipt of the sale  price  in  full  and  handed  over  the
delivery  and  possession  of  the  scheduled  property.  The  sale  of  the
scheduled property was made free from all encumbrances known to the  secured
creditor listed below on deposit of the money demanded by the undersigned."


It may be noted that the sale certificate sought under the  prayer  requires
the delivery of possession of the suit property.  Thus,  we  find  that  the
prayer for delivery of possession was an implicit one in the  present  case.
The prayer as sought in the plaint could not have been granted  without  the
delivery of possession of the suit property as the sale  certificate  itself
contemplates the delivery of the immovable property. Thus, in view  of  this
we find that the Adcon Electronics would not apply as  there  was  a  prayer
for delivery of possession in the present case. Therefore, we hold that  the
present suit was indeed a suit for land.

Exclusive jurisdiction
Now, we shall consider as to which court has the jurisdiction  to  entertain
and try the suit. Clause  5  of  the  Agreement  entered  into  between  the
parties reads as under:

"The  payment/cheque  shall  be  drawn  and  made  payable  in  Mumbai.  The
jurisdiction shall be Courts of Mumbai."


Clause 9(e)(viii) of the Agreements further reads as follows:

"Disputes,  if  any,  shall  be  subject  to  the  jurisdiction  of   Mumbai
Court/Tribunals only"

It is clear from these two clauses that the intention of the parties to  the
Agreement was to restrict limitation to the forums/courts  of  Mumbai  only.
This Court in Swastik Gases P. Ltd. vs. Indian Oil Corporation Ltd.,  (2013)
9 SCC 32, has held as under:

"The very existence of a jurisdiction  clause  in  an  agreement  makes  the
intention of the  parties  to  an  agreement  quite  clear  and  it  is  not
advisable to read such a clause in the agreement  like  a  statute.  In  the
present case, only the Courts in Kolkata had jurisdiction to  entertain  the
disputes between the parties."

Therefore,  we are of the opinion that the Courts  of  Mumbai  were  granted
exclusive jurisdiction as per the Agreement and we find no reason to  create
any exception to the intention of the parties.

In view of the above-mentioned two findings that the present suit is a  suit
for land, and that the parties had granted  exclusive  jurisdiction  to  the
Court of Mumbai, the jurisdiction  of  the  Court  at  Calcutta  is  clearly
ousted as per law. Thus, from the  above  conclusion  it  appears  that  the
plaint will have to be returned by the Calcutta High Court as  it  does  not
have the jurisdiction. Therefore, we are of the view that  the  question  of
jurisdiction  of  the  Debt  Recovery  Tribunal  need   not   be   answered.
Consequently, this appeal is dismissed. The parties may proceed to take  any
appropriate measure in an appropriate forum as provided in  law  to  enforce
their rights.

                                       ....................................J.
                                                                (M.Y. Eqbal)


                                       ....................................J.
                                                             (Pinaki Chandra
Ghose)
New Delhi;
April 01, 2015.