2009 (8) TMI 1285 - HC - Indian Laws

Summary

Issues Involved:
1. Grant of interim injunction.
2. Validity of mortgage and sale certificate.
3. Jurisdiction of civil court versus DRT under SARFAESI Act.
4. Allegations of fraud and forgery.
5. Principle of res judicata.
6. Suppression of facts and clean hands doctrine.
7. Prima facie case and balance of convenience for granting injunction.

Detailed Analysis:

1. Grant of Interim Injunction:
The applicant sought an interim injunction to restrain the respondents from acting upon the sale certificate dated 15.10.2007, pending disposal of the suit. The court initially granted an ad-interim injunction, which was not continued after 8.6.2009. The court dismissed the application, stating that the applicant did not make out a case for entertaining the application and ordered costs payable to the first respondent Bank.

2. Validity of Mortgage and Sale Certificate:
The applicant contended that the company never authorized any loan from the first respondent Bank and that the documents were forged. The Bank, however, claimed that the mortgage and sale were valid, supported by personal guarantees and board resolutions. The court found that the applicant's claims were not substantiated and noted that the CBI investigation did not question the genuineness of the Udhagai property title deeds.

3. Jurisdiction of Civil Court versus DRT under SARFAESI Act:
The court discussed the jurisdictional conflict between civil courts and DRT under the SARFAESI Act. It referenced the Supreme Court judgment in Authorized Officer, Indian Overseas Bank v. Ashok Saw Mill, which clarified that DRT has the authority to scrutinize actions taken under Section 13(4) of the SARFAESI Act, including setting aside transactions and restoring possession. The court concluded that the applicant's suit was not maintainable due to the bar under Section 34 of the SARFAESI Act.

4. Allegations of Fraud and Forgery:
The applicant alleged that the Bank committed fraud by using forged documents to create an equitable mortgage. The Bank refuted these claims, stating that the mortgage was valid and supported by genuine documents. The court observed that the CBI investigation only found forgery in the Chennai property documents, not the Udhagai property, and thus the Bank's actions were not fraudulent.

5. Principle of Res Judicata:
The court emphasized that the applicant had already litigated the matter before DRT, DRAT, and the High Court, and their SLP was dismissed by the Supreme Court. Citing the principle of res judicata, the court held that the applicant could not re-litigate the same issues in the present suit, referencing the Supreme Court judgment in State of Karnataka v. All India Manufacturers Organisation.

6. Suppression of Facts and Clean Hands Doctrine:
The court found that the applicant suppressed material facts about previous proceedings before other forums. Citing the Supreme Court decision in Prestige Lights Ltd. v. State Bank of India, the court noted that parties must disclose all relevant facts when seeking equitable relief. The applicant's failure to do so meant they did not come to the court with clean hands, and thus were not entitled to equitable relief.

7. Prima Facie Case and Balance of Convenience for Granting Injunction:
The court assessed whether the applicant had established a prima facie case and whether the balance of convenience favored granting an injunction. Referencing the Supreme Court decision in Dalpat Kumar v. Prahlad Singh, the court stated that the applicant failed to demonstrate a serious disputed question that needed adjudication. The court concluded that the balance of convenience did not favor the applicant, and no irreparable injury would result from denying the injunction.

Conclusion:
The court dismissed the application for interim injunction, noting that the applicant did not establish a prima facie case, failed to disclose material facts, and was barred by the principle of res judicata. The court ordered the applicant to pay costs to the first respondent Bank.