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2017 (1) TMI 1165 - SC - Indian LawsAuction sales - recovery proceedings - grant interim injunction - Held that - It is not open either a party to the lis or to any third party to determine at their own that an order passed by a Court is valid or void. A party to the lis or the third party who considers an order passed by a court as voidable or non est, must approach the court of competent jurisdiction to have the said order setaside on such grounds, as may be available in law. This Court held that the order of the Company Court of Madras High Court was to be complied with and sale held in violation of the said order was to be set aside. The entitlement of EIH to receive ₹ 15.21 Crores, which was the condition of the agreement dated 4th February, 2002 was to be reflected in any future transaction by virtue of the injunction order dated 18th March, 2005 dealing with the property, has rightly been taken note by the Division Bench of the High Court and we do not find any error in the directions issued by Division Bench of the High Court, directing 1st and 2nd Respondent, i.e., erstwhile owner and 8th Respondent Robust Hotels to deposit the sum of ₹ 15.12 Crores. We, however, are of the view that it was not necessary for the High Court to presume that the conditions of deposit, as ordered by the court shall not be complied with. Orders of the court are issued to be complied with and a court does not lack power to ensure the compliance by appropriate proceedings. Thus, further directions of the High Court that if the condition of deposit as ordered by this court has not complied with by either of the parties , interim injunction, restraining the 8th Respondent was uncalled for. The interim order passed by the High Court, directing for deposit of ₹ 15.12 Crores has done substantial justice between parties, which need no interference by this Court in exercise of its jurisdiction under Article 136. It goes without saying that the trial judge has to expeditiously proceed to decide the suit. The deposit was to be made under the order of the High Court till 31st August, 2011. This Court passed an interim order on 29th August, 2011 due to which no deposit was made, we thus extend the time for deposit of the amount till 31st January, 2017. The appeals filed by Robust are disposed of as above. The Division Bench as well as learned Single Judge has already noted that hotel has already commenced its operation and contracts have been made with third parties for the operation of the hotel and bookings are also being taken from the customers. We have already noticed the directions issued by Division Bench, directing the defendant Nos. 1, 2 and 8 to the suit to deposit an amount of ₹ 15.21 Crores which order had done substantial justice between parties. Taking into consideration the overall circumstances, specially when issues raised in C.S. No. 164 of 2011 are yet to be adjudicated, the orders passed by both learned Single Judge and Division Bench, refusing to grant interim injunction in view of the facts as noted above cannot be faulted.
Issues Involved:
1. Validity and enforceability of various agreements between EIH and BHEL. 2. The effect of the SARFAESI Act, 2002 on the jurisdiction of civil courts. 3. The impact of interim injunctions and their violation. 4. The liability of Robust Hotels for the agreements and debts of BHEL. 5. The legality of the transfer of the hotel unit to Robust Hotels. Detailed Analysis: 1. Validity and Enforceability of Agreements: The appeals stem from two different suits filed by the same plaintiff, EIH Ltd., against BHEL and others. EIH entered into several agreements with BHEL, including a 'Technical Services Agreement' on 26.10.1988 and subsequent financial agreements. EIH provided technical services and financial accommodation to BHEL for constructing a hotel. The agreements stipulated that BHEL would repay ?15.12 Crores along with interest. The agreements were contested in the court, and EIH sought a declaration that these agreements were "valid, legal and subsisting and are binding and enforceable" on the defendants. 2. Effect of SARFAESI Act, 2002: Robust Hotels argued that the proceedings under the SARFAESI Act, 2002, which led to the transfer of the hotel unit to them, could not be challenged in a civil court due to Section 34 of the Act. This section bars civil court jurisdiction over matters that the Debt Recovery Tribunal or Appellate Tribunal can determine. The Supreme Court noted that the jurisdiction of civil courts is plenary unless expressly or implicitly ousted, and the issue of whether the suits were barred by Section 34 was yet to be decided on merits. 3. Impact of Interim Injunctions and Their Violation: EIH obtained an interim injunction on 18.03.2005, restraining the defendants from selling or encumbering the hotel unit without recognizing EIH's rights. Despite this, the hotel unit was transferred to Robust Hotels. The Supreme Court cited precedents stating that actions taken in violation of court orders are void and must be set aside. The Division Bench of the High Court directed Robust Hotels and the erstwhile owners to deposit ?15.12 Crores, recognizing the breach of the interim injunction. 4. Liability of Robust Hotels: Robust Hotels contended that they acquired the hotel unit free from encumbrances under the SARFAESI Act and had no liability to EIH. However, the Supreme Court upheld the High Court's direction for Robust Hotels to deposit ?15.12 Crores, emphasizing that the transfer was subject to the interim injunction recognizing EIH's financial claim. 5. Legality of Transfer to Robust Hotels: EIH challenged the legality of the transfer deed dated 5th July 2007 and the certificate of sale, arguing they were contrary to the interim injunction. The High Court initially refused to grant an interim injunction against the enforcement of the transfer deed, noting that the hotel had already commenced operations and contracts were in place. The Supreme Court affirmed the High Court's direction for the deposit of ?15.12 Crores but modified the order to remove unnecessary presumptions about non-compliance. Conclusion: The appeals of Robust Hotels were disposed of by modifying the High Court's order to require the deposit of ?15.12 Crores by 31st January 2017. The appeals of EIH were dismissed, affirming the High Court's refusal to grant an interim injunction against the transfer deed. The Supreme Court emphasized the need to respect court orders and the consequences of violating interim injunctions.
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