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2018 (10) TMI 484 - SC - Companies LawTaking contrary stand in the proceedings - Substitution in place of IFCI as a secured creditor - After the claim of the appellant of being a secured creditor was rejected by the Company Judge, and the appellant realised the unsustainability of its claim in the law, it made a complete volte face from its earlier stand and surprisingly, contrary to its own pleadings, now contended that it had never sought the status of a secured creditor under the SARFAESI Act. Held that - The contention of the appellant that it had never sought substitution as a secured creditor under the SARFAESI Act is additionally belied from the recitals contained in the order dated 07.09.2015. Time and again this court has held that the recitals in the order sheet with regard to what transpired before the High Court are sacrosanct. A litigant can take different stands at different times but cannot take contradictory stands in the same case. A party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands. Appeal dismissed.
Issues:
1. Appellant's request for substitution as a secured creditor under the SARFAESI Act. 2. Company Judge's rejection of the application for substitution. 3. Appellant's contention of being a transferee of an actionable claim under Section 130 of the Transfer of Property Act. 4. Company Judge's refusal to exercise inherent powers under Rule 9 of the Companies (Court) Rules. 5. Appellant's change in stance regarding secured creditor status. Analysis: 1. The appellant, as an assignee of debt by IFCI, sought substitution as a secured creditor for M/s. MPL's outstandings. The Company Judge rejected the application, citing the appellant's lack of eligibility as a bank, financial institution, or securitization company under the SARFAESI Act. The appellant's plea was to draw benefits under Section 130 of the Transfer of Property Act, but the Company Judge found it inapplicable. 2. The Company Judge's order highlighted the appellant's specific request for substitution as a secured creditor under the SARFAESI Act, supported by IFCI's filings before the Debt Recovery Tribunal. The Judge emphasized that the appellant's claim was not limited to an actionable claim under Section 130 of the T.P. Act. The rejection was based on the appellant's ineligibility under the SARFAESI Act, leaving other contentions open for future proceedings. 3. Initially, the appellant pursued the status of a secured creditor under the SARFAESI Act. However, after the rejection by the Company Judge, the appellant changed its stance, denying ever seeking secured creditor status. The court emphasized the importance of consistency in legal proceedings and disallowed the appellant's contradictory positions within the same case. 4. The Company Judge declined to exercise inherent powers under Rule 9 of the Companies (Court) Rules in the appellant's favor. The rejection was based on the appellant's shifting positions and the lack of merit in the request for substitution as a secured creditor. The court cited legal precedents emphasizing the principle of consistency and clean hands in legal actions. 5. The Supreme Court upheld the Company Judge's decision, finding no merit in the appeal. The appellant's inconsistent positions and failure to maintain a consistent stance throughout the proceedings led to the dismissal of the appeal. The court reiterated the importance of maintaining integrity and consistency in legal arguments to avoid approbation and reprobation on the same facts.
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