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METAL FORGINGS PRIVATE LIMITED., NEW DELHI VERSUS ALLAHABAD BANK

    Interim Application Appeal Nos: 8112 of 1992, 4822 of 1985 & Suit Appeal Nos: 1196 of 1985, 1580 of 1985, 1626 of 1985, 1195 of 1985, 1192 of 1985

    Decided On, 03 February 1995

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE JASPAL SINGH

    For the Appearing Parties: A.N. Tiwari, Mukul Rohatagi, Rajiv Nair, S.K. Mehta, Advocates.



Judgment Text

JASPAL SINGH, J.


( 1 ) THE parties are fighting their legal battles since the year 1985. There seems to be no end to it. Whereas M/s. Metal Forging Pvt. Ltd. has filed as many as four suits the Allahabad Bank has instituted one. A brief resume of those suits is called for to have an overall view of the applications leading to this order. Suit No-1192 of 1985 by Metal Forging Pvt. Ltd. is- for the recovery of Rs-60,60,395. 37. The company alleges that loss was suffered due to stoppage of L. C. facilities and bank guarantee facilities by the defendant bank. The second suit by it bears No-1195 of 1985. It is for the recovery ofrs-40,06,687. 85. It alleges losses on account of alleged acts of omissions and commission on the part of the defendant bank. The third suit bears No-1626/85. This too is by the said Company and is for the recovery of Rs-21,42,404. 85. It makes a grievance of the alleged refusal or failure of the defendant bank to adjust certain amounts due to the plaintiff. Suit No. 1196 is also of the year 1985 instituted by the same company for recovery of Rs. 42,72,514. 49. It alleges the defendant bank having made debits in the account of the plaintiff company on account of interest and other charges from time to time, which allegedly were not due and for having charged interest and penal interest on the amount so over charged showing the same as the balance due from the plaintiff company with varying rates of interest. On the other hand suit No. 158q of 1985 is by the Allahabad Bank against the said company for the recovery of Rs-9,97,24,689. 61. As already noticed above there seems to be no end, at least not in the near future, to the suits. Real issues are yet to be touched. The battles range around the periphery only with interim applications a la galore. This order too has been prompted by two of those I. A. s - one in suit No-1580/85 instituted by the bank and the second in suit No. 1196/85. The applicant in both the cases happens to be the Allahabad Bank.


( 2 ) I am conscious of the fact that both the suits are different and that the applicants ordinarily ought to have seen two Separate orders dealing with both the applications. However, the facts are so inter-twined that it is difficult to extricate one from the other. Hence this exercise to deal with both these applications by one order.


( 3 ) IN the suit instituted by the bank it had also moved two applications - one was I. A. No-4822 of 1985 under Order 38 rule 5 and the other bearing No-5454 of 1985 under Order 39 rule s 1 and 2. Those applications came up before the court for consideration on August, 26, 1985 when the following order was passed:


"In the meantime the defendant No. l is hereby restrained from selling, alienating or mortgaging property No. B-I, BX, B-17, Mayapuri Industrial Area, Phase I and property number plot No. 1, Block No. 1,kirti Nagar Warehousing Scheme, village Vasai Dara Pur Estate till further orders. "


That order is still in operation.


( 4 ) BEFORE the order referred to above, an order had been passed by this court in Suit No. ll92/85. That order is of July 15,1985 and was passed in I. A. 3658/85 moved by the Metal Forging Pvt. Ltd. along with the said suit. The order runs as under:


"notice for 26-8-1985 to the defendants. In the meantime, after hearing the learned counsel for the plaintiff on his application and after going through the pleadings and the copies of the documents filed on the record I am satisfied that it is a fit case in which the defendants be restrained from interfering with the production and commercial activities of the plaintiff till then. Ordered accordingly. Dasti. "


Admittedly this order too is in operation since then.


( 5 ) THE bank now prays that the order of July 15, 1985 needs to be modified. The I. A. making this prayer for modification is No-8112/92. Very briefly stated the bank alleges that the injunction order issued by this court is causing undue hardship to the bank as under the garb of that order the plaintiff company has been carrying out its commercial production and siphoning the amount for its own benefit without making any arrangement towards the liquidation of its liabilities and that the balance sheets of the company from 1982 to. 1987 and of the year 1990 would go to reveal that it has been committing various irregularities or practicing fraud to defeat and deny the legitimate dues of the bank and that even otherwise financial position of the company is deteriorating day by day as while in the year 1985 the sale proceeds of the company amounted to Rs-518. 88 lacs the same came down to merely Rs-90. 93 lacs in March, 1990. The bank has thus prayed that in order to secure its own interest the order in question dated 26th July, 1985 needs to be varied or set aside and that its interests would be best protected by appointment of a receiver.


( 6 ) AS noticed above in suit No-1580/85 instituted by the Allahabad Bank on an application under Order 38 rule 5 and. under Order 39 rules I and 2 this court had passed an injunction order against defendant No. I restrain* ing it from selling, alienating or mortgaging the property mentioned in the said order. The bank now seems to be not satisfied with that order and prays for appointment of a receiver.


( 7 ) IT is significant to note that from July 26, 1985 till the moving of the application bearing No. I. A. 8112/92 the bank took no steps to get the order passed in suit No-1196/85 varied or set aside and it was only on 21st May, 1992 when a grievance was made against it by means of the said interim application. Similarly in suit No-1580/85 when order was passed by this 4 court on I. A. s 4822/85 and 5454/85 in August, 1985 the plaintiff bank did not feel dissatisfied over the same and neither by means of an application applied for its variation nor preferred an appeal against it.


( 8 ) IT is true that the claim of the bank amounts to around Rs. 10 crores but then we can ill afford to ignore the fact that the company too has alleged that the bank has not fulfilled its part of the agreement and has thereby led the company into great losses. It is because of this that the Company too has filed suits claiming huge amounts against the bank. It would neither be advisable nor desirable to examine the merits or demerits of the claim of each of the parties. This is no stage to undergo that exercise. However one thing is certain and it is that when the order was passed in August, 1986 restraining the defendant No. l from alienating its immovable properties care was taken by the court to protect the interests of the bank. It is now claimed that those properties are worth more than 25 crores, though the bank has placed the market value of those properties at around 11 crores. It is common knowledge that prices of real' estate in Delhi are rocketing sky high. And, therefore, those properties with regard to which the restrain order has been passed must be taken to be safe bets. Of course, since the plaintiff bank is feeling nervous and as in this molasses of allegations and counter' allegations it is difficult to extricate oneself with a clearer vision. It would, be better if it is further added to read into the order that the company would regularly furnish its balance sheets and would not sell, dispose of or mortgage its plant and machinery as found by Mr. S. P. Goyal,. Local Commissioner in his report of 130th January, 1990 without first obtaining the orders of the court. J Order accordingly.


( 9 ) WHY am I not passing an order for the appointment of a receiver? As we know in such like money suits the court will exercise its power of appointment of a receiver only in extra-ordinary circumstances and that too only if there is proof of violent and whole sale charges of waste and malv ersation against the party in possession. It is not a case where the property is as it were in medio, in the enjoyment of no one and where it would be the common interest of all parties that the court should prevent a scramble. It is, on the other hand a case where the Company is in the enjoyment of the property and is running business which is of specialised type. True, the bank alleges that the Company has been running into losses but then this is denied by the other side. The Company rather claims that whatever losses have been suffered they were on account of the bank and that in any case it is now turning the table and has assets sufficient enough to. meet any contingency. Keeping all these facts i

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n view the ' taking over of possession. and appointment of receiver may do a wrong to the Company - nay an irreparable wrong - for which the subsequent restoration of the property may afford no adequate compensation. ( 10 ) IT was repeatedly emphasised that this court has the power to appoint the receiver: 'this is undisputed but then the power has to be exercised with a sound discretion on a view of whole of the circumstances of the case, not merely the circumstances which might make the appointment expedient rotection of the property but of all the circumstances. We should also not forget that appointment of a receiver is an equitable relief and will be granted only on equitable grounds. And when the applicant does not establish a special equity in his favour it cannot be said that it is just and convenient that a receiver should be appointed. That' explains why no such appointment has been made. The I. As. stand disposed of accordingly.
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