A Litigant Cannot Take Contradicting Stands In The Same Case : SC

While dismissing an appeal against an order of the Gujarat High Court, the Supreme Court on 8thOctober 2018 emphasized on the point that a litigant cannot take different standpoints in the same case at varied points in time. No litigant shall change the contention of the case according to his convenience or whenever it is favorable towards him.

In the instant case, a company petition was filed in 1996 for winding up of M/s Mahendra Petrochemicals Ltd. (M/s MPL). The same company was also referred for rehabilitation to the Board for Industrial and Financial Reconstruction (BIFR) in a reference made in 2000. During pendency of the same, keeping BIFR oblivious of the following, M/s MPL entered into an unregistered memorandum of understanding (MoU) with the co-concerned of the applicant, M/s Suzuki Parasrampuria Pvt. Ltd. for leasing out its properties to the same for 20 years for repayment of its debts. The MoU was also not brought to the attention of the company court till the winding-up order was passed on 19th April 2010. The Industrial Finance Corporation of India Ltd. (IFCI), Bank of Baroda and the Punjab National Bank were secured creditors, who had filed original applications against M/s MPL for recovery of their debts before the Debt Recovery Tribunal under the Securitization and Reconstruction of Financial Assets and Enforcements of Securities Interest Act, 2002 (SARFAESI). IFCI’s first charge over the assets of M/s MPL was held for outstanding of INR 160 crores and the Bank of Baroda with an outstanding of approximately INR 4,68,00,000 held second charge. After the winding-up order was passed on 28thJuly 2010, IFCI assigned its dues to the appellant for a sum of INR 85 lacks only and informed the official liquidator thereafter.

This was followed by the M/s Suzuki Parasrampuria Pvt. Ltd. filing a company application in 2014 with a prayer for substitution in place of IFCI as a secured creditor of M/s MPL. This application was rejected by the Company Judge on 31st July 2015 holding that the appellant was neither a Bank nor Banking company or a financial institution or securization company or reconstruction company and therefore could not be substituted in place of IFCI as a secured creditor for the purpose of the SAFRAESI Act. The Company Judge further held that the appellant could not draw any benefit for the purpose from Section 130 of the Transfer of Property Act (T.P. Act). The appellant then tried to invoke the powers of the Company Court under Rule 9 of the Companies (Court) rules, 1959 for review or recall of the order dated 31st July 2015 contending that the appellant had never sought substitution as a secured creditor and simply desired substitution as a transferee of an actionable claim under Section 130 of the T.P. Act. This recall application was rejected on the ground that an entirely new case was sought to be made out in the application. The appeal against the same has been rejected by the impugned order.

Assailing the impugned order dated 2nd September 2016, Shri Harin P. Raval, learned senior counsel for the appellant contended that the appellant had never sought the status of a secured creditor in lieu of the IFCI. The finding to that effect is erroneous and completely misinterpreted. The counsel for the respondents lashed back stating that the appellant cannot be permitted to make a volte face after the rejection of its only claim by the Company Judge and take shifting stands at different times according to its convenience in the same proceedings. The Court finding no merit in the appeal dismissed the same while stating, “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.” The Bench comprising of CJI Ranjan Gogoi, Justice Navin Sinha and Justice KM Joseph has observed that the recitals in the order sheet with regard to what transpired before the high court are sacrosanct.