IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN MONDAY, THE 22ND JUNE 2009 / 1ST ASHADHA 1931 FAO.No. 203 of 2008() --------------------- AGAINST THE ORDER IN IA.1171/2007 IN OS.133/2007 of PRINCIPAL SUB COURT,ATTINGAL .................... APPELLANT/RESPONDENTS 2, 3 & 4 -------------------------------------------------- 1. M/S.CLIFFTOP BEACH RESORTS, CHANGANACHERRY, KOTTAYAM DISTRICT, KERALA A PARTNERSHIP FIRM REPRESENTED BY ITS PARTNERS MR.SIBY XAVIER, ALUVA, ERNAKULAM DISTRICT. 2. MR.SIBY XAVIER, S/O.P.D.XAVIER, PARTNER, M/S.CLIFFTOP BEACH RESORTS, CHANGANACHERRY, RESIDING AT PARAKKAL HOUSE, ALUVA, ERNAKULAM DISTRICT. 3. MR.LOUIS THOMAS, S/O.MR.THOMAS, PARTNER M/S.CLIFFTOP BEACH RESORTS, CHANGANACHERRY, KUTTAMPEROOR, CHAKKALACKAL, CHANGANACHERRY P.O. KOTTAYAM DISTRICT. BY ADV. SRI.V.CHITAMBARESH, SENIOR ADVOCATE SRI.T.C.SURESH MENON SRI.JIBU P THOMAS SRI.P.S.APPU RESPONDENT(S): PETITIONER & IST RESPONDENT ---------------------------------------------------------------------- 1. GEORGE JOSEPH @ JOSEPH GEORGE, ALSO KNOWN VAVACHAN, S/O.GEORGE MORRIS, KANNITTA HOUSE, CHURCH ROAD, SAKTHIKULANGARA, SAKTHIKULANGARA VILLAGE, KOLLAM TALUK, KOLLAM DISTRICT. 2. MORRIS HOSPITALITY SERVICE (P) LTD., REP. BY ITS M.D., MR.SEBASTIAN GEORGE MORRIS, S/O.GEORGE MORRIS, SUITSUMMIT, FLAT NO.102A, ERG ROAD, EKM, KOCHI REP. BY ITS GENERAL POWER OF ATTORNEY HOLDER GEORGE JOHNS MORRIS, R/AT KANNITTAYIL PUTHENTHOPPU, KADINAMKULAM VILLAGE, KAZHAKKOOTAM, THIRUVANATHAPURAM, NOW WORKING AS THE MANAGING DIRECTOR, EURO MARINE PRODUCTS (PVT) LTD., PUTHENTHOPPU ST. XAVIER COLLEGE P.O., THIRUVANANTHAPURAM. ADDL. R3 IMPLEADED. 3. THE CENTRAL BANK OF INDIA, OVERSEAS BUSINESS CENTRE BRANCH, WILLINGTON ISLAND, COCHIN – 682 003. ADDL.R3 IS IMPLEADED AS PER ORDER DATED 23.9.2008 IN I.A.3454/2008. ADV. SRI.S.V.BALAKRISHNA IYER, SENIOR ADVOCATE FOR R2 SMT.K.A.SANJEETHA FOR R2 SRI.JOHNSON GOMEZ FOR R1 SRI.G.KRISHNA KUMAR (MARANAD) FOR R1 SRI.DEVAN RAMACHANDRAN FOR R3 SRI.K.JAYAKUMAR FOR R2 SRI.P.B.KRISHNAN FOR R2 SRI.ZAKIR HUSSAIN FOR R2 ADDL. R3 BY ADV. SRI. DEVAN RAMACHANDRAN. THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY HEARD ON 22/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R. RAMAN & P. BHAVADASAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - F.A.O. No. 203 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 22nd day of June, 2009. JUDGMENT Raman, J, Appellants are respondents 2, 3 and 4 in I.A. No. 1171 of 2007 in O.S. No.133 of 2007 on the file of the Sub Court, Attingal. That is an application filed by the first respondent herein for an injunction restraining the counter petitioners-defendants or any one claiming under them from creating any charge, encumbrance or other liabilities over the plaint schedule property and from making any structural alterations to the building in the property and from committing any waste therein till the disposal of the suit. 2. The suit is one for a declaration that the sale deed executed by the plaintiff to the first defendant is sham and that the subsequent sale by defendants 4 and 5 is vitiated by fraud, and for a declaration of the right, title and interest of the plaintiff over the property. The plaint schedule property consists of an extent of 2 acres and 38 cents situate in Varkala. The said property was originally sold by the plaintiff to first defendant Company ,in which the plaintiff was a Director (then). The second defendant was the Managing Director, F.A.O.203/2008. 2 who is none other than the brother of the plaintiff and third defendant was also a Director, who is the wife of second defendant. Subsequently the said property was offered as a security for securing a loan from the Bank, fourth defendant. Plaintiff retired from the Directorship on 5.10.2004. Defendants 2 and 3 were the guarantors of the loan along with the plaintiff. When default was committed, Bank proceeded to realise the amount by initiating proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. Ultimately possession was taken. It was in the meantime, a writ petition, W.P.(C) No.6817 of 2007 was filed by the second defendant, and this court by its judgment dated 13th March, 2007 disposed of the same directing the Bank to take up the question of sale and issue sale certificate after finalizing the sale with the person, who is identified by the petitioner for the purchase. Thus this court accorded permission for the sale of the property by the Bank in favour of a private party as suggested by the petitioner therein. Finally the property was sold in favour of the fifth defendant. It is challenging the sale made by the Bank in favour of the fifth defendant alleging fraud that the above suit has been filed. It is also alleged in the plaint that even the first sale in favour of the Company is sham. During the pendency of the suit, as stated earlier, the present application seeking to restrain the fifth defendant from F.A.O.203/2008. 3 alienating or creating any encumbrance over the property by way of an interim injunction was sought for. The court eventually after hearing granted an order restraining the fifth defendant from creating any charge or encumbrance over the property or any other kind of liability and from committing any waste therein. The order however does not restrain the fifth defendant from alienating the property for the reason that such alienation will be hit by Section 52 of the Transfer of Property Act. 3. The learned Senior Counsel Sri.V.Chithambaresh appearing for the appellants would inter alia contend that the order of the court below is clearly illegal and wrong in so far as the court below did not consider as to whether the plaintiff has made out any prima facie case and whether the balance of convenience is in favour of granting the order as sought for. These are two main aspects to be considered before an order is passed in a temporary injunction application. Reliance is placed on the decision of this court in P. Muthukoya v. M. Muthukoya (1988(1) K.L.T. 664). Learned counsel Sri. G. Krishnakumar appearing for the first respondent/plaintiff on the other hand supported the order impugned in this appeal. According to him the property was sold for a meager amount. Since various issues crop up for consideration in the suit, it is not necessary for us to detail out the various pleas raised in the plaint and written statement by the parties. F.A.O.203/2008. 4 However, we find that the plaintiff herein, who is none other than the brother of the other two party defendants and who is also a Director of the Company had sold the property in favour of the Company. True that there is an allegation that the said document executed by him in favour of the Company is sham. It is said that the loan was availed first offering the property as security by the plaintiff and thereafter the plaintiff sold the property to the Company. At any rate, the plaintiff continued to be a Director in the Company till 5.10.2004. Therefore, prima facie, it cannot be said that he is unaware of the various transactions, which took place and the Company having availed a huge amount by way of loan from the Bank. It is also contended that the suit is barred by limitation, since the suit itself was filed only after the expiry of a period of three years of the execution of the document by the plaintiff in favour of the company. However, we are not examining this question since that is an issue to be considered in the suit. 4. As far as the sale by the Bank in favour of the fifth defendant is concerned, it was pursuant to the judgment by this court in W.P.(C) 6817 of 2007. Of course, we are not expressing any opinion as to whether while effecting the sale by the Bank in favour of the fifth defendant, there was any procedural irregularity or fraud. All that we say is that the sale in favour of the fifth defendant was as permitted by this court. F.A.O.203/2008. 5 The fifth defendant having purchased the property, to restrain him from creating any charge or encumbrance on the property by an injunction will naturally affect his right to enjoy the property. Further if ultimately the suit is to be decreed in favour of the plaintiff, necessarily Section 52 will come to his rescue to invalidate all such transactions hitherto taken after the institution of the suit by the fifth defendant. Therefore, whatever transaction entered into by the fifth defendant during the pendency of the suit will be hit by the rule of lis pendens and he will be doing so at his risk. In such circumstances, we do not think that a specific injunction restraining the fifth respondent from creating any charge or encumbrance over the property could have been passed by the court below in this case. In the result, balance of convenience is not in favour of granting the injunction. Accordingly we set aside the order passed by the court and allow this appeal. P.R. Raman, Judge P. Bhavadasan, Judge sb.