Case: Excel Dealcomm Pvt. Ltd Vs. Asset Reconst. Company (India) Ltd. &amp; Or

3. Uniworth Apparel Limited (hereinafter referred to as Uniworth), being Respondent No.3 herein, was a company registered in Maharashtra under the Companies Act, 1956. It had an industrial unit in Thane District of Maharashtra. It availed credit facilities from ICICI Bank. Uniworth could not clear the Banks dues, as a result the Bank assigned their claim in favour of Asset Reconstruction Company India Limited (hereinafter referred to as ARCIL), being Respondent No.1 herein, a company incorporated under Companies Act, 1956 and registered with the Reserve Bank of India as a Company under Section 3 of the Securitization and Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act?). ARCIL took steps under Section 13 of the SARFAESI Act and took possession of the assets. Allegedly the ARCIL entered into a Private Treaty Agreement dated 13.02.2007 (hereinafter referred to as ‘the Agreement?) with the appellant Excel Dealcomm Pvt. Ltd. (herein after referred to as Excel), for sale of the said properties for a consideration of Rs.7.50 Crores. This was to be a sale under SARFAESI Act wherein the sale was to be conducted by execution of sale certificate by the ARCIL in favour of Excel. The Excel alleges that it had even issued a cheque of Rs. 9.5 Crores dated March 1, 2007 to the ARCIL. In reply thereto, Mr. Sanjoy Gupta, Vice President of the ARCIL (Respondent No. 2 herein) had vide letter dated 20-03-2007 informed Excel to collect its cheque since the deal could not be materialised as the management of ARCIL did not approve such a proposal. Thus, the sale could not get through and the present appellant brought out a suit for specific performance of the Agreement against ARCIL, being C.S. No.299 of 2007, in the High Court of Calcutta in December 2007. Initially, there were three Defendants in the said suit, namely, ARCIL, Mr. Sanjoy Gupta (Vice President of ARCIL) and Uniworth. However, later on it was found that ARCIL had sold the suit property to one Webtech Industries Pvt. Ltd. (hereinafter referred to as Webtech), Respondent No.4 herein, on 10.02.2011. So Webtech was impleaded as Defendant No.4 in the said suit after the application for impleadment, being G.A. No.3574 of 2010 was allowed on 06-01-2011. It is to be noted that the suit property was the one mentioned in the Schedule of the Agreement and included both movable and immovable properties as mentioned below:(i) Mortgage on immovable properties of the Uniworth situate at Plot No. A606, TTC Industrial Area, MIDC, Shil Mahape Road, New Mumbai, Maharashtra.  (ii) Hypothecation of the whole of movable assets of Uniworth situate at TTC Industrial Area, MIDC, Shil Mahape Road, New Mumbai, Maharashtra including the movable plant and machinery, machinery spare tools and accessories and other movables both present and future (save and except book debts)4. ARCIL filed an application, being G.A. No.1225 of 2011, for revocation of leave granted under Clause 12 of Letters Patent by the High Court of Calcutta to the Excel and asking return of the plaint in C.S. No.299 of 2007 to be filed before the Court having jurisdiction to try the same. The said application was based on following grounds:(a) The suit was effectively a ?suit for land? and the immovable property was situate in New Mumbai, Maharashtra. Therefore, as per clause 12 of Letters Patent the suit should be filed in a Court having territorial jurisdiction over the immovable property.  (b) That the alleged Private Treaty Agreement between ARCIL and Excel was entered into pursuant to Section 13(4) of the SARFAESI Act and even the sale was to be conducted by execution of sale certificate as provided in Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ?Rules?). Therefore, the jurisdiction of civil court is excluded.  (c) That the Private Treaty Agreement provided that Mumbai Court would have exclusive jurisdiction5. The learned Single Judge of the Calcutta High Court under Original jurisdiction, vide his judgment and order dated 22.12.2011 dismissed the application for revocation of leave and refused to return the plaint for the following reasons:(i) The suit was not a suit for land as the Private Treaty Agreement required creation of security or charge of the assets mentioned in the schedule i.e. ?mortgage of immovable properties? and ?hypothecation of movable properties?; the nature of this security was not mentioned in the agreement and thus, any security could be created on the said mortgage or hypothecation. Therefore, the learned High Court came to the conclusion that the enforcement of terms of agreement would not lead to the decree in suit for land.  (ii) With respect to Forum Selection Clause, the High Court held that the ARCIL had waived its right to object to the lack of jurisdiction by participating in application for impleadment of Respondent No.4, wherein orders were passed on 06.01.2011. The learned High Court noted that ARCIL had made no objection to the jurisdiction while the impleadment application was argued.  (iii) On the question of the jurisdiction of Civil Court being ousted by the SARFAESI Act, the High Court found that the breach of present agreement would not fall under Section 17 of the SARFAESI Act wherein the Debt Recovery Tribunal is given the jurisdiction to rule only that whether the sale was a correct measure adopted and conducted properly. In the present case, even if it is assumed that ARCIL was the assignee of ICICI and a third party sued for specific performance against such assignee, the case would not fall under Section 17 of the SARFAESI Act6. Aggrieved by the judgment and order dated 22.12.2011 passed by the learned Single Judge of the Calcutta High Court, dismissing the application for revocation of leave granted under Clause 12 of Letters Patent, ARCIL filed an appeal before the Calcutta High Court, being A.P.O. No.180 of 2012. The High Court in this appeal, analysed the judgment of the learned Single Judge in the Original Jurisdiction of the High Court of Calcutta. The High Court came to following conclusion while allowing the appeal:(I) The Private Treaty Agreement was not to be considered a concluded contract as it was subject to the approval of the Board of Directors of the ARCIL. Since, the approval was not given and even the cheque supplied by Excel was made available for return, the said agreement was at best a term sheet.  (II) On the point of suit for land the High Court found the alleged sale of assets was to take place by issuing ?sale certificate? in terms of Rule 5(6) of the Rules which pre-supposes the handing over of the possession.  (III) In view of above two conclusions, the High Court found it was not necessary to answer the question regarding forum selection clause7. On the basis of these conclusions, the Division Bench of the High Court reversed the order of the learned single Judge holding that the contract could not be specifically enforced as it was not a concluded one and also that it would be a suit for land if, at all, the suit is maintainable. Therefore, the Division Bench revoked the leave granted under Clause 12 of the Letters Patent.

Reasoning: 10. In the present case, a suit was filed for the specific performance of the Agreement which contemplated the sale of property, as has been described in para 1 under Section 13 of SARFAESI Act in terms of the Rules. The question with respect to Clause 12 of Letters Patent in the present case is that whether the present suit is suit for land12. The learned counsel for the Respondent has very emphatically argued that this prayer is in effect a prayer for possession of the said properties since the procedure under the Rules for execution of the sale certificate, the transfer of possession is pre-requisite. Therefore, he has submitted that although, the possession is not asked for in direct words but that would be the obvious corollary to granting of the prayer. Further, another point which has been emphasized on behalf of respondent is that the prayer requires sale to be effected in terms of the Agreement, and therefore, the entire agreement may be read as a part of the prayerTherefore, we are of the opinion that the Courts of Mumbai were granted exclusive jurisdiction as per the Agreement and we find no reason to create any exception to the intention of the parties16. In view of the above-mentioned two findings that the present suit is a suit for land, and that the parties had granted exclusive jurisdiction to the Court of Mumbai, the jurisdiction of the Court at Calcutta is clearly ousted as per law. Thus, from the above conclusion it appears that the plaint will have to be returned by the Calcutta High Court as it does not have the jurisdiction. Therefore, we are of the view that the question of jurisdiction of the Debt Recovery Tribunal need not be answered.