Real judgements, distilled

Legal Case Shots

Court judgements broken down into the case type, how the decision played out, and the lesson worth remembering, with the full judgement available as a PDF.

Company & Insolvency LawSupreme Court of India

Suzuki Parasrampuria Suitings Pvt. Ltd. v. The Official Liquidator of Mahendra Petrochemicals Ltd. (In Liquidation) and Others

Civil Appeal · 2018 INSC 937Decided 8 Oct 2018
Civil Appeal No. 10322 of 2018
Chief Justice Ranjan Gogoi · Justice Navin Sinha · Justice K.M. Joseph

Background

M/s Mahendra Petrochemicals Ltd. (MPL) went into winding-up, with IFCI holding first charge (Rs. 160 crore outstanding) and Bank of Baroda holding second charge over its assets as secured creditors. After the winding-up order, IFCI assigned its entire Rs. 160 crore debt to the appellant for just Rs. 85 lakh, and the appellant then applied to the Company Court to be substituted in IFCI's place as a secured creditor under the SARFAESI Act. The Company Judge rejected this, holding the appellant was not a bank, financial institution, or similarly qualified entity under the SARFAESI Act and so could not be substituted as a secured creditor, and could not rely on Section 130 of the Transfer of Property Act for that purpose either; a subsequent recall/review application and an appeal to a Division Bench both failed, leading to this further appeal to the Supreme Court.

Decision Breakdown

Before the Supreme Court, the appellant performed a complete about-turn, now claiming it had never sought status as a secured creditor at all and had only ever wanted recognition as a transferee of an actionable claim under Section 130 of the Transfer of Property Act. The Court rejected this, holding that the Company Judge's order itself recorded, in explicit and unambiguous terms, that the appellant had specifically argued for substitution as a secured creditor under the SARFAESI Act, a recital of court proceedings that is treated as authoritative, and that the appellant could not now deny having made that argument. Relying on its earlier rulings in Amar Singh v. Union of India and Joint Action Committee of Air Line Pilots' Association v. DG of Civil Aviation, the Court held that a litigant cannot approbate and reprobate, i.e., cannot take one position to get a favourable ruling and then flatly deny having taken that position when it loses, since doing so amounts to playing fast and loose with the court. Finding no merit in the appeal on this ground, the Court dismissed it.

Lesson Learnt

A party cannot change its own legal position mid-litigation to escape an unfavourable ruling, once a specific claim or argument is placed on record before a court (and recorded in its order), a litigant is bound by it and cannot later deny ever having made that argument; courts treat such contradictory conduct as an abuse of process.

Suzuki Parasrampuria Suitings Pvt. Ltd. v. The Official Liquidator of Mahendra Petrochemicals Ltd. (In Liquidation) and Others – Legal Case Shots | LegalAware