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A litigant can take different stands at different times but cannot take contradictory stands in the same case

In SUZUKI PARASRAMPURIA SUITINGS PVT. LTD. vs THE OFFICIAL LIQUIDATOR OF MAHENDRA PETROCHEMICALS LTD. (IN LIQUIDATION), an appeal was filed against the order of the company judge rejecting the application of the appellant to be substituted in place of another litigant.

Background:-

An application for winding up of M/s MPL was filed by M/s IFCI and others as secured creditors. After the winding­ up order, IFCI assigned its dues to the appellant for a sum of Rs.85 lacs only and informed the official liquidator thereafter. The appellant then filed Company Application No.248 of 2014 with a prayer for substitution in place of IFCI as a secured creditor of M/s. MPL. The Company Judge rejected the application on 31.07.2015 holding that the appellant was neither a Bank or Banking company or a financial institution or securitization company or reconstruction company and therefore could not be substituted in place of IFCI as a secured creditor for the purpose of the SARFAESI Act. In the nature of the relief sought for substitution as a secured creditor under the  SARFAESI Act, the Company Judge held that the appellant could not draw any benefit for the purpose from Section 130 of the Transfer of Property Act. All other contentions were left open to be raised before the appropriate court/forum in appropriate proceedings. The appeal against the same has been rejected after which the appellant approached the Supreme Court.

The Supreme Court on reviewing the court documents found that the submissions made before the Company Judge leaves no doubts that as an assignee of debts from the IFCI (a secured creditor holding first charge), the appellant essentially sought substitution as a secured creditor under the SARFAESI Act and for that purpose sought to draw sustenance from the provisions of Section 130 of the Transfer of Property Act. Therefore, the Company Judge opined that Section 130 of the Transfer of the Property Act was not applicable in the facts of the case leaving it open for the parties to take all available contentions before the appropriate court/forum in appropriate proceedings. That the claim was not simply with regard to assignment of an actionable claim under Section 130 of the T.P. Act is evident from its own pleadings and the pursis filed by the IFCI before the Debt Recovery Tribunal. No material has been placed before us with regard to the orders that may have been passed by the Tribunal on such application. After the claim of the appellant of being a secured creditor was rejected by the Company Judge, and the appellant realised the unsustainability of its claim in the law, it made a complete volte face from its earlier stand and surprisingly, contrary to its own pleadings, now contended that it had never sought the status of a secured creditor under the SARFAESI Act.

The Supreme Court rejecting the appeal and referring to decisions of the court in  Amar Singh vs. Union of India & Joint Action Committee of Air Line Pilots’ Assn. of India vs. DG of Civil Aviation, held that 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 untenability of an inconsistent stand in the same case was considered in  An action at law is not a game of chess. A litigant who comes to Court and invokes its writ jurisdiction must come with clean hands. He cannot prevaricate and take inconsistent positions.

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