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CASE NO.:

Appeal (civil) 3827 of 2007

PETITIONER:

M/S PRESTIGE LIGHTS LTD

RESPONDENT:

STATE BANK OF INDIA

DATE OF JUDGMENT: 20/08/2007

BENCH:

C.K. THAKKER & ALTAMAS KABIR

JUDGMENT:

J U D G M E N T

CIVIL APPEAL NO. 3827 OF 2007

ARISING OUT OF

SPECIAL LEAVE PETITION (CIVIL) NO.9409 OF 2005

C.K. THAKKER, J.

1. Leave granted.

2. The present appeal is directed against the

judgment and order dated March 29, 2005 passed by the

High Court of Uttaranchal at Nainital in Writ Petition No.

293 of 2005 by which the petition filed by the petitioner

(present appellant) was dismissed in limine.

3. To appreciate the controversy, few relevant

facts may be noted.

4. Appellant herein is a Private Limited Company

engaged in manufacturing bulbs, chokes and fittings.

The factory of the appellant is situated at Dhalwala

Industrial Area, Rajpur Road, Dehradun, Uttranchal. In

1992, the appellant obtained a loan of Rs. 85 lakhs from

State Bank of India, Commercial Branch, Radha Palace,

Rajpur Road, Dehradun \026 respondent herein. The

Company mortgaged its land and building with the

respondent-Bank. According to the appellant, till 2001,

the business of the appellant was comparatively good and

it had no problem in depositing the interest accrued

towards credit facilities. In or about 2001-02, however,

because of heavy slump in the market due to arrival of

cheaper Chinese Products, the appellant suffered huge

losses and could not deposit the interest-amount with

the respondent-Bank. The respondent-Bank, therefore,

issued a notice on October 16, 2004 under sub-section

(2) of Section 13 of the Securitization, Reconstruction of

Financial Assets and Enforcement of Security Interest

Act, 2002 (hereinafter referred to "the Act") alleging

therein that the appellant failed to pay a sum of

Rs.87,64,549.42 P. It was stated that the appellant had

created security by equitable mortgage of land, bearing

Khasra No. 550/3 and 550/4 admeasuring 10,036 sq. ft.

situated at village Jagjitpur, Pargana Jwalapur, Tehsil

and District Haridwar. The notice also sought to invoke

personal guarantee given by M.P. Goel, Sudha Goel and

Abhinav Goel. The appellant was called upon to deposit

the amount mentioned in the notice with interest,

expenses and costs within sixty days failing which the

Bank would exercise power under sub-seciton (4) of

Section 13 of the Act. It was also stated that the

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appellant should not transfer by sale, lease or otherwise

the secured assets detailed in Schedule to the notice. The

notice was served on the appellant-Company on October

19, 2004. It is the case of the appellant that it submitted

a representation on October 20, 2004 wherein it was

stated that the appellant had proposed to pay dues of the

Bank after selling the land and building of the Factory. It

was further stated that the appellant had proposed to

regularize assets of the Company as per fixed plan. If the

respondent-Bank would continue working in a healthy

spirit, the appellant was confident that it would be able

to regularize the assets of the Company as per the

proposal. It was also stated that the Bank had a second

charge on the assets of the Company and the dues to be

paid to Uttar Pradesh Financial Corporation were very

small and the substantial sale proceeds of the assets of

the Company would automatically go to the Bank and the

Bank need not take any hasty action by invoking the

provisions of the Act.

5. It may be stated at this stage that it is the case

of the respondent-Bank that it had not received any such

representation said to have been sent by the appellant on

October 20, 2004. According to the appellant-Company,

without considering the representation of the appellant,

dated October 20, 2004, the respondent-Bank in

purported exercise of the power under sub-section (4) of

Section 13 of the Act, threatened the appellant to take

over residential premises of the Directors of the

appellant-Company by a communication, dated February

8, 2005. On March 19, 2005, the respondent-Bank

issued a notice to take over possession of the residential

house of the Director. Being aggrieved by all these illegal

actions and 'dispossession-notice', the appellant

approached the High Court of Uttranchal at Nainital on

March 24, 2005 by invoking writ jurisdiction of the Court

under Article 226 of the Constitution. The High Court,

however, dismissed the petition in limine on March 29,

2005 which constrained the Company to challenge the

action of the respondent-Bank in this Court under Article

136 of the Constitution.

6. It appears that a mention was made to the

Court on April 28, 2005 and the Court ordered Registry

to list the matter 'as notified'. Stay of dispossession was,

however, granted. On May 6, 2005, notice was issued

and interim relief was granted on certain terms and

conditions which we will refer to at an appropriate stage.

Affidavits and further affidavits were filed and the Court

directed the Registry to place the matter for final hearing.

Accordingly, the matter has been placed before us.

7. We have heard the learned counsel for the

parties.

8. The learned counsel for the appellant

contended that the action of the respondent-Bank was

wholly illegal, unlawful and against the provisions of the

Act. It was also in violation of the law laid down by this

Court in Mardia Chemicals Ltd. v. Union of India & Ors.,

(2004) 4 SCC 311. It was submitted that once a

representation was made, it was incumbent on the

respondent-Bank to consider the same, to extend an

opportunity to the appellant to enable the Company to

pay-off the amount and in case of rejection of such

representation, to inform the appellant about such

decision by recording reasons. Nothing had been done

by the respondent. The orders passed by the Bank,

therefore, were totally illegal and unsustainable. A

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grievance was also made that the respondent-Bank

which is 'State' within the meaning of Article 12 of the

Constitution has acted arbitrarily and unreasonably. It

ought to have appreciated the difficulties of the appellant

that it was doing business in manufacturing electric

goods and because of availability of Chinese Products at

a cheaper rate, it suffered huge losses. Had the

respondent-Bank shown sympathetic attitude and

adopted constructive approach, the situation could have

been avoided and the appellant- Company would have

been able to pay-off the dues. No such opportunity had

been granted and high-handed action was taken. A

complaint was also made that the High Court was wholly

wrong in summarily dismissing the writ petition when

several questions of power, authority and jurisdiction of

respondent-Bank had been raised which required a

detailed judgment. It was stated at the time of hearing

that even now the appellant is prepared to pay the

amount if time is granted by the respondent-Bank. But if

the respondent-Bank is not prepared to show grace, this

Court may set aside the action of the Bank by granting

time and allowing the appellant-Company to pay-off the

entire amount.

9. The learned counsel for the respondent-Bank,

on the other hand, supported the action taken by the

Bank and the order passed by the High Court. It was

stated that there was suppression of material facts by the

appellant and it has not come with clean hands. Only on

that preliminary ground, this Court may decline to hear

the appellant and may refuse to enter into merits. It was

also submitted that no representation dated October 20,

2004 said to have been made by the appellant had been

received by the respondent-Bank. According to the

counsel, it was an after-thought and only with a view to

take benefit of observations in Mardia Chemicals, such a

case had been put forward by the appellant-Company.

Grievance was also raised that apart from failure to pay

regular instalments, the appellant-Company has not

complied with the order passed by this Court. This is,

therefore, not a fit case to exercise discretionary

jurisdiction in favour of the Company and the appeal

deserves to be dismissed.

10. Having considered the rival contentions of the

parties and going through the records and proceedings of

the case, in our view, no case has been made out by the

appellant-Company to claim any relief from this Court. It

is clear from what is stated above that the appellant took

a credit facility from the respondent-Bank to the extent of

Rs. 85 lakhs. It is not disputed even by the appellant

that no regular re-payment of loan was made by the

Company. The respondent-Bank was, therefore, within

its power to take appropriate action in consonance with

law. Accordingly, a notice came to be issued on October

16, 2004 which was received by the Company on October

19, 2004. So far as the representation said to have been

made by the appellant on October 20, 2004 is concerned,

it is the case of the respondent-Bank that no such

representation was made by the appellant and such

stand was taken belatedly by the Company with a view to

get benefit of Mardia Chemicals. In this connection our

attention has been invited by the learned counsel for the

respondent-Bank to an affidavit-in-reply, dated

September 5, 2005 filed by D.K. Rudola, Chief Manager

wherein it was stated that though the appellant had

asserted that it submitted a representation on October

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20, 2004 in terms of Section 13(3A) of the Act, the Bank

had never received the 'alleged representation'. A letter

dated October 20, 2004 written by the appellant-

Company had been received by the Bank. That letter,

however, did not refer to the notice and was not in reply

to the notice issued by the Bank. There was no reference

of notice in the said letter. In fact, it was expressly stated

that the letter was with reference to 'telephonic talks'

held on that day, i.e. on October 20, 2004.

11. The Counsel also referred to an order passed

by this Court on October 24, 2005 which inter alia read

as under\027

"It is stated by learned counsel appearing for

the respondent, as supported by the counter

affidavit that the alleged representation stated

to have been made at page 55 to the

respondent by the petitioner had never in fact

been received by the respondent. No rejoinder

has been filed. The statement made in the

counter affidavit therefore till today stands

unrebutted.

One week's time granted to file rejoinder

affidavit".

(emphasis supplied)

12. It is interesting to note that though the

affidavit-in-reply was filed on September 5, 2005,

wherein it was explicitly stated that no representation

dated October 20, 2004 said to have been submitted by

the appellant had been received by the respondent-Bank,

there was no rejoinder by the appellant-Company. The

said fact was pressed in service by the respondent-Bank

at the time of subsequent hearing of the case and was

reflected in the order dated October 24, 2004 extracted

hereinabove. It was only thereafter that a rejoinder

affidavit was filed on November 5, 2005 in which it was

asserted by the Company that the representation dated

October 20, 2004 was made and was sent through

courier "First Flight Couriers Ltd." a reputed courier

company having its office at 414-415, 2nd Floor, Sahara

Trade Centre, Faizabad Road, Lucknow. Thus, there is a

word against word. Moreover, this Court cannot be

oblivious of the fact that it was only after the order dated

October 24, 2005 passed by this Court that in rejoinder-

affidavit filed in November, 2005, such a statement was

made. The respondent-Bank, in the circumstances

appears to be right in contending that in spite of notice

issued under Section 13 (2) of the Act, neither payment

was made nor a representation was submitted by the

Company and only with a view to take benefit of Mardia

Chemicals, as an afterthought it was alleged that in

pursuance of notice issued by the respondent-Bank

under sub-section (2) of Section 13 of the Act, the

appellant-Company had forwarded a representation, it

ought to have been considered by the respondent-Bank,

a decision ought to have taken thereon by recording

reasons and such decision ought to have been intimated

to the appellant-Company.

13. It is pertinent to note at this stage that in

Mardia Chemicals, constitutional validity of certain

provisions of the Act had been challenged. Section 13

was one of them. It was contended that no adjudicatory

mechanism for resolution of disputes had been provided

by the Legislature under the said section and the

provision was, therefore, ultra vires and unconstitutional.

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14. Partly accepting the argument of the

petitioner, this Court stated;

"45. In the background we have indicated

above, we may consider as to what forums or

remedies are available to the borrower to

ventilate his grievance. The purpose of serving

a notice upon the borrower under sub-section

(2) of Section 13 of the Act is, that a reply may

be submitted by the borrower explaining the

reasons as to why measures may or may not

be taken under sub-section (4) of Section 13

in case of non-compliance of notice within 60

days. The creditor must apply its mind to the

objections raised in reply to such notice and

an internal mechanism must be particularly

evolved to consider such objections raised in

the reply to the notice. There may be some

meaningful consideration of the objections

raised rather than to ritually reject them and

proceed to take drastic measures under sub-

section (4) of Section 13 of the Act. Once such

a duty is envisaged on the part of the creditor

it would only be conducive to the principles of

fairness on the part of the banks and financial

institutions in dealing with their borrowers to

apprise them of the reason for not accepting

the objections or points raised in reply to the

notice served upon them before proceeding to

take measures under sub-section (4) of Section

13. Such reasons, overruling the objections of

the borrower, must also be communicated to

the borrower by the secured creditor. It will

only be in fulfillment of a requirement of

reasonableness and fairness in the dealings of

institutional financing which is so important

from the point of view of the economy of the

country and would serve the purpose in the

growth of a healthy economy. It would

certainly provide guidance to the secured

debtors in general in conducting the affairs in

a manner that they may not be found

defaulting and being made liable for the

unsavoury steps contained under sub-section

(4) of Section 13. At the same time, more

importantly we must make it clear

unequivocally that communication of the

reasons not accepting the objections taken by

the secured borrower may not be taken to give

an occasion to resort to such proceedings

which are not permissible under the provisions

of the Act. But communication of reasons not

to accept the objections of the borrower, would

certainly be for the purpose of his knowledge

which would be a step forward towards his

right to know as to why his objections have not

been accepted by the secured creditor who

intends to resort to harsh steps of taking over

the management/business of viz. secured

assets without intervention of the court. Such

person in respect of whom steps under Section

13(4) of the Act are likely to be taken cannot be

denied the right to know the reason of non-

acceptance and of his objections. It is true,

as per the provisions under the Act, he may

not be entitled to challenge the reasons

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communicated or the likely action of the

secured creditor at that point of time unless

his right to approach the Debt Recovery

Tribunal as provided under Section 17 of the

Act matures on any measure having been

taken under sub-section (4) of Section 13 of

the Act.

46. We are holding that it is necessary to

communicate the reasons for not accepting the

objections raised by the borrower in reply to

notice under Section 13(2) of the Act more

particularly for the reason that normally in the

event of non-compliance with notice, the party

giving notice approaches the court to seek

redressal but in the present case, in view of

Section 13 (1) of the Act the creditor is

empowered to enforce the security himself

without intervention of the Court. Therefore, it

goes with logic and reason that he may be

checked to communicate the reason for not

accepting the objections, if raised and before

he takes the measures like taking over

possession of the secured assets etc".

The Court concluded;

"80. \005 \005 \005 \005 \005 \005 \005 \005

1. Under sub-section (2) of Section 13 it is

incumbent upon the secured creditor to serve

60 days notice before proceeding to take any of

the measures as provided under sub-section

(4) of Section 13 of the Act. After service of

notice, if the borrower raises any objection or

places facts for consideration of the secured

creditor, such reply to the notice must be

considered with due application of mind and

the reasons for not accepting the objections,

howsoever brief they may be, must be

communicated to the borrower. In connection

with this conclusion we have already held a

discussion in the earlier part of the judgment.

The reasons so communicated shall only be for

the purposes of the information/knowledge of

the borrower without giving rise to any right to

approach the Debt Recovery Tribunal under

Section 17 of the Act, at that stage".

15. It may also be stated that after the above

decision of this Court, Parliament amended the Act and

after sub-section (3) of Section 13, sub-section (3-A) was

inserted by Act 30 of 2004 with effect from November 11,

2004. The said provision reads thus;

(3A) If, on receipt of the notice under sub-

section (2), the borrower makes any

representation or raises any objection, the

secured creditor shall consider such

representation or objection and if the secured

creditor comes to the conclusion that such

representation or objection is not acceptable or

tenable, he shall communicate within one

week of receipt of such representation or

objection the reasons for non-acceptance of

the representation or objection to the

borrower:

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Provided that the reasons so

communicated or the likely action of the

secured creditor at the stage of communication

of reasons shall not confer any right upon the

borrower to prefer an application to the Debts

Recovery Tribunal under section 17 or the

Court of District Judge under section 17A."

16. The submission of the learned counsel for the

respondent-Bank appears to be well-founded that taking

clue from the decision in Mardia Chemicals, the

appellant-Company, as an afterthought alleged that it

had made a representation in pursuance of notice issued

by the respondent-Bank under Section 13(2) of the Act.

17. But, there is an additional factor also as to

why we should not exercise discretionary and equitable

jurisdiction in favour of the appellant. It is contended by

the learned counsel for the respondent-Bank that having

obtained interim order and benefit thereunder from this

Court, the appellant-Bank has not paid even a pie. The

appellant is thus in contempt of the said order. The

Company has never challenged the condition as to

payment of amount as directed by this Court. Thus, on

the one hand, it had taken benefit of the order of interim

relief and on the other hand, did not comply with it and

failed to pay instalments as directed. Neither it raised

any grievance against the condition as to payment of

instalments nor made any application to the Court for

modification of the condition. It continued to enjoy the

benefit of stay ignoring and defying the term as to

payment of money. The Company is thus in contempt of

the order of this Court, has impeded the course of justice

and has no right of hearing till it has purged itself of the

contempt.

18. As already noted, stay of dispossession was

granted by this Court on mention being made on April

28, 2005. The matter was then notified for admission-

hearing on May 6, 2005. A two-Judge Bench of which

one of us was a party (C.K. Thakker, J.) passed the

following order;

"Permission to file additional documents

is granted.

Issue notice.

Subject to the petitioner's depositing an

amount of Rs.20 lakhs per month in this

Court, there will be stay of the operation of the

impugned order. First of such payment shall

be made by 6th June, 2005 and the

subsequent payments by 6th of each

succeeding month. In default of payment of

any one instalment, the stay will stand

vacated."

19. From the above order, it is clear that notice

was issued to the other side and stay granted earlier was

ordered to continue on the appellant's depositing a sum

of Rs. 20 lakhs per month in this Court. It was also

made clear that first of such payment should be made by

6th June, 2005 and subsequent payments by 6th of each

succeeding month. A default clause was also introduced

in the order that if such payment would not be made, the

stay would stand vacated. It is an admitted fact that the

order has not been complied with and no payment as per

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the order has been made by the appellant-Company to

the respondent-Bank. The said fact has also been

reflected in the order of this Court passed on July 25,

2007, wherein it was stated;

"It is recorded that the stay is

transgressed by reason of the admitted non-

compliance with the order dated 6th May,

2005".

20. The original order was of May, 2005 and the

matter was heard finally in May, 2007. Thus, about two

years had passed and the order has been thwarted with

impunity. In our opinion, therefore, the learned counsel

for the respondent-Bank is right that such appellant does

not deserve sympathy from the Court.

21. An order passed by a competent court \026interim

or final- has to be obeyed without any reservation. If

such order is disobeyed or not complied with, the Court

may refuse the party violating such order to hear him on

merits. We are not unmindful of the situation that

refusal to hear a party to the proceeding on merits is a

'drastic step' and such a serious penalty should not be

imposed on him except in grave and extraordinary

situations, but some time such an action is needed in the

larger interest of justice when a party obtaining interim

relief intentionally and deliberately flouts such order by

not abiding the terms and conditions on which a relief is

granted by the Court in his favour.

22. In the leading case of Hadkinson v. Hadkinson,

(1952) 2 All ER 567, the custody of a child was given to

the mother by an interim order of the court, but she was

directed not to remove the child out of jurisdiction of the

Court without the prior permission of the Court. In spite

of the order, the mother removed the child to Australia

without prior permission of the Court. On a summons by

father, the Court directed the mother to return the child

within the jurisdiction of the Court. Meanwhile, an

appeal was filed by the mother against that order. A

preliminary objection was raised by the father that as the

appellant was in contempt, she was not entitled to be

heard on merits.

23. Upholding the contention and speaking for the

majority, Romer, L.J. observed;

"I am clearly of the opinion that the

mother was not entitled, in view of her

continuing contempt of court, to prosecute the

present appeal and that she will not be entitled

to be heard in support of it until she had taken

the first and essential step towards purging

her contempt of returning the child within the

jurisdiction.

24. In a concurring judgment, Denning, L.J. also

stated;

"The present case is a good example of a

case where the disobedience of the party

impedes the course of justice. So long as this

boy remains in Australia, it is impossible for

this court to enforce its orders in respect of

him. No good reason is shown why he should

not be returned to this country so as to be

within the jurisdiction of this Court. He should

be returned before counsel is heard on the

merits of this case, so that, whatever order is

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made, this court will be able to enforce it. I am

prepared to accept the view that in the first

instance the mother acted in ignorance of the

order, but nevertheless, once she came to

know of it, she ought to have put the matter

right by bringing the boy back. Until the boy

is returned, we must decline to hear her

appeal."

(emphasis supplied)

25. That, however, does not mean that in each and

every case in which a party has violated an interim order

has no right to be heard at all. Nor the court will refuse

to hear him in all circumstances. The normal rule is that

an application by a party will not be entertained until he

has purged himself of the contempt. There are, however,

certain exceptions to this rule. One of such exceptions is

that the party may appeal with a view to setting aside the

order on which his alleged contempt is founded. A

person against whom contempt is alleged must be heard

in support of the submission that having regard to the

meaning and intendment of the order which he is said to

have disobeyed, his actions did not constitute a breach of

it.

26. In Gorden v. Gorden, (1904) 73 LJ 41 : 90 LT

597 : 16 Dig 90, 1128, Cozens Hardy, L.J. put the

principle succinctly in the following words;

"\005.I desire expressly to limit my

judgment to a case in which the [party in

contempt] is saying that the order complained

of is outside the jurisdiction of the court, as

distinguished from the case of an order which,

although it is within the jurisdiction of the

court, ought not, it is said, to have been

made."

27. Lord Denning made the following pertinent

observations in Hadkinson;

"It is a strong thing for a court to refuse

to hear a party to a cause and it is only to be

justified by grave considerations of public

policy. It is step which a court will only take

when the contempt itself impedes the course of

justice and there is no other effective means of

securing his compliance."

28. There is still one more reason why the

appellant-Company should be denied equitable relief

under Article 136 of the Constitution. According the

respondent-Bank, the appellant has not come with clean

hands before the Bank. It has suppressed and concealed

material facts from the Court.

29. It is not in dispute that when the loan was

taken by the appellant-Company from the respondent-

Bank, certain immovable properties including residential

premises of the Director of the Company had been

mortgaged with the Bank and a document to that effect

had been executed in favour of the Bank. The

owner/Director Sudha Goel had filed an affidavit dated

February 16, 1996. In the said affidavit, it was, inter alia,

stated as under:

"That I/We declare and say that I/We

have not created any mortgage charge, or

encumbrance of any kind or nature

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whatsoever on or in respect of the said

property. I/We further declare and say that the

said property is free from all encumbrances,

claims or demands of any kind or nature

whatsoever. \005

\005I/We shall not sell, charge, encumbrance,

lease, dispose off or deal with any of my/our

property in any manner whatsoever until such

time all the liabilities under the various

facilities granted to M/s. Prestige Lights Ltd.

has been paid in full by the said M/s. Prestige

Lights Ltd. and the deponent has got the

discharge confirmed in writing".

30. In spite of the above declaration, undertaking

and affidavit, encumbrance has been created by the

deponent and the Company over the property in respect

of which such undertaking has been furnished.

31. It was also alleged by the respondent-Bank

that the appellant-Company had shifted machinery to

other place and stock statements were not supplied to

the respondent-Bank. On August 4, 2004, the Central

Excise and Custom Officials attached the Plant and

Machinery of the Company for recovery of its dues. On

August 25, 2004, Uttar Pradesh Financial Corporation

issued a notice under Section 29 of the State Financial

Corporation Act, 1951 for taking over physical possession

of the assets of the appellant-Company. On May 16, 2005

a collusive suit was got filed by one Yashpal in Haridwar

Court wherein the plaintiff had asserted that he was the

tenant of Sudha Goel in respect of mortgaged property in

question and he should not be dispossessed. A summons

of the said suit was issued to the respondent-Bank. On

May 24, 2005, the respondent-Bank received another

summons from a Court that one Vijendra Singh Tyagi

claimed himself to be the tenant of the aforesaid

mortgaged premises.

32. It is thus clear that though the appellant-

Company had approached the High Court under Article

226 of the Constitution, it had not candidly stated all the

facts to the Court. The High Court is exercising

discretionary and extraordinary jurisdiction under Article

226 of the Constitution. Over and above, a Court of Law

is also a Court of Equity. It is, therefore, of utmost

necessity that when a party approaches a High Court, he

must place all the facts before the Court without any

reservation. If there is suppression of material facts on

the part of the applicant or twisted facts have been

placed before the Court, the Writ Court may refuse to

entertain the petition and dismiss it without entering into

merits of the matter.

33. The object underlying the above principle has

been succinctly stated by Scrutton, L.J., in R v.

Kensington Income Tax Commissioners, [(1917) 1 KB 486 :

86 LJ KB 257 : 116 LT 136], in the following words:

"(I)t has been for many years the rule of

the Court, and one which it is of the greatest

importance to maintain, that when an

applicant comes to the Court to obtain relief on

an ex parte statement he should made a full

and fair disclosure of all the material facts\027

facts, not law. He must not misstate the law if

he can help it\027the Court is supposed to

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know the law. But it knows nothing about

the facts, and the applicant must state fully

and fairly the facts, and the penalty by which

the Court enforces that obligation is that if it

finds out that the facts have not been fully and

fairly stated to it, the Court will set aside, any

action which it has taken on the faith of the

imperfect statement". (emphasis supplied)

34. It is well settled that a prerogative remedy is

not a matter of course. In exercising extraordinary power,

therefore, a Writ Court will indeed bear in mind the

conduct of the party who is invoking such jurisdiction. If

the applicant does not disclose full facts or suppresses

relevant materials or is otherwise guilty of misleading the

Court, the Court may dismiss the action without

adjudicating the matter. The rule has been evolved in

larger public interest to deter unscrupulous litigants

from abusing the process of Court by deceiving it. The

very basis of the writ jurisdiction rests in disclosure of

true, complete and correct facts. If the material facts are

not candidly stated or are suppressed or are distorted,

the very functioning of the writ courts would become

impossible.

35. In the case on hand, several facts had been

suppressed by the appellant-Company. Collusive action

has been taken with a view to deprive the respondent-

Bank from realizing legal and legitimate dues to which it

was otherwise entitled. The Company had never disclosed

that it had created third party's interests in the property

mortgaged with the Bank. It had also shifted machinery

and materials without informing the respondent-Bank

prejudicially affecting the interest of the Bank. It has

created tenancy or third party's right over the property

mortgaged with the Bank. All these allegations are

relevant when such petitioner comes before the Court

and prays for discretionary and equitable relief. In our

judgment, the submission of the respondent-Bank is

well-founded that appellant is not entitled to ask for an

extraordinary remedy under Article 226 of the

Constitution from the High Court as also equitable

remedy from this Court under Article 136 of the

Constitution. A party, whose hands are soiled, cannot

hold the writ of the Court. We, therefore, hold that the

High Court was not in error in refusing relief to the

appellant-Company.

36. For the foregoing reasons, we hold that by

dismissing the petition in limine, the High Court has

neither committed an error of law nor of jurisdiction. The

appellant-Company is not entitled to any relief. Though

the respondent-Bank is right in submitting that the

appellant has suppressed material facts from this Court

as also that it has not complied with interim order

passed by the Court and it has, therefore, no right to

claim hearing on merits, we have considered the merits of

the matter also and we are of the considered view that no

case has been made out for interference with the action

taken by the respondent-Bank or the order passed by the

High Court.

37. The appeal, therefore, deserves to be dismissed

and is accordingly dismissed with costs.