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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.