ARCE POLYMERS PRIVATE LIMITED versus M/S. ALPHINE PHARMACEUTICALS PRIVATE LIMITED AND OTHERS

Citation: [2021] 11 S.C.R. 1059 · Decided: 03-12-2021 · Supreme Court of India · Bench: L. NAGESWARA RAO · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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1059
ARCE POLYMERS PRIVATE LIMITED
v.
M/S. ALPHINE PHARMACEUTICALS PRIVATE LIMITED
AND OTHERS
(Civil Appeal No. 7372 of 2021)
DECEMBER 03, 2021
[L. NAGESWARA RAO, SANJIV KHANNA AND
B. R. GAVAI, JJ.]
Waiver: Meaning and applicability of – Held: Waiver is an
intentional relinquishment of a known right – Waiver applies when
a party knows the material facts and is cognizant of the legal rights
in that matter, and yet for some consideration consciously abandons
the existing legal right, advantage, benefit, claim or privilege –
Waiver can be contractual or by express conduct in consideration
of some compromise – However, a statutory right may also be waived
by implied conduct, like, by wanting to take a chance of a favourable
decision – The fact that the other side has acted on it, is sufficient
consideration – SARFAESI Act.
SARFAESI Act : ss.13(2) and (4) – Failure of Borrower to
repay loan as per payment schedule – Loans declared NPA – Notice
issued by Bank under s.13(2) calling upon Borrower to discharge
its liability – However, Borrower neither made any payment nor
responded by way of reply – Thereafter, Borrower wrote letter in
which while accepting defaults and non payment enlisted reasons
for not being able to adhere to payment schedule and requested to
grant further moratorium – Bank granted further moratorium and
deferred action under SARFAESI Act to enable Borrower to submit
detailed project/viability report – Borrower failed to fulfill promise
made – Post this default also there were negotiations with assurances
and promises by the Borrower – Displaying forbearance, the Bank
granted indulgence as action under the SARFAESI Act was deferred
for nearly one year – Thereafter Bank issued notice under s.13(4)
and took symbolic possession of subject property – After several
attempts to auction the property, fourth attempt was successful and
property was sold and sale certificate issued – Before auction,
Borrower was given notice of auction – Thereafter borrower filed
[2021] 11 S.C.R. 1059
1059
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SUPREME COURT REPORTS
[2021] 11 S.C.R.
petition before DRT challenging the enforcement proceedings in
respect of the subject property including all steps taken right from
issue of notice under s.13(2) of the SARFAESI Act – DRT dismissed
borrower’s application – Borrower preferred writ petition –
Meanwhile auction purchaser sold the property to second purchaser
– High Court held that the Borrower can challenge the possession
notice, taking of symbolic possession notice, taking of physical
possession, sale notice and sale certificate as they all form part of
the same cause of action – High Court concluded that compliance
with s.13(3A) being mandatory, Bank had failed to respond with
reasons to the representations made by the Borrower – Instant appeal
filed by second purchaser – Held : It is correct that waiver being an
intentional relinquishment is not to be inferred by mere failure to
take action, but the instant case is of repeated positive acts post the
notices under ss.13(2) and (4) of the SARFAESI Act – Not only did
the Borrower not question or object to the action of the Bank, but it
by express and deliberate conduct had asked the Bank to
compromise its position and alter the contractual terms – The
Borrower wrote repeated request letters for restructuring of loans,
which prayers were considered by the Bank by giving indulgence,
time and opportunities – The Borrower, aware and conscious of its
rights, chose to abandon the statutory claim and took its chance
and even procured favourable decisions – Borrower’s conduct had
put the Bank in a position where they have lost time, and suffered
on account of delay and laches, which aspects are material – Action
on the subject property was delayed by more than a year as at the
behest of the Borrower, the Bank gave them a long rope to regularise
the account – To ignore the conduct of the Borrower would not be
reasonable to the Bank once third party rights have been created –
In this background, the principle of equitable estoppel as a rule of
evidence bars the Borrower from complaining of violation – The
Borrower challenged the actions taken by the Bank after the Subject
Property had changed hands and third party interests had been
created – Thus, the Borrower waived and is estopped from
challenging violation of s.13(3A) of the SARFAESI Act.
Judgment/Order: Remedy/relief – Grant of, scope – Held:
Power of the courts/judicial authorities to mould reli

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