(Prayer: Original Side Appeal filed under Clause 15 of Letters Patent read with Order XXXVI Rule 1 of O.S.Rules against the Order dated 2.11.2011 made in Application No.5097 of 2011 on the file of this Court.)

R.BANUMATHI,J

1. Being aggrieved by the dismissal of the application in A.No.5097 of 2011 and declining to grant leave to sue, plaintiffs have preferred this appeal.

2. Case of appellants is that the 1st appellant is a resident of United Kingdom. 2nd and 3rd appellants are Companies incorporated in United Kingdom. On 24.1.2011, an Agreement was entered into between the 1st appellant and 1st respondent, being the Bridge Loan Agreement, which was effective from 24.5.2010. In terms of the Bridge Loan Agreement, the 1st respondent confirmed that the 1st appellant had given a loan of GB Pounds 110,000/- (GB Pounds One hundred and ten thousand only) being approximately US $ 180,000/- (United States Dollars Hundred and Eighty Thousand only) to the 1st respondent. The Bridge Loan was to part finance the acquisition of a 1.5 MW anaerobic digestion plant near Salem. Clause 6 of the Bridge Loan Agreement inter alia provided that the loan should be repaid within ten months following the draw down date of the Loan. As per the terms of the Agreement, Bridge loan ought to have been repaid by 24.3.2011; however, it has not been repaid. On 31.8.2011, the 1st respondent issued a settlement letter offering certain terms for settlement of the debts owned to the appellants amounting to US $ 400,000 and also with regard to the shares that were being held by the appellants in the 1st respondent. The Settlement agreement (dated 31.8.2011) was signed on behalf of the 1st respondent by the 4th respondent.

3. Further case of appellants is that they have learnt from the website of United States Securities Commission (SEC) that even prior to entering into the Settlement Agreement (dated 31.8.2011), the 1st respondent represented by the 4th respondent had purportedly entered into two agreements on 5.8.2011 with M/s.Maxrise Powergen Ltd.(Maxrise) - (i) a Transfer Agreement and (ii) an Agreement for Purchase and Sale of Business. In terms of the said Transfer Agreements, the 1st respondent had purported to transfer the entire share capital in the 2nd respondent to Maxrise for a consideration of US$1 (US Dollar one only) and Maxrise shall assume 100% ownership of all the assets and liabilities of the 2nd respondent including the said plant and another 18.5 MW Power Plant. According to the appellants, the said Transfer Agreements have been made to effectively dispose of the said Plant, which, according to the appellants, is the primary asset with the respondents, with a view to defeat the claim of the appellants by divesting the 1st respondents entire shareholding in the 2nd respondent without settling the appellants loan and other outstandings. The Transfer Agreements are violative of and in breach of the Settlement Agreement and bad in law and illegal.

4. It is further averred in the plaint that the 2nd and 3rd respondents are having the registered offices in Chennai and Plant has been acquired by the 1st respondent from the loan advanced by the appellants, which has been offered as security for repayment of the loan to the defendants. The divesting of the Plant is sought to be brought about by the 1st respondent by transferring his shares to its wholly owned subsidiary - 2nd respondent and such transfer of shares can be effected only at Chennai, where the registered office of the 2nd respondent is situate. Stating that the plant is owned and held by the 1st respondent through its subsidiaries, who have their registered office at Chennai, the appellants have filed the suit for specific performance of the Agreement to create charge and for a declaration of the appellants first charge on the Plant and consequential orders. Along with the suit, appellants have also filed A.No.5097 of 2011 seeking leave.

5. Upon consideration of the application, the learned single judge passed an elaborate order holding that mere seeking declaration that the appellants have first charge over the property with consequential relief of mandatory injunction to create charge over the immovable property cannot take out a suit from purview of being suit for the land. The learned Judge further held that the main relief claimed by the appellants is for specific performance of agreement to create mortgagees right on the immovable property to secure the amount. Referring to the citations relied on by the appellants i.e., ADCON ELECTRONICS PVT. LTD. VS. DAULAT AND ANOTHER ((2001) 7 SCC 698 [LQ/SC/2001/2043] ) and S.V.SUBRAMANIAN VS. CYPRESS SEMICONDUCTOR TECHNOLOGY INDIA PRIVATE LIMITED AND OTHERS, (2008(1) CTC 471), the learned judge held that those judgments are of no assistance to the appellants. Observing that the reading of the pleadings in the judgment shows that the suit is in fact a suit for specific performance of agreement to create mortgagees right to secure the amount, the learned judge dismissed the application declining to grant leave.

6. As pointed out earlier, the learned single Judge dismissed the application by passing an elaborate order. Since the impugned order is an elaborate order, at the time when the appeal came up for hearing, though notice could be ordered to the respondents, the learned counsel for the appellants has submitted that in view of amendment made by the Madras High Court to sub-rule (1) of Order XLI Rule 14, by way of insertion of proviso to sub-rule (1), notice may not be necessary.

7. Proviso to sub-rule (1) of Order XLI Rule 14 inserted by Madras High Court amendment reads as under:

"Provided that the Appellate Court may dispense with service of notice on respondents, who have remained absent, against whom the suit has proceeded ex parte in the court from whose decree the appeal is preferred or who have been declared absent by the said Court."

We do not think that the above amended proviso is applicable to the case on hand. By reading of the above proviso, it is seen that the Appellate Court may dispense with service of notice on respondents, who were served and who remained absent and against whom the suit proceeded exparte. That is not the case here. No notice was sent to the respondents nor a situation arose where the respondents remained exparte. However, since the learned counsel for the appellants insisted that notice to respondents is not necessary, we have proceeded with the matter and heard the arguments of the learned counsel for the appellants in extenso.

8. Challenging the impugned order, learned counsel for the appellants has submitted that the learned judge erred in saying that the suit is for creation of a mortgagees right and that it would be a suit for land. It was further contended that the learned judge failed to appreciate the settled law that any relief relating to transfer of all shares of a Company ought to be initiated only in the place where the registered office of the Company (Chennai ) is situate and the relief sought for by the appellants against such transfer of shares in the 2nd and 3rd respondents would not be maintainable in the Courts outside India and therefore Madras High Court is the most appropriate and suitable Court to initiate the proceedings. Placing reliance upon the decision of ADCON ELECTRONICS PVT. LTD. VS. DAULAT AND ANOTHER ((2001) 7 SCC 698 [LQ/SC/2001/2043] ), it was further contended that the suit is a suit for specific performance simpliciter and while so it cannot be treated as a suit for land and prayed for allowing of the appeal and grant of leave.

9. In terms of the Bridge Loan Agreement (dated 24.5.2010), the 1st respondent confirmed that the 1st appellant had given a loan of GB Pounds 110,000/- (GB Pounds One hundred and ten thousand only) being approximately US $ 180,000/- (United States Dollars Hundred and Eighty Thousand only) to the 1st respondent. In Clause 2.1 of the Bridge Loan agreement, it is stated that the purpose of the Bridge Loan was to part finance the acquisition of a 1.5 MW anaerobic digestion plant near Salem, India. As pointed out earlier, the 1st appellant is a resident of United Kingdom and the 2nd and 3rd appellants are the Companies incorporated in United Kingdom. By perusal of clause 15.1 of the Bridge Loan Agreement, it is seen that the Agreement shall be governed and construed in accordance with the substantive law of the United Kingdom.

10. Clause 6 of the Bridge Loan Agreement provided that the loan amount was to be repaid within ten months of the draw down date of the Loan (i.e., date of disbursement) and Bridge loan ought to have been repaid by 24.3.2011. Since it has not been paid the 1st respondent issued a settlement letter (31.8.2011) offering certain terms for settlement of all the debts owed by the appellants amounting to US $ 400,000 (US Dollars Four Hundred Thousand). The clauses in the Settlement, which are relevant for consideration, reads as under:

"1 and 2 .....

3. No later than September 30, 2011, Clenergen will purchase from SIM a total of 4 million sharers of Clenergen common stock currently owned by SIM for a total of $300,000. These shares will be sold free and clear of all liens and encumbrances.

4. Clenergen agrees to file with the US Securities and Exchange Commission (the "SEC") its Form 10-Q for the three month period ended July 31, 2011 by the due date (including the SEC-permitted extension) for such Form 10-Q, which is understood to be September 19, 2011 (including the five-day extension period).

5. Upon completion of the transactions set forth in points 1, 2, 3 and 4 above within the defined time scales, SIM will contribute to the capital of Clenergen 3 million shares of Clenergen common stock currently owned by SIM.

6. Clenergen shall irrevocably agree that, should Clenergen fail to make the timely actions as contemplated by points 1, 2, 3 and 4 above, Clenergen will have no claim to any of the 10 million shares currently owned by SIM and shall not take any steps that would cause any delay in allowing SIM to sell any shares of Clenergen common stock that SIM owns, provided such sale or sales are made in compliance with applicable US securities laws and SEC rules and regulations. Clenergen represents to SIM than Clenergen is not aware of any facts that would result in any such sale not to be in compliance with said laws, rules and regulations. Furthermore, Clenergen agrees that under such circumstances it will instruct its advisers to have a first charge of $400,000 placed on the 1.5 MW plant in favour of SIM in a manner that is acceptable to the Reserve Bank of India and other applicable Indian Government regulations."

11. Drawing our attention to the above clause, learned counsel for appellants contended that since the 2nd and 3rd respondents are having registered office at Chennai and the above Settlement relates to offering transfer of shares in 2nd and 3rd respondents (subsidiaries of 1st respondent Company) as security for the financial assistance, any relief restraining 2nd and 3rd respondents from transferring, alienating, encumbering or creating any charge and the shares held in the 2nd and 3rd respondents could be filed only in the Madras High Court.

12. Even though it is contended that the Plant is based on the above settlement between 1st respondent and the appellants, the above Settlement (31.8.2011) cannot stand in isolation. The said Settlement letter issued by the 1st respondent is an integral part of the Bridge Loan Agreement dated 24.1.2011. As pointed out earlier, the Bridge Loan Agreement shall be governed and construed in accordance with the substantive law of the United Kingdom. When the agreement is governed by the substantive law of United Kingdom, we do not think that this Court would have jurisdiction to entertain the suit.

13. Be that as it may, let us now consider the prayer in the suit. In the plaint, the plaintiffs have sought for the following reliefs:

"a. For a declaration that the plaintiffs have the first charge on the 1.5 MW Power Generation Plant near Salem, Tamil Nadu (hereinafter referred to as the "Said Plant"), owned by the First Defendant, through its wholly owned subsidiary, the Second and Third Defendant being the subsidiary of the second defendant, with effect from 24.05.2010 / 31.08.2011, pursuant to and in terms of the Bridge Loan Agreement dated 24.01.2011 and Settlement Agreement dated 31.08.2011;

b. For a Mandatory Injunction directing the Defendants to record the first charge on the said Plant created in favour of the plaintiffs and to register the charge with the Registrar of Companies, Tamil Nadu and other statutory authorities;

c. For a permanent injunction restraining the First and Second Defendants, their Directors and / or any other person/s in control or management of the First and Second Defendants and the Fourth Defendant, from transferring, alienating, encumbering or creating any charge, either directly or indirectly, of the shares held in the Second and Third Defendants and consequently, restraining the Second and Third Defendants, their Directors and/or any person/s in control or management of the Second and Third Defendants, from in any manner permitting, registering or recording the transfer of shares held by the First Defendant in the Second Defendant and/or by the Second Defendant in the Third Defendant, until repayment of the sum of US$ 400,000/- (United States Dollars Four Hundred Thousand only) by the Defendants to the Plaintiffs;

d. For a permanent injunction restraining the Defendants, their directors, men, agents and/or any person acting through or under them, from transferring, alienating, encumbering or in any other manner creating any charge whatsoever on the Said Plant more fully set out in the Schedule."

14. Contending that the suit is for specific performance simpliciter and that it cannot be treated as a suit for land, learned counsel for appellant placed reliance upon the decision of ADCON ELECTRONICS PVT. LTD. VS. DAULAT AND ANOTHER ((2001) 7 SCC 698 [LQ/SC/2001/2043] ). In the impugned order, the learned single Judge has also extracted the said decision. In that case, the Supreme Court considered the suit for specific performance and an application for leave filed under Clause 12 of the Letters Patent before the High Court of Judicature at Bombay, which is in pari materia with clause 12 of the Letters Patent of Madras High Court. While considering the said clause, the Supreme Court held that if a suit is for determination of title to land or suit for possession of land or other suits, in which the reliefs claimed, if granted, would affect the title or possession of land, suit could be filed in the Court in which the land is situated. Observing that a suit for specific performance of an agreement for sale without a claim for delivery of possession, cannot be treated as a suit for land, the Supreme Court held as under:

"16. In a suit for specific performance of contract for sale of immovable property containing a stipulation that on execution of the sale deed the possession of the immovable property will be handed over to the purchaser, it is implied that delivery of possession of the immovable property is part of the decree of specific performance of contract. But in this connection it is necessary to refer to Section 22 of the Specific Relief Act, 1963 .......

17. It may be seen that sub-section (1) is an enabling provision. A plaintiff in a suit of specific performance may ask for further reliefs mentioned in clauses (a) and (b) thereof. Clause (a) contains reliefs of possession and partition and separate possession of the property, in addition to specific performance. The mandate of sub-section (2) of Section 22 is that no relief under clauses (a) and (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed. Thus it follows that no court can grant the relief of possession of land or other immovable property, subject-matter of the agreement for sale in regard to which specific performance is claimed, unless the possession of the immovable property is specifically prayed for.

18. In the instant case the suit is for specific performance of the agreement for sale of the suit property wherein relief of delivery of the suit property has not been specifically claimed, as such it cannot be treated as a suit for land.

(underlining is added)

15. The above decision is of no assistance to the appellants. The present suit is not merely the declaration of plaintiffs right over the charge (Plant) but also for further reliefs. Even though the appellants seek declaration to the effect that the plaintiffs have the first charge in favour of the plaintiffs over its asset viz., 1.5 MW Power Generation Plant near Salem, as per clause 2.1 of the Bridge Loan Agreement, in effect, the prayer is only for creation of charge over the plant. The plaint prayer (d) is for Permanent Injunction restraining the defendants from transferring, alienating, encumbering or in any other manner creating any charge over the said Plant erected in Salem and for acquiring control over the plant.

16. The contention of appellants is that since the 2nd and 3rd respondents are having registered office at Chennai and transfer of its shares can be effected only at Chennai, where the registered office of 2nd respondent is situate and therefore any relief restraining the respondents from transferring, alienating or creating charge over the shares held by the 1st respondent in the 2nd and 3rd respondents could be filed only in the Madras High Court and the learned single Judge erred in saying that the suit is for land.

17. Of course, the plaint prayer (c) is regarding transfer of shares of the 2nd and 3rd respondents. As pointed out earlier, the Bridge Loan Agreement is governed by the substantive law of United Kingdom. The suit has been filed mainly for declaration that the plaintiffs are having the 1st charge over the said 1.5 MW Power Generation Plant near Salem and a Permanent Injunction restraining the respondents from alienating, encumbering or any manner creating any charge on the said Plant. Even though it is termed as Plant, it is a Power Generation Plant embedded to earth - immovable property. As per Section 3 of Transfer of Property Act i.e., Interpretation clause, "immovable property" does not include standing timber, growing crops or grass. As per General Clauses Act, Section 3(25), Immovable property shall include land, benefits arising out of land and things attached to the earth or permanently fastened and anything attached to the earth. The Transfer of Property Act defines the phrase, "attached to the earth" and gives no definition of immovable property and exclude standing timber, creating crops and grass. In P.Ramanath Aiyers Law Lexicon, meaning of "immovable property" is inter alia stated as "Real or immoveable property consists of (1) land; (2) that which is affixed to land; (3) that which is incidental or appurtenant to land; (4) that which is immovable by law.

18. In the present case, 1.5 MW anaerobic digestion plant near Salem, India is embedded to the earth, where it is erected. When the Plant is embedded in the earth and being used for the beneficial enjoyment of the land, the Plant is the "immovable property". By seeking for declaration that the appellant is having first charge over the said Plant and also seeking for permanent injunction restraining the respondents from alienating, encumbering and creating charge would certainly amount to adjudication of right to the immovable property and it will be a suit for land. The interest of mortgagee in the property over which charge is created is evidently a "benefit to arise out of land" and therefore it is immovable property.

19. Considering the question, whether the suit for injunction is suit for land, in TAMIRAPARANI INVESTMENTS PRIVATE LIMITED VS. METFILMS PVT.LTD., ((2006) 1 MLJ 357 [LQ/MadHC/2005/1862] ), the First Bench of this Court has held that the suit for bare injunction is a suit for land and is a suit for the purpose of acquiring possession or safeguarding possession of or establishing title to or a right in land viz., the suit schedule property. It was further held that "..... It is well settled that the expression suit for land should not be confined and limited to suits for recovery of possession of land or to obtain a declaration of title to land only." In the said case, suit, being one for control for land lying outside the jurisdiction of this Court, it was held that High Court has no jurisdiction to entertain the suit".

20. Referring to Moolji Jithas case and considering the expression suit for land, in Tamiraparani Investments case, ((2006) 1 MLJ 357 [LQ/MadHC/2005/1862] ), the Division Bench has held as under:

"8. ..... The words suits for land or other immovable property in Clause 12, besides obviously covering claims for recovery of possession or control of land, or apt to connote also suits, which are primarily and substantially seeking an adjudication upon title to immovable property or a determination of any right or interest therein. The words "suit and land" means establishing title to land or any interest in the same, or for possession or control thereof, and the decree sought for must be intended proprio vigore to be enforceable against and binding on the land itself.

In the said judgment, it is also stated that the nature of the suit and its purpose have to be determined by reading the plaint as a whole. The inclusion or absence of a prayer is not decisive of the nature of the suit, nor is the order in which the prayers are arrayed in the plaint. The substance or object of the suit has to be gathered from the averments made in the plaint on which the reliefs sought for in the prayers are based. In the case on hand, undoubtedly, looking to the averments made in the plaint as a whole, and the relevant relief sought for, the suit is clearly, substantially, and mainly for land.

(underlining added)

21. Applying the ratio of the above decisions to the case on hand, the suit, being one for declaration of appellants charge over the Plant and also for permanent injunction restraining the respondents from alienating or encumbering the said Plant, which is lying outside the jurisdiction of this Court, this Court has no jurisdiction to entertain the suit. The learned single Judge rightly held that this Court has no jurisdiction to entertain the suit and rightly dismissed the application. We do not find any reason warranting interference with the order of the single Judge.

22. In the result, the Original Side Appeal is dismissed. However, there is no order as to costs.