IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 4754 of 2011 with CIVIL APPLICATION No. 7578 of 2011 For Approval and Signature:
HONOURABLE MR.JUSTICE A.L.DAVE HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= BHARVIN S PATEL - Petitioner(s) Versus DENA BANK - THROUGH MANAGER & 2 - Respondent(s) =========================================================
Appearance :
MR RD DAVE for Petitioner(s) : 1, MR PRANAV G DESAI for Respondent(s) : 1, NOTICE UNSERVED for Respondent(s) : 2, MR AMITBHAI KOTAK for Respondent(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE A.L.DAVE and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 30/03/2012 COMMON CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. At the outset before deciding the main petition i.e. Special Civil Application No.4754 of 2011, we deem fit to take up Civil Application No.7578 of 2011, which is an application preferred by the owner of the property (borrower) for being impleaded as a party respondent in the main petition i.e. Special Civil Application No.4754 of 2011. The learned advocate Mr.Mayursinh B. Gohil appearing for the applicant of Civil Application No.7578 of 2011, submitted that the applicant is a necessary and proper party for better adjudication of the controversy in question. He submitted that as the applicant who is one of the co-owners of the property has executed an agreement to sell in favour of respondent No.3 of the main petition, he has direct interest so far as the subject matter of the main petition is concerned.
2. Having heard the learned advocate Mr.Mayursinh B. Gohil and the learned advocate Mr.R.D. Dave appearing for the petitioner and having gone through the materials on record, we are of the view that the presence of applicant herein would be necessary in the facts and circumstances of the case for better adjudication of the main petition. In the result, the application is allowed and the applicant is ordered to be impleaded as respondent No.4 in the main petition. Necessary amendment be carried out forthwith.
3. We shall now proceed to decide the main petition.
4. By way of this petition under Articles 226/227 of the Constitution of India, the petitioner seeks to challenge the order dated July 07, 2010 passed by the Debts Recovery Appellate Tribunal, Mumbai in Appeal No.156 of 2010 and in this context, the following reliefs have been prayed for in this petition :
“21(A) This Hon'ble Court may be pleased to issue writ of certiorari or any other writ, order or direction declaring that Debts Recovery Appellate Tribunal, Mumbai has no jurisdiction to hear and decide an Appeal No.156 of 2010 filed by the respondent No.3.
(B) This Hon'ble Court may be pleased to pass appropriate writ in the nature of certiorari and/or any other appropriate writ or direction to quash and set aside the impugned order of Debts Recovery Appellate Tribunal, Mumbai dated 7.7.2010 passed in Appeal No.156/2010 (annexed at ANNEXURE-A) which has been continuing from time to time.
(C) This Hon'ble Court may further be pleased to issue Writ of Mandamus or any other appropriate Writ, Order or direction directing the Respondent No.1 Bank, its officers, servants and agents to handover possession of the property in question being Plot/ Survey No.163/B, Industrial Road No.6-G, Udhna Udyog Nagar, Udhna, Surat and by executing sale deed in favour of the petitioner.
(D) Pending hearing and final disposal of this Petition, this Hon'ble Court may be pleased to direct the Respondent No.1 Bank, its officers, servants and agents to handover physical possession of the property in question being Plot/ Survey No.163/B, Industrial Road No.6-G, Udhna Udyog Nagar, Udhna, Surat immediately.
(E) Any other and further relief/ reliefs as this Hon'ble Court may deem fit and proper be granted.
5. The facts relevant for the purpose of deciding this petition can be summarised as under :
5.1 The respondent No.2 availed of various financial assistance from the respondent No.1-Bank. The respondent No.1 is a nationalised bank governed by the provisions of the Banking Regulation Act, having one of its branches at Udhna Industrial Branch, Surat. Record reveals that the respondent No.2-borrower defaulted in repayment of dues, as a result of which the Bank filed Regular Civil Suit No.37 of 1993 in the Court of the Civil Judge, Senior Division, Surat, for recovery of its dues with interest and costs. Upon enactment of The Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act'), the said case was transferred to Debts Recovery Tribunal at Ahmedabad, which came to be registered vide T.A. No.841 of 1995.
5.2 Record also reveals that during the pendency of the application for recovery before the Debts Recovery Tribunal, the Bank preferred an application for attachment of secured assets before the judgment. The Bank also prayed for appointment of a Court Commissioner / Receiver to make inventory and to take over possession of the property and to dispose of the same vide Exhbit 67, which was filed in Debts Recovery Tribunal at Ahmedabad. The said application was allowed by the Debts Recovery Tribunal by appointing the Court Receiver with authority to make inventory and to take possession of the property in question and dispose of the same as per the order dated August 01, 2003. It appears that in the meantime, the Court Receiver came to be appointed as a Civil Judge and, therefore, he could not complete the work as Receiver. He, therefore, preferred an application for appointment of another Court Receiver and to carry out the directions of the Debts Recovery Tribunal issued in its order dated August 01, 2003. Accordingly, Ms.Abhinita Chaturvedi, an advocate, was appointed to act as per order dated August 01, 2003. On request of Ms.Chaturvedi, the Debts Recovery Tribunal appointed Mr.Kaushikbhai, Development Officer of the respondent No.1-Bank as co-receiver for compliance of the order dated August 01, 2003. The Court Receiver took over possession of the property in question which was put to auction after getting verification report in the year 2003-04. The property consists of the land, building, plant and machinery, of which the land is leasehold land. The reserved price for factory premises was fixed at Rs.10 lac and for plant and machinery at Rs.105 lac. Public notice was issued in the newspaper for sale of the property. The response to the public notice for auction was very poor and only plant and machinery was sold. The auction proceeds were deposited with the Bank. Thereafter, on February 20, 2010 on the basis of fresh valuation the leasehold land and superstructure thereupon were again put to auction. Public notice was issued on January 01, 2010 in the newspaper “Divya Bhaskar” of Surat edition. In response to the said public notice, the petitioner herein submitted his offer. The petitioner herein was declared to be the highest bidder at Rs.112 lac and, therefore, he requested to confirm the sale.
5.3 The Debts Recovery Tribunal vide order dated March 25, 2010 confirmed the sale in favour of the petitioner and accordingly, the petitioner deposited the entire amount of Rs.112 lac with the respondent-Bank.
5.4 The Debts Recovery Tribunal vide its order dated May 07, 2010 directed the Court Receiver to hand over the possession of the land in question with superstructure thereupon to the petitioner herein. The respondent- Bank appropriated the entire amount deposited by the petitioner towards their dues.
5.5 At this stage, the respondent No.3 preferred an application for quashing and setting aside the sale before the Debts Recovery Tribunal in the pending suit dated April 02, 2010 being intervener/ objector bearing No.T-124 and raised objections on the basis of an agreement to sell dated October 05, 2009 which is said to have been executed by the power of attorney holder of one of the co-owners Dalsukhbhai Parmar. This application came to be rejected by the Debts Recovery Tribunal vide order dated May 07, 2010.
5.6 It deserves to be noted that one of the original owners Dalsukhbhai Parmar, resides in U.S.A. His so-called Chartered Accountant is his Power of Attorney. The said power of attorney entered into an agreement to sell in the year 2009 with the respondent No.3 and the agreement to sell contains the following terms and conditions :
(i) The agreement to sell is subject to lease deed.
(ii) The consideration is Rs.35 lac, out of which Rs.20 lac is paid allegedly by cash and Rs.15 lac have been paid by way of cheque.
(iii) Possession of the land in question was also handed over to the respondent No.3 by virtue of agreement to sell.
(We deem fit to state at this stage that the agreement to sell was executed in the year 2009, whereas based on the order passed by the Debts Recovery Tribunal, the Court Receiver appointed took over the possession of the property since the year 2003).
(iv) The agreement to sell is conspicuously silent insofar as the orders which have been passed by the Debts Recovery Tribunal from time to time.
(v) The agreement to sell is not registered. The stamp paper is of State of Maharashtra and the property in question is in Gujarat.
5.7 Record reveals that the respondent No.3 thereafter preferred Appeal No.156 of 2010 before the Debts Recovery Appellate Tribunal, Mumbai and got an ex-
parte injunction/ stay order on July 07, 2010. The Appellate Tribunal restrained the Court Receiver from handing over possession to the petitioner. In short, the Appellate Tribunal ignored and overlooked the important question of fact that the petitioner was declared the highest bidder in the auction proceedings and has already deposited an amount of Rs.112 lac with the Bank.
5.8 It appears that the interim order of the Appellate Tribunal is still in operation despite objections filed by the petitioner as a third party since respondent No.3 appears to have not joined the petitioner as party in the appeal knowing fully well that he is the auction purchaser having deposited Rs.112 lac with the Bank.
5.9 Record reveals that the petitioner preferred a formal application with original owner Mr.Dalsukhbhai M. Parmar for renewal of lease for a period of 30 years before expiry of 30 years in the month of May, 2011. The period of 30 years would commence from September, 1981 and came to an end on May 31, 2011.
5.10 In the meantime, the original owner Mr.Dalsukhbhai Parmar on his own approached this Court for cancellation of sale by challenging the order passed by the Debts Recovery Tribunal at Ahmedabad. This Court vide order dated April 26, 2011 permitted the original owner to apply before the Debts Recovery Tribunal at Ahmedabad. It deserves to be noted that Mr.Dalsukhbhai Parmar is the same person who claims to have sold his property to respondent No.3 by an agreement to sell after receiving the entire sale consideration of Rs.35 lac.
5.11 On June 01, 2011, the original owner Mr.Dalsukh Parmar approached the Debts Recovery Tribunal by an interim injunction application for impleading him as a party and for cancellation of the sale in question in the backdrop of the fact that identical application of the respondent No.3 to whom the property is sold by the original owner by way of so-called agreement to sell receiving Rs.35 lac had already been rejected by the Debts Recovery Tribunal. It appears that the application preferred by Mr.Dalsukhbhai Parmar is still pending before the Debts Recovery Tribunal for consideration.
5.12 It is in this set of facts and circumstances of the case that the petitioner has approached this Court by way of this petition and has prayed for quashing and setting aside the order which has been passed by the Appellate Tribunal restraining the Court Receiver from handing over the physical possession of the property in favour of the petitioner.
CONTENTIONS OF THE PETITIONER :
6. Mr.Dave, learned advocate appearing on behalf of the petitioner, vehemently contended that the Debts Recovery Appellate Tribunal has no jurisdiction to decide the right, title and interest of the respondent No.3 on the land in question as against that of the petitioner, who has been declared a successful highest bidder having deposited a sum of Rs.112 lac with the Bank. Mr.Dave submitted that in light of this legal position, the Debts Recovery Appellate Tribunal cannot decide as to who has a better title between the petitioner and the respondent No.3. He would also contend that it is settled position of law that an agreement to sell does not confer any right, title or interest in the property. Mr.Dave submitted that the petitioner is ready and willing to deposit an amount of Rs.35 lac before the Debts Recovery Tribunal or with the Bank in order to secure the claim of the respondent No.3, if any, under the agreement to sell. He submitted that collusion between Mr.Dalsukhbhai Parmar and the respondent No.3 is writ large on the face of the record. The agreement to sell is nothing but sham and has been created only with a view to frustrate and defeat the entire auction sale.
6.1 He, therefore, submitted that the petition deserves to be allowed and the petitioner may be permitted to take over possession of the property in question.
CONTENTIONS OF THE RESPONDENT No.4 :
7. Mr.Gohil, learned advocate appearing on behalf of newly impleaded party i.e. original owner of the property in question, submitted that vide agreement for sale dated October 05, 2009, the property in question has been handed over to the respondent No.3. He submitted that the respondent No.3 has paid a sum of Rs.35 lac towards full consideration of the property in question. He, therefore, submitted that this Court may not interfere with the interim order which has been passed by the Appellate Tribunal.
CONTENTIONS OF THE RESPONDENT No.3 :
8. Mr.Amitabh Kotak, learned advocate appearing on behalf of respondent No.3, submitted that the petitioner cannot be permitted to assail the interim order passed by the Appellate Tribunal by invoking extraordinary discretionary writ jurisdiction. He submitted that the Debts Recovery Appellate Tribunal being the Appellate Tribunal has jurisdiction to decide all the controversies between the parties, including illegalities in auctioning the property by the Debts Recovery Tribunal while deciding Appeal No.156 of 2010. He submitted that the petitioner cannot be permitted to bypass the remedy of appeal provided under Section 20 of the Debts Recovery Tribunal Act by way of filing this petition and the petitioner should be relegated to the Debts Recovery Appellate Tribunal. He submitted that the petition involves highly disputed questions of fact, which cannot be effectively adjudicated in writ jurisdiction.
ANALYSIS :
9. Having heard the learned counsel for the respective parties and having gone through the materials on record, we find that the following facts are undisputed :
(i) Mr.Dalsukhbhai Parmar, one of the co-owners of the property in question, had availed of a loan facility from Dena Bank.
(ii) Mr.Dalsukhbhai Parmar defaulted in repayment of the the loan amount and, therefore, the secured assets were attached by the Court Receiver appointed by the Debts Recovery Tribunal and the physical possession of the same was taken over by the Court Receiver.
(iii) In the auction proceedings initiated by the Bank, the petitioner herein was declared the highest bidder and after being declared the highest bidder deposited the entire sum of Rs.112 lac with the Bank. This amount of Rs.112 lac is still lying with the Bank since the year 2010.
10. When time came for the petitioner to take over physical possession of the property in question, bought by him in the auction proceedings, the respondent No.3 claiming to hold an agreement to sell executed by the owner in his favour with respect to the same property for total sale consideration of Rs.35 lac approaches the Debts Recovery Tribunal and raises a question as regards the legality and validity of the auction proceedings. The Debts Recovery Tribunal rejected the objections. While rejecting the application of the respondent No.3, the Debts Recovery Tribunal observed as under :
“The lease is of 1981 in favour of the defendant company, mortgage is of 1988 in favour of the applicant bank, then civil suit filed by the bank in 1993 and that civil suit is before this Tribunal as present proceedings. The order of Receiver and sale is passed by this Tribunal in the year 2003 and since then possession of the property is with the Receiver. Earlier also the said property was put for sale that too without any objection from the defendants and even no objection from the owner (from whom the present TP purchased) inspite of knowledge of mortgaged lease. Under such circumstances, whether the TP who appears in picture 2009 can raise all technical objections on the procedural regulation. Answer is in negative. Because if such type of objection is allowed, it would frustrate all process. Ultimately, rules are there to subserve the ends of justice. Otherwise, also hyper technical approach should be avoided unless any grave prejudice is caused by such irregularity. Advocate was appointed as Receiver to sell the property mortgaged as per the rules prevailing at that relevant point of time.
It is pertinent to note that though the present application is filed to review the Order dated 25.03.10, in fact, ultimately it claims for reviewing and recalling all the relevant orders passed by this Tribunal till date right from 2003 on the ground mentioned therein at S. No.-1 (a) to (e). The applicant third party claims to be the bona fide purchaser for consideration by virtue of agreement to sale dated 05.10.09.
This document is executed by the Power of Attorney holder. The executor of Power of Attorney resides at the given address of USA as given in the Power of Attorney itself. It appears from the documents of third party, i.e., the Power of Attorney executed in favour of Ms Anusha Inderaj, that owner was well aware of the mortgaged lease. He was further aware of pending matter in this Tribunal filed by the Bank. Therefore, he has empowered the Power of Attorney holder to settle the matter, to pay the dues, etc, also. Neither the lessor, i.e., predecessor in title of the third party objector or this Power of Attorney holder has bothered to raise any objection in the light of Clause No.4 of the Lease Deed which is produced on record, that the lease cannot be mortgaged and that the possession cannot be parted with and never objected to the appointment of the receiver for sale. The order of appointment of receiver to sell this mortgaged lease is passed in August 2003. Since then the property is in possession of the Receiver. In my opinion, it is too late to challenge those orders by way of review application. Law does not help those who are sleeping over their rights. The Bank is permitted by this Tribunal to engage the security.
Now as it reveals from the record that after much effort the mortgaged lease is sold for Rs.112 lacs, at a price much above the valuation. Today even if, inspite of all the objections, it is assumed that the Power of Attorney and agreement of sale are bona fide documents, still then the Third Party objector enters into the shoes of the seller/ owner / lessor. The sale to him is subject to pre- existing tenancy. The mortgage in favour of the Bank is decades prior to the present agreement to sale of 2009 in favour of the third party objector. The documents produced by the third party objector makes it clear that the predecessor-in-title of the present third party objector was aware of all the events including the pendency of the present proceedings. Therefore, he has empowered the Power of Attorney Holder even for the settlement of the dues. He has never raised any objection to the mortgage and allows to happen all the subsequent events and orders, knowing well the mortgage lease. He has never issued any notice to determine the lease for non-payment of rent or for transferring in violation of lease deed. The Clause No.4 of the sale deed is the restriction and terms of transfer directing not to transfer, sublet without permission of the transferor. The lessor has not taken pain to enforce this direction as contemplated u/s.11 of the T.P. Act nor called for determination of lease for non- payment of rent as alleged. Whether such a condition is valid as per section 10 of TP Act. Clause No.5 of the Lease Deed has taken care of the determination of the lease sooner than the stipulated period. So there appears no intention on the part of predecessor in the title of the third party purchaser to determine the lease. Admittedly the lease is subsisting till 30.05.11. The lease is a transfer of right to enjoyment. As mentioned above the third party by purchasing the property has entered into the shoes of the seller/ owner/ lessor. Thus, he has all the rights available as per the provisions of TP Act. The property is in the possession of the Receiver since 2003. The owner well aware of this situation has ignored all these. The law does not help the litigants who are sleeping over their rights. The lease deed of 1981 in question is executed by Shri Daulat Bhai Parmer for himself and as a Power of Attorney Holder of Shri Anil Manjhi Parmar. But the third party has purchased only from the Power of Attorney holder Shri Daulatbhai Parmar. Shri Anil Manjhi Parmar has not sold his property to the Third Party. Therefore, it appears that no Power of Attorney from Shri Anil Manjhi Parmar for the purpose of the agreement of sale.
What about the share of Anil Manjhi Parmar who is the owner as per the lease deed executed by Daulatbhai Parmar and copy of which is placed on record by the third party objector.
Concerned property is sold by the auction sale. Sale is confirmed in favour of the auction purchaser, thereby, certainly some rights are created in favour of the purchaser who has invested huge amount for purchase of the property.
Third party objector who has filed the instant application has all the rights available as per Section 109 of the T.P. Act. Lease, mortgage, sale are dealt with in the T.P. Act. Section 10 of the TP Act deals with the condition or restriction, if any, on the alienation, etc. Section 11 deals with the restriction repugnant to interest created. In any case, the lessor has never agitated this issue.
In view of the above discussion, Application Exh.T/124 fails. Application filed by the applicant Exh.A/127 for handing over the possession, etc. deserves to be allowed. As such following order :-
:: ORDER ::
1. Application Exh.T/124 is hereby rejected.
2. Application Exh.A/127 is allowed. Court Receiver is directed to handover the possession of the property to the successful auction purchaser.
3. Registrar to comply the further necessary formalities to give an effect to the sale.
Matter adjourned to 23.06.2010.
sd/-. illegible (V.N. Lothey Patil) Presiding Officer Date : 07.05.2010 Shri Amit Kotak, Advocate for the third party objector has filed an application for stay of the operation of the order passed today. Shri Ankit Patel, Advocate on behalf of Shri H.R. Shah, Advocate for the applicant has strongly objected for granting of stay. Heard both the Ld. Advocates. Lease Deed is going to expire in the May, 2011. As such operation of the order passed today is stayed till 18.06.2010, with direction that no further stay will be granted.
sd/-. illegible (V.N. Lothey Patil) Presiding Officer”
11. Aggrieved by the order passed by the Debts Recovery Tribunal rejecting the application Exhibit T-124 filed by the respondent No.3 and allowing the application Exhibit A/127 directing the Receiver to hand over possession of the property to the petitioner herein as a successful auction purchaser, the respondent No.3 preferred an appeal before the Debts Recovery Appellate Tribunal at Mumbai and the Appellate Tribunal, Mumbai in Appeal No.156 of 2010 preferred by the respondent No.3 ordered that the interim order which was granted by the Debts Recovery Tribunal-II, Ahmedabad, for a period upto June 18, 2010 shall continue.
12. From the conspectus of the above facts, we are convinced that the respondent No.3 has no case in his favour. The respondent No.3 is trying to assert his rights under the agreement to sell. If he has any right under the agreement to sell, he has a remedy available by filing an appropriate suit in this regard, may be for specific performance of contract or another remedy available under the law. However, we are convinced by the fact that the respondent No.3 cannot be permitted to frustrate the the auction proceedings which have been undertaken by the Bank lawfully. For no fault on the part of the petitioner, the petitioner has not been able to reap the fruits of he being the highest bidder in auction proceedings and that too after depositing an amount of Rs.112 lac with the Bank.
13. We are inclined to interfere only on the ground that the bona fides of the owner as well as the respondent No.3 are absolutely doubtful. Only with a view to frustrate the entire proceedings undertaken by the Bank and only with a view to see that the physical possession is not handed over to the petitioner, the entire theory of agreement to sell seems to have been created. The objections now at such a belated stage by Mr.Dalsukhbhai Parmar directly or through respondent No.3 on the basis of the so-called agreement to sell executed by Mr.Dalsukhbhai Parmar through his power of attorney is nothing but an abuse of process of law as Mr.Dalsukhbhai Parmar has all throughout from the beginning by a positive action created the lease deed in favour of respondent No.2- Company and thereafter, created charge by equitable mortgage in favour of the Bank. Mr.Dalsukhbhai Parmar never raised any objection when the proceedings were going on before the Debts Recovery Tribunal for sale of rights in the property by the Bank.
14. In the aforesaid premises of the matter, the petition succeeds and the same is, accordingly, allowed. The impugned order dated July 07,. 2010 passed by the Debts Recovery Appellate Tribunal, Mumbai in Appeal No.156 of 2010 is quashed and set aside and the respondent No.1-Bank is hereby directed to hand over possession of the property bearing Plot/ Survey No.163/B, Industrial Road No.6-G, Udhna Udhyognagar, Udhna, Surat, forthwith. In the facts and circumstances of the case, there shall be, however, no order as to costs.
( A. L. Dave, J. ) ( J. B. Pardiwala, J ) :: FURTHER ORDER ::
On pronouncement of the judgment today, learned advocate Mr.M.B. Gohil requested the Court to stay the operation of the judgment for a period of six weeks.
In the facts and circumstances of the case and for the reasons recorded in the judgment, the request is not acceded to.
( A. L. Dave, J. ) Aakar ( J. B. Pardiwala, J )