IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF OCTOBER, 2019 BEFORE THE HON' BLE MR. JUSTICE B. VEERAPPA WRIT PETITION No.11228/2013 & WRIT PETITION Nos.11579-11581/2013 (GM-DRT) BETWEEN:
M/S G. R. DEVELOPERS, A PARTNERSHIP FIRM HAVING ITS ADMINISTRATIVE OFFICE AT NO.142, I FLOOR, G. R. PLAZA, D. V. GUNDAPPA ROAD, BASAVANAGUDI, BANGALORE- 560 004.
REPRESENTED BY ITS MANAGING PARTNER MR. C. R. GOPALA KRISHNA, ... PETITIONER (BY SRI H. S. DWARAKANATH, ADVOCATE) AND:
1. IFCI LTD NO.2,CUBBONPET MAIN ROAD, BANGALORE-560 002 REPRESENTED BY ITS VICE PRESIDENT 2. ICICI LTD REGISTERED OFFICE AT NO. 163, BACKBAY RECLAMATION, MUMBAI-400 020 REPRESENTED BY ITS DIRECTOR 3. IDBI BANK LTD HEAD OFFICE, IDBI TOWER, CUFFE PARADE, MUMBAI- 400 005 REPRESENTED BY ITS DIRECTOR 4. TFCI LTD., IFCI TOWER,61, NEHRU PLACE, NEW DELHI-110 019 REPRESENTED BY ITS DIRECTOR 5. THE UNITED WESTERN BANK LTD., VADGADI BRANCH, MUMBAI-400 009. REPRESENTED BY ITS DIRECTOR 6. PUNJAB NATIONAL BANK ARMB,DALAMAL HOUSE, J B MARG, NARIMAN POINT, MUMBAI- 400 021. REPRESENTED BY ITS SENIOR MANAGER 7. RECOVERY OFFICER-1, DEBTS RECOVERY TRIBUNAL, BANGALORE KRISHI BHAVAN, HUDSON CIRCLE, BANGALORE- 560 001.
8. M/S SUMAN MOTELS LTD., HAVING ITS REGISTERED OFFICE AT INDIA PRINTING HOUSE, 42, AMBEKAR MARG,WADALA, MUMBAI-400 031. REPRESENTED BY ITS DIRECTOR ... RESPONDENTS (BY SRI S.S. NAGANAND, SENIOR COUNSEL FOR SRI S. SRIRANGA, ADVOCATE FOR R1;
SRI S.P. SHANKAR, SENIOR COUNSEL A/W SRI VARADARAJ R. HAVALADAR, ADVOCATE FOR R6; R2,R3,R4 ARE SERVED BUT UNREPRESENTED;
VIDE ORDER DATED 25.06.2014 NOTICE TO R5, R7 AND R8 IS HELD SUFFICIENT) **** THESE WRIT PETITIONS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH SALE PROCLAMATION DATED 14.2.2013 VIDE ANNEXURE-A ISSUED BY THE RECOVERY OFFICER-I, DEBTS RECOVERY TRIBUNAL, BANGALORE IN RESPECT OF DCP NO.3517 IN PURSUANCE OF O.A. NO.2634/2000 BY THE DEBTS RECOVERY TRIBUNAL-II, MUMBAI, AND ORDER PASSED BY DEBTS RECOVERY TRIBUNAL-II, MUMBAI IN O.A. NO.939/2001 DATED 22.7.2011 VIDE ANNEXURE-B IN SO FAR AS RELIEF [C] THAT HAS BEEN GRANTED AND RECOVERY CERTIFICATE IN DCP NO.3517 ISSUED IN PURSUANCE OF ORDERS IN O.A. NO.2634/2000 BY THE DRT-II, MUMBAI VIDE ANNEXURE-C AND ORDER PASSED IN O.A. NO.2634/2000 DATED 8.10.2002 BY THE DRT-II, MUMBAI PRODUCED AS ANNEXURE-R3 BY THE 1ST RESPODNENT, IN SO FAR AS IT RELATES TO SCHEUDLE PROPERTIES AND FOR DECLARATON THAT RESPONDENTS CANNOT ENFORCE ANY ORDER RELATING TO SCHEUDLE PROPERTIES IF PETITIOENR IS NOT A PARTY TO THE PROCEEDINGS ETC., THESE WRIT PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R The petitioner in these writ petitions has sought for quashing the sale proclamation dated 14.2.2013 vide Annexure-A issued by the Recovery Officer-I, Debts Recovery Tribunal (‘DRT’ for short), Bangalore in respect of DCP No.3517 in pursuance of O.A. No.2634/2000 by the DRT-II, Mumbai and the order passed by the DRT-II, Mumbai in O.A. No.939/2001 dated 22.7.2011 vide Annexure-B in so far as relief (c) that has been granted and Recovery Certificate in DCP No.3517 issued in pursuance of orders in O.A. No.2634/2000 by the DRT-II, Mumbai vide Annexure-C and order passed in O.A. No.2634/2000 dated 8.10.2002 by the DRT-II, Mumbai produced as per Annexure-R3 by the 1st respondent, in so far as it relates to schedule properties and for declaration that respondents cannot enforce any order relating to schedule properties if petitioner is not a party to the proceedings.
I. BRIEF FACTS OF THE CASE 2. It is the case of the petitioner that it is the absolute owner of the petition schedule properties purchased under four sale deeds dated 11.3.1986 and two sale deeds dated 1.3.1996 and one sale deed dated 10.3.1996 as per Annexures-D,E,F.G,H, J & K. It is further case of the petitioner that the properties cannot be attached for the dues of anyone other than the petitioner and the petitioner who is the owner of the properties alone can mortgage the said properties and no one else has rights to mortgage the properties. The claim of mortgage, if any from anyone other than the petitioner would be void and not enforceable.
3. It is further contended that the petitioner had leased the properties in favour of M/s Suman Motels Limited as per Annexure-M dated 26.3.1997 and the said lease deed also refers to an agreement dated 12.2.1997 (Annexure-N). Based on the aforesaid title, the petitioner filed O.S. No.1440/2006 for eviction against Suman Motels Limited as well as Punjab National Bank (‘PNB’ for short), who claimed to be in possession by exercising rights under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short) and also against Income Tax Department. In the said suit, 3rd defendant - PNB filed written statement and stated that the 1st defendant – ‘M/s Suman Motels Limited’ has created security of mortgage in its favour in respect of the properties described in the 2nd schedule to the lease deed by delivering and depositing title deeds with IIBI on 21.5.1998 along with the other properties. The PNB has produced a document in O.S. No.1440/2006 and marked it as Ex.D15 and the said document says that IIBI had written letter to PNB referring to paripassu agreement. Based on the said lease deed dated 26.3.1997, M/s Suman Motels Limited has mortgaged the schedule properties in favour of IIBI with which M/s PNB claimed paripassu agreement.
4. The suit filed by the present petitioner in O.S. N0.1440/2006 for recovery of possession initially came to be dismissed, which was confirmed in RA No. 26/2008. Against the concurrent findings of fact, the petitioner filed RSA No.2344/2008. The said appeal was allowed and the matter came to be remanded to the trial Court. After remand, the Trial Court considering both oral and documentary evidence on record, decreed the suit against the PNB. Being aggrieved by the said Judgment & Decree, PNB filed R.A. No.168/2011. The said appeal came to be dismissed, against which RSA No.390/2012 has been filed by PNB and the said second appeal is pending and stay of eviction order has been granted.
5. When the things stood thus, on 18.2.2013 certain persons came and pasted proclamation of sale of the schedule properties near the schedule properties. Thereafter, the petitioner went to the office of the Recovery Officer, which had issued the said proclamation and taken certified copies of proclamation of sale and came to know that M/s Suman Motels Limited had taken loan from IFCI Limited. The petitioner has no dealings with IFCI Limited and further, DRT, Mumbai has not issued any notice to the petitioner at any point of time. It is further contended that the Recovery Certificate DCP 3517 has been issued in pursuance of the decree allegedly passed in O.A. No.2634/2000 dated 8.10.2002 by the DRT-II, Mumbai. The PNB also claimed that it had filed O.A. No.939/2001 and that the said case has been decreed. It had produced a copy of the said decree in the Eviction Proceedings and had furnished a copy thereof to the petitioner. Admittedly, the petitioner is not a party to the DRT proceedings.
Thereafter, the PNB threatening to enforce the decree passed in O.A. No.938/2001 by the DRT, Mumbai etc. Aggrieved by the enforcement of various impugned orders against the petitioner’s properties, the petitioner is before this Court for the reliefs sought for.
II. OBJECTIONS FILED BY THE RESPONDENT NO.1 6. The 1st respondent filed objections to the main writ petition and contended that the petitioner has efficacious and alternative remedy of appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and on that ground alone, the writ petitions are liable to be dismissed. The 1st respondent further contended that the petitioner entered into an agreement on 26.3.1997 to lease non-agricultural land to Respondent No.8 i.e., M/s Suman Motels Limited. Clause 23 of the lease deed expressly states that the lease can create security by mortgage and deposit of title deeds in respect of second schedule properties in favour of financial institutions and the lessors will not object to the same. Accordingly on 21.5.1998, Respondent No.8 mortgaged the lease hold rights in the properties in favour of Industrial Investment Bank of India (‘IIBI’ for short) by way of equitable mortgage of title deeds.
7. It is further contended that the schedule properties have been mortgaged by Respondent No.8 to secure the loans sanctioned and disbursed by Public Financial Institution/Banks and the said monies have been utilized for the development of the properties, inter alia construction of club house, swimming pool and other facilities for use by the residents staying adjacent to the schedule properties. The schedule properties have been leased by the petitioner with a specific intention to put up club house and other infrastructure and make facilities for use by the residents of the petitioner’s gated community project just adjacent to it and to derive the value from the development of said facilities. There is a valid lease agreement between the petitioner and Respondent No.8 and the lease is for a period of 99 years, which again explains the long-term interest of the petitioner to derive value for the adjacent gated community if the schedule properties are developed by Respondent No.8.
8. It is further contended that the 1st respondent has acquired the security interest in the property which is the subject matter of the sale proclamation which is under challenge in the present writ petitions. It is submitted that the IIBI assigned its security interest in the property in favour of the 1st respondent by way of assignment deed dated 8.6.2011 as per Annexure-R1. As the 1st respondent – IFCI has stepped into the shoes of IIBI under the said assignment deed, the 1st respondent is entitled to exercise all rights with respect to the security interest acquired. It is further contended that security by way of Earnest Money Deposit has been executed by Respondent No.8 in favour of Respondent No.1 and an entry to this effect has been recorded in the index of charges of Respondent No.8.
9. It is further contended that IIBI had granted a term loan of Rs.700 lakhs to Respondent No.8 wherein a pari passu charge was created along with Respondent No.6 – Punjab National Bank on the assets of Respondent No.8 located in Bangalore and Mussorie. Due to non-payment of dues, IIBI filed an application in O.A. No.2634/2000 before the DRT-II, Mumbai, which was decreed on 8.10.2002. In pursuance of the same, the Recovery Certificate bearing DCP No.3517 was issued on 21.11.2002. The amount that was to be recovered was Rs.11,95,67,880/- with interest and costs. Thereafter, a proclamation of sale was made by way of an E-Auction notice published by the Recovery Officer on 14.2.2013.
10. It is further contended that the contention of the petitioner that Respondent No.8 is not competent to mortgage the leased property to the 1st respondent and the said mortgage is beyond the scope of the lease agreement, is false. The Respondent No.8 has mortgaged the leased property to the 1st respondent by virtue of the existence of Clause 23 of the lease agreement. The petitioner has also placed reliance on the order of this Court in RSA No.2344/2008 and contends that it is applicable to the 1st respondent. The said contention is devoid of any merit as the 1st respondent was not party to the proceedings in the said Second Appeal. The Judgment & Decree in the said RSA is a judgment in personam and therefore applicable only to parties to it. Therefore, the findings are of no bearing with respect to the 1st respondent.
11. It is further contended that the lease agreement entered into between the petitioner and Respondent No.8 is based on a profit sharing model, whereby by virtue of Clause 18 of the Agreement, the Lessor and Lessee share the profits in the ratio of 40:60. The Clause states that profits accrued out of running of the club building on the said premises after defraying all the expenses shall be shared between the lessors and the lessess in the ratio of 40:60 respectively. The said clause also gives the petitioner supervisory powers over Respondent No.8 in running the said premises. Therefore, Clauses 18 and 23 empower the 8th respondent to mortgage the second schedule property along with the club building to any financial institution.
12. The 1st respondent further denied the averments made in the writ petition and contended that the 1st respondent is only enforcing its right against the mortgaged property due to non-payment of loan by Respondent No.8. By virtue of Clause 23 of the lease agreement and Section 108(j) of the Transfer of Property Act, 1882, the Respondent No.8 is by all means entitled to the right to mortgage the property as a lessee. Therefore, sought for dismissal of the Writ Petitions.
13. The 1st respondent also filed additional statement of objections on 10.6.2015 and contended that the petitioner had originally challenged the proclamation of sale issued by the DRT, Bangalore dated 14.2.2013, in the proceedings initiated by IIBI against Respondent No.8 and others. The petitioner also challenged the judgment of the DRT, Mumbai, which was based on the application instituted by Respondent No.6 and also the Recovery Certificate issued by the DRT, Mumbai in the proceedings instituted by the 3rd respondent. Although a specific reference has been made to the order dated 18.10.2002 passed in O.A. No.2634/2000 by the DRT, Mumbai, the same was not made subject matter of challenge in the present Writ Petitions.
14. It is further contended that this Court lacks the territorial jurisdiction to entertain such a challenge. Any such challenge must be made before any competent forum/Court in Mumbai, which will have the territorial jurisdiction to hear such a challenge and on that ground alone, these writ petitions are liable to be dismissed.
III. OBJECTIONS FILED BY RESPONDENT NO.6 15. The 6th respondent filed objections and raised preliminary objection with regard to maintainability of the writ petition against the impugned orders passed by the DRT-II, Mumbai and issuance of sale proclamation on the basis of the order passed by the DRT-II, Mumbai, under Articles 226 and 227 of the Constitution of India. It is contended that the alleged cause of action is beyond the territorial jurisdiction of this Court and the public law remedy under Article 226 cannot be availed to seek private or common law relief.
16. It is further contended that Section 30 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 clearly empowers any person aggrieved by the order of the Recovery Officer to prefer an appeal before the DRT. If the petitioner is not a party to the impugned orders at Annexures-A to C, he has to avail the efficacious alternative remedy of appeal before the appropriate Appellate Authority. On that ground also, the writ petition is not maintainable.
17. It is further contended that the writ petition filed against the impugned orders, is liable to be dismissed on the ground of delay and laches. It is also contended that the petitioner has suppressed the other legal proceedings and litigations, either past or present concerning the subject matter of these writ petitions and the petitioner is aware of the fact that the present 6th respondent - PNB has filed RSA No.390/2012 before this Court and this Court admitted the said appeal and granted order of stay after framing the substantial question of law. It is further contended that permitting the Respondent No.8 to mortgage the interest covered under the lease deed Ex.P1 r/w Ex.P13 enabled the Respondent No.6 – Bank to act upon such specific authorization and accept the same as valuable security to advance the loan of Rs.3.00 crores. The petitioner has authorized Respondent No.8 by virtue of Clause-21 of the lease to mortgage the interest given under the said documents.
18. It is further contended that in the second round of litigation after remand, the suit filed by the petitioner in O.S. No.1440/2006 came to be decreed and confirmed by the first appellate Court and same is the subject matter of RSA No.390/2012 filed by the 6th respondent – PNB before this Court. Respondent No.6 has also raised various other contentions and sought to dismiss the present writ petitions as not maintainable.
IV. ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE PARTIES 19. I have heard the learned counsel for the parties to the lis.
20. Sri H.S. Dwarakanath, learned counsel for the petitioner while adopting the arguments advanced by Sri Ananth Mandagi, learned senior counsel appearing for Respondent No.1 in RSA No.390/2012 (present petitioner is Respondent No.1 in RSA No.390/2012, which was disposed off today by a separate judgment) contended that the petitioner is not a party to Annexure-A – E.auction sale notice arising out of the recovery certificate bearing DCP No.3517 made in O.A. No.2634/2000; Annexure-B – Original Application No.939/2001; Annexure-C – Recovery Certificate in O.A. No.2634/2000; and O.A. No.2634/2000 filed by IIBI as per Annexure-R3 and therefore, the said orders are not binding on the property of the petitioner and a decree to which the petitioner is not a party, is sought to be enforced against the property of the petitioner and the same is not permissible. He would further contend that the decrees passed in O.A. No.2634/2000 as well as in O.A. No.938/2001 are decrees passed without the petitioner being a party and they relate to the property belonging to the petitioner and as such the said decrees are contrary to mandatory requirements of law and are also opposed to the principles of natural justice. He would further contend that the suit filed by the present petitioner in O.S. No.1440/2006 is for possession and damages and not for recovery of dues under the provisions of the Securitization Act. He would further contend that the claim of mortgage when the original documents are with the petitioner and there is no registered mortgage deed, is absolutely contrary to law and as such cannot be accepted. Mortgage can never be recognized in the absence of either registered document in favour of creditor or the original documents of title being with the creditors and in the absence of both, claim of mortgage cannot be entertained.
21. He would further contend that when IIBI by itself was not a mortgagee, respondent Nos.1 to 5 who claim rights under IIBI cannot claim right as mortgagees and the same is prohibited. When there is no privity of contract between the petitioner and any of the respondent banks to bring the property of the petitioner to sale in pursuance of the proceedings where petitioner is not a party, is absolutely illegal and is in violation of principles of natural justice. He would further contend that Suman Motels Limited could not have mortgaged the property because it was not the owner and a mortgage of leasehold rights would survive only as long as the lease survives. A claim of mortgage by Punjab National Bank or for that matter any other bank, when the debtor as claimed by them viz., Suman Motels Limited was not the owner is impermissible. Execution of a decree against a person who is not a party is impermissible and is in violation of basic principles of law and in violation of Articles 14 and 21 of the Constitution of India. Therefore, the impugned orders at Annexures-A to C and Annexure-R3 are not binding on the petitioner. Therefore, he sought to allow the writ petitions.
22. In support of his contentions, learned counsel for the petitioner relied upon the following judgments:
1. Nahar Industrial Enterprises Limited vs. Hong Kong & Shanghai Banking Corporation {(2009)8 SCC 646 (paragraph-39)} 2. United Bank of India vs. Satyawati Tondon and others {(2010)8 SCC 110} 3. Baburam vs. Zila Parishad {AIR 1969 SC 556 (Paragraph-3)} 4. Harbanslal Sahnia vs. Indian Oil Corporation Limited {(2003)2 SCC 107 (paragraph-7)} 23. Per contra, Sri S.S. Naganand, learned senior counsel along with Sri S. Sriranga, learned counsel for Respondent No.1 reiterating the averments made in the statement of objections as well as additional statement of objections, has contended that O.A. NO.2634/2000 is filed by the IIBI before the DRT-II, Mumbai as per Annexure-R3 for recovery of dues on the basis of the loan agreement executed by the lessee/Respondent No.8 and the equitable mortgage created by depositing the original lease agreement dated 26.3.1997. The said O.A. was decreed on 8.10.2002 directing to pay an amount of Rs.11,95,67,880/- with interest and costs. The said decree dated 8.10.2002 was not challenged by the lessee. He would further contend that as per the terms of lease deed dated 26.3.1997 (Annexure-M), the Lessee got every right to pledge the property and that the Lessee can create security by mortgage and deposit of title deeds in respect of second schedule properties in favour of financial institutions for due repayment and discharge of term loans together with interest etc., and also create charge on all its movable properties, both present and future. The Lessors, therefore, shall authorize and not object to the Lessee to mortgage the second schedule properties along with the Club Building to any financial institutions, banks or non-banking financial companies to generate finance only for the development of the said plot. However, the Lessors are not liable to answer any such liabilities.
24. He would further contend that these writ petitions filed against the impugned orders passed by the DRT-II, Mumbai as per Annexure-B & Annexure-R3 and E.Auction Sale notice dated 14.2.2013 (Annexure-A) issued in pursuance of order passed in O.A. No.2634/200 by the DRT-II, Mumbai, are not maintainable before this Court. Therefore, he sought to dismiss the writ petitions.
25. In support of his contentions, learned counsel for the 1st respondent relied upon the following judgments:
1. Sita Ram Singhania vs. Bank of Tokyo-Mitsubishi Limited and others {(1999)4 SCC 382(paragraph-1)} 2. Rajkumar Shivhare vs. Assistant Director, Directorate of Enforcement and another {(2010)4 SCC 772 (paragraphs 31 to 35)} 26. Sri S.P. Shankar, learned senior counsel along with Sri Varadaraj R. Havaldar, learned counsel for Respondent No.6 reiterating the averments made in the statement of objections, raised preliminary objection with regard to maintainability of the writ petitions against the impugned orders passed by the DRT-II, Mumbai and issuance of sale proclamation on the basis of the order passed by the DRT-II, Mumbai, under Articles 226 and 227 of the Constitution of India. He contended that the alleged cause of action is beyond the territorial jurisdiction of this Court and the public law remedy under Article 226 cannot be availed to seek private or common law relief.
27. He further contended that the provisions of Section 30 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 clearly empowers any person aggrieved by the order of the Recovery Officer to prefer an appeal before the DRT. If the petitioner is not a party to the impugned orders at Annexures-A to C, he has to avail the efficacious alternative remedy of appeal before the appropriate Appellate Authority. On that ground also, the writ petitions are not maintainable.
28. He further contended that the writ petition filed against the impugned orders, is liable to be dismissed on the ground of delay and laches. He also contended that the petitioner has suppressed the other legal proceedings and litigations, either past or present concerning the subject matter of this petition and the petitioner is aware of the fact that the 6th respondent - PNB has filed RSA No.390/2012 before this Court and this Court admitted the said appeal and granted order of stay after framing the substantial question of law. He further contended that permitting the Respondent No.8 to mortgage the interest covered under the lease deed Ex.P1 r/w Ex.P13 enabled the Respondent No.6 – Bank to act upon such specific authorization and accept the same as valuable security to advance the loan of Rs.3.00 crores. He further contended that the petitioner has authorized Respondent No.8 by virtue of Clause-21 of the lease to mortgage the interest given under the said documents.
29. He further contended that in the second round of litigation after remand, the suit filed by the petitioner in O.S. No.1440/2006 came to be decreed and confirmed by the first appellate Court and same is the subject matter of RSA No.390/2012 filed by the 6th respondent – PNB before this Court. Therefore, he sought to dismiss the present writ petitions as not maintainable.
V. POINTS FOR DETERMINATION 30. In view of the aforesaid rival contentions, the points that arise for consideration in the present writ petitions are:
i) Whether the writ petitions filed by the petitioner against the impugned Judgment dated 22.7.2011 made in O.A. No.939/2001 as per Annexure-B and the Judgment dated 8.10.2002 made in O.A. No.2634/2000 as per Annexure-R3, both passed by the DRT- II, Mumbai and the E.Auction sale notice dated 14.2.2013 issued by the Recovery Officer, DRT, Bengaluru as per Annexure-A in pursuance of the order passed in O.A. No.2634/2000 by the DRT-II, Mumbai and the Recovery Certificate in O.A. No.2634/2000 issued by the DRT-II, Mumbai as per Annexure-C, are maintainable before this Court under Articles 226 and 227 of the Constitution of India ?
ii) Whether the petitioner has made out any case to interfere with the impugned Judgments & Decrees stated supra passed by the DRT-II, Mumbai in view of the Decree dated 24.3.2011 made in favour of the present petitioner in O.S. No.1440/2006 on the file of the Senior Civil Judge & JMFC, Devanahalli, in the facts and circumstances of the present case ?
VI. CONSIDERATION 31. I have given my anxious consideration to the arguments advanced by the learned counsel for the parties and perused the entire material on record, carefully.
32. The present petitioner claims that he is the owner of the writ petition schedule properties purchased under four sale deeds dated 11.03.1986 and two sale deeds dated 01.03.1996 and one sale deed dated 10.03.1996 and it is further case that the properties cannot be attached for the dues of any one other than the petitioner and the petitioner who is the owner of the properties alone can mortgage the said properties and no one else has got right to mortgage the properties in favour of the bank. The claim of mortgage from any one other than the petitioner would be void and not enforceable.
33. It is further contended that the petitioner had leased the properties in favour of M/s Suman Motels Limited/8th respondent as per Annexure-M dated 26.03.1997 and the said lease deed also refers to an agreement dated 12.02.1997 (Annexure-N). Based on the aforesaid title deeds, the petitioner filed O.S. No.1440/2006 for possession against Suman Motels Limited/8th respondent as well as 6th respondent/Punjab National Bank (‘PNB’ for short). In the said suit, the present 6th respondent-PNB who is 3rd defendant in the suit has contended that the 1st defendant/present respondent No.8–M/s Suman Motels Limited has created security of mortgage in its favour in respect of the properties described in the 2nd schedule to the lease deed by delivering and depositing title deeds with IIBI on 21.05.1998 along with the other properties. It is further contended that, RSA No.2344/2008 filed by the present petitioner came to be allowed and the matter was remanded to the Trial Court for fresh consideration and after remand, the suit in O.S.No.1440/2006 came to be decreed against PNB. Aggrieved by the said judgment and decree, PNB filed R.A.No.168/2011 which came to be dismissed and the PNB filed RSA No.390/2012. Based on the lease deed, any transaction between the lessee i.e., 8th respondent herein with the other respondents viz., PNB or IFCI are not binding and is not a party to the suit.
34. It is the specific case of the first respondent in the present writ petitions that the 8th respondent-M/s Suman Motels Limited had executed mortgage deed and deposited title deeds in respect of the schedule properties in favour of the first respondent by virtue of clause 23 of the lease deed dated 26.03.1997 executed by the petitioner in favour of the 8th respondent/ M/s Suman Motels Limited. Based on the mortgage, the 1st respondent disbursed the money for utilization and development of the properties and constructed club house, swimming pool and other facilities. The 1st respondent/IFCI has stepped into the shoes of IIBI under assignment deed dated 08.06.2011 and granted a term loan of Rs.700 lakhs to the 8th respondent wherein paripassu charge was created along with 6th respondent/PNB on the assets of 8th respondent located in Bengaluru and Mussorie. Due to non-payment of dues, IIBI filed an application in O.A.No.2634/2000 before the Debts Recovery Tribunal-II, Mumbai, which came to be decreed on 08.10.2002 directing the defendants therein to pay Rs.11,95,67,880/- with interest at 15% from the date of filing of the original application, till realization. It is also not in dispute that PNB filed O.A.No.939/2001 against M/s Suman Motels Limited, Sheikh M. Hussain and Surendra M.Khandhar and others for recovery by liquidating mortgaged properties of Rs.4,14,63,022/-. After contest, the said Original Application came to be allowed against the defendants 1 to 5 therein for recovery of Rs.4,10,29,989/- with 12% interest per annum.
35. Based on the decrees passed by the DRT, Mumbai, stated supra, Recovery Certificate came to issued by the DRT-II, Mumbai, in favour of IIBI for recovery of Rs.11,95,67,880/- and based on O.A.No.2634/2000 filed by the first respondent, the Recovery Officer-I, DRT, Bengaluru, issued sale proclamation as per Annexure-A dated 14.02.2013.
36. Admittedly, in all these proceedings, petitioner is not a party. Though the petition schedule properties alleged to have been mortgaged by the lessee viz., M/s Suman Motels Limited in favour of PNB and IIBI, the question of mortgage made by M/s Suman Motels Limited in favour of PNB or IFCI subsequently assigned to IIBI, has to be decided in the appropriate proceedings before the appropriate Court, in view of the provisions of Article 227 of the Constitution of India.
37. It is also not in dispute that the judgment/order passed by the DRT, Mumbai, in O.A.No.2634/2000 dated 08.10.2002 and O.A.No.939/2001 dated 22.07.2011 is in exercise of original jurisdiction. Therefore, petitioner cannot maintain the present writ petition under Article 226 of the Constitution of India, before this Court. If that is so, petitioner cannot maintain the present writ petitions against the judgment/ Order passed by the DRT, Mumbai, under supervisory jurisdiction of this Court under Article 227 of the Constitution of India.
38. The provisions of Article 227 of the Constitution of India reads as under:
227. Power of superintendence over all courts by the High Court (1) Every High Court shall have superintendence over all courts and tribunals throughout the territories interrelation to which it exercises jurisdiction (2) Without prejudice to the generality of the foregoing provisions, the High Court may (a) call for returns from such courts;
(b) make and issue general rules and prescribe forms for regulating the practice and proceedings of such courts; and (c) prescribe forms in which books, entries and accounts shall be kept by the officers of any such courts (3) The High Court may also settle tables of fees to be allowed to the sheriff and all clerks and officers of such courts and to attorneys, advocates and pleaders practicing therein: Provided that any rules made, forms prescribed or tables settled under clause ( 2 ) or clause ( 3 ) shall not be inconsistent with the provision of any law for the time being in force, and shall require the previous approval of the Governor (4) Nothing in this article shall be deemed to confer on a High Court powers of superintendence over any court or tribunal constituted by or under any law relating to the Armed Forces 39. A careful reading of the said provision makes it clear that, every High Court shall have superintendence over all Courts and Tribunals through out the territories in relation to which it exercises jurisdiction. Article 227(1) clearly indicates that this Court has no jurisdiction to supervise over the Courts/Tribunals at Mumbai. Therefore, the present writ petitions filed against Annexures-B and R3, judgment and Order passed by the DRT-II, Mumbai and consequential Certificate issued as per Annexure-C at Mumbai, are not maintainable before this Court and it is for the petitioner to approach appropriate High Court viz., the High Court of Judicature, Mumbai, for appropriate reliefs, in accordance with law.
40. It is also relevant to state that Annexure-A, Proclamation of Sale is issued under Rule 38 and 52(2) of the second schedule to the Income Tax Act, 1961 r/w Recovery of Debts Due to Banks and Financial Institutions Act, 1993, by the Recovery Officer-I, DRT, Bengaluru, on the basis of the judgment and order dated 08.10.2002 made in O.A.No.2634/2000 on the file of the DRT-II, Mumbai, in view of the language of Rule 38 and 52(2) which reads as under:
Issue of proclamation.
38. When any sale of movable property is ordered by the Tax Recovery Officer, the Tax Recovery Officer, district, of the intended sale, specifying the time and place of sale and whether the sale is subject to confirmation or not.
Sale and proclamation of sale:
52. (1) The Tax Recovery Officer may direct that any immovable property which has been attached, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold.
(2) Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a Proclamation of the intended sale to be made in the language of the District.
41. A careful reading of Rule 38 clearly indicates that, when any sale of immovable property is ordered by the Tax Recovery Officer, the Tax Recovery Officer shall issue a proclamation, in the language of the District of the intended sale, specifying the time and place of sale and whether the sale is subject to confirmation or not.
42. Rule 52 clearly indicates that, the Tax Recovery Officer may direct that any immovable property which has been attached, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold. Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a Proclamation of the intended sale to be made in the language of the District.
43. In view of the above, this Court is of the considered opinion that the present writ petitions filed against very judgment dated 22.07.2011 made in O.A.No.939/2001 as per Annexure-B and judgment in O.A.No.2634/2000 dated 08.10.2002 as per Annexure-R3, passed by the DRT-II, Mumbai, and subsequent Recovery Certificate dated 21.11.2002 as per Annexure-C, issued by the DRT-II, Mumbai, are not maintainable. This Court has no jurisdiction to entertain the writ petitions against the judgment and order passed by the DRT, Mumbai, as stated supra. In that view of the matter, liberty is reserved to the petitioner to approach the competent High Court to challenge the above judgment/orders. Before any initiation is made by the petitioner to challenge the said judgment/orders, if any proceedings are initiated in pursuance of Annexure-A/Proclamation, the very purpose for which the liberty is reserved to the petitioner to approach the competent High Court will be frustrated. Therefore, the interim order granted by this Court shall enure to the benefit of the petitioner in so far as the Proclamation of Sale vide Annexure-A for a period of three months from the date of receipt of copy of this order.
44. My view is fortified by the dictum of the Hon’ble Supreme Court in the case of Sita Ram Singhania vs. Bank of Tokyo-Mitsubishi Ltd., reported in 1999(4) SCC 382, para-1, which reads as under:
1. We see no reason why the High Courts in such matters filed by the defendants in suits instituted by the banks before the Debt Recovery Tribunal should more or less as a matter of course grant stay of proceedings before the tribunals. The very purpose of setting up the tribunals will be lost by granting stay merely because there is challenge to the notification constituting the tribunal. In the present case, the High Court has rightly come to the conclusion that as the proceedings were initiated in the State of Madhya Pradesh, the Allahabad High Court had no jurisdiction.
45. My view is also fortified by the dictum of the Hon’ble Supreme Court in the case of Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and another reported in (2010)4 SCC 772, para 31 to 35, which reads as under:
31. When a statutory forum is created by law for redressal of grievance and that too in a fiscal statute, a writ petition should not be entertained ignoring the statutory dispensation. In this case the High Court is a statutory forum of appeal on a question of law.
That should not be abdicated and given a go-by by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great respect, fell into a manifest error by not appreciating this aspect of the matter. It has however dismissed the writ petition on the ground of lack of territorial jurisdiction.
32. No reason could be assigned by the appellant's counsel to demonstrate why the appellate jurisdiction of the High Court under Section 35 of FEMA does not provide an efficacious remedy. In fact there could hardly be any reason since the High Court itself is the appellate forum.
33. Reference may be made to the Constitution Bench decision of this Court rendered inThansingh Nathmal v. Supdt. of Taxes [AIR 1964 SC 1419] , which was also a decision in a fiscal law. Commenting on the exercise of wide jurisdiction of the High Court under Article 226, subject to self- imposed limitation, this Court went on to explain: (AIR p. 1423, para 7) “7. … The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up.”
(emphasis added) The decision in Thansingh [AIR 1964 SC 1419] is still holding the field.
34. Again in Titaghur Paper Mills Co. Ltd. v. State of Orissa [(1983) 2 SCC 433 : 1983 SCC (Tax) 131 :
AIR 1983 SC 603] in the background of taxation laws, a three-Judge Bench of this Court apart from reiterating the principle of exercise of writ jurisdiction with the time-honoured self imposed limitations, focused on another legal principle on right and remedies. In para 11, at AIR p. 607 of the Report, this Court laid down: (SCC pp. 440-41, para 11) “11. … It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Waterworks Co. v. Hawkesford [(1859) 6 CBNS 336 :
141 ER 486] in the following passage: (ER p. 495) ‘… There are three classes of cases in which a liability may be established founded upon a statute. … But there is a third class viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. … The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to.’ The rule laid down in this passage was approved by the House of Lords in Nevillev. London Express Newspapers Ltd. [1919 AC 368 : (1918-19) All ER Rep 61 (HL)] and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd. [1935 AC 532] and Secy. of State v.Mask and Co. [(1939-40) 67 IA 222 : AIR 1940 PC 105] It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine.”
35. In this case, liability of the appellant is not created under any common law principle but, it is clearly a statutory liability and for which the statutory remedy is an appeal under Section 35 of FEMA, subject to the limitations contained therein. A writ petition in the facts of this case is therefore clearly not maintainable.
46. The judgments relied upon by the learned counsel for the petitioner have no application to the facts and circumstances of the present case and the counsel for the petitioner is not in a position to convince or appraise this Court about the maintainability of the writ petitions filed against the judgments and orders passed by the DRT, Mumbai.
47. It is also relevant to state at this stage that the very petitioner filed O.S.No.1440/2006 for possession and damages against respondent Nos.6 and 8 (defendant Nos.1 and 3) in respect of the very schedule property. The said suit at the inception came to be dismissed and same was confirmed in R.A. No.26/2008. Against the concurrent finding of facts, present petitioner filed RSA No.2344/2008 and this Court, by the judgment and decree dated 30.07.2010 allowed the Regular Second Appeal by setting aside the judgment and decree in R.A. No.26/2008 and O.S.No.1440/2006 and remanded the matter to the Trial Court to record findings on issue Nos.1, 2 and 6 and pass appropriate Orders in accordance with law. That was subject matter of SLP No.30106/2010 before the Hon’ble Supreme Court filed by the PNB, which came to be dismissed.
48. After remand, the Trial Court, considering both oral and documentary evidence on record, recorded a finding that the plaintiff/ present petitioner is entitled to possession of the suit schedule property from the defendants and proved that the first defendant has to pay an amount of Rs.25,000/- per month as damages from 30.06.2003 till the date of delivery of possession of the suit schedule property to the plaintiff. Aggrieved by the said judgment and decree, defendant No.3/PNB filed R.A.No.168/2011 which came to be dismissed on 02.01.2012 and the appeal filed by the PNB in RSA No.390/2012 before this Court came to be dismissed by a separate order.
49. For the reasons stated above, the first point raised in the present writ petitions has to be answered in the negative holding that the writ petitions filed by the petitioner against the impugned judgments in O.A.No.939/2001 and O.A.No.2634/2000 vide Annexures-B and R3, and Recovery Certificate dated 21.11.2002 vide Annexure-C are not maintainable before this Court under Articles 226 and 227 of the Constitution of India. The petitioner has not made out any case to interfere with the impugned judgment and decree passed by the DRT-II, Mumbai, in view of the decree dated 24.03.2011 made in favour of the petitioner in O.S.No.1440/2006 on the file of the Senior Civil Judge and JMFC, Devanahalli, confirmed by the lower Appellate Court and affirmed by this Court in the Regular Second Appeal. Accordingly, the second point raised in the present writ petitions has to be answered in the negative.
VII CONCLUSION 50. In view of the aforesaid reasons, the writ petitions filed by the petitioner against the impugned judgments and order as per Annexures-B, C and R3 are not maintainable. Accordingly, writ petitions are dismissed. However, liberty is reserved to the petitioner to challenge the impugned judgments and Order before the appropriate High Court, within a period of three months from the date of receipt of copy of this order. The interim Order granted by this Court in the above writ petitions shall enure to the benefit of the petitioner, in so far as the Proclamation of Sale as per Annexure-A for a period of three months from the date of receipt of copy of this order.
Ordered accordingly.
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