[1.0] Present Second Appeal under Section 100 of the Code of Civil Procedure, 1908 (hereinafter referred to as “CPC”) has been preferred by the appellant herein – original defendant – Nadiad People’s Cooperative Bank Limited (hereinafter referred to as “Bank”) to quash and set aside the impugned judgment and order dated 07.02.2007 passed by the learned Appellate Court – learned Presiding Officer, 7th Fast Track Court, Nadiad in Regular Civil Appeal No.156 of 2004 by which the learned Appellate Court has allowed the said Appeal preferred by the respondent herein – original plaintiff and has quashed and set aside the judgment and decree dated 30.10.2004 passed by the learned Civil Judge (Senior Division), Nadiad in Regular Civil Suit No.456 of 2000 and consequently the learned Appellate Court has partly allowed the said suit preferred by the respondent herein – original plaintiff restraining the appellant herein – original defendant from putting seal on the suit property. [2.0] That the appellant herein – original defendant Bank instituted Arbitration Case No.1435 of 2000 against one Nadiad Kirana Bhandar and its proprietor Rafiq Usmanbhai Motana for recovery of the loan amount/amount which was advanced to the said firm i.e. Rs.20 lacs with interest. It is to be noted that at the time when the aforesaid amount was advanced to the aforesaid firm, the suit property in question was put as a security by way of mortgage with the Bank. That in the said suit the appellant herein also sought the injunction restraining the borrower from transferring and/or alienating the suit property which was already mortgaged with the Bank while taking advance of Rs.20 lacs and it appears that during the pendency of the arbitration case, the learned Board of Nominees granted the injunction restraining the borrower from transferring and/or alienating the suit property which was already mortgaged. It appears that during the continuation of the injunction, the original borrower – original owner of the suit property transferred the same in favour of the respondent herein – original plaintiff by registered sale deed dated 24.07.2000. It appears that thereafter the suit filed by the appellant herein came to be decreed by the learned Board of Nominees and when the judgment and award passed by the learned Board of Nominees was sought to be executed by selling the suit property which was mortgaged with the Bank by the original owner and when the said property was to be sealed, at that stage the respondent herein – original plaintiff preferred the impugned suit being Regular Civil Suit No.456 of 2000 against the appellant herein – original defendant – judgment creditor and against the original owner of the suit property in the Court of learned Civil Judge (Senior Division), Nadiad for a declaration that as the plaintiff has purchased the suit property and is bonafide purchaser with consideration, the Bank has no authority to seal the suit property and also prayed for a permanent injunction restraining the appellant herein – original defendant from putting any seal on the suit property. It was the case on behalf of the plaintiff that she has become the owner pursuant to the registered sale deed executed by the owner and that she was the bonafide purchaser with consideration. That the said suit was resisted by the appellant herein – original defendant by filing the written statement at Exh.22 specifically denying that the plaintiff is the bonafide purchaser without notice and with consideration. It was submitted that the suit property was mortgaged with the Bank much prior to the plaintiff purchased the same and the same was purchased even when there was an injunction granted against the original owner by the learned Board of Nominees in Arbitration Case No.1435 of 2000. It was the case on behalf of the appellant herein – original defendant that only with a view to see that the Bank does not recover the amount under the judgment and award passed by the learned Board of Nominees in Arbitration Case No.1435 of 2000, with a malafide intention the original owner has sold and/or executed the sale deed in favour of the plaintiff and that to without consideration. It was further submitted that as such the appellant herein – original defendant cannot be restrained from executing the judgment and award passed by the learned Board of Nominees.
[2.1] That the learned trial Court framed the issues. That both, plaintiff and the defendant led the evidence, oral as well as documentary and on appreciation of evidence, the learned trial Court held that the suit is bad for nonjoinder of property party i.e. the original owner and also held that the plaintiff cannot be said to be the bonafide purchaser of the suit property and with consideration and the learned trial Court also held that the sale deed is executed in favour of the plaintiff only with a view to defeat the dues of the defendant and consequently the learned trial Court dismissed the suit by judgment and decree dated 30.10.2004.
[2.2] Feeling aggrieved and dissatisfied with the judgment and decree dated 30.10.2004 passed by the learned Civil Judge (Senior Division), Nadiad in Regular Civil Suit No.456 of 2000 in dismissing the suit, the respondent herein – original plaintiff preferred Civil Appeal No.156 of 2004 before the learned District Court, Nadiad and the learned Appellate Court – learned Presiding Officer, 7th Fast Track Court, Nadiad by impugned judgment and order dated 07.02.2007 has allowed the said Appeal by quashing and setting aside the judgment and decree passed by the learned trial Court dismissing the suit and consequently partly decreeing the suit restraining the appellant herein – original defendant from sealing the suit property in question by holding that the original plaintiff is the bonafide purchaser without notice. The learned Appellate Court also quashed and set aside the finding given by the learned trial Court that as the mortgage was registered, the same is as good as public notice and consequently the learned Appellate Court restrained the appellant herein – original defendant from sealing the property in execution of the judgment and award passed by the learned Board of Nominees against the original owner and to recover the amount due and payable by the original owner.
[2.3] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Appellate Court, the appellant herein – original defendant has preferred the present Second Appeal under Section 100 of the CPC.
[3.0] Shri H.M. Parikh, learned advocate appearing on behalf of the appellant has vehemently submitted that the learned Appellate Court has materially erred in allowing the Appeal preferred by the respondent herein – original plaintiff and quashing and setting aside the judgment and decree passed by the learned trial Court dismissing the suit and consequently partly decreeing the suit restraining the appellant herein – original plaintiff from sealing the suit property in question. It is submitted that the learned Appellate Court has not properly appreciated the fact that the suit property in question was sought to be sealed while execution of the judgment and award passed by the learned Board of Nominees in Arbitration Case No.1435 of 2000 which was passed against the original owner and the suit property in question was already mortgaged by the original owner. It is submitted that as such the appellant herein – original defendant – original judgment creditor cannot be restrained from initiating any proceedings and/or executing the decree considering Section 41 of the Specific Relief Act, 1963. It is submitted that the consequences of granting the relief by the Appellate Court restraining the appellant from sealing the suit property in question would tantamount to restraining the appellant – judgment creditor from executing the judgment and award passed by the learned Board of Nominees, which cannot be sustained.
[3.1] It is further submitted by Shri Parikh, learned advocate appearing on behalf of the appellant that even the learned Appellate Court has materially erred in holding that the original plaintiff is the bonafide purchaser without notice and with consideration. It is submitted that as such the suit property in question was already mortgaged with the Bank by the original owner at the time when a sum of Rs.20 lacs was advanced and said mortgage was a registered mortgage and therefore, as rightly held by the learned trial Court, the plaintiff who is the subsequent purchaser is supposed to have knowledge of the mortgage. It is further submitted that even no consideration was paid at the time of execution of the sale deed in favour of the plaintiff and even in the sale deed in favour of the plaintiff, it has been specifically mentioned that the sale consideration has been paid by cheque dated 02.08.2000 which is subsequent to the execution of the sale deed. Therefore, as such no consideration was paid by the plaintiff at the relevant time when the sale deed was executed in her favour. It is further submitted that even no documentary evidence has been produced and/or no evidence has been produced by the original plaintiff to prove that even the cheque dated 02.08.2000 has been cleared and/or the sale consideration has been paid. It is submitted that therefore, the learned Appellate Court has materially erred in restraining the appellant from putting up the seal virtually restraining the appellant from executing the judgment and award passed by the learned Board of Nominees and to recover the amount by auctioning the suit property which was mortgaged by the original owner with the Bank at the time when they took the loan/advance of Rs.20 lacs i.e. in the year 1997.
[3.2] It is further submitted that even the learned Appellate Court has not property appreciated and considered the fact that at the time when the plaintiff purchased the suit property by registered sale deed dated 24.07.2000, not only there was already a mortgage in favour of the appellant Bank but even there was a injunction against the original owner in Arbitration Case No.1435 of 2000 restraining the original owner from transferring and/or alienating the suit property and despite the injunction the original owner – judgment debtor sold/transferred the same in favour of the plaintiff. Therefore, it is requested to allow the present Second Appeal.
[4.0] Shri Nirav Thakkar, learned advocate initially appeared on behalf of respondent No.1, however, subsequently at the time when the present Second Appeal was take up for final hearing, he declared that he has no further instruction in the matter and respondent herein has taken away the papers from him. When the present Second Appeal was taken up for final hearing today, Shri Mehul Shah, learned advocate has stated at the Bar that he has received the oral instruction from the respondent to appear, however, he has no further instructions in the matter. He also stated at the Bar that as he is not having any vakalatnama, he will not be in position to appear on behalf of the respondent. Under the circumstances and in the facts and circumstances of the case, this Court proceeded further with the hearing of the present Second Appeal exparte.
[5.0] Heard Shri H.M. Parikh, learned advocate appearing on behalf of the appellant – original defendant and considered the impugned judgment and order passed by both the Courts below. It is to be noted that at the time of admission of the present Second Appeal, the learned Single Judge framed the following substantial questions of law for consideration by this Court in the present Second Appeal.
(1) Whether on the facts and in the circumstances of the case the appellantBank can be restrained from executing the award made in its favour ?
(2) Whether on the facts and in the circumstances of the case the Civil Suit without issuance of notice under Section 167 of the Gujarat Cooperative Societies Act against the appellantBank was maintainable ?
[5.1] It is not in dispute that a huge amount of Rs.20 lacs was advanced by the appellant Bank in favour of Nadiad Kirana Bhandar and its proprietor Rafiq Usmanbhai Motana in the year 1997. It is also not in dispute that at the time when the aforesaid amount of Rs.20 lacs was advanced in favour of original owner of the suit property, the suit property in question was mortgaged with the Bank by way of security and the said mortgage was also registered. That thereafter the appellant herein – original defendant instituted Arbitration Case No.1435 of 2000 against the original borrower – original owner of the suit property and even prayed for injunction restraining the original borrower from transferring and/or alienating the suit property which was mortgaged with the Bank and even the learned Board of Nominees granted the injunction. It appears that despite the above, the original borrower – original owner of the suit property which was mortgaged with the Bank, transferred the suit property in favour of the respondent herein original plaintiff by registered sale deed dated 24.07.2000. That thereafter the learned Board of Nominees decreed the aforesaid Arbitration Case and passed the judgment and award against the original owner of the suit property – borrower and when the plaintiff of that suit initiated the proceedings to recover the amount under the judgment and award passed by the learned Board of Nominees by sealing the suit property in question which was mortgaged with the Bank and was trying to recover the amount under the award by auctioning the suit property which was mortgaged with the Bank, at that stage the respondent herein – original plaintiff instituted the suit for restraining the appellant herein – original defendant from sealing the property contending interalia that she is the bonafide purchaser of the suit property without notice and with consideration. That the learned trial Court dismissed the suit by holding that the plaintiff cannot be said to be the bonafide purchaser of the suit property without notice and with consideration. The learned trial Court also held that the transfer in favour of the original plaintiff is malafide with a view to defeat the dues of the appellant Bank and consequently the learned trial Court dismissed the suit. The learned trial Court also held that as the mortgage was a registered mortgage, the plaintiff is deem to have knowledge about the mortgage. On appreciation of evidence the learned trial Court also held that the plaintiff has failed to prove the sale consideration and consequently the learned trial Court dismissed the suit. However, unfortunately, the learned Appellate Court reversed the findings given by the learned trial Court given by the learned trial Court and observed that merely because the mortgage is registered one, it cannot be said that the plaintiff is deemed to have the knowledge about the mortgage and consequently the learned Appellate Court held the plaintiff to be the bonafide purchaser without notice and with consideration and consequently restrained the appellant herein – original defendant from sealing the suit property in question. It is required to be noted that the appellant herein – original defendant was to seal the suit property in question to recover the amount under the judgment and award passed by the learned Board of Nominees against the original borrower – original owner and was trying to recover the amount by auctioning the suit property which was already mortgaged with the Bank by the original owner at the time when they took the advance. Therefore, as such by passing the impugned judgment and order, the learned Appellate Court has virtually restrained the appellant herein – original defendant – judgment creditor to execute the judgment and award passed by the learned Board of Nominees and to recover the amount by sealing / auctioning the property under the judgment and award passed by the learned trial Court i.e. to sold the suit property which was already mortgaged with the Bank. Considering Section 41 of the Specific Relief Act, 1963, such a relief could not have been granted by the learned Appellate Court. As provided under Section 41 of the Special Relief Act, 1963, an injunction cannot be granted to restrain any person from instituting or prosecuting any proceedings in a Court not subordinate to that from which the injunction is sought. Under the circumstances, the impugned judgment and order passed by the learned Appellate Court is just contrary to Section 41 of the Special Relief Act, 1963 and therefore, the same cannot be sustained. Even otherwise on facts also, the learned Appellate Court has materially erred in holding the respondent herein – original plaintiff to be the bonafide purchaser of the suit property without notice and with consideration. It is required to be noted that the suit property was mortgaged with the appellant Bank at the time when the original owner took the loan/advance of Rs.20 lacs and the said mortgage was registered mortgage. Therefore, when the mortgage was a registered mortgage, the plaintiff is deemed to have the knowledge of such a mortgage and the plaintiff could not have pleaded ignorance.
At the time of purchasing the suit property, the original plaintiff ought to have verified the title/record. Under the circumstances, the learned Appellate Court has materially erred in holding the plaintiff to be the bonafide purchaser without notice on the ground that the plaintiff had no knowledge about the registered mortgage. It is also required to be noted that even the plaintiff has failed to prove the payment of sale consideration either at the time of execution of the sale deed or subsequently. It is to be noted that the sale deed in favour of the original plaintiff is dated 24.07.2000 and admittedly at the relevant time no sale consideration has been paid. In the sale deed itself, it has been stated that the sale consideration is paid by cheque dated 02.08.2000, which is subsequent to the execution of the sale deed dated 24.07.2000. As observed by the learned trial Court, the plaintiff has not led any evidence to prove that the cheque dated 02.08.2000 has been honoured and the payment under the said cheque has been made. Under the circumstances also, the learned Appellate Court has materially erred in holding that the plaintiff is the bonafide purchaser with consideration.
[5.2] The learned Appellate Court has lost sight of one another thing that when the plaintiff purchased the suit property by registered sale deed dated 24.07.2000, there was already a injunction against the original owner in Arbitration Case No.1435 of 2000 restraining him from transferring the property and still he executed the sale deed in favour of the plaintiff. Therefore, the sale deed / transaction in favour of the plaintiff was absolutely in breach of the injunction granted by the learned Board of Nominees.
[5.3] Considering the aforesaid facts and circumstances of the case, the learned Appellate Court has materially erred in allowing the Appeal and quashing and setting aside the judgment and decree passed by the learned trial Court dismissing the suit and consequently restraining the appellant herein – original defendant – judgment creditor to seal the suit property in question which the defendant was to seal to recover the amount under the judgment and award passed against the original borrower – original owner and to seal the property which was already mortgaged with the appellant herein – Bank. Under the circumstances, impugned judgment and order passed by the learned Appellate Court cannot be sustained and the same deserves to be quashed and set aside.
[6.0] In view of the above and for the reasons stated above, present Second Appeal succeeds and the impugned judgment and order dated 07.02.2007 passed by the learned Appellate Court – learned Presiding Officer, 7th Fast Track Court, Nadiad in Civil Appeal No.156 of 2004 is hereby quashed and set aside and the judgment and decree dated 30.10.2004 passed by the learned Civil Judge (Senior Division), Nadiad in Regular Civil Suit No.456 of 2000 dismissing the suit is hereby restored. Present Second Appeal is allowed to the aforesaid extent. No costs.
menon (M.R. Shah, J.)