Bombay High Court
Ram Laxman Hotels Pvt vs Induslnd Bank Ltd. And Anr on 26 April, 2019
Author: A.K.Menon
Bench: A.A.Sayed, A.K.Menon
wp-997-2007.odt
rrpillai IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 997 OF 2007
Ram Laxman Hotels Ltd. ... Petitioner
through its Chairman and Managing Director
Dr. Laxmikant Rewachand Bhojwani
2, Purushottam Bhavan, Malabar Hill
Mumbai - 400 021
vs.
1. IndusInd Bank Ltd. ... Respondents
2401, General Thimmaya Road
Pune 411 001
2. Classic City Investment Pvt. Ltd.
Bhosale Pavillion, Bhandarkar Institute Road
Pune 411 004
Mr. Atul Rajadhyaksha, Senior Advocate a/w. Mr. Nikhil Jayakar a/w. Amar
Mishra a/w. Harshad Acrekar a/w. Tejas Kasar i/b. SRM Law Associates for the
Petitioner.
Mr. Mayur Khandeparkar i/b. Nachiket Khaladkar for Respondent no. 2.
CORAM: A.A.SAYED & A.K.MENON, JJ.
RESERVED ON : 22 nd NOVEMBER, 2018
PRONOUNCED ON : 26 th APRIL, 2019
JUDGMENT (Per A.K.MENON, J.):
1. The challenge in this writ petition is to an order dated 7 th December, 2006 passed by the Chairman, Debt Recovery Appellate Tribunal, Mumbai in 1/29 wp-997-2007.odt Miscellaneous Appeal bearing no. 242 of 2005. The petitioner is a Company incorporated under the Companies Act,1956. Respondent no. 1 is a Scheduled Bank. Respondent no. 2 is also a Company incorporated under the Companies Act, 1956.
The facts in brief are as follows :
2. The petitioner was owner of inter alia a brand name "Holiday Inn". The petitioner operated a Five Star Hotel under the brand name "Holiday Inn". The structures put up on the property were belonging to the petitioner as franchisee of "Six Continent Hotels". After the respondent no. 1-bank obtained decree against the petitioner on or about 23 rd August, 2001 in Original Application No. 158-P of 2001 from the DRT, Pune for a sum of Rs. 7,52,34,294/- a recovery certificate came to be issued on 11 th January, 2002. The bank therefore filed Recovery Proceedings no. 4 of 2002 at DRT, Pune.
3. It is the case of the petitioner that on 25 th January, 2002 the Recovery Officer issued a demand notice directing the petitioner to pay the aforesaid sum. Upon failure to pay, Recovery officer issued an order of attachment on 9th May, 2002. The attachment is stated to be restricted to immovable property and there is no mention of any movable property proposed to be sold. A notice for settling the proclamation sale came to be issued by the Recovery Officer on 30th May, 2002 which did not contain reference to any movable property. On 24th May, 2002 it is stated that the banks valuers had issued a valuation report setting out the fair market value of land and building with the dimensions of 2/29 wp-997-2007.odt the building. The report clarified that movable furniture, carpets, crockery, interior work, decorative movable items, kitchen accessories and machinery were not taken into account but only fixed interiors and built-in furniture were considered for the purpose of valuation. On 3 rd July, 2002 the proclamation of sale issued also described the property without referring to movable articles.
4. The petitioner who was also appellant filed an application in RP no. 4 of 2002 contending that only immovable property sold and that is why it was priced much lower and that if the hotel was sold as a going concern it would fetch a better price in the market being a running Five Star Delux hotel. The Recovery Officer apparently rejected the application on 28 th June, 2002 which came to be challenged before the DRT, Pune. The DRT, Pune rejected the appeal and inter alia observed that if the hotel was sold as a going concern, the valuation should include valuation of movable and fixtures. Their submission was rejected on the basis that, if only immovable property is to be sold, value of that can be ascertained and movables can be sold separately. The petitioner filed a Miscellaneous Appeal No. 313 of 2002 against this order before the DRAT. The appeal was dismissed by order dated 9 th July, 2002 observing that banks had a first charge over the movable and immovable properties and that if these assets could be hypothecated to different banks separately, which they were, there was no substance in the objection that the movable and immovable properties could not be sold separately.
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5. After the order of the DRAT a Writ Petition no. 4322 of 2002 came to be filed in this Court which was also dismissed resulting in SLP CC no. 17984 of 2002 being filed in the Supreme Court. The respondent no. 2 namely Classic City Investment Pvt. Ltd. intervened. Respondent no. 2 was a successful bidder of the property and its bid of Rs. 29,80,15,000/- was the highest. It is contended that the Supreme Court stayed the confirmation of sale till 22 nd October, 2002 and granted liberty to the petitioner to deposit the amounts. The petitioner could not deposit the amount and sought extension of time which was rejected, although the SLP is said to have been adjourned to 28 th October, 2002. On 25th October, 2002 the respondent no. 2 took charge of the movable and immovable property. On 28 th October, 2002 the petitioner made an application to the Recovery Officer for permission to remove the movables from the auctioned movable property. They sought three months time to remove the movable and articles, but on the same day respondent no. 2 sought and obtained a Certificate of Sale. According to the petitioner on 25 th October, 2002 the auction purchasers had clandestinely taken possession of the property.
6. Mr. Rajadhyaksha learned Senior Advocate appearing on behalf of the petitioner submitted that on legal advice the petitioner filed a Civil Suit being Special Civil Suit No. 802 of 2002 in the Court of Civil Judge (Senior Division) Pune to protect movable property. Respondent no. 2 opposed the application on the basis of jurisdiction and maintainability. Thereafter the petitioner filed 4/29 wp-997-2007.odt M.A.80 of 2003 before the DRT, Pune under section 19(25) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 ( "RDDB Act" ) and the Civil Suit came to be withdrawn on or about 11 th June, 2004. In the M.A.80 of 2003 the petitioner sought a declaration that the auction sale was restricted to the immovable property being land ad-measuring 4,589.670 sq.mtrs and structures constructed therein with plant and machinery permanently attached to the earth as more particularly described in the valuation report that the movable property were not part of the auctioned property and that the petitioner continued to be the owner of the movable property.
7. A further declaration was sought that certain other properties valued at Rs.36.90 crores and consumables were not part of the auctioned property. The petitioner also sought mesne profits for alleged wrongful use of the property and a direction to respondent no. 2 to pay damages and costs. The hotel premises housed a beauty parlor and in that respect petitioner sought payment of Rs. 1 lakh per month from respondent no. 2 and other allied reliefs in respect of property which according to the petitioner had not been sold. The bank in response, contended that no movable articles had been sold since its claim had been satisfied by sale of the immovable property. Meanwhile in the M.A.80 of 2003, issues came to be framed and maintainability of M.A..80 of 2003 came to be decided.
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8. On 29th March, 2004 respondent no. 1 bank filed a written statement in M.A. 80 of 2003 in which it admitted that what was sold in the auction was the immovable property and that the banks' claim stood satisfied upon sale of immovable property. Mr. Rajadhyaksha pointed out that the Civil Suit was withdrawn even before the M.A.80 of 2003 was heard. On 14 th June, 2004 respondent no. 2 objected to the filing of M.A.80 of 2003 on the ground that the DRT did not have jurisdiction to entertain the application, interalia it was under section 17 of the RDB Act only a bank and other financial institution had the right to initiate proceedings for recovery of debts and that section 19(25) of the Act had been wrongly invoked and the petitioner should have filed appeal against order dated 8th November, 2002 passed by the Recovery Officer.
9. On 5th July, 2004 the DRT upheld its jurisdiction to hear M.A.80 of 2003 concluding that power conferred under section 19(25) were wide enough to include power of revision. Respondent no. 2 meanwhile filed Writ Petition No. 1936 of 2006 in this Court which remanded the matter directing the DRAT to give a proper opportunity to respondent no. 2 to file reply and decide the matter afresh. On 4 th April, 2006 respondent no. 2 once again moved an application seeking stay of the order dated 5 th July, 2004.
10. On 7th December, 2006 the DRAT set aside order dated 5 th July,2004 of the DRT holding that a Miscellaneous. Application under section 19(25) of the Act can be filed only while proceedings are pending and since no proceedings 6/29 wp-997-2007.odt were pending the application could not be filed. More so since the petitioner had an alternate remedy of filing an appeal against the order of the DRT dated 8th November, 2002 which remedy had not been availed of. Thus being aggrieved by this that the present Writ Petition has been filed. This Court while admitting the writ petition observed that the utilization of the movable property by the auction purchaser would be subject to further orders in the Writ Petition.
11. In the meanwhile respondent no. 2 was allegedly trying to dispose of movable property along with land and building to one K.G.C. Hotel and Resorts Pvt. Ltd.. A Notice of motion no. 301 of 2017 thus came to be filed seeking an injunction restraining respondent no. 2 from dealing with, or disposing of the movables. Respondent no. 2 opposed the motion but in an affidavit in reply it stated that all movables were stored in a godown and same would not be sold till disposal of the petition. On 12 th July, 2017 the notice of motion came to be dismissed since the reliefs sought were in the nature of final reliefs.
12. By the impugned order and judgment the DRAT considered whether an action by the Recovery Officer can be challenged before the DRT by filing a Miscellaneous Application. Mr. Rajadhyaksha invited our attention to paragraph 6 of the impugned order wherein the DRAT recorded that reading of section 19(25) would show that DRT has certain inherent powers such as giving directions to give effect to its orders and to prevent abuse of its process 7/29 wp-997-2007.odt and to secure the ends of justice. This provision it was found akin to provision of section 151 of the Code of Civil Procedure under which the Court can exercise inherent powers. That similar powers could be exercised in a matter which is pending before DRT but in the facts in hand it was contended that there was no abuse of process of court. The case was that for the auction, what was required to be advertised for sale was only the immovable property viz. hotel, building and land, to the exclusion of articles of furniture and other movables which were used by the respondent no. 1 company. The Miscellaneous Application filed by the company before the Recovery Officer was rejected because the movables had already been handed over.
13. The Court came to the conclusion that section 19(25) of the RDDB Act does not confer right on the party to file a proceeding which is not contemplated by law or Rules and regulations. Thus considering the powers under section 151 of the CPC, powers under section 19(25) of the RDDB Act would have to be exercised in a pending proceeding or filed before the tribunal. The order of the Recovery Officer in Miscellaneous Application could have been challenged by filing an appeal under section 30 of the RDB Act but instead of it a Miscellaneous Application came to be filed for interim relief. There was no proceeding that was pending before the DRT and therefore no question of filing Miscellaneous Application. The impugned order makes reference to the Debts Recovery Tribunals, Maharashtra & Goa, Regulations of Practice, 2003. The applications for interim relief are not treated as 8/29 wp-997-2007.odt Miscellaneous Applications but are given Exhibit numbers. Section 3 of the regulations were adverted to, which defines an Interim Application, Interlocutory Application and Miscellaneous Application and reproduced in the impugned order as follows :
(6) "Interim Application" means an application for which is not an interlocutory application or Miscellaneous Application." (sic) (7) "Interlocutory Application" means an application for injunction, appointment of Receiver, attachment before the judgment, arrest of Certificate debtor, cross examination, intervener application, amendment application, application for condonation of delay, praecipe for placing the matter on board and application for stay.
(8)"Miscellaneous Application" means an application, which is not an interlocutory application and includes application for setting aside abatement, application given in the pending proceeding for setting aside exparte order and/or for setting aside abatement or like nature."
14. The DRAT held that an interim application can only be filed in proceeding pending. In other words if any substantive proceeding was pending, either party to that proceeding could file an Interim application, Interlocutory or Miscellaneous Application as may be required. That section 19(25) entitles parties to file any proceeding or other application only when there is no other procedure provided in law for parties to secure a remedy following the ubi jus ebi remedium principle.
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15. The impugned order further records that section 30 of the RDDB Act makes a provision for filing an appeal against order of Recovery Officer when such a remedy is available. Seeking recourse to section 19(25) was misconceived and such an application could not have been filed. If the respondent no. 1 company had noticed alleged illegality upon delivery of the movables to the auction purchaser, it could have filed an appeal under section
30. However the petitioner herein had proceeded to file a Civil Application instead and later a Miscellaneous Application before the DRT. An Application could have been made for condoning delay under the provisions of the Limitation Act as well as RDDB Act. If the DRT held the view that what was sold was only immovable property and movable property was wrongly delivered to the auction purchaser under section19(25) it could have been allowed respondent no. 1 to withdraw the application and file an appeal or permitted converting the application into an appeal under section 30 of the RDB Act. Instead of exercising powers under section 19(25) and granting opportunity to parties to rectify the irregularity or illegality the presiding officer assumed jurisdiction in an application for which there was no provision in law under rules and regulations and incorrectly held that application was maintainable. The DRAT therefore allowed the appeal and quashed and set aside the order passed by the DRT under section 19(25) holding that the application was not maintainable.
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16. In the writ petition an affidavit in reply has been filed by the Director of respondent no. 2 in which he states that the petitioner could have filed a Civil Suit if there are disputed questions of fact as to whether movable property was sold in auction conducted by the bank and therefore that would require leading of evidence in Civil Suit and not by way of application under section 19(25). It is contended that the jurisdiction of the DRT was as contemplated under section 17 of the RDB Act. Property auctioned by the bank was a parcel of land with construction along with all plant and machinery attached to the earth as also fixtures and fittings thereon. Purchase of the property was on "as is where is basis" and certificate of sale had been made absolute on 25 th October, 2002. That respondent no. 2 has since been enjoying the property. There is no challenge to the certificate of sale but only to the ownership of the movables.
17. Mr. Rajadhyaksha in the course of his submission made reference to paragraph 12 of the affidavit in reply in which the respondent no. 2 admitted to have taken objection to the filing of the suit, thereby taking a contradictory stand, on one hand contending that a suit is required to be filed and on the other opposing the filing of the suit. A copy of the reply opposing the suit has also been annexed to the affidavit in reply. Mr. Rajadhyaksha invited our attention to paragraph 1(C) of the reply filed before the Civil Judge Senior Division, Pune and submitted that the respondent no. 2 had in that case contended that Civil Court have no jurisdiction to try the suit which is within 11/29 wp-997-2007.odt the jurisdiction of DRT and that DRT is the appropriate authority to interpret the Certificate of Sale. It was therefore submitted that respondent no. 2 should not be permitted to take up such contradictory position. In support of his submissions Mr. Rajadhyaksha relied upon the following decisions.
(i) Lalitkumar J. Thakkar & Anr. vs. State Bank of India & Ors [AIR 2010 Gujarat 4].
(ii) Ranipet Municipality vs. Shamsheer Khan [1998 (2) KLJ 879 ]
(iii) Dr Anil N. Tibrewala vs. Jammu & Kashmir Bank Ltd. [2006 (5) ALL MR 676].
(iv) Srinibas Jena & Ors. vs. Janardan Jena & Ors. [AIR 1981 Orissa 1].
(v) Harinagar Sugar Mills Ltd. vs. Shyam Sunder Khunkhunwala & Ors, [AIR 1961 SC].
(vi) Bihar State Co-op Marketing Union Ltd. vs. Uma Shankar Sharan & Anr. [AIR 1993 SC 1222].
(vii) National Insurance Co. Ltd. vs. Mastan & Anr. [AIR 2006 SC 577].
(viii) Transcore vs. Union of India & Anr. [AIR 2007 SC 712]
18. Mr. Khandeparkar opposed the petition and placed reliance on the contents of the recovery certificate which made reference to the amount recovered from the appellants. He submitted that the amount was overdue and the petitioner had challenged the order passed by the DRAT in Writ Petition No. 4322 of 2002. He invited our attention to the order dated 27 th August, 2002 in which case the Division Bench of this Court held that they were in complete agreement with the DRAT and that the attempt of the petitioner was to stall the auction of the property.
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19. Mr. Khandeparkar submitted that it is pertinent to note that on 23 rd August, 2001 the DRT had ordered the petitioners to pay the amount due to the bank within one month of passing the order. This had not been complied with and that is how the property came to be attached. The movable property had already been mortgaged to IFCI and it was thereafter that the proclamation of sale was finalised and public notice was issued. This order of DRT of 21st August, 2002 had not been challenged and it is prior to auction that the petitioner had moved the Court. The auction had taken place on 19 th August, 2002 and the bid by the respondent no. 2 had been accepted. Meanwhile the shareholder of the company had filed a suit which directed status quo to be maintained. The petition eventually came to be dismissed and it was clarified that the order of status quo also stood vacated. Mr. Khandeparkar therefore supported the impugned order.
20. Reference was also made to the public notice proclamation of sale in support of his contention Mr. Khandeparkar relied upon the fact that relief claimed in Civil Suit No. 802 of 2002 and the relief claimed in MA 80 of 2003 were largely similar. The suit having been withdrawn he contended that there was no occasion for the petitioners to agitate the same issue in a Miscellaneous application. On behalf of respondent no.2 Mr. Khandeparkar had placed reliance in the case of Kishore Y. Patel & Ors. Patel Engineering Co. Ltd. & Ors. [1193 Mh.L.J.307] wherein a single judge of this Court had observed in a matter under the Companies Act that while considering the application made 13/29 wp-997-2007.odt to the Company Court under the substantive provisions of the Companies Act, 1956 the Company Court is entitled to mould the relief. The Court would have to address itself to the question as to under which substantive provision of the Companies Act, 1956 the application before it would fall and if the application made is found maintainable under specific substantive provisions of the Act alone, Rule 9 of the Rules could be pressed into service but not otherwise. This decision was pressed into service. in support of the contention that the rule 19(25) should have been pressed into service unless there was some substantive to provisions under which petitioner could rely upon.
21. We have heard learned counsel for the parties at length and have considered their submissions in the factual background. The impugned judgment of the DRAT after dealing with the factual aspects observed that the presiding office of the DRT had framed the preliminary issue on 20 th October, 2004 as to whether DRT had jurisdiction to entertain and decide MA 80 of 2003 filed by the respondent company. By the impugned order dated 5 th July, 2005 the DRT held that the application was maintainable under section 19(25) of the RDDB Act. That section 19(25) was perceived by the DRT as being wider in scope then section 151 of the Code of Civil Procedure to the extent that it included the powers of revision but before that application could be heard on merits, the appeal in which impugned order was passed came to be filed. The DRT observed that the provision of section 19(25) was more or less or at least akin to the provision of section 151 of the Code of Civil Procedure under 14/29 wp-997-2007.odt which Court has given wide powers to such orders which would be necessary for the ends of justice or to prevent abuse of the process of Court. However, such powers could be exercised only in a matter that is pending before the DRT in order to secure the ends of justice and to prevent abuse of its process.
22. In the case at hand DRAT found that there was no abuse of process of Court but one in which respondent no. 1 - company had contended that the property to be sold was only immovable property consisting of hotel and land excluding articles, furniture and other movable items. This contention found support in the advertisement issued and the price fixed in respect of the properties put into auction and it is in this behalf that the petitioner company had filed a miscellaneous application which came to be rejected since movable property goods had already been delivered. The record indicates that on the very same day that the premises were to be sold, an application was filed by the petitioner for return of movables but instead of challenging the order of rejecting that application by an appeal under section 30 of the RDDB Act, the company went ahead and filed a Civil Suit only to be withdrawn later.
23. The DRT has found that the powers under section 19(25) did not confer additional rights to parties which are otherwise not contemplated by law or rules and regulations. That an application should have been filed under the provisions of the Act. The inherent powers have been held to be available only in proceeding that is pending and filed before the tribunal under the Act. That 15/29 wp-997-2007.odt in such proceeding so pending as on date of filing miscellaneous application and therefore the inherent powers could not be exercised. It was further observed that the petitioner had observed the illegality was after movables were delivered to the purchaser. An appeal could have been filed under section 30 of the RDDB Act. Although the issue of limitation was involved the petitioner had resorted to filing a Civil Suit and later the miscellaneous application. Thus the DRAT came to the conclusion that the presiding officer while acting under section 19(25) assumed jurisdiction in an application for which there was no provision in law under the rules and the DRT had erred in entertaining the application. It is on this basis that the appeal filed by respondent no. 2 has been entertained and allowed.
24. We have also considered the judgments that the Petitioners have pressed into service which we will briefly advert to.
(i) In Lalitkumar J. Thakkar (supra) our attention was invited to paragraph 3 and 7. The question that arose in that case was whether a third party could invoke provision of section 19(25) of the Act so as to prevent abuse of process of the tribunal and to secure the ends of justice.
In that case the Division Bench of the Gujarat High court made reference to a decision of the Division Bench of this Court in Anil Nandkishor Tibrewala & Anr. (supra) in which this Court held that section 19(25) would enable the tribunal to give orders or directions to prevent abuse of its process or secure ends of justice. It is open to the 16/29 wp-997-2007.odt tribunal to lay down its own procedure and it was not bound by procedure required of the Civil Procedure Code. At the same time, certain provisions of the Civil Procedure Code had been conferred on the tribunal. The Court held that since recovery officer cannot go beyond the recovery certificate and an aggrieved party who claims title to the property or interest to the property can move the tribunal by invoking section 19(25) and in such case if a prima facie case is made out the tribunal is bound to consider the application and on that basis this Court disposed the application which was made by person who was not party to the proceeding before the DRT. The Gujarat High Court held that the Bombay High Court judgment was only of persuasive value and would not have been binding on the DRT in Gujarat. The Bombay High Court view was not preferred and the Court held that it was primarily concerned with the question whether an application by a third party can be entertained by the DRT under section 19(25) of the RDB Act.
If a tribunal is convinced orders passed would amount to abuse of process that every Court or tribunal is obliged to ensure that it is process to not abuse and improper abuse of process of the tribunal may cause inconvenience to parties and witnesses. The tribunal is empowered to make such orders and give such directions as may be necessary and lawful. The tribunal is also empowered to make such orders as may be 17/29 wp-997-2007.odt appropriate and that there is no stipulation in the Act that such powers may be invoked only at the instance of parties to the proceedings. Abuse of process of the tribunal was a matter to be considered in the facts of each case. The Court upheld the order of the Tribunal.
(ii) In the case of Ranipet Municipality (supra) paragraph 11 dealt with the meaning of the expression "abuse of process of Court" which would include retention of a benefit wrongly received and executing a decree manifestly at variance with its purpose and intent.
(iii) In Sreedharan v. Seethala (1988(2) KLT 732) the Kerala High Court had occasion to consider the power of the Court to make such orders which are necessary to prevent abuse of process. It proceeded to consider the scope of the expression abuse of process and held that it could amount to malicious process of the legal process where party is in legal process and not for the purpose for which it was intended by law. Relying on paragraph 18 Mr. Rajadhyaksha had submitted that even under Writ Jurisdiction under Article 227 of the Constitution the High Court could consider all what had happened in the Courts below and invoke that power along with section 151 of the Civil Procedure Code and if there is miscarriage it is duty of the Court to ensure rectification. Quoting from the decision of Annapoorni vs. Janaki (1995 I L. W. 141) 18/29 wp-997-2007.odt our attention was invited to the observation that when a Court finds that a decree suffers from an error of law apparent on the face of the record due to non-application of mind of the Court to the relevant principles of law, the Court cannot keep silent and allow the decree to be enforced, particularly when it causes grave injustice. The Court further held that if there was miscarriage of justice resulting in abuse of process, the Court possessed inherent power to correct an error committed by the lower court.
(iv) In Dr.Tibrewala (supra) Mr. Rajadhyaksha invited our attention to the fact that under the RDDB Act the orders cannot be questioned in any Court of law other then by way of petition in the High Court and that the expression "prevent abuse of its process" would be wide enough to cover a case where a financial institution has obtained an order for recovery pursuant to a mortgage based on fraudulent documents and if such a party comes to Court and demonstrates that the mortgage created is sham or bogus, the tribunal can assume jurisdiction under Section 19(25) to decide that issue and for that purpose exercise powers conferred under section 22. In that case the petitioner contended that he was entitled to rectification of the order which allowed the original application and held the property to be validly mortgaged in favour of the respondent bank. The Recovery Officer issued a recovery certificate and the bank moved an application for enforcement of the recovery 19/29 wp-997-2007.odt certificate allegedly without notice. It was contended that there was specific documentary evidence to show that the petitioners had legal title to the land in question. Therefore the property could not have been sold without notice to the petitioners. Since the DRT had declared the mortgage valid, the only remedy available to them was under section 19(25) of the RDDB Act, in the absence of any other specific provisions. The Bank opposed the challenge on the basis that they had a valid document in their favour and in those circumstances the application could not be entertained. The petitioner had raised an important issue as to which forum a person who is not a party to the proceeding before the DRT and whose property has been declared to be validly mortgaged could approach. The Court considered the fact that an appeal lies under the Act. Section 19(25) came in for consideration and the Division Bench found that the expression "prevent abuse of its process" and "or to secure the ends of justice" would be wide enough to cover a case where a financial institution had to obtain an order or a certificate pursuant to a mortgage created by the judgment debtor based on a fraudulent document. If such a party comes to Court and points out that the mortgage created is sham and/or bogus, the Tribunal can assume jurisdiction under section 19(25) to decide that issue and for that purpose exercise powers under section 22 of the Act. That in cases where the Recovery Officer cannot go beyond the certificate, a party like petitioners who claims title to the property moved the tribunal by 20/29 wp-997-2007.odt invoking section 19(25) and if prima facie case is disclosed the tribunal is bound to consider the application and dispose it in accordance with law. That petition was then disposed by directing the tribunal to make application under Secyion 19(25).
(v) In the case of Srinibas Jena (supra) the full bench of the Orissa High Court had occasion to consider the meaning of the expression "Abatement" and "Stay". Finding that they were not synonymous "Abatement" means the destruction of a suit while "Stay" is temporary suspension of further proceedings. Reference had been made to the definition of "Abate" in the Black's Law Dictionary in this respect. Mr. Rajadhyaksha used this definition in support of his contention that the proceedings had not abated and application under section 19(25) could still have been considered.
(vi) In Harinagar Sugar Mills (supra) the Supreme Court had occasion to consider a remedy of a person aggrieved by refusal to register transfer of shares to apply to the Court for rectification of the register under section 155 and to appeal against the resolution refusing to register the transfers under section 111. The Court was required to act judicially. However under section 111 the Central Government was vested with power to determine the dispute.
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(vii) Reliance was also placed on the decision of the Supreme Court in Uma Shankar Sharan(supra) where the Supreme Court had occasion to consider validity of plural remedies available under the law and where two or more remedies are available to a person, the principle of election would come in. Mr. Rajadhyaksha had submitted that the petitioner was entitled to chose the remedy and had opted for pursuing the application under section 19(25).
(viii) In Mastan & Anr. (supra) the 'Doctrine of election' was once again considered as being a branch of the 'Rule of estoppel' and in considering whether a person may be precluded by his action or conduct or silence when it is his duty to speak, the aggrieved party may avail of one of two remedies but not both. Thus it was sought to be contended that the petitioner was entitled to choose the path for invoking section 19(25).
(ix) Reliance was also placed on the decision of the Supreme Court in Transcore (supra) wherein also the doctrine of election came in for consideration and the Supreme Court found that remedies under SARFAESI could also be resorted to as also the NPA Act, 2002 and the DRT Act, 1993.However, it is contended that under the RDDB Act the petitioner had the option to adopt the route of filing the application. 22/29
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25. We do not find how these decisions come to the assistance of the petitioner. In our view the approach of the DRAT in the impugned order cannot be faulted. It is obvious that the procedural aspects provide for Interim Applications, Interlocutory Applications and Miscellaneous Applications. An interim application is one that is not interlocutory application. An interlocutory application is also defined in clear terms and obviously means an application within an existing application. The expression interlocutory is defined in Black's law dictionary as "Interim or temporary, not constituting a final resolution of the whole controversy" Thus an interlocutory application is clearly one which is made, agitated and decided pending a final resolution of the entire dispute.
26. In the present case this application under section19(25) does not qualify as interlocutory application nor it would qualify as interim application since the expression interim application is defined under the regulation 3(6) of the Regulations as an application which is not an interlocutory application or miscellaneous application. The word "interim" in Black's law dictionary is defined as follows - "done, made or occurring for an effective time, temporary or provisionally". Thus the nature of an interim application is also one which is temporary and provisional. An interim application would in our view not exceed the scope of an interlocutory application and thus the scope of Miscellaneous application is clearly contemplated as one not falling within the applications which are made during the pendency or before the final 23/29 wp-997-2007.odt resolution of any dispute. A Miscellaneous Application by its very nature is said to include an application for setting aside 'Abatement', for setting aside ex-parte order and/or of that like nature. The application is one therefore which would relate to a proceeding which has been finally resolved. The expression "Miscellaneous" according to the Oxford English Dictionary means "various types, composed of members or elements of different kinds" . The expression therefore indicates that it is wider in its scope. However, the question to be considered is whether the application can be widened and whether it would also include the power to include within its scope applications which could otherwise be made or could have been made within the framework of the Act, Rules and Regulations.
27. In our view a Miscellaneous Application would not necessarily be contained within the limitations of interim or interlocutory applications but will be wider in nature. Specific reference being had to the definition of "Miscellaneous Application" under the DRT regulations indicates that it is an inclusive one viz. for setting aside abatement, setting aside ex-parte order of the like nature. Therefore it points towards an application which is being made in a disposed proceeding and in a pending proceeding limited to setting aside an exparte order but in our view a Miscellaneous application cannot encompass one which calls for final determination of rights of parties. A final resolution of rights of parties can only be contemplated in a substantive proceeding.
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28. The Miscellaneous application by no stretch of imagination can be qualified as a substantive proceeding is indicative of application which will bring back a substantive proceeding to life. The Miscellaneous Application filed by the petitioner was clearly calling for determination of the rights of the petitioner qua the respondent no. 2 to the movable property which in a sense also could have affected the rights of respondent no. 1- bank. The bank has taken a stand on this aspect but was not directly concerned with the result of the lis. The bank may possibly have proceeded with an inaccurate description of the property but that is a matter between petitioner and the bank- respondent no. 1. The respondent no.2's contention that the property being sold was inclusive of movable cannot, prima facie be faulted given the description of the property as described in the public notice which reads as follows :
"All that piece and parcel of land and construction thereon bearing a portion of the lands comprising of Sub Plot No. 262/B and 262/C. About 4588.670 Sq.Meters bearing final plot no. 262 of Sangamwadi town planning scheme III situated at Bund Garden Road, Pune together with all buildings, structures, erections etc. constructed thereon and the plant and machinery attached to the earth or permanently fastened to anything attached to the earth, fixture and fittings erected / installed thereon and every part thereof." (Emphasis supplied)
29. In our view the DRAT is correct inasmuch as the petitioner should have filed appeal even if the same was belated. It could have applied for 25/29 wp-997-2007.odt condonation of delay and if the delay was not condoned he could have filed appropriate proceeding in accordance with law. It appears to have chosen not to do so whether by choice or inadvertence is not for us to consider in this petition. Suffice it to say that the impugned order passed by the DRAT to the extent it observed that the relief sought in this Miscellaneous Application could not have been granted and the DRT had erred in entertaining an application cannot be faulted.
30. That having been said we hasten to add that the view taken by the DRAT that a Miscellaneous Application can only be filed in proceedings pending before the tribunal does not commend to us as the correct view. This in view of the fact that a miscellaneous application is one that cannot fall within the definition of interim application or interlocutory application both of which are application which may be moved, canvassed and decided during the life time of a proceeding and not after its disposal. In other words interim applications and interlocutory applications are decided pending final resolution of the dispute whereas the miscellaneous application is one that pertain to any other aspect of the matter which includes an application for setting aside abatement and for setting aside ex-parte orders. To a limited extent a miscellaneous application may be filed in a pending proceeding but its scope is clearly different. In the case of Dr. Anil Nandkishor Tibrewala & Anr. Vs. Jammu and Kashmir Bank Ltd. & Ors. 1, the Division Bench of this court had 1 2006 (5) ALL MR 676 26/29 wp-997-2007.odt held that, section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, would facilitate making of an application where a financial institution had obtained an order or the certificate, pursuant to a mortgage created by a judgment debtor based on a fraudulent document; for instance, a mortgage in respect of the property not belonging to the judgment debtor but the third party alleging fraud. The court interpreted the expression "prevent abuse of its process" and "to secure the ends of justice".
31. Thus, an application could have been entertained at the instance of third party, who was not a party to the proceedings, but whose property had been declared by the tribunal to have been validly mortgaged to a financial institution. The court, in these circumstances, held that although an appeal lies before the appellate tribunal against the order of the tribunal, as the petitioner in that case was not a party to the proceedings before the Debts Recovery Tribunal, where they claimed ownership of the property alleged to be fraudulently mortgaged by the judgment debtor and contended that they are not created any mortgage, the court found that the petitioner had an opportunity to plead his case. Reference was made by the Division Bench of this court to Section 29 of the RDB Act and provisions of the Income Tax Act as regards the modes of recovery. It is under these circumstances, that the court observed that an application under section 19(25) can be entertained at the request of a party, who claimed title in the property, and that the mortgage was the result of a fraud played by the judgment debtor.
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32. In the instant case, we are afraid, that the ratio in Dr. Anil Nandkishor Tibrewala (supra) will not apply being distinguishable on facts and an application under Section 19(25) was not a remedy available to the petitioner. However, that having been said, the fact remains that the petitioner does not appear to have mortgaged the movables to the respondent no.1 bank and the security offered was only the immovable property. This fact has been confirmed by the Bank, which has gone on record admitting that these movable items have not been mortgaged or taken as security. On account of the widely worded advertisement inviting offers, it appears that respondent no.2 has staked claim to the entire hotel premises, along with the movables. In that view of the matter, although we consider it appropriate that the petitioner be permitted to file an appeal against the order of the Recovery Officer under section 30 of the RDB Act.
33. We accordingly pass the following order :
(i) Writ Petition dismissed.
(ii) Petitioner is granted liberty to file an appeal. In the event such an
appeal is filed within one month from today, the time taken for a decision on this writ petition shall be taken into account at the time of hearing of the application for condonation of delay.
(iii) If such an appeal is filed and the delay is condoned, the appeal shall be disposed expeditiously without being influenced by the 28/29 wp-997-2007.odt observations on merits if any. In the meantime protection granted to the petitioner at the time of issuing Rule shall continue for a period of eight weeks from today. The petitioner is at liberty to apply for continuation of the protection in the appeal.
(iv) In view of the disposal of the Writ Petition Chambers Summons No. 54 of 2017 and Notice of Motion No. 370 of 2017 do not survive. The same shall also stand disposed.
(A.K.MENON,J.) (A.A.SAYED,J.)
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