Punjab-Haryana High Court
Gurmeet Singh & Another vs Financial Commissioner on 27 November, 2012
Author: Ranjit Singh
Bench: Ranjit Singh
Civil Writ Petition No.2602 of 2012 (O&M) :1:
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
DATE OF DECISION: November 27, 2012
Gurmeet Singh & another
.....Petitioners
VERSUS
Financial Commissioner, Cooperation, Punjab, Chandigarh &
others
....Respondents
CORAM:- HON'BLE MR.JUSTICE RANJIT SINGH
1. Whether Reporters of local papers may be allowed to see the judgement?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
PRESENT: Mr.M.S.Bedi, Advocate,
for the petitioners.
Ms.Monica Chhibbar Sharma, DAG, Punjab,
for the State.
Mr.Balwinder Singh Sehra, Advocate,
for respondent No.4.
Mr.Ashwani Prashar, Advocate,
for respondent Nos.7 and 8.
****
RANJIT SINGH, J.
6 kanals land of late Beant Singh located in Town of Kharar has been auctioned by the Kharar Primary Cooperative Agricultural Development Bank Ltd., Kharar for a sum of `1,66,000/- for not repaying the loan of `37,000/-. Beant Singh had obtained this Civil Writ Petition No.2602 of 2012 (O&M) :2: loan for tubewell on 29.12.1995 and had mortgaged his 6 kanals land in Khasra No.75/6. He is alleged to have obtained another `40,000/- as a loan for cattle shed on 7.11.1997, for which he had mortgaged land measuring 2 kanals 13 marlas. When he failed to pay instalments, the Administrator of the Bank on 20.5.2004 authorised the Manager to proceed with the sale of mortgaged properties of the defaulted members.
On the basis of this resolution, Bank prepared the sale cases of mortgaged land. Sale Officer was appointed. The Bank claims to have issued letter dated 15.9.2004 to the father of respondent Nos.6 and 7 demanding the payment of the defaulted amount alongwith interest within 15 days. The Bank otherwise threatened him with sale of mortgaged property. In response to this notice, respondent No.6 (son of the loanee Beant Singh) appeared before the committee. It is stated that he did not give any satisfactory reason for not repaying the loan. He, however, informed the Bank that his father had expired on 20.12.2002. It is alleged that respondent No.6 never promised to pay the loan amount obtained by his father, which was repayable with interest.
The Bank had issued a letter dated 20.10.2004 intimating that it had decided to proceed with the mortgaged land for recovery of the loan. The land, so mortgaged, was ordered to be put to auction by issuing proclamation on 20.12.2005. The auction was fixed on 4.1.2006. It is alleged that letter dated 20.12.2005 was duly received by respondent No.6, but despite that respondent Nos.6 and 7 did not take any step to repay the loan. The auction notice was published Civil Writ Petition No.2602 of 2012 (O&M) :3: and was also displayed on the notice board of the Bank. The auction proceedings were accordingly held on 4.1.2006 at 1.10 PM. Five persons participated in the auction and deposited a security amount of `1,000/- each. Respondent No.5 was the highest bidder at `1,66,000/- and, thus, was declared successful.
The total amount outstanding against Beant Singh was `1,44,400/-. Even after the auction, respondent No.3 issued a letter to respondent No.6 and liberty was granted to him to repay the loan with interest. When no response was received, then certificate of purchase was issued on 15.6.2006 to respondent No.5. The mutation was accordingly sanctioned in the name of respondent No.5 and his name was entered in the jamabandi for the year 2006-07. He, thus, became an absolute owner of the property. Respondent No.5 executed a general power of attorney in favour of Kulshinder Singh, who being attorney, sold the property measuring 2 kanals 9-1/3 marls to the petitioners for consideration of `10.00 lacs, vide registered sale deed dated 6.8.2009. The mutation has, therefore, been entered in the name of the petitioner on 7.9.2010 and he is stated to be in peaceful possession of the property.
Respondent No.7 Dr.Ajit Singh filed a petition under Section 16(3) of the Cooperative Societies Act before Registrar, who sent the same to Additional Registrar-respondent No.2 for disposal. The Bank was put to notice and filed a written statement on 10.5.2009 supporting the case of the petitioners. The petitioners claim to be bonafide purchasers of the property measuring 2 kanals 9-1/3 marlas. Still, they were not impleaded as a party in the petition. Civil Writ Petition No.2602 of 2012 (O&M) :4: Respondent No.7, however, had impleaded Harpinder Singh (respondent No.5) and Ranbir Singh (respondent No.6) as a party. Additional Registrar has accepted the petition of respondent No.7 on 25.5.2010. The mutation sanctioned in favour of Harpinder Singh (respondent No.5) of the property in question has been cancelled and entry to this effect in the jamabandi for the year 2006-07 has been reflected.
On learning about the cancellation of auction, the petitioners approached the Bank and came to know that the sale proceedings dated 4.1.2006 have been set aside by the Additional Registrar. The petitioners obtained the certified copy of the order dated 25.5.2010 on 28.4.2011 and learnt that the petitioners had not been impleaded as a party. They have also noticed that service was not effected on respondent No.5, who had purchased this land in dispute.
The petitioners accordingly plead that respondent No.2 has travelled beyond his jurisdiction in passing the impugned order and he did not have any jurisdiction to interfere in the proceedings. As per the petitioners, the Bank had adopted the due procedure and had conducted the auction. They would further plead that once respondent No.6 had appeared before the committee on 14.10.2004 and had received a notice regarding repayment, he cannot be permitted to take the plea that he had no knowledge of the loan obtained by his father. The petitioners, thus, filed a revision petition under Section 69 of the Act before the Financial Commissioner (Cooperation), who had disposed of the same on 8.12.2011. They Civil Writ Petition No.2602 of 2012 (O&M) :5: have accordingly impugned the order dated 25.5.2010 passed by Additional Registrar and order dated 8.12.2011 passed by the Financial Commissioner being illegal, arbitrary and without jurisdiction.
Written statements on behalf of the Bank as well as on behalf of respondent Nos.7 and 8 have been filed. Respondent Nos.7 and 8 being contested respondents have raised preliminary submission/objections. It is stated that respondent No.5 has purchased 6 kanals land in Kharar Town for `1,66,000/- only. The petitioners purchased the land measuring 2 kanals 9 marlas from respondent No.5. It is stated that no person can pass a better title than what he possesses himself. Respondent Nos.7 and 8 claim that the possession of the land in dispute is still with them and the sale of this land was held at their back and, thus, was against the provisions of Punjab Cooperative Land Mortgage Banks Act, 1957. (for short "the Act"). Respondents would allege that the sale conducted by the Bank was in haste and without following the procedure that too with some ulterior motive. It is stated that the petitioners have no locus to challenge the order passed by respondent No.2. It is urged that respondent No.5 alone can challenge this order, but he has not come forward in this regard.
Respondents in the reply have then mentioned the detailed background of the case. The loans in this case were advanced by Punjab Agricultural Development Bank and, thus, recoveries thereof are governed by the Act. The procedure for sale of mortgaged property is provided under Sections 15 and 16 of this Act. Civil Writ Petition No.2602 of 2012 (O&M) :6: Section 15 provides that State Bank can sell the mortgaged property without intervention of the court and for that purpose, Board or any person authorised in this behalf can sell the property in accordance with the permission of the Act. Sub-section (2) of Section 15, however, contains a rider to the effect that before conducting such sale, objections must be invited from the mortgagor or any other person having any interest in the mortgaged property. It is further provided that notice in writing requiring payment of such mortgaged money or a part is required to be served amongst the mortgagor or each of the mortgagor or any person who has any interest in the property mortgaged. In view of Section 41 of this Act, the provisions of Sections 15 and 16 have been applied to mutatis mutandis to all PADBs.
The loan, which the father of the answering respondents had obtained, is not disputed, but it is pointed out that father of the answering respondents expired on 20.12.2002 and the answering respondents were not aware of the status of the loans obtained by their father. On 15.4.2009 when the answering respondents had gone to get the land mutated in their name, they were informed that land measuring 2 kanals 13 marlas was mortgaged without possession with the Bank. The answering respondents accordingly served a legal notice dated 16.4.2009 on the Bank to know the full and proper details of the loan and to get the entries in this regard removed from the jamabandi. Yet another legal notice was served to the Bank which was returned without even opening the envelope with the remarks "the said letter does not relate to the Bank". From this, Civil Writ Petition No.2602 of 2012 (O&M) :7: the counsel would urge that the Bank had returned the notice even without opening the envelope to see what it contained and, thus, apparently was conniving with the respondent-auction purchasers to extend benefit to them. The answering respondents, therefore, were forced to approach Registrar Cooperative Societies and then the Manager of the Bank was directed and had supplied information as demanded on 31.8.2009. Respondent No.7 then learnt that a sum of `77,000/- in all was obtained by his father, but it was not returned. The auction was conducted on 4.1.2006 and 6 kanals land was sold for `1,66,000/-. It is also stated that respondent No.6 was asked to deposit the amount with the Bank so that sale may not be confirmed. Respondent No.7 accordingly would plead connivance of respondent Nos.3 to 5 with each other in putting this very valuable land in the Town of Kharar measuring 6 kanals just for sum of `1,66,000/-. The total loan outstanding at the time of auction as calculated `1,44,400/- which was discharged from the sale proceeds held on 4.1.2006. Loan clearance certificate of both the accounts was issued on 24.9.2009.
After getting this information, answering respondent No.7 challenged the alleged sale deed by filing a petition before Registrar Cooperative Societies. Harpinder Singh was impleaded as respondent. He was served a notice but chose not to appear. The Bank, however, appeared and filed a written statement. After hearing the pleas, it has been held by respondent No.2 that no notice was served upon answering respondents to pay this amount before confirming the sale. Finding further is that the Bank had auctioned Civil Writ Petition No.2602 of 2012 (O&M) :8: the land without following proper procedure. The Registrar has further found that auction was held for 6 kanals land, whereas share of late Beant Singh in this land was 2 kanals only out of this 6 kanals. It is noticed that 6 kanals land was inherited by three sons of late Ishar Singh, namely, Harbans Singh, Beant Singh and Gurnam Singh. Share inherited by Beant Singh, who took this loan was 2 kanals 9 marlas. The Bank had, thus, sold 3 kanals 11 marlas of land belonging to some other persons who had no concern with this loan. Even out of 2 kanals 9 marlas, land coming to the share of Beant Singh was 1/4th share it being an ancestral property. The sale by way of auction ordered on 4.1.2006 accordingly has been set-aside.
This order was challenged by the present petitioners. They have impleaded Harpinder Singh, who was duly represented by his counsel, but he has not challenged the order dated 25.5.2010 passed by Additional Registrar by filing any separate revision petition.
Incidentally, another issue may arise on account of death of Beant Singh. His legal heirs would have interest in the property after his death. On his death, they were required to be called and asked to repay the loan. The view accordingly is that any particular mortgaged property cannot be conducted in the back of the person, who has any interest or charge upon the mortgaged property and, thus, the auction as held has been found to be bad in the eyes of law. The petitioners, who are subsequent purchasers from Harpinder Singh (respondent No.5) are accordingly before this court.
Counsel for the petitioners in support of his plea has Civil Writ Petition No.2602 of 2012 (O&M) :9: placed reliance on Balakrishnan Versus Malaiyandi Konar, AIR 2006 Supreme Court 1458. The facts in this case apparently are different. In this case, sale was confirmed and the proceedings by judgment-debtor to set-aside the sale was dismissed. Thereafter decree holder-purchaser applied for possession by moving an execution. The Hon'ble Supreme Court in this background has held that the court cannot after the sale has been confirmed go into the question of legality of sale being in violation of Order 21 Rule 64. Order 21 Rule 64 uses word "necessity" to satisfy decree which indicates that the portion of property which would be sufficient to satisfy decree is only to be sold. The Hon'ble Supreme Court has held this to be not just a discretion but an obligation on the court. The sale held without examining this aspect is termed as illegal.
The court in this case even after holding that after confirmation of a sale the question of legality of sale cannot be gone into, has observed that the issue of applicability of Order 21 Rule 64 should have been considered by the High Court in view of the dismissal of earlier revision petition. Even otherwise no relief could have been granted to the appellant in view of Article 144 of the Limitation Act. Thus, the Hon'ble Supreme Court passed this order to do substantial justice to the parties and maintained the order passed by the High Court, whereby the case was remitted. This judgment, thus, would not be any guide in the facts of the present case.
The judgment relied by the counsel for the petitioners in Gurmeet Kaur and others Versus Addl.Registrar (Loans), Cooperative Societies, Punjab and others, LPA No.1838 of 2011) Civil Writ Petition No.2602 of 2012 (O&M) : 10 : decided on 20.9.2012 was dealing with a case where Single Judge had dismissed the petition on the ground of delay. The appellant in this case was charged with embezzlement of funds of the cooperative society which was subject matter of adjudication in the arbitration proceedings. The award for recovery of money was passed and on demand the appellant defaulted in making the payment. This led to issuance of an auction notice for the attachment and sale of the land of the appellant pledged with the Bank. The auction was conducted and the sale certificate was issued. The revision filed against this order was dismissed and the sale certificate was issued. The appellant had approached this court after 13 years. He died during the pendency of the writ petition and his legal representatives were brought on record. In this background, the LPA Bench has held as under:-
"We have given thoughtful consideration to the matter. In absence of effective rebuttal to non-payment by the auction purchaser of 75% of the balance amount of the bid within 15 days from the date of auction, no legal or vested right stands transmitted to the Ropar Central Cooperative Bank, Ropar-6th respondent and the auction proceedings would remain inchoate till date and since the appellants have expressed their unequivocal willingness to pay the Bank its outstanding dues under the award we see no reason why the appellants should not in equity be called upon to make good the amount in discharge of the pious debt by the children of the deceased-writ petitioner. Civil Writ Petition No.2602 of 2012 (O&M) : 11 : We feel justice would be served if this path is followed to which the respondents have no legally valid answer."
This judgment rather would support the cause of respondent No.7. It is noticeable that no proper notice was served on the loanee, who had died much before the date of auction. This fact even is not in the knowledge of the respondent-Bank. The interest on the property would be of a loanee and anyone having interest therein. The Bank in this case has seriously faulted in not validly considering the title of property which the late Beant Singh had mortgaged. He had mortgaged 6 kanals land which has been put to auction for `1,66,000/-. This is too meager an amount which this property would fetch it being located in Kharar Town. Having purchased 6 kanals for `1,66,000/-, he has sold about 2 kanals for `10.00 lacs which itself would show the nature of auction.
The petitioners have an interest only in 2 kanals and 9- 1/3 marls which they have purchased from respondent No.5. Late Beant Singh did not have a valid title to mortgage 6 kanals land as he did not own it. This in fact is a serious defect in the entire process of the mortgage deed and subsequently putting this property to sale by way of auction. Mortgage was without possession. The property in question continues to be in possession of respondent No.7 and others. The notice to pay the loan amount was never served on the person having interest in the property, which finding has been returned by the Additional Registrar and upheld by the Financial Commissioner. In fact, notice was issued to a dead person Beant Singh and this fact also appears to be in the knowledge of Bank. In Civil Writ Petition No.2602 of 2012 (O&M) : 12 : view of the entirety of facts in this background, the impression would emerge that the Bank or somebody in the Bank indeed had connived in auctioning this property in this manner and it does not appear to be auction done honestly. 6 kanals located in a Kharar Town where land value is quite high was auctioned for just `1,66,000/-. Part of it, the auction purchaser sold it for `10.00 lacs. How can such an auction pass of as honestly done auction. Besides, there are numerous serious infirmities in procedure and in law in conducting this auction. It is not without reason that respondent No.7 is crying hoarse that this auction is done by the Bank people in a fraudulent manner to enrich the auction purchaser. His cry is justified.
Keeping all the factors in view, this auction and subsequent sale has rightly been interfered with by the Additional Registrar. There are serious defects in this auction which cannot be ignored.
There is no merit in the writ petition and the same is accordingly dismissed.
November 27, 2011 ( RANJIT SINGH ) ramesh JUDGE