Gujarat High Court
Ashapura vs State on 16 October, 2008
Author: Jayant Patel
Bench: Jayant Patel
Gujarat High Court Case Information System
Print
SCA/12275/2008 35/ 35 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 12275 of 2008
With
MISC.CIVIL
APPLICATION No. 2445 of 2008
For
Approval and Signature:
HONOURABLE
MR.JUSTICE JAYANT PATEL
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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ASHAPURA
ARCADIA LOGISTIC PVT LTD - Petitioner(s)
Versus
STATE
OF GUJARAT & 2 - Respondent(s)
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Appearance :
MR
SANDIP C SHAH for Petitioner(s) : 1,
None for
Respondent(s) : 1 - 2.
MR SHIRISH JOSHI for Respondent(s) :
3,
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CORAM
:
HONOURABLE
MR.JUSTICE JAYANT PATEL
Date
: 16/10/2008
ORAL
JUDGMENT
As the proceedings of the petition as well as Misc. Civil Application No. 2445/08, they are being considered by this common order.
The short facts of the case appears to be that Jamnagar Telibiya Utpadak Sahkar Sangh Ltd. (hereinafter referred to as the Sangh/Society for short) was ordered to be liquidated by the competent authority under the Gujarat Cooperative Societies Act (hereinafter referred to as the Act ) in exercise of the power under Section 107 read with Section 108 of the Act. The liquidator for liquidation proceeding was also appointed. As a part of the liquidation proceedings, one of the work to be undertaken by the liquidator is to dispose of the property of the Society in liquidation. Therefore, he had undertaken the process for such purpose. As per the Society, it was having one of the property bearing Survey No.1522 located at Jamnagar admeasuring 4,03,337 sq. ft. and another land bearing Survey No.211 located in the same city bearing 1,01,037 sq. ft. It appears that the then liquidator of the Society in an arbitrary manner, had entered into a transaction for sale of the aforesaid property at a very meager price coupled with the allegations of favoritism, nepotism and extraneous consideration and even a show was made as if the agreement is entered into by the Society with private party viz. Balaji Corporation (hereinafter referred to as the first offerer ) for sale of the property at the price of Rs.340/- per sq. ft. for the land bearing Survey No.1522 and Rs.325/- per sq.ft. For the land bearing Survey No.221. It appears that thereafter, when it came to the knowledge of State Registrar, the proceedings were initiated by Registrar, Cooperative Societies and at that stage, Balaji Corporation filed Suit being Special Civil Suit No.21/08 in the Court of Senior Civil Judge at Jamnagar for specific performance of the contract and in the said suit, the application for temporary injunction was also submitted. At that stage, one another person who was interested to buy the property at the higher price at Rs.400/- per sq. ft., preferred Special Civil Application No.5481/08 before this Court. This Court with a view to test the genuineness of the offer, called upon the petitioner therein to deposit the amount of Rs.1 Crore with this Court and it was accordingly deposited and thereafter, the matter was further considered. In the said petition, the liquidator, the first offerer, the State Government through the learned Advocate General, the Registrar, State Cooperative Societies, and the petitioner therein who was also one of the offerer (he can be said as second offerer), were heard and ultimately, this Court recorded that as per the GITCO valuation, the price of the land is Rs.724/- per sq.ft., as against the acceptance of the offer by the liquidator at Rs.340/- per sq.ft. and the offer coming in record by the petitioner therein at Rs.400/- per sq.ft., it was ex facie apparent that the public property was being sold away at a throwaway price by the then liquidator and the transaction was entered into in a surreptitious manner for frustrating the rights of the Society. It was considered by this court inter alia as under:
10.In view of the above, and considering the record of the present petition, following aspects are apparent:
A huge chunk of land admeasuring of 504374 sq.ft is the property of the Sangh which is agreed to be sold away by the then liquidator without holding public auction of the property in question.
The advertisement was given in newspaper having no circulation even in Gujarat State.
The mode and manner in which the offer is accepted by way of a private negotiation cannot be countenanced for disposal of such a huge property.
It is well settled norms for disposal of the public property that the opportunity should be given to the interested persons to purchase the property and if required, in a given case, negotiation amongst inter se offerers may also be held so as to make an attempt to procure the highest price of the property.
The publicity of the invitation to submit the offer must be clear and must be given in a newspaper having vide circulation so that the public at large may have the equal opportunity to submit their offer, if they are so interested.
If the valuation of the property, as stated by the State Government, is considered, the price would be of about Rs.36.51 Crores. If the offer of the petitioner is considered, it comes to about Rs.20.77 Crores and if the offer of the applicant of Civil Application No.5620 of 2008 is considered, it comes to about 20.67 crores. As against the same, the offer accepted by the impugned order by the liquidator is for the amount of Rs.16.99 Crores (roughly Rs.17 Crores). Therefore, if the offer accepted by the impugned order is allowed to operate, it would result into huge monetary loss to the public money of about Rs.20 Crore if the valuation made by GITCO and accepted by the Government is considered or in alternative, in any case, would cause loss of about Rs.3 Crores and more if the private offers are considered.
The transaction for acceptance of the offer prima face appears to have been done in a surreptitious manner not only to cause huge loss to the public money, but the mode and manner in which the transaction is entered into is absolutely in arbitrary manner with a view to favour respondent No.4 to enable him to crystalise his right pursuant to the sale transaction and thereby, adversely affecting the interest over the property of the Sangh inasmuch as, against the offer of Rs.17 Crore, not even 10% of the amount is accepted as the Earnest Money and on a meager amount of Rs.51,00,000/-, the Agreement to Sell is executed. Further, on the same day, an unregistered supplementary agreement is executed for handing over of the possession by Shri Kanani claiming the authority under the decision of the liquidator for handing over of the possession without receiving any additional consideration whatsoever. In normal circumstances, unless the consideration is received in full, there is no question of keeping of the possession. Such would be a normal conduct of the owner of the property, but in the present case, the liquidator holds the public duty and is supposed to act as trustee of the public property who owes more responsibility to pursue the transaction in a manner which may not frustrate the rights of the public body.
Having expressed the aforesaid view, this Court had prima facie observed that the Government could consider the matter for initiating criminal prosecution against the persons concerned, more particularly against the then liquidator and/or manager of the respondent No.4, who is the beneficiary of the transaction, unless the respondent No.4 is ready to abandon all rights pursuant to the impugned order and to withdraw the litigation and to stand as one of the offeror in the event the Court directs for auction of the property by settled norms for disposal of the public property.
At that stage, Mr.Jani, learned counsel appearing for respondent No.3 under the instruction of his client, declared before the Court that with a view to see that the Court may not heavily bounce upon by ordering criminal prosecution, the respondent No.4 is agreeable for declaring that he shall not claim any right whatsoever based on the impugned order and the action taken pursuant to the impugned order as that of Agreement to Sell and the supplementary agreement and the respondent No.4 shall also withdraw the litigation pending before the appropriate forum for asserting the rights pursuant to the impugned order and the action taken thereafter. However, Mr.Jani further declared on behalf of the respondent No.4 that if the offer of the respondent No.4 is not be accepted, such may be considered as his offer at the time when the next public auction is held and in the event his offer is not accepted thereafter, the Court may pass an order for returning of the amount of Rs.51 Lakhs and with the reasonable Bank rate interest @8% p.a. It appears to the Court that in view of the peculiar circumstances that the impugned order is already acted upon and the rights are created pursuant to the Agreement to Sell, and further created pursuant to the supplementary agreement, it would be just and proper to consider the said declaration and consequently to avoid further legal complications based on the alleged civil rights and with the purpose to save the huge public property of a huge value of Rs.36.50 Crores. If the declaration of respondent No.4 is not accepted, it may create further complications in future of getting back the possession of the land, cancellation of the agreement to Sell, huge long litigation, etc., which consequently may result into putting the public property as well as the public money in jeopardy for a long period and the money may not be available of the real price of the land for distribution in the liquidation proceedings. Therefore, I find that keeping in view the peculiar facts and circumstances, the declaration of the petitioner can be accepted and the same would be in the larger interest of such properties of the Sangh and also in the larger interest of the public money of the public property. It is only if the respondent No.4 backs out from the declaration made or creates any hurdles by frustrating the declaration made, the Government may be required to take stern action including that of lodging criminal prosecution, but as the respondent No.4 has now abandoned the rights, it may not require the State Authorities to initiate action against him. Of course, the lapse on the part of the then liquidator may be the subject matter of the departmental inquiry in future, where the matter can be examined in accordance with law for suitable action.
It was also submitted on behalf of the State Authorities that the Government is desirous to sell the property by public action and the attempt shall be made to realize maximum price of the property by giving wide publicity and at that stage, the offer of the respondent No.4, of the petitioner, as well as of the newly added applicant, if so ordered by this Court, can be considered together with the other offerers, but the Government should be at the liberty to decide as to whether the offer should be accepted or not.
It was also submitted on behalf of the State Authorities that if the offer fetches requisite price, or more price, the State Government would have no objection in accepting the offer, but the action shall be taken in a positive manner for maximum realization of the money and no compromise shall be made in following the settled norms for disposal of the public property and to realize maximum price of the public property.
It appears that there cannot be any second opinion on the aspects that the Government or the liquidator, as the case may be, has to make sincere effort to see that the maximum price of the property is realized and the money is made available to the fullest extent for distribution. As the property is declared as having value of Rs.36.51 crores, ultimately, it will be for the State Authorities to undertake the procedure by giving wide publicity for inviting offers and then to finalise the offer keeping in view the valuation made and also additional amount if any available by disposal of the property. At the same time, if the offers are not received of the amount of the upset price or if the authority finds that the offers received are at very lower price, it may decide not to accept any offer and to make a fresh attempt for disposal of the property. As such contingencies are yet to arise, I find it proper to leave the matter at that stage without concluding on the said aspects.
Concerning to the impugned order, in view of the aforesaid fact situation and more particularly that the decision of the liquidator is in ex facie breach of the settled norms for disposal of the public property, and it is satisfactorily demonstrated before this Court that the same is to result into huge loss to the public money of about Rs.20 Crores, the same cannot be sustained in the eye of law. It is coupled with the circumstance that the Additional Registrar (Appeal) has exercised the suo motu powers and in appellate jurisdiction the decision is stayed. The most important aspect is that the beneficiary of the order, respondent No.4 herein, as recorded hereinabove, has also declared for abandonment his rights pursuant to the said order except for the refund of the amount already paid with the reasonable interest. Therefore, the impugned order of the liquidator in any case deserves to be quashed and suitable directions deserves to be issued with a view to see that the property may be made available for the Sangh for realization of the maximum amount after following the settled norms for disposal of the public property.
Thereafter, the following directions were issued by this Court in the said petition:
19. Hence, the following orders:
The impugned order (Annexure-A) passed by the respondent No.3 is quashed and set aside.
The declaration of the respondent No.4 for abandoning all rights, if any, pursuant to the impugned order after passing of the impugned order on account of the registered Agreement to Sell and Supplementary Agreement is accepted. It is clarified that as a consequence thereof, the Agreement to Sale and Supplementary Agreement shall stand cancelled and the land shall remain in title and possession of the Sangh only.
The respondent No.4 in furtherance to the said declaration shall also withdraw the proceedings before the State Government of Revision No.43/08 and shall also withdraw the Civil Suit No. 21/08 within one week from today. In the event, there is failure on the part of the respondent No.4, for withdrawal, it would also be open to the State Authorities including the liquidator to place the copy of this order in the proceedings of the revision and of the Suit for disposal of such proceedings.
The respondent No.3 shall undertake the fresh procedure for disposal of the property in question by giving public advertisement in the newspaper having wide circulation for inviting offer of the interested parties. The upset price of the property shall be fixed at Rs.36.51 Crore at the rate of Rs.720/- per sq. mtr.
The offer of the respondent No.4 shall be considered at Rs.340/- per ft. for Rs.16.99 Crore and it would also be open to the respondent No.4 to submit a fresh offer by by revising the earlier offer. At that time, the requisite amount of EMD will be required to be deposited by the respondent No.4 minus the amount of Rs.51 Lakhs already lying with the respondent No.3.
The offer of the petitioner shall also be considered at Rs.400/- per sq.ft., total Rs.20.17 Crore. It would also be open to the petitioners to revise the offer, but at that stage, the petitioner will be required to deposit the requisite amount of Earnest Money Deposit (EMD) minus (-) the amount of Rs.1 Crore which is already deposited by him pending the petition.
The amount of Rs.1 Crore which is deposited by the petitioners, shall be transmitted by the office of this Court respondent No.3 for consideration of the offer of the petitioner as per the earlier direction within two weeks from the receipt of the order.
The applicant of Civil Application No.5620/08 shall be at the liberty to deposit the amount of Rs.1 Crore with the respondent No.3 on or before 21.05.2008 by registering his offer at Rs.410/- per sq.ft. It would also be open to such applicant to revise the offer as and when the public advertisement is issued, at that stage, he will be required to deposit requisite EMD minus the amount of Rs.1 Crore already deposited.
The respondent No.3 shall undertake the exercise for disposal of the property in association with the officer not below the rank of Joint Registrar, who may be deputed by respondent No.3 for such purpose and without prior approval of the Registrar, Cooperative Societies, the offer of any party shall not be accepted by respondent No.3.
It will also be open to respondent No.3 in association with the officer who may be deputed by respondent No.2 to have the inter se bid amongst the highest offerers of the land in question and the sincere attempt shall be made to realise maximum amount of the property.
The aforesaid process shall be completed as early as possible preferably within a period of three months from the receipt of the order.
In the event the offer of the respondent No.4 is not accepted, the amount of Rs.51 Lakhs shall be returned to the petitioner together with interest at the rate 8% p.a. from 29.02.2008 till 14.05.2008 and such amount shall be returned within two weeks from the finalisation of the offer received.
In the event the offer of the petitioner or the applicant of Civil Application No.5620 of 2008 is also not accepted, the respondent No.3 shall return the amount of Rs.1 Crore deposited by the petitioners and by the applicant of Civil Application No.5620 of 2008 is so deposited, within two weeks from the finalisation of the offer.
The pertinent aspect is that the price of the property as per the valuation of GITCO was recorded as that of Rs.36.51 Crore and the liquidator had to undertake the exercise for disposal of the property in association with the officer not below the rank of Joint Registrar, Cooperative Societies and the offer was not be to be accepted without prior approval of the Registrar, Cooperative Societies. The opportunity was also given to the offerer to submit his offer inter se bid, amongst the highest offerer was also made permissible with a view to realise the maximum amount of the property. As the directions are reproduced hereinabove, no much discussion may be necessary.
It appears that thereafter, pursuant to the aforesaid directions issued by this Court, the liquidator did publish the advertisement in the newspaper inviting the offer of the interested parties and the advertisement is produced at Annexure-B which inter alia refers to the proceedings being undertaken pursuant to the direction issued by this Court in Special Civil Application No. 5481/08 and the offers were also invited on as is where is basis . The respondent No.7 of Misc.Civil Application No.2445/08 and the petitioners of Special Civil Application No.12275/08 viz. Ashapura Arcadia Logistics Pvt. Ltd. (hereinafter referred to as the highest offerer/the petitioners of Special Civil Application No.12275/08 ) submitted offer on 04.08.2008 for an amount of Rs.36.51 Crores and as per the conditions of the tender/offer, Rs.1.81 Crore was also deposited by the highest offerer with the Society. The condition of the tender/bid inter alia provided for sale of the property on as is where is basis coupled with Condition No.11 that the offerer has to verify the position of the land as it exist and the liquidator will not be made responsible for clear title or any encumbrance over the land. It was also expressly provided that after the acceptance of the offer by the Registrar, Cooperative Societies within a period of 7 days from the communication, the offerer had to deposit 25% of the amount with the liquidator and after undergoing the necessary formalities as per law, the possession be handed over and the remaining amount shall be paid within three months. It was expressly provided, English translation of which can be extracted as under:
If there is failure to deposit the remaining amount within stipulated time limit, without intimation, the authorised officer shall have the power to forfeit the amount deposited and cancel the tender/offer.
It appears that thereafter, the offerers were also called for raising the offer by way of negotiation, and the offer of the highest offerer was accepted. Consequently, the liquidator of the Society forwarded the proposal to the Registrar for acceptance of the approval of the offer, which was granted and the highest offerer was also intimated for deposit of the remaining amount so as to meet with the conditions of depositing 25% of the offered price. Accordingly, the highest offer had to deposit Rs.7,29,87,750/- within a period of 7 days from the communication by the liquidator.
It appears that somehow or other, with a view to back out from the offer, and to create a platform for litigating, though it was not expressly provided as per the terms and conditions of the tender agreement, the highest offerer through advocate addressed correspondence calling upon the Society to supply a copy of the title documents etc. At that stage, once again with a view to stall the proceedings for disposal of the property, which was being held pursuant to the direction issued by this Court, it appears that Civil Suit being Regular Civil Suit No.425/08 has been filed by one Dilipkumar H.Barai for the declaration and perpetual injunction contending inter alia that the process is not being undertaken in a transparent manner as directed by this Court and the direction of this Court is sought to be bypassed by the liquidator and the action of inviting offer and acceptance of the offer of respondent No.3 therein who is the highest offerer herein, is illegal and therefore, the prayers were made in the Suit that the holding of the auction and the procedure undertaken in favour of the highest offerer be declared as null and void and further directions be issued to undertake the process of sale in a transparent manner and it was also prayed that until the aforesaid process is completed, no further transaction be entered into between the Society and the highest offerer. In the said Suit, the application for temporary injunction was also submitted for prohibitory order against the liquidator for entering into any kind of transaction or handing over of the possession with the highest offerer. The learned Civil Judge appears to have entertained the Suit and granted ex parte injunction by way of mechanical exercise of power on 18.08.2008, whose english meaning can be extracted as under:
The submissions of both the sides are considered. No reply has been submitted for the present. Hence, it is ordered to maintain status quo. After the reply is submitted, the merits shall be examined by appropriate decision. Until the reply is submitted, it is directed to maintain status quo by the present order The pertinent aspect is that the plaintiff of the said Suit has nowhere submitted his willingness to purchase the property at a particular price by stating the amount of his offer or otherwise specifically and the principal grievance raised is about the holding of the auction in contravention to the order passed by this Court. The aforesaid shows that by resorting to the proceedings of the Suit, the attempt on the part of the plaintiff of the Suit is to not only interfere in the process for implementation of the order of this Court, but is to extend the benefit to the highest offerer by making the matter as subjudice and further to shield him from enforcement of the direction to deposit the remaining amount of 25% after acceptance of the offer by the Registrar and also to stall the further action for forfeiture of the amount deposited by the highest offerer. Such an initiation of the proceedings by way of the aforesaid Suit, keeping in view all the facts and circumstances of the case as stated hereinabove and as may be referred to hereinafter goes to show that not only the Civil Court had no jurisdiction or authority to hear the complaint against the proper implementation of the order passed by this Court, but it has been rather with a view to create a stalemate for implementation of the order of this Court by creating hindrance under the guise of invoking the power of the Civil Court. It further appears that the attempt by invoking the jurisdiction of the Civil Court could be termed as only by way of ingenuine devise not only by misuse of the process of law but also by creating an obstruction in the proper implementation of the order of this Court and consequently, to create a shield against the future action for forfeiture of the amount in favour of defendant No.3 therein, the highest offerer.
Under these circumstances, the Society through the liquidator has approached to this Court by preferring MCA No.2445/08 with the prayer to declare that the highest offerer be directed to deposit the amount as per the tender condition and this Court may declare that the proceeding of Civil Suit in Regular Civil Suit No. 425/08 against the Society is without jurisdiction and the order dated 18.08.2008 of status quo granted by the Civil Court be quashed and set aside. This Court at the initial state in the said Misc.Civil Application issued notice and did observe that the Society who is the applicant before this Court shall be at the liberty to seek adjournment in the Civil Suit. At that stage, the defendant No.3 of the Suit/highest offerer possibly having realised that the High Court may interfere with the action of the Civil Court for entertainment of the Suit and if the order of status quo is vacated or set aside, as was granted by the Civil Court operating to its benefit, the consequence may arise for forfeiture of the amount deposited by the highest offerer and therefore, Special Civil Application No. 12275/08 has been filed by the highest offerer for the relief inter alia to challenge the notification of the State Government continuing with the liquidation proceedings and has prayed for a declaration that the liquidation proceedings have been terminated and it is also prayed by the highest offer who is the petitioner of Special Civil Application No. 12275/08 to direct the Society or the liquidator to supply the documents before taking further action in the proceedings of the land bearing Survey No.1522 and Survey No.221 situated at Jamnagar(the property which is the subject matter). As this Court was after hearing the learned advocate appearing for respective parties in MCA No. 2445/08 was to proceed for passing the order on 30.09.2008, it was submitted by the learned counsel for the highest offerer that a substantive writ petition is filed. Therefore, on 30.09.2008, the following order was passed:
1. Mr. Sandip Shah, learned counsel of the respondent No.7 states that he has filed Special Civil Application (Stamp) No.11894 of 2008 for challenging the action of the liquidator for disposal of the property by auction, which is the subject matter of the Civil Suit preferred by the respondent No.6.
2. Hence, office to place above referred Special Civil Application with this Civil Application on first board on 7.10.2008.
Thereafter, the learned advocate appearing for both the sides, viz. Shirish Joshi for the Society, Mr. Trivedi, learned Advocate General with Ms. Sangeeta Visher, learned AGP for the State Authorities, Mr.Jani for the first offer, Mr.G.M.Joshi for the plaintiff before the Civil Court, and Mr. Sandeep Shah for the highest offer appearing for the respective parties on respective sides were heard at length for final disposal.
On 07.10.2008, following order was passed.
1. The arguments are concluded. During the course of the hearing, upon the query of the Court as to whether the petitioner is desirous to deposit the remaining amount of Rs.7,29,87,750/- to show the genuineness on his part of his offer with this Court, for which otherwise the period has expired on 18.8.2008, Mr.Shah, learned Counsel, in response thereto, stated that he will be able to make positive statement on 13th October, 2008.
2. Mr.Gautam Joshi, learned Counsel appearing for opponent No.6 in the MCA, original plaintiff, also declared before the Court that if the property, which is the subject matter of the petition is to be acquired by the offerer with the title, his client would be in a position to declare before the Court the quantum of his offer on 13.10.2008 and the requisite deposit of 25% within some reasonable period.
3. The arguments of both sides are otherwise concluded. Hence, S O to 13th October, 2008 for dictation orders.
4. The proceedings before the Civil Court being Civil Suit No.425 of 2008 shall remain stayed until further orders. Direct service is permitted.
It appears that thereafter, before this Court proceeded for dictation of the order, the highest offerer, the petitioners of Special Civil Application No.12275/08 submitted an application for amendment being Civil Application No.12035/08, which as per the order passed by this Court today has been granted. The pertinent aspect is that, no willingness is shown by the highest offerer to deposit the amount of Rs.7,29,87,750/- with this Court to show the genuineness on his part of his offer submitted before the liquidator nor Mr. Gautam Joshi, appearing for the plaintiff in the Suit before the Civil Court has declared any offer to purchased the land, if the title is to be acquired by the offerer ultimately. On the contrary, a lame excuse appears to have been represented by the highest offerer as well as by the plaintiff of the Suit before the Civil Court inasmuch as the highest offer through Mr. Sandeep Shah declared before the Court that unless all title documents are supplied and verified by his client, the highest offerer is not desirous to deposit the amount of Rs.7,29,87,750/- so as to meet with the condition to deposit 25% of the requisite amount, whereas on behalf of the plaintiff of the Suit before the Civil Court, Mr. Gautam Joshi declared that no instruction is received by him from his client.
Therefore, it is apparent that there is no willingness on the part of the highest offerer to deposit the remaining amount and thereby, to comply with the condition which would save him from forfeiture of the amount already deposited. In the same manner, it is also apparent that the attempt on the part of the original plaintiff is not to purchase the property by submitting the offer and thereby to pursue litigation in bonafide, but is with an intention to create a hindrance and obstruction in proper implementation of the order of this Court and was intended to create an ingenuine shield in favour of respondent No.3-defendant No.3 therein, the highest offerer against the further action by the liquidator which may include the forfeiture of the amount already deposited by the highest offer with the liquidator.
Mr.Joshi, learned counsel appearing for the Society, at the bar when this Court proceeded to dictate the order, made statement before the Court that another Suit is filed by Kamlaben Hirjibhai Shah being Regular Civil Suit No.531/08 for the relief inter alia to declare that the defendant No.1 therein, the Society or the liquidator has no power to sell the land and no action be taken for disposal of the property by defendant No.3 who is the highest offerer or any other party and it is alleged that the possession of the Suit property is of the plaintiff therein and the defendant therein be restrained from entering over the property. He stated that the Civil Suit is filed and in the Civil Suit, application for temporary injunction is also filed for restraining the Society or the liquidator from interfering with the alleged possession of the plaintiff of the land therein. Since the said proceedings of the Civil Suit was not the part of the record, no further observations may be required about the merits or demerits of the Suit, but such can at the most be considered as an attempt made to invoke the jurisdiction of the Civil Court, which if entertained, may operate on the face of the order of this Court for directing the disposal of the property, more particularly when nothing prevented the very plaintiff to approach before this court by suitable application by way of modification or otherwise.
In support of the petition, Mr. Sandeep Shah, learned counsel appearing for the petitioner contended that the liquidator was exercising the power in liquidation proceedings and he submitted that as per Section 114 of the Act, the proceedings are required to be concluded within a period of 7 years and if not concluded, the liquidation proceedings are deemed as concluded and terminated and therefore, the liquidator will have no authority to function as the liquidator of the Society. He also submitted that the notification dated 23.07.2008 (Annexure-A to the petition) for granting exemption under Section 161 of the Act to the Society and thereby to grant extension for completion of the liquidation proceeding is also unauthorised, arbitrary and illegal. In support of his contention, he relied upon the decision of this Court in the case of Bhavnagar Cooperative Bank Ltd. Vs. H.M.Joshi & Ors. reported in 1985(2) GLR 1087 by contending that the State Government cannot take resort to the provisions of Section 161 of the Act for continuing with the liquidation proceedings after 7 years. He also relied upon the another decision of this Court in the case of Bhavnagar District Cooperative Bank Ltd. Vs. Government of Gujarat and contended that the exercise of power by the Government under Section 161 of the Act for extending the period of completion of the liquidation proceedings can be said as against the legislative intention and illegal and without authority. Therefore, it was submitted that if the liquidator has no authority to continue with the liquidation proceedings and the liquidator proceedings are deemed as terminated and concluded, all proceedings of auction will be without authority under law and therefore, this Court may quash the notification and may declare that the liquidation proceedings are terminated. It was also submitted by Mr.Shah that the respondent authority be directed to supply the title documents to the petitioner before taking any further action in connection with the auction proceedings since it is required for the respondent authority to supply all the title documents to the petitioner and it cannot insist for deposit of the remaining amount.
As observed earlier, the petitioner is the person who has submitted the highest offer and the locus or the status of the petitioner is only as one of the offerer interested to buy the property of the Society in liquidation. Neither the petitioner is a member of the Society nor the creditor in the liquidation proceedings. If the exemption is not granted by the State Government under Section 161 of the Act, the proceedings of liquidation might come to an end, but if the exemption has been granted by the State Government to save the liquidation proceedings, with a view to see that the Society is in a position to realise the money which may be available to its creditor or shareholders for distribution, such an exercise of the power by the State Government under Section 161 of the Act cannot be termed as arbitrary or unreasonable. Further, the power assigned by the legislature to the State Government under Section 161 of the Act can be termed as by way of subordinate legislation and such can be exercised for achieving the object of the Act. The primary object in any liquidation proceeding is to ensure that the properties of the Society which are liquidated and thereafter, the monies are distributed amongst the creditors as per priority and also to the shareholders towards their investment made in the Society subject to the availability of the fund. It appears that the exercise of the power by the State Government in the impugned order is with a view to save the liquidation proceedings and thereby, to continue the same so as to enable the Society to sell the property and realise the money which may be made available to the creditors. Such an exercise of the power by the State Government under Section 161 of the Act can be said to achieve the object of the Act and therefore, the notification (Annexure-A) cannot be termed as without authority or against the legislative intention as sought to be canvassed on behalf of the petitioner.
The attempt on the part of the learned counsel for the petitioner to rely upon the above referred Judgement of this Court in the case of Bhavnagar District Cooperative Bank Ltd. (supra) is ill-founded and cannot be countenanced because the observations in any decision of this Court cannot be read in absolute like a law but to be read in context to the facts of the case. If the decision in the case of Bhavnagar District Cooperative Bank Ltd. Vs. H.M.Joshi is considered, in the said case, an order was already passed by the Registrar prior to exercise of the power by the State Government under Section 161 of the Act that the proceedings of liquidation are terminated and the registration certificate is also cancelled as per the order dated 01.09.1976 and thereafter, there was exercise of the power by the State Government under Section 161 of the Act and therefore, the observations were made by this Court in the aforesaid decision. Such is not the fact situation in the present case. There is no order passed by the Registrar for termination of the proceedings or cancellation of the Certificate of the Society. Therefore, the observations made therein cannot be made applicable in the present case on the ground as sought to be canvassed.
In the case of Bhavnagar District Cooperative Bank Ltd. Vs. State of Gujarat, the exercise of the power by the State Government was found as undertaken in retroactive manner and to have its retrospective effect, by the Division Bench of this Court and therefore, the observations were made, which is also not the fact situation in the present case.
The attempt on the part of the learned counsel for the petitioner Mr. Sandeep Shah was that even in the present case, the power is exercised with retrospective effect by the State Government and therefore, the same analogy may apply.
It appears that in the case before the Bhavnagar District Cooperative Bank Vs. State of Gujarat, the State Government had not exercised the power and the petitioner approached to this Court for issuing mandamus to the State Government to exercise the power with retrospective effect and while declining that relief, observations were made. In the present case, the situation is otherwise and therefore, the attempt as sought to be made cannot be countenanced.
In any case, the petitioner is the person who accepted the authority of liquidator on the premise that the liquidation proceeding subsist and also submitted offer. If the liquidation proceedings are maintained, the petitioner would not be adversely affected. If the petitioner is desirous to assail the authority of the liquidator on the ground that the proceedings are terminated so as to create a platform for withdrawal of his offer, such can not be entertained on equitable consideration.
Therefore, both the contentions of the learned counsel for the petitioner cannot be accepted.
Concerning to the last prayer to give direction to the respondent Authority to supply the title documents to the petitioner, if considered, it appears that in a matter of submission of the tender, the rights of the parties are to be governed by the terms and conditions of the tender agreement. The condition of the tender which is a part of the record in the proceeding of Misc. Civil Application (Annexure-C) onwards shows that there is an admission that the offerers have read carefully all the terms and conditions, rules and regulations, and they are acceptable and binding to it. The conditions which are on page 41 in the proceedings of Misc. Civil Application did not provide for such a right available to the highest offerer whose offer is accepted, prior to the deposit of 25% of the requisite amount. The reference to the legal formalities are only after such amount of 25% is deposited but before the Sale Deed is executed, at that time when the possession of the property is to be handed over. Therefore, if the said contention raised on behalf of the petitioner is accepted, the consequence would be to allow the petitioner to back out from the agreed condition for which he had to abide by and such condition was offered to all the tenderer who submitted their offer. Therefore, such prayer cannot be entertained. The aforesaid is coupled with the submission of the learned counsel for the Society that the actual title documents are inspected by the petitioner and therefore, that question also does not arise.
In view of the aforesaid, Special Civil Application No. 12275/08 lacks merit and deserves to be dismissed.
As observed in the earlier paragraph in the present order, the invoking of the power by the plaintiff of the Suit is by way of an attempt to create a hurdle in the enforcement of the order of this Court and in any case, the Civil court has no authority to examine the question as to whether the order of this Court is properly implemented or not and such power, if any, is with this Court only. The judicial discipline demands that when it is a question of implementation of the order of this Court, the Civil Court should refrain itself from examining such questions and relegate the parties to approach before this Court which has passed the order. If such a course is not made operative, it would not only lose the very sanctity of the order, but it would also create a situation of uncertainty and no uniformity in the orders of the judicial forum. It may also result into ambiguous situation in proper implementation of the order. Further, in any case, requisite statutory notice under Section 167 of the Act is not given. Prior permission of the Registrar under Section 112 of the Act is not obtained before filing of the Suit before the Civil Court.
Therefore, keeping in view the facts and circumstances of the present case, I am inclined to hold that the Civil Court had no jurisdiction or authority to entertain the Suit, which is essentially for proper implementation of the order of this Court nor the Civil Court had any power, jurisdiction or authority to pass an order of status quo resulting into creating a situation of stalemate for the implementation of the order of this Court. If such a jurisdiction with the Civil Court is read, it may not only frustrate the sanctity of the order, but it would fly against the order of a constitutional Court which can never be in the interest of maintenance of propriety and proper implementation of the orders of the higher forum which in the present case is this Court exercising the power under Article 226 of the Constitution.
Hence, the impugned action on the part of the Civil Court in entertaining of the Suit and the grant of interim injunction by entertaining the application for temporary injunction can be said as without authority, competence and jurisdiction and deserves to be quashed and set aside.
The attempt was made by the learned counsel for the original plaintiff Mr. Gautam Joshi to contend that once this Court has disposed of the Special Civil Application, the Court becomes functus officio and in his submission, this Court may not be in a position to retain the jurisdiction for entertaining writ against invoking of the power by the Civil Court by his client. Therefore, it was submitted that the Misc. Civil Application may not be maintainable or this Court may decline the exercise of power at the instance of the Society who is defendant in the Suit.
In my view, when the judicial orders are passed they are meant to see that they are implemented in its proper spirit and ultimate purpose for which the exercise of the power was intended by this Court is achieved and no ingenuine device by creating hurdle on one ground or other is permitted. If this Court has passed the order under Article 226 of the Constitution, and any attempt is made by any person to create obstacle, which is apparent on the face of the record and thereby to frustrate the order of this Court, and if this Court fails to exercise the power or declines entertainment of the application, it may not only result into failing to discharge its constitutional obligation, but it would strike at the root of the enforcement of the orders passed by this Court and if the power is not exercised, it may result into a mockery of the judicial order by creating a gamut of litigation through ingenuine device, may be at the instance of the parties to the proceedings or at the instance of a party who has the only intention to abuse the process of law and thereby to create an obstacle in the smooth administration in the course of justice by proper implementation of the order.
Further, it also deserves to be recorded that the property is of a Society which is though not a State within the strict meaning of Article 12 of the Constitution but is a Telibia Utpadak District Level Society, where huge public interest including the Government money are involved. The sale of the property and the realisation of the money is to result into larger benefit of the public at large and more particularly the class of the creditors including Government and the shareholders who are primary level cooperative Societies. If any room is left for entertainment of ingenuine device, the consequence may result into causing huge loss to the public money. Therefore, under these circumstances, the contention raised on behalf of the learned counsel appearing for the original plaintiff cannot be accepted, but at the same time, when it has come to the notice of this Court that by way of misuse and abuse of process of law, the attempt is made on the part of the original plaintiff to crate obstruction for implementation of the order of this Court, it would invite further consequences also and the matter may not end there. Since for initiation of the proceedings of contempt, the jurisdiction as per the roaster vests to the Division Bench, this Court may not be in a position in conclude on the said aspects, but the reference may be required to be made to the appropriate bench of this Court.
In view of the above, Special Civil Application No. 12275/08 is dismissed. Misc. Civil Application No. 2445/08 is allowed to the extent that the proceedings of the Civil Suit No.425/08 pending before the Court of the Additional Senior Civil Judge (SD) are quashed and set aside including the interim application and the interim order passed therein.
It is further observed that the liquidator of the Society, applicant herein, shall be at the liberty to proceed in accordance with law by way of implementation of the order of this Court passed in Special Civil Application No. 5481/08 dated 14.05.2008. Because of the present litigation of invoking of the power before the Civil Court and Misc. Civil Application before this Court and separate Special Civil Application, it would be open to the liquidator to proceed for further action in accordance with law including the forfeiture of the deposit of the offerer, if conditions are not complied and for further attempt by inviting offer for disposing of the property in accordance with law.
The plaintiff of Civil Suit No.425/08 who is respondent No.6 herein shall submit his explanation as to why appropriate order should not be passed under the Contempt of Court Act for abuse of the process of law and creating hurdle in the implementation of the order of this Court. Such explanation shall be submitted within a period on or before the 20.11.2008 for initiation of the action under the Contempt of Court Act.
Mr.Shah, learned counsel for the petitioner of Special Civil Application No.12275/08 prayed that the operation of the present order be stayed for sometime so as to enable his client to approach before the higher forum.
Considering the facts and circumstances, as no order whatsoever has been passed in Special Civil Application No. 12275/08, either protecting by way of an interim order or otherwise, and this Court has found that the petition is not entertained and has been rejected, such request is declined.
(JAYANT PATEL, J.) *bjoy Top