Delhi District Court
Mrs. Rama Arora vs Rita Khanna on 15 March, 2017
IN THE COURT OF MS. NEELOFER ABIDA PERVEEN,
ADDITIONAL DISTRICT JUDGE04, SOUTHEAST, SAKET
COURTS, NEW DELHI
Presiding Officer: Ms. Neelofer Abida Perveen, ADJ04
Case no. 11706/16
In the matter of:
Mrs. Rama Arora
W/o Sh. Subhash Arora
R/o B10, Ground Floor,
Greater Kailash EnclaveII,
New Delhi48
Through her GPA Holder
Sh. Subhash Arora
S/o Sh. J.R. Arora
R/o B10, Ground Floor,
Greater Kailash EnclaveII,
New Delhi48 ..........Plaintiffs.
V/s
1. Rita Khanna
D/o Late Sh. R.N. Bakshi
R/o C102, Defence Colony, New Delhi
2. Mrs. Mukta Bakshi
W/o Late Sh. R.N. Bakshi
R/o C102, Defence Colony, New Delhi
3. Ms. Reena Kuyper
D/o Late Sh. R.N. Bakshi
R/o 249 Pennington Rocky Hill road,
Pennington, New Jersey08543, USA
4. Mrs. Namita Pradhan
W/o Sh. G.B. Pradhan
R/o A1/148, Safdarjang Enclave,
New Delhi29
5. Mr. Amit Khanna
S/o Late Sh. J.L. Khanna
R/o 301, SEA Star, Balraj Sahni Marg
Juhu, Mumbai40049 .........Defendants.
CS No. 11706/16 Rama Arora V/s Rita Khanna Page 1 of 41
Date of institution : 08.09.2014
Date on which order was reserved : 15.03.2017
Date of pronouncement of the order : 15.03.2017
ORDER
Vide this order, I shall decide the two applications filed by the defendants seeking rejection of the plaint u/o 7 Rule 11.
1. Two separate applications u/o 7 Rule 11 are filed, one is preferred by defendants 1 and 2 registered as IA No. 15583/13 and the other is filed on behalf of defendants 4 and 5. The defendants seek rejection of the plaint on the ground that the suit as filed by the plaintiff is a glaring example of gross abuse and misuse of process of law and is liable to be dismissed forthwith. As per the allegations in the plaint itself a suit for partition was filed by defendant no. 1 against defendant no. 2 and 3 bearing CS(OS) No. 625/2012. The disputes were referred to mediation and a settlement agreement dated 03.07.2013 was entered into between the said parties agreeing to sell the suit property bearing No. C102, Defence Colony, New Delhi 110024 measuring 325 sq. yards. Defendant no. 1 agreed to take 46% share of the sale proceeds whereas defendants no. 2 and 3 agreed to take 27% each from the sale proceeds. For undertaking the sale, the Hon'ble Court vide order dated 18.07.2013 appointed two nominees, namely former Chief Justice(Retd.) Mukul Mudgal and Justice (Retd.) Usha Mehra. The plaintiff was the highest bidder for Rs. 24.60 crores and in accordance with the terms and conditions of sale deposited, by way of three Pay Orders, a sum of Rs. 1 crores in the names of CS No. 11706/16 Rama Arora V/s Rita Khanna Page 2 of 41 defendants no. 1 to 3. The plaintiff through her husband and GPA Sh. Subhash Arora vide letter dated 09.09.2013 withdrew their offer and categorically stated that they were no longer interested in the said bid transaction and had requested for refund of the sum of Rs. 1 crores. Since the plaintiff did not agree to deposit balance 20% amount, the Court Nominees in the proceedings held on 09.09.2013 canceleld the bid of the plaintiff and directed that the amount of Rs. 1 crore be forfeited. Thereafter the counsel for the parties requested the Court Nominees to contact the next highest bidder to know whether they were still interested in purchasing the property. Sequel thereto the property was sold to the defendant no. 4 and 5 by virtue of a sale deed dated 09.10.2013 for a total sale consideration of Rs. 22.50 crores and the possession of the property was handed over at site to defendants No. 4 and 5. The sale deed stood duly registered at Sub RegistrarV, New Delhi at Serial No. 9000 in Book No. 1, volume No. 13003 on pages 162 to 175 on 14.10.2013. In the meantime, Sh. Subhash Arora, as Attorney of the plaintiff, lodged an NCR on 09.09.2013 regarding loss of the aforesaid 3 pay orders on 09.09.2013. The Pay Orders for Rs. 1 crores were returned unpaid by Kotak Mahindra Bank Ltd. when presented for encashment since they had been reported lost. It was in these circumstances that I.A. No. 15583/2013 was filed by defendants no. 1 to 3 for directions to Sh. Subhash Arora and Kotak Mahindra Bank Ltd. to deposit the amount of Rs. 1 crore in the Hon'ble Court. In the meantime the Pay Order for Rs. 46.00 lacs in favour of defendant no. 1 was encashed. The Hon'ble Court vide order dated 27.11.2013, after hearing the parties including the Counsel for CS No. 11706/16 Rama Arora V/s Rita Khanna Page 3 of 41 the plaintiff, directed Kotak Mahindra Bank Ltd. to cancel the pay orders of Rs. 27 lacs each in the name of defendants no. 2 and 3 and issue Bankers Cheque in their favour. The Hon'ble Court further directed the SHO to examine whether a cognizable offence stood made out against Sh. Subhas Arora and take appropriate steps in that regard. The application was allowed subject to cost of Rs. 50,000/ to be paid by Sh. Subhash Arora. It was against the said order dated 27.11.2013 that an FAO(OS) 577/2013 had been preferred by the plaintiff herein whereunder the liberty being claimed to institute the present suit for the reliefs as claimed is stated to have been passed. That, the liberty if any, to the plaintiff given by the Hon'ble Division Bench was only regarding filing of appropriate proceeding with regard to claim of Rs. 1 crore which has been forfeited. Cancellation of the bid of the plaintiff or for that matter the sale in favour of defendants no. 4 and 5 was never in question before any forum. No application whatsoever was ever filed by the plaintiff in CS(OS) 625/2012 challenging the cancellation of his bid or for that matter for the cancellation of the sale deed dated 09.10.2013 signed and executed by defendants no. 1 to 3 in favour of defendants no. 4 and 5. There is thus no cause of action for filing the present suit which is liable to be dismissed with exemplary costs. That the suit as filed against is wholly misconceived, in as much as the present suit is the second round of litigation wherein the plaintiff seeks adjudication of the issues which she has, admittedly, already contested in CS(OS) No. 625 of 2012 and the same have been duly adjudicated by a court of competent jurisdiction i.e., the Hon'ble High Court of Delhi vide CS No. 11706/16 Rama Arora V/s Rita Khanna Page 4 of 41 Order dated 27.11.2013. It was held in the order dated 27.11.2013 that there was no valid justification for the plaintiff herein for not depositing balance amount of Rs. 3.90 crores towards the 20% of sale consideration and as the earnest money of Rs. 1 crore was liable to be forfeited. It was further recorded in the Order dated 27.11.2013 that the suit property was sold to the second highest bidder i.e., defendant no. 4 and 5 for Rs. 22.50 crores in as much as after the bidding process was over, Rs. 22.50 crores was the best price which the property could fetch. Findings of this Hon'ble Court in the Order dated 27.11.2013 in CS(OS) No. 625 of 2012 have attained finality when the Appeal bearing FA(OS) No. 577 of 2013 against the same was dismissed as withdrawn on 13.12.2013. Even the suit bearing CS(OS) No. 625 of 2012 stands disposed off on 28.03.2014 as nothing survived in the said proceedings. Hence the present suit is barred by the principles of resjudicata as envisaged under Section 11 of the Code of Civil Procedure, 1908 and the same is liable to be dismissed. That Section 47, CPC mandates that all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit. Further, as per Order 21 Rule 92 of the Code of Civil Procedure, 1908 no suit lies against the order of confirmation of sale. In the present case, no objections were raised by the plaintiff to the cancellation of her bid and confirmation of sale of the suit property in favour of defendants no. 4 and 5. It was held in the Order dated 27.11.2013 that there was no valid justification for CS No. 11706/16 Rama Arora V/s Rita Khanna Page 5 of 41 the plaintiff herein for not depositing balance amount of Rs. 3.90 crores towards the 20% of sale consideration and the earnest money of Rs. 1 crores was liable to be forfeited. It was further recorded in the Order dated 27.11.2013 that the suit property was sold to the second highest bidder i.e., defendants no. 4 and 5 for Rs. 22.50 crores in as much as after the bidding process was over, Rs. 22.50 crores was the best price which the property could fetch. An appeal preferred by the plaintiff was also dismissed vide order dated 13.12.2013 passed in FA(OS) No. 577 of 2013. Hence, the cancellation of bid of the plaintiff and sale of the suit property in favour of the defendants no. 4 and 5 has attained finality. The sale of a property through Court auction has to be considered sacrosanct and the same is not open to challenge in any other proceedings. Hence, the present suit is liable to be dismissed. That the suit as filed is not maintainable in as much as the plaintiff in the entire suit has not claimed any right, title or interest in the suit property and has nowhere disclosed as to what right, title or interest does he have in the suit property. The plaintiff seeks cancellation of the sale of the suit property and a decree of cancellation of the sale deed dated 09.10.2013. The plaintiff has no right, title or interest to pray for cancellation of the sale deed dated 09.10.2013 signed and executed by defendants no. 1 to 3 the erstwhile owners in favour of defendants no. 4 and 5 for valuable consideration. The plaintiff in the entire suit has nowhere disclosed as to what right, title or interest he has in the suit property. The plaintiff is neither the executant of the said sale deed nor is he claiming any right in the said property and as such the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 6 of 41 question of seeking any cancellation of an instrument of which he is not a party simply does not arise. In so far as Prayers(c) and (d), are concerned, the same are not maintainable in as much as once the plaintiff claims recovery of Rupees one crore only, there does not arise any cause of action for the reliefs of cancellation as prayed. Plaintiff has effectively admitted that the sale of the suit property was valid and the same has attained finality. Further, even the Order dated 13.12.2013 passed in FA(OS) No. 577 of 2013 has given the plaintiff only a limited liberty to institute appropriate proceedings with regard to his claim of Rupee one crore only, which has been forfeited. Hence the present suit is liable to be dismissed under Order VII Rule 11, Code of Civil Procedure, 1908. That the suit as filed is not maintainable in as much as in so far as the reliefs of cancellation sale of the suit property and cancellation of the sale deed dated 09.10.2013 as prayed in Prayers(c) and (d), in view of the provisions of the Specific Reliefs Act, 1963. Prayer Clause (c) seeks cancellation of sale of the sent property, whereas as per Section 31 of the Specific Reliefs Act, 1963, cancellation can be sought/granted only for a written instrument and not the act per se. As such the suit for cancellation of the sale of the suit property, concluded between the defendants No. 1 to 3 and the defendants no. 4 and 5, is not maintainable and the same is liable to be dismissed. So far as Prayer Clause (d) seeking cancellation of Sale deed dated 09.10.2013 is concerned, as per Section 31 of the Specific Reliefs Act, 1963, cancellation can be sought/ granted of a written instrument only if the same is void or voidable against the person seeking such cancellation.
CS No. 11706/16 Rama Arora V/s Rita Khanna Page 7 of 41The entire plaint, as filed, does not contain even a whisper as to how the impugned SaleDeed dated 09.10.2013 is either void or voidable against the plaintiff. Under these circumstances the present suit does not disclose any cause of action.
2. Ld. counsel for the plaintiff/ non applicant on the other hand contends that the suit for declaration and injunction alongwith recovery of money and damages is filed in terms of the liberty granted by Hon'ble High Court of Delhi vide order dated 13.12.2013 passed in FAO (OS) 577 of 2013. Ld. counsel for the plaintiff submits that there is no embargo upon the institution of the suit for the reliefs claimed under any law and every action of civil nature is maintainable in terms of section 9 of the CPC unless specifically barred. Ld. Counsel further submits that in case the plaint is rejected at the threshold the plaintiff has no other remedy against the arbitrary action of the court nominees in forfeiting the amount of Rs. 1 crore deposited by the plaintiff in the course of CS(OS) no. 625 of 2012 and the plaintiff is rendered initially remedy less against the impugned act and order of the court Nominees. that the provisions of Section 47 CPC of order 21 CPC are not applicable as the sale of the immovable property was not in pursuance to the execution of any decree.
3. I have heard the submissions of the Ld. Counsels and perused the record with their able assistance.
4. It is now a settled proposition of law that the relevant facts which need to be looked into for deciding an application u/o 7 rule 11 are the averments in the plaint, only the averments in the plaint are the germane and the pleas taken by the defendant in the defense statement CS No. 11706/16 Rama Arora V/s Rita Khanna Page 8 of 41 would be wholly irrelevant at the stage of deciding the application u/o 7 rule 11. The courts at the outset are only to evaluate as to whether from the averments taken at their face value a real cause of action has been set up or something purely illusory has been stated or the suit is barred by the provisions of law and for the purposes a meaningful and not merely a formal reading of the plaint is required.
5. The plaintiff has instituted the present suit seeking the following reliefs against the defendants "a. Pass a decree of declaration that the order dated 09.09.2013 passed by court nominees forfeiting a sum of Rs. 1,00,000/ which was deposited by the plaintiff as earnest money at the auction sale of the property bearing plot no. C102, admeasuring 325 sq. yards, Defence Colony, New Delhi is nullity; and/ or b. Pass a decree for recovery of the amount of Rs. 1,00,000/ forfeited by the court nominees on 09.09.2013 and/ or;
c. Pass a decree of cancellation of the sale of the suit property bearing plot no. C102, admeasuring 325 sq. yards, Defence Colony, New Delhi concluded between the defendant no. 1 to 3 and defendant no. 4 and 5 ( second highest bidders); and/or d. Pass a decree of cancellation of the sale deed dated 09.10.2013 executed by the defendant no. 1, 2 and 3 in favour of defendant no. 4 and 5 (second highest bidders) in regard to the suit property bearing plot no. C102, CS No. 11706/16 Rama Arora V/s Rita Khanna Page 9 of 41 admeasuring 325 sq. yards, Defence Colony, New Delhi; and/or e. Grant costs of the suit in favour of the plaintiff and against the defendants; and/or f. Pass and such further order(s) which this Hon'ble Court seems fit and proper in the interest of justice."
6. The plaintiff seeks a decree of declaration in his favour and against the defendants that the order dated 09.09.2013 passed by Former Chief Justice (Retd.) Mukul Mudgal and Justice (Retd.) Uma Kumari acting as court nominees whereby a sum of Rs. 1 crore deposited by the plaintiff as earnest money at the auction sale of the property described as Plot No. C102, admeasuring 325 sq. yards, Defence Colony, New Delhi was ordered to be forfeited by the Court Nominees is a nullity.
The plaintiff contends and rightly so that the present suit has its genesis from CS(OS) 625/2012 filed by defendant no. 1 against defendant no. 2 and 3 seeking partition of property described as C102, Defence Colony, New Delhi 110024 .The claim for the reliefs sought is not premised on the cause of action as set up under CS(OS) 625/2012 but arises out of the proceedings of CS(OS) 625/2012 A suit for partition filed by the defendant no. 1 against the defendant no. 2 and 3 herein. What emerges from the pleadings of the plaintiff and the documents relied upon by the plaintiff under the present suit are that the parties to the CS(OS) 625/2012, i.e., defendants 1 to 3 herein were referred to mediation in the course of proceedings of the suit for partition and the dispute as involved under CS No. 11706/16 Rama Arora V/s Rita Khanna Page 10 of 41 the suit for partition was amicably resolved and the parties to the suit for partition arrived at a settlement that defendant no. 1 herein shall take a 46% share in the property described as C102, Defence Colony, New Delhi 110024 and the defendants no. 2 and 3 herein shall take 27 % share each in the aforestated property. The respective shares in the aforestated property were mutually determined by way of a settlement/ agreement and the Hon'ble Court in order to effect a partition of the aforestated property in accordance with the shares so determined (amongst the parties to the lis) ordered that the aforestated property be sold and the sale proceeds be apportioned in accordance with the shares settled and determined amongst the parties to CS(OS) 625/2012 the defendants no. 1 to 3 herein. In order to effect a sale of the property former Chief Justice (Retd.) Mukul Mudgal & Justice (Retd.) Uma Kumari were appointed as Court Nominees in the course of the proceedings in CS(OS) 625/2012 with the commission to effect a sale by public auction of the property described as C102, Defence Colony, New Delhi 110024 and apportion the sale proceeds amongst the three parties to the lis in accordance with the shares determined.
7. Vested with the said mandate the Court Nominees issued Notice for sale calling for offers for purchase of the property described as C102, Defence Colony, New Delhi 110024 to be submitted in sealed cover on 19.08.2013 with inspection at site fixed at 11.08.2013. The plaintiff has also filed copy of the Terms and Conditions of the sale. The relevant clauses of the Terms and Conditions are reproduced as under "2. The Intending Purchaser is required to satisfy CS No. 11706/16 Rama Arora V/s Rita Khanna Page 11 of 41 himself/ itself regarding the status, title, etc. of the property before submitting the offer. Original documents of title etc. can be inspected at C102, Defence Colony, New Delhi 110024 on August 11, 2013 between 10am to 5 pm. No queries shall be entertained after the submission of the offers.
3. Offers are to be made directly or through Authorized Representative, by interested parties as per "Format of Offer", in a sealed cover specifying the price offered (the offer amount) for the property along with 3( three) Bank Drafts/ Pay Orders drawn on a scheduled bank of Rs. 1 crore as the earnest money divided in 3 parts in favour of and in the ratio as given below
a) Rita Khanna (Rs. 46 lakhs)
b) Mukta Bakshi (Rs. 27 lakhs), and
c) Reena Kuyper ( Rs. 27 lakhs) to be delivered at Niti Bagh Club, Arbitration Room, New Delhi between 10.00 am to 2.00 pm on August 19, 2013
4. Selected intending purchaser(s) (at the sole discretion of the Court Nominees) shall be invited for negotiations. Intimation regarding date and time for negotiations shall be conveyed to the selected intending purchaser(s) by Court Nominees on August 19, 2013 itself. Amount deposited by those not selected, shall be returned to them along with the Pay Orders/ Drafts by Court Nominees CS No. 11706/16 Rama Arora V/s Rita Khanna Page 12 of 41 forthwith. If the selected Intending Purchasers do not turn up for negotiations, Rs. 10 lakhs shall stand forfeited out of the amount deposited as earnest money.
6. Inspection of the property will be provided by Sh. Madhu Sudan (representative of the Court Nominees) to be interested parties, on August 11, 2013 between 10 am to 5 pm. No requests for inspection will be entertained subsequent to the time mentioned herein.
7. The successful offer maker/ intending purchaser shall upon acceptance of the offer, deposit with the Court Nominee a sum equivalent to 20 % of the total sale consideration (after adjusting the initial amount of Rs. 1 crore deposited along with the offer) by way of 3 pay orders/ bank drafts of a scheduled bank in favour of and in the ratios mentioned hereabove. In case of default in the said deposit, the amount deposited with the initial offer shall stand forfeited.
8. The parties i.e., Rita Khanna, Mukta Bakshshi, Reena Kuyper (Sellers) and the selected intending purchaser shall execute an Agreement to Sell and thereafter a Sale Deed on the terms contained in the Draft Agreement to Sell as provided by the Court Nominees. The parties shall be bound by the terms of the said Agreement.
9. After aforesaid deposit of the 20% of the sale consideration by the selected purchaser with the Court Nominees, the balance 80% of the sale consideration CS No. 11706/16 Rama Arora V/s Rita Khanna Page 13 of 41 shall be required to be deposited within the time as stipulated by the Court Nominees in form of 3 pay order/ bank drafts of the scheduled bank drawn in favour of and in the ratios as mentioned hereinabove with the Court Nominees, failing which all amounts deposited by the purchaser shall stand forfeited and the defaulting purchaser shall not have any claim on any property or any part thereof and the sellers shall, apart from forfeiting the earnest amount, be free to deal with the property in any manner that they wish to."
8. The plaintiff comes into picture at this stage as the highest bidder in the auction sale of property described as C102, Defence Colony, New Delhi 110024 in pursuance to the notice for sale issued by the Court Nominees in CS(OS) 625/12. The plaintiff as such was not a party to the suit for partition, but was the highest bidder of the auction sale of the property to be partitioned, the defaulting purchaser if I may say so. As per the Terms and Conditions of the sale the plaintiff had deposited a sum of Rs. 1 crore and upon acceptance of the bid of the plaintiff by the Court Nominees, the plaintiff as per the terms and conditions was obligated to deposit 20% of the bid amount/ sale consideration with the Court Nominees after adjusting the initial or the earnest amount of Rs. 1 crore. The terms and conditions of the sale, the relevant clauses of which are reproduced supera in unequivocal terms lay down that in the event of the failure of the selected purchaser to deposit the 20% of the sale consideration, the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 14 of 41 initial amount of Rs. 1 crore shall stand forfeited. The amount of Rs. 1 crore was deposited by the plaintiff vide three pay orders drawn in the names of the defendant no. 1 to 3 in proportion to their shares viz.
(i) Pay Order bearing number 444940 dated 27.08.2013 in the name of defendant no. 1 for Rs. 46 lacs and;
(ii) Pay Order bearing number 444939 dated 27.08.2013 in the name of defendant no. 2 for Rs. 27 lacs and; (iii) Pay Order bearing number 444938 dated 27.08.2013 in the name of defendant no 3 for Rs. 27 lacs.
9. The plaintiff as intending purchaser as per the clear terms and conditions of sale was required to satisfy himself as regards the status, title etc. of the property before submitting the offer. The plaintiff subsequently at the next stage of depositing the 20% of the sale consideration upon acceptance of his bid developed cold feet. The bidder was obligated to inspect the property and carry out due diligence regarding title of the property subject matter of the notice for sale. The bid of the plaintiff was accepted by the Court Nominees as per proceedings recorded for the date 28.08.2013 and on 28.08.2013 the date of 09.09.2013 was fixed for deposit of the 20% of the sale consideration as per the terms and considerations of the auction sale. The penultimate para of the proceedings dated 28.08.2013 reads as under: " Now to come up on 09.09.2013 at 4.00 pm at Niti Bagh Club when Mr. Subhash Arora will deposit the balance amount out of 20% and also for the execution of agreement to sell. Terms of agreement to sell have been CS No. 11706/16 Rama Arora V/s Rita Khanna Page 15 of 41 settled and approved by the Court Nominees as well as by Counsel for the parties and in acknowledgement signed the same."
An undertaking of the attorney of the plaintiff herein, the defaulting auction purchaser, Sh. Subhash Arora, was also recorded under the signatures of Sh. Subhash Arora. The relevant portion of the undertaking reads as under "I undertake to pay 20% of the bid amount amounting to Rs. 4 crore 92 lacs, including the amount of Rs. 1 crore handed over by me today by way of bank drafts(3) drawn on Kotak Mahindra Bank, New Delhi within a period of 10 days in the same ration on 9 th September, 2013 at Neeti Bagh Club at 4.00 pm. The balance bid amount of Rs. 19 Crore 68 lacs in the same ration shall be paid on or before 29thNovember,2013. The stamp duty & registration charges & registration fee shall be borne by me. In case of default, the amount deposited by me shall be forfeited."
10. The plaintiff was spooked by a letter received from one Sh. Hemant Singh which enclosed a receipt purportedly executed by the defendant no. 1 in respect of the suit property. The plaintiff admittedly did not come forward to deposit the 20% of the balance sale consideration on 09.09.2013 in accordance with the terms and conditions of sale and the specific undertaking recorded on 28.08.2013 at the time of acceptance of the bid. Faced with this situation, the court nominees canceled the bid of the plaintiff and CS No. 11706/16 Rama Arora V/s Rita Khanna Page 16 of 41 security deposited by the plaintiff was forfeited and on the request of the parties to CS(OS) 625/2012, proceeded to contact the next higher bidder to know whether they were still interested to buy the property on the bid given by them and interim report was filed by the Court Nominees in terms of proceedings conducted on 28.08.2013 and 09.09.2013. The relevant portion of the minutes of the meeting dated 09.09.2013 is reproduced as under "We having waited upto 5.00 pm and when Mr. Subhash Arora was not ready to pay the balance amount left with no alternative but to cancel his bid and order that security furnished by him amounting to Rs. 1.00 crore. He had given in writing to the court nominees on 28.08.2013 that in case he commits default his security be forfeited. Accordingly bid of Mr. Subhash Arora having been canceled due to the default committed by him hence security deposited by him is hereby forfeited. The three drafts given by him in the name of Mrs. Rita Khanna, Mrs. Mukta Bakshi and Mrs. Reena Kuyper were handed over to respective parties for encashment. Their acknowledgment taken.
It was decided that based on today's proceeding and proceeding of 28.08.2013 an interim report may be filed in the court."
11. Proceedings held on 09.09.2013 by the Court Nominees, part of which is reproduced above is impugned and relief of declaration under prayer clause 'a' is directed against the forfeiture of CS No. 11706/16 Rama Arora V/s Rita Khanna Page 17 of 41 the security deposit/ earnest money deposited by the plaintiff at the auction sale of property C102, Defence Colony, New Delhi 110024. The plaintiff contends that the suit impugning the proceedings of the Court Nominees is instituted in terms of the liberty granted by Hon'ble the High Court of Delhi in FAO (OS) 577/2013 filed by the plaintiff herein. The appeal i.e., FAO(OS) 577/2013 was filed by the plaintiff impugning the order dated 27.11.2013 passed by Hon'ble The High Court of Delhi while disposing of I.A. No. 15583/2013 instituted in CS(OS) 625/2012. Order dated 13.12.2013 passed in FAO(OS) 577/2013 reads as under "The Ld. Counsel for the appellant seeks permission of this Court to withdraw the present appeal with liberty to institute an appropriate proceeding with regard to the appellant's claim of Rs. 1 crore which has been forfeited. Dismissed as withdrawn with the aforesaid liberty. The pending applications also stand disposed of."
12. Needless to emphasise that the liberty granted is to institute appropriate proceedings in accordance with law and not de hors the law. I therefore proceed to examine as to whether the suit impugning the proceedings dated 09.09.2013 of the Court Nominees appointed to conduct the auction sale of property described as C102, Defence Colony, New Delhi 110024 and to effect a partition of the said property in the course of the proceedings of the suit for partition registered as CS(OS) 625/2012 is the appropriate proceedings in accordance with law.
13. The law in respect of partition is enshrined under the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 18 of 41 Partition Act of 1893. Whenever in any suit for partition it appears to the court by reason of the nature of the property or of the number of shareholders or any special circumstance that a division of the property cannot reasonably or conveniently be made and that a sale of the property and distribution of the proceeds would be more beneficial for all the share holders, the court may direct the sale of the property and the distribution of the proceeds. The procedure to be followed in case of sales is also incorporated under the Act of 1893. The relevant provisions are reproduced hereunder Section 2 of the Partition Act reads as "Power to court to order sale instead of division in partition suits Whenever in any suit for partition in which, if instituted prior to the commencement of this Act, a decree for partition might have been made, it appears to the court that, by reason of the nature of the property to which the suit relates, or of the number of the shareholders therein, or of any other special circumstance, a division of the property cannot reasonably or conveniently by made, and that a sale of the property and distribution of the proceeds would be more beneficial for all the shareholders, the Court may, if it thinks fit, on the request of any of such shareholders interested individually or collectively to the extent of one moiety or upwards direct a sale of the property and a distribution of the proceeds."
Section 7 of the Partition Act provides as follows CS No. 11706/16 Rama Arora V/s Rita Khanna Page 19 of 41 "7. Procedure to be followed in cases of sales Sales as hereinbefore provided, when any property is directed to be sold under this Act, the following procedure shall, as far as practicable, be adopted, namely
(a) if the property be sold under a decree or order of the High Court of Calcutta, Madras or Bombay, in the exercise of its original jurisdiction, the procedure of such court in its original civil jurisdiction for the sale of property by the Registrar,
(b) if the property be sold under a decree or order of any other court, such procedure as the High Court may from time to time by rules prescribe in this behalf, and until such rules are made the procedure prescribed in the Code of Civil Procedure in respect of sales in execution of decrees."
14. Section 7 of the Partition Act therefore prescribes provides that the sale in a suit for partition is to be carried out in accordance with the rules prescribed or as per the procedure prescribed under the Code of Civil Procedure in respect of sale in execution of decree.
The suit for partition, CS(OS) 625/2012 in the course of which the Court Nominees were appointed was pending adjudication before the Hon'ble High Court of Delhi and it is the Delhi High Court (Original side) Rules, 1967 and particularly Rules contained under Chapter X pertaining to appointment of Commission and Chapter 27 relating to Executions and as supplemented by the provisions of the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 20 of 41 Civil Procedure Code as embodied u/o 21 pertaining to the executions governing the field not specifically addressed otherwise under the High Court Rules and Orders shall be applicable in terms of the Partition Act. Under Rule 19 of Chapter I of the Delhi High Court (original side) Rules, 1967 it is clarified that except to the extent provided in the rules, the provisions of CPC shall apply to all proceedings on original side. Commissions are appointed under Rule 9 of Chapter 1 which reads as under: "Commissioner for taking account etc. The Court may appoint a suitable person as Commissioner for taking accounts, making local investigations and effecting partition of immovable property."
The remedy against the report of the Commission is laid down under Rule 13 which reads as under: " Notice of filing of report; Filing objections thereto
(a) On receipt of the report of the commissioner other than the report forwarding the deposition of a witness recorded by him, the Registrar shall give notice to the parties to the suit or matter of the filing of the report.
(b) Any party desiring such report to be set aside or varied shall, unless the Registrar, otherwise directs, within ten days from the date of the service of such notice on him, file his objections thereto and serve a copy of the same on the other parties to the suit or matter. After the objections have been filed as aforesaid, CS No. 11706/16 Rama Arora V/s Rita Khanna Page 21 of 41 the suit shall be set down for hearing of such objections. If any party after having filed objections/ abandons or does not proceed with them, any other party in the same interest shall be at liberty to proceed with such objections."
The Rules categorically provide for filing of the objections against the Report of the Commissions appointed by the Hon'ble High Court. The proceedings undertaken are therefore to be impugned in the prescribed manner of filing objections. The plaintiff is not rendered remedyless in respect of the proceedings undertaken by the Court Nominees. The plaintiff admittedly did not file any objections to the Report of the Court Nominees.
15. Order 26 Rule 13 and 14 of the CPC are also pertinent and are therefore reproduced as under " 13. Commission to make partition of immovable property Where a preliminary decree for partition has been passed, the Court may, in any case not provided for by Section 54, issue a commission to such person as it thinks fit to make the partition or separation according to the rights as declared in such decree.
14. Procedure of Commissioner(1) The Commissioner shall, after such inquiry as may be necessary, divide the property into as many shares as may be directed by the order under which the commission was issued, and shall allot such shares to the parties, and may, if authorized thereto by the said order, award sums to be paid for the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 22 of 41 purpose of equalizing the value of the shares.
(2) The Commissioner shall then prepare and sign a report or the Commissioners (where the commission was issued to more than one person and they cannot agree) shall prepare and sign separate reports appointing the share of each party and distinguishing each share( if so directed by the said order) by metes and bounds. Such report or reports shall be annexed to the commission and transmitted to the Court; and the Court, after hearing any objections which the parties may make to the report or reports, shall confirm, vary or set aside the same.
(3) Where the Court confirms or varies the report or reports it shall pass a decree in accordance with the same as confirmed or varied; but where the Court sets aside the report or reports it shall order either a new commission or make such other order as it shall think fit"
There is no explicit bar to the institution of a civil suit impugning the proceedings of a Commission appointed by a Court to carry out any purpose for the Court, however bar is implied by the specific remedy laid down under the Rules and the Code. More so on the reasoning that it is the Court which appoints a Commission is to adjudge as to whether the mandate vested by the Court has been digressed, transgressed by the Commissioner/s and to accept, vary, modify or reject the report and proceedings conducted by the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 23 of 41 commission appointed by the Court for the object of the Commission is laid down by the Court appointing the Commission. Further if a separate suit challenging the proceedings and the report of the commission were to be entertained, there may arise a piquant anamoly where the report of the Commission is accepted by the Court which appointed the commission and a decree is passed in a separate sent holding the proceedings and the report as nullity.
16. Adverting to the case at hand the plaintiff very fairly has narrated the sequence of events culminating in the passing of the direction by the Court Nominees effecting the auction sale of property to be partitioned canceling the bid of plaintiff and forfeiting the security deposit. The plaintiff contends that on 09.09.2013, plaintiff appeared before the Court Nominees, carrying with him the pay orders for the balance amount of Rs. 3.90 crores drawn in the names of the defendant no. 1 to 3. The plaintiff then submitted a letter to the Court Nominees stating that he has reasonable apprehension that the property was encumbered and hence, requested for return of the pay orders amounting to Rs. 1 crores or else he would have no choice but to get the same stopped from his bankers. The plaintiff had got prepared the pay order in the requisite amount. However, they were canceled on the following date. The reason for the refusal of the payment of the balance sale consideration by the plaintiff was a communication received by the plaintiff by post, from one Mr. Hemant Singh which contained a receipt purported to have been executed by the defendant no. 1 in respect of the suit property, whereby she purported to acknowledge receipt of Rs. 70 lacs from CS No. 11706/16 Rama Arora V/s Rita Khanna Page 24 of 41 one Mr. Hemant Singh, s/o Late Sh. B.N. Singh, R/o 295, Sector4 Gurgaon (Haryana), out of the total sale consideration of Rs. 13 crores dated 06.05.2013 and further Rs. 30 lacs was received by cheque no. 262518 of the same day drawn at Canara Bank, Gurgaon and Rs. 40 lacs was purportedly received by cash on 06.05.2013 by the defendant no. 1. To clarify the dispute with regard to the title of the property the defendant no. 1 was asked by the Court Nominees to verify the said fact of having entered into any such agreement and defendant no. 1 categorically denied having entered into any sale agreement in respect of the said property with anyone, including Mr. Hemant Singh and in this regard gave an affidavit to the Court Nominees saying that the said receipt does not bear her signatures. The defendant no. 1 further denied having received any cheque drawn on Canara Bank in consideration of the alleged agreement to sell and also denied the receipt of any cash. The defendant no. 1 submitted before the court nominees that she is ready to indemnify the buyer i.e., the plaintiff if the allegation against her of already selling the property is found to be true. The plaintiff requested the Court Nominees to send the matter before the Court for the proper adjudication of the dispute regarding the ownership of the suit property and inspite of the said request, the court nominees erroneously proceeded to examine the signatures of the defendant no. 1 on the receipt produced by the plaintiff, with that of the defendant no. 1 from their own record, and came to a conclusion that the signature on the copy of the receipt produced by Mr. Subhash Arora did not match with the signature of the defendant no. 1. Thereafter in view of the stand taken by defendant no. 1 who CS No. 11706/16 Rama Arora V/s Rita Khanna Page 25 of 41 filed her affidavit by way of indemnity - indemnifying the buyer, the plaintiff was assured by the court nominees that he should not worry about the alleged transaction, because, if the said Hemant Singh would have been a genuine person he would have immediately approached the Court before whom the matter was pending for a long time even before the order dated 18.07.2013 was passed. The court nominees further assured the plaintiff that even upon issuance of public notice in leading newspapers pursuant to their order, no objections were filed nor any such receipt was produced at that time. The court nominees waited till about 5.00 pm and when the plaintiff did not agree to deposit the balance 20% amount, they canceled the bid and ordered that the security furnished by the plaintiff, amounting to Rs. 1 crore, be forfeited in view of the writing given by the plaintiff to the court nominees on 28.08.2013, that in case he commits default, his security be forfeited. Thereafter, the court nominees delivered the three pay orders, to the defendants for encashment.
17. The plaintiff contends that the conduct of the Court Nominees while undertaking the sale proceedings was autocratic and arbitrary which is evident from the fact that the court nominees themselves adjudicated the dispute between the parties I.e, the defendants and the prospective buyer the plaintiff which is against the well established principles of rule of law. That the nominees are appointed to look after the proceedings and to submit a report of the same to the concerned authority. The Court nominees were appointed to conduct the sale proceedings of the property and to distribute the sale consideration amongst the defendant no. 1, 2 and 3 and the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 26 of 41 nominees were not entrusted with the power of adjudicating any dispute between the parties. In the present case the nominees had adjudicated the dispute between the plaintiff and defendants and thereby forfeited the security deposit of Rs. 1,00,00,000/ and handed over the said amount to the defendants. The court nominees adjudicated the dispute between the defendants and the plaintiff by comparing the signatures on the copy of the receipt produced by plaintiff with that of Mrs. Rita Khanna (defendant no. 1 herein) which was there on the records available with nominees. After comparing both the signatures and without taking the opinion of the hand writing expert the nominees held that they are prima facie of the view that the signatures on the receipt do not match with defendant no. 1s original signature. That the production of the said receipt by the plaintiff does not lead to a presumption that the said receipt was sent by the plaintiff and such presumption without any evidence is untenable in law.
18. In my considered opinion whether the Court Nominees acted arbitrarily or whether overstepped the terms of the commission can alone be determined by the Court which appointed the commission and settled the terms, object and purpose of the Commission. The Commission after execution is to be returned to the Court which assigned the commission. If the proceedings are shown to be vitiated the court may set aside the report, the court may pass such orders as would vary, modify the proceedings. No court in a separate proceedings can assess the report and proceedings of a Commission got executed by another Court. The proceedings and the report of the Commission on its own may not have any bearing CS No. 11706/16 Rama Arora V/s Rita Khanna Page 27 of 41 unless accepted and confirmed by the Court. Once the proceedings and report are accepted, the adjudication by the court follows against which appropriate remedies are again prescribed under the law.
19. In the case at hand the plaintiff did not prefer any objections to the report of the Court Nominees in respect of proceedings dated 28.08.2013 and 09.09.2013 submitted to the court which appointed the commission. The plaintiff on 09.09.2013, after refusing to deposit the 20% balance sale consideration got lodged a report to the effect that the pay orders have been misplaced/ lost, and the alleged loss was intimated to the Bank issuing the pay orders as a result when the defendant 1 and 3 approached the bank for the encashment of the pay orders, the bank declined to honor the same on the ground that the instruments were reported as lost. The defendants herein therefore were constrained to approach the Hon'ble Court that appointed the commission and received the report of the Court Nominees for appropriate orders in this regard. This application is registered as IA No. 15583/13 in CS(OS) no. 625/2012. The application is disposed of with cost imposed upon the present plaintiff affirming the proceedings of the Court Nominees forfeiting the security deposit of the plaintiff for his failure to come forward to pay the 20% of the Sale consideration in accordance with the terms and conditions of the sale and the undertaking recorded of the attorney holder of the plaintiff. The plaintiff has filed the order dated 27.11.2012 passed in IA No. 15583/12 in CS(OS) no. 625/2012 and the relevant portions are reproduced as under "......I am of the view that there was absolutely no CS No. 11706/16 Rama Arora V/s Rita Khanna Page 28 of 41 justification for Mr. Arora, not to proceed with the transaction and not to deposit the balance amount then due amounting to Rs. 3.90 crores before the court nominees on 09.09.2013, much less there was any justification to seek return of the amount of Rs. 1 crore deposited by Mr. Arora before the count nominees towards security. By unjustifiably reneging from his agreement, Mr. Arora made himself liable for forfeiture of the security amount of Rs. 1 crores.....
The court nominees, while recording their proceedings on 09.09.2013, have given full and complete justification for rejecting the stand taken by Mr. Arora. The relevant portion off the said proceedings in reproduced as under:
"We have compared the signatures on the copy of receipt produced by Mr. Arun Vohra, Advocate of Mr. Subhash Arora with that of Mrs. Rita Khanna on our record. We are prima facie of the view that the signature on the receipt do not match with her signature. In any case she has filed her affidavit by way of indemnity indemnifying the buyer. We assured Mr. Subhash Arora that he should not worry about the alleged transaction because if this Hemant Singh been a genuine person he would have immediately approached the Hon'ble High Court before whom matter was pending for a long time before the order dated 18.07.2013 was passed. No such application was moved in the Hon'ble High Court. Even CS No. 11706/16 Rama Arora V/s Rita Khanna Page 29 of 41 when public notice was issued pursuance to the order of Court Nominees is the leading newspapers no objection was filed nor such a receipt was produced at that time. It is only today when balance amount out of 20% was to be deposited that copy of this receipt alleged to have been executed by Mrs. Rita Khanna has been produced and that too at 4.30 pm. How Mr. Hemant Singh came to know the names of Court Nominees? How did he know that case was listed today? He himself has not appeared. At about 4.50 pm a letter sent through courier addressed to Court Nominees was received by official of the Club from Mr. Hemant Singh. It contains copy of receipt. Taken on record.
Both the counsel Mr. D.S. Narula as well as Mr. Aditya Madan rightly say this is a ply by Mr. Subhash Arora to get out so that he may not deposit the balance amount. When Mr. Subhash Arora refused to deposit the balance amount in spite of our informing that this being a court auction and that Mrs. Rita Khanna has indemnified him and that neither Hemant Singh, nor receipt seems to be genuine, still he refused to deposit the drafts. He was not prepared to deposit the balance amount. We find that his act neither justified nor bonafide.
We having waited upto 5.00 pm and when Mr. Subhash Arora was not ready to pay the balance amount left with no alternative but to cancel his bid and order that CS No. 11706/16 Rama Arora V/s Rita Khanna Page 30 of 41 security furnished by him amounting to Rs. 1 crores be forfeited. He had given in writing to the court nominees on 28.08.2013 that in case he commits default his security be forfeited. Accordingly bid of Mr. Subhash Arora having been cancelled due to the default committed by him hence security deposited by him is hereby forfeited. The three drafts given by him in the name of Mrs. Rita Khanna, Mrs. Mukta Bakshi and Mrs. Reena Kuyper were handed over to respective parties for encashment. Their acknowledgment taken....."
.... As aforesaid, there is no valid justification offered by Mr. Subhas Arora for not paying the amount of Rs. 3.90 crores and proceeding with the transaction when the plaintiff gave her indemnity, the plaintiff categorically denied having entered into any transaction with the so called Mr. Hemant Singh; signatures of the plaintiff on the alleged receipt did not even match with her signatures on the record;so called Mr. Hemant Singh never appeared in any proceeding, much less before the court nominees to stake his claim on the basis of the said alleged receipt dated 06.05.2013, even though he was aware of the fact that the court had appointed two court nominees to sell the said property and proceedings were fixed before the court nominees on 09.09.2003. Consequently, the amount of Rs. 1 crores deposited by Mr. Subhash Arora is liable to be forfeited and it is CS No. 11706/16 Rama Arora V/s Rita Khanna Page 31 of 41 ordered accordingly.(emphasis mine) It is informed by the counsel for defendant nos. 1 and 2 that the original pay orders are not immediately available for the reason that the defendant no. 1 is 80 years old and she does not remember where she has kept the same, and the defendant no. 2 is not a resident of India. The said pay orders are expiring today. In these circumstances, Kotak Mahindra Bank is directed to cancel the pay orders and not to honour the same even if presented. Instead the bank shall issue bankers cheque for Rs. 27 lacs each in the name of defendant nos. 1 and 2. The bankers cheque shall be delivered to the counsel for defendant nos. 1 and 2, against acknowledgment, within one week.(emphasis mine) From the aforesaid narration, it is evident that Mr. Subash Arora resorted to deliberately and intentionally lodging a knowingly false complaint stating that the pay orders amounting to Rs. 1 crores has been lost. The police registered the NCR no. 1166/13 dated 09.09.2013 and on the basis of similar representation made by Mr. Arora, Kotak Mahindra Bank returned the pay orders unpaid when they were presented by the parties to the suit. The NCR made by Mr. Subhash Arora records that the said pay orders were lost somewhere in Greater KailashI. This was patently false to the knowledge of Mr. Arora, as the said CS No. 11706/16 Rama Arora V/s Rita Khanna Page 32 of 41 pay orders had been delivered to the court nominees by him on 28.08.2013, and on the same date i.e., 09.09.2013, the court nominees had delivered the same to the parties to the suit. Mr. Arora resorted to making the knowingly false complaint only with a view to somehow block the payment of the said pay orders by the Kotak Mahinder Bank.......
...... The application is allowed with costs of Rs. 50,000/ to be paid by Mr. Arora to the parties equally.... "
20. The report of the court nominees is accepted the proceedings dated 09.09.2013 are affirmed and the security deposited is held to be rightly forfeited and it is held that the amount of Rs. Crores deposited by Mr. Subhash Arora is liable to be forfeited and it is ordered accordingly. The order / direction / proceedings of the Court nominees has merged with the order of Hon'ble High Court as passed in I.A. 15583/2012. The Hon'ble High Court has directed the Kotak Bank to cancel the pay orders as these were nearing expiry and to issue bankers cheques in like amount,and within one week of the order. The amount of Rs. 1 crore sought to be recovered by the plaintiffs under the present suit is therefore disbursed in accordance with the categoric directions issued by Hon'ble the High Court. The Hon'ble High Court vide order dated 27.11.2013 besides affirming the report of the Court Nominees has after considering the facts and circumstances and the rival contention ordered the forfeiture of the amount of Rs. 1 crore deposited by the plaintiffs, the defaulting purchaser through her attorney.CS No. 11706/16 Rama Arora V/s Rita Khanna Page 33 of 41
20. The present suit is not the appropriate proceedings to set aside the order passed by Hon'ble the High Court in I.A. No. 15583/2012. The order is not passed behind the back of the plaintiff. The plaintiff admits that on 27.11.2013 during the hearing on the above said application filed by the defendant no. 1 to 3, it was duly submitted by the plaintiff before the Court that in the face of the communication received by the plaintiff, which purported to contain receipt / agreement entered into by the defendant no. 1 with one Mr. Hemant Singh, Mr. Subhas Arora was fully justified in having apprehensions and not depositing the balance amount of Rs. 3.90 crores for which he has holding the pay orders and also demanding the refund of Rs. 1 crores deposited before the court nominees. It was further submitted that if the intention of the plaintiff was not to go ahead with matter, he would not have appeared before the Nominees on 09.09.2013 carrying pay orders of Rs. 3.9 crores. The bonafides of the plaintiff are not disputed. The plaintiff as is borne out from the averments made in the plaint is heard by Hon'ble The High Court while adjudicating upon the rights of the parties arising out of the proceedings and report of the Court Nominees dated 09.09.2013. Now if the suit setting up a challenge to the report and the proceedings dated 09.09.2013 including the forfeiture of the security deposit were to be entertained and upon trial a decree of declaration annulling the proceedings and the report came to be passed such would be nothing short of a travesty of justice. The order dated 27.11.2013 has attained finality. Sanctity is to be accorded to the finality of orders and judgments. The sanctity to the CS No. 11706/16 Rama Arora V/s Rita Khanna Page 34 of 41 finality of orders and judgment passed by Courts of law serves the ends of justice and if final orders and judgments could be upset in the like manner there would be no quietus to litigation and the same grievances would continue to be reagitated adinfinitum. Further this court cannot sit in judgment and appeal over the categoric observation returned by the Hon'ble High Court under order dated 27.11.2013 which has a direct bearing upon the entitlement of the plaintiff to a decree of declaration that the order dated 09.09.2013 passed by the Court Nominees forfeiting the security deposit of the plaintiff is a nullity. Further the Hon'ble High Court has ordered to the effect that the security of Rs.1 crore is forfeited and a challenge to the order dated 27.11.2013 though is not set out explicitly but is made out specifically and categorically from the reliefs sought and the cause of action as set up. Therefore the present suit for reliefs as prayed for of declaration and recovery is not appropriate proceedings in accordance with law.
21. Further the plaintiff also seeks cancellation of sale of the property bearing plot no. C102 admeasuring 325 sq. yards Defence Colony, ND vide sale deed dated 09.09.2013 entered interse defendants no. 1 to 3 on one hand and defendants no. 4 and 5 on the other hand. The procedure to be followed when the immovable property is sold in pursuance to court orders and decrees is also laid down under the Delhi High Court (Original side) Rules and order 21 of CPC and the Partition Act instructs that the sale of property for the purposes of effecting partition of the property is to be in accordance with the High court Rules and /or order 21 of CPC. Rules governing CS No. 11706/16 Rama Arora V/s Rita Khanna Page 35 of 41 sale of attached property run from Rule 17 to Rule 32 of Chapter 24 of the Delhi High Court Rules 1967 which is a Chapter exclusively dealing with executions. Rules 31 and 32 are pertinent and are reproduced as under "31. Report of Sale Upon the completion of the sale the Registrar or other officer conducting the sale shall file in Court his report of the sale.
32. Time for confirming sale A Sale of immovable property shall not be confirmed until after the expiration of 30 days from the date thereof."
22. The Provisions under order 21 of CPC dealing with sale of immovable property are necessarily to be noted from Rule 65 onwards. Rule 65 of Order 21 prescribes that Sales shall be conducted by an officer of the court or such other person as the court may appoint in this behalf and shall be made by public auction, the requisites of the proclamation are laid down under Rule 66 and 67. The defaulting purchaser is made answerable for loss on the sale in terms of Rule 71 which stipulates that any deficiency of price which may happen on a resale by reason of the purchaser's default and all expenses attending such resale, shall be certified to the Court by the officer or other person holding the sale, and shall, at the instance of either the decreeholder or the judgmentdebtor, be recoverable from the defaulting purchaser under the provisions relating to the execution of a decree for the payment of money. The challenges that may be set up to a sale conducted under orders of the Court are envisaged under Rules 89, 90 and 91 and Rule 92 in peremptory terms clothes sales conducted in execution of decrees and orders with finality. The Rules are reproduced as under for ready reference.
CS No. 11706/16 Rama Arora V/s Rita Khanna Page 36 of 41"89. Application to set aside sale on deposit (1) Where immovable property has been sold in execution of a decree any person claiming an interest in the property sold at the time of the sale or at the time of making the application, or acting for or in the interest of such person may apply to have the sale set aside on his depositing in Court
(a) for payment to the purchaser, a sum equal to five percent of the purchasemoney, and
(b) for payment to the decreeholder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been received by the decree holder.
(2) Where a person applies under rule 90 to set aside the sale of his immovable property, he shall not, unless he withdraws his application, be entitled to make or prosecute an application under this rule.
(3) Nothing in this rule shall relieve the judgmentdebtor from any liability he may be under in respect of costs and interest not covered by the proclamation of sale."
Rule 90 reads as "Application to set aside sale on ground of irregularity or fraud(1) Where any immovable property has been sold in execution of a decree, the decreeholder, or the purchaser, or any other person entitled to share in a reteable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it. (2) No sale shall be set aside on the ground of irregularity CS No. 11706/16 Rama Arora V/s Rita Khanna Page 37 of 41 or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. (3) No application to set aside a sale under this rule shall be entertained upon any ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up."
Rule 92 "Sale when to become absolute or be set aside (1) Where no application is made under Rule 89, rule 90 or rule 91, or where such application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute.
Provided that, where any property is sold in execution of a decree pending the final disposal of any claim to, or any objection to the attachment of, such property, the Court shall not confirm such sale until the final disposal of such claim or objection (2) Where such application is made and allowed, and where, in the case of an application under rule 89, the deposit required by that rule is made within(sixty days) from the date of sale. (or in case where the amount deposited under rule 89 is found to be deficient owing to any clerical or arithmetical mistake on the part of the depositor and such deficiency has been made good within such time as may be fixed by the Court, the Court shall make an order setting aside the sale) Provided that no order shall be made unless notice of the application has been given to all persons affected thereby.
CS No. 11706/16 Rama Arora V/s Rita Khanna Page 38 of 41Provided further that the deposit under this subrule may be made within sixty days in all such cases where the period of thirty days, within which the deposit had to be made, has not expired before the commencement of the Code of Civil Procedure (Amendment) Act, 2002.
(3) No suit to set aside an order made under this rule shall be brought by any person against whom such order is made. (4) Where a third party challenges the judgmentdebtors title by filing a suit against the auctionpurchaser, the decreeholder and the judgment debtor shall be necessary parties to the suit. (5) If the suit referred to in subrule(4) is decreed, the court shall direct the decreeholder to refund the money to the auctionpurchaser and where such an order is passed the execution proceeding in which the sale had been held shall, unless the Court otherwise directs, be revived at the stage at which the sale was ordered."
23. The plaint itself recounts the circumstances leading to the execution of the sale deed in respect of property described as C102, Defence Colony, New Delhi 110024 by the defendants 1 to 3 in favour of defendants 4 and 5. As per the narration of facts set down under the plaint and the orders relied upon, it emerges that instantly after the cancellation of bid of the plaintiffs, the defaulting purchaser, on the same day I.e, 09.09.2013, the counsels for the defendants requested the nominees to contact the second highest bidder Ms. Namitha Pradhan and Mr. Amit Khanna. Pursuant to the request of the counsels of the defendants the court nominees immediately CS No. 11706/16 Rama Arora V/s Rita Khanna Page 39 of 41 approached the second bidder the very same day. Thereafter, on 18.09.2013, the defendant no. 1 to 3 entered into a Sale Agreement with the second highest bidder i.e., Ms. Namitha Pradhan and Mr. Amit Khanna (defendant no. 4 and 5 herein) at the Sale Auction instantly after the bid of the plaintiff was cancelled and security amount of the plaintiff of Rs. 1 crore was handed over to the defendants. The defendant no. 1 to 3 sold the property in question to the second highest bidder vide registered Sale Deed dated 09.10.2013 for a total consideration of Rs. 22.50 crores, which was much less than the highest bid of the plaintiff at Rs. 24.620 crore.
24. The plaintiff challenges the sale which in terms of Rules 31 and 32 of the Delhi High Court Rules and Rule 92 of Order 21 of CPC has attained finality on the ground that the court nominees accepted the second highest bid and sold the property at Rs. 22.50 Crores which was lower than the bid of the plaintiff at Rs. 26.50 crores. In the facts and circumstances therefore Rule 71 of Order 21 would have been attracted to render the plaintiff liable for the loss on resale. The plaintiffs alleges fraud, and connivance in selling the property at lower rate to the defendants 4 and 5. Rule 90 provides that the DH, the purchaser, any person entitled to a rateable distribution of assets or any person whose interests are affected by the sale may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it. The statute deliberately employes the term "the Court"
therefore it is not any court vested with civil jurisdiction but the Court that ordered the sale of the property that is to hear and adjudicate CS No. 11706/16 Rama Arora V/s Rita Khanna Page 40 of 41 upon a challenge set up by a person whose interests are affected by the sale, to the sale of immovable property. The plaintiff did not avail of the specific remedy enshrined in terms of Rule 90. A separate suit challenging the sale would be barred and infact be an abuse of the process of law in the facts and circumstances as the sale has been made absolute in terms of Rule 31 and 32 of Hon'ble The High Court of Delhi, High Court (Original Side) Rules, 1967 and Rule 92 of Order 21 CPC which explicitly bars the institution of a separate suit for setting aside the order confirming the sale. Once a sale is confirmed no challenge is admissible and particularly on behalf of the defaulting purchaser who does not prefer any objections to the report of the commission effecting the auction sale or in terms of Rule 91 of Order 21 CPC. For the reasons as aforestated I find that the suit for declaration, recovery, cancellation as prayed for is not maintainable and the cause of action as set up is barred in terms of the Delhi High Court (Original side) Rules, 1967 and provisions of Order 26 and 21 of the CPC and is infact an abuse of the process of law.
25. The applications u/o 7 Rule 11 are therefore accepted and the plaint is ordered to be rejected in terms of Order 7 Rule 11 (a)(d). No order as to costs.
File be consigned to record room.
Pronounced in the open Court (Neelofer Abida Perveen) on this 15th March, 2017. Addl. District Judge04, South East, Saket Court, New Delhi.
* The judgment/order contains 41 pages all checked and signed by me.
CS No. 11706/16 Rama Arora V/s Rita Khanna Page 41 of 41