Gujarat High Court
Bank Of Baroda vs Chimanlal Chandmal Jain & ... on 2 May, 2016
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt, R.P.Dholaria
C/MCA/3368/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
MISC. CIVIL APPLICATION (FOR REVIEW) NO. 3368 of 2015
In
CIVIL APPLICATION NO. 3605 of 2015
In
SPECIAL CIVIL APPLICATION NO. 312 of 2014
==============================================================
BANK OF BARODA....Applicant
Versus
CHIMANLAL CHANDMAL JAIN & 4....Opponents
==============================================================
Appearance:
MR KM PARIKH, ADVOCATE for the Applicant
MR A M VADERA, ADVOCATE for the Opponent No. 2
MR NM KAPADIA, ADVOCATE for the Opponent No. 1
MR PAVAN S GODIAWALA, ADVOCATE for the Opponent No. 5
==============================================================
CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 02/05/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT)
1. The applicant, who happened to be 3rd party and as it was not party in the proceeding of Civil Application No.3605 of 2015 and Special Civil Application No. 312 of 2014, has approached this Court by way of this application with following prayers;
(A) This Hon'ble Court be pleased to allow the applicant being aggrieved person to file this Miscellaneous Civil Application for review and recall of Common Oral Order dated 23/03/2015 Page 1 of 19 HC-NIC Page 1 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER passed by this Hon'ble Court in Civil Application (for order) No.3605/2015 in S.C.A. No. 312/2014 on the aforesaid grounds urged herein above.
(B) This Hon'ble Court be pleased to hold and declare that Resp. No.1 & 2 of this Miscellaneous Civil Application have obtained order from this Hon'ble Court in Civil Application (for order) No.3605/2015 in S.C.A. No.312/2014 by playing fraud with this Hon'ble Court and by suppression of material facts to this Hon'ble Court and therefore, Common Oral Order dated 23/03/2015 requires to be recalled and reviewed by this Hon'ble Court and consequently, S.C.A. No. 312/2014 requires to be re-notified for hearing by this Hon'ble Court and applicant be permitted to be impleaded as one of the respondent in S.C.A. No. 312/2014 and thereafter, after hearing all the concerned, appropriate order may kindly be passed by this Hon'ble Court.
(C) This Hon'ble Court be pleased to hold and declare that there is no delay and latches on the part of the applicant in filing this review application before this Hon'ble Court and consequently, be hold and declare that said review filed Page 2 of 19 HC-NIC Page 2 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER by the applicant is within the period of limitation.
(D) This Hon'ble Court be pleased to hold and declare that sale of secured asset by Resp. No.1 & 2 in favour of Resp. No.5 under the guise of consent terms is contrary to sec. 13(9) of the Securitization Act read with Rule-8(5) of the securitization rules-2002 and requires to be quashed and set aside by this Hon'ble Court in exercise of inherent and equitable review jurisdiction available under Order-47 Rule-1 of C.P.C. to prevent the abuse process of law and to meet ends of justice for recovery of public money by applicant in association with Resp. No.2 in accordance with law.
(E) This Hon'ble Court be pleased to
restrain Resp. No.5 from demolishing,
destructing or removing, leveling,
developing, digging, removing any
structures or dealing with and or
disposing of any land, building,
structures of lease hold N.A. land adm.
Plot area of 2271.43 sq. mtrs. i.e.
2716.63 sq. yds. with construction
existing thereon with sheds situated on the plot No.17, GIDC, Pandesara, being, Page 3 of 19 HC-NIC Page 3 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER lying situate mouje: Pandesara Dist:
Surat without prior permission of this Hon'ble Court.
(F) This Hon'ble Court be pleased to direct Resp. No.5 to maintain status quo of secured asset belonging to SDPL till final disposal of Miscellaneous Civil Application by this Hon'ble Court.
(G) This Hon'ble Court be pleased to
direct Resp. No.2 BMC Bank Ltd. to
deposit the sale proceeds of Rs.
1,08,51,000/- paid by Resp. No.5 with
the Registry of this Hon'ble Court till final disposal of this Miscellaneous Civil Application and Resp. No.2 BMC Bank Ltd. be directed not to appropriate the said proceeds towards outstanding dues payable by Resp. No.1 to Resp. No.2 without prior permission of this Hon'ble Court.
Thus, essentially what is sought to be achieved by seeking the prayer is recalling and reviewing of the common oral order dated 23.03.2015.
2. Facts in brief, as could be gathered from the proceedings, be set out as under in order to appreciate the real controversy between the parties.
Page 4 of 19HC-NIC Page 4 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER
3. The petitioner of Special Civil Application No. 312 of 2014 appears to have preferred that petition challenging the vires of Sections 13 and 14 of the Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'SARFAESI Act' for the sake of brevity), with following prayers;
(A) Your Lordships be pleased to declare Section 13 and 14 of the SARFAESI Act as unconstitutional.
(B) Your Lordships be pleased to declare the order dated 26.09.2013 issued by the respondent no.2 as illegal without jurisdiction null and void and by issuing writ of mandamus or writ of certiorari and quash and set aside the same.
(C) Your Lordships be please to issue writ of mandamus, or writ of certiorari or any other appropriate writ, order, or direction, quashing and setting aside the notification 28.01.2013 and also declaring the SARFAESI Amendment Act 2013 as illegal, unconstitutional.
(D) Your Lordships be further pleased to issue writ of mandamus or any other appropriate writ or directions declaring Page 5 of 19 HC-NIC Page 5 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER any other action including of taking over the possession of the property at plot no.17 GIDC, Pandesara upon Revenue Survey No.30 paiki and 32 paiki of Pandesara, Surat, as illegal, null and void, w/o authority of law and be further pleased to issue the directions to the respondent no.1 and 2 to hand over the possession of the said property to the petitioner forthwith.
(E) Your Lordships be pleased to
initiate the proceedings against the
respondent no.1 and 2 under the Contempt of the Courts Act and be further pleased to direct the State Government to initiate disciplinary proceedings against the respondent no.2, and his concerned subordinate officers.
(F) That pending hearing and final
disposal of this petition, your
Lordships be pleased to restrain the
respondents from transferring,
auctioning the property in question,
alienating, creating charge, proceeding further regarding the property in question under the SARFAESI Act.
(G) Your Lordships be pleased to order imposition of heavy cost upon both the Page 6 of 19 HC-NIC Page 6 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER respondents, both litigation cost as well exemplary cost and also order payment of compensation by the respondent to the.
(I) Your Lordships may be pleased to quash and set aside the public notice for sale dated 24.12.2013 issued by the respondent no.1 and be pleased to restrain respondent Bank from proceeding further in pursuance of the publication.
Thus, what was essentially under challenge in that petition was a notice issued for possession, which unfortunately was coupled with ostensible challenge to the provision of the statute for the obvious reason of stalling the process and eventuality that may entail on account of invoking of Sections 13 and 14 of the SARFAESI Act.
During the pendency of the said proceeding, it seems that an application being Civil Application No.3605 of 2015, came to be filed inter alia contending the following prayers;
(A) The Hon'ble Court would be pleased to allow the present application and allow the bank to sell the property in question viz: Plot No.17, Pandesara, GIDC, Surat, mortgaged with the bank, to M/s. Susheel Textiles for the Page 7 of 19 HC-NIC Page 7 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER consideration of Rs.1,08,51,000/- and dispose of the petition on the consensus and confirm and approve the consent terms.
(B) The Hon'ble Court would be pleased to pass such other and further order as it deem fit and proper in the interest of justice.
It seems that on account of settlement between the parties, the Court was requested to take into consideration and pass appropriate orders on the basis thereof. It is, at this stage, required to be noted that in the proceedings of either Special Civil Application or Civil Application, the present applicant being Bank of Baroda was not a party and this Court passed an order on 23.03.2015, which read as under;
"1. Draft amendment in Civil Application is allowed. The applicant is permitted to add Susheel Textile as party - respondent No.4 in the cause title of Civil Application. The applicant to carry out necessary amendment during the course of the day.
2. By way of the present Civil Application, the applicant - original respondent No.1 Bank has sought permission of this Court to sell the Page 8 of 19 HC-NIC Page 8 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER property in question i.e. Plot No.17, Pandesara, GIDC, Surat mortgaged with the applicant Bank to M/s. Susheel Textiles - respondent No.4 herein for a consideration of Rs.1,08,51,000/- under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 and also prayed to dispose of the main writ petition on the basis of consent terms arrived at between the parties.
3. We have heard learned counsel appearing for the parties. We have also gone through the record of the case as well as material produced along with the Civil Application as well as main writ petition. The parties to the proceedings are present before the Court. We have also gone through the consent terms produced at Annexure B to the Civil Application. The parties admit the consent terms. Learned advocates appearing for the parties have urged that on the basis of the consent terms, the present Civil Application as well as main writ petition may be disposed of.
4. In the premises aforesaid, when the parties to the proceedings have executed consent terms, we permit the applicant to sell the property in question and we Page 9 of 19 HC-NIC Page 9 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER direct the parties to act in accordance with the consent terms.
5. In the result, the present Civil Application stands disposed of on the basis of the consent terms. The consent terms shall form part of the order.
6. In view of disposal of Civil Application, main writ petition also stands finally disposed of. Interim relief stands vacated. There shall be no order as to costs. D.S. Permitted to the applicant as well as respondent No.1."
This order is subject matter of review in the present proceeding of Misc. Civil Application No.3368 of 2015.
4. The applicant through its counsel appears to have served copy of this application to all the concerned, hence, they have filed their reply and counter, which have been placed on record.
5. Learned counsel appearing for the applicant submitted that in fact on account of approval dated 29.12.2010 conveyed by the concerned authority of the Government of India, the Scheme of Specific Assets & Liabilities of the Memon Co.Op. Bank Limited to Bank of Baroda had taken place. It was not objected by the Page 10 of 19 HC-NIC Page 10 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER R.B.I. and specific assets and liabilities of the Memon Co.Op. Bank Limited came to be transferred to the present applicant. Those documents are placed on record and the Court's attention was invited thereto. By virtue of those orders, the counsel for the applicant contended that the applicant Bank stuck into the shoes of Memon Co.Op. Bank Limited, Mumbai and in that capacity, as it was stepping in the shoes of Memon Co.Op. Bank Limited, it was right to file and maintain the present Review Application. The applicant thus became entitle to pursue the proceedings undertaken on behalf or against the transferor bank i.e. Memon Co.Op. Bank Limited.
6. It was also urged that the applicant is one of the secured creditor having pari passu charge over the properties of M/s. Shalimar Dyeing Limited whose property was subject matter of consent terms and challenged under the SARFAESI Act before the Court.
We, at this stage, have to record that this stand is vehemently opposed by the respondents' counsels in the present proceeding.
7. It was urged before the Court that the applicant Bank was enjoying the rights by virtue of it's being transferee of the specific assets of Memon Co.Op. Bank Limited. The Memon Co.Op. Bank's right to enforce its right against the borrower like the original petitioner could be said to have been vested in the applicant and, therefore, in the proceeding preferred by the borrower being proceeding of Special Page 11 of 19 HC-NIC Page 11 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER Civil Application No.312 of 2015 could not have been decided without there being notice to all the concerned, who are likely to be affected and present Bank being one, the same was required to be put to notice thereof, as there is no notice and as the Bank was not made a party and as on account of the concerned order, which is sought to be reviewed, the Bank's interest is suffered. The present Review Application is preferred for seeking setting right the action permitted to have been taken under the proceedings of Special Civil Application as well as Civil Application.
8. Learned counsel appearing for the applicant invited this Court's attention to the communication dated 20.02.2014, which is placed at page no.112, and submitted that the concerned Bank had already informed that the auction of the property in question was slated on 27.12.2013 and the applicant Bank be advised of the latest development in that behalf.
9. Learned counsel appearing for the applicant Bank fairly submitted that the Lavad Suit is pending before the Board of Nominee's Court at Surat in proceeding of Lavad Suit No.893 of 1998. They have in fact moved an application, which may be held out against the Bank for resisting this. The application is preferred by the Bank and the prayers therein may also not deter the present applicant in seeking appropriate relief, as unfortunately, it is projected as if there is an approval of the Court to the sale Page 12 of 19 HC-NIC Page 12 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER undertaken by way of consent terms in the order which is sought to be reviewed and to that extent the bank's right to receive its dues is jeopardized.
10. Learned counsel Shri Parikh submitted that the applicant, had he been given a chance, would be pointing out that on the date of sale, the limitation would be stepped in, whereunder the property could not have been sold in light of Section 36 of the SARFAESI Act.
11. Shri Parikh, learned counsel very fairly submitted that there is charge registered on their property and there is no mortgage so far as the present Bank is concerned and therefore they have no right to even participate under the SARFAESI Act. Shri Parikh submitted that the Bank has stepped into the shoes of Memon Co.Op. Bank and derived rights and entitlement thereunder; and had there been a chance, Section 36 of SARFAESI Act could have been pressed into service for thwarting the sale proceedings in this fashion.
12. Learned counsel appearing for the respondents submitted that entire action, which was under challenge before the Court at the behest of borrower, an action proposed to be taken under the SARFAESI Act and its perusal would clearly indicate that there exists a room for the charge holder Bank to deal with the property by way of private negotiation also. While exercising power under Page 13 of 19 HC-NIC Page 13 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER Section 36 of the SARFAESI Act, as per Rule 8, sub Rule 5, Clause (d), the private negotiation is not ousted or rather expressly permissible in light thereof and therefore when this Court has permitted the settlement between the parties, which is placed on record while disposing of the matter, it cannot be said that there is any harm happened to the Bank. It was open to the Bank to challenge any action under Section 17 of the SARFAESI Act by way of appropriate proceedings, as Section 17 envisages, appear to be available to any person aggrieved on account of this.
13. Learned counsels for the respondents have also very fairly submitted that the order passed in Civil Application may not, therefore, be treated as an impediment in the way of any appeal. The fact remains to be noted that the order under which the property was sold under the consent terms, which has been placed on record and which has been forming part of the record the sale proceeds have already been appropriated.
14. Learned counsel for the respondents have invited Court's attention to the additional affidavit at page no.437 filed by the respondent no.1 and submitted that Memon Co.Op. Bank Ltd. is in liquidation, the said Bank has in fact filed an application in the pending suit on 20.08.2015, copy thereof is annexed to the affidavit, which the respondent no.1 has filed on 28.01.2016. Learned counsel for the respondents have further submitted Page 14 of 19 HC-NIC Page 14 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER that the documents, which have come on record and the exchange of the pleadings between the parties, would rather more than establish that the applicant Bank have had no charge over the property in question in its own stead and naturally therefore it did not find any mention in the register. The fact has also not been denied by the applicant Bank that they could not produce any document, which were not indicate that by any means the Bank i.e. present applicant had any charge which could classify to be a secured creditor over the property in question. In absence of such a document or a charge supported by any such document, the applicant Bank at the best can claim to be treated as unsecured creditor attempted to step into the shoes of Memon Co.Op. Bank and whatever rights and obligations fasten upon the Memon Co.Op. Bank were either to be answered or enforced by the Bank and no further right could be assigned to the applicant Bank.
15. It was further argued apropos the submission qua limitation on the strength of Section 36 of the of the SARFAESI Act that assuming for the sake of arguments without conceding that Section 36 did have some play for holding it out against the borrower. The question of limitation would be dependent upon the mix pleadings of facts and law and the review proceeding would not be a proper proceeding for raising this question. Moreover, the law of limitation would take away the remedy, but not the right. In other words, the law of limitation as Page 15 of 19 HC-NIC Page 15 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER envisaged under Section 36 of the SARFAESI Act, may even said to have acted as a bar, the same would not entitle the original borrower to seek either declaration of mortgage been over or non existence thereof, nor would it been in possession to seek the title pledged with the mortgagee and therefore to that extent the property would remain under the cloud for which even invocation of Section 36 by the borrower would be of no avail to the original borrower and hence the 3rd party-Bank in the present proceedings of review shall not be permitted to agitate the same for defeating the claim of other parties, who have now attain finality on account of sale in question and the sale proceeds being appropriated accordingly.
16. Learned counsel for the respondents relied upon the decision of Supreme Court in case of Shrimant Shamrao Suryavanshi And Another Vs. Pralhad Bhairoba Suryavanshi (Dead) LRS. And Others, reported in (2002) 3 Supreme Court Cases 676 in support of his submission.
17. We have heard learned counsel for the parties and perused the provisions and papers. Before adverting to the rival contentions, it would be most appropriate to set out glaring facts emerging therefrom, as under;
(i) The Memon Co.Op. Bank was in fact had filed a Lavad Suit in the appropriate forum being Lavad Page 16 of 19 HC-NIC Page 16 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER Suit No.893 of 1998, which was pending since then.
(ii) During the pendency of the said proceedings the Memon Co.Op. Bank itself, when under liquidation and some punishment came to be made whereunder the rights and liabilities as per the internal scheme and as per their agreed terms and conditions, were argued by the present applicant, it is pertinent to note that in that punishment and scheme other borrowers were not party nor their confirmation were invited.
(iii) The Bank i.e. Bombay Mercantile Co.Op. Bank Ltd. in exercise of its power under the SARFAESI, had issued order under Section 13 and the Magistrate's Order was also obtained for seeking physical possession of the property in question, which was mortgaged to the Bank by valid mortgage deed and at that time, the original borrower namely Chimanlal Chandmal Jain, who happened to be the Director of M/s. Shalimar Dyeing Ltd., preferred writ petition being Special Civil Application No.312 of 2014, inter alia challenging the vires and action of the Bank i.e. Bombay Mercantile Co.Op. Bank and in that proceedings on account of settlement, the dispute was settled and the parties have placed settlement on record so as to bring about an end to the dispute.
(iv) It may not be out of place to mention here that the present applicant was in know of the fact that the Bombay Mercantile Co.Op. Bank i.e. original respondent in the petition had invoked SARFAESI Page 17 of 19 HC-NIC Page 17 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER proceedings under the SARFAESI Act against M/s. Shalimar Dyeing Ltd. and had requested the Bank to keep them posted with the development and advise of the development. That means, to that extent, the present applicant was rather expecting the positive result of SARFAESI proceeding and did support the SARFAESI action undertaken by the Bombay Mercantile Co.Op. Bank - the respondent and ultimately when the lease came to an end on account of settlement, it down of the present applicant to bring about an action in form of present review.
18. Against the aforesaid backdrop, this Court needs to be mindful of the fact that there are certain limitations attached with this proceeding of review and therefore, those parameters for maintaining review have to be pleaded and proved by the Bank before seeking review of the provision. The said parameters have not been made out for invoking the review jurisdiction and therefore, we are unable to accept the Review Application.
19. We are unable to agree with the contention that the order sought to be reviewed was in any manner curtailing the right, if any, of the present applicant to bring an action in law that may include appeal under Section 17 of the SARFAESI Act. At this stage, when the apprehension was canvassed that this being a High Court order, the D.R.T. may not go into it. The said apprehension could be allayed by specific declaration and observation that the said Page 18 of 19 HC-NIC Page 18 of 19 Created On Sat May 07 00:20:09 IST 2016 C/MCA/3368/2015 ORDER order, which is sought to be reviewed and review whereof is rejected, may not be treated as a declaration in law in any manner so as to whittled down the right that may exists in the Bank to bring an action against the sale in any manner.
20. With these observations, the petition fails and is hereby rejected. However, there shall be not order as to costs.
(S.R.BRAHMBHATT, J.) (R.P.DHOLARIA,J.) Pankaj Page 19 of 19 HC-NIC Page 19 of 19 Created On Sat May 07 00:20:09 IST 2016