Gujarat High Court
Goopalbhai Mohanlal Mankadia And Ors. ... vs Punjab National Bank And Ors. on 13 December, 1995
Equivalent citations: AIR1996GUJ165, (1996)1GLR514, AIR 1996 GUJARAT 165
Author: H.L. Gokhale
Bench: H.L. Gokhale
JUDGMENT H.L. Gokhale, J.
1. Respondents Nos. 2 and 3 in Appeal from Order No. 629 of 1995 raised a loan of over Rs. 17 lakhs through three documents and mortgaged two shops to respondent No. 1, Punjab National Bank, some time in the year 1985 for securing the said amount. Not a single paisa has been returned so far and the amount due by now with interest thereon comes to about Rs. 40 lakhs. Respondent No. 1-bank filed three suits on 30th October, 1986 to enforce the mortgage by sale of the property and to recover the money, the three suits being Special Civil Suits Nos. 216, 217 and 218 of 1986 in the Court of the learned Civil Judge (Senior Division) at Rajkot. An order of attachment before judgment concerning these two shops was obtained on 5th May, 1987. Subsequently, preliminary decree was 'obtained on 30th September, 1987 and final decree on 28th December, 1994. Respondent No. 1 filed execution applications on 17th May, 1995 and the proclamation for auction has subsequently been issued in August, 1995. Respondent No. 1-bank applied for appointment of Receiver by Exh. 16 on 20th September, 1995. It is at this stage that the appellants in A.O. No. 629 of 1995 filed two applications bearing Exhs. 20 and 21. They contended that they are the tenants of the two shops which have been let out to them by respondents Nos. 2 and 3 and prayed that the proposed action be stayed. These two applications were rejected by the learned Judge by his order dated 5th October, 1995. Against these two orders, Civil Revision Applications Nos. 2159 and 2160 of 1995 have been filed separately by the present appellants. As far as the bank's application for appointment of Receiver is concerned, the same came to be granted on 20th October, 1995. That order is challenged by the present appellants in A.O. No. 629 of 1995. The very order appointing Receiver is challenged by respondents Nos. 2 and 3 in their appeal being A.O. No. 639 of 1995.
2. Before I deal with the arguments of the learned counsel for the parties, what is material to note is that it is not disputed that the appellants have come into these two shops on 1st June, 1989, that is, two years after the attachment before judgment was levied. It is further interesting to note that they filed Standard Rent Applications against respondents Nos. 2 and 3 on 14th December, 1989 and although summons was made returnable on 16th January, 1990, consent terms were filed on 17th December, 1989 and the application was granted on 18th December, 1989.
3. I heard at length Mr. J. R. Nanavati, senior counsel appearing with Mr. A. R. Mehta for the appellants in A.O. No. 629 of 1995 and Mr. S. M. Shah, senior counsel appearing with Mr. M. S. Shah for the respondent No. 1-bank and Mr. Y. S. Lakhani, learned advocate for respondents Nos. 2 and 3. The argumetns of Mr. Nanavati for the appellants have been adopted by Mr, Y. S. Lakhani for respondents Nos. 2 and 3. The main argument of Mr. Nanavati has been that as far as the order dated 20th October, 1995 appointing the Receiver is concerned, the same is bad in law. The application made for appointment of Re-ceiver itself does not have necessary averments to justify the same nor has the learned Judge given the necessary reasons to support it. He further submits that the application to stay the action has also been wrongly rejected. It is the submission of Mr. Nanavati that the attachment of the property effected earlier was itself void being in breach of provisions of Order XXI, Rule 54(2) and in that behalf he relied on judgment of Privy Council in the case of Muthiah Shetty v. Palniappy Shetty reported in AIR 1928 PC 139 and contended that if the attachment itself is void ab initio, the subsequent actions of auction etc. based thereon thereafter will equally be bad. In this connection, it is material to note that this plea has not been taken in the tenant's applications moved before the trial Court at all and in that view of the matter, Mr. Nanavati did not press this submission at length. He however submitted that as far as the' appointment of Receiver is concerned, the same could not be held to be valid. No grounds have been made out in the Bank's application to the trial Court to point out as to how the appointment of Receiver was necessary, just and convenient and that as a result thereof the right of the tenants to obstruct their eviction at a later point of time under Order XXI, Rule 95 gets affected. Mr. Nanavati submitted that Order XI, Rule 1(2) of Civil Procedure Code does not authorise the Court to remove from the possession or custody of the property any person whom any party to the suit does not have a: present right so to remove. Mr. Nanavati submitted that by appointing a receiver, the right of a third party under Order XL, Rule 1(2) not to be removed from the possession is sought to be affected and that the party concerned is entitled to wait until necessary action is taken under Order XXI, Rule 95. In this behalf he has relied on the. judgment reported in AIR 1920 Mad 986 in the case of Kumaraswamy v. Pasupathia Pillai. In that case the lessees were sought to be evicted by seeking the appointment of a receiver. In those facts the Court held that this cannot be done on an interlocutory application. That was not a case where third parties were inducted after an order of attachment before judgment. The facts in the Madras case are altogether different and the proposition laid down in those circumstances will not apply herein. Apart from other submissions, Mr. Nanavati laid great emphasis on the judgment of the Supreme Court in (1981) 2 SCC 675 : (AIR 1981 SC 981) in the case of Dev Raj Dogra v. Gyanchand Jain and contended that an auction purchaser is not entitled to recover physical possession from a party in view of the provisions contained in Order XXI, Rule 95 of Civil Procedure Code and that the auction purchaser must be held to be entitled only to a symbolic possession and nothing more. Mr. Nanavati therefore submitted that it was just and necessary that all these three orders ought to be interfered with and set aside.
4. Mr. S.M. Shah, learned counsel appearing for the bank, on the other hand, submitted that as far as the order dated 5th Oct. 1995 rejecting the stay of the auction is concerned, the order specifically recorded the earlier development. The order recorded that after the order of attachment before the judgment was granted on 5th May, 1987 the bailiff of the Court had levied attachment on the two shops by sealing them. The warrant was accordingly executed on 25th June 1987, and in those circumstances he submitted that the application by the so called tenants who had come into the property subsequently, seeking to stay the auction could not be entertained. This order dated 5th Oct. 1995 is referred to while appointing the receiver in the order dated 20th Oct. 1995. In the application made by the bank for the appointment of the receiver the circumstances necessitating the appointment had been narrated, namely, that whereas on the one hand the bank was interested in proceeding with the auction, the judgment-debtors were trying to see that it is defeated. The judgment-debtors were sending different persons to see to it that no party comes forward to give a good price and were also threatening the persons concerned. In the order passed on 20th Oct. 1995, the learned judge has referred to the earlier order rejecting the stay of auction proceedings and has noted that no appeal has been preferred against the same and has stated that in the circumstances the appointment of receiver was necessary. Mr. S.M. Shah has submitted that in the circumstances as far as the orders are concerned it could not be said that there was anything intrinsically wrong therein.
5. He further submitted that inducting of the so called tenants subsequently the attachment before judgment was void in view of the mandate of Section 64 of the Civil Procedure Code. That being so, relying upon the obervations made by the Supreme Court in (1994) 2 JT (SC) 619 (para25) in the case of Krishna Lal v. State of J. & K. Mr. Shah submitted that a void act is nullity or an act having no legal froce or validity. If the transaction is null and void, no rights could flow therefrom. He further made his arguments good by relying upon the judgment of the Supreme Court reported in AIR 1987 SC 2061 in the case of Nancy John v. Prabhati Lal to submit that so long as the order of attachment before judgment was running, no act done to defeat the same will be considered valid.
6. Mr. Shah also drew my attention to the rent note executed between the parties and submitted that the same could not be said to be a genuine rent note. Relying upon the judgment in the case of Maganlal v. Lakhram reported in (1968) 9 Guj LR 161 : (AIR 1968 Guj 193), his further submission was that based on Section 52 of the Transfer of Property Act, the rights of the party to the litigation could not be permitted to be eroded duping the pendency of the litigation and that as far as Gujarat High Court is concerned, he submitted that Section 65A of the Transfer of Property Act has been held to be subject to Section 52 thereof.
7. Mr. Shah has also submitted that the appellants herein were neither a party to the suit nor to the execution application and in that view of the matter their appeals or CR As should not be entertained. He also drew my attention to the fact that the appellant-tenants had filed substantive suits against respondents Nos. 2 and 3 as well as the bank for declaration that they were the tenants and seeking injunction and such injunction had not been granted.
8. Be that as it may, the main controversy before me is whether the plaintiff-judgment creditor has a present right to remove the appellants from the suit property or whether that was prohibited under the provisions of Order XL, Rule 1(2) of Civil Procedure Code. In my view, the submission of Mr. Nanavati based on two judgments of Allahabad and Madras cannot be said to be well founded and will lead to absurd results, if accepted. His plea almost amounts to this that unless there is a decree against these occupants who were put into this property after the order of attachment before the judgment, they cannot be removed from the premises. Now, as far as this present right to remove is concerned, it has to be available a party to the suit. In the instant case, the mortgagor as a landlord had that right. Besides, in view of the void transaction created between the mortgagor and the inducted tenants, the bank can certainly be said to have a present right to remove them inasmuch as no cognizance can be taken of this subsequently created relationship. Mr. Nanavati submitted that even as far as the mortgagor is concerned, to him also the protection under Order XL, Rule 1(2) will be available viz. that he cannot be removed unless the other side has a 'present right' through a decree. He relied upon the judgment of Full Bench of Allahabad High Court in Anandi Lal v. Ram Sarup reported in AIR 1936 All 495 (at page 503 column 1). This view, if accented, will lead to startling results and it will defeat the provision of Order XL, Rule 1(b) which specifically empowers the Court to remove any person from possession or custody of the property while appointing a receiver. The words 'any person' in Sub-rule (2) will have to be construed as persons other than the parties to be construed as persons other than the parties to the suit. Mr. S.M. Shah rightly pressed into service the observations of the Full Bench of the Bombay High. Court in the case of State Bank v. Trade Aid Papers Limited reported in AIR 1995 Bom 268 wherein the Court has dealt with this judgment as well as the earlier Division Bench judgment of Bombay High Court (per Bharucha, J. as he then was) in Podar Mills v. State of Bank of India, AIR 1992 Bom 277 wherein the Court held that it must be born in mind that the claim made by the company is in respect of public monies. The Full Bench has further held as follows in paragraph 12:
"The Courts while appointing Receiver under Order 40, Rule 1 of the Code of Civil Procedure may not deprive the defendant of possession, in case of immovable properties provided that the defendant is ready and willing to continue in possession as agent of the Receiver on the terms and conditions to be settled. In case, the defendant is ready and willing to accept the agency, then the defendant will continue to hold 'de facto' possession. In case the defendant is not ready and willing to accept the agency or commits default in compliance with the terms of the agency, then it is open for the Court to invite bids from outsiders for use and enjoyment of immovable property."
I am in respectful agreement with this view and in my view in such matters there is no other alternative but to take this view.
9. As far as the judgment reported in (1981) 2 SCC 675 : (AIR 1981 SC 981) is concerned, there also in my understanding, the judgment will have to be read entirely on the facts of that case. That was a case where the parties agreed to a consent decree. It was agreed that if the decretal amount was not paid within certain time, the property mortgaged could be sold in execution. It was thereafter that the judgment-debtor leased out different parties. It was much thereafter that in public auction the premises were sold and then the auction purchaser sought the possession which was sought to be obstructed by the tenants. It is under the circumstances, after discussion the earlier judgments of the Supreme Court as well as Bombay and Gujarat High Court that the Supreme Court held that in the present proceedings the auction purchaser who is an outsider and was not a party to the suit resulting in the compromise decree in execution of which the property was put up for sale and thereafter Section 52 of the Transfer of Property Act Was not applicable. In our case there is an attachment before the judgment in force. Therefore, Section 64 of the C.P.C. will come into force and the category where there is an attachment of the property prior to such third persons coming into possession has specifically been excluded by the Supreme Court in the above judgment where the Supreme Court holds as follows (at p. 90 of AIR):
"In the facts and circumstances of this case the auction-purchaser, in view of the provisions contained in Rule 95 which regulates the rights of the auction-purchaser to obtain physical possession of the portions in the occupation of the appellant as tenants. The appellants are not the judgment-debtors. They are also not claiming to be in occupation under a title created by the judgment-debtor Subsequently to any attachment of the property. There has been no question of any attachment in the instant case. The appellants are in the occupation of the respective portions as tenants and they claim to occupy the same as such. The question of validity or otherwise of the tenancy may have to be considered and determined in an appropriate proceedings."
10. In that view of the matter, the orders passed by the Court below in the present case were perfectly in accordance with law and in fact were necessary in the circumstances. Hence, Appeal from Order Nos. 629 and 639 of 1995 and Civil Revision Applications 2159 of 1995 as also Civil Revision Application No. 2160 of 1995 are dismissed.
11. Mr. Nanavati applies for submits that the stay against the appointment of receiver granted by the lower Court be continued for 12 weeks hereinafter. So is the request made by Mr. Lakhani. As far as the request of the tenants is concerned, the submission is that they would like their rights to be decided. It is however material to be noted that at one stage of these proceedings the tenants had offered to pay the set off price of Rs. 5 lakhs to purchase this very property in auction. The request was of course not accepted by the bank. Be that as it may, in my view, it will be proper if the tenants are put to term and the stay granted by the Lower Court is continued. Hence, the stay granted by the Trial Court will be continued for a period of ten weeks hereinafter subject to the tenants herein depositing an amount of Rs. 5 lakhs in the trial Court which amount will remain deposited in that Court. There is one more condition viz. that the appellants make a statement that they will not part with the premises nor will they create third party interests or any encumbrance in the property in question. The aforesaid stay is granted on the condition that the deposit will be made within five weeks from today. In the event the deposit is not made, the stay will stand vacated. The parties may apply for orders to the trial Court in case they deposit this amount and in the light of the orders of the Supreme Court and the trial Court may pass appropriate order after hearing all the parties concerned. As far as the request made on behalf of landlord judgment-debtors is concerned, since a stay is granted against this order on the request of the tenants, the landlord can also avail the benefit thereof. In his case however that will be on his paying the amount of Rs. 5 lakhs to the bank as condition precedent and that amount to be paid within five weeks from today.