Punjab-Haryana High Court
R.J. Agro Industries vs Parkash Rice And General Mills And Ors. on 3 July, 2007
Equivalent citations: (2007)4PLR690, AIR 2007 (NOC) 2077 (P. & H.), 2007 (6) AKAR (NOC) 872 (P.&H.)
JUDGMENT Vinod K. Sharma, J.
1. This order shall dispose of C.R No. 1565 of 2004 titled R.J. Agro Industries v. Parkash Rice & General Mills, and C.R. No. 5112 of 2006 titled Yogesh, Kumar v. R.J. Agro Industries, as common questions of law and facts are involved in both these revision petitions.
2. For facility facts are being taken from C.R. No. 1565 of 2004.
Present revision petition has been filed against the order dated 27.2.2004 passed by learned Civil Judge (Senior Division), Kurukshetra disposing of the application filed on behalf of the applicants Raj Kishan, M/s Bhagat Ram Jai Bhagwan, Gupta Trading Company., OBC Thanesar, U.H.B.V.N, Pipli, Sales Tax Department, Bajaj Rice Mill, M/s Shish Pal Yash Pal for payment and application-of applicant Annan for Imperial India/Auction Purchaser for confirmation of sale.
3. M/s R.J. Agro Industries, Patiala; the petitioner herein filed: a civil suit for the recovery against M/s Parkash Rice & General Mills, Pundri, Tehsil Thanesar. Said suit was decreed for the recovery Rs. 13,56,018.75 along with costs and interest from the date of filing of the suit till realisation vide judgment and decree dated 3-1.3.2003.
4. The petitioner moved ah application for the recovery of Rs. 26,18,998/- i.e. the decretal amount along with costs and interest along with future-interest in terms of the judgment and decree and in execution learned Executing Court was pleased to attach property measuring 24 kanals along with superstructure of the judgment debtor. The attached property was mortgaged with me Oriental Bank of Commerce, Thanesar.
5. The bank had filed a suit for recovery against the judgment debtor and its partners. However, in the said suit the matter was settled in the Lok Adalat on27.7.2003 and under the said settlement as per the orders passed by the Debt Recovery Tribunal, Chandigarh, Judgment Debtor had agreed to pay a sum of Rs. 90.59 lass along with interest to th6 bank. Respondent Nos. 1 to 3 had also mortgaged the-residential house in favour of the bank.
6. Vide order dated 18.10.2003 learned Civil Judge (Senior Division), Kurukshetra on an application moved under Order 21 Rule 66 of the Code of Civil Procedure (for short the Code) for the sale of the attached property was pleased to order the sale of the property subject to mortgage as per the following schedule:
Notice Munadi at spot Auction Report 31.10.03 15.11.03 6.12.03 20.12.03
7. In pursuance to the order dated 18.10.2003 the property was auctioned on 6.12.2003 for a sum of Rs. 1,39,00,000/- which was purchased by M/s. Imperial India, Kurukshetra, respondent No. 14 who sought the Confirmation of sale. After the sale, respondents No. 4 tol3 moved an application under Section 73 of the Code praying for rateable distribution of the sale proceeds. Said application came up for hearing before the Executing Court oh 27.2.2004 and the same was disposed of by observing that the Oriental Bank of Commerce had the preferential right/first right to recover the outstanding amount from the mortgage/hypothecated property of the firm. It was also observed that vide order dated 28.8.2003 a decision had already been taken that the amount so realised from the Sale of mortgaged property shall be first payable to the bank being a secured creditor and the said decision was affirmed by the learned Additional District Judge, Kurukshetra vide order dated 6.4.2003 as well as by Shri U.N. Mittal, learned District Judge, Kurukshetra vide order dated 26.8.2003. Said order was also affirmed in Civil Revision No. 3186 of 2003 decided 6ri 15.7.2003 by this Court. The order passed by this Court reads as under:
The present petition is against the order passed by the Additional District Judge, kurukshetra whereby the appeal filed by the decree-holder against the order of recall of the attachment order passed-by the Executing Court was accepted order was restored.
At the outset, it may be stated that on the application of the judgment debtor, property was ordered to be released from the attachment. The appeal against the said order has been accepted by the Additional District Judge, Kurukshetra. In terms of Order 21 Rule 58 of the Code of Civil Procedure, such order has the force of decree. In view thereof, order passed by the Additional District Judge is appealable order being decree. Hence, this petition is required to be registered as execution second appeal against the decree. The office is directed to register the present revision petition as Execution Second Appeal.
Learned Additional District Judge has found that the Bank is mortgagee of property, therefore, there is no impediment in sale of the mortgaged property subject to the right of the mortgage. The grievance of the appellant is that the appellant has entered into a compromise before the Debt Recovery Tribunal. The Bank as secured creditor has preferential right over the unsecured creditor. Therefore, the order passed by the Additional District Judge (sic) and sustainable.
I have gone through the order and find that the executing court has held that the Debt Recovery Tribunal has already passed a decree for recovery. There is no doubt hat the claim of the secured creditors out of the mortgaged property has to be first satisfied. In view thereof objection of the appellant is not tenable. The property can be attached and sold by the Civil Court. However, claim of the secured creditors has to be satisfied first if the property was subject matter of mortgage. The counsel for the appellant further states that there are statutory dues. Such dues are also required to be dealt within the manner prescribed by the law out of the property attached.
There is no illegality in the order passed by the learned appellate court.
No substantial question of law arises. Dismissed.
8. In the impugned order it was also observed that the Sales Tax Authorities would also have a preferential right qua the other decree holder. It was further held that the claim of U.H.B.V.N. being statutory dues also had preferential right over the private decree holders. In the said order it was specifically observed that Shri S.K. Goyal, learned Counsel appearing for the decree holder suffered a statement on 10.2.2004 that he had no objection if the sale is confirmed in view of the order dated 18.10.2003 the order further observed that no objections were filed against the sale of judgment debtor Parkash Rice Mills or any of the parties. Thus, the sale was confirmed.
9. Mr. Arun Bansal, learned Counsel appearing on behalf of the petitioner vehemently contended that the impugned order passed by the learned Executing Court being contrary to the provisions of Section 73 of the Code cannot be sustained. The contention of the learned Counsel for the petitioner was that under Section 73 of the Code a property which is sold subject to mortgage or charge the mortgagee or the encumbrance is not entitled to share anything surplus arising from such sale. Learned Counsel for the petitioner made reference to Annexure P.1 attached with the Civil Revision to contend that the sale was ordered subject to mortgage and therefore, it was not open to the Executing Court to have ordered that the amount payable to the bank should be first satisfied. Learned Counsel for the petitioner made reference to Annexure P.1 attached with the Civil Revision to contend that the sale was ordered subject to mortgage and therefore, it was not open to the Executing Court to have ordered that the amount payable to the bank should be first satisfied. Learned Counsel for the petitioner also contended that the sale was liable to be set aside as the proclamation made for sale was not proper and therefore, was in violation of the mandatory provisions of law. The contention of the learned Counsel for the petitioner, therefore, was that in terms of order 21 Rule 66 of the Code it was incumbent upon the court to have complied with the condition of disclosure of any encumbrance to which the property was subjected to. It was contended that it was also the requirement of law that every other details which were material for purchaser to know in order to judge the nature of the value of the property were also required to be given. The contention of the learned Counsel for the petitioner, therefore, was that once in the proclamation no mention about the mortgage was made it has to be treated violation under Order 21 Rule 66 of the Code which is mandatory in nature and therefore, the sale is liable to be set aside. The contention of the learned Counsel for the petitioner was that as the order was contrary to Section 73 of the Code same was liable to be set aside and the petitioner was entitled to decretal amount by ignoring the claim of the secured creditor or in the alternative the sale being in violation of the provisions of Order 21 Rule 66 of the Code was liable to be set aside.
10. Learned Counsel for the petitioner argued that in view of the law laid down by Hon'ble Supreme Court in the case of Kabidi Venku Sah v. Syed Abdul Hai the sale of the property which is attached by the creditor can only be sold subject to mortgage and thus, the sale would only be with respect to mortgagor's equity of redemption as transfer of title to the auction purchaser would be subject to the right of mortgagee, which would go with the property. Learned Counsel for the petitioner further made reference to the judgment of Hon'ble Madras High Court in the case of Venus Chit Fund and Finance Corporation v. Pondicfiery Co-operative Housing Society Ltd. 2004 (3) R.C.R. (Civil) 836 : 2004 (3) Civil Court Cases 234 to contend that in view of the proviso (a) to Section 73 the mortgagee of the property is not entitled to rateable distribution in any surplus arising from the sale of such property in pursuance of a decree obtained by another decree holder. The mortgagee can have his remedy in the manner known to law in independent proceedings for the realisation of whatever sums due to him/it pursuant to the said mortgage.
11. Mr. P.K. Gupta, learned Counsel appearing for the petitioner in C.R. No. 5112 of 2006 challenged the order of sale dated 18.10.2003 as also the order impugned in C.R. No. 1565 of 2004 i.e. the order dated 27.2.2004.
12. Besides adopting the arguments raised by Mr. Arun Bansal, learned Counsel for the petitioner in C.R. No. 5112 of 2006, he contended that the petitioner was one of the Judgment debtors who was not served with any notice and therefore, the sale of the property without notice to the petitioner was bad in law. In support of this contention learned Counsel for the petitioner placed reliance on the judgment of this Court in the case of Randhir Singh v. New Bank of India 2003 (1) Civil Court Cases 530 to contend that the sale without notice to the judgment debtor is nullity.
13. Mr. Arun Jain and Mr. Jagdish Manchanda, Advocates, learned Counsel appearing for respondent No. 14 vehemently contended that it is not open to the petitioner to raise the plea against the confirmation of sale, distribution of the sale proceeds in view of the order passed by the learned Executing Court which were confirmed upto to this Court in C.R. No. 3180 of 2003 decided on 15.7.2003.
14. It was next contended, by the learned Counsel for the petitioner that the decree holder i.e. M/s R.J. Agro Industries were duly represented through Shri S.K. Goyal, Advocate and no objections to the sale were filed by the J.D. i.e. M/s Parkash Rice and General Mills.
15. It was also contended by the learned Counsel for the respondent that it is not open to the parties to raise objections against the sale in view of the provisions of Order 21 Rule 90 of the Code wherein it has been provided that no application to set aside a sale under this Rule shall be entertained on any ground which the applicants could have taken on or before the date on which the proclamation of the sale was drawn up.
16. Mr. V.B. Aggarwal, learned Counsel appearing on behalf of respondents No. 9 and 10 supported the arguments raised'by the learned Counsel for respondent No. 14. However, he added that the sale was ordered to be confirmed with the consent of all the parties and therefore, it is not open the petitioner now to challenge the sale on any ground.
17. Learned Counsel for the petitioner also contended that the property was worth more than Rs. 3 crores which has been sold on lesser price and therefore, the sale deserves to be set aside on this ground.
18. I have considered the arguments raised by the learned Counsel for the parties. As regards the challenge to the sale is concerned it is suffice to note that in the impugned order it has been specifically mentioned that no objections; whatsoever, against me sale were filed by the Judgment Debtor M/s Parkash Rice and General Mills or any other; parties. Once no objection to the sale was taken by the parties before the learned Executing Court it is not open to the parties to raise the said plea for the first time before this Court in exercise of revisiorial jurisdiction.
19. It may further be mentioned that learned Counsel appearing for the petitioner in C.R. No. 1565 of 2004 had suffered a statement on 10.2.2004 to the effect that he has no objection to the confirmation of sale. Similarly the judgment debtor did not raise any objection. T>e contention of Shri P.K. Gupta, learned Counsel for the petitioner in C.R. No. 5112 of 2006 that sale was without any notice cannot be accepted firstly for the reason that the presence of the counsel is marked for the judgment debtor. In any case, the petitioner in C.R. No. 5112 of 2006 is judgment debtor and once a notice has been issued to the firm it was not open to the petitioner to have claimed an independent notice especially when the counsel appeared for the judgment debtor i.e. firm of which petitioner in C.R. No. 5112 of 2006 was partner.
20. The contention of the learned Counsel for the petitioner in C.R. No. 1565 of 2004 to the effect that the impugned order is in violation of Section 73 of the Code looks prima facie to be correct] However, when the same is seen deeply the same cannot be accepted. It cannot be disputed that the mortgagee is not entitled to share in the proceed of the sale along with other decree holders as he retains his right to proceed against the mortgaged property as the sale made in the present case was subject to mortgage. If the matter was taken up for the first time then certainly there was force in the contention raised by Mr. Arun Bansal, learned Counsel appearing for the petitioner. But it maybe noticed that in the present case the secured creditor had challenged the attachment of the property for sale in execution of the decree. However, on the application moved by the bank a specific order was passed by the learned trial court directing therein that these cured creditor would have the first charge to recover the amount in terms of the order passed by the Debt Recovery Tribunal. The said order was challenged before the learned District Judge as well as before this Court and order passed by the learned executing Court ordering preferential treatment to the mortgagee already stood upheld and. that order has attained finality. In the absence of challenge to that order it is not open to the petitioner now to contend that the bank would not be entitled to any share in the property as per the provision of Section 73 of the Code.
21. It may further be noticed that even before the learned Executing Court, the counsel appearing for the decree holder did not raise; any objection to the confirmation of sale which was subject to the orders passed by this Court in C.R. No. 3180 of 2003.
22. Section 73 of the Code though mandatory rules give an option to the mortgagee, to have the sale with a right to claim rateable distribution. The order passed by this Court in C.R. No. 3190 of 2003 therefore, amounted to the consent of the mortgagee to the sale subject to its right to recover its amount, In exercise of power under Article 227 of the Constitution, of India it is not open to this Court, to differ with the order passed by this Court in C.R. No. 3180 of 2003 and consequently, it has to be held that there is no, error in the order passed by the learned executing Court in protecting preferential right of the mortgagee to have its claim. It is father pertinent to note here that in pursuance to the order passed the mortgagee had already been paid the total amount and part of the amount has also been accepted by the petitioner under the rateable distribution and therefore, it is not open to the petitioner now to challenge the rateable distribution or sale as is sought to be done.
23. Consequently, finding no force in these two revision petitions, the same are dismissed with no order as to costs.