Bombay High Court
Bank Of Baroda vs Dilip Babubhai Shah Prop.Of R. S. Bros. & ... on 26 March, 2019
Author: G. S. Patel
Bench: G.S. Patel
902-CRR96-18+.DOC
Atul
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COURT RECEIVER'S REPORT NO. 96 OF 2018
IN
COMMERCIAL SUIT NO. 5 OF 1997
WITH
COMMERCIAL SUIT NO. 5 OF 1997
AND
COURT RECEIVER'S REPORT NO. 21 OF 2019
Bank of Baroda ...Plaintif
Versus
Eastern Enterprises & Ors ...Defendants
COMMERCIAL SUIT NO. 2 OF 1997
Bank of Baroda ...Plaintif
Versus
Praful N Ghoghari & Ors ...Defendants
COMMERCIAL SUIT NO. 2963 OF 1997
Bank of Baroda ...Plaintif
Versus
Eastern Enterprises & Ors ...Defendants
Mr Dhaval Patil, i/b K Ashar & Co., for the Plaintiff in all the
matters.
Mr Dinesh P Shah, for Defendants Nos. 1 and 3 in CRR/96/2018./
Ms SP Trivedi, i/b A Bharat & Co., for Defendants Nos. 4(a), (b) and
(c) in Coms/5/1997..
Page 1 of 8
26th March 2019
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902-CRR96-18+.DOC
Mrs KY Ambekar, Ist Assistant to the Court Receiver, with Mr AB
Malvankar, Section Officer, are present.
Mr Kantilal Sangoi, is present in Court.
CORAM: G.S. PATEL, J
DATED: 26th March 2019
PC:-
1.These are a few among 13 suits that the Bank of Baroda filed alleging inter alia that there was a fraud perpetrated on it by one Madhusudan Bhat, previously an employee with the Bank of Baroda, in collusion with, among others, one Praful Ghoghari, one Dilip Shah, one Likesh Shah and one NM Parikh, apart from some firms or commercial entities. The suits were filed in 1997. Some suits were transferred to the Bombay City Civil Court, where a few are at trial.
2. The Bank of Baroda alleged that Bhat and his associates used the money and amounts defalcated or siphoned of from the Bank of Baroda to invest in various properties.
3. By this order today I intend to revisit some of the orders that have been previously made in regard to one set of third parties, persons who are not arrayed as defendants to any suit, but whose property has been brought into receivership. I believe I have no choice in the matter. The entire basis on which these third parties' flat has been brought into Receivership is entirely incorrect and cannot be sustained.
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4. The first order in point of time is of 18th January 2002 appointing the Court Receiver. This disposed of a Notice of Motion filed by the Plaintif. Exhibit "C" to the plaint in Suit No. 2960 of 1997 (now renumbered as Commercial Suit No. 5 of 1997) was a list of properties against various names. This was followed by an order of 4th June 2002 directing the Court Receiver to take possession of the properties mentioned in 18th January 2002 order. There was an earlier order of 19th March 1999 noting that the Inspector of Police, Crime Branch had frozen or attached certain immovable properties and jewellery but directed him not to release the property without an order of the Magistrate concerned.
5. The property in question is the fourth of these five (shown in italics below):
Sr. No. Details of suit flat Status1.
1. Flat No. 4, at Bhoumik Formal possession taken on 6th CHS Ltd., Kandivali August 2002 from Mrs Rohini Dilip (West), Mumbai. Shah
2. Flat No. 201-A, situated Physical possession taken on and known as Shivkurupa 17th December 2003 from the Coop Soc., "A" Wing, police authority (C.I.D.) by affixing Andheri (E), Old Nagardas possession board and kept under Road, Mumbai. lock and seal.
3. Flat No. 302-B, 3rd floor, Formal possession taken on 10th situated at Shubhshanti March 2004 from Mr PN Ghoghari Complex, and handed over the said flat to Dhahanukarwadi, Defendant No. 1 to continue in Kandivali (W), Mumbai occupation as agent of the Court 400 067 Receiver.
4. Flat No. 201 on 2nd Floor On 10th March 2004, third party at Vraj Castle, was found in possession hence Dhanukarwadi, Kandivali could not execute Court's Order (W), Mumbai 400 067. dated 18th January 2002.
Page 3 of 8 26th March 2019 ::: Uploaded on - 27/03/2019 ::: Downloaded on - 28/03/2019 01:44:20 ::: 902-CRR96-18+.DOC Sr. No. Details of suit flat Status1. 5. Flat No. 603, situated at Various appointment were fixed by Ram Tower, Yogi Nagar, this registry for executing the order
Link Road, Borivali (West), but due to non co-operation of Mumbai of M.H. Bhat. parties possession could was not taken by Court Receiver.
6. I am making, however, an order for the reasons that follow in respect of the flat at Serial No. 4 releasing it from Receivership immediately.
7. It seems that some time in 1995, before the suit was filed, the Crime Branch began its investigations into the complaint obviously lodged by the Bank of Baroda. To cut a very long story short, it seems that those accused of this bank fraud told the investigating authorities that they had used these ill-gotten gains to invest in various properties and assets. One of Bhat's fellow alleged conspirators was PN Ghoghari, also a Defendant to some suits. It appears that he informed the Crime Branch in 1995 that he had paid some amount to M/s VD Developers, the developers of the Vraj Castle building, and that he did so to acquire Flat No. 201. Paragraph 11 of an Affidavit in Reply filed on behalf of the Bank of Baroda in Court Receiver's Report No. 96 of 2018 says that the Crime Branch then told the developer "not to deal with or transfer or deliver possession" of this flat No. 201.
8. There is no agreement of sale between VD Developers and Ghoghari for Flat No. 201 at all. None has ever been produced. It is one thing for the Crime Branch to attach or seize an asset that has been acquired, i.e. in which title has passed to the accused. It is Page 4 of 8 26th March 2019 ::: Uploaded on - 27/03/2019 ::: Downloaded on - 28/03/2019 01:44:20 ::: 902-CRR96-18+.DOC quite another for the Crime Branch, acting on the basis of what the accused himself said, to attempt to deliver some sort of civil injunction restraining sales or alienations of a property to which no title can in law be said to have passed to the accused.
9. These dates are important because this action of the Crime Branch is of 1995, a good two years before the suit was even filed. It seems that on 10th March 2014, as I have noted in my previous orders, the Court Receiver found the Sangoi family in possession of Flat No. 201 at Vraj Castle. I made made orders dated 20th February 2018 and 10th December 2018 inter alia in regard to this flat. Possession was found to be with Kantilal Sangoi and Nilam Kantilal Sangoi. Kantilal Sangoi and his son are present in Court as they were yesterday. They have furnished the Court Receiver with copies of their documents. These make for the most interesting reading. They show that VD Developers entered into an agreement for sale with Nilam Kantilal Sangoi on 4th September 2000. The agreement is registered. At the time when this agreement was executed, there was no Receiver at all. The Court Receiver was appointed for the first time on 18th January 2002, a good two years later.
10. No title to the Vraj Castle flat ever passed to any of the Defendants accused of having cheated the Bank of Baroda or having siphoned money from it, i.e. Bhat or Ghoghari. It was merely a statement by one defendant that he had paid some amount VD Developers that resulted in the Crime Branch advising or cautioning the developer. There was no operative injunction or restraint against the developer. There could not have been. It is most certainly not Page 5 of 8 26th March 2019 ::: Uploaded on - 27/03/2019 ::: Downloaded on - 28/03/2019 01:44:20 ::: 902-CRR96-18+.DOC for the Crime Branch to issue civil injunctions, let alone decide questions of title. It is incomprehensible, therefore, how the Court Receiver could have "obtained" possession of any kind, symbolic, formal or otherwise, from the Crime Branch of Flat No. 201 in Vraj Castle. There is absolutely no manner of doubt that this agreement between Sangoi and VD Developers is registered and passes good title to the Sangois. It cannot be dislodged in this suit. The only manner in which the Bank of Baroda can claim superior rights is to show that it was a flat in which Bhat or Ghoghari had acquired title. That is in fact nobody's case. If Ghoghari proves he paid money to VD Developers, and it is shown that the money was illicitly obtained, it can be traced to whatever hands it passes. But unless that money has been used to acquire a tangible asset, and there is a legally valid document transferring title, the Bank cannot proceed against some flat that Ghoghari chose to name but for which he had no agreement or any document of title.
11. For this reason, the Court Receiver will stand immediately discharged in respect of Flat No. 201, Vraj Castle, Dhanukarwadi, Kandivali (West), Mumbai 400 067 forthwith without passing accounts. The Sangois are not defendants to any of the suit. No further directions are required. There presence in this court and in these proceedings is no longer necessary. To make it abundantly clear, since they are here in person, there is no longer any order in these suits against them or against their Flat No.201 at Vraj Castle. They may deal with it in any way they wish.
12. Flat No. 603 at Ram Tower, Borivali (West), at Sr No. 5, stands on a diferent footing. This flat is said to have been acquired Page 6 of 8 26th March 2019 ::: Uploaded on - 27/03/2019 ::: Downloaded on - 28/03/2019 01:44:20 ::: 902-CRR96-18+.DOC on 4th December 1994 by Madhusudan Bhat and Nila Madhusudan Bhat from one Taradevi Jaiswal. Madhusudan Bhat is in fact one of the principle Defendants in the suit and is one of the persons mainly accused along with Ghoghari of having cheated the Plaintif-Bank. It is he, Bhatt, who was an employee of the Bank of Baroda. There is no dispute that Bhat claimed to have acquired the flat from Taradevi Jaiswal on 4th December 1994. It will not be clear until the trial of the suit how Bhats were able to pay the consideration for this flat and whether the Ram Tower flat is, therefore, an asset unlawfully acquired with funds siphoned from the Bank of Baroda or otherwise. This is, therefore, an asset that will have to continue in Receivership and will have to be protected as such. I have previously passed orders in that regard and there is no reason to revisit the same in this order.
13. The Court Receiver will proceed to take formal possession of Flat No. 603 at Ram Tower. Mrs Nila Bhat and family are represented in Court today. Formal possession will be handed over and compliance report will be placed on 22nd April 2019. Any attempt to delay or obstruct will invite an immediate action in contempt.
14. Flat No. 201-A, Shivkrupa, at Sr No. 2, is in a similar situation to Flat No. 603 in Ram Tower. This flat is also said to have been acquired by PN Ghoghari. That will, therefore, stand on the same footing as Sr No. 2, since Ghoghari is also said to have been involved in the same fraud. This will also apply to Flat No. 302-B in the Shubh Shanti Complex, at Sr No. 3 above. It is also said to have been acquired by PM Ghoghari.
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15. The Advocates appearing for Ghoghari will, on or before 12th April 2019, file an Affidavit in Court Receiver's Report No. 694 of 2015 setting out copies of all the documents of title relating to Flat Nos. 201-A and 302-B, i.e. those at Sr Nos. 2 and 3 above.
16. Flat No. 4 at Bhoumik CHS Ltd, Kandivali (West), at Sr No.1, is said to stand in the name of Rohini Dilip Shah. Her husband Dilip Shah was one of the Defendants in some of the suits and is also said to have involved in the defalcation by the Bank of Baroda. Rohini Dilip Shah has produced no document whatsoever regarding the acquisition of Flat No. 4. The Receivership of that flat will continue and she will also file, on or before 12th April 2019, an Affidavit in Court Receiver's Report No. 694 of 2015 setting out the relevant documents of title.
17. It is once again clarified that it is only the Vraj Castle flat that is released from Receivership.
18. List the Court Receiver's Report for further orders in regard to all the flats, except Vraj Castle, on 22nd April 2019 at 3.00 pm. (G. S. PATEL, J) Page 8 of 8 26th March 2019 ::: Uploaded on - 27/03/2019 ::: Downloaded on - 28/03/2019 01:44:20 :::