Bombay High Court
Kuber Housing Investment And Finance vs Tci Finance Limited And Others on 13 June, 2013
Author: D.Y.Chandrachud
Bench: D.Y. Chandrachud, A.A. Sayed
1 of 7 APP.128.2013
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.128 OF 2013
IN
CHAMBER SUMMONS NO.1867 OF 2010
IN
EXECUTION APPLICATION NO.441 OF 2006
Kuber Housing Investment and Finance
Private Limited Appellant
versus
TCI Finance Limited and others Respondents
Mr.P.B.Shah i/by Vivek Salunke for Appellant.
Ms.Shilpa Kapil for Respondents.
CORAM : DR.D.Y.CHANDRACHUD AND
A.A.SAYED, JJ.
DATE : 13 June 2013
PC :
1. Admit. Learned counsel for the Respondents waives service. The appeal is taken up for hearing and final disposal, by consent and on the request of the learned counsel.
2. Leave granted on the oral request of the counsel for the Appellant to correct the name of the Appellant in the memo of appeal. The amendment be carried out forthwith. Verification is dispensed with.
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3. This appeal arises from an order of the learned Single Judge dated 18 June 2012 on a Chamber Summons that was taken out by the Appellant for raising an attachment which was levied in respect of immovable property. The property consists of office premises being A-1, Inder Mohini Co-operative Housing Society Ltd; 1/22, Dadabhai Road, Linking Road (Extension), Santacruz (W), Mumbai-400 054.
4. In a suit instituted by the First Respondent against the Second Respondent and the Third Respondent, a decree was passed on 5 April 2004 by the Third Senior Civil Judge, City Civil Court, Secunderabad in the amount of Rs.78.39 lakhs together with future interest @ 6% p.a. An Execution Application was instituted before this Court in 20061, in the course of which an attachment was levied on the immovable property in question. The Appellant took out a Chamber Summons for raising the attachment, claiming title on the basis of a registered deed of transfer dated 29 January 2005. The attachment was levied on 8 November 2006. The Chamber Summons for raising the attachment was dismissed by the learned Single Judge for the following reasons :
"3. The applicant has not paid any consideration thereunder. The consideration is shown by way of certain adjustments of liabilities. The transfer of M/s.Mahalakshmi Factoring Services Ltd; is represented by its authorised signatory and constituted attorney one Mr.P.Manivelan. Even despite the transfer Mr.P.Manivelan continued to pay the society charges for the suit flat. The transaction is neither bonafide, nor clear. The transfer in favour of the Applicant is rightly rejected by the Society and must be also rejected by the 1 Execution Application No.441 of 2006 ::: Downloaded on - 27/08/2013 20:46:21 ::: 3 of 7 APP.128.2013 Court. Based upon such a transfer the execution of a valid decree obtained by the Plaintiff cannot be frustrated. There is no transfer from the Defendants to the Applicant/Claimant/Objector."
5. The grievance of the Appellant is that the Appellant, having raised a claim based on title to the immovable property, in the course of execution proceedings, it was necessary for the Executing Court to adjudicate upon the claim. Instead, it has been urged that the learned Single Judge without framing any issue and without allowing an opportunity to the Appellant to lead evidence, came to the conclusion that the transaction on the basis of which the Appellant claims possession was neither bona fide nor clear and rejected the transfer in favour of the Appellant. Counsel submitted that a claim by a third party purchaser who sets up an independent title in the course of execution proceedings has to be adjudicated upon by the Executing Court bearing in mind the principles which are enunciated in Order XXI, Rules 97, 98, 100 and 101 of the Code of Civil Procedure, 1908.
6. On the other hand, it has been urged on behalf of the First Respondent that the Executing Court has dealt with the case of the Appellant and if the Appellant desired to lead any evidence in support of its claim of title, it was for the Appellant to assert a right to do so before the learned Single Judge. In the present case, it has been urged that the transfer of title to the Appellant has taken place without actual payment of money since the ostensible consideration is an adjustment of the dues owing to the Appellant. Hence, it is urged that the order of the learned Single Judge does not warrant any interference in the appeal.
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7. For the purposes of the present appeal it will be necessary for the Court to indicate the basis on which the Appellant has claimed title to the property which forms the subject matter of the execution application. The decree which is sought to be placed in execution was passed in a suit instituted by the First Respondent against the Second Respondent (Delvin Electric Pvt.Ltd.) and the Third Respondent (Rajeev M. Dixit) who was both a Managing Director and a guarantor in respect of the facilities which were extended by the First Respondent to the Second Respondent. The Third Respondent was also a proprietor of a concern by the name of Apro Exports to which loan facilities were extended by TVS Lakshmi Credit Limited. The collateral security for the transaction is alleged to be a deposit of title deeds of the immovable property in question. The Appellant has relied upon a letter of sanction dated 6 December 1996 and a loan agreement executed between TVS Lakshmi Credit Limited and Apro Exports. According to the Appellant, a deed of assignment was executed between TVS Lakshmi Credit Limit and a company by the name of Harita Finance Limited on 17 July 1998. The Appellant has relied upon an order passed by the Madras High Court in a Company Petition2 between TVS Lakshmi Credit Limited and Harita Finance Limited. According to the Appellant, Harita Finance Limited informed Apro Exports on 19 December 2000 that it had assigned its book debts and related assets under the loan agreement to Mahalakshmi Factoring Services Limited. An irrevocable power of attorney is alleged to have been executed by the Third Respondent authorizing Mahalakshmi Factoring Services Limited to sell the 2 Company Petition No.142 of 1998 ::: Downloaded on - 27/08/2013 20:46:21 ::: 5 of 7 APP.128.2013 property on 29 January 2005. An agreement is alleged to have been executed between Mahalakshmi Factoring Services Limited and the Appellant. The agreement recites that the Appellant was a recovery agent of Mahalakshmi Factoring Services Limited to which services were rendered on a commission basis. Mahalakshmi Factoring Services Limited had agreed to transfer the property in favour of the Appellant in consideration of the outstanding dues. The agreement recites that the vendor was in possession of the title deeds and was in possession of the flat since 2000. The Appellant has also stated that there were certain proceedings before the Debt Recovery Tribunal arising out of a claim filed by the State Bank of India against Apro Exim Private Limited and Apro Exports Private Limited. The Appellant intervened in the recovery proceedings and sought a raising of the attachment which was levied on the same immovable property. The Recovery Officer of DRT-II by an order dated 26 September 2008 came to the conclusion that the disputed property could not be sold until the priority of the bank was decided by an appropriate authority or unless the intervener consented for the sale.
8. We have indicated the basis and foundation on which the Appellant has claimed title to the immovable property. We are not called upon at this stage to evaluate whether the Appellant has established a title to the property, since in our view it was for the learned Single Judge in the course of the execution proceedings to adjudicate upon that question once the Appellant had sought a lifting of the attachment on the ground that it was the Appellant who had title to the property. Such a claim in the course of execution ::: Downloaded on - 27/08/2013 20:46:21 ::: 6 of 7 APP.128.2013 proceedings cannot be disposed of summarily. A claim of this nature cannot be asserted by way of an independent suit but has to be raised in the course of the execution proceedings. Order XXI Rule 101 of the Code of Civil Procedure, 1908 postulates that all questions (including the question relating to right, title or interest in the property) arising between the parties to a proceeding on an application under Rule 97 or Rule 99 and relevant to the adjudication of the application shall be determined by the Court dealing with the application and not by a separate suit. The meaning and purport of these rules of Order XXI has been dealt with in several decisions of the Supreme Court including Ashan Devi and Another Vs. Phulwasi Devi and others3. The Supreme Court observed after referring to the earlier decisions that the provisions of Order XXI, Rules 97 and 99 have been widely and liberally construed to enable the executing court to adjudicate the inter se claims of the decree-holder and third parties in the course of the execution proceedings themselves to avoid prolongation of litigation by driving parties to file independent suits 4. The Supreme Court further observed as follows :
"25. In interpreting the provisions of Order 21 Rule 97 of the Code and the other provisions in the said order, the aims and objects for introducing amendment to the Code cannot be lost sight of. Under the unamended Code, third parties adversely affected or dispossessed from the property involved, were required to file independent suits for claiming title and possession. The legislature purposely amended provisions in Order 21 to enable the third parties to seek adjudication of their rights in execution proceedings themselves with a view 3 (2003)12-SCC-219 4 At para 21, page 229 of (2003)12-SCC-219 ::: Downloaded on - 27/08/2013 20:46:21 :::
7 of 7 APP.128.2013 to curtail the prolongation of litigation and arrest delay caused in execution of decrees."
9. Having regard to the well settled position of law, we are of the view that the summary manner in which the learned Single Judge has dealt with the Chamber Summons is untenable. The Chamber Summons required the Executing Court to adjudicate upon the title claimed by the Appellant on the basis of a registered agreement dated 29 January 2005. We clarify that whether the Appellant has established such a title is a matter which would not stand adjudicated by this judgment. Since the learned Single Judge has not dealt with the issue in the manner as required by the judgment of the Supreme Court noted earlier, we allow the appeal and while setting aside the order of learned Single Judge, restore the Chamber Summons for a disposal afresh.
10. The appeal is accordingly disposed of. There shall be no order as to costs.
(DR.D.Y.CHANDRACHUD, J.) (A.A.SAYED, J.) MST ::: Downloaded on - 27/08/2013 20:46:21 :::