Madhya Pradesh High Court
Branch Manager Central Bank Of India vs Director M/S Shubham Manglam ... on 21 January, 2020
Author: S.C.Sharma
Bench: S.C.Sharma
Writ Petition No.5364/2012 1
HIGH COURT OF MADHYA PRADESH: BENCH AT INDORE
Writ Petition No.5364/2012
Central Bank of India v/s M/s Shubham Mangalam Construction
(P) Limited
Indore, dated 21.01.2020
Shri Abhijeet C. Thakur, learned counsel for the
petitioner.
Shri Abhinav Malhotra, learned counsel for the
respondent.
The petitioner before this Court has filed this present petition under Article 227 of the Constitution of India challenging the legality and validity of an order dated 20.04.2012 passed by the Debts Recovery Appellate Tribunal, Allahabad in Appeal No.R-15/2012. The Appellate Tribunal by the aforesaid order, has directed the petitioner / Bank to refund the entire amount paid by the respondent with interest, which has been received towards sale consideration.
02. The facts, as stated in the writ petition as well as in the reply filed by the respondent, reveal that the petitioner / Bank has filed a civil suit for recovery against M/s Jiwaji Rao Sugar Company Limited before the District Judge, Mandsaur and after the enactment of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (hereinafter referred as RDDBFI Act, 1993) and after establishment of Debt Recovery Tribunal at Jabalpur, the civil suit was transferred from the Court of District Judge, Mandsaur to Debt Recovery Tribunal, Jabalpur for adjudication. The suit was decreed and in the executions proceedings under the orders of the Company Judge, High Writ Petition No.5364/2012 2 Court of Madhya Pradesh, Bench at Indore passed in Company Petition No.25/2001, three properties under the ownership of M/s Jiwaji Rao Sugar Company Limited were subjected to auction. The auction of the properties took place on 18.12.2006 and the details of the properties are as under:-
Lot A : Land Lot B : Plant and Machinery Lot C : Super Structures - Factory building, Godown, Stores, Garage, Servant Quarters, Rest House, Admin Block, Staff buildings etc.
03. The undisputed facts reveal that the sole respondent / M/s Shubham Manglam Construction Private Limited was declared as the highest bidder in respect of the property mentioned in Lot - B and Lot - C movable.
04. The most important aspect of the case is that in respect of Lot - B, the auction sale was confirmed by the Recovery Officer, Debt Recovery Tribunal, Jabalpur on 18.12.2006 after receipt of full auction amount. In respect of Lot - C, the respondent / Company was required to deposit Rs.1,21,51,000/- and the same was deposited within fifteen days, as the Company was required to deposit the same within fifteen days from 18.12.2006, however, in spite of the fact that the entire amount was deposited towards Lot - C within the stipulated time, the sale confirmation was withheld and no sale certificate was issued. It is an undisputed fact.
05. The undisputed facts further reveal that the petitioner / Bank took no steps in getting the sale certificate Writ Petition No.5364/2012 3 issued even though the entire consideration was received and as the property was deteriorating and was being subjected to theft, the respondent submitted various representation for refund of the amount along with the interest. The sole respondent before this Court has also moved an application before the Company Judge seeking refund of the deposited auction amount along with the interest, however, the Company Judge directed the Recovery Officer of the Bank to adjudicate the application of refund preferred by the respondent / Company. The respondent / Company submitted an application before the Recovery Officer for refund of the amount and the Recovery Officer by an order dated 10.02.2010 dismissed the application i.e., after three years and confirmed the auction sale.
06. Thereafter, the respondent / Company preferred an appeal against the order passed by the Recovery Officer dated 10.02.2010 before the Presiding Officer, Debt Recovery Tribunal and the appeal was dismissed by the Presiding Officer on 28.02.2011.
07. The respondent / Company, being aggrieved by the order dated 10.02.2010 and order dated 28.02.2011, preferred a second appeal, as provided under the statute, before the Debt Recovery Appellate Tribunal, Allahabad and the appeal has been allowed directing refund of the amount to the respondent / Company. The order has been passed by the Appellate Tribunal on 20.04.2012 and against the aforesaid order, the present writ petition has been filed under Article 227 of the Constitution of India.
Writ Petition No.5364/2012 408. The order passed by the Appellate Tribunal reveals that the respondent before this Court was the highest bidder for Lot - C and entire amount was deposited by the respondent within the stipulated time frame work i.e., within fifteen days as per Section 9 of the RDDBFI Act, 1993. It has also been held that the Recovery Officer, though has confirmed the sale and has issued a sale certificate in respect of Lot - A and Lot - B on 28.12.2006, did not confirm the sale in respect of Lot - C and no cogent reason was assigned for not confirming the sale except for making a bald statement that the record was with the Company Court.
09. Before this Court also, it has been vehemently argued by learned counsel for the petitioner / Bank that the record was with the Company Judge, and therefore, no sale certificate was issued in respect of Lot - C.
10. This Court really fails to understand that if the record was with the Company Court, how sale certificate in respect of same auction, in which there were three lots, sale was confirmed in respect of Lot - A and Lot - B and sale was not confirmed in respect of Lot - C. There was no objection also filed by anyone for not confirming the sale in respect of Lot - C.
11. Another important aspect of the case is that as per the statutory provision, the amount was deposited by the respondent / Company within fifteen day. For three years, sale was not confirmed nor any sale certificate was issued and the moment in 2010 when an application was preferred before the Recovery Officer for refund of amount, the Writ Petition No.5364/2012 5 Recovery Officer has shown unholy haste in passing the order dated 10.02.2010 dismissing the application and at the same time confirming the auction sale.
12. The petitioner / Bank has challenged the order passed by the Appellate Tribunal under Article 227 of the Constitution of India and it has been contended that there is no provision for refund of auction sale amount under the RDDBFI Act, 1993. It has also been argued that no appeal was maintainable before the Debt Recovery Appellate Tribunal and lastly it has been contended that there was a delay in filing the application for refund of the amount and the allegation of the respondent / Company that the assets have been deteriorated not proved.
13. The respondent / Company has filed a reply and its contention is that the present petition filed under Article 227 of the Constitution of India deserves to be dismissed summarily, as there is no jurisdictional error committed by the Appellate Tribunal nor the order suffers from any perversity. The respondent has submitted that auction was concluded on 18.12.2006 and amount was deposited by the respondent within time. The auction sale was not confirmed in respect of Lot - C nor any sale certificate was issued by the Recovery Officer / Bank in favour of the respondent until 10.02.2010, meaning thereby, for a period of 4 years and 3 months after the auction, and therefore, as no sale certificate was issued, the auction sale could not have been said to be completed in view of Rule 44 Schedule II of the Income Tax Rules.
14. The respondent / Company, taking shelter of the Writ Petition No.5364/2012 6 aforesaid rule, has argued before this Court that in a sale of movable property by public auction, an auction purchaser is under an obligation to pay for each lot at the time of sale and in default of the aforesaid, the auction sale and the property has to be resold.
15. It has been further contended that once the auction purchaser fulfills his obligation i.e., deposits the amount, then the aforesaid rule mandatorily obligates the holder of the sale to grant a sale certificate and then only the sale becomes absolute and auction is complete.
16. The respondent / Company has further stated that the petitioner / Bank did not issue a sale certificate nor a sale certificate was issued by the Recovery Officer until 10.02.2010, and therefore, there was no sale in the eyes of law. Hence, the Debt Recovery Appellate Tribunal was justified in directing refund of the amount.
17. The respondent has further stated that claim of refund is otherwise also valid by enforceability of doctrine of Restitution. It has been contended that in case, one party to an agreement / contract fails to meet its end of the obligation in respect of which the other party has already enriched him or paid consideration for, the doctrine of restitution authorises the other party to claim refund of the amount so paid.
18. The respondent has further stated that findings of a Nine Judge Bench of the Hon'ble Supreme Court in the case of Mafatlal Industries v/s Union of India reported in (1997) 5 SCC 536 are very relevant and on point and it has been held that the Law of Restitution is founded upon the Writ Petition No.5364/2012 7 principle of 'unjust enrichment'. As stated by the learned authors, Lord Goff of Chieveley and Gareth Jones in the book 'The Law of Restitution' (3rd Edn.) 1986, ' It presupposed three things: first, that the defendant has been enriched by the receipt of a benefit; secondly that he has been so enriched at the plaintiff's expense; and thirdly, that it would be unjust to allow him to retain the benefit. These three subordinate principles are closely interrelated'.
19. The respondent has further stated that applicability and fulfillment of the above principle in the facts of the instant case is crystal clear. The petitioner / Bank has undoubtedly received and is in possession of the huge deposit made by the respondent and when neither sale certificate was issued nor possession was timely offered, it would be extremely unjust to allow the petitioner / Bank to retain the possession of the deposit made by the respondent as a third party auction purchaser for sale consideration where the respondent has been deprived of the enjoyment of the possession of the property for which they timely and duly paid for.
20. The respondent has further submitted that despite them satisfying their end of the obligations by depositing the entire auction amount as sale consideration within the stipulated time, the petitioner / Bank failed to meet its end of the obligations by denying / delaying issuance of sale certificate and handing over the possession of the subject properties. The respondent has placed reliance upon a judgment delivered in the case of Chaudhary Rambabu Singh v/s Dilip Kumar reported in AIR 1981 MP 158 and Writ Petition No.5364/2012 8 its contention is that as such where the petitioner / Bank failed to deliver the possession to the respondent despite the respondent praying the entire auction amount, the respondent had all the right to withdraw from the offer before its acceptance and claim refund of the amount deposited for the aforesaid purposes.
21. The respondent has further contended that the auction of the subject properties mentioned in Lot - C was conducted on 'as is where is' basis, which means that the conditions at the time of the auction sale had to prevail when delivering the possession and certainly not the conditions prevailing at the time of delivery of possession. As such, it was the duty of the petitioner / Bank to ensure safeguarding of the property between the date of auction (or date of earnest money) and the date of handing over of possession to the auction purchaser, if not on the same day. The respondent has stated that facts in the present case establishes that between the intervening period, owing to negligence and absence of security provided by the CH Bank, the subject property mentioned in Lot - C underwent substantial deterioration from the point of view of the objectives behind the purchase of these properties and when the auction was belatedly confirmed in 2010, the property had lost its value in comparison to the value at the time of auction sale and deposit. The intention behind auction cannot be taken as a mere receiving the title of auction purchase but to take control and ripe the fruits of his purchase at the auction.
22. The respondent has further stated that no justifiable Writ Petition No.5364/2012 9 reason has been provided for the undue delay caused by the petitioner / Bank in handing over the possession to the respondents, and therefore, the petitioner / Bank now cannot take the advantage of its wrong by forcing the respondent to take the possession of deteriorated property which quite frankly has lost all its value for the respondent.
23. Heard learned counsel for the parties and perused the record.
24. The undisputed facts reveal that the petitioner / Bank has filed a civil suit for recovery against M/s Jiwaji Rao Sugar Company Limited before the District Judge, Mandsaur and after the enactment of RDDBFI Act, 1993 and after establishment of Debt Recovery Tribunal at Jabalpur, the civil suit was transferred from the Court of District Judge, Mandsaur to Debt Recovery Tribunal, Jabalpur for adjudication. The civil suit was decreed and in the execution proceedings under the orders of the Company Judge, High Court of Madhya Pradesh, Bench at Indore passed in Company Petition No.25/2001, three properties under the ownership of M/s Jiwaji Rao Sugar Company Limited were subjected to auction. The auction of the properties took place on 18.12.2006 and details of the properties are as under:-
Lot A : Land Lot B : Plant and Machinery Lot C : Super Structures - Factory building, Godown, Stores, Garage, Servant Quarters, Rest House, Admin Block, Staff buildings etc.
25. It is an undisputed fact that the sole respondent / Writ Petition No.5364/2012 10 M/s Shubham Manglam Constitution Private Limited was declared as the highest bidder in respect of the properties mention in Lot - B and Lot - C (movable). The auction sale was confirmed by the Recovery Officer, Debt Recovery Tribunal, Jabalpur on 18.12.2006 after receipt of full auction amount in respect of Lot - B. In respect of Lot - C, the respondent / Company was required to deposit Rs.1,21,51,000/- and the same was required to deposited within fifteen days from 18.12.2006. However, in spite of the fact that the entire amount was deposited towards Lot - C within the stipulated time, the sale confirmation was withheld and no sale certificate was issued. It is an undisputed fact.
26. The undisputed facts further reveal that the petitioner / Bank took no steps in getting the sale certificate issued even though the entire consideration was received and as the property was deteriorating and was being subjected to theft, the respondent submitted various representation for refund of the amount along with the interest. The sole respondent before this Court has moved an application before the Company Judge seeking refund of the deposited auction amount along with interest, however, the Company Judge directed the Recovery Officer of the Bank to adjudicate the application of refund preferred by the respondent / Company. The respondent / Company submitted an application before the Recovery Officer for refund of the amount and the Recovery Officer by an order dated 10.02.2010 has dismissed the application i.e. after three years and the confirmed the auction sale. Thereafter, Writ Petition No.5364/2012 11 against the order passed by the Recovery Officer dated 10.02.2010, the respondent / Company preferred an appeal before the Prisiding Officer, Debt Recovery Tribunal and the appeal was dismissed by the Presiding Officer on 28.02.2011.
27. Being aggrieved by the order dated 10.02.2010 and order dated 28.02.2011, the respondent / Company has preferred a second appeal, as provided under the statute, before the Debt Recovery Appellate Tribunal and appeal has been allowed directing refund of the amount to the respondent / Company by an order dated 20.04.2012. Being aggrieved by the order dated 20.04.2012 passed by the Debt Recovery Appellate Tribunal, the petitioner / Bank has filed the present petition under Article 227 of the Constitution of India.
28. The facts of the case reveal that three lots were auctioned and in respect of Lot - C, entire amount was deposited by the respondent / Company within fifteen days as per Section 9 of the RDDBFI Act, 1993. The Recovery Officer, though has confirmed the sale and has issued a sale certificate in respect of Lot - A and Lot - B on 18.12.2006 but did not confirm the sale in respect of Lot - C and no cogent reason was assigned for not confirming the sale except for making a bald statement that the record was with the Company Court.
29. Learned counsel appearing for the petitioner / Bank before this Court has also made a statement that the record was with Company Judge. This Court really fails to understand that if the record was with the Company Judge, Writ Petition No.5364/2012 12 how a sale certificate was issued in respect of Lot - A and Lot - B and why it was not issued in respect of Lot - C. The date of auction in respect of all three lots is the same and in fact the statement that the record was with the Company Judge is an afterthought. There was no objection filed by anyone for not confirming the sale in respect of Lot
- C, and therefore, the Appellate Tribunal was justified in directing refund to the respondent / Company.
30. It has also been argued that after four years, now sale has been confirmed. The property in question under Lot - C was not given in possession of the respondent / Company and it has deteriorated and now after four years the petitioner / Bank wants from the respondent to take the property, as the sale confirmation has been issued after four years.
31. In the considered opinion of this Court, the Debt Recovery Appellate Tribunal was justified in directing the refund in favour of auction purchaser, M/s Shubham Manglam Construction Private Limited. No reasonable explanation has been provided by the petitioner / Bank as to why the sale was not confirmed. The value of the property has diminished due to exposure, rain and theft and the auction purchaser cannot be subject to loss on account lapse committed by the Bank / Recovery Officer.
32. In the considered opinion of this Court, the question of interference by this Court, in the peculiar facts and circumstances of the case, does not arise.
33. The Apex Court in the case of Shalini Shyam Shetty Vs. Rajendra Shankar Patil reported in 2010 (8) Writ Petition No.5364/2012 13 SCC 329 in paragraph 49 held as under:-
"49. On an analysis of the aforesaid decisions of this Court, the following principles on the exercise of High Court's jurisdiction under Article 227 of the Constitution may be formulated:
(a) A petition under Article 226 of the Constitution is different from a petition under Article 227. The mode of exercise of power by High Court under these two Articles is also different.
(b) In any event, a petition under Article 227 cannot be called a writ petition. The history of the conferment of writ jurisdiction on High Courts is substantially different from the history of conferment of the power of Superintendence on the High Courts under Article 227 and have been discussed above.
(c) High Courts cannot, on the drop of a hat, in exercise of its power of superintendence under Article 227 of the Constitution, interfere with the orders of tribunals or Courts inferior to it. Nor can it, in exercise of this power, act as a Court of appeal over the orders of Court or tribunal subordinate to it. In cases where an alternative statutory mode of redressal has been provided, that would also operate as a restrain on the exercise of this power by the High Court.
(d) The parameters of interference by High Courts in exercise of its power of superintendence have been repeatedly laid down by this Court. In this regard the High Court must be guided by the principles laid down by the Constitution Bench of this Court in Waryam Singh (supra) and the principles in Waryam Singh (supra) have been repeatedly followed by subsequent Constitution Benches and various other decisions of this Court.
(e) According to the ratio in Waryam Singh (supra), followed in subsequent cases, the High Court in exercise of its jurisdiction of superintendence can interfere in order only to keep the tribunals and Courts subordinate to it, 'within the bounds of their authority'.
(f) In order to ensure that law is followed by such tribunals and Courts by exercising jurisdiction which is vested in them and by not declining to exercise the jurisdiction which is vested in them.
(g) Apart from the situations pointed in (e) and (f), High Court can interfere in exercise of its power of superintendence when there has been a patent Writ Petition No.5364/2012 14 perversity in the orders of tribunals and Courts subordinate to it or where there has been a gross and manifest failure of justice or the basic principles of natural justice have been flouted.
(h) In exercise of its power of superintendence High Court cannot interfere to correct mere errors of law or fact or just because another view than the one taken by the tribunals or Courts subordinate to it, is a possible view. In other words the jurisdiction has to be very sparingly exercised.
(i) High Court's power of superintendence under Article 227 cannot be curtailed by any statute. It has been declared a part of the basic structure of the Constitution by the Constitution Bench of this Court in the case of L. Chandra Kumar vs. Union of India & others, reported in (1997) 3 SCC 261 and therefore abridgement by a Constitutional amendment is also very doubtful.
(j) It may be true that a statutory amendment of a rather cognate provision, like Section 115 of the Civil Procedure Code by the Civil Procedure Code (Amendment) Act, 1999 does not and cannot cut down the ambit of High Court's power under Article
227. At the same time, it must be remembered that such statutory amendment does not correspondingly expand the High Court's jurisdiction of superintendence under Article 227.
(k) The power is discretionary and has to be exercised on equitable principle. In an appropriate case, the power can be exercised suo motu.
(l) On a proper appreciation of the wide and unfettered power of the High Court under Article 227, it transpires that the main object of this Article is to keep strict administrative and judicial control by the High Court on the administration of justice within its territory.
(m) The object of superintendence, both administrative and judicial, is to maintain efficiency, smooth and orderly functioning of the entire machinery of justice in such a way as it does not bring it into any disrepute. The power of interference under this Article is to be kept to the minimum to ensure that the wheel of justice does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the functioning of the tribunals and Courts subordinate to High Court.
(n) This reserve and exceptional power of judicial Writ Petition No.5364/2012 15 intervention is not to be exercised just for grant of relief in individual cases but should be directed for promotion of public confidence in the administration of justice in the larger public interest whereas Article 226 is meant for protection of individual grievance. Therefore, the power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above.
(o) An improper and a frequent exercise of this power will be counter-productive and will divest this extraordinary power of its strength and vitality."
In light of the aforesaid judgment, as no patent illegality has been committed by the Debt Recovery Appellate Tribunal and the order passed by the Debt Recovery Appellate Tribunal neither suffers from any jurisdictional error nor from any perversity, this Court does not find any reason to interfere with the order passed by the Debt Recovery Appellate Tribunal dated 20.04.2012. The Debt Recovery Appellate Tribunal was well within its jurisdiction , as the appeal was maintainable, in passing the impugned order.
Accordingly, the present Writ Petition stands dismissed.
Certified copy, as per rules.
(S.C. SHARMA) (SHAILENDRA SHUKLA)
JUDGE JUDGE
Ravi
Digitally signed by Ravi Prakash
Date: 2020.01.27 17:55:10 +05'30'