Bombay High Court
Mrs. Meera Unnikrishnan vs Aashutosh Dyeing Mills Pvt. Ltd on 9 September, 2014
Author: R.D.Dhanuka
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO.186 OF 2012
ALONGWITH
CIVIL APPLICATION NO. 407 OF 2012
IN
FIRST APPEAL NO.186 OF 2012
DISTRICT : THANE
Mrs. Meera Unnikrishnan, )
Age : adult, Occu : Proprietor of
ig )
Shankar Trading Corporation having its )
office at Riddhi Apt, Ground Floor, )
Vadavali Section, Ambarnath, )
Tq. Ambarnath, Dist. Thane ) ..... Appellant (DH)
VERSUS
1. Aashutosh Dyeing Mills Pvt. Ltd., )
A Company incorporated under the )
Companies Act, 1956 having its )
Registered Office at 66 Vinod Villa, )
rd rd
3 Cavel X Lane, 3 Flr., R.NO.307 )
Ramwadi, Mumbai - 400 002, )
and its Factory is situated at Plot No.F-12)
MIDC Ind.Estate, Badlapur, )
Dist. Thane - 421 503 )
2. Shri Harish Brijmohan Thanvi )
Manager & Authorised Signatory of )
Aashutosh Dyeing Mills Pvt. Ltd. )
Unit - II, Plot NO. F-12, MIDC Ind.Estate)
Badlapur Dist. Thane - 421 503. ) ..... Respondents
(Objectors)
3. Mr Narottam Purohit )
Director/Manager, Bajrangbali Textiles )
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Pvt Ltd & Suntex Hosiery Pvt. Ltd. )
MIDC Badlapur, Dist : Thane ) ..... Respondents
(Ori Deft/JD)
ALONGWITH
CIVIL APPLICATION NO. 3818 OF 2013
IN
FIRST APPEAL NO.186 OF 2012
DISTRICT : THANE
Jankalyan Sahakari Bank Ltd., Having )
its office at Thane, and having Its Head )
Office at 140, Vivek Darshan Sindhi )
Society, Chembur, Mumbai - 400 071 ) ..... Applicant/Intervener
In the matter between
Mrs. Meera Unnikrishnan, )
Age : adult, Occu. Proprietor of )
Shankar Trading Corporation having its )
office at Riddhi Apartment, Ground Floor,)
Vadavali Section, Ambarnath, )
Tq. Ambarnath, Dist. Thane ) ..... Original Appellant
VERSUS
1. Aashutosh Dyeing Mills Pvt. Ltd., )
Company incorporated under the )
Companies Act, 1956 having its )
Registered Office at 66 Vinod Villa, )
rd rd
3 Cavel X Lane, 3 floor, R.No.307 )
Ramwadi, Mumbai - 400 002, )
and its Factory is situated at Plot No.F-12)
MIDC Industrail Estate, Badlapur, )
Dist. Thane 421 503 )
2. Shri Harish Brijmohan Thanvi )
Manager & Authorised Signatory of )
Aashutosh Dyeing Mills Pvt. Ltd., )
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Unit - II, Plot No. F-12, MIDC Industrial)
Estate, Badlapur Dist. Thane - 421 503. )
3. Mr. Narottam Purohit, )
Director/Manager, Bajrangbali Textiles )
Pvt. Ltd. & Suntex Hosiery Pvt. Ltd. )
MIDC Badlapur, Dist. Thane ) ..... Original Respondent
Mr.R.G.Panchal, a/w. Mr.A.R.Metkar for the Appellant.
Mr.D.H.Mehta, i/b. Mr.Nalin Shah for Respondent nos. 1 and 2.
Mr.Nikhil Rajani, i/b. M/s.V.Deshpande & Co. for the Applicant in
CAF/3818/2013 Intervener/Jankalyan Sahakari Bank.
ig CORAM : R.D. DHANUKA, J.
RESERVED ON : 21st AUGUST, 2014
PRONOUNCED ON : 9th SEPTEMBER, 2014
JUDGMENT
This appeal filed under section 96 of the Code of Civil Procedure, 1908 is directed against the order dated 7th October, 2011 passed by the 3rd Joint Civil Judge, Senior division, Kalyan allowing the application filed by the respondent nos. 1 and 2 herein partly, filed under order 21 rule 58 of Code of Civil Procedure, 1908. Some of the relevant facts for the purpose of deciding this appeal are as under :-
2. On or about 29th July 1997 Jankalyan Sahakari Bank Limited sanctioned loan in the sum of Rs.73.86 lacs to M/s.Suntex Hosiery Private Limited and Mr.Narottam Purohit against collateral security i.e. a factory premises known as plot No.F-12, situated at MIDC Industrial Estate, Badlapur, District Thane consisting of plot, plant and machinery etc. (hereinafter referred to as the suit property) M/s.Suntex Hosiery Private Limited and Mr.Narottam Purohit are ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 4/25 FA186.12 hereinafter referred to as the judgment debtors. On 8 th January 1999 the said bank issued a recall notice to the judgment debtor calling upon to pay Rs.89.16 lacs.
3. Sometime in the month of July 1999 the appellant filed a suit bearing Special Suit no.141 of 1999 before IIIrd Joint Civil Judge, Senior Division Kalyan against Mr.Naottam Purohit, the judgment debtor for recovery of certain amount.
4. On 18th January 2001 the said bank addressed a letter to the executive engineer, MIDC, Badlapur recording of lien in respect of the suit plot in view of the mortgage created in respect of the suit property by the judgment debtor in favour of the said bank. The said plot of land was alloted to the judgment debtor by MIDC on lease.
5. Sometimes in the year 2001 the bank filed a dispute against the judgment debtors under section 91 of the Maharashtra Co-operative Societies Act, 1960 before the Co-operative Court at Mumbai for recovery of loan of Rs.1,29,05,666/-
with interest. The bank also filed an application for injunction against the judgment debtors not to dispose of the suit property and praying for attachment before judgment. On 20th February 2001 the Co-operative Court granted injunction and order of attachment before judgment in favour of the said bank and against the judgment debtors in respect of the suit plot and plant and machineries, moveables etc.
6. On 9th March, 2001 the judgment debtors filed an affidavit in those proceedings admitting the claim of the said bank and submitted that they had no objection for appointment of court receiver. On 27th April 2001 the Co-operative Court passed an award against the judgment debtors directing the judgment debtors ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 5/25 FA186.12 to pay a sum of Rs.1,29,05,666.67 to the said bank and granted liberty to the bank to sell the hypothecated and mortgage properties in case of default committed by the judgment debtors.
7. On 11th September 2001 the Co-operative Court forwarded the award dated 27th April 2001 to the special recovery and sale officer (co-operative department) for the purpose of execution of the said award against the judgment debtors. On 14th September 2001 the special recovery and sale officer (co-operative department) issued a demand notice upon the judgment debtors calling upon them to pay a sum of Rs.1,29,05,666.67 with interest as awarded within 15 days of the said notice. The judgment debtor failed to comply with the said award and the demand notice.
8. On 8th November 2001 the special recovery and sale officer issued a warrant of attachment against Plot No.F-12, MIDC, Badlapur, Plant and Machinery, moveables and stock raw materials etc. On 6 th February 2003 the said bank issued a public notice in the issue of 'Thane Parishad' for public auction of the Plot No. F- 12, MIDC, Badlapur Industrial Area District Thane. No offer however was received in response to the said public notice. It was the case of the bank that since no offer was received pursuant to the said public notice, the role of the special recovery and sale officer discontinued and the further proceedings for recovery and/or execution by sale of securities continued by the bank.
9. On 23rd May 2003 the director of respondent no.1 addressed a letter to the bank making an offer to purchase the said plot for the sum of Rs.10 lacs after paying/clearing liabilities in respect of the said plot towards MSEB, MIDC Nagar Parishad and CETP charges. On 7 th July 2003 the said bank accepted the offer of ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 6/25 FA186.12 the respondent no.1of Rs. 10 lacs with liabilities to be paid to MIDC, MSEB, Nagar Palika Tax, CETP and directed to make the payment within 30 days from the date of the said letter.
10. On 15th July 2003 the said bank addressed a letter to the judgment debtors informing that the property would be auctioned towards the recovery of the decreetal amount and called upon the judgment debtors to pay the decreetal amount making it clear that in the event of the judgment debtors failing to pay the property would be disposed of.
11. On 21st August 2003 the respondent no.1 made payment of Rs. 10 lacs by pay order to the said bank. The bank accepted the said payment towards consideration in respect of the said property and informed the respondent no.1 that on clearance of the pay order, the bank would handover all the title deed of the said property and handover possession to the respondent no.1. Mr. Narottam Purohit, the judgment debtor gave his no objection to sell the factory premises to the respondent no.1.
12. On 26th August 2003 the bank handed over possession of the factory premises to the respondent no.1 and also forwarded original title deeds in respect of the suit property to the respondent no.1. On 26 th August 2003 the said bank also issued a certificate certifying that the suit property had been sold to Mr.Rajkumar Mushaib the director of the respondent no.1 on as is where is basis vide letter dated 26th August 2003 and the possession of the said property had been handed over to the said purchaser on the same date. In the said certificate the bank also referred to the loan transaction between the bank and the judgment debtors and also referred to the proceedings filed by the bank against the judgment debtors and the ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 7/25 FA186.12 award/decree passed by the co-operative court and the certificate of execution issued by the said court.
13. It is the case of the respondent no.1 that after purchase of the said property from the said bank, the respondent no.1 made payment of MIDC dues amounting to Rs.11,74,261/-, to Kulgan Badlapur Nagar Parishad Rs.7,54,220/-, and a sum of Rs.58,720/- towards MSEB dues aggregating to Rs.19,87,201/-. It is case of the respondent no.1 that since the date of handing over possession of the suit property by the bank the respondent no.1 has been in quiet and peaceful possession of the suit property and has been carrying on business from the said property. The respondent no.1 has also brought its name in the records of the MIDC in respect of the said property.
14. On 28th November 2005 the Joint Civil Judge, Senior Division Kalyan decreed the suit filed by the appellant against Mr.Narottam Purohit the judgment debtor directing him to pay a sum of Rs.22,18,862/- with interest thereon to the appellant. The appellant thereafter filed a Special Darkhast No.40 of 2006 before 3rd Joint Civil Judge Senior Division for execution of the said decree. On 14 th August 2008 the 3rd Civil Judge Senior Division passed an order of attachment of the property of the judgment debtor i.e. the suit plot alongwith machinery moveables equipments articles lying therein. In the said Darkhast application it was pleaded by the appellant that the judgment debtor was owner of the said property. On 1st September 2008 the 3rd Civil Judge Senior Division levied an ex- parte attachment on the said plot and the factory.
15. On 18th September 2008 the respondent no.1 filed an application under order 21 rule 58 of Code of Civil Procedure, 1908 before the 3 rd Civil Judge Senior ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 8/25 FA186.12 Division Kalyan inter alia praying for setting aside the order of attachment dated 14th August 2008 and 1st September 2008 and for various other reliefs.
16. On 12th March 2011 the respondent no.1 requested the bank to execute the sale deed in respect of the said immoveable property in favour of the respondent no.1. On 14th July 2011 the bank authorized one of the officer to execute the sale deed in respect of the said plot in favour of the respondent no.1 by passing a resolution. On 7th September 2011 the bank executed the sale deed in respect of the suit plot in favour of respondent no.1.
17. The respondent no.1 examined Mr.Rajkumar Mushaib one of the director of the said company and also examined an officer of the Jankalyan Sahakari Bank Limited in the proceedings filed by the respondent no.1 under order 21 rule 58. Both the witnesses examined by respondent no.1 produced various documents including the pleadings filed before the Co-operative Court, various steps taken by the bank for sale of the property in question, proof of payment made by the respondent no.1 to the bank, various steps taken by the respondent no.1 before and after sale of the property etc. The appellant did not examine any witness. Both parties filed written arguments before the learned executing court.
18. By an order dated 7th October 2011 the learned 3rd Joint Civil Judge Senior Division allowed the application filed by the respondent no.1 under order 21 rule 58 partly and ordered that the order of attachment of the said property stood set aside and the said property was free from any attachment. Being aggrieved by the said order and judgment dated 7th October 2011 the appellant has preferred this appeal.
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19. I have heard the learned counsel appearing for the parties to this appeal and also the learned counsel representing the bank and have perused the documents, pleadings and evidence.
20. Learned counsel appearing for the appellant submits that the respondent no. 1 and the bank has committed fraud upon the appellants. The claim of the bank was more than Rs.1 Crore whereas the bank has purported to have sold the property to respondent no. 1 for Rs.10 lacs. It is submitted that the special recovery officer did not fix any upset price required to be fixed before putting the property of the judgment debtor to auction which is mandatory under rule 107 of the Maharashtra Cooperative Societies Rules. It is submitted that even if no offer was received in response to the public notice/advertisement, the special recovery officer ought to have issued fresh notice for conducting public auction. The bank could not have sold the said property on its own and that also without following the mandatory procedure under Rule 107 of Maharashtra Cooperative Societies Rules.
It is submitted that the respondent no. 1 did not refer to any advertisement/public notice purported to have been issued by the special recovery officer.
21. Learned counsel submits that even the payment agreed to be made by the respondent no. 1 to the bank has not been made within time prescribed and thus it would not amount to a concluded sale. It is submitted that the special recovery officer did not sign and/or issue any sale certificate in favour of the respondent no.
1. The bank could not have issued any such alleged sale certificate being the decree holder in favour of respondent no. 1. Learned counsel placed reliance on the order passed by this court on 4th January, 2013 and 19th November, 2013 passed in this First Appeal. Matter was adjourned to enable the respondent nos.1 and 2 to take instructions whether they possess the sale certificate in respect of the purchase of ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 10/25 FA186.12 the property through auction sale or any other document vesting the title except Exh. 100 i.e. certificate dated 26 th August, 2003. This court recorded the statement made by respondent no. 1 and 2 on 19 th November, 2013 that a conveyance deed was executed on 7th September, 2011 by the bank in favour of respondent no.1 and apart from the certificate dated 26th August , 2003 there was no other incident of sale certificate in respect of the purchase of the property through auction sale. This court also recorded the submission that such sale certificate was not required once the auction purchaser had certified the same.
22. Learned counsel submits that since the mandatory procedure under Rule 107 of Maharashtra Cooperative Societies Rules 1961 was not followed and the sale was not absolute in view of section 65 of the Code of Civil Procedure read with order 21 rule 92 of Code of Civil Procedure, the learned executing court could not have held that sale was completed before levy of warrant of attachment. It is submitted that respondent nos.1 and 2 were not the owners of the property in question on the date of warrant of attachment levied by the executing court on the suit property and thus the warrant of attachment was property levied and could not be set aside. It is submitted that under rule 107(14) (iv) of the Maharashtra Cooperative Societies Rules, 1961 if the sale is not confirmed by the authorities money has to be returned. In this case no such sale confirmation is issued by the authority. It is submitted that the sale certificate can be issued only after confirmation of the sale. Learned counsel for the appellant placed reliance on the judgment of the Andhra Pradesh High Court in case of Dandu Daud Basha Vs. Abdul Khader, AIR 2006 AP 43 in support of the submission that the bank could not have issued the sale certificate since the bank was a decree holder.
23. Learned counsel placed reliance on the judgment of Supreme Court in case ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 11/25 FA186.12 of Nellikkottu Kollreyil Madhavi Vs. Kavakkalathi Kalikutty and Ors. (1997) 1 SCC 749 and in particular paragraph 3 in support of the submission that a person who purchases a property in court auction sale gets title to the property by sale certificate issued by the court as true owner and after confirmation of the sale, he gets possession thereof. Paragraph 3 of the said judgment reads thus :
"3. This appeal by special leave arises from the judgment and decree of the Kerala High Court dated 24,5.1993, made in SA.No. 368 of 1989. The respondents had purchased the Plaint Schedule property in execution of the decrees in OS No. 262 of 1955 on the file of the Court of the District Munsif, Parappanagadi. The sale certificate, Exh. A-2 dated 28.1.1958 was given to the respondents. They had also filed an application for delivery of possession of the property which had come to be delivered under Exh. A-3 dated 21.7.1961. After taking delivery of the possession on 20.10.1961, they assigned the Plaint Schedule property to the plaintiff. Under those circumstances, the question arises whether they are entitled to a decree of perpetual injunction, restraining the appellant from interfering with his possession. Though the trial Court and the appellate Court had accepted the case of the appellants, the High Court has pointed out that aforesaid documents are material for deciding the controversy and the Courts below had not considered those documents in proper perspective. Accordingly, in second appeal, the High Court has gone into that question. It is settled law that the person who purchases the property in a Court auction-sale, gets title to the property by sale certificate issued by the Court as true owner and after confirmation of the sale, he gets possession thereof. In view of the fact that Plaint Schedule Property was delivered to Sankaran under Exh. A-3 on 21.7.1961, he lawfully came into possession and the same was delivered in turn to the plaintiffs.
Non-consideration of the material evidence is a substantial question of law."
24. Learned counsel placed reliance on the judgment of the Supreme court in the case of P. Udayani Devi Vs. V.V. Rajeshwara Rao and another, AIR 1995 SC 1357 in support of the submission that certificate of sale or document of title ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 12/25 FA186.12 which ought not to be lightly regarded or loosely construed. Paragraph 7 of the said judgment reads thus :
"7. We find considerable substance in this contention. The position in law is well-settled that "certificates of sale are documents of title which ought not to be lightly regarded or loosely construed." [See : Rambhadra Naidu v. Kadiriyasami Naicker . In Sheodhyan Singh and Ors. v. Musammat Sanichara Kuer and Ors. MANU/SC/0283/1961: [1962]2SCR753 , in the sale certificate the boundaries as well as the plot number were mentioned but there was a mistake in mentioning the plot number. It was held :
"The matter may have been different if no boundaries had been given in the final decree for sale as well as in the sale certificate and only the plot number was mentioned. But where we have both the boundaries and the plot number and the circumstances are as in this case, the mistake in the plot number must be treated as mere misdescription which does not affect the identity of the property sold.""
25. Learned counsel placed reliance on the judgment of this court in case of Smita Janak Thacker Vs. Commissioner of Registrar, District Cooperative Societies Pune and Ors, 2001 4 BomCR 730 in support of the submission that auction sale of the property without reserving upset or reserved price is ex facie arbitrary, illegal and nullity. Paragraph 15 of the said judgment reads thus :
"15. In the present case, at every stage, the process of auction has taken place in defiance of well established principles and procedures. The upset price which had initially been fixed at Rs.
55.42 lakhs on 15th October, 1997 had been reduced subsequently to Rs. 51.12 lakhs. When the auction sale came to be conducted on 15th September, 1999, the upset price which had been fixed was Rs. 51.12 lakhs. The bid which was submitted by the petitioner in the amount of Rs. 37.01 lakhs, even if it was the highest bid, was lower than the upset price. Notwithstanding this, the bid which was submitted by the petitioner was accepted and on the basis of the bid submitted by the petitioner, a request was ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 13/25 FA186.12 made by the Special Recovery Officer to the District Deputy Registrar to reduce the upset price from Rs. 51.12 lakhs to Rs.
37.01 lakhs. Such a procedure is ex-facie arbitrary. The upset or reserved price at an auction must be fixed and determined before the commencement of the auction process. Once the auction has been held on the basis of the upset price which is determined prior to the commencement of the auction, the process would be susceptible to grave public danger if the officers of the Co-
operation Department were to be permitted to seek a reduction in the upset price thereafter because the highest bid did not measure upto the upset price. As the facts of the present case would show, the upset price was sought to be reduced from Rs. 51.12 lakhs to Rs. 37.01 lakhs without any real application of mind to the question as to whether the bid which was submitted by the petitioner did at all meet the fair market value then prevailing of the property. In response to the request which was made by the Special Recovery Officer on 8th November, 1999, the District Deputy Registrar, reduced the upset price from Rs. 51.12 lakhs to Rs. 37.01 lakhs. The reduction in upset price was sought from Rs. 51.12 lakhs to Rs. 37.01 lakhs not because the later figure represented the revised fair market value but because that was what was quoted by the highest bidder. The District Deputy Registrar accepted the proposed reduction."
26. Learned counsel placed reliance on the judgment of the Supreme Court in case of M/s. Mahakal Automobiles and anr. Vs. Kishan Swaroop Sharma, AIR 2008 SC 2061 in support of the submission that the special recovery officer did not carry out any valuation of the property, did not give notice to the judgment debtor before conducting sale and thus sale conducted was illegal. Paragraphs 7, 8 and 11 of the said judgment read thus :
"7. Each stage of the sale is governed by the provisions of the Code. For the purposes of the present case, the relevant provisions are Order 21 Rule 54 and Order 21 Rule 66. At each stage of the execution of the decree, when a property is sold, it is mandatory that notice shall be served upon the person whose property is being sold in execution of the decree, and any property which is sold, without notice to the ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 14/25 FA186.12 person whose property is being sold is a nullity, and all actions pursuant thereto are liable to be struck down/quashed.
8. The admitted position that has emerged is that:
(i) There was no notice served upon the Judgment-Debtor under Order 21 Rule 54 (1-A).
(ii) There was no valuation of the property carried out;
(iii) There was no proclamation of sale as per the statutory provisions of the M.P. Civil Court Rules, 1961 read with Order 21 Rule 66.
(iv) There was no publication of the sale.
11. The records do not reveal that the appellant-judgment debtor was served with a notice as required under Order 21 Rule 54(1)(A) of the Code in the appendix B Forms 23, 24 and 29. It is to be noted that the records reveal that the address of the appellant as contained in the sale deed was different from the address at which the process server purportedly affixed the notice on the door and in open court and at the chorah only. It has also to be noted that under Order 21 Rule 66(2) the service of the notice has to be personally affected on the judgment debtor. That also does not appear to have been done. Interestingly, the valuation of the property as required to be done under the proviso to Sub-rule (2) of Rule 66 of Order 21 of the Code has not been done. The same appears to have been valued on the spot at Rs. 9,00,000/- and it was not done by the Court. There are admittedly other non-compliance with certain requirements. We do not think it necessary to deal with those aspects in detail in view of the order proposed to be passed. From the records it is revealed that Rs. 14,38,893/-
and Rs. 4,46,926/- have been deposited by the appellant purportedly for satisfaction of the Execution Court Ujjain and Indore respectively. The appellant shall further deposit a sum of Rs. 15,00,000/- within 4 months from today. The respondent No. 1 shall be entitled to withdraw the amount deposited in the bank with accrued interest. The appellant shall be responsible for payment of the property tax of the property from the date of execution of sale deed i.e. 5.12.1986 ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 15/25 FA186.12 till date and the same shall be paid deposited with the concerned authority within the aforesaid period of four months. On payment of the amounts, the title to the property described in the registered sale deed will vest free of all encumbrances on the appellant."
27. Learned counsel placed reliance on the judgment of Supreme Court in case of Shilpa Shares and Securities and Ors. Vs. The National Cooperative Bank Limited and Ors. 2007 (3) BomCR 790 in support of the submission that respondent no. 1 not having paid the purchase money within the time prescribed under rule 107(11)(g) of the MCS Rules, the sale was nullity and could not be considered as a valid auction sale. Paragraph 4 and 7 of the said judgment of the Supreme Court read thus :
"4. In pursuance to the recovery, recourse was taken to the procedure for attachment and sale of the property of the appellant prescribed in Rule 107 of the Rules, framed under the Act. An auction was held for sale of the appellants' properties. Under Rule 107(11)(g) of the Rules, 15% of the price of the immovable property has to be deposited by the auction purchaser at the time of the purchase, and the remaining 85% of the purchase money has to be paid within 15 days from the date of such sale. Admittedly, in the present case, the aforesaid 85% of the purchase money was not paid within 15 days from the date of the sale nor even thereafter.
7. In view of the above, we are of the opinion that the auction sale of the appellants' property was a nullity, and there was no valid auction sale."
28. Mr. Mehta learned counsel appearing for respondent nos. 1 and 2 on the other hand invited my attention to the documents and oral evidence led by the respondent no. 1 and 2 and the documents produced by the appellant before the executing court. It is submitted that since there was no response to the public notice/advertisement issued by the special recovery officer, respondent no. 1 had ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 16/25 FA186.12 made an offer. It is submitted that the offer of the respondent no. 1 was not only for Rs.10 lacs but over and above the payment of Rs.10 lacs. respondent no. 1 had agreed to bear various other liabilities on the said property. Respondent no. 1 had made payments as agreed. After receiving the entire consideration by the bank, the bank handed over the title documents and peaceful and vacant possession of the suit property to respondent no. 1 in the month of August, 2003. The consent of judgment debtor was also obtained by the bank. The bank issued certificate on 26 th August, 2003 confirming the sale and handing over possession of the properties to respondent no. 1. The attachment levied in respect of the said property came to be released. Respondent no. 1 thereafter cleared all such liabilities which the respondent no.1 had agreed to clear over and above making of payment of agreed consideration. Respondent no. 1 has started its business in the said factory premises in the year 2003 itself and is carrying on business from the said premises. It is submitted that since the respondent no.1 had cleared all the liabilities, respondent no.1 applied for execution of conveyance to the bank in favour of respondent no. 1 and 2 in furtherance of earlier certificate. Learned counsel submits that the sale was already concluded in all respect, possession was handed over to respondent no.1. The warrant of attachment levied earlier was already released in the month of August, 2003 itself.
29. Mr. Mehta, learned counsel submits that the judgment debtor had mortgaged the immovable property in favour of the bank. The Bank was a secured creditor.
Bank followed all the procedure required to be followed under the provision of Maharashtra Cooperative Societies Rules. It is submitted that admittedly the decree was passed in favour of the appellants herein against the judgment debtor on 28 th November, 2005 i.e. much after the sale was confirmed by the bank and possession was handed over to the respondent nos. 1 and 2 after receipt of entire ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 17/25 FA186.12 consideration. The suit property thus ceased to be the property of the judgment debtor on 26th August, 2003 that is much prior to the attachment of the property levied by the executing court in execution of decree obtained by the appellant. The appellant had applied for warrant of attachment on 30 th March, 2007 under Order 21 rule 54 on which date the judgment debtors were not the owners of the suit property. Mr. Mehta submits that section 60 of Code of Civil Procedure applies for attachment of property belonging to judgment debtor which would not apply in this case since the property ceased to be owned by the judgment debtor on the date of levy of attachment at the instance of the appellant.
30. Mr. Mehta, learned counsel submits that under order 21 rule 58 of Code of Civil Procedure the executing court could not have adjudicated upon the claim of the appellant in respect of the suit property since the property attached had been already sold prior to the date of such attachment. It is submitted that the learned executing court has rightly allowed the application filed by respondent no. 1 for setting aside warrant of attachment by holding that the said court was not sitting in the appellate jurisdiction of the cooperative court and was not empowered to assess the procedure followed for execution of award by the cooperative court. It is submitted that the executing court could not go into the validity of sale already effected prior to the date of attachment of the property in question which was in execution of the decree passed by the another court. Learned counsel submits that the appellants did not lead any evidence in support of their allegations of fraud. In any event all these issues could not be decided by the executing court and the sale already effected could not be set aside by the executing court in another proceedings. Mr. Mehta learned counsel submits that the judgments relied upon by the learned counsel for the appellant are not applicable to the facts of this case as one executing court could not go into the validity of the sale effected for the ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 18/25 FA186.12 purpose of execution of decree passed by another court.
31. Learned counsel appearing for Jankalyan Bank would submit that the bank had properly followed all the requisite procedure and had also obtained the consent of the judgment debtor for sale of the property in question to respondent no. 1. It is submitted that the bank had already levied attachment on 8 th November, 2001 and sold in 2003 whereas attachment was levied by the appellant on 20 th November, 2005 that is much after the sale of the said property by the bank in favour of respondent no. 1.
32. Learned counsel placed reliance on Rule 107(14) of the Maharashtra Cooperative Societies Rules and would submit that in any event the objection regarding validity of the sale or an application for setting aside the sale on the ground of alleged fraud could be made by a party before the special recovery officer himself within the time prescribed under the said provision. The appellant never applied for setting aside the same on any of the ground canvassed before the executing court and not having made such application, could not have agitated such issue before the executing court. It is submitted that the bank had called upon the judgment debtor to pay and was issued notice but the judgment debtors failed to pay. The bank was thus empowered to sell the property so as to execute the decree in favour of the Bank which was not challenged by the judgment debtors. It submitted that issuance of any other sale certificate by the special recovery officer was not required as alleged by the appellants.
REASONS AND CONCLUSION :
33. Question that arises for consideration of this Court is whether the executing Court could levy warrant of attachment on the property which is already sold prior ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 19/25 FA186.12 to such claim made by the decree holder. Question also arises for consideration of this court is whether the executing court can go into the validity of the sale of property effected by virtue of a decree passed by another Court while deciding the application under Order 21 Rule 58 of the Code of Civil procedure.
34. It is not in dispute that the Janakalyan Sahakari Bank Ltd. had given a loan to the judgment debtor on 29/07/1997 and a recall notice was issued by the bank on 08/01/1999. The appellant had filed a suit for recovery of money from the judgment debtor in the month of June 1999. Co-operative Court passed an award and decree in favour of the said bank and against the said judgment debtor on 27/04/2001 with liberty to sell the hypothecated and mortgaged properties in case of the default committed by the judgment debtor. The Co-operative Court had already forwarded the award dated 27/04/2001 on 11/09/2001 to the Special Recovery and Sale Officer (Co-operative department) for the purpose of execution of the said award against the judgment debtor. The Special Recovery and Sale Officer thereafter issued a notice of demand on 14/09/2001 on the judgment debtor calling upon to pay the decreetal amount which the judgment debtor failed to pay. The Special Recovery and Sale Officer thereafter issued warrant of attachment against plot No. F/1 MIDC, Badlapur and also against the plant, machinery, movable stock, raw materials and work in progress etc. The said bank thereafter issued a public notice in the issue of " Thane Parishad " in respect of the public auction of the said immovable property on 06/02/2003. The Special Recovery and Sale Officer did not receive any offer pursuant to the said public notice. Respondent No.1 however made an offer subsequently. The bank negotiated with respondent No.1 and accepted the offer made by respondent No.1. It is not in dispute that respondent No.1 had paid the entire amount as agreed by and between the Janakalyan Sahakari Bank Ltd. and on receipt of such payment, the said bank ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 20/25 FA186.12 has already handed over the peaceful possession of the said property and also all the title documents in favour of respondent No.1.
35. A perusal of record indicates that respondent No.1 also made payment to various parties towards liabilities on the said plot. Respondent No.1 has been carrying on business in the said factory premises since 2003. The bank has also issued a certificate confirming the sale in favour of respondent No.1 on 26/08/2003 and also confirming the handing over possession of the said property to respondent No.1.
36. In so far as suit filed by the appellant is concerned, the said suit came to be decreed only on 28/11/2005. On 14/08/2008, the 3rd Civil Judge (S.D.) passed an order of attachment of the said property which was already sold in favour of respondent No.1 by the bank in execution of the Judgment and award obtained by the bank against the judgment debtor. The record indicates that judgment debtor had given no objection for sale of the property in favour of the first respondent. It is thus clear that on the date of levying an attachment by the 3 rd Civil Judge (S.D.) on the suit property on 14/08/2008, the said property was already sold much prior thereto i.e. on 26/08/2003 in favour of respondent No.1.
37. Learned counsel appearing for the appellant strenuously urged that the entire procedure conducted by the bank in auctioning the property of the judgment debtor was illegal and contrary to the mandatory procedure laid down in Rule 107 of the Maharashtra Co-operative Societies Rules, 1961 and a fraud was committed by the bank, the judgment debtor and respondent No.1 in conducting such sale. Learned counsel placed reliance on various Judgments in support of this submission.
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38. There is no dispute about the proposition laid down by the Supreme Court and this Court in the Judgments referred to and relied upon by the learned counsel appearing for the appellant. A perusal of record indicates that the property sold by the Janakalyan Sahakari Bank Ltd., was a mortgaged property which was created by the judgment debtor in favour of the said bank to secure the loan facility granted by the said bank to the judgment debtor. The said bank was thus a secured creditor.
The judgment debtor committed default in making payment. The decree passed by the Co-operative Court on 27/04/2001 was not challenged by the judgment debtor.
The Special Recovery and Sale Officer (Co-operative department) had levied warrant of attachment on 08/11/2001 since the judgment debtor failed to pay the decreetal amount in spite of receipt of notice. A perusal of the said warrant of attachment indicates that it was specifically made clear that if the judgment debtor fails to make payment of the decreetal amount within 15 days from the date of the said warrant of attachment, the judgment debtor shall give peaceful possession of the said property to the decree holder bank for sale by public auction or private negotiation towards recovery of decreed debt.
39. The bank also had examined a witness and proved before the executing Court various steps taken by the bank before effecting the sale of the property in question to the first respondent. It is the case of the bank that since there was no offer received pursuant to the public notice, the property was sold by the bank.
40. A perusal of the order dated 26/08/2003 passed by the Special Recovery and Sale Officer (Co-operative department), Government of Maharashtra, indicates that after reciting the facts of execution of decree, notice issued to the judgment debtor, offer received from the first respondent, and the payment received by the bank from the first respondent, the said officer had certified that the attachment dated ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 22/25 FA186.12 08/11/2001 on the said property for the reasons stated in the said order was released. It is not in dispute that the said order was passed by the Special Recovery and Sale Officer after completion of the sale in favour of respondent No.1.
41. In so far as the appellant is concerned, the appellant was one of the unsecured creditor who had obtained a decree much after completion of sale in favour of the first respondent. It is not in dispute that the suit filed by the appellant for recovery of the money claim was pending when the decree came to be passed in favour of Janakalyan Sahakari Bank Ltd. against the said judgment debtor. Though a public notice came to be issued for conducting auction sale, the appellant did not raise any objection. Respondent No.1 was already carrying on business and has been in established possession of the said property on the date of decree passed by the Civil court in favour of the appellant on the date of levying warrant of attachment on the said property.
42. The executing Court in the impugned order has held that the executing Court was not sitting in appellate jurisdiction of the Co-operative Court and was not empowered to assist the procedure followed for execution of award by Co- operative Court, Bombay. The executing Court has taken cognizance of the fact that the warrant of attachment was actually levied at the instance of the appellant on the said property only on 27/08/2008, whereas respondent No.1 was already having title and possession over the property since 2003 on the strength of an award passed by the Co-operative Court.
43. A perusal of Order 21 Rule 58 of the Code of Civil Procedure 1908 makes it clear that if any claim or objection is received by the executing Court to the ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 23/25 FA186.12 attachment of any property which is attached in execution of a decree on the ground that such property is not liable to such attachment, the executing Court has to adjudicate the claim or objection in accordance with the provisions contained therein. The proviso to Order 21 Rule 58 makes it clear that no such claim or objection, however shall be entertained after such property attached has already been sold. Order 21 Rule 58 sub-rule 5 provides that where a claim or an objection is preferred and the Court under the sub-rule 1 refuses to entertain it, the party against whom such order is made, may institute a suit to establish the right which he claims in the property in dispute. Subject to result of such suit if any, an order so refusing to entertain the claim or objection shall be conclusive.
44. A perusal of record indicates that the sale was already effected of the said property and respondent No.1 was already put in possession by the bank much prior to the decree obtained by the appellant against the said judgment debtor and much prior to executing Court in that suit filed by the appellant levied warrant of attachment on the said property. In my view, one executing Court cannot decide the validity of the orders passed by another Court or of the steps taken by the parties in execution of the decree passed by another Court which has achieved finality. The executing Court in the impugned order, in my view, has rightly taken a view that it could not sit in appeal against the order passed by the Co- operative Court in favour of Janakalyan Sahakari Bank Ltd. or could not have adjudicated upon the steps taken by the said bank or by the Special Recovery and Sale Officer in execution of such decree. In my view, the validity of an order passed by the competent Court or the steps taken in execution of decree, cannot be adjudicated upon by other Court while hearing an application in execution application. Even if the executing Court refuses to entertain any claim or objection in view of the provisions of Order 21 Rule 58 sub-rule 5 of the Code of Civil ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 24/25 FA186.12 Procedure, the remedy of such party whose claim or objection is refused by the executing Court under the proviso to sub-rule 1, would be to file a suit to establish the right which such claimant or objector claims to the property in dispute.
45. Learned counsel appearing for Janakalyan Sahakari Bank Ltd., invited my attention to sub-rule 14 of Rule 107 in support of his submission that any party whose interest is affected by sale under Rule 107 by the Recovery Officer, he may apply to the Recovery Officer to set aside the same on the ground of material irregularity or mistake or fraud in publishing or conducting it. If the Recovery Officer is satisfied that such applicant has substantial injury by reason of such irregularity, mistake or fraud, such sale can be set aside by the Recovery Officer and may direct fresh one. It is submitted by the learned counsel for the bank that the appellant never applied for setting aside the sale under the provisions of Rule 107(14) of the Maharashtra Co-operative Societies Rules 1961 within the time prescribed or even thereafter. It is submitted that the bank has followed the entire procedure and has already handed over all the title documents and possession of the said property to respondent No.1 much prior to the date of even decree passed in favour of the appellant by the civil Court. The bank has received the entire consideration. The bank had issued a notice to the judgment debtor who subsequently gave its no objection for sale of its property to respondent No.1. It is submitted that sale was concluded in all respects.
46. In my view, if the appellant wanted to make any claim in respect of the property in question and if according to the appellant, there was any irregularity, mistake or fraud in conducting the sale by the Special Recovery and Sale Officer, the appellant could have applied for setting aside such sale before the Recovery Officer, which admittedly has not been applied by the appellant. I am therefore of ::: Downloaded on - 09/09/2014 23:48:20 ::: Kvm 25/25 FA186.12 the view that the claim made by the appellant for levying warrant of attachment on the suit property itself was not maintainable in view of the said property already having been sold much prior to the date of decree and levying warrant of attachment at the instance of the appellant. The learned executing Court, in my view, has rightly set aside the said warrant of attachment levied by the executing Court on the property in respect of which sale was already concluded much prior to such decree and date of attachment.
47. I, therefore pass the following order.
(a)
(b) First Appeal No.186 of 2012 is dismissed. No order as to costs.
In view of dismissal of appeal, Civil Application No.407 of 2012 does not survive and the same is dismissed.
(c ) Civil Application No.3818 of 2013 filed by Janakalyan Sahakari Bank Ltd. seeking impleadment as party respondent in the appeal and to make necessary submissions before this Court is allowed. Amendment to be carried out within four weeks from today. No order as to costs.
( R.D.DHANUKA, J.) ::: Downloaded on - 09/09/2014 23:48:20 :::