Calcutta High Court (Appellete Side)
M/S Alogoma Steels Limited vs Cic Steels Pvt. Ltd. And Another on 6 February, 2019
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
In the High Court at Calcutta
Civil Revisional Jurisdiction
Appellate Side
The Hon'ble Justice Sabyasachi Bhattacharyya
R.V. W. No. 84 of 2018
With
C.A.N. No. 4501 of 2018
With
C.A.N. No. 4502 of 2018
In
C.O. No. 993 of 2018
M/s Alogoma Steels Limited
Vs.
CIC Steels Pvt. Ltd. and another
For the petitioner : Mr. Jayanta Mitra,
Mr. Saptangshu Basu,
Mr. Sarathi Dasgupta,
Mr. Shehabuddin,
Mr. Vikas Singh
For CIC Steels Pvt. Ltd. : Mr. Hirak Mitra,
Mr. Suddhasatwa Banerjee,
Ms. Suchismita Ghosh,
Mr. Shounak Mitra,
Mr. Rishov Dutt
For the State Bank of India : Mr. Jay Saha,
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Mr. Kunaljit Bhattacharjee
For LOCO Industries/
intervenor : Mr. Dhruba Ghosh,
Mr. Arindam Banerjee,
Mr. Vivek Basu
Hearing concluded on : 28.01.2019
Judgment on : 06.02.2019
Sabyasachi Bhattacharyya, J.:-
1. RVW 84 of 2018 and CAN 4502 of 2018 are taken up together for hearing, being directed
against the same order - the former seeks review of an order dated June 15, 2018 passed in
C.O. No. 993 of 2018 and the latter seeks recall of the same order.
2. The present review petition has been taken out by the opposite party no. 1 in C.O. No. 993 of
2018. The grounds of challenge to the order under review are primarily as follows:
3. That no third party (here the petitioner/present respondent no. 1, namely, CIC Steels Pvt. Ltd.)
could be impleaded in a proceeding under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the DRT Act").
4. Secondly, that since the present respondent no. 1 sought virtually to enforce an agreement allegedly entered into between the applicant and the respondent no. 1, the tribunal did not have jurisdiction to grant such relief and the petitioner/respondent no. 1 ought to have approached the appropriate forum, either for specific performance of contract or for damages.
5. Thirdly, the statutory right of redemption, which was available to the applicant, was taken away by the order under review.
6. Learned senior counsel appearing for the applicant places the provisions of Section 19 of the DRT Act in this context, which are set out below:
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"Recovery of Debts Due to Banks and Financial Institutions Act, 1993 :-
19. Application to the Tribunal. - (1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction, -
(a) the branch or any other office of the bank or financial institution is maintaining an account in which debt claimed is outstanding, for the time being; or (aa) the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or
(c) the cause of action, wholly or in part, arises.
Provided that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, on an application made by it, withdraw the application, whether made before or after the Enforcement of Security Interest and Recovery of Debts Law (Amendment) Act, 2004 for the purpose of taking action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), if no such action had been taken earlier under that Act:
Provided further that any application made under the first proviso for seeking permission from the Debts Recovery Tribunal to withdraw the application made under sub- section (1) shall be dealt with by it as expeditiously as possible and disposed of within thirty days from the date of such application:
Provided also that in case the Debts Recovery Tribunal refuses to grant permission for withdrawal of the application filed under this sub-section, it shall pass such orders after recording the reasons therefor.
(1-A) Every bank being, multi-State co-operative bank referred to in sub-clause (vi) of clause (d) of Section 2, may, as its option, opt to initiate proceedings under the Multi-State Co-operative Societies Act, 2002 (39 of 2002) to recover debts, whether due before or after 4 the date of commencement of the Enforcement of the Security Interest and Recovery of Debts Laws (Amendment) Act, 2012 from any person instead of making an application under this Chapter.
(1-B) In case, a bank being, multi-State co-operative bank referred to in sub-clause
(vi) of clause (d) of Section 2 has filed an application under this Chapter and subsequently opts to withdraw the application for the purpose of initiating proceeding under the Multi-
State Co-operative Societies Act, 2002 (39 of 2002) to recover debts, it may do so with the permission of the Tribunal and every such application seeking permission from the Tribunal to withdraw the application made under sub-section (1-A) shall be dealt with by it as expeditiously as possible and disposed of within thirty days from the date of such application:
Provided that in case the Tribunal refuses to grant permission for withdrawal of the application filed under this sub-section, it shall pass such orders after recording the reasons therefor.
(2) Where a bank or a financial institution, which has to recover its debt from any person, has filed an application to the Tribunal under sub-section (1) and against the same person another bank or financial institution also has a claim to recover its debt, then, the later bank or financial institution may join the applicant bank or financial institution at any stage of the proceedings, before the final order is passed, by making an application to that Tribunal.
(3) Every application under sub-section (1) or sub-section (2) shall be in such form, and shall be accompanied with true copies of all documents relied on in support of the claim along with such fee, as may be prescribed:
Provided that the fee may be prescribed having regard to the amount of debt to be recovered:
Provided Further that nothing contained in this sub-section relating to fee shall apply to cases transferred to the Tribunal under sub-section (1) of Section 31.
Explanation. - For the purposes of this section, documents includes statement of account or any entry in banker's book duly certified under the Bankers' Books Evidence Act, 1891 (18 of 1891).
(3-A) Every applicant in the application filed under sub-section (1) or sub-section (2) for recovery of debt, shall -5
(a) state particulars of the debt secured by security interest over properties or assets belonging to any of the defendants and the estimated value of such securities;
(b) if the estimated value of securities is not sufficient to satisfy the debt claimed, state particulars of any other properties or assets owned by any of the defendants, if any; and
(c) if the estimated value of such other assets is not sufficient to recover the debt, seek an order directing the defendant to disclose to the Tribunal particulars of other properties or assets owned by the defendants.
(3-B) If any application filed before the Tribunal for recovery of any debt is settled prior to the commencement of the hearing before that Tribunal or at any stage of the proceedings before the final order is passed, the applicant may be granted refund of the fees paid by him at such rates as may be prescribed.
(4) On receipt of the application under sub-section (1) or sub-section (2), the Tribunal shall issue summons with following directions to the defendant -
(i) to show cause within thirty days of the service of summons as to why relief prayed for should not be granted;
(ii) direct the defendant to disclose particulars of properties or assets other than properties and assets specified by the applicant under clauses (a) and (b) of sub-section (3-A); and
(iii) to restrain the defendant from dealing with or disposing of such assets and properties disclosed under clause (c) of sub-section (3-A) pending the hearing and disposal of the application for attachment of properties. (4-A) Notwithstanding anything contained in Section 65-A of the Transfer of Property Act, 1882 (4 of 1882), the defendant, on service of summons, shall not transfer by way of sale, lease or otherwise except in the ordinary course of his business any of the assets over which security interest is created and other properties and assets specified or disclosed under sub- section (3-A), without the prior approval of the Tribunal:
Provided that the Tribunal shall not grant such approval without giving notice to the applicant bank or financial institution to show cause as to why approval prayed for should not be granted:6
Provided further that defendant shall be liable to account for the sale proceeds realised by sale of secured assets in the ordinary course of business and deposit such sale proceeds in the account maintained with the bank or financial institution holding security interest over such assets.
(5)(i) the defendant shall within a period of thirty days from the date of service of summons, present a written statement of his defence including claim for set-off under sub-
section (6) or a counter-claim under sub-section (8), if any, and such written statement shall be accompanied with original documents or true copies thereof with the leave of the Tribunal, relied on by the defendant in his defence:
Provided that where the defendant fails to file the written statement within the said period of thirty days, the Presiding Officer may, in exceptional cases and in special circumstances to be recorded in writing, extend the said period by such further period not exceeding fifteen days to file the written statement of his defence;
(ii) where the defendant makes a disclosure of any property or asset pursuant to orders passed by the Tribunal, the provisions of sub-section (4-A) of this section shall apply to such property or asset;
(iii) in case of non-compliance of any order made under clause (ii) of sub-section (4), the Presiding Officer may, by an order, direct that the person or officer who is in default, be detained in civil prison for a term not exceeding three months unless in the meantime the Presiding Officer directs his release:
Provided that the Presiding Officer shall not pass an order under this clause without giving an opportunity of being heard to such person or officer.
Explanation. - For the purpose of this section, the expression 'officer who is in default' shall mean such officer as defined in clause (60) of Section 2 of the Companies Act, 2013 (18 of 2013).
(5-A) On receipt of the written statement of defendant or on expiry of time granted by the Tribunal to file the written statement, the Tribunal shall fix a date of hearing for admission or denial of documents produced by the parties to the proceedings and also for continuation or vacation of the interim order passed under sub-section (4).7
(5-B) Where a defendant makes an admission of the full or part of the amount of debt due to a bank or financial institution, the Tribunal shall order such defendant to pay the amount, to the extent of the admission within a period of thirty days from the date of such order failing which the Tribunal may issue a certificate in accordance with the provisions of sub-section (22) to the extent of the amount of debt due admitted by the defendant.
(6) Where the defendant claims to set-off against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be set-off along with original documents and other evidence relied on in support of claim of set-off in relation to any ascertained sum of money, against the applicant.
(7) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Tribunal to pass a final order in respect both of the original claim and of the set-
off.
(8) A defendant in an application may, in addition to his right of pleading a set-off under sub-section (6), set up, by way of counter-claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not.
(9) A counter-claim under sub-section (8) shall have the same effect as a cross-suit so as to enable the Tribunal to pass a final order on the same application, both on the original claim and on the counter-claim.
(10) The applicant shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be prescribed.
(10-A) Every application under sub-section (3) or written statement of defendant under sub-section (5) or claim of set-off under sub-section (6) or a counter-claim under sub- section (8) by the defendant, or written statement by the applicant in reply to the counter- claim, under sub-section (10) or any other pleading whatsoever, shall be supported by an affidavit, sworn in by the applicant or defendant verifying all the facts and pleadings, the statements pleading documents and other documentary evidence annexed to the application or written statement or reply to set-off or counter-claim, as the case may be: 8
Provided that if there is any evidence of witnesses to be led by any party, the affidavits of such witnesses shall be filed simultaneously by the party with the application or written statement or replies filed under sub-section (10-A).
(10-B) If any of the facts or pleadings in the application or written statement are not verified in the manner provided under sub-section (10-A), a party to the proceedings shall not be allowed to rely on such facts or pleadings as evidence or any of the matters set out therein.
(11) Where a defendant sets up a counter-claim in the written statement and in reply to such claim the applicant contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent action, the Tribunal shall decide such issue along with the claim of the applicant for recovery of the debt.
(12) The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal.
(13)(A) Where, at any stage of the proceedings, the Tribunal on an application made by the applicant along with particulars of property to be attached and estimated value thereof, or otherwise is satisfied, that the defendant, with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him, -
(i) is about to dispose of the whole or any part of his property; or
(ii) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Tribunal; or
(iii) is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the Tribunal may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Tribunal, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt, or to appear and show cause why he should not furnish security.
(B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may 9 order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.
(14) The applicant shall, unless the Tribunal otherwise directs, specify the property required to be attached and the estimated value thereof.
(15) The Tribunal may also in the order direct the conditional attachment of the whole or any portion of the property specified under sub-section (13).
(16) If an order of attachment is made without complying with the provisions of sub-
section (13), such attachment shall be void.
(17) In the case of disobedience of an order made by the Tribunal under sub-sections (12), (13) and (18) or breach of any of the terms on which the order was made, the Tribunal may order the properties of the person guilty of such disobedience or breach to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Tribunal directs his release.
(18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order, -
(a) appoint a receiver of any property, whether before or after grant of certificate for recovery of debt;
(b) remove any person from the possession or custody of the property;
(c) commit the same to the possession, custody or management of the receiver;
(d) confer upon the receiver all such powers, as to bringing and defending suits in the courts or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and
(e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.
10(19) Where a certificate of recovery is issued against a company as defined under the Companies Act, 2013 (18 of 2013) and such company is under liquidation, the Tribunal may by an order direct that the sale proceeds of secured assets of such company be distributed in the same manner as provided in Section 326 of the Companies Act, 2013 or under any other law for the time being in force.
(20) The Tribunal may, after giving the applicant and the defendant, an opportunity of being heard, in respect of all claims, set-off or counter-claim, if any, and interest on such claims, within thirty days from the date of conclusion of the hearings, pass interim or final order as it deems fit which may include order for payment of interest from the date on which payment of the amount is found due up to the date of realisation or actual payment.
(20-A) Where it is proved to the satisfaction of the Tribunal that the claim of the applicant has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties or where the defendant has repaid or agreed to repay the claim of the applicant, the Tribunal shall pass orders recording such agreement, compromise or satisfaction of the claim.
(20-AA) While passing the final order under sub-section (20), the Tribunal shall clearly specify the assets of the borrower over which security interest is created in favour of any bank or financial institution and direct the Recovery Officers to distribute the sale proceeds of such assets as provided in sub-section (20-AB).
(20-AB) Notwithstanding anything to the contrary contained in any law for the time being in force, the proceeds from sale of secured assets shall be distributed in the following orders of priority, namely -
(i) the costs incurred for preservation and protection of secured assets, the costs of valuation, public notice for possession and auction and other expenses for sale of assets shall be paid in full;
(ii) debts owed to the bank or financial institution.
Explanation. - For the purposes of this sub-section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency and bankruptcy proceedings are pending in respect of secured assets of the borrower, the distribution of proceeds from sale of secured assts shall be subject to the order of priority as provided in that Code.
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(21)(i) The Tribunal shall send a copy of its final order and the recovery certificate, to the applicant and defendant.
(ii) The applicant and the defendant may obtain copy of any order passed by the Tribunal on payment on such fee as may be prescribed.
(22) The Presiding Officer shall issue a certificate of recovery along with the final order, under sub-section (20), for payment of debt with interest under his signature to the Recovery Officer for recovery of the amount of debt specified in the certificate.
(22-A) Any recovery certificate issued by the Presiding Officer under sub-section (22) shall be deemed to be decree or order of the Court for the purposes of initiation of winding up proceedings against a company registered under the Companies Act, 2013 (18 of 2013) or Limited Liability Partnership registered under the Limited Liability Partnership Act, 2008 (9 of 2008) or insolvency proceedings against any individual or partnership firm under any law for the time being in force, as the case may be.
(23) Where the Tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of the jurisdiction of two or more Tribunals, it may send the copies of the certificate of recovery for execution to such other Tribunals where the property is situated:
Provided that in a case where the Tribunal to which the certificate of recovery is sent for execution finds that it has no jurisdiction to comply with the certificate of recovery, it shall return the same to the Tribunal which has issued it.
(24) The application made to the Tribunal under sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and every effort shall be made by it to complete the proceedings in two hearing, and to dispose of the application finally within one hundred and eighty days from the date of receipt of the application.
(25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice."
7. Next placing reliance on Section 60 of the Transfer of Property Act, 1882 (hereinafter referred to as "the TP Act"), learned senior counsel argues that the right of redemption is available to the applicant till the sale is confirmed in favour of any of the intending 12 purchasers. Learned senior counsel also relies upon Section 60-A of the TP Act in this context. Sections 60 and 60-A of the TP Act are set out below:
"Transfer of Property Act, 1882:-
60. Right of mortgagor to redeem. - At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-
money, to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished:
Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court.
The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money.
Redemption of portion of mortgaged property. - Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor.
60-A. Obligation to transfer to third party instead of re-transference to mortgagor. - (1) Where a mortgagor is entitled to redemption, then, on the fulfilment of any conditions of the fulfilment of which he would be entitled to require a re-transfer, he may require the mortgagee, instead of re-transferring the property, to assign the mortgage-debt and transfer 13 the mortgaged property to such third person as the mortgagor may direct; and the mortgagee shall be bound to assign and transfer accordingly.
(2) The rights conferred by this section belong to and may be enforced by the mortgagor or by any encumbrancer notwithstanding an intermediate encumbrance; but the requisition of any encumbrance shall prevail over a requisition of the mortgagor and, as between encumbrancers, the requisition of a prior encumbrancer shall prevail over that of a subsequent encumbrancer.
(3) The provisions of this section do not apply in the case of a mortgagee who is or has been in possession."
8. It is argued that the provisions of Sub-Section (25) of Section 19 of the DRT Act are governed by the contours laid down in Sub-Section (1) of the said section. Sub-section (1) of Section 19, it is argued, restricts the ambit of the entire section to borrowers and creditors. As such, there is no scope of intervention of a third party in such a proceeding. Any independent right asserted by such a third party will have to be urged before an independent forum having jurisdiction.
9. As far as redemption is concerned, it is argued on the strength of Section 60-A that where a mortgagor is entitled to redemption, then, on the fulfilment of any condition entitling him to require a retransfer, he may require the mortgagee, instead of re-transferring the property, to assign the mortgage debt and transfer the mortgaged property to such third person as the mortgagor may direct; and the mortgagee shall be bound to assign and transfer accordingly. It is argued that such right of redemption, which was otherwise available in law to the applicant, was closed in the order under review, which is an error apparent on the face of the record.
10. It is further argued that the entire scope of the application under Article 227 of the Constitution of India was the refusal by the fora below of the prayers of respondent no. 1 for intervention in the proceeding and for recall of a previous order dated April 3, 2018. By the said previous order, the application of the applicant for a direction upon the bank to hand over the original title deeds of the property-in-question to the applicant and for issuance of no dues 14 certificate in respect of the said property was allowed. The bank was further directed to refund the pay order amounting to Rs.1,92,50,000/- (Rupees One Crore Ninety-two Lakh Fifty Thousand only) to the respondent no. 1 CIC Steels Pvt. Ltd. on furnishing of the same by the present applicant to the bank.
11. As such, it is submitted, this court travelled beyond the scope of the lis and directed the tribunal to pass consequential orders not only to negate the effect of subsequent developments pursuant to the order dated April 3, 2018 but also to facilitate sale of the property in question in favour of the petitioner therein, that is, the present respondent no. 1.
12. Learned senior counsel for the applicant cites a judgment reported at (2005) 4 SCC 741 [Board of Control for Cricket in India & Anr. v. Netaji Cricket Club & Ors.] in support of the proposition that the scope of review is very wide and encompasses even misconceptions of fact or law by the court or even an advocate.
13. Learned senior counsel for the bank submits that there was no privity of contract between the bank and the respondent no. 1 at any point of time, even if it is assumed that the bank agreed to the applicant in the review petition paying off the bank's debts by transfer of the property in favour of the respondent no. 1 at a particular juncture.
14. The bank, it is argued, is only interested in the debt, incurred by the applicant, being repaid and as such has no particular interest in who the property would be transferred to.
15. Moreover, it is argued, the bank's total claim, including accruing interest, is now far more than the sale price offered by any of the parties. Since the bank is dealing with public money, which entails responsibility and urgency of a higher standard than a private litigant, learned senior counsel for the bank submits that this court, in its wide powers under Article 227 of the Constitution of India, could review the previous order, thereby reopening the arguments on the parent revisional application, and direct sale of the property to the currently highest bidder.
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16. The bank further submits that this court, while passing the order under review, proceeded on a fundamental misconception that, by the order impugned in the revision, sale in favour of LOCO Industries had been finalized and that there had been a concluded agreement for sale in favour of the respondent no. 1.
17. The recall applicants in CAN 4502 of 2018 are allegedly partners of one LOCO Industries, in whose favour the applicant in the review petition sought to sell the property-in-suit instead of the respondent no. 1.
18. It is contended on behalf of the recall applicants that the order under review was passed behind their back, although they were necessary parties since their interest would be worst affected by the order under review.
19. It is submitted that although the respondent no. 1 in the review deposited only a portion of the consideration amount, the recall applicants not only matched such consideration but deposited the entire amount of such consideration in advance with the bank, and as such ought to have been given preference over the respondent no. 1, instead of setting aside the order impugned in the revision.
20. Learned senior counsel for the recall applicants argues that this court exceeded its jurisdiction in not only shutting out the rights of LOCO Industries to purchase the property, but also in going one step further directing the tribunal to facilitate sale of the property-in-question in favour of the respondent no. 1.
21. It is submitted that since the orders under challenge in the revision were confined to refusal of permission to the respondent no. 1 to intervene in the proceeding under Section 19 of the DRT Act and recall of an order dated April 3, 2018 whereby the Debts Recovery Tribunal allowed the application of the applicant in the review petition for a direction on the bank to hand over the title deeds of the disputed property and for issuance of a "no dues certificate" to the applicant, and directed the bank to refund the earnest money of Rs. 1,92,50,000/- to the respondent no. 1 CIC, it was beyond the jurisdiction of this court, while deciding such 16 revision, to set aside the proposed sale in favour of the recall applicants and to facilitate the transfer in favour of the respondent no. 1.
22. It is further argued that, by the order dated December 15, 2017, the bank was directed to communicate its decision regarding the proposal to the then intending purchaser, that is, CIC, within 25 days from depositing the earnest money. Since the bank did not communicate its acceptance, there was no question of any agreement binding on the bank for transfer of the disputed property to CIC. In fact, the bank was a third party-debtor and the transfer would be between the applicant in the review and a purchaser, in which the bank had no direct role to play.
23. In the said circumstances, it is submitted, the entire order under review ought to be recalled and steps for transfer of the property to the petitioners' firm LOCO Industries to be permitted.
24. In a composite reply, the respondent no. 1 argues that there was no provision of redemption under the DRT Act and the provision of redemption was restricted to Section 60 of the TP Act. As per the proviso to the said section, the right of redemption conferred on a mortgagor by Section 60 was subject to such right having not been extinguished by act of the parties or by decree of a court.
25. In the present case, it is argued, the applicant in the review petition extinguished its right of redemption by agreeing to transfer the property-in-dispute in favour of the respondent no. 1. Such agreement got the seal of the tribunal vide order dated December 15, 2017. Since the earlier purchaser Sunflower Goods (P) Ltd. was unable to deposit money for it proposed purchase, the respondent no. 1 (CIC Steels Pvt. Ltd.) offered to purchase the properties of the applicant free from all encumbrances, charges, liabilities, liens including charge of the bank at a consideration of Rs.7,70,00,000/-. Hence a modification was sought by the applicant in the review petition permitting the new intending purchaser CIC to make the offer instead of the earlier intending purchaser Sunflower.
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26. Accordingly, the tribunal, vide order dated December 15, 2017, ordered that the intending purchaser M/s CIC Steels (P) Ltd. must deposit Rs. 50 lakh by December 18, 2017 and further Rs.1,42,50,000/- by January 3, 2018 with the bank. The bank was directed to communicate its decision regarding the proposal to the intending purchase within 25 days from depositing the earnest money. If the proposal was not accepted by the bank, the bank was directed to refund the amount of Rs. 1,92,50,000/- to the intending purchaser M/s CIC Steels (P) Ltd.
27. Respondent no. 1 argues that it put in the entire amount as directed in the order dated December 15, 2017. Although the bank did not convey its acceptance within 25 days as directed by such order, by a subsequent communication dated March 28, 2018 to the applicant in the review petition, with a copy being forwarded to the CIC, the bank expressed its approval of the release of property and the applicant was advised to deposit the entire amount as per the proposal by the next date, that is, March 29, 2018. However, the said communication never reached the respondent no. 1, who intimated the bank, vide letter dated April 4, 2018, that it came to know about such communication for the first time on that day when its authorized signatory met with a bank person and a copy of the letter dated March 28, 2018 was handed over to such authorized signatory of the respondent no. 1. It was confirmed to the bank by the letter dated April 4, 2018 that the respondent no. 1 was ready and willing to deposit the said amount subject to handing over possession of the factory of the applicant to the respondent no. 1 through the DRT. It was further intimated that immediately upon receipt of the bank's confirmation as regards thereto, the respondent no. 1 would take necessary steps to comply with the bank's instruction for deposit of the amount as stated in the letter under reference.
28. Thereafter all on a sudden on April 3, 2018 the applicant in the review filed a put-up petition and asked for a direction on the bank to hand over the original title deeds in respect of the property-in-question to the applicant as well as original title deeds relating to such property and also for issuance of a 'no dues certificate' in respect of the said property. The said petition 18 was allowed behind the back of the respondent no. 1, granting all the said prayers and directing the bank to refund the pay order amounting to Rs.1,92,50,000/- (Rupees One Crore Ninety Two Lakh Fifty Thousand only) to the respondent no. 1.
29. The said order, according to the respondent no. 1, amounted to taking away the vested right of respondent no. 1 to purchase the property-in-question, without giving any hearing to the respondent no.1, despite such procedure for the purchase by respondent no. 1 having been initiated and continued under the aegis of the tribunal itself, being sanctioned by the order dated December 15, 2017 passed by the tribunal, with the concurrence of all concerned, including the bank.
30. In such a scenario, it is argued, there arose no question of filing any separate proceeding before any other forum either for specific performance of the agreement-in-question or for damages. Since the agreement for sale of the property to the present respondent no. 1 had got the seal of the tribunal and did not remain a mere agreement inter se the parties pursuant to the order of the tribunal, the tribunal could not have taken away the said vested right without hearing the respondent no.1, nor could any independent proceeding lie to perform the said agreement.
31. Learned senior counsel for the respondent no. 1 next cites a judgment reported at AIR 1955 SC 233 [Hari Vishnu Kamath vs. Syed Ahmad Ishaque and others] in support of the proposition that no error could be said to be apparent on the face of the record if it was not self-evident and if it required an examination or argument to establish it. In such view of the matter, it is argued, the present review application did not merit any consideration by this court at all.
32. The respondent no. 1 next cites a judgment reported at (2003) 6 SCC 675 [Surya Dev Rai vs. Ram Chander Rai and others], wherein the Supreme Court held inter alia that the supervisory jurisdiction under Article 227 of the Constitution of India is exercised by the High Courts for keeping the subordinate courts within the bound of their jurisdiction. When a subordinate 19 court has assumed a jurisdiction which it does not have or has failed to exercise the jurisdiction which it does have or the jurisdiction, though available, is being exercised by the court in a manner not permitted by law and failure of justice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction. It is submitted that the hands of this court were sufficiently long to pass the order under review and no case for review has been made out by the applicant.
33. It is further submitted that since the applicant in the recall application had no right to interfere in the process of sale in favour of the present respondent no. 1, absence of notice to the said party could not vitiate the order under review to merit a recall of the same.
34. A consideration of the materials on record shows that the order dated December 15, 2017, passed by the Debts Recovery Tribunal, recorded in presence of the bank as well as the applicant in the review that the present respondent no. 1, M/s CIC Steels (P) Ltd. must deposit Rs.50 lakh by December 18, 2017 and further Rs.1,42,50,000/- (Rupees One Crore Forty Two Lakh Fifty Thousand only) by January 3, 2018 with the bank. This clause, as stipulated in the said order, was complied with to the letter by the present respondent no. 1 (CIC).
35. The applicant bank was directed by the said order to communicate their decision regarding the proposal to the intending purchaser within twenty-five days from depositing the earnest money, which the bank failed to comply with. In view of having flouted the said direction, it does not now lie in the mouth of the bank to say that the said non-compliance on its part amounted to non-acceptance of the proposal.
36. In fact, by subsequent communication between the bank and the respondent no. 1, it is evident that the bank, although post facto, made it amply clear that they had agreed to such proposal and taken steps accordingly. In such view of the matter, the bank was now estopped from challenging the said order dated December 15, 2017, as is the applicant in the review petition, since the said order has attained finality.
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37. Although there might not be privity of 'contract' between the bank and the applicant and respondent no. 1, the bank is debarred by the principle of Estoppel from disagreeing with the sale being effected in favour of the respondent no. 1.
38. As regards the alleged rights of LOCO (the applicant in the recall application) is concerned, the said rights were subject to the result of the proceeding which was going on. In view of finality being conferred on the order dated December 15, 2017, LOCO took the risk of depositing an amount with the bank, thereby resorting to a wager of sorts. Such attempt, in any event, would be governed by the principle of lis pendens and LOCO cannot take advantage of its own wrong in intruding into the ongoing sale process.
39. The argument, as to the orders impugned in the appeal being restricted to the intervention of CIC in the proceeding and recall of the previous order dated April 3, 2018, are neither here nor there. Even if the impugned orders were restricted to such a dispute, a decision permitting the intervention of the respondent no. 1 (CIC) and a recall of the order dated April 3, 2018 would automatically entail the tribunal as well as the concerned parties to proceed with and finalize the sale in favour of the respondent no. 1, since the respondent no. 1 had already complied with its part of the agreement, crystallized in the order dated December 15, 2017. Neither the bank nor the applicant could resile from the said process.
40. As regards the arguments of the applicant, that the right of redemption of the applicant was curtailed by the order under review, the respondent no. 1 is justified in pointing out that, in view of the right conferred by Section 60 of the Transfer of Property Act having been extinguished by the act of the applicant itself in applying for transfer in favour of the respondent no. 1, which was conceded to by the bank and finalized in the form of the order of the tribunal dated December 15, 2017, no further right of redemption of mortgage could exist in favour of the applicant, that is, the mortgagor, at least detrimental to the rights of the respondent no. 1. Even if the provisions of Section 60-A of the Transfer of Property Act are taken into consideration, and the mortgagor was entitled to redemption by requiring an 21 assignment of the mortgaged debt and transfer of the mortgaged property to a third party as the mortgagor may direct, the said provisions could not take away the right of the respondent no.1, that is, the assignee in this context to purchase the property. Section 60-A only gives an additional option to the mortgagor to redeem through a third party, subject to the consequence that the rights of the mortgagor in the property stand transferred to the third party-assignee in exclusion of the mortgagor. The effect of Section 60-A is only to relieve the mortgagor of the liability to repay the loan by assigning the mortgaged debt to the third party.
41. However, the right to redeem a loan and the title in the property stands transferred to the third party-assignee. Hence, in the present case, no title in the property was retained by the mortgagor. Even the mortgaged loan being assigned to the respondent no. 1, the right of redemption also went to the respondent no. 1- assignee in substance. What remained with the mortgagor-applicant was the right to be free from the liability to repay the loan.
42. Thus the argument on redemption cannot stand.
43. A perusal of the order under review shows that full reasons were given for setting aside the exercise of release of title deeds in favour of LOCO and the permission to LOCO to deposit the money for the purpose of purchasing the property.
44. In fact, the tribunal was directed to pass consequential orders to negate the effect of any subsequent developments which might have taken place pursuant to the order dated April 3, 2018 and to facilitate sale of the property-in-question in favour of the present respondent no.1 "in accordance with law" and "subject to the petitioner (present respondent no. 1) complying with the petitioner's part of the agreement relating to the sale, as stipulated in the order dated December 15, 2017".
45. Thus, any legal right, if available in law either to the applicants in the review petition as well as the recall application, were not affected by the order under review. In the event there was any subsequent attempt to tender significantly higher bids than the respondent no. 1, there was no fetter on the tribunal, imposed by the order under review, to consider the same. The 22 term "in accordance with law" was sufficiently wide to encompass any subsequent changed circumstance.
46. Moreover, the apprehensions expressed by the applicants in the review and recall applications, as to the present respondent no. 1 not performing its part of the agreement pursuant to the order dated December 15, 2017, are alleviated in the observations made in the order under review itself as regards the requirement of the present respondent no. 1 (petitioner therein) to comply with its part of the agreement relating to the sale.
47. In the event any of the parties have any grievance against the order under review as regards the legality of the same, such alleged error of law would have to be taken in a challenge preferred before the appropriate authority by way of an appeal or a special leave petition. The tests for review, being the existence of an error apparent on the face of the record, discovery of new matter or any other ground akin thereto, are entirely absent in the present case. The questions raised by the applicants in both the review application and the recall application pertain to alleged errors of law and/or fact and do not attract in any manner the provisions of review.
48. As such, both the applications, respectively for review and recall of the order dated June 15, 2018 passed in C.O. No. 993 of 2018 fail, having no merits. Accordingly, R.V.W. 84 of 2018 and CAN 4502 of 2018 and, consequentially, CAN 4501 of 2018, are dismissed on contest, thereby upholding the order dated June 15, 2018 passed in C.O. No. 993 of 2018, which was already disposed of by the said order.
49. There will be no order as to costs.
50. Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.
( Sabyasachi Bhattacharyya, J. )