Ashok Prabhakar Mastakar Vs Ramchandra… — Contract and Commercial Disputes | Bombay HC (2007)

Ashok Prabhakar Mastakar Vs Ramchandra… — Contract and Commercial Disputes | Bombay HC (2007)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.6452 OF 2007

Ashok Prabhakar Mastakar.. Petitioner

Versus
Ramchandra Mahadev Parte.. Respondent

Mr.N.V.Walawalkar, Senior Advocate with
Mr.S.R.Bhalekar for petitioner

Mr.G.S.Godbole with Harish Pawar for respondent.

CORAM :S.C.DHARMADHIKARI, J.
DATE:17th December 2007

ORAL JUDGEMENT:-

.Rule.By consent of parties heard

finally. Respondent waives service.

2.This petition challenges an order passed
by the lower appellate court dated 25th July 2007
in Appeal No.61 of 2007. The lower appellate
court by the impugned order has allowed the
appeal which was a miscellaneous civil appeal and
reversed the order of the trial court, which was
an interim order, in Regular Civil Suit No.3 of
2007. By its order dated 15th May 2007, the
trial court allowed the application and directed
that the respondent before me who is party
defendant to the suit should not till the hearing
and final disposal of the suit, either by himself
or anybody claiming through him, disturb physical
possession of the present petitioner in respect
of the suit property.

3.Aggrieved by this order, the above appeal
was preferred by the respondent original
defendant and that having been allowed, the
petitioner plaintiff in the above R.C.S. is
before me.

4.It appears from the record that the
property was purchased by the petitioner in an
auction. That auction was held pursuant to
respondent defendant defaulting in payment of the
dues which were due and payable to the Coop.Bank
viz., Jaoli Coop.Bank. Upon the possession of
the property being taken over by the Bank under
Securitisation Act, it was put up for auction and
the petitioner’s bid having been accepted, other
proceedings took place and my attention is
invited to the sale certificate in that behalf.
The sale certificate, a copy of which is annexed
to the compilation tendered on behalf of
petitioner as also respondent, states that
Dattatraya Maharaj Jaoli Sahakari Bank had
advanced certain monies to respondent before me
and his loan liability was Rs.96,28,249/- as on
22nd July 2006. The property was subject matter
of mortgage and that is how the bank proceeded
under the Securitisation Act and vide further

powers conferred thereunder proceeded with the
Auction. The sale certificate reads thus:-

"WHEREAS:

.The undersignedbeing the
authorised officer of the Dattatraya
Maharaj Kalambe Jaoli Sahakari Bank Ltd.,
Mumbai 418/20, Maulana Azad Road, Mumbai
400 004 and appointed as per the
provisions under the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 (54 of 2002) Ordinance 3 of 2002.
And in exercise of the power confirmed
under sub-section 12 of Section 13 read
with rule 8 and 9 of the Security
Interest (Enforcement) Rules, 2002. Sold
on behalf of the Dattatraya Maharaj
Kalambe Jaoli Sahakari Bank Ltd., Mumbai
418/20 Maulana Azad Road, Mumbai 400 004

in favour of Shri Ashok Prabhakar
Mastakar R/o.Shantaram Nivas, Flat No.12,
Gokhale Road, (North), Dadar West, Mumbai
400 028. The immovable property shown in
the Schedule below.

.The immovable property mentioned
in the Schedule hereinafter appearing
lastly was mortgaged with aforesaid
mention creditor bank on 06/08/2003 and
now by way of auction sale dated
24/8/2006, sold the said immovable
property to aforesaid mention purchaser
towards the loan liability of
Rs.96,28,249/- as on 22/7/2006, which was
given to Shri Dr.Ramchandra Mahadev Parte
R/o.Tapola, Taluka Mahabaleshwar,
Dist.Satara on 18/8/2003 for the amount
of Rs.65,00,000/-.

.For the aforesaid purpose the

authorised officer appointed as per the
provisions of the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 (54 of 2002) Ordinance 3 of 2002,
obtained the possession of said immovable
property as mentioned in Schedule lastly
from the District Magistrate (Collector)
Satara on 27/4/2006, and then after
inviting the tenders for sale in public.
The proceeding under the said Act, also
confirmed from the Hon’ble Debt Recovery
Tribunal Pune in Appeal No.20 of 2006
dated 18/7/2006.

.And as per the provisions of the
said Act, the authorised officer on
24/8/2006 by way of auction sale held at
head office at 418/20 Maulana Azad Road,
Mumbai 400 004 confirmed the sale in
favour of Shri Ashok Prabhakar Mastakar

for the amount of his tender offer of
Rs.85,00,006/-

.The authorised officer on behalf
of the said creditor bank acknowledge the
receipt of the sale price Rs.85,00,006/-.
As 25% amount as Rs.10,000/- by way of
D.D. No.61710 on date 22/8/2006
Rs.21,15,006/- by way of A/c.payee cheque
No.309240 from H.D.F.C. on date
25/8/2006 and remaining 75% amount of
Rs.63,75,000/- by way of A/c.payee cheque
No.309241 from H.D.F.C. on date
9/9/2006.

.The possession of immovable
property as mentioned in following
schedule is handed over and delivered to
the purchaser on 23rd September 2006.

property was made free from all
encumbrances known to the secured
creditor."

5.It is undisputed before me that the
respondent defendant had filed Special Civil Suit
No.166 of 2006 which is pending in the Civil
Court and in the said suit, he claimed a
declaration against the present petitioner and
the bank to the effect that his physical
possession in respect of the said property shall
not be disturbed by the petitioner - purchaser
and the bank. The suit is filed on 18th November
2006. However, there is no interim order in
favour of the respondent operating in the said
suit.

6.Equally, it is accepted before me that
the respondent did not challenge the sale, which
was under the Securitisation Act, by taking
recourse to the remedy available under the said

Act.

7.It is in these circumstances, that when
physical possession of the petitioner was being
disturbed by the respondent - defendant that the
above suit was filed by the petitioner.

8.The plaint averment in the petitioner’s
suit proceed on the basis that the petitioner has
purchased the property at the auction. The
auction has concluded. The petitioner further
pleaded that the said property was handed over on
23rd September 2006 after the entire sale price
was tendered and a sale certificate was issued.
The plaint averments proceed on the basis that
the petitioner has become owner of the property.
However, when the petitioner was threatened that
the continuous electricity and water connection
to the premises would be interfered with and
snapped, that he decided to approach the civil
court and pray for permanent injunction. The

permanent injunction is to restrain the present
respondent from in any manner disrupting the
M.S.E.B. connection, water connection so also
interfering with the petitioner’s possession by
obstructing their servants, agents in any manner.

9.An application for interim injunction was
filed, which application was duly served on the
defendant. The respondent defendant has in reply
to the application for injunction, purported to
question the sale. The sale itself is vitiated,
according to respondent, for the reasons set out
in the affidavit in reply/written statement.
Thereafter, the application was placed before the
trial court which adverted to all these facts and
in para 10 referred to the position that
Securitisation Act was resorted to and having
completed the process of Auction thereunder, the
property was handed over. The possession receipt
in favour of the Bank has been referred to.
Panchanama at site has also been referred to.

The sale deed also is referred to by the Trial
Court with the factum of possession being handed
over to petitioner by the Bank. It is in such
circumstances and having found that the
petitioner was in possession that the injunction
order was passed.

10.Aggrieved thereby,respondent has
preferred civil miscellaneous appeal No.61 of
2007 which has been allowed. The Dist.Court is
fully aware of the fact that the civil court has
very limited right to question the actions under
Securitisation Act. It is fully aware of the
decision of the Supreme Court in Mardia Chemicals
Vs. Union of India, reported in 2004 (2) Mh.L.J.
1090. However, its reasoning in paras 9, 10 and
11 proceeds on the basis that the petitioner
himself having invoked the jurisdiction of the
civil court, the issue of jurisdiction of the
civil court need not detain him. Secondly, the
lower appellate court refers to the proceedings

before the D.R.T. and observes that the dispute
is pending. However, before me, it is common
ground that no proceedings before the D.R.T. are
pending. The lower appellate court, thereafter,
proceeds on the basis of alleged breach of Rule 9
of the Security Interest (Enforcement) Rules 2003
and sub-rule (3) thereof and observes that the
sale certificate cannot be said to be proper
because 25% of the total consideration was not
tendered forthwith, but on the next day. It is
in such circumstances and relying upon a decision
of the Supreme Court in the case of Manilal Shah
Vs. Sardar Sayed Ahmed Sayad Mahmad, reported in
A.I.R. 1954 S.C. 349, that it reversed the
order of the trial court.

11.Mr.Walawalkar, learned Senior Counsel for
petitioner contended that the lower appellate
court’s order is ex facie bad in law. It is
vitiated by patent illegality, inasmuch as, the
lower appellate court being fully aware of the

mandate of section 34 of the Securitisation Act,
could not have questioned the injunction of the
trial court in the suit of petitioner on the
basis that the provisions of Securitisation Act
have not been complied with. He invites my
attention to section 34 and submits that the suit
filed by the respondent before the trial court,
being R.C.S.No.166 of 2006 was not maintainable.
That apart, he filed an application for
injunction therein which application has been
rejected on 29th January 2007. The matter was
not pursued by the respondent further. Secondly,
the respondent has not approached the D.R.T. or
the D.R.A.T., questioning the sale and violation
of the mandate of the Rules in that behalf. In
such circumstances, when all documents evidence
at this prima facie stage that the property has
been sold, consideration tendered and physical
possession handed over, then, the trial court’s
order require no interference. In such
circumstances, ignorance of all this material on

record, vitiates appellate court’s order and it
can be safely termed as perverse. He submits
that this is a fit case for exercising
jurisdiction under Article 227 of Constitution of
India.

12.Mr.Godbole for respondent on the other
hand submits that the sale certificate which is
placed on record would evidence that
consideration has not been tendered as per the
mandate of Rule 9. The sale was ex facie bad.
The other civil suit No.166 of 2006 is pending.
Even if the application for injunction therein is
rejected, that by itself is no ground for the
lower appellate court to exercise its discretion
and interfere with the order of the trial court
in the petitioner’s suit. He has invited my
attention to the decisions of the Supreme Court
and Division Bench of this Court. He also
submits that the law laid down in Mardia
Chemicals (Supra) is that a Civil Suit is not

totally barred. In such circumstances, the lower
appellate court was right in concluding that the
order of the trial court deserves to be
interfered with.

13.Alternatively, he submits that there is
an order of status quo granted by this Court.
Now reverting physical possession back to the
petitioner would be unjust and unfair. The
property is being maintained by the respondent
and he is ready and willing to deposit such sums
as are directed by this Court. Therefore, the
order under challenge need not be interfered
with.

14.I have perused the petition and the
annexures thereto including the impugned order.
It is pertinent to note that the petitioner is
party to a suit being Special Civil Suit No.166
of 2006 which is filed by the present respondent
and one Vishal Rameshchandra Parte. The suit is

filed for a declaration that the sale deed dated
9th October 2006 which is in favour of the
present petitioner is bad in law and not binding
upon the plaintiffs. Further, they had also
sought reliefs of permanent injunction
restraining the bank as also the present
petitioner from obstructing their possession over
the suit property. The suit properties in both
suits are the same. It is of some relevance to

note that the application for temporary
injunction (Exh.5) in the respondent’s suit has
been rejected. The reasoning of the learned
trial Judge therein is that Securitisation and

Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as
well as provisions of the Cooperative Societies
Act and C.P.C., if perused, prima facie, make the
application untenable. The prima facie finding
is that the sale is complete. The reasoning is
that the Court has virtually no jurisdiction at
this stage. Now, this order of 29th January 2007

remains unchallenged.

15.Self-same contentions were raised by the
respondent in the petitioner’s suit being
R.C.S.No.3 of 2007 which was filed for permanent
injunction. A copy of the reply to the
application Exh.5 filed on behalf of respondent
(Exh.E to the petition), proceeds on the basis
that the contentions of the petitioner are false.
There is a reference made to the mortgage deed.
There is also a reference made to the pending
suit instituted by the respondent. There is also
a reference made to the fact that the petitioner
has colluded with the Specified Officer and has
purchased the property at the auction. The reply
proceeds on the basis that the sale itself is
void. After this reply was filed, the trial
court perusing the same has more or less taken
the same view that was taken by the trial judge
in the suit instituted by the respondent. That
prima facie view and the present prima facie view

of the trial Judge proceeds on the same lines.
The trial Judge in the present case in para 10
may have referred to the petitioners as bonafide
purchasers for value yet, it has rightly, at this
stage, placed reliance upon documents evidencing
the sale. These are documents which have been
produced and relied upon by both sides. At this
stage, it was not permissible for the respondent
to question their authenticity, genuineness and
whether they would constitute a valid sale or
not. Admittedly, all documents commencing from
the sale notice which is dated 23rd July 2006 up
to the sale deed dated 9th October 2006 including
the panchanama and possession receipt are there
on record. The possession receipt Exh.9/1 and
9/2 shows that the suit property has been handed
over to the Coop.Bank. The panchanama shows that
Tahsildar Mahabaleshwar has taken possession
thereof. The possession has been taken over from
the present respondent. This is all in pursuance
of the order of Dist.Magistrate under the

Securitisation Act. This order under section
13(4) thereof, thereafter enables the bank to
proceed and sell the property. That is the
scheme of the Act itself. It is in such
circumstances and when the bank gave full
opportunity to the respondent debtor, that the
property was put up for sale. The observations
of the D.R.T. in Appeal No.20 of 2006 have also
been perused by the trial Judge in this case.

16.It is in such circumstances and relying
upon several decisions interpreting the subject
provisions of the Securitisation Act that the
trial court holds that in the given facts and
circumstances, it cannot question the auction
sale and unless and until the auction has been
set aside so also the sale deed nullified by
competent court/Authority, the petitioner cannot
be prevented from claiming the injunction sought
by him.

17.The trial court thus held that petitioner
has made out a strong prima facie case, balance
of convenience is in his favour and having
obtained the sale certificate so also sale deed
grave and irreparable loss, harm and injury will
be caused to him, if he is now prevented from
possession and enjoyment of the property. Such
an order, to my mind required no interference in
the light of the admitted facts. Merely because
civil suit filed by the respondent is pending or
that the respondent invites the attention of the
lower appellate court to the Security Interest
(Enforcement) Rules 2003, is no ground to
interfere with the discretion exercised by the
trial court. The reasoning of the lower
appellate court proceeds on the basis that the
civil court can questioned the entire auction
procedure under the Securitisation Act. It may
be that the sale can be question as observed by
the Supreme Court and held in Mardia Chemical’s
case. However, that is a case of proven fraud.

Here, prima facie, the documents which have been
placed on record will have to be believed. More
so, when the respondent could not succeed in
getting an injunction in his favour in his own
suit. Further, he has not resorted to the
remedies provided by the Securitisation Act. By
instituting a suit in the civil court or by
questioning the sale, in the affidavit in reply
to an application for interim injunction in the
instant suit, does not mean that the sale becomes
automatically bad or vitiated in law. That
aspect will have to be proved by the respondent
by leading evidence. Until that stage is
reached, it was not permissible in the present
facts and circumstances to have permitted the
respondent to interfere with the petitioner’s
possession.

18.The Authorities and decisions brought to
my notice by Mr.Godbole coupled with Rule 9 would
make it clear that it is not as if the respondent

has no opportunity at all to prove that the sale
is vitiated by fraud. He will have to prove that
the purchaser immediately did not deposit 25% of
the amount of sale price to the authorised
officer conducting the sale so also balance price
by 15th day. The respondent is free to lead
evidence in his own suit so also in the instant
suit. Until that material is placed and the
matter is heard finally, the respondent could not
have taken law in his hands and interfered with
the possession of the petitioner.

19.In such circumstances, Rule is made
absolute. The order under challenge is set
aside. The order of trial court is restored,
however, with condition that the petitioner shall
not create any third party rights nor part with
possession of the suit property until final
decision in the suit. In the peculiar facts of
this case, after the lower appellate court’s
order if the respondent has interfered with

petitioner’s possession or that status quo at
site was directed to be maintained does not mean
that the petitioner has lost possession. The
possession was lost by the respondent prior to
the sale in favour of the petitioner. There is
no merit in the submission that I am restoring
status quo ante. Equally, it would be for the
petitioner to apply for all licenses and until
and unless he obtains such authorisation and
licenses, the property would not be put to use as
an hotel.

20.It is not permissible for me now to take
cognisance of the request of Mr.Godbole and allow
the respondent to deposit any sums as prayed.
That apart, the respondent is only offering to
pay or deposit a portion of the sale price. The
sale price has been tendered in August 2006. In
such circumstances, it will be neither equitable
nor fair, just and proper to accept this plea.

21.Mr.Godbole, states that Rs.16 lakhs have
already been deposited and he would deposit Rs.80
lakhs in addition. However, the deposit of Rs.16
lakhs is disputed by Mr.Walawalkar and he states
that the said sum is not deposited. Considering
the order that I have passed, I do not wish to
enter into this controversy. Petition is allowed
accordingly.

22.At this stage, Mr.Godbole prays for eight
weeks time to challenge this order and therefore,
the order of status quo passed by this Court be
continued to enable him to do so. This request
is opposed by Mr.Walawalkar. In my view, having
held that the petitioner has been deprived of
possession of the property by the order of the
lower appellate court, which is quashed and set
aside by me, as being patently unsustainable, so
also, the petitioner having tendered the entire
sale price and the sale deed being executed, this
request cannot be acceded to. Request is

refused.

23.Needless to state that both suits shall
be decided by the courts below uninfluenced by
the observations which are wholly tentative and
prima facie. They are made for the purpose of
disposal of Temporary Injunction Application
(Exh.5). The suits must be decided on their own
merits, after the oral and documentary evidence
is led.

(S.C.Dharmadhikari, J)