Disposed

L and T Finance Ltd. v. M/S. Shrimouli Builders and the Ambajogai Peoples Bank Ltd.

Bombay HC1 Feb 2008CHS/676/2007

Case brief

AI extract

What is this about?

The Court disposed of execution and arbitration applications concerning distribution of funds attached against a judgment debtor. Holding that priority is not based on the date of decree, the Court ordered rateable distribution of amounts available in court among L. & T. Finance Ltd. and Ambajogai Peoples Co-operative Bank Ltd. in proportion to their respective claims.

What did the court decide?

Amounts lying in court to be distributed rateably between L. & T. Finance Ltd. and Ambajogai Peoples Co-operative Bank Ltd. in proportion to their respective claims after deducting costs.

L and T Finance Ltd. Vs M/S. Shrimouli Builders and… — Execution and Attachment | Bombay HC (2008)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

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JUDGE’S ORDER NO.494 OF 2006
IN
ARBITRATION PETITION NO.242 OF 2005
IN
ARBITRATION PETITION NO.66 OF 2005

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Angerlehner Michel Construction Pvt.Ltd. ..Petitioner
V/s.
M/s.Shrimouli Builders & Anr. ..Respondents
And
Ambajogai Peoples Co-Op.Bank Ltd...Applicant

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WITH

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CHAMBER SUMMONS NO.676 OF 2007

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AND

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CHAMBER SUMMONS NO.124 OF 2007
IN
EXECUTION APPLICATION NO.425 OF 2005
IN
ARBITRATION AWARD NO.162 OF 2002

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L.& T. Finance Ltd....Plaintiff
V/s.
Shrimouli Builders & Ors.....Defendants

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Ms.Shakuntala Joshi for the Petitioner.

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Mr.J.P. Sen i/b Mehta Girdharlal for Applicant in
Chamber Summons No.676 of 2007 and Judge’s Order
No.494 of 2006.

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Mr.S.B. Rao i/b Mr.G.S. Rao for Defendant No.1, in
all Chamber Summons and Respondent No.1 in Judge’s
Order No.494 of 2006.

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Ms.Reshma Nathani with Mr.Vijay Patil for Maharashtra
Krishna Valley Development Corporation (Garnishee).

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CORAM : S.J. VAZIFDAR, J.
DATED : 1ST FEBRUARY, 2008.

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ORAL JUDGMENT :

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1.The above proceedings can conveniently be
disposed of by a common order.

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2.It is not necessary to refer to the facts in
detail as they have already been set out in the order
and judgment dated 9.10.2007 passed by the learned
single Judge in the above proceedings and the order of
the Appeal Court dated 15.2.2007 in an appeal filed
against the order of the learned single Judge in
Appeal No.127 of 2007.

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3.The arbitration proceedings were initiated by
Angerlehner Michel Construction Pvt.Ltd. - the
Petitioner in the arbitration proceeding. The moneys
 have been deposited by various third parties on
account of the Judgment debtor/Respondent No.1 in the
above proceedings.

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4.The order of the learned single Judge was set
aside and remanded for a fresh hearing.

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5.It is however, pertinent to note that the
question of priorities in respect of the Petitioner -

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Angerlehner Michel Construction Pvt.Ltd. has been
decided against it by the learned single Judge. No
appeal has been filed against the said order by the
Petitioner. The Petitioner has remained absent today.

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6.The question of priorities therefore requires
to be decided only between L. & T. Finance Ltd. and
Ambajogia Peoples Co-operative Bank Ltd.

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7.It is necessary to note only a few dates for
the purpose of deciding the question of priority
between them. An award was passed in the arbitration
proceedings in favour of L. & T. Finance Ltd. on
2.4.2003 in the sum of Rs.61,85,989/- along with
interest at 18% pa. on Rs.54,46,118/- and costs of
Rs.75,000/-. The execution proceedings were commenced
by L. & T. Finance Ltd. in April, 2004. The bank
obtained a recovery certificate dated 14.9.2006 under
the provisions of the Maharashtra Co-operative
Societies Act, 1960 for Rs.4,09,79,406/- with interest
at 14% p.a. on Rs.2,70,12,684/- from 1.7.2006 till
payment.

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8.Ms.Joshi contended on behalf of L. & T.

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Finance Ltd. that L. & T. Finance Ltd. was
entitled to priority in view of the fact that the

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award was passed prior to the recovery certificate.
The submission is not well founded. Section 73 of the
Code of Civil Procedure reads as under :-

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"73.Proceeds of execution-sale to be
rateably distributed among
decree-holders. - (1) Where assets are
held by a Court and more persons than
one have, before the receipt of such
assets, made application to the Court
for the execution of decrees for the
payment of money passed against the same
judgment-debtor and have not obtained
satisfaction thereof,the assets, after
deducting the costs of realization,
shall be rateably distributed amongst
all such persons :

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Provided as follows :-

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(a)where any property is
sold subject to a mortgage or charge,
the mortgagee or incumbrancer shall not
be entitled to share in any surplus
arising from such sale ;

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(b)whereanyproperty
liable to be sold in execution of a
decree is subject to a mortgage or
charge, the Court may, with the consent
of the mortgagee or incumbrancer, order
that the property be sold free from the
mortgage or charge, giving to the
mortgagee or incumbrancer the same
interest in the proceeds of the sale as
he had in the property sold ;

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(c)where anyimmovable
property is sold in execution of a
decree ordering its sale for the
discharge of an incumbrance thereon, the
proceeds of sale shall be applied -

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first, in defraying the expenses of the
sale ;

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secondly, in discharging the amount due
under the decree ;

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thirdly, in discharging the interest and
principal moneys due on subsequent
incumbrances (if any) ; and

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fourthly, rateably among the holders of
decrees for the payment of money against
the judgment-debtor, who have, prior to
the sale of the property, applied to the
Court which passed the decree ordering
such sale for execution of such decrees,
and have not obtained satisfaction
thereof.

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(2)Where all or any of the
assets liable to be rateably distributed
under this section are paid to a person
not entitled to receive the same, any
person so entitled may sue such person
to compel him to refund the assets.

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(3)Nothing in this section
affects any right of the Government."

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9.There is nothing in Section 73 of the C.P.C.
which indicates that priority is to be determined on
the basis of the date of the decrees passed in favour
of the parties claiming distribution.

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10.Ms.Joshi thereafter took the ground of fraud
in respect of the transactions between the bank and
the Judgment debtor. It is pertinent to note in the
first instance that the allegations of fraud pertain
to the manner in which the transactions had been
entered into between the bank and the Judgment debtor.
The allegations were made against the officers of the
bank in respect of the manner in which the loan was

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sanctioned and disbursed. It is crucial to note that
it was not contended that there was any fraud between
the bank per-se and the judgment qua the proceedings
or the manner in which recovery certificate was
passed.

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11.Ms.Joshi in respect of the allegations of
fraud, contended that there was no resolution of the
bank for granting the loan ; that the share
certificate issued to the Judgment debtor shows the
address of the Director of the bank ; that the
application for loan did not have photographs of the
Applicant and did not mention the category of the loan
; that the category of the facilities have not been
specified and that the address of the guarantor was
that of one of the Director’s of the Judgment debtor
itself and that the guarantor was the brother of the
Director.

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12.Apart from making these bare submissions,
Ms.Joshi did not seek to corroborate the same in any
manner whatsoever. No application for leading oral
evidence was made. I do not find material sufficient
to hold that there was any fraud between the bank and
the Judgment debtor. Even assuming that there may
have been collusion between certain officers of the

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bank and the Judgment debtor, it would not bar the
bank from recovering the amounts admittedly lent and
advanced. As stated earlier, it was neither contended
nor is there anything to indicate that there was
collusion between the bank itself and the Judgment
debtor in recovery proceedings.

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13.In this view of the matter, it is not
necessary to consider Mr.Sen’s further submission that
there was no reply to the Bank’s Judge’s Order.

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14.In the circumstances, it must be held that L.
& T. Finance Ltd and the Bank are entitled to the
amounts lying in Court in proportion to their claims.
In other words, after deducting all costs, charges and
expenses, L. & T. Finance Ltd. and the Bank shall
be entitled to ratable distribution of the said
amounts in proportion to their claim as on the date of
this order. The Judge’s Order, Chamber Summons
Nos.124 of 2007 and 676 of 2007 are disposed of in
accordance with the above order.

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15.Liberty to the parties to adopt independent
proceedings if necessary for the remaining prayers in
Chamber Summons No.124 of 2007.

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There shall be no order as to costs.

L and T Finance Ltd. v. M/S. Shrimouli Builders and the Ambajogai Peoples Bank Ltd.

Case brief

What is this about?

What did the court decide?

L and T Finance Ltd. v. M/S. Shrimouli Builders and the Ambajogai Peoples Bank Ltd.

Case brief

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What did the court decide?

What the court decided

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