Disposed

Janakalyan Sahakari Bank Ltd. and Anr. v. State of Maharashtra and 8 Ors.

Bombay HC18 Mar 2009WP/569/2009

Case brief

AI extract

What is this about?

The High Court held that defence contracts containing secrecy clauses do not entitle respondents to stall property sales. It placed responsibility on respondents to ensure no breach of secrecy during inspection, instructing that inspection and auction dates be postponed for the factory premises but continue for residential flat.

What did the court decide?

Inspection of factory premises postponed to 30.3.2009; auction postponed to 9.4.2009; inspection and sale of residential flat to continue as scheduled.

Janakalyan Sahakari Bank Ltd. and Anr. Vs State of… — Banking and Recovery | Bombay HC (2009)

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

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 WRIT PETITION (LDG.) NO.519 OF 2009

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 Janakalyan Sahakari Bank Ltd. & Anr. ....Petitioners
 V/s.

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 State of Maharashtra & Ors. ....Respondents

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 Mr.Birendra Saraf with Mr.Ashish Kamat and Mr.Nikhil
 Rajani i/b M/s.V. Deshpande & Co. for the
 Petitioners.

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 Mr.Milind More, A.G.P. for Respondent No.1.

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 Mr.Nitin Deshpande with Mr.Khasbardar for Respondent
 Nos.2 and 3.

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CORAM : S.J. VAZIFDAR, J.
DATED : 18TH MARCH, 2009.
P.C. :

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 1. The Petitioners obtained a recovery

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 certificate on 29.3.2006 for a sum of about
 Rs.13,50,00,000/-. The amounts due today are around
 Rs.16.00 crores.

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 2. The only question in this Writ Petition is
 whether the bidders for the properties which are to be
 sold in execution of the recovery certificate ought to
 be permitted to take inspection thereof or not.

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 3. There is no dispute that the property is
 liable to be sold in execution of the recovery

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 certificate. There is no dispute that normally the
 prospective bidders are entitled to inspection of such
 property. The only objection raised is in regarding
 the manner in which the sale is proposed to be
 conducted. An earlier application in this regard was
 dismissed. It is stated on behalf of Respondent Nos.2
 and 3 that another application objecting to the manner
 of sale has been filed. These objections will be
 decided by the Special Recovery Officer. In any
 event, even during the pendency of these objections,
 there is no warrant for staying inspection of the
 properties.

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 4. The above aspect arises for consideration on
 account of the contentions on behalf of Respondent
 Nos.2 and 3 that in two of the properties certain
 defence orders are being executed. The defence orders
 in respect of Respondent No.2 contains clause 14 which
 reads as under :-

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"14. Secrecy : i) The contractor shall
 ensure that all persons employed in any
 work in connection with this contract
 including its sub-contractors have full
 knowledge of the official secret Act and
 any regulation framed thereunder and
 shall not be disclosed any information
 in respect of this contract to person or
 persons not concerned therewith.

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 ii). Any information obtained in the
 course of execution of the contract by
 contractor, its employees or agents or
 any person so employed as to any matter
 whatsoever,or indirectly of use to any

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 enemy of India must be treated asSECRET
 and shall not at any time and under any
 circumstances communicated to any person
 or persons.

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 iii). Any breach of the aforesaid
 conditions shall be in addition to any
 civil or criminal remedy open to the
 purchaser entitle to cancel the contract
 and to purchase or authorise to purchase
 the store at the risk and cost of the
 contractor in accordance with clause 9
 of schedule "B". In the event of
 cancellation, the parts manufactured in
 the execution of the contract may be
 taken over at his sole discretion by the
 purchase at such prices as he consider
 fair and reasonable and the decision of
 the purchaser as to such price shall be
 final and binding on the contract."

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 5. It was stated that a similar contract has

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 also been executed by Respondent No.3. Respondent
 No.3 agrees to furnish a copy thereof to the
 Petitioners’ advocate on or before 21.3.2009.

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 6. By a letter dated 4.2.2009, Respondent No.2
 informed the Recovery Officer that he should give a
 specific written order undertaking the entire
 responsibility for breach of secrecy before anybody is
 allowed in the premises of the plant involved in
 executing the defence order. What is suggested in
 this letter in fact is that any inspection would be
 contrary to the defence order and would involve a
 breach of secrecy.

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 7. Respondent Nos.2 and 3 cannot be permitted to

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 stall a sale in this manner. The defence contract is
 being executed by Respondent Nos.2 and 3. They are
 bound to ensure that there is no breach of the defence
 contract or any threat to security. It is therefore,
 the responsibility of Respondent Nos.2 and 3 to take
 all steps necessary during the inspection to ensure
 that there is no breach of secrecy or security. It is
 the responsibility of Respondent Nos.2 and 3 to inform
 the ordinance factory or any other concerned
 government officials regarding the proposed
 inspection. Such authorities would also be entitled
 to take all steps necessary to ensure that there is no
 breach of secrecy clause and there is no danger to the
 security in any manner whatsoever in the course of the
 inspection. The Special Recovery Officer will also
 take such steps as may be necessary to ensure the same
 and to consider the representations, if any, of the
 ordinance factory or any of the authorities. If
 necessary and if the authorities deemed it proper, it
 is also open to the Special Recovery Officer to
 consider whether any process manufacturing or
 otherwise is temporarily shut down for the purpose of
 ensuring inspection without prejudicing to the secrecy
 clause and security.

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 8. Respondent Nos.2 and 3 shall serve a copy of
 this order on the ordinance factory on or before

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 23.3.2009. The Petitioners shall also be at liberty
 to serve a copy of this order on the ordinance
 factory.

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 9. The meeting for inspection shall be held
 tomorrow - 19.3.2009 as scheduled and at that meeting
 the inspection of the two factory premises shall be
 postponed to 30.3.2009. Accordingly the meeting for
 the auction shall be convened as scheduled on 2.4.2009
 and on that day postponed to 9.4.2009.

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 10. The learned counsel appearing on behalf of
 Respondent Nos.2 and 3 states that they have no
 objection to the inspection being taken of the
 residential flat. Accordingly the inspection and sale
 of the residential flat shall continue as scheduled.

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 11. The confirmation of the sale of the premises
 shall be subject to any orders that may be passed on
 the objections which are stated to have been filed.

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 12. The Writ Petition is accordingly disposed of.

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 . All parties to act on an ordinary copy of
 this order duly authenticated by the Associate/Private
 Secretary of this Court.

Janakalyan Sahakari Bank Ltd. and Anr. v. State of Maharashtra and 8 Ors.

Case brief

What is this about?

What did the court decide?

Janakalyan Sahakari Bank Ltd. and Anr. v. State of Maharashtra and 8 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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