Allowed

Ujwala Kishor Zare v. Bank of Baroda and Ors.

Bombay HC6 May 2013WP/2125/2012

Case brief

AI extract

What is this about?

The court exercised writ jurisdiction under Article 226 to protect a bona fide school teacher who purchased a flat. The court held that recovery orders obtained by the bank against incorrectly described High Income Group properties could not be enforced against the petitioner's distinct Middle Income Group flat.

What did the court decide?

Declared that the DRT order, recovery certificate, and warrant of attachment do not pertain to the petitioner's flat and cannot be enforced against it.

Ujwala Kishor Zare Vs Bank of Baroda and Ors. — Banking and Recovery | Bombay HC (2013)

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

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WRIT PETITION NO.2125 OF 2012

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Ujwala K. Zare V/s.

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Bank of Baroda & Ors.

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...Petitioner

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...Respondents

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Mr.Dilip G.Bagwe for the Petitioner.

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Ms.Sowmya Srikrishna with Ms.Gaurangi Pujare i/b M/s.Little & Co. for Respondent No.1.

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Mr.Sanjay A. Ghaisas for Respondent No.3.

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CORAM : S.J. VAZIFDAR &

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R.Y. GANOO, JJ. DATE : 6TH MAY, 2013.

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P.C. :-

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Rule. Rule is made returnable forthwith and with the consent of the parties heard finally.

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The petitioner seeks a declaration that she is the bonafide purchaser for value without notice of a flat in a Middle Income Group colony. The petitioner also seeks a permanent order and injunction restraining respondent No.4, Recovery Officer of the Debt Recovery Tribunal (DRT) from enforcing a recovery certificate dated 17.11.2003 in respect of the said flat. In the alternative, the petitioner seeks an order directing the DRT and Recovery Officer / respondent

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No.4 to amend the recovery certificate dated 17.11.2003 and a warrant of attachment dated 22.12.2006, so as to exclude the said flat from the purview of the recovery proceedings. Lastly, the petitioner has sought an order quashing the warrant of attachment dated 22.12.2006.

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The prayers are indeed unusual in a petition under Article 226 of the Constitution of India. We are however, inclined to exercise our powers under Article 226 of the Constitution of India in view of the facts and circumstances of the present case. Our failure to do so would lead to a gross miscarriage of justice.

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The petitioner, a school teacher finds herself in an extremely unfortunate situation for no fault whatsoever of her own. She is sought to be evicted from the residential premises that she purchased in the year 1997 at the instance of respondent No.1 in execution of a decree / recovery certificate obtained by it from the DRT, despite the fact that admittedly the decree is not in respect of the said flat. Admittedly the flat described in the plaint was not the petitioner's flat. The orders of injunction and the other proceedings accordingly did not relate to the petitioner's flat. Respondent No.1 however, claims that the erroneous description in the plaint was an inadvertent error on its part. The petitioner however, cannot possibly be penalized for the same.

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The case, in short, is this.

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The petitioner had purchased a residential premises on

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07.06.1997 from respondent No.3. Prior thereto by an agreement dated 10.12.1992, respondent No.2 – Ramadasan Kerayil (defendant No.3 to the suit / OA) agreed to sell the said flat to respondent No.3 – Vijay Anant Paradkar. By an agreement dated 07.06.1997, respondent No.3, in turn, agreed to sell the flat to the petitioner. The petitioner has been in use and occupation of the flat since then.

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Respondent No.1, however, contends that both the agreements are void as they were entered into during the subsistence of an order of injunction passed by this Court in interim proceedings in a suit / OA filed by it. Suit No.1282 of 1991 was filed by respondent No.1 for recovery of a sum of about Rs.19 crores and for a declaration that the payment was duly secured by a charge on the properties mentioned therein. The petitioner was obviously not a party to the suit. Nor was her vendor – respondent No.3 a party to the suit. The crucial fact in the matter is that the properties mentioned in the plaint did not include the petitioner's flat. The suit was transferred to the DRT and was given OA No.741 of 2000, which was allowed by the DRT, entitling the respondent No.1 to recover the said amount, including by appropriating the sale proceeds of the properties described in the plaint towards its claim, if necessary.

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Respondent No.1 thereafter obtained a recovery certificate and a warrant of attachment dated 17.11.2003 and 22.12.2003, respectively. The warrant of attachment was sought to be levied on the petitioner's flat despite the fact that neither the OA nor the recovery certificate or the warrant of attachment pertained to the petitioner's flat.

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Respondent No.1, however, contended that there was an inadvertent error while describing the properties in the plaint which error continued in the order of injunction, the recovery certificate and the warrant of attachment. It is not the first respondent's case that the petitioner took undue advantage of the alleged inadvertent error. No allegations of mala fides or dishonesty have been made against the petitioner. It is not even suggested that the petitioner was aware of these proceedings and the orders passed therein, including the order of injunction. Her conduct is beyond doubt, honest and bona-fide Despite the same, respondent No.1 states that it is entitled to enforce its claim by evicting the petitioner and selling her flat and appropriating the sale proceeds towards its claim against the defendants in the suit / OA as it had only made an inadvertent error in describing the property in the plaint.

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We have come to the conclusion that to uphold the contention of respondent No.1 would, in fact, permit it to take

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advantage of its own wrong and negligence. Worse still it would prejudice the petitioner's interests for the negligence of respondent No.1. The petitioner is a bona -fide purchaser for value without notice. Even assuming that the order of injunction would render void any transactions during its subsistence, the same would be limited to the properties described in the plaint and cannot, by any stretch of imagination, apply in respect of any other property although the same may have been, through inadvertence, not mentioned in the plaint. That would affect the rights of innocent third parties.

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Unfortunately the petitioner adopted proceedings which did not yield a just result, as a result whereof, the petitioner is faced not with a case against her on merits but with purely technical difficulties. Fortunately these technicalities do not stand in the way of the petitioner and justice.

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It is in these exceptional circumstances that we intend entertaining this writ petition instead of relegating the petitioner to yet another round of agonizing and expensive litigation before the DRT. 6. Respondent No.1 filed Suit No.1282 of 1991 in this Court which stood transferred to the DRT. Upon transfer, it was numbered as O.A. No.741 of 2000.

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It is of crucial importance to note that in paragraph 6 of the plaint, respondent No.1 stated that defendant Nos.2 and 3 therein i.e.

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M/s.Suba Marketing Company Private Limited, one Mrs.Vasanthi Surendran and one Ramadasan Karayil (Respondent No.2 herein) had addressed a letter dated 15.09.1987 to respondent No.1 agreeing and undertaking to create an equitable mortgage of various properties including :-

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(2) “Right, title and interest of Defendant No.3 in Flat No.5/114, H.I.G. Colony, Samata Nagar, Kandivli East, Bombay – 400 101.

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(3) Right, title and interest of Defendant No.4 in Flat No.27/2525 H.I.G. Colony, Samta Nagar, Kandivali (East), Bombay – 400 101.”

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Admittedly neither of these properties correspond to the petitioner's flat which is “Flat No.114, Building No.6, Poisar Kandivali Nakshatra Co-operative Housing Society Limited, M.I.G. Colony, Samata Nagar, Kandivali (East), Mumbai - 400 101. The differences in the description of the petitioner's flat and those in the plaint are too obvious to high-light. The most important difference is that the petitioner's flat is in the M.I.G. Colony i.e. Middle Income Group Colony, whereas the flats described in the plaint are located in the H.I.G. i.e. High Income Group Colony.

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It is also important to note that the description of the property allegedly mortgaged by the erstwhile owner in favour of respondent No.1, was contained in Exhibit “P” to the plaint (annexed

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as Exhibit “M” to the petition). Items 2 and 3 thereof read as under :-

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“2. Right, title and interest of Defendant No.3 in Flat No.6/114, H.I.G. Colony, Samta Nagar, Kandivli East, Bombay- 400 101.

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Right, title and interest of Defendant No.4 in Flat No.27/535, H.I.G. Colony, Samta Nagar, Kandivali (East), Bombay-400 101.”

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Even here there is a crucial difference for the reference is to flat No.6/114 in the H.I.G. Colony (High Income Group Colony), whereas the petitioner's flat, as we noted earlier is in the M.I.G. Colony (Middle Income Group Colony). Thus even if the petitioner had knowledge of the plaint and the orders of injunction passed therein, which she quite clearly did not, it would have made no difference to her rights in respect of her flat.

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Respondent No.1 contends that the misdescription of the flat was an inadvertent error on its part throughout in the plaint. It is not the first respondent's case that the petitioner took advantage of this error. Indeed there was nothing to indicate the petitioner's knowledge of the existence of these proceedings. Even assuming that the petitioner knew about the said proceedings, this crucial alleged error cannot possibly prejudice the petitioner – an innocent third party. Indeed the further proceedings and orders which we will now refer to also do not contain any reference to the petitioner's flat. 10. On 24.04.1991, a learned Judge of this Court passed an

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ad-interim injunction in Notice of Motion No.1005 of 1991 restraining the defendants therein inter-alia from disposing of the flat. The order of injunction obviously would operate only in respect of the flat described in the plaint viz. one in the H.I.G. (High Income Group) colony and not the petitioner's flat.

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It is necessary to note another important fact. Respondent No.1 is unable to indicate the date on which the order of injunction was served upon the defendants. This assumes importance for a party cannot be held guilty of contempt of an order which was never brought to its notice. One of the contentions raised on behalf of respondent No.1 was that in view of the said injunction the alienation of the properties would be void. Reliance was placed upon the judgment of a Division Bench of this Court and of the Supreme Court in this regard. Those however were cases where the order of injunction was known at least to the parties against whom it was passed. The important distinguishing feature in this case is that respondent No.1 is unable to furnish any details as to when the order of junction was served upon the defendants prior to their having sold the flat, which was the subject matter of the injunction. This of course is assuming that the petitioner's flat was subject to the injunction. At the cost of repetition, the petitioner's flat was in fact not the subject matter of the order of injunction, for the order of injunction was in

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respect of the flat mentioned in the plaint which did not include the petitioner's flat.

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On 10.12.1992, an agreement of sale was entered into between respondent No.2, said Ramadasan Karayil, who was defendant No.3 to the suit and respondent No.3 herein, Vijay Anant Paradkar.

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By an order dated 10.11.1993, the learned single Judge of this Court directed respondent no.1 to serve the notice of motion upon the defendants in the suit. The said notice of motion was finally disposed of by an order of another learned single Judge dated 04.03.1994. The learned single Judge noted that prima-facie, there was no mortgage in respect of the properties described in the suit. The learned Judge therefore refused to appoint a Court Receiver and only granted an injunction in respect of the properties described in the suit.

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On 25.06.1994, respondent No.6, Poisar Nakshatra Cooperative Housing Society Limited, in which the petitioner's flat is situated, transferred the share certificate to the name of respondent No.3, Vijay Anant Paradkar.

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On 07.06.1997, an agreement for sale was entered into between respondent No.3 and the petitioner in respect of the said flat. On 13.06.1997, respondent No.3 put the petitioner in possession

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of the said flat. On 14.01.1999, respondent No.5, Maharashtra Housing and Area Development Authority, executed a sale-deed in respect of the building in which the petitioner's flat is situated, in favour of respondent No.6.

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This brings us to the proceedings before the DRT upon the transfer of the suit. O.A. No.741 of 2000 was allowed by an order of the DRT entitling respondent No.1 to recover a sum of about Rs.19.00 crores against the defendants therein. The order provided that on failure to pay the said amount, the immovable properties described in the plaint, as aforesaid, be sold and the net sale proceeds thereof be paid to respondent No.1.

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Pursuant thereto, a recovery certificate dated 17.11.2003 was issued by the DRT. A warrant of attachment was issued by the Recovery Officer, respondent No.4 on 22.12.2006.

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The description of the property in the plaint was not amended / corrected either in the O.A. or the recovery certificate. Nor was it amended / corrected in the warrant of attachment. Thus the order in the O.A. and the recovery certificate and the warrant of attachment would obviously operate only in respect of the properties described in the plaint.

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Ultimately, the warrant of attachment was served upon the petitioner on 23.12.2006.

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The position therefore, upto this stage is this. Respondent No.1 obtained orders for recovery of the amount including by the sale of the immovable properties described in the plaint. The recovery certificate and the warrant of attachment were issued pursuant thereto. Indeed the recovery certificate and the warrant of attachment ought to be in conformity with the principal order of recovery passed by the DRT dated 30.09.2003. The order dated 30.09.2003 was in relation to the immovable property “described in Exhibit “P” (Exhibit “M” to the petition) to the plaint / O.A. The description did not correspond to the petitioner's flat. There is no evidence as to when the order of injunction was served upon the defendants in the suit.

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Thus in any view of the matter, the orders of the DRT including the order of recovery dated 30.09.2003, the recovery certificate dated 17.11.2003 and the warrant of attachment dated 23.12.2003 cannot be enforced in respect of a property which was not the subject matter of the suit. As we have demonstrated, the petitioner's flat was not the subject matter of the suit.

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There was an alleged mis-description in the plaint and the particulars annexed thereto in respect of the said flat. The defendants to the suit may not have been able to take advantage of the same for they would have been aware of the facts. However, innocent third parties, such as the petitioner, cannot by any stretch of

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imagination be prejudiced on account thereof. Even if there was a mis-description, admittedly the petitioner had nothing to do. We do not see by what principle of law or equity respondent No.1 is entitled to execute the orders against the petitioner's flat in these circumstances.

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The petitioner is entitled to succeed on this ground alone.

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It is therefore, not necessary to consider the issue raised by Ms.Srikrishna, the learned counsel appearing on behalf of respondent No.1 to the effect that the sale by the defendants to respondent No.3 is void in view of the order of injunction. She relied upon the judgment of a Division Bench of this Court in Keshrimal Jivji vs. Bank Mah. 2004(3) Mh.L.J., 893 and a judgment of the Supreme Court in Surjit Singh vs. Harbans Singh, (1995) 6 SCC 50. Primafacie atleast, the judgments are of no assistance to respondent No.1 for in those cases, the defendants at least were aware of the order of injunction. In the present case, respondent No.1 is unable to furnish any details as to whether the orders of injunction were served upon the defendants prior to the sale by the defendants to respondent No.3. The petitioner had in turn purchased the property from respondent No.3. In view of what we have held on the first question, it is not necessary to express a final opinion in this regard.

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This leads us to the technical difficulties that the petitioner

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is faced with on account of the two proceedings adopted by her upon being served the warrant of attachment dated 23.12.2006.

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Firstly on 30.05.2007, the petitioner filed an Intervention Application in the recovery proceedings No.486 of 2003, taken out by respondent No.1. By an order dated 15.04.2008, the Recovery Officer dismissed the petitioner's Intervention Application. On 07.05.2008, the petitioner filed Appeal No.23 of 2008 before the DRT under section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and took out an application for interim reliefs therein. By an order dated 06.08.2008, the DRT rejected the petitioner's prayer for interim reliefs in the appeal. On 16.09.2008, the petitioner challenged this order by filing Appeal No.327 of 2008 before the Debt Recovery Appellate Tribunal (DRAT). By an order dated 30.09.2008, the DRAT directed the parties to maintain status-quo in respect of the property. During the pendency of the appeal before the DRAT, the petitioner's Appeal No.23 of 2009 was dismissed by an order dated 30.07.2009 by the DRT. The petitioner's appeal No.327 of 2008 before the DRAT which challenged only the order dated 06.08.2008 refusing interim orders became infructuous. The petitioner, therefore, withdrew the same.

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Secondly, on 28.09.2009, the petitioner filed Misc. Application No.59 of 2009 before the DRT under section 19(25) of

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the said Act seeking an amendment of the order dated 30.09.2003 passed by the DRT. This application was in fact unnecessary for the order dated 30.09.2003 did not pertain to the petitioner's flat at all for the reasons we have already furnished. If respondent No.1 had in fact made an inadvertent error, as alleged by it in the description of the property, it was for respondent No.1 in the first instance to have had the O.A. and/or the recovery certificate and/or the warrant of attachment amended. Respondent No.1 admittedly did not do so. Even if the petitioner had done so after the defendant had sold the flat to respondent No.3, it would have made no difference either to respondent No.3 or to the petitioner who could not be prejudiced after they had altered their position to their detriment. The warrant of attachment could never have been executed against the petitioner's flat. In view thereof, the fate of the said application is irrelevant. The petitioner's interim application therein was rejected. Ultimately, the petitioner on 04.09.2012, withdrew the application itself.

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The petitioner however, also withdrew the said Appeal No.327 of 2008. That appeal, in any event had become infructuous, as it was only against the order of the DRT dated 06.08.2008, refusing interim reliefs in the petitioner's Appeal No.23 of 2008. Appeal No.23 of 2008 itself having been finally rejected by the DRT on 31.07.2009, Appeal No.327 of 2008 before the DRAT became

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infructuous.

Indeed the petitioner could have challenged the order dated 31.07.2009, dismissing her Appeal No.23 of 2008, which was filed under section 30 before the DRT against the order of the Recovery Officer dated 15.04.2008, rejecting her application for intervention. The application for intervention was necessary on account of the attempt by the respondents to execute the warrant of attachment against the petitioner's flat. It may even be said that the petitioner ought to have challenged the said order. We however, do not see how her having failed to do so results in her being deprived of her flat to which she is rightfully entitled or in respondent No.1 being entitled to enforce its alleged claim in respect thereof despite the fact that none of the orders pertain to the said flat.

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It is in these unfortunate circumstances that we are inclined to exercise our extra-ordinary jurisdiction under Article 226 of the Constitution of India to protect the petitioner. Our failure to do so would lead to a gross mis-carriage of justice. The petitioner, who is a school teacher, has obviously spent her life's earnings and in any event a substnatial part thereof in purchasing in the said flat. She is a bona-fide purchaser for value without notice. Respondent No.1 sought orders in respect of properties, the description whereof did not conform to the petitioner's flat.

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It is sufficient to hold and declare that the order of the DRT dated 30.09.2003, the recovery certificate dated 17.11.2003 and the warrant of attachment dated 23.12.2003, do not include the petitioner's flat. The same therefore, cannot be enforced against the said flat.

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The writ petition is, accordingly, disposed of.

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Respondent No.1 shall however, pay the costs of this writ

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petition fixed at Rs.25,000/- to the petitioner within twelve weeks from today.

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(R.Y. GANOO, J.) (S.J. VAZIFDAR, J.)

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Ujwala Kishor Zare v. Bank of Baroda and Ors.

Case brief

What is this about?

What did the court decide?

Ujwala Kishor Zare v. Bank of Baroda and Ors.

Case brief

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What the court decided

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