Dismissed

Bank of Baroda v. M/S Sbq Steels Limited

DRT25 Jan 2024TA/72/2022

Case brief

AI extract

What is this about?

DRT-I Chennai rejected the Bank of Baroda's application to recall an attachment order dated 26.11.2021. The court held that the petitioner company lacked valid title to the property as an unregistered partnership deed could not transfer immovable property.

What did the court decide?

The IA No.72/2023 seeking recall of the attachment order was dismissed.

Bank of Baroda versus M/S Sbq Steels Limited — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI

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Dated this 25^th Day of January, 2024

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PRESENT: SHRI A.S.JAYACHANDRA Presiding Officer

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IA No.72 of 2023 In TA No.72 of 2022

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Cove Holdings Private Limited, Repd. By its Director Ms.Rupal Rai, Having Regd. Office at: No.5, Ethiraj Lane, Egmore, Chennai – 600008.

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. . . Petitioner/3^rd Party

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Versus

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Bank of Baroda,

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Corporate Financial Service Branch,

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BOB Buildings, II Floor,

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No.74, Thyagaraya Road,

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Near Panangal Park, T.Nagar,

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Chennai – 600017. . . . 1^st Respondent/Petitioner/Applicant

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Mr.Rajiv Rai,

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S/o Late Sri. Balwant Rai,

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New No.9, Old No.5, Ethiraj Lane, Egmore, Chennai – 600105.

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Mr.Ritesh Rai,

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S/o Rajiv Rai,

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New No.9, Old No.5,

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Ethiraj Lane, Egmore,

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Chennai – 600105.

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. . . 2^nd & 3^rd Respondents/Respondents/2^nd &3^rd Defendants

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Counsel for Petitioner/3^rd Party :- M/s.Arvind Srevatsa Counsel for Respondent :- M/s.NVS & Associates

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ORDERS ON IA NO-72/2023- FILED BY THE 3^RD PARTY

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Heard on the IA.

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1. In this IA filed by M/s Cove Holdings Private Limited, a 3^rd party to the OA seeks the prayer to recall the order dt 26.11.2021 passed by my Ld Predecessor in IA1303/2021, prior to transfer of this case to this Tribunal.

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1. The IA is supported by an affidavit of one Rupal Rai w/o Rajiv Rai who claims as the director of the applicant company herein. It is her case that while the company staff conducted a search of the encumbrances, the company was shocked to know the impugned order dt 30.8.2021 as mentioned in Para 6 of the Affidavit.

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It is also her case that the property involved in the ‘lis’ is the property of the company which could have never been the subject matter of attachment as per the impugned order. However the order sought to be recalled dt 26.11.2021 is mentioned in the prayer. The title is asserted on the following facts;

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a) By a settlement deed dt 29.9.2004, one Rajiv Rai was conferred with the title and the settlement deed is executed by one Balwant Rai who is none other than his father.

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b) The said Rajiv Rai entered as a partner into the firm which already existed. The name of the firm is Ram Krishan Kulwant Rai holdings.

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c) The said Rajiv Rai entered through the reconstituted partnership deed dt 3.10.2008 into the firm and according to the IA the said Rajiv Rai had ploughed in the property in question to the said firm and thus seeded through this deed which is unregistered.

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d) It is also the case of the applicant that the said firm metamorphosed into a private company now by the name and style as M/s Cove Holdings Private Limited. The applicant contends that thus the property is the asset of the company and the company is the title holder. Therefore this Tribunal could have never passed an order affecting the rights and interest of a 3^rd party.

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The applicant bank (plaintiff) opposes this application by filing a detailed reply. The aspects of maintainability as well as merits are seriously repudiated. The matter is heard.

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The ld Counsel Sh.Arvind Srevatsa and Sh.Kavin appearing for the 3^rd party that is the petitioner in the IA submits that the order is liable to be recalled since the property belongs to a private limited company which is not connected with the debt involved in the OA. He has taken this Tribunal through the list of documents filed by him to emphasise that the property belongs to the 3^rd party and therefore the order is subverting the title of his client.

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The ld Counsel Sh.Rangesh and Ms.Vinitra Srinivasan, submits that the application itself is not maintainable in law and the applicant has no locus. Further as regards the merits it is argued that the applicant company has no title recognised under law to seek recalling. The ld Counsel also relied on the ruling of BUDHIA SWAIN AND ORS VS GOPINATH DEB AND ORS –MANU /SC/0932/1999 to submit that the power to recall is limited as held in the above ruling at Para 6 on certain grounds like fraud played in obtaining the order, the order passed by misleading or a mistake on the part of the Court prejudicing the parties. It is also held ‚ the power to recall judgement will not be exercised when the ground for reopening the proceedings or vacating the judgements was available to be pleaded in the original action but was not done or were a proper remedy in some other proceedings such as by way of appeal or revision was available but not availed‛. The ld Counsel also submit that the present IA is defeated by delay and latches since the order sought to be recalled is 26.11.2021 which is passed after show cause notice for which there was no response and the present IA having stated that the company came to know of the same only on 20.12.2022 more than a year after issuing of show cause notice to the husband of the present petitioner.

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Having given careful thought to the submissions and the contentions of the parties, the only point is arises for consideration in this IA is:

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‚Whether the petitioner in IA is the title holder to the property attached by this Tribunal affecting the right title and interest of this Petitioner?‛

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To answer this point this Tribunal carefully considered the documents relied by the petitioner in IA. Her case is that the property belongs to the company as is evidenced from the annual reports of the company. It is also traced to the reconstituted deed of the partnership firm of M/s Ram Krishan Kulwant Rai dt 3.10.2008.

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Both the petitioner and the applicant bank do not dispute the settlement deed dt 29.9.2004 by which Rajiv Rai was vested with some title which is not in dispute.

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The subsequently it is claimed that Rajiv Rai had ploughed in the said property under the reconstituted deed of firm dt 3.10.2008 by seeding in the said property to the assets of the firm which later became the property of the company as is canvassed by the petitioner.

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The title to the property passing on to the hands to the reconstituted firm itself is questionable as regards the validity of the transfer of the property. The claim that it was seeded in to the assets of the firm cannot be believed by an unregistered deed of reconstitution of a firm. This is not the method known to law to transfer the immovable property. The company does not have any registered deed of sale/gift/valid transfer known to law. The mere deed of reconstituted firm cannot be held as the title flowing in to the hands of the firm conferring the title. In the absence of such valid, tenable and valid title, this petitioner company cannot canvass any of its interest in the property in the absence of such title.

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Further it is relevant to note that the ld Counsel appearing for the applicant bank having relied on the ruling of BUDHIA SWAIN AND ORS (supra) submits that no fraud was played nor the Court was misled in passing the impugned order. Further it is submitted that there was no mistake on the part of the court also. It is argued that the Ld Predecessor after having issued the show cause notice had passed the order of attachment which cannot be breached by the 3^rd party. Though the ld Counsel for the petitioner submits that the ruling is not applicable to the present case, it is to be noted that the Ld Predecessor had issued a show cause notice to Rajiv Rai who is none other than the husband of the deponent to the IA. It was Rajiv Rai who had the opportunity to question the order within the period of limitation if he had transferred the interest in the property in question. Further he had never availed the opportunity to explain responding to the show cause notice.

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After careful consideration of the material on record ,this Tribunal is unable to accept the contentions of the applicant in IA-72/2023 to recall the order of my Ld Predecessor dt 26.11.2021 for lack of title and thus the following order:

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IA-72/2023 stands dismissed.

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Put up this matter for AOS and appearance of Defendant no-11 to produce the original documents by 28.2.2024 before the Ld Registrar.

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Sd/- (A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

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(Dictated to Assistant who typed in the system, corrected, signed and pronounced in open court on this 25^TH Day of January, 2024)

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Bank of Baroda v. M/S Sbq Steels Limited

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. M/S Sbq Steels Limited

Case brief

What is this about?

What did the court decide?

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