Dismissed

Sunil Inder Singh v. Pb. Fin. Corp. & Anr.

Punjab & Haryana HC1 Nov 2011CWP/1658/2009

Case brief

AI extract

What is this about?

The High Court of Punjab and Haryana dismissed two writ petitions challenging the auction and sale of mortgaged assets by the Punjab Financial Corporation. The Court held that the petitions were an unauthorized attempt to re-agitate issues already adjudicated in civil courts and negated by the Supreme Court, declaring them an abuse of process.

What did the court decide?

Dismissal of CWPs No. 1658 and 19126 of 2009, and imposition of Rs. 25,000/- costs.

Sunil Inder Singh Vs Pb. Fin. Corp… — Pension and Retirement Benefits | Punjab & Haryana HC (2011)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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Date of decision:1.11.2011

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(1) CWP No. 1658 of 2009

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Sunil Inder Singh …..Petitioner

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vs.

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Punjab Financial Corporation & ors …..Respondents

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Present: - Mr. Amit Dayal, Advocate for the petitioner

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Mr. G. S. Gill, Advocate for respondents.

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(2) CWP No. 19126 of 2009

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Tirgun Auto Plast Private Limited …..Petitioner

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vs.

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Punjab Financial Corporation & ors ....Respondents

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Present: - Mr. Amit Dayal, Advocate for the petitioner

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CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE G.S.SANDHAWALIA

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HEMANT GUPTA, J

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This order shall dispose of above mentioned two writ petitions arising out of the action of the Punjab Financial Corporation, auctioning immovable property of Company i.e. M/s Tirgun Auto Plast Private Limited (for short the ‘Company’).

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The said Company applied to Punjab Financial Corporation (for short the ‘Corporation’) for a term loan of Rs. 47.60 lacs and Special Capital Assistance of Rs. 4.00

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CWPs No. 1658 and 19126 of 2009

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lacs1. The said Company mortgaged its assets in favour of Corporation vide the mortgage deed 10.10.1991. Since, the Company failed to pay the due amount along with interest, the possession of the mortgaged property comprising land, building and machinery was taken over by the Corporation on 19.3.1998 in exercise of the powers conferred under Section 29 of the State Financial Corporation Act, 1951 (for short the ‘Act’).

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In CWP No. 1658 of 2009 filed by Sunil Inder Singh, Director of the Company, the petitioner has sought a writ of certiorari for quashing and setting aside the order dated 3.9.2008 (Annexure P-1) passed by the specified Authority constituted under Section 32-G of the Act. In CWP No. 19126 of 2009, the Company has sought setting aside of the sale proceedings including acceptance of the offer of respondent No. 6 on 13.2.2001 and the sale deed dated 28.1.2008 with respect to land, building and machinery of the petitioner in favour of respondent No. 2.

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During the course of arguments, learned counsel for the petitioner pointed out that the assets of the Company were sold to Nirmal Singh Sidhu-respondent No. 6 in CWP No. 19126 of 2009. Petitioner has produced the minutes of the Default Review Committee of the Corporation dated 15.2.2001 (Annexure P-7) accepting the offer of Shri Nirmal Singh Sidhurespondent No. 6 to purchase the assets on payment of Rs. 21 lacs which was stated to be Rs. 51.39% of the assessed value

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CWPs No. 1658 and 19126 of 2009

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of the unit. It notices the fact that possession of the unit was taken in March 1998 and was advertised eight times. The Petitioner has also produced noting dated 18/19.6.2001 (Annexure P-8) of the Corporation. It records that the said purchaser has not deposited the 25% of the sale consideration and that a proposal was initiated for forfeiture of the earnest money and for advertising the property for sale again. The said note was approved.

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It may be noticed that the petitioner filed a suit for declaration and for injunction on or about dated 17.2.2001. Copy of the plaint dated 17.2.2001 has been appended as Annexure P-5 in CWP No. 1658 of 2009. Petitioner has challenged the sale which is evident from the following paragraphs of the plaint: -

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“2. That the dependant-Corporation has given advertisement in the newspaper regarding the sale of the suit property and the sale advertisement has been issued by the defendant without issuing any notice to the plaintiff. Now, the defendant would sell the suit property and if the sale takes place during the pendency of the Civil Suit, the same would be subject to the final decision of the present suit.

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That the impugned sale of suit property and its take over, namely, TIRGUN AUTO PLANT PVT. LTD., is illegal, ultra-vires null and void, arbitrary, malafide, without jurisdiction, against principles of natural justice and fair play, inter alia, on the following grounds: -

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e) That no resolution was passed by the Financial Corporation deciding to sell the present suit property. Under Section 29 of the Act, the power to sell the suit property only rests with the Financial Corporation and none else. The Board of Directors of the Corporation did not pass any specific Resolution regarding the decision to sell the suit

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CWPs No. 1658 and 19126 of 2009

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property. Hence, the impugned sale is wholly illegal as well as without jurisdiction.

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f) that the defendant-Corporation did not disclose the highest tender received by it regarding the sale of the suit property. This has violated the guidelines laid down by the Hon’ble Supreme Court of India in the ruling recorded in Mahesh Chandra vs. Regional manager, U.P. Financial Corporation, 1992 Judgment today Page 326 . The plaintiff was deprived/third party to purchase the property himself at the highest tendered amount.

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m) …….The impugned action of taking over the suit property and all subsequent sale proceedings are illegal, null and void, inoperative and not binding on the plaintiff. So the impugned action of taking over the suit property and all subsequent sale proceedings are illegal, null and void and deserves to be so declared that all the impugned actions of the Corporation in respect of the suit property are illegal, null and void, malafide, arbitrary and further violative of the principles of the natural justice and fair play and not binding on the plaintiff.

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That the cause of action has accrued to the Plaintiff on 15.2.2001 when a telegram was sent to the defendantCorporation with a request not to sell the unit, but there was no response. Moreover, they did not give response to the representations made by the plaintiff.

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It is, therefore, respectfully prayed that a decree for declaration may kindly be passed declaring that the impugned action of taking over of the unit TIRGUN AUTO PLAST PVT. LTD. in the month of March 19998 and all subsequent sale proceedings regarding the suit property TIRGUN AUTO PLAST PVT LTD are illegal, null and void, inoperative and against principles of natural justice and fair play and malafide and by way of consequential relief a decree for mandatory injunction may kindly be passed in favour of the plaintiff and against the Defendants mandating the Defendants to put the plaintiff in the possession of the Suit property.”

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CWPs No. 1658 and 19126 of 2009

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The said suit was dismissed on 10.5.2007 as the Company has not led any evidence in the said suit. The Company filed an appeal against the said judgment and decree before the learned District Judge and also moved an application for ad interim injunction. Learned First Appellate Court did not grant any ad interim injunction. Such order passed by Additional District Judge dated 17.12.2007 was challenged by the petitioner in CR No. 6712 of 2007. The Revision Petition was decided on 21.12.2007 (Annexure P-7) with the direction to the learned Additional District Judge to decide the application on the next date of hearing. Learned first Appellate Court dismissed the application vide the order dated 16.1.2008. Such order was challenged by the petitioner in CR No. 344 of 2008. The revision was decided on 22.1.2008 with the direction that any sale deed executed by the Corporation in favour of respondents No. 2 to 5 would be subject to the outcome of the appeal.

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After the suit was dismissed, the property of the Company was put to sale on 20.6.2007. The Company challenged such sale before this Court in CWP No. 17997 of 2007. The said writ petition was dismissed on 29.11.2007 in view of the appeal pending against the decree dated 10.5.2007. After the order passed by this Court on 29.11.2007, the Company filed an application to implead the auction purchasers as the respondent in the first appeal pending at that time. The said application was allowed.

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CWPs No. 1658 and 19126 of 2009

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Learned first Appellate Court dismissed the suit on 20.3.2008 and observed as under: -

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As a sequel to the above mentioned legal and factual position, it is held that there is no merit in this appeal and as such the same is dismissed with cost. Needless to say anything stated in this order shall not be misconstrued as an opinion as to the subsequent matters, which were not in issue before the lower court and the appellant is at liberty to agitate those matters as per law. Decree sheet be prepared a copy of this judgment alongwith lower court record be sent back to the lower Court. Appeal filed be consigned after compliance.

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The Company challenged the said judgment and decree in second appeal before this Court in RSA No. 1107 of 2008. This Court allowed the appeal on 20.9.2010 granting the liberty to the plaintiff to lead evidence. The order passed by this Court has been set aside by Hon’ble Supreme Court in CA No. 7532 of 2011. Though, learned counsel for the petitioner stated that he is not in possession of the copy of the said order but that the Company has filed a petition for review but we were able to down load the order from the website, passed by the Hon’ble Supreme Court. Hon’ble Supreme Court, inter alia, observed to the following effect: -

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“As noticed above, after the issues were framed on July 19, 2006, on three occasions, the trial court fixed the matter for the plaintiffs’ evidence but on none of these dates any evidence was let in by it. What should the Court do in such adjournment merely because he stakes are high in the disputes? Should the court be a silent spectator and leave control of the case to a party to the case who has decided not

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CWPs No. 1658 and 19126 of 2009

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to take the case forward? It is sad, but true, that the litigants seek and the courts grant adjournments at the drop of the hat. In the cases where the judges are little pro-active and refuse to accede to the requests of unnecessary adjournments, the litigants deploy all sorts of methods in protracting the litigation. It is not surprising that civil disputes drag on and on. The misplaced sympathy and indulgence by the appellate and revisional courts compound the malady further. The case in hand is a case of such misplaced sympathy. It is high time that courts become sensitive to delays in justice delivery system and realize that adjournments do dent the efficiency of judicial process and if this menace is not controlled adequately, the litigant public may lose faith in the system sooner than later. The Courts, particularly trial courts, may ensure that on every date of hearing, effective progress takes place in the suit.

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No litigant has a right to abuse the procedure provided in the CPC. Adjournments have grown like cancer corroding the entire body of justice delivery system…...”

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In the replication filed by the Director of the Company in his writ petition, the petitioner has annexed the office noting (Annexure P-21). The said note shows that 20 advertisements were issued by the Corporation from 14.7.1998 till 18.5.2007 for sale of the assets of the Company. The Company was informed of the proceedings vide the Anneuxre P-20 dated 27.11.2007, leading to acceptance of the highest bid of M/s Shiv Cotex when it said to the following effect: -

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CWPs No. 1658 and 19126 of 2009

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“In this connection, it is to inform you that due to continuous default in the loan account of the company, the Corporation exercised power vested in its u/s 29 of the SFCs Act, 1951 and acquired the mortgaged assets after giving ample opportunities to the promoters to pay the dues. The Corporation after acquiring the assets u/s 29 of the SFCs Act, 1951, advertised the same in the leading newspapers number of times. As per the policy, the promoters were informed through registered letters after each advertisement to bring suitable buyer for the purchaser of property. As per record, Sh. Sunil Inder Singh, Director of the Company attended the Sale Committee meetings held on 5.4.2007 and 1.4.2007 without any buyer. In the sale Committee meeting held on 5.6.20076, in which Corporation sold the assets to the highest bidder i.e. M/s Shiv Cotex at Rs. 64.60 lacs, was well attended by Sh. Sunil Inder Singh, Director of the Company, who submitted the offer for the purchase of assets at Rs. 63.00 lacs by third party but without the mandatory deposit of earnest money draft of Rs. 6.30 lacs.

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In the light of the above, the Corporation has accepted the offer of M/s Shiv Cotex at Rs. 64.40 lacs and the Corporation has received full sale proceeds from the purchaser. As per the policy, the total sale proceeds have been credited in the borrower’s account and after crediting a sum of Rs. 3,13,96,555/- in a/c-1 and Rs. 31,82,165 in a/c-II with further intt. from 1.10.2007 is recoverable from the directors of the company as they have executed personal bond of Guarantees for repayment of dues of the Corporation. Your right to redeem stands extinguished by your own acts and also on account of action taken by the Corporation. Your right to redeemed also extinguished on account of dismissal of civil suit filed by you but even in that suit, company did not claim its right to redeemed so far all reasons company’s right to redeemed stands extinguished.”

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CWPs No. 1658 and 19126 of 2009

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With this factual background, learned counsel for the petitioner has vehemently argued that after the sale was affected on 15.2.2001, the property could not be put to sale again on 20.6.2007. It is also argued that petitioner was not informed about the process of the sale conducted on 20.6.2007. Therefore, such sale is illegal. It is also contended that petitioner has a right to challenge the sale conduced on 20.6.2007, in terms of the liberty granted by the learned Additional District Judge in its order dated 20.3.2008. It is contended that the petitioner came to know about the sale only in the year 2009, when the documents were obtained by the petitioner under the Right to Information Act, 2005.

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We have heard learned counsel for the parties and find that the present petitions are another attempt by the petitioner to adopt the delaying methods in protecting the litigation. Firstly, the sale said to be conduced on 15.2.2001 has not been finalized as the said purchaser has not deposited the 25% of the sale consideration and as per Anneuxre P-8, the amount of earnest money was forfeited. Still further, the said sale was the subject matter of the challenge before the Civil Court and the challenge to the said sale has remained unsuccessful. Therefore, it is not a case where the Corporation is selling the assets of the Company twice over.

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The petitioner has impleaded the auction purchaser in the auction conducted on 20.6.2007 before the learned first Appellate Court. The Appeal stands dismissed on 20.3.2008

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CWPs No. 1658 and 19126 of 2009

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and that the said order has attained finality as the Civil Appeal by the Hon’ble Supreme Court was decided against the Company.

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The argument that the petitioner was not aware of the auction is nothing but mis-statement of the facts. Firstly, the petitioner has challenged the auction conducted on 20.6.2007 in a writ petition which was dismissed on 20.11.2007. Thereafter, the petitioner has filed an application in the pending appeal and impleaded the auction purchaser in a revision declining the ad interim injunction. This Court has passed the order that the sale deed executed by the Corporation in favour of respondents No. 2 to 5 in the appeal would be subject to the outcome of the appeal. Therefore, it cannot be said that the petitioner was not aware of the sale conducted on 20.6.2007. False plea has been raised by the petitioner before this Court.

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Still further, Annexure P-20 dated 27.11.2007 shows as many as 20 advertisements were issued for the sale of assets of the Company. It was in pursuance of 20^th advertisement, the sale could be conducted and respondents No. 2 to 5 were the highest bidders. Even after bid, the Company was kept informed which is apparent from the communication (Annexure P-20) dated 27.11.2007 produced by the petitioner. Though, learned first Appellate Court has observed that the petitioner is at liberty to agitate the subsequent matter which was not issue before the Lower

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CWPs No. 1658 and 19126 of 2009

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Court as per the law but the said liberty does not entitle the petitioner to dispute the second sale dated 20.6.2007 by way of present writ petition. In fact, in either of the two petitions, there is no specific challenge to the auction conducted on 20.6.2007. Challenge is to the sale deed executed on 28.1.2008. Still further, we find that the judgment and decree of this Court have been set aside by the Hon’ble Supreme Court, therefore, the writ petitioner cannot be permitted to dispute the sale conducted in favour of the auction purchasers in the present writ petitions.

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Once, this Court has granted liberty to the petitioner to challenge the sale before the learned first Appellate Court and the petitioner has acted on such liberty, then the Petitioner cannot be permitted to challenge the sale in a subsequent writ petition when such sale was subject matter of challenge in the earlier proceedings.

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In view of the above we do not find any merit in the present writ petitions. The same are dismissed with cost Rs. 25,000/- as the present petitions are nothing but continued abuse of process of law. The costs shall be deposited with the High Court Legal Services Committee within a period of one month.

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(HEMANT GUPTA) JUDGE

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(G.S.SANDHAWALIA)

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CWPs No. 1658 and 19126 of 2009

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JUDGE

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1.11.2011 preeti