:1: CAW 2903.06 bgp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO.2903 OF 2006 IN WRIT PETITION NO.1272 OF 2005 WITH CIVIL APPLICATION NO.2904 OF 2006 IN WRIT PETITION NO.1273 OF 2005 Bank of Maharashtra & Anr. ..Applicants Vs. Smt.Zulekha Usmangani M.Patrawala & Ors. ..Respondents Mr.J.P.Sen with Ms.Samindara Surve i/b. Little & Co. for applicants. Mr.Kevic Setelwad i/b. N.Suneel & Associates for respondents. CORAM :- V.C.DAGA,J. DATE :- SEPTEMBER 17, 2010 ORDER 1. Bank of Maharashtra (“the Bank” for short) through this civil application, is seeking restoration of its writ petition No.1272 of 2005, which was dismissed as withdrawn vide order dated 25th November, 2005. FACTUAL BACKDROP 2. The factual backdrop giving rise to the present application is, as under: The Bank had filed the above writ petition No.1272 of 2005 against the judgment and order dated 12th January, 2005 passed by the Appellate Bench of Small Causes Court, Bombay whereby and whereunder, the judgment and decree passed by the Small Causes Court dated 18th November, 2002 directing payment of mesne profit and arrears of rent in favour of respondents (landlords) and against the Bank was confirmed. :2: CAW 2903.06 3. The suit premises consist of an area admeasuring about 13459 sq.ft. situate on the 1st floor of the building known as “Haji Moosa Industrial Estate”, located at 20, Dr.E.Moses Road, Mahalaxmi, Bombay 400 011 (“suit premises”). 4. M/s.Stretch Fibres (I) Ltd. had borrowed huge financial assistance from the Bank against mortgage security of their leasehold rights; which they had in the suit premises. They defaulted in payment of dues of the Bank. Hence, entire loan facility was recalled. They failed to pay demand made by the Bank. The Bank was required to file a suit bearing No.2527 of 1985 before this court against them to realise mortgage security so as to recover their outstanding dues. This Court, during the pendency of the suit, by an order dated 4th October, 1985, was pleased to appoint a Court Receiver in respect of the suit premises. The recovery suit filed by the Bank was decreed. 5. The Bank initiated execution proceeding before this Court. During the pendency of the execution proceeding, the legislation by name, the Recovery of Debts due to Banks and Financial Institutions Act,1993 came to be enacted, with the result, the execution proceedings were transferred to the Debt Recovery Tribunal, Mumbai (DRT) in the year 1999. The Chief Manager of the Bank i.e. the applicant No.2 herein was appointed as a Receiver by the DRT, Mumbai in respect of the suit premises, on discharge of Court Receiver appointed by this Court during the pendency of the suit. 6. The respondent Nos.1 to 11 claiming to be the landlords and owners of the premises, during the pendency of the suit filed by the Bank for recovery of their dues, filed RAE & R Suit No.266/769 of 1986 before the Small Causes Court at Bombay against the applicant No.1 Bank, the Court Receiver and respondent Nos.12 and 13 who were in possession, inter alia; seeking vacant possession of the suit premises, arrears of rent and mesne profits. The said RAE & R Suit was decreed on 18th November, 2002 by the Small Cause Court :3: CAW 2903.06 in favour of respondent Nos. 1 to 11, the landlords and owners of the suit premises. 7. Aggrieved by the judgment and decree passed by the Small Causes Court, the applicant Bank filed an appeal before the appellate bench of Small Causes Court on 24th June, 2003. 8. According to the 1st applicant Bank, one Mr.Aslam Patrawala holding Power of Attorney on behalf of the landlords and owners of the suit premises approached the Bank to open negotiations with a view to settle the claim of the Bank and seek possession of the suit premises. The negotiations were opened by Mr.Aslam Patrawala. He furnished copy of the Power of Attorney dated 19th May,1995 so as to establish authority to negotiate on behalf of the owners and landlords. Mr.Aslam Patrawala is a son of respondent No.1. He represented respondent Nos.1 to 11 as their Constituted Attorney in the above small causes suit. He was also examined as one of the witnesses in the said suit on behalf of the landlords – plaintiffs. The Bank, therefore, entertained the request for settlement at his instance believing that he must be a person with authority on behalf of the owners and landlords. 9. During the pendency of the aforesaid appeal, the Bank addressed a letter dated 17th March,2004 to M/s.Usman Gani Patrawala and nine others informing them that their compromise proposal is accepted by Bank, subject to the payment of Rs.35 lacs in full and final settlement of Bank’s claim against filing of Consent Terms in the Small Causes Court having entire claim set up against the Bank. 10. The Bank had agreed to withdraw appeal pending in Small Causes Court on compliance of the terms of compromise, subject to their paying full amount of Rs.35 lacs. Bank also agreed to handover the possession of the property on as-is-where-is basis. It was also informed by the Bank that :4: CAW 2903.06 respondent Nos.1 to 11 will have to waive all their claims regarding rent in arrears and expenses on account of repairs etc. 11. On 22nd April, 2004, the Bank received a letter on behalf of respondent Nos.1 to 11 through their Advocate inter alia; calling upon the Bank not to create any third party rights in respect of the suit premises. 12. When the aforesaid correspondence was going on between the parties, the appeal filed by the Bank bearing No.438 of 2003 was dismissed by the Division Bench of the Small Causes Court vide its judgment and order dated 12th January, 2005. 13. Mr.Osman Patrawala and nine others vide their letter dated 14th February, 2005 informed the Bank that all the co-owners of the property have executed an agreement dated 16th October, 1995 granting a contingent tenancy in favour of one Mr.Ved Sarogi in respect of the suit property whereby all the owners have agreed that Mr.Ved Sarogi should become the tenant immediately upon the discharge of the Receiver in respect of the suit property and that Mr.Ved Sarogi was authorised under the agreement dated 16th October, 1995 to negotiate and settle the claim of the Bank and obtain possession of the suit premises from the Receiver. 14. On 24th February, 2005, the Chief Manager of the Bank again received a letter addressed by respondent Nos.1 to 11 through their Advocate purporting to inform inter alia; that they had not authorised any person to negotiate with Bank and no settlement shall be binding on them and that they do not wish to settle the matter. 15. By another letter dated 25th February, 2005, the Bank through their Advocates informed the Advocate of Respondent Nos.1 to 11 referring to the various attempts that had been made to settle the dispute, but of no avail and that no party could be compelled to settle the matter. :5: CAW 2903.06 16. The Bank left with no alternative considering remote chance of settlement filed a Writ Petition bearing No.1272 of 2005 to challenge the judgment and order dated 12th January, 2005 passed by the Appellate Bench of the Small Causes Court, Mumbai in appeal No.438 of 2003 confirming the judgment and decree dated 18/20 and 21st November, 2002 passed by the Small Causes Court in RAE/R/Suit No.266 of 1986 and prayed for dismissal of the said suit. The operation of the impugned judgment and order of the Appellate Bench of Small Causes Court was stayed by this Court pending admission of the writ petition vide order dated 9th March, 2005. 17. The said Writ Petition was admitted by this Court vide order dated 5th September, 2005. The Court Receiver of this Court was appointed as a Receiver of the suit premises, with authority to give the suit premises on agency basis to any third party. 18. Mr.Aslam Patrawala again became active to bring about settlement and addressed one more letter dated 9th September, 2005 on behalf of owners and landlords (respondent Nos.1 to 11) as their duly Constituted Attorney reiterating authorisation in favour of Mr.Ved Sarogi to negotiate on behalf of the respondents/landlords. 19. Mr.Ved Sarogi vide his letter dated 14th September, 2005 addressed to the Advocates of the Bank forwarded one cheque for a sum of Rs.25 lacs towards the settlement proposal given by him. 20. The applicant bank on 16th November, 2005 received a letter addressed by Mr.Ved Sarogi recording therein that upon Bank accepting the amount, releasing the suit premises and handing over possession thereof to Mr.Aslam Patrawala on behalf of the owners, the decree passed by the Small Causes Court would be treated as fully satisfied and that respondent Nos.1 to 11 shall have no right or claim against the Bank. This proposal was accepted by the :6: CAW 2903.06 Bank. The Bank, after acceptance of the said proposal and in view of the settlement thought it fit to obtain appropriate orders from the DRT seeking discharge of applicant No.2 as Receiver with further right to hand over possession of the suit premises to the Landlords and/or their authorised representative. 21. The application moved before the DRT Mumbai was allowed by an order dated 21st November, 2005. The respondent Nos.1 to 11 through their Advocates’ addressed a letter dated 22nd November, 2005 to the Court Receiver of this Court enclosing a copy of the Writ Petition and copy of the order of this Court without giving any copy to the Bank. 22. The petitioner Bank, on 24th November, 2005 moved a praecipe before this Court through their Advocate seeking withdrawal of the writ petition. The Bank did so in view of the settlement already reached between the parties. This Court by an order dated 25th November, 2005 permitted withdrawal of writ petition. The respondent Nos.1 to 11 and the names of their Advocates were shown in the cause lists and on the daily board put up outside Court Room but respondent Nos.1 to 11 chose to remain absent. They did not appear in the Court to oppose withdrawal of the writ petition for the reasons best known to them. 23. It appears that after dismissal of the above petition on 25th November, 2005, the possession of the suit premises was handed over by applicant No.2, the Chief Manager of the Bank to Mr.Aslam Patrawala on behalf of respondent Nos.1 to 11. A possession receipt was prepared in this behalf. It was duly signed by Mr.Aslam Patrawala. Mr.Ved Sarogi vide his letter dated 25th November, 2005 reiterated the terms of settlement accepting the fact that the Bank as well as respondent Nos.1 to 11 shall have no claim against each other in respect of the suit premises. :7: CAW 2903.06 24. On 28th November, 2005, some of the respondents forming group of landlords through their Advocate addressed a letter to the Bank making various allegations, including that of surreptitious withdrawal of the writ petition without notice with intention to hand over possession of the suit premises to Mr.Ved Sarogi. 25. The applicant bank through their Advocates letter dated 30th November, 2005 replied to the aforesaid letter and denied the allegations made therein. It was recorded that the withdrawal of the petition was on the basis of the settlement reached between the parties and that the possession of the suit premises was handed over to Mr.Aslam Patrawala, the constituted attorney. It was further recorded that the partner of the respondent’s Advocates firm was present at the time of the withdrawal of the petition in the Court to watch the proceedings. The letter also recorded that the name of respondents’ Advocates was shown on the Board on that particular date and they had chosen not to appear. 26. It appears that on 6th June, 2006 a Miscellaneous Notice No.236 of 2006 was taken out by respondent Nos.1 to 11 inter alia; claiming a sum of Rs.8,80,75,922/- as and by way of mesne profit. This application was in disregard and in repudiation of settlement which led to withdrawal of the above Writ Petition. 27. The Bank, faced with aforesaid ordeal, moved present Miscellaneous Application on 24th November, 2006 seeking to recall the order dated 25th November, 2005 and prayed for restoration of the writ petition to the file of this Court with revival of the interim order. The applicant Bank, on the assumption that the suit premises is vacant, prayed for an appointment of Court Receiver of this Court as a Receiver in respect of the suit premises in view of the apprehension that the respondents may create third party rights in the suit premises. :8: CAW 2903.06 28. On being noticed, respondent Nos.1 to 11 appeared and filed their reply disputing all the assertions made by applicant Bank. They, vide their affidavit in reply dated 6th December, 2006 opposed the reliefs claimed by the Bank. It is alleged that the Writ Petition was voluntarily withdrawn by the Advocate as such, the application for restoration of writ petition is not maintainable. It is further alleged that the application for restoration was taken out with malafide intention for pressurizing the respondents for giving up their claim for mesne profit raised against the Bank. It is further alleged that the Bank in collusion with Mr.Ved Sarogi surreptitiously withdrew the writ petition. It is further alleged that the original respondents had given a joint Power of Attorney dated 13th October, 1999 along with two others, as such Mr.Aslam Patrawala alone had no authority either to negotiate or enter into any compromise on behalf of respondent Nos.1 to 11. That the said Power of Attorney was, ultimately, withdrawn and cancelled some time in the year 2003. In any event, the said Power of Attorney was joint and at any rate Mr.Aslam Patrawala alone could not have acted for and on behalf of the landlords and owners of the suit premises. It was further urged that out of eleven, three executants to the Power of Attorney had expired in the year 1997, 2003 and 2004 respectively. As such, at any rate, the said Power of Attorney could not have been acted upon by Mr.Aslam Patrawala and that it could not have been accepted by the Bank. It was not legal and valid after the death of all the three executants of the Power of Attorney. 29. In addition to the above reply, affidavit by way of sur-rejoinder dated 18th December, 2006 was filed by the respondent with one more affidavit on behalf of respondent No.1 on 12th March, 2008, wherein they have denied that they had parted with possession of the premises in favour of third person. It was sought to be asserted that on the basis of the arrangements entered into prior to the date of the interim order of this Court, the premises was given to the occupants of the premises to hold it for and on behalf of respondent Nos.1 to 11 as such respondent Nos.1 to 11 themselves are in possession of the suit :9: CAW 2903.06 premises. 30. With the aforesaid rival pleadings on record, the application was heard by this Court. PRELIMINARY OBJECTION: 31. The learned Counsel for the respondent raised a preliminary objection about the maintainability of the present application contending that such application is not maintainable for want of any provision either under the Code of Civil Procedure or under any other law for the time in force as such application deserves to be rejected. 32. In reply, learned Counsel for the applicant Bank in order to demonstrate its tenability, has placed reliance on the judgment of the Apex Court in the case of Jet Ply Wood (P) Ltd. and Anr. Vs. Madhukar Nowlakha and Ors. (2006) 3 SCC 699, wherein, the Apex Court, in the more or less similar facts and circumstances of the case, held as under: “23. As indicated hereinbefore, the only point which falls for our consideration in these appeals is whether the Trial Court was entitled in law to recall the order by which it had allowed the plaintiff to withdraw his suit. 24. From the order of the Learned Civil Judge (Senior Division) 9th Court at Alipore, it is clear that he had no intention of granting any leave for filing of a fresh suit on the same cause of action while allowing the plaintiff to withdraw his suit. That does not, however, mean that by passing such an order the learned court divested itself of its inherent power to recall its said order, which fact is also evident from the order itself which indicates that the Court did not find any scope to exercise its inherent powers under Section 151 of the Code of Civil Procedure for recalling the order passed by it earlier. In the circumstances set out in the order of 24th September, 2004, the learned trial court felt that no case had been made out to recall the order which had been made at the instance of the plaintiff himself. It was, therefore, not a question of lack of jurisdiction but the conscious decision of the Court not to exercise such jurisdiction in favour of the plaintiff. :10: CAW 2903.06 25. The aforesaid position was reiterated by the learned Single Judge of the High Court in his order dated 4th February, 2005, though the language used by him is not entirely convincing. However, the position was clarified by the learned Judge in his subsequent order dated 14th March, 2005, in which reference has been made to a bench decision of the Calcutta High Court in the case of Rameswar Sarkar (supra) which, in our view, correctly explains the law with regard to the inherent powers of the Court to do justice between the parties. There is no doubt in our minds that in the absence of a specific provision in the Code of Civil Procedure providing for the filing of an application for recalling of an order permitting withdrawal of a suit, the provisions of Section 151 of the Civil Procedure Code can be resorted to in the interest of justice. The principle is well established that when the Code of Civil Procedure is silent regarding a procedural aspect, the inherent power of the court can come to its aid to act ex debito justitiae for doing real and substantial justice between the parties. This Court had occasion to observe in the case of Manohar Lal Chopra vs. Rai Bahadur Rao Raja Seth Hiralal, AIR 1962 SC 527, as follows: "It is well settled that the provisions of the Code are not exhaustive, for the simple reason that the Legislature is incapable of contemplating all the possible circumstances which may arise in future litigation and consequently for providing the procedure for them." 26. Based on the aforesaid principle, the Division Bench of the Calcutta High Court, in almost identical circumstances in Rameswar Sarkar's case, allowed the application for withdrawal of the suit in exercise of inherent powers under Section 151 of the Code of Civil Procedure, upon holding that when through mistake the plaintiff had withdrawn the suit, the Court would not be powerless to set aside the order permitting withdrawal of the suit. FINDING ON PRELIMINARY OBJECTION: 33. Having examined the judgment of the Apex Court and the law laid down therein, I am of the considered view that the preliminary objection has no force. The application is very much maintainable. Preliminary objection stands overruled. :11: CAW 2903.06 RIVAL SUBMISSIONS ON MERITS: 34. After having disposed of the preliminary objection raised by the respondents, the matter was heard on merits. 35. Mr.Sen, learned Counsel for the applicant Bank urged that the Bank had two options either to enforce the terms of the settlement or to accept that there was no legal settlement by the authorised representative on behalf of respondent Nos.1 to 11. The Bank has chosen the second option. He, thus, submits that the factual matrix brought on record is sufficient to demonstrate that the misrepresentation was made to the Bank by Mr.Aslam Patrawala and Mr.Ved Sarogi and that at no point of time, the Bank was informed about the alleged cancellation of Power of Attorney or that Mr.Aslam Patrawala alone had no authority to represent respondent Nos.1 to 11 i.e. the landlords and owners of the suit premises and to compromise dispute on their behalf. 36. Mr.Sen further urged that the correspondence exchanged between the parties make it clear that there were negotiations between the Bank and Mr.Aslam Patrawala, who represented to be representative of respondent Nos.1 to 11. He further submits that when Mr.Aslam Patrawala was negotiating with the Bank, each and every respondent being close relative and family member were very much aware about on going negotiations. He further brought to my notice that Mr.Aslam Patrawala is a son of respondent No.1 Smt.Zulekha Usman Gani Patrawala, one of the owners of the suit premises. The emerging situation is that a mother is taking a stand against her son and disowning the authority that was given to him. 37. Mr.Sen further submits that at no point of time either cancellation of Power of Attorney by mutual consent and consequent non-existence thereof was informed to the Bank by the parties to the petition. During the course of hearing, he sought to urge that such cancellation of Power of Attorney by consent of family members and/or in collusion thereof can always be brought :12: CAW 2903.06 about in the back date. According to him, no public notice of the alleged cancellation of Power of Attorney was issued immediately on the alleged cancellation of Power of Attorney. At no point of time, such information was forwarded to the bank. He further submits that it is clear from the rival contentions that the Bank was misled by Mr.Aslam Patrawala, Mr.Ved Sarogi and that respondent Nos.1 to 11, had taken position of the silent spectators. Under these circumstances, he prayed that the order dismissing the petition as withdrawn be recalled and interim orders which were operating in favour of the petitioner be revived. PER CONTRA: 38. Mr.Settlewad, learned Counsel appearing for the respondents strongly opposed the above application contending that no settlement has been placed on record by the applicant bank since the very basis of their civil application is the alleged “settlement” arrived at between the applicant Bank, Aslam Patrawala and Ved Sarogi. According to him, had there been a “settlement”, it would have been in writing, considering that a public sector undertaking i.e. the Bank was involved. No Bank will enter into oral settlement is the submission. That in absence of the said “settlement” being on record, it is not possible to infer any settlement, as such this civil application cannot be allowed. 39. According to Mr.Settlewad, failure to produce “settlement” on record by the Bank must lead to the presumption of suppression of fact. The Bank is, thus, not entitled to claim any reliefs. Reliance is placed on the decision of the Apex Court in the case of S.P.Chengalvaraya Naidu Vs. Jagannath AIR 1994 SC 853. 40. Mr.Settlewad further submits that the statements made in the present civil application are contrary to the pleadings which were made before the DRT while inviting orders from the DRT while withdrawing execution :13: CAW 2903.06 proceedings. It must, therefore, result in rejection of the prayer made. He further submits that respondents - landlords did not authorise anybody on their behalf to enter into any compromise with the applicant bank. In support of his submissions, he relied upon the correspondence exchanged between the parties. 41. Mr.Settlewad further submits that the Bank was very much aware of the death of three persons as such, Bank was on notice that the Power of Attorney under which Mr.Aslam Patrawala was acting, was rendered invalid. He further submits that the Power of Attorney dated 19th May, 1995 was not in existence since it was cancelled in the month