IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 15093 of 2006 DATE OF DECISION: 1.10.2007 Smt. Darshana Kumari …Petitioner Versus Punjab National Bank and another …Respondents CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present: Mr. Ashok Singla, Advocate, for the petitioner. Mr. Hans Raj Bansal, Advocate, for respondent No. 1. M.M. KUMAR, J. This petition filed under Article 226 of the Constitution prays for quashing order dated 31.5.2005 (P-3), passed by the Recovery Officer, Debts Recovery Tribunal-II, Chandigarh, dismissing the application filed by the petitioner in which prayer was made for return of the amount deposited in respect of the auction property, which in fact was under litigation. A further prayer has also been made for quashing order dated 22.8.2006 (P-7), passed by the Recovery Officer, Debts Recovery Tribunal-II, Chandigarh, in which prayer for re-calling order dated 31.5.2005 (P-3) has been rejected. Brief facts of the case, which have led to filing of the instant petition are that the Debts Recovery Tribunal, Chandigarh Bench, Chandigarh (for brevity, ‘the Tribunal’), passed a C.W.P. No. 15093 of 2006 decree/recovery certificate dated 4.1.2001 against M/s Cut Fast Industries, which is a partnership firm carrying on the business at Ludhiana, for recovery of Rs. 15,16,882/- along with interest @ 18.32% per annum and costs of Rs. 35,860/-. The Punjab National Bank (respondent Bank) filed an application for recovery/execution of the aforementioned recovery certificate before the Recovery Officer of the Tribunal and the mortgaged property of M/s Cut Fast Industries, Ludhiana, was put to sale. The petitioner offered the highest bid of Rs. 14,50,000/- and was, thus, declared successful purchaser on 15.1.2004. An amount of Rs. 3,65,000/-, which is 25% of the total bid amount, was deposited by the petitioner within the prescribed time and for the remaining total price she had prepared four demand drafts dated 31.1.2004, worth Rs. 10,85,000/-. However, the petitioner before depositing the remaining 75% of the amount came to know that the property auctioned to her is subject matter of litigation in Civil Court, Ludhiana, between various partners of the judgment debtor M/s Cut Fast Industries and others and the litigation has been pending much before the court auction. It was found that two suits being Civil Suit No. 211, dated 17.11.1998 (Mohit Bansal etc. v. Jogesh Aggarwal etc.) and Civil Suit No. 36, dated 27.1.2004 (Vinod Bansal v. Darshana Devi etc.) were pending. The aforementioned fact was not disclosed at the time of court auction or earlier thereto. The court auction was held by holding out that the property was free from all encumbrances. As a consequence, the petitioner filed an objection petition dated 27.1.2004 (P-1) before the Recovery Officer of the Tribunal by making an offer that she was 2 C.W.P. No. 15093 of 2006 prepared to deposit the remaining 75% amount if clear title of the property in question was transferred to her, failing which she had prayed that the amount of 25% already deposited by her be refunded. The aforementioned application was dismissed on account of non- appearance of the counsel for the petitioner, vide order dated 31.5.2005 (P-3). Thereafter, an application for re-calling order dated 31.5.2005 was filed on 17.3.2006 (P-4) along with an application for restoration and condonation of delay (P-5 & P-6). However, the aforementioned applications were also dismissed on 22.8.2006 (P-7). After issuance of notice of motion, when the matter came up for consideration before a Division Bench of this Court on 10.10.2006, learned counsel for the respondent bank apprised the Court that the property in dispute has already been sold and accordingly the Division Bench passed interim direction that if the sale was not confirmed then the same was not to be confirmed till passing of further orders. In the written statement filed by the respondent bank the stand taken is that the property which was put to auction is not subject matter of litigation before any Civil Court and the petitioner has failed to deposit the sale price within the stipulated period, which was mandatory. It has been insisted that the bid amount of 25% paid by the petitioner stands forfeited by the Recovery Officer who has ordered re-sale of the property. The property has been re-auctioned on 31.7.2006 and an amount of Rs. 16,2000 (more than Rs. 16 lacs?) was accepted. With regard to the suits filed by the parties it has been alleged that the suits are inter se between the partners of the firm and the property in dispute is not the asset of the firm. It is not disputed 3 C.W.P. No. 15093 of 2006 that the receiver is to take charge of all the assets of the firm by doing numerous acts including preparation of inventories of articles belonging to the firm at 15-A, Industrial Area ‘A’, Ludhiana and 346, Industrial Area-A, Ludhiana. The property in dispute which is admittedly owned by Mohit Bansal and Kamlesh Aggarwal has not been attached by the receiver. It is, thus, claimed that the Recovery Officer of the Tribunal was under no obligation to disclose any fact as the property in dispute is not involved in any litigation and that the petitioner has given bid with her eyes open and as such is not entitled to refund of any amount deposited by her. The written statement is duly supported by an affidavit. When the matter came up for consideration on 30.5.2007, it transpired that the respondent bank has denied that the property in question, namely, 15-A, Industrial Area ‘A’, Ludhiana, is involved in Civil Court litigation. Learned counsel for the petitioner after obtaining time has placed on record a copy of the plaint showing that the partners of M/s Cut Fast Industries have been fighting with regard to the business of the firm, property bearing No. 15-A, Industrial Area ‘A’, Ludhiana and also in respect of property bearing No. 346, Industrial Area ‘A’, Ludhiana. Even an affidavit of the petitioner has been filed substantiating the claim that commercial building measuring 192 Sq. Yards, situated at 15-A, Industrial Area ‘A’, Ludhiana, bearing Municipal No. Old B23-134 (new Municipal No. 206/1A) was purchased by Mohit Bansal and Kamlesh Aggarwal, partners of the said firm vide a registered sale deed No. 20781, dated 23.1.1992. It has further been asserted that the aforementioned area 4 C.W.P. No. 15093 of 2006 never existed in any other area of Plot No. 15-A of Industrial Area, Ludhiana. The same property was purchased by the petitioner in the court auction. The suits are also pending in respect of the same property. There is no rebuttal of the additional affidavit as well as to the plaint filed by the petitioner, therefore, the stand taken by the respondent bank is liable to be rejected that the property in respect of which litigation is pending is different than the one which is subject matter of litigation. Mr. Ashok Singla, learned counsel for the petitioner has argued that if the title of the property is clear and vacant possession could be delivered to the petitioner as per the terms and conditions of the auction, she is prepared to even purchase the same today itself. According to learned counsel as a matter of fact the property is subject matter of litigation and Court Receiver is dealing with the property. He has insisted that the petitioner is keen to purchase a property but not litigation attached to that property. He has also submitted that the bona fide of the petitioner have been established when she deposited Rs. 3,65,000/- within stipulated period and for the remaining amount she had kept demand drafts amounting to Rs. 10,85,000/- ready, which were prepared on 31.1.2004. Mr. H.R. Bansal, learned counsel for the respondent bank could not successfully argue that the property in question is not the same property, which is subject matter of litigation before the Civil Court at Ludhiana being 15-A, Industrial Area ‘A’, Ludhiana, belonging to M/s Cut Fast Industries. 5 C.W.P. No. 15093 of 2006 After hearing learned counsel for the parties, we are of the considered view that the Recovery Officer of the Tribunal was required to disclose pendency of the civil suits and subsequently appointment of receiver in respect of the property in dispute. There is intrinsic evidence in the written statement filed by the respondent bank indicating that the same property is subject matter of dispute before the Civil Court. In that regard, the order of the Civil Court appointing receiver, who is to take charge of all assets of the firm, is required to do a number of things including preparation of inventory of articles belonging to the firm, which was being run at 15-A, Industrial Area ‘A’, Ludhiana. This very property was purchased by Mohit Bansal and Kamlesh Aggarwal, vide registered sale deed on 23.1.1992. Once the property which was put to auction is the same and also subject matter of litigation then the petitioner would become entitled to communication of information before auction. It is admitted position that no such information was furnished to the petitioner. The property in any case has been sold further on 31.7.2006 and it has fetched highest bid of Rs. 16,2000/- (more than Rs. 16 lacs?) as against the highest price offered by the petitioner amounting to Rs. 14,50,000/-. Therefore, the Recovery Officer of the Tribunal did not act lawfully and deprived the petitioner from vital information that the property was subject matter of litigation. Therefore, alternative prayer made by the petitioner that her deposit of 25% deserve to be refunded alongwith accrued interest warrants acceptance. 6 C.W.P. No. 15093 of 2006 In view of the above, the writ petition succeeds. Orders dated 31.5.2005 and 22.8.2006 (P-3 and P-7 respectively) are set aside. The application filed by the petitioner before the Recovery Officer of the Tribunal is allowed to the extent that whole amount of 25% deposited by the petitioner with the recovery officer shall be refunded to her along with accrued interest because ordinarily such deposits are kept in FDR with a nationalised bank. The needful be done by the Recovery Officer of the Tribunal within two weeks from the date of receipt of certified copy of this order. As the property in dispute has already been re-auctioned on 31.7.2006, the Recovery Officer of the Tribunal shall be at liberty to proceed with completion of other formal steps of executing documents in favour of new auction purchaser. The writ petition stands disposed of in the above terms. (M.M. KUMAR) JUDGE (AJAY KUMAR MITTAL) October 1, 2007 JUDGE Pkapoor 7