CIVIL WRIT PETITION NO. 15030 OF 2006 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. DATE OF DECISION: November 19, 2008. Parties Name Sarv Chander and others ..PETITIONERS VERSUS State of Punjab and others ...RESPONDENTS CORAM: HON'BLE MR. JUSTICE T.S.THAKUR, CHIEF JUSTICE HON'BLE MR. JUSTICE JASBIR SINGH PRESENT: Mr. Akashdeep Mahajan, Advocate, with Ms. Gurvir Kaur, Advocate, for the petitioners Mr. Amol Rattan Singh, Addl. A.G., Punjab, for respondent No. 1. Mr. B.S. Sidhu, Advocate, for respondent No. 2. Mr. D.V.Sharma, Sr. Advocate, with Ms. Shivani Sharma, Advocate, for respondent No. 3. Mr. Ramesh Kumar, Advocate, for respondent No. 4. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? T.S.THAKUR, CHIEF JUSTICE (oral) JUDGMENT This petition has been filed in public interest. It prays for a writ CIVIL WRIT PETITION NO. 15030 OF 2006 -2- of certiorari quashing a public notice, issued by respondent – Hindu Co- operative Bank Ltd., Pathankot, proposing to auction what is described as Gandhi Park and its Shopping Complex together with a Community Centre/ Hall, situate along the canal at Dhariwal. The notices fixed a reserve price of Rs. 1,00,00,000/- in so far as 12 Kanals and 4 Marlas of Gandhi Park land and the Shopping Complex is concerned and a sum of Rs. 10,00,000/- for the Community Centre offered for sale. The petitioners' case as set out in the writ petition is that the land aforementioned was initially owned by British India Corporation, respondent No. 4 in the writ petition, which was handed over to the Municipal Committee, Dhariwal, for being used as a park on the terms and conditions, stipulated in a letter dated December 13, 1928, addressed by New Egerton Woollen Mills Co., which happened to be a unit of British India Corporation. One of the conditions, stipulated in the said communication, was that no building shall be erected on the land being handed over to the Municipal Committee nor any public meetings for any purpose what-so-ever allowed to be held in the park to be established on the said land and that the land shall be used solely as a park for the inhabitants of Dhariwal. It was also stipulated that violation of any of the conditions, stipulated in the letter, would entitle the Company to reclaim the land on the same terms and conditions, on which the same had been handed over to the Committee. Municipal Committee, Dhariwal, accepted the said terms and conditions by a resolution No. 8, passed on December 18, 1928. The above resolution was then followed by resolution No. 2 dated December 28, 1928, which inter alia records that transfer of the land on payment of a sum of Rs. 5,000/-, which was half the market price of the said property on the date of the transfer, was accepted with thanks and the payment demanded by the CIVIL WRIT PETITION NO. 15030 OF 2006 -3- Company ought to be arranged. With the passage of time, the Municipal Committee appears to have constructed a Shopping Complex comprising a number of shops apart from a Community Centre , a tubewell and a water- tank in the same. A substantial part of the land, despite the said constructions, continues to be used by the inhabitants of Dhariwal as a park and is popuarly known as Gandhi Park. The use of the land for purposes other than the ones for which the same was given by the Company was objected to by the Company in terms of its communications dated January 29, 1960 and February 4, 1960, addressed to the President, Municipal Committee, Dhariwal. In the earlier of the two communications, the Company had drawn the attention of the Committee to the stipulation that no public meetings for any purpose what- so-ever will be held in the Park and pointed out that the Committee was permitting meetings to be held, which was a violation of the terms, on which the land had been given to the Committee. In the latter of the two letters, the Company had again pointed out that no building would be erected on the land in question and yet the Committee had constructed shops and buildings in the Park area in violation of the said condition. Be that as it may, the Shopping Complex and other structures raised on a part of the Park continue to exist even today. In the year 2001, the Municipal Committee, Dhariwal, appears to have approached respondent No. 3 Hindu Co-operative Bank for a loan of Rs. 45,00,000/- in connection with another project. The Shopping Complex including the land under the same together with the tubewell and the Community Hall were mortgaged with the Bank towards security for repayment of the said loan. The Bank accepted the said security and CIVIL WRIT PETITION NO. 15030 OF 2006 -4- advanced a sum of Rs. 45,00,000/- by way of loan to the Committee. Upon the failure of the Committee to repay the amount borrowed by it from the Bank, the latter appears to have started arbitration proceedings for recovery of the outstanding loan amount which had in the meantime considerably increased on account of interest accrued on the same. These proceedings were eventually withdrawn by the Bank with a view to initiating measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is in connection with the said proceedings that respondent No. 3 has in terms of a public notice issued in various newspapers offered for sale by way of public auction Gandhi Park together with the Shopping Complex, Community Centre etc. for recovery of the amount payable to it by the Committee. The present writ petition, as noticed earlier, assails the correctness of the said proceedings and questions the bonafides of all those connected with the grant of the loan, making of the mortgage and the proposed sale of the mortgaged property. When this petition came up for hearing before a Division Bench comprising Shri Vijender Jain, the then Chief Justice, and Shri Mahesh Grover, J., on August 3, 2007, the Court was of the opinion that the mortgage of the property, which did not legally vest in the Committee, was wholly unjustified. The Court observed: “We are amazed as to how the Co-operative Bank could issue loan against the mortgage of a public park, but for obvious and extraneous considerations since it was difficult for a Co- operative Bank as a professional banker to have disbursed the loan to the aforesaid persons Tilak Raj and Satish Kumar.” CIVIL WRIT PETITION NO. 15030 OF 2006 -5- The Court, on the above observations, directed the Chief Director, Vigilance, Punjab, to have a thorough probe in the transactions, referred to above, and establish the nexus between the persons who are involved in it and submit a report to this Court within four weeks. In pursuance of the above direction, the Vigilance Bureau, Punjab, has conducted a proper investigation after registering FIR No. 36, dated November 19, 2007, for offences punishable under Sections 420, 467, 468, 471, 120-B IPC and 13(1)(d) read with Section 13 (2) of the Prevention of Corruption Act, 1988. An affidavit , filed by the DSP, Vigilance Bureau, Punjab, in this Court has summarised the steps taken by the Bureau and the conclusion of the Bureau in connection with the aforementioned case in the following words: “According to record, it is also found that Ex. President Satish Kumar for preparing and passing the above resolutions neither taken the above said councilors into confidence nor given any remark in the proceedings book of the house in this regard. Ex President Satish Kumar, E.O. Tilak Raj (Retd.), Councilor Surinder Kumar Kalu, Kuldip Singh Ghagla, Kuldip Singh Arora, Smt. Sita Rani, Smt. Ritu Thapa and Smt. Harjinder Kaur were fully aware that 13 Kanal 4 Marlas land given by Woolen Mill Dhariwal cannot be mortgaged with the Bank for taking loan. Knowing this fact, they intentionally for raising loan of Rs. 45 Lacs for construction of Shopping Complex at Dhariwal and passed resolution No. 148 and 149 dated 1-6- 2001 and obtained loan of Rs. 45 Lacs within two days in connivance with Smt. Veena Arora, Sh. Sanjiv Sharda, Vice CIVIL WRIT PETITION NO. 15030 OF 2006 -6- Chairman and Director Bishamber Dass, Sh. Dinesh Sharma, Sh. Vikas Gupta, Smt. Darshan Sharma, Manager Smt. Usha Sharma, Junior Accountant Sh. Ravi Kumar the Hindu Co- operative Bank Ltd. Pathankot and for surety, mortgaged land 13 Kanal 4 Marlas, given by Woolen Mill Dhariwal, with Bank and E.O. Tilak Raj showed the loan amount spent within 1 and half month and issued utilization certificate. On the basis of these proved allegations, report u/S 173 Cr.P.C. has been presented in the competent Court.” Mr. Amol Rattan Singh, counsel appearing for the State of Punjab and the Director, Vigilance Bureau, submit that the Vigilance Bureau has filed a proper charge-sheet under Section 173 of the Cr.P.C. against the then President and Executive Officer of the Municipal Committee, Dhariwal, and some of the Councilors found responsible for the alleged fraud committed in the course of the transactions including the Director of the Bank and two of its officials. He submitted that the competent Court is seized of the trial of the said case, which will be taken to its logical conclusion. On behalf of the petitioners, it was contended that the investigation, which this Court had directed to the Vigilance Bureau, has established that the proposed sale of the Park and the Shopping Complex as also the Community Centre erected over the same was nothing but a blatant fraud on the people of Dhariwal. It was contended that the proposed sale of the property was against public interest, especially when the Vigilance Bureau had clearly reported that the property in question was a public park CIVIL WRIT PETITION NO. 15030 OF 2006 -7- and had been given by the British India Corporation for being used only as a park and for no other purpose. Mortgage of the said property with the Bank and its proposed sale by the Bank for recovery of the loan transaction, which was vitiated by fraud was, therefore, impermissible in law and ought to be prevented by this Court in exercise of its writ jurisdiction. On behalf of the respondent –Bank, it was contended by Mr. Sharma that the findings recorded by the Vigilance Bureau were not justified on the facts and that the property in question was free from any encumbrance as per the encumbrance certificate , issued by the Sub Registrar concerned and that there was no question of any fraud having been played either by the Committee or the Bank. He further argued that the exemption of the stamp duty on the mortgage of the property itself suggested that there was no question of any fraud being played by the Municipal Committee or the Bank upon the residents of Dhariwal or upon anybody else. On behalf of the respondent – Committee, it was argued by Mr. Sidhu that the issue whether and if so what liability arose against the Committee via-a-viz the Bank could be sorted out by the committee of officers, constituted pursuant to the directions of the Supreme Court in Oil and Natural Gas Commission and another v. Collector of Central Excise, 1995 Supp. (4) Supreme Court Cases 541. Counsel appearing for the British India Corporation, however, submitted that the land in question had been given to the Committee on the specific conditions that the same shall be used only as a park for the benefit of residents of Dhariwal and that neither any constructions will be raised on the same nor any public meetings allowed to be held therein. The raising of CIVIL WRIT PETITION NO. 15030 OF 2006 -8- the construction by the Municipal Committee was an act of bad faith on its part , which was compounded by its fraudulent transaction with the Bank, in which the property which did not legally vest in the Committee and which was not free from encumbrance was taken as a security for repayment of the loan amount. He submitted that aggrieved by the measures adopted by the Bank, the Corporation had preferred an appeal before the Debt Recovery Tribunal in terms of Section 17 of the SRFAESI Act. It was also pointed out that even the Municipal Committee had preferred two appeals under the said Act against the measures taken by the respondent – Bank, in which appeals the entire issue as to the validity of the mortgage and the legality of the security sought to be enforced could be examined. We have given careful consideration to the submissions made at the Bar and perused the record. The short question that calls for our determination is whether the proposed sale of the Gandhi Park, Dhariwal, and the superstructures raised on the same ought to be permitted in the background that we have detailed at some length in the body of this order. It is evident from the submissions made at the Bar that the bonafides of all those connected with the loan transaction have been found to be suspect by the Vigilance Bureau. A charge-sheet as already seen above has also been filed against all the officers, who were instrumental in finalizing the loan transaction and accepting the property in question by way of security / mortgage. Such being the position and keeping in view the fact that against the measures adopted by the Bank, the British India Corporation has also preferred appeals before the Debt Recovery Tribunal under Section 17 of the SRFAESI Act, we are of the view that the question whether the security was or was not legally valid and whether the Bank is entitled to enforce the CIVIL WRIT PETITION NO. 15030 OF 2006 -9- same by resorting to the provisions of the Act will call for determination by the Tribunal. It is true that the Tribunal has not stayed the auction/ sale of the property by the Bank but that part should not in our view prevent this Court from directing that the sale as proposed in terms of the impugned auction notice Annexure P-7 shall await the final determination by the Tribunal of all the issues that have been raised by the British India Corporation as also the Municipal Committee. It goes without saying that any party aggrieved by the finding recorded by the Tribunal shall be free to agitate the matter in such other proceedings as may be legally open to them. We need not, therefore, in the present proceedings express any opinion as to the correctness or otherwise of allegations and contentions made on either side before us. We say so because expression of any opinion by us in these proceedings is likely to prejudice one or the other party before the Tribunal. All that we need say is that the Tribunal will look into the entire controversy closely and take an appropriate decision and issue appropriate directions in accordance with law expeditiously. In so far as a possible settlement by reference to the committee of officers appointed in terms of the judgments of the Supreme Court in ONGC case (supra), is concerned, we find that in our order dated August 3, 2007, a similar contention was urged before the Court and had been turned down. In that view, therefore, we do not consider the present to be a fit case where we ought to refer the matter to the Committee for an amicable settlement. The next question is whether we need to issue any direction regarding the investigation, which had been started by the Vigilance Bureau pursuant to our orders. As mentioned earlier the said investigation has culminated in a proper charge-sheet filed against those found guilty of CIVIL WRIT PETITION NO. 15030 OF 2006 -10- fraud and other offences before the competent Court. All that we, therefore, need say is that the competent Court seized of the said case shall take the proceedings to their logical conclusion in accordance with law. With the above observations and directions, this petition is disposed of leaving the parties to bear their own costs. ( T.S.THAKUR) CHIEF JUSTICE (JASBIR SINGH) November 19, 2008. JUDGE DKC