-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4222 OF 2010 Vashdeo Rewachand Bhojwani ) Age 67 years, occupation business, having address ) at 12,Wonderland, 7 M.G. Road, Pune-411 001. )..Petitioner vs.. 1. Indusind Bank Limited ) 2401, General Thimmayya Road, Pune-411 001 ) 2. Bhojwani Hotels Pvt. Ltd., ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 3. Dr. Laxmikant R. Bhojwani ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 4. Sanjay L. Bhojwani ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 5. Romy L. Bhojwani ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 6. Hotel Amir Private Limited ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 7. Trust House Estate Private Limited ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 8. Progressive Land Development Corporation, ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) -2- 9. Trust House Commerce Centre, ) having address at 31-32, Wonderland ) 7 M.G. Road, Pune-411 001. ) 10. IndusInd Enterprises Finance Ltd. ) having address at 2401, ) General Thimmayya Road, Pune-411 001 ) 11. Ms. Kavita Gope Mahbubani, ) 14, High Street, Grenada, West Indies ) 12. Anurag Jain ) 13. Mrs. Varsha A. Jain ) Nos. 12 & 13 both having their address at and ) residing at ‘Green Leaf Manor, Gat No. Kanchanwadi, ) Aurangabad Phaltan Road, Opp. Walmi, ) Aurangabad-431 005. )...Respondents Mr. Joaquim Reis with Mr. Swanand R. Ganoo, instructed by Mr. Kunal A. Cheema for the petitioner. Mrs. Vandana D. Jaisingh for respondent No.1. Mr. A. Mishra, instructed by Mr. S.R. Mishra for respondent Nos. 2, 3, 5 and 6. Mr. A.S. Gadkari with Mr. B.M. Patwardhan for respondent Nos. 12 and 13. CORAM: P.B. MAJMUDAR & ANOOP V. MOHTA, JJ. DATE: OCTOBER 14, 2010. ORAL JUDGMENT : (Per P.B. Majmudar, J.) By way of this petition, the petitioner has challenged the order passed by the Debts Recovery Appellate Tribunal (DRAT) dated 23rd April, 2010 passed in Misc. Appeal No. 75 of 2008. By the impugned order, the DRAT dismissed the appeal filed by the present petitioner. -3- 2. The first respondent-Bank preferred applications before the Debts Recovery Tribunal (DRTP being Original Application No. 159-P/2001 and 169- P/2001 against one Hotel Amir Pvt. Ltd. and their Directors (159-P/2001) and Bhojwani Hotels Pvt. Ltd. (160-P/2001). It is not in dispute that the present petitioner was one of the respondents in the aforesaid application viz. (160- P/2001). The DRT after considering the evidence on record allowed the applications by its orders dated 13th September, 2001 and 7th March, 2002. It is required to be noted that against the aforesaid order of the DRT i.e. 7th March, 2002 in Original Application No. 160-P/2001 an appeal was preferred by the petitioner being Appeal No. 28 of 2002 before the DRAT. The said appeal was ultimately dismissed by the DRAT. Accordingly, the order passed in OA No. 160-P/2001 became final. On the basis of the aforesaid order, sale certificate was issued and the disputed property was put to auction and thereafter the same has been purchased by respondent Nos. 12 and 13. 3. The petitioner thereafter preferred a fresh application before the DRT being Misc. Application No. 4 of 2007 on 14th December, 2006 under Section 19 (25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as “the Act”) for setting aside the auction sale in respect of the immovable property bearing No. 38, Koregaon Park, Pune-411 001. The case of the petitioner before the DRT was that the -4- Bank has committed a fraud and even though petitioner had never signed any documents as guarantor, he was shown as a guarantor. The DRT rejected the said application on 25th January, 2008 against which the petitioner preferred an appeal being Misc. Appeal No. 75 of 2008. By a detailed order dated 23rd April, 2010, the DRAT dismissed the appeal against which this petition is filed. 4. Mr. Reis, learned counsel appearing for the petitioner, vehemently submitted that even though the petitioner had not signed any documents as a guarantor, he was unnecessarily joined by the Bank in the original proceedings in which a decree came to be passed against him. It is submitted that petitioner was neither a borrower nor a guarantor nor a Director of the Company. As aforesaid, the DRAT by a detailed order rejected the appeal preferred by the petitioner. 5. It is required to be noted that the present petitioner never disputed the fact that he is not a guarantor in the original proceedings in any manner. The claim of the bank was allowed by the DRT against which the petitioner preferred an appeal which came to be dismissed. Even at that point of time, no challenge was made to the said order of DRAT and, therefore, it attained finality. The petitioner thereafter preferred an application before the DRT under Section 19 (25) of the Act. In our view, since the earlier proceedings have attained finality, the subsequent application under Section 19 (25) of the Act -5- was not maintainable before the DRT. Thereafter the auction sale has been confirmed. The Tribunal has observed in paras 3 and 4 as under. “3. The Respondent Bank filed reply, inter alia, contending that the application is not maintainable. It was also pleaded that the application is barred by limitation. It has been pleaded by the Respondent Bank that the issue of sale of the suit property has been decided by the Hon’ble Supreme Court. In view of the decision of the Hon’ble Supreme Court, the suit property belonged to four persons. It has also been pleaded that the issues which have been raised in O.A. No.160-P/2001 cannot be raised now. The suit property is disposed off long back. The Appellant cannot file any application at his fancy. The objections raised by the Appellant in the recovery proceeding were taken in the consideration. The respondent Bank admits that the suit property was not mortgaged. However, it belonged to the Guarantor, therefore, it was attached. The sale has been confirmed. Therefore, there is no scope for entertaining the application under Section 19 (25) of the RDDB & FI Act. The application is liable to be dismissed with costs. 4. The Presiding Officer heard the arguments of the learned counsel for the par4ties and held that the application under Section 19 (25) of the RDDB & FI Act is maintainable. He also held that the ratio of the case reported in (1994) 1 SCC 1 [S.P. Chengalvaraya Naidu (dead) by LRs vs. Jagannath (dead) by Lrs]is not applicable in this case. He further held that the Appellant should have filed Appeal against the valuation if he was aggrieved. It was also held that the ratio of the case reported in AIR 1977 Calcutta 235 (Jyotish Chandra vs. Smt. Parbati Bala) does not apply to the facts of the present case. The application under Section 19 (25) of the RDDC & FI Act was, therefore, dismissed” 6. The Tribunal has considered a Memorandum of Understanding arrived between the parties on 5th May, 2005 to which the petitioner is a signatory. The contents of the said MoU which is not in dispute is incorporated -6- by the Tribunal in para 12 which reads as under: “ 12. Our attention has also been invited to an MoU executed on 05.05.2005 between the Respondent Bank and some others including the Appellant whose name4 figures at Sr. No.5. This MoU has been signed by the Appellant. In para 1 of the MoU, parties of the first – eleventh part (including the Appellant) irrevocably and unconditionally admit, accept, confirm and acknowledge their indebtness to the Bank for the amounts due and payable in terms of the recovery orders dated 07.03.2002 in O.A. No. 160-P/2001 and dated 13.09.2001 in O.A. No. 159- O/2001. Besides there are acknowledgments of other debtors also. In this MoU, the parties have worked out an arrangement to make payment to the Respondent Bank and put an end to various litigations.” The learned counsel for the petitioner, however, submitted that this MoU was not to be relied upon in any court proceedings and it was accepted without prejudice. Even if that be so, it is required to be noted that in the year 1999, a deed of mortgage was executed between the parties to which the petitioner is a signatory by which he has mortgaged some other property in connection with the loan transaction in question. On the said deed of mortgage at page 228 , the particulars of the outstanding amount of loan payable to mortgagee No.1 by the borrower aggregate to Rs. 26,53,62,863.36. The petitioner is also signatory to the said document on the basis of which it is argued by the learned counsel for the respondents that the petitioner had availed of the facility of loan from the Bank. In this connection, the relevant observations of the Tribunal may be noted and the same read thus: -7- “ 13. The status of the appellant a guarantor is confirmed by the order dated 10.02.2004 of the Hon’ble Supreme Court. A plea to the contrary is not available to the Appellant. It is also noteworthy that the Appellant did not file an appeal against the order dated 22.02.2002 whereby his application for setting aside the order to proceed ex parte was rejected. If the Appellant was seriously contesting his status as a Guarantor then he should have filed Appeal against the order dated 22.02.2002.The facts of this case are quite distinct and different from the case of S.P. Chengalvaraya Naidu’s case (supra) where the appellants were unaware of the documents as the same was suppressed by the Respondent. In the case before us there are two pleas, which the appellant’s learned counsel submits, are based on fraud. The first plea is that the disputed property was not mortgaged with the Respondent Bank and the second plea is that the Appellant was a Guarantor. As far as the first plea is concerned, this plea was admittedly taken. However, the Respondent Bank modified its stand before the Hon’ble Supreme Court and stated that the disputed property is not mortgaged with the respondent Bank. O.A. No. 160-P/2007 was filed for both recovery of money and declaration of mortgage. Therefore, the claim of the Respondent Bank for money decree was not contingent upon the declaration of the mortgage. The claim for money decree was very much there and the respondent Bank could successfully get a money decree even if there was no declaration of a mortgage. Therefore, Appellant’s suggestion that the Respondent Bank has practiced deliberate deception by taking a plea of mortgage with the design of securing a mortgage decree does not appeal to reason. The ratio of S.P. Chengalvaraya Naidu’s case (supra) is not applicable to the facts of the present case. It is also noteworthy that the Appellant had knowledge from the very beginning that a plea of mortgage and the Appellant being a Guarantor is taken in th O.A. No. 160-P/2001. There have been litigations at different levels starting from DRT to the Hon’ble Supreme Court but plea of being a victim of fraud is not raised by the Appellant before any forum. This plea is taken for the first time by filing M.A. No. 4/2007 on 14.12.2006. The plea of learned counsel for the appellant is that it is the settled proposition of law that a judgment or decree obtained by playing fraud on Court is a nullity and non-est in the eyes of law. The said judgment/decree – by first Court or by the highest court has -8- to be treated as nullity by every Court whether superior or inferior. It can be challenged in any Court even in collateral proceedings. Appellant had discovered as early as 18.02.2002 that the Respondent Bank had fraudulently raised the aforesaid two pleas but he took no effective steps to controvert those pleas by filing appropriate proceedings. It will mean that the appellant acquiesced in those pleas and, by no stretch of imagination, it can be said that the Respondent Bank has played fraud on the Appellant or the Court.” The Tribunal has considered that the petitioner himself is a party to the MoU dated 5th May, 2005 and, therefore, after giving detailed reasons, dismissed the appeal. 7. It is required to be noted that the petitioner has never raised this dispute even during the original proceedings in which recovery order was passed in favour of the Bank. Even in appeal, all these points have not been taken and only after the auction took place that the petitioner filed an application before the DRT as stated above. The DRT by a detailed order rejected the said application, though on merits. The proceedings have achieved finality once the appeal filed by the present petitioner had already been decided by the DRAT and the said order has not been challenged further. 8. Considering the conduct of the petitioner and considering the fact that he has executed various documents and considering the reasoning of the Tribunal as well as the fact that against the original order of the DRT the petitioner had filed an appeal before the DRAT which was dismissed on merits -9- wherein no such contention was taken, this is not a case in which no interference is called for in our extraordinary jurisdiction under Article 226 of the Constitution of India. The contention raised now can be said to be an afterthought and no weightage can be given to the same at such a belated stage. In the appeal before DRAT, the petitioner admittedly has not taken any dispute which is raised herein and the appeal was decided on merits. Not only that, the petitioner has not challenged the order of the DRAT further. The application, therefore, in our view before the DRT under Section 19 (25) of the Act has no legs to stand. It is nothing but an after thought to derail the proceedings especially when the auction took place long back and the auction purchaser has taken possession of the property. 9. In view of what is stated above, we do not find any infirmity in the order passed by the DRAT. The petition is accordingly dismissed. At the request of the learned counsel for the petitioner, the interim protection granted earlier is ordered to be continued for a period of three weeks from today. Certified copy expedited. P. B. MAJMUDAR, J. ANOOP V. MOHTA, J.