ESA No.440 of 2007 1 In the Punjab and Haryana High Court at Chandigarh. Decided on April 22,2009. Kulbhushan Gupta and another --Appellants vs. Kanta Rani and others --Respondents CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present: Mr.Kanwaljit Singh,Senior Advocate,with Mr.Rahul Chaudhary,Advocate,for the appellants Mr.Rakesh Gupta,Advocate,for the respondents Rakesh Kumar Jain, J: Challenge in this appeal is to the order passed by Addl.Civil Judge (Senior Division), Amloh, dated 19.10.2001, whereby objections filed by the appellants in the execution were dismissed and it was declared that the Decree Holder is the owner to the extent of 2/3rd share of the auctioned suit land and rest of the 1/3rd share, auctioned in excess was ordered to be released after making necessary correction in the Sale Certificate issued by the Court and to the order of the Addl. District Judge,Fatehgarh Sahib dated 2.5.2002, whereby the appeal filed by the appellants was dismissed except for the modification in the finding on issue No.5 wherein it was further held that it would be open to the objectors/appellants to recover back the ESA No.440 of 2007 2 consideration amount from the judgment debtors, alleged to have been paid in lieu of sale deeds dated 13.9.1995, having recourse to the remedy available to them, if so advised. Brief facts of the case are that Kanta Rani (decree holder) filed a suit for recovery of Rs. 10,42,942/- against three defendants, namely (i) Moga Steel Rolling Mill, Mandi Gobindgarh (ii) Jeevan Parkash Mittal and (iii) Dharam Pal Mittal both sons of Harbans Lal, partners of M/S.Moga Steel Rolling Mill. The said suit was decreed ex-parte on 14.5.1996. The decree holder filed an execution application in which the present appellants (Kulbhushan Gupta and Raj Pal) filed objections which were dismissed on 2.6.1998. The appellants preferred an appeal before the District Judge, Patiala, which was dismissed on 2.2.1999. Thereafter, the appellants filed a Civil Revision No.1169 of 1999 before this Court against the order dated 2.2.1999 titled as Raj Pal and another vs. Kanta Rani and others, which was allowed and the order dated 2.6.1998 passed by Addl.Civil Judge (Senior Division), Amloh and orders dated 2.2.1999 passed by the District Judge, Patiala, were set aside and the case was remanded to the executing Court for deciding afresh after framing proper issues and affording opportunity to the parties to lead evidence. In the said order of the High Court, it was directed that the objections filed by the appellants be treated to have been filed under Order 21 Rule 98 of Code of Civil Procedure (for short, the CPC) though the same were originally filed under Order 21 Rule 90 of the CPC. It transpired from the record that Kanta Rani (decree holder) filed an execution application against M/S. Moga Steel Rolling Mill and its partners, namely Jeevan Parkash Mittal and Dharam Pal for recovery of Rs. 11,05, 262/- by way of attachment and sale of property of the judgment debtors ESA No.440 of 2007 3 which comprises of six different properties. The judgment debtors replied to the notice under Order 21 Rule 66 of the Code and filed objections alleging therein that they were neither owners nor in possession of the property comprised in Khasra Nos. 1789/452 (0-5),Khata No. 869/ 1257 and Khasra No.2094/1291/452 (0-3) Khata No. 842/ 1232, situated in the revenue estate of village Kukarmajra, Tehsil Amloh, District Fatehgarh Sahib. The same has been sold much prior to the filing of the suit for recovery vide separate sale deeds dated 13.9.1995 which have been purchased by the appellants/ objectors to the extent of properties comprised in Khasra No. 1789/452 (0-3), Khata No. 869/ 1257 measuring 3 Biswas and the property comprised in Khasra No.2094/1291/452 (0-3), Khata No. 842/1232 measuring 3 Biswas. It was also averred that vide order dated 7.5.1997, share of Dinesh Kumar co-owner has been released from attachment on the ground that he was not a party to the suit. Thus, after deducting 1/3rd share of Ramesh Kumar out of Khasra No. 1789/452 (0-6), remaining 4 biswas of land was to be put to auction, but despite the said fact, the Tehsildar Amloh as the Court Auctioneer, auctioned the entire khasra Number measuring 6 biswas. It was also averred that no proper publication was made before putting the property on sale and that the property in question being residential house was exempted under the provisions of Section 60 of the CPC. The appellants purchased the property in question after making bonafide enquiry in the revenue record for a valuable consideration, therefore, they are bonafide purchasers. Kanta Rani also filed a suit on behalf of her son Rajan Gupta for declaring the sale deed in favour of the appellants null and void, but the said fact was not disclosed by the plaintiff (decree holder). The decree holder did not ESA No.440 of 2007 4 deposit the earnest money of 1/4th at the time of bid and there was no valid and legal attachment. The decree holder filed reply to all the material averments made in the objection petition. It was averred that land measuring 3 biswas comprised in khasra Number 3094/ 1791/ 452, khata No. 842/532 and another 3 biswas of land comprised in khasra Number 1789/ 452, Khata Khatoni No.869/ 1259 was put to sale by the Court Auctioneer in accordance with law for a consideration of Rs. 11,25,000/-. It was also averred that the alleged sale deeds in favour of the appellants/objectors were fraudulent and were executed for the purposes of avoiding realization of money from the judgment debtors. On the pleadings of the parties, the executing Court framed the following issues:- 1. Whether the Tehsildar Amloh was competent to conduct the auction proceedings of disputed property ? OPDH. 2. Whether the Objectors Raj Pal and Kulbhushan Gupta are the owners in possession of residential property comprising of khasra No. 3094/1791/452 (0-3) and 1987/452(0-3)situated in the revenue estate of village Kukar Majra, Tehsil Amloh covered by sale deed No.1078 & 1979 ? OPD 3. Whether the objector Raj Pal and Kulbhushan Gupta purchased this property against consideration without any notice ? OPD 4. Whether the J.Ds were the owners of the above property at the time of alleged attachment as well as at the time of conducting the alleged auction ? OPDH ESA No.440 of 2007 5 5. Whether the auction alleged to have been conducted in this case is liable for confirmation ? OPDH 6. Whether the property comprising of Khasra No.3094/1791/ 452(0-3) and1798/452 (0-3) is liable for attachment? OPDH 7. Whether the objector Swaranjit Singh and Raj Pal are the owners in possession of residential property comprising of Khasra No.2177/1747/1/441 (0-4) situated in the revenue estate of village Kukar Majra covered by sale deed No.1082 and this property is liable to be released from the alleged attachment ? OPD 8. Whether the objector Swaranjit Singh and Raj Pal purchased the above property against consideration and without any notice ? OPD 9. Whether at the time of alleged attachment, the property purchased by Swaranjit Singh and Raj Pal belongs to the J.Ds ? OPDH 10.Whether any decree was passed against Smt.Sarita Rani or the objectors Swaranjit Singh, Raj Pal and Kulbhushan Gupta ? OPDH 11.Whether the DH has concealed the factum of ownership of the objectors with respect of the properties in question covered by the sale deeds in their favour ? OPD 12.Whether the attachment of property in this case is wrong, illegal or is the result of fraud ? OPD 13.Whether village Kukar Majra and Gobindgarh are the same village and have no separate identity in the revenue ESA No.440 of 2007 6 record ? OPDH. 14.Relief: Both the parties led oral as well as documentary evidence. The appellants/objectors examined Som Nath as OW-1, Tejinder Kumar Gupta as OW-2, Raj Pal objector as OW-3, Kulbhushan Gupta as OW-4, Prem Aggarwal as OW-5,Vijay Kumar as OW-6. On the other hand, the decree holder did not enter the witness box herself and had rather examined her attorney Sudarshan Kumar as DHW-1. After tendering some documents, learned counsel closed the evidence. After appreciating the entire evidence available on record, the Court below much-less the First Appellate Court came to the conclusion that the sale deeds dated 13.9.1995, on the basis of which the appellants have claimed their rights to file objections, cannot be treated to be legal and valid sale deeds and, therefore, no right of ownership can be conferred upon them. Assailing the finding of the Courts below, learned counsel for the appellants has vehemently contended that the Courts below have erred in observing that the sale deeds are sham transaction, though the sale deeds are registered and are prior to the date of filing of the civil suit. Neither the vendors nor the vendees had any idea that Kanta Rani would file a suit for recovery and get the property in question attached, therefore, it is not the case of fraudulent transaction. Moreover, Kanta Rani who challenged the sale deeds had withdrawn the suit. Therefore, it is argued that the findings recorded by the Courts below are illegal and are liable to be set aside. Learned counsel for the respondents has vehemently contended ESA No.440 of 2007 7 that initially, a suit was filed on 12.9. 1995 by Rajan Gupta which was titled as Rajan Gupta vs. Moga Steel Rolling Mills including Jeevan Parkash Mittal and Darshan Pal Mittal, in which they were directed to maintain status-quo regarding the property which is subject matter of the present appeal. On 13.9.1995, in violation of the order of status-quo passed by the Civil Court, they executed the alleged sale deeds in favour of the appellants without any prior agreement to sell and without consideration. On 21.3.1996, the present decree holder Kanta Rani filed the suit which was decreed ex-parte on 14.5.1996. An application for setting aside the ex- parte decree was filed by the judgment debtors but that was dismissed and the ex-parte decree attained finality. On 07.8.1996, execution application was filed by the decree holder which was adjourned to 25.9.1996 for appearance of the judgment debtors. On 25.1.1997, the Court passed the order of attachment of the property, subject matter of the appeal, and proclamation under Order 21 Rule 66 of the CPC was issued on 8.2.1997. Out of the total attached property, it was found that 1/3rd share belongs to Ramesh, who was not the judgment debtor,therefore, his share was released and the remaining 2/3rd of the suit property was put to auction which was purchased by the decree holder Kanta Rani on 16.6.1997 against a bid of 11,25,000/-. On 8.9.1997, the present appellants filed objections under Order 21 Rule 90 of the CPC and another set of objections was filed by the Judgment Debtor on 7.3.1998. In both the objection petitions filed by the present appellants as well as the Judgment Debtor, the same Advocate represented the parties. The objections filed by the judgment debtors and the appellants claiming themselves to be the bonafide purchasers were dismissed on 2.6.1998 on the ground of limitation as well as on merits. ESA No.440 of 2007 8 Both the judgments debtors and the objectors filed appeals along-with an application for condonation of delay under Section 5 of the Limitation Act, which was dismissed by the District Judge, Fatehgarh Sahib and the appeal was also dismissed on merit as well vide his order dated 06.8.1998, which led to the filing of the Civil Revision before this Court. The Civil Revision was allowed by this Court and the case was remanded back to the District Judge, to decide the matter afresh on merits. On 2.2.1999, the District Judge, Patiala, heard the appeal filed by the present appellants and dismissed the same on merit. On 27.2.1999, a Sale Certificate was issued in favour of the auction purchaser /decree holder. The Civil Revision No.1169 of 1999 filed by the appellants was disposed of on 24.1.2001 in which it was observed that since the appellants are strangers in possession, therefore, their objections should be treated to have been filed under Order 21 Rule 98 and not under Order 21 Rule 90 of the CPC. Thus, the matter was again remanded back to the trial Court directing the appellants to file objections under Order 21 Rule 98 of the CPC. Consequently, the present objections were filed on 19.10.2001 under Order 21 Rule 98 of the CPC, in which issues were framed and evidence was led by both the parties. It is also submitted by learned counsel for the respondents that after dismissal of the objections by the lower Appellate Court, fresh objections were filed by one Gurditta Mal Nagpal claiming himself to be in possession of the property in question as a tenant under the appellants. It is argued by learned counsel for the respondents that the entire controversy revolves around the fact as to whether the sale transaction set up by the appellants on 13.9.1995 is fraudulent and sham. ESA No.440 of 2007 9 It is contended in this regard that there was no prior agreement to sell between the judgment debtors and the present appellants about the property alleged to have been sold on 13.9.1995. There is no sale consideration transacted by the seller to the buyer on the date of sale. The sale consideration of Rs.2 lacs. which is mentioned in the sale deed was wholly inadequate as the property has been purchased by the decree holder for Rs.11,25,000/- and in the F.I.R. No.5 dated 9.1.1996 which was registered against Jiwan Parkash, Darshan Pal and the appellants for commission of offences under Section 420/34 of I.P.C, a specific stand was taken by them that the present property was transferred in favour of the appellants without consideration by six members committee which was formed to settle the liabilities of Moga Steel Rolling Mills. It was also alleged in those affidavits that the present appellants, after getting the property transferred in their names as committee members, have become dishonest and refused to make payment to the creditors. It is also contended that in another bail application moved by the appellants, it was admitted by them that they were approached by the creditors of M/S. Moga Steel Rolling Mills as well as by partners of M/S. Moga Steel Rolling Mills to intervene and settle their accounts in which they specifically said that the appellants are in no way concerned in any loan transaction or any sale, purchase of Moga Steel Rolling Mills, with other persons, seller, purchasers or creditors. Thus the moot question involved in this appeal is as to whether the sale deeds dated 13.9.1995 on the basis of which the appellants are claiming their rights, are genuine or sham transactions and are hit by Section 53 of the Transfer of Property Act, 1953, which reads as under:- ESA No.440 of 2007 10 “Fraudulent transfer (1) Every transfer of immovable property made with intent to defeat or delay the creditor of the transferor shall be voidable at the option of any creditor so defeated or delayed. Nothing in this sub section shall impair the rights of a transferee in good faith and for consideration. Nothing in this sub section shall affect any law for the time being in force relating to insolvency. A suit instituted by a creditor (which term includes a decree holder whether he has or has not applied for execution of his decree) to avoid a transfer on the ground that it has been made with intent to defeat or delay the creditors of the transferor shall be instituted on behalf of, or for the benefit of, all the creditors. (2)Every transfer of immovable property made without consideration with intent to defraud a subsequent transferee shall be voidable at the option of such transferee. For the purposes of this sub section, no transfer made without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made.” From the resume of aforesaid facts, it is apparent that the first suit was filed by Rajan Gupta against Moga Steel Rolling Mills on 12.9.1995 in which status-quo was ordered to be maintained with regard to the property in question. On the next day i.e.13.9.1995, in violation of the order of status-quo, the objectors/judgment debtors Jiwan Parkash Mittal ESA No.440 of 2007 11 and Darshan Pal Mittal executed the sale deeds in favour of the appellants without any prior agreement to sell. It has come on record that when the order dated 12.9.1995 in Civil suit No, 486 dated 12.9.1995 titled Rajan Gupta v. Moga Steel Rolling Mills, was passed, defendant No.2 Jiwan Parkash Mittal was present in the Court ,therefore, he was fully aware about the stay having been granted against alienation of the property in question and the other judgment debtor Darshan Pal Mittal is none else than the real brother of Jiwan Parkash Mittal and attorney of M/S. Moga Steel Rolling Mills, therefore, they had knowingly sold it, if it is at all presumed to be a sale of the property in dispute on 13.9.1995, then it was in violation of the order of status-quo dated 12.9.1995. It has also come on record that bail application No.54 dated 2.3.1996 was filed by Jiwan Parkash Mittal and Darshan Pal Mittal sons of Harbans Lal (judgment debtor) in case FIR No.5 dated 9.1.1996, registered at Police Station, Mandi Gobindgarh, under Section 420/34 of I.P.C. in which they had averred that they are partners of M/s.Moga Steel Rolling Mills which was dealing in iron trading and steel rolling and running mill by taking mills on lease since 1987. Their business was running successfully and in day to day transaction, they were getting raw material on credit basis from various firms of Mandi Gobindgarh which were to be returned as per the terms and conditions going on in the market within 17/18 days and in case of default, interest was payable on the said amount. Due to slump in the business, they have suffered liability of Rs.2.50 crores to various firms. Since they failed to make the payment, therefore, in the month of June,1995, they approached the persons for settlement to whom payment was to be made. In view of that, in order to avoid litigation in Civil and Criminal Courts, a committee of six ESA No.440 of 2007 12 persons was constituted, comprising Dhijinder Gupta, Ved Dewan, K.B.Gupta, Madan Lal and Raj Pal and later on, one more person, namely Swaranjit Singh was added and the goods lying finished and unfinished in the mill premises including plants and machinery were handed over to the members of the committee . The said committee after taking charge of the said items finally on 13.9.1995 got registered the sale deed of the properties movable/immovable in the names of the judgment debtors and their relations like brother etc. and the said properties were got transferred in the name of the committee members vide sale deed dated 13.9.1995. The committee members thereafter started making payment to certain creditors, but later on, they became dishonest and started refusing to make the payment. Thus, from the averments made in the bail application, it is claimed that it was not a sale of the property in question in favour of the appellants, rather it was an arrangement made by the decree holder in favour of the appellants in the shape of a registered sale deed for the purpose of paying of their debts to their creditors. Similarly, bail application No.16 dated 11.1.1996 was filed for anticipatory bail in the aforesaid F.I.R.No.5 registered at Police Station, Mandi Gobindgrh, under Section 420/34 of I.P.C. by 7 committee members including the present appellants Kulbhushan Gupta and Raj Pal. In this bail application, it was alleged by them that they are businessmen and are income tax payees. There was a firm by the name and style of M/S.Moga Steel Rolling Mills, which was running re-rolling business on a very high scale . The said firm suffered loss and had liability to pay heavy amount to various creditors. The said creditors approached the appellants, other persons who had filed bail application as well as partners of M/S.Moga Steel Rolling Mills to ESA No.440 of 2007 13 intervene and settle their accounts. It is averred that they are no where concerned with the alleged transaction or any sale purchase of the said M/S.Moga Steel Rolling Mills, sellers, purchasers or creditors. From the above recorded facts, it is transpired that the sale deed dated 13.9.1995 was executed in favour of the appellants as a measure of an arrangement and in fact, property was not sold against consideration. One more factor needs to be noticed that the property in question is shown to have been sold at a very low rate of Rs. 2 lacs, otherwise, it has been sold in auction @ Rs.11,25,000/-. The reason for selling the same at Rs. 2 lacs is obvious that it was not a genuine sale but an arrangement made by the judgment debtors with the committee of which the appellants were also members and in order to avoid payment of stamp fee, the value of sale deed was kept incredibly low. It is worthwhile to mention here that the learned counsel who had filed the objections on behalf of the judgment debtors is the same who had filed the objections on behalf of the appellants. From this fact alone, it appears that the appellants were in collaboration with the judgment debtors in assailing the sale of the attached property. There is nothing on record by the appellants to show as to how they had entered into transaction, conducted negotiations with the judgment debtors for purchase of property, entered into an agreement to sell, what earnest money was paid, what was the source of funds from where sale money was paid, as to how sale deed was executed on 13.9.1995 when there was an order of status-quo granted by the Civil Court in respect of the said property on 12.9.1995 in the presence of one of the judgment debtors. Thus, in my view, there is no sale by the judgment debtors in ESA No.440 of 2007 14 favour of the appellants (objectors) in accordance with law. The sale deed dated 13.9.1995, thus does not confer any title upon the appellants. Once it is held that the sale deeds dated 13.9.1995 which are the basis for the appellants to file objections do not confer any title upon the appellants as sale deeds are without consideration and is an act of management of the judgment debtors, the objections on the basis of title are totally misconceived. Thus I do not find any infirmity or illegality in the impugned order passed by both the Courts below and as such, the appeal filed by the appellants is found to be without any merit and the same is hereby dismissed with no order as to costs. April 22,2009 (Rakesh Kumar Jain) RR Judge