1 appl638.10.sxw ssm IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL (L) NO. 638 OF 2010 IN NOTICE OF MOTION NO. 35 OF 2010 IN INSOLVENCY PETITION NO. 46 OF 2002 Krystal Stone Exports Ltd. .....Appellant. Vs. Ghisalal C. Shah & Ors. ......Respondents Mr. S.A. Tawate for the Appellant. Mr. K.P. Jain i/by Ms. Nisha Parmar for Respondent No. 2. CORAM : D.K. DESHMUKH AND ANOOP V. MOHTA, JJ. DATE : 8th MARCH, 2011. P.C.: 1 By this Appeal, the Appellant challenges the order dated 15 th June, 2010, passed by the learned Single Judge of this Court in the Notice of Motion No. 35 of 2010. By that Notice of Motion, the present Appellant has prayed for following relief. “(a) That the Hon’ble Insolvency Court be pleased to Order and direct the Respondents to restore the “Physical possession” of the premises viz. Flat No. 305, Blase view Co-operative Housing Society Ltd., Matherpada Road, Amboli Naka, Andheri (west), Mumbai-400 058, to the Applicant by removing the Lock of Respondent No.5.” 2 Thus, by this Motion, the Appellant prayed for direction for 2 appl638.10.sxw ssm handing over the physical possession of Flat No. 305. 3 The relevant facts are- Admittedly, the owner of the flat is one Sangeeta B. Agarwal, who is adjudged insolvent. Admittedly, she and her husband Mr. B.D. Agarwal are the Directors of the Appellant Company. The claim of the Appellant is that by a unregistered lease agreement dated 11 th April, 1996, lease of the flat No. 305 which is at Andheri, Mumbai was granted in favour of the Company for a period of 15 years and the lease money is something which is remarkable. The relevant clause in the lease Deed reads as under:- “That the parties hereto agree for an amount of Rs. 1 per month towards the lease, the society charges and municipal taxes shall be borned by the Leasee, in additions to the lease amount.” 4 Thus, the Appellant wants the Court to believe that insolvent Sangeeta Agarwal agreed to lease out residential flat at Andheri area of Mumbai for lease money of Re.1 per month. This singular circumstance, coupled with the circumstances that the owner Sangeeta Agarwal is declared as an insolvent and the Appellant company was controlled by herself and her husband, we are of the 3 appl638.10.sxw ssm opinion that the entire case of the lease, is an eyewash and the document is bogus. What is interesting is that, Sangeeta Agarwal who herself is a Director of the Company has signed the document as an lessor and her husband has signed on behalf of the leasee Company. 5 It appears that the Appellant had taken loan from the Central Bank of India and the same flat has been mortgaged to the Central Bank of India by Sangeeta Agarwal as a guarantor of the loan advanced to the Company. The Central Bank of India initiated proceedings for recovery in the DRT at Jaipur. An order came to be passed on 24/08/2009. In paragraph 4 of that order in relation to the flat which is subject matter of these proceedings, in our opinion, is relevant which reads as under:- “4. It is an admitted fact that the exparte recovery certificate has now been set aside and the matter is restored back to the original number and is pending for adjudication. Both the counsel have admitted the legal position that the effect of the setting aside an exparte decree is to restore the parties to the position they previously occupied. This legal principle is based on the Judgment of Hon’ble Supreme Court reported in A.I.R. 1985 SC 964 and the Full Bench of Hon’ble Andhra Pradesh High Court reported in A.I.R. 1974 Andhra Pradesh 1 as well as Judgment of Hon’ble Kerala High Court reported in A.I.R. 1986 Kerala 10. I also bow down to this legal position. It is an 4 appl638.10.sxw ssm admitted fact that as on the date of passing the exparte recovery certificate the possession of the property under dispute i.e. Property of Appellant No. 2 Smt. Sangeeta Agarwal was in possession of the Official Assignee attached with Hon’ble Bombay High Court and the Recovery Officer had taken the possession from the Official Assignee through Receiver appointed by him. It is also an admitted fact that after taking possession of the property by the Receiver the Recovery Officer has handed over the possession of the property to the Respondent Bank. In the light of the above referred settled legal position the status of the property should be restored back as on the date of passing of the decree and on that date since the possession was with the Official Assignee attached with the Hon’ble Bombay High Court the possession is required to be restored back to the official assignee. The learned counsel for the Appellants has argued that when the Receiver took the possession the physical possession of the property was with the Appellant No.2 and the Official Assignee had symbolic possession only, therefore the physical possession must be restored back to the Appellant No.2 Sangeeta Agrawal. This argument is not tenable because in law there is no dichotomy between symbolic possession and physical possession as has been held by the Hon’ble Apex Court in the matter of M/s. Transcore & Anr. Vs. Union of India reported in 1(2007) BC 33 (SC).” (Emphasis supplied) 6 The learned counsel appearing for the Appellants (The company and the insolvent Sangeeta were the Appellants before the DRT) has argued that when the Respondent took possession, the physical possession of the property was with the Appellant No.2 (Appellant No. 5 appl638.10.sxw ssm 2 before the DRT was Sangeeta, the insolvent) and the Official Assignee had symbolic possession only. Therefore, the physical possession must be restored back to the Appellant No.2 Sangeeta Agarwal. It is thus clear that it was the case jointly of the insolvent and the Company that on 22 nd January, 2008, the Official Assignee had taken only symbolic possession and that the physical possession was with the insolvent Sangeeta Agarwal and therefore, a submission is made that the physical possession should be handed over to her. If lease was granted in favour of the company in 1996 for a period of 15 years then there is no question of Sangeeta Agarwal landlady being in physical possession in the year 2008 and if the company is claiming to be leasee, then there is no question of company requesting the DRT that Sangeeta Agarwal should be given physical possession of the property. 7 What is further to be seen is that the same company had taken out Notice of Motion No. 67 of 2009 in this Court. Prayer clause (a) of that Notice of Motion reads thus- “(a) That the respondent Official Assignee be ordered and directed to restore the possession of the Applicant Company of flat No. 305, Blase View Hsg Soc, Amboli, Andheri (w) Mumbai 58 by removing his lock illegally placed on the front door on 9/9/2009 6 appl638.10.sxw ssm and he be directed not to disturb the physical possession of the Applicant Company in respect of the said flat, without due process of law.” 8 That Notice of Motion was taken out in the month of September, 2009 and by that Notice of Motion a direction was sought to the Official Assignee to restore the physical possession of the flat to the company. A comparison of prayer clause (a) of Notice of Motion No. 67 of 2009 and 35 of 2010 shows that in September, 2009, the company was claiming an order for restoration of the flat to it by removing the lock which according to the company was illegally put by the Official Assignee. Bare perusal of prayer clause shows that the company was not in a possession because the flat was admittedly under the lock and key of the Official Assignee. Notice of Motion No. 67 of 2009 was disposed of by a learned Single Judge of this Court by an order dated 1st December, 2009. It appears that along with that Notice of Motion, Notice of Motion No. 68 of 2009 which was taken out by the Central Bank of India and also Report No. 8 of 2009 which was submitted by the Official Assignee were also disposed off. The learned Single Judge directed the Official Assignee to hand over the possession of the flat to the Central Bank of India. The relevant paragraph No. 2 reads as under:- 7 appl638.10.sxw ssm “2. The Central Bank of India has taken out a notice of Motion for a direction to the official Assignee to handover possession of the flat since the bank has instituted proceedings under the Securitisation Act. The bank had issued a notice under Section 13(2) on 11th July, 2002 after which a notice of possession was issued on 16th February, 2009. The bank is a secured creditor. In these circumstances, notice of Motion 68 of 2009 taken out by the Central Bank of India is made absolute in terms of prayer clause (a) save and except for the bracketed portion which reads as follows: “(a) that the learned official Assignee, High Court, Bombay, may be directed to handover the flat being Flat No. 305, Blace View “A” Co-operative Housing Society Limited, Matherpada Road, Amboli, Andheri (West), Bombay 400 058, to the Applicants, Central Bank of India, Tonk Road Branch, Jaipur.” 9 The Central Bank of India was placed in possession of the flat. The Notice of Motion No. 67 of 2010 was dismissed holding that no direction for placing the Appellant in possession can be made. We have been informed that on the report of the Official Assignee a finding has been recorded that as a consequences of adjudication, the property vested in the Official Assignee. We have been informed that the Appeal has been filed against this order, which is pending. In this background, Notice of Motion No. 35 of 2010 was taken out for 8 appl638.10.sxw ssm restoration of physical possession, when order passed in Notice of Motion No. 67 of 2009 is still in force. By Notice of Motion No. 67 of 2009, similar relief was claimed which was denied by the learned Single Judge. In our opinion, therefore, taking out of Notice of Motion No. 35 of 2010 really amounts to abusing of process of the Court. In our opinion, in view of the stand taken before the DRT by the Appellant that physical possession should be restored to Sangeeta Agarwal and not to the Company and also stand taken that the physical possession always was with the Sangeeta Agarwal even in the year 2008, it does not lie in the mouth of the company that it was in possession, specially considering the nature of the lease deed. It is thus, amply clear that the Appeal has no substance and really filing of such motion and Appeal amounts to the abusing of process of the Court. The Appeal is rejected. The Appellant is directed to pay as and by way of costs of Appeal Rs.25,000/- to the Official Assignee. 10 Official Assignee is, therefore, permitted to pay the fees of the advocate from the estate of the insolvent, as per leave taken from the insolvency Judge. (ANOOP V. MOHTA, J.) (D.K. DESHMUKH, J.)