1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. COURT RECEIVEDR REPORT NO.124 OF 2009 IN SUIT NO.2555 OF 2003 Housing Develolpment Finance Corporation& Anr. ...Plaintiffs. Vs. Jayesh C. Doshi & Ors. ...Defendants. .... Mr. Sanjay Udeshi i/b. Sanjay Udeshi & Co. for Plaintiff No.1. Mr. D.V. Merchant, Sr. Advocate i/b. Diwekar Gond for Plaintiff No.2. Mr. Y.S. Jahagirdar, Sr.Advocate with Mr. B.N. Vaishnawa i/b. N.N. Vaishnawa & Co. for Defendant Nos.1 and 2. Mr.N. G.Thakkar, Sr. Advocate with Mr. Kalpesh Parekh for intervenor i.e. for Mr. Mahendra Doshi. Mr. G.G. Ketkar, 1st Asstt. to Court Receiver. ..... CORAM : DR.D.Y.CHANDRACHUD, J. August 12, 2009. P.C. Two directions have been sought in the report of the Court Receiver dated 18th April 2009 which are to the following effect: (a) Whether the Court receiver should proceed to take forcible possession of the suit flat being Flat No.1 on the First Floor in the building known as Shatrunjay 15, Shree Hind Co-operative Housing Society Ltd., Duncan Causewazy Road, Sion, Mumbai 400 022 from Mr.Mahendra Doshi or from whomsoever found to be in possession, or by breaking open the locks, with the help of Police, if necessary; (b) That the Plaintiffs may be directed to take out 2 appropriate proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in the light of Notification dated 10th November 2003 in pursuance of the Court’s Order dated 22nd June 2007 within stipulated time that may be fixed by the Hon’ble Court, failing which the Court Receiver stands discharged without passing account subject to payment of costs, charges and expenses.” 2. The suit was instituted before this Court by HDFC Ltd. for the recovery of a sum of Rs.39 lakhs in respect of a housing loan advanced to the First, Second and Third Defendants. The residential flat in question, which forms the subject matter of the report of the Receiver was mortgaged as security for the repayment of the loan. By an order dated 29th November 2003, a Learned Single Judge of this Court, directed that the Court Receiver shall stand appointed as Receiver of the flat, but that he shall permit the First, Second and Third Defendants to occupy the flat as his agent without security, but on the payment of royalty. The order of the Learned Single Judge was confirmed as the order on the Notice of Motion on 30th September 2005. Subsequently, a Notice of Motion was taken out by the original Plaintiff seeking permission of this Court to proceed under the provisions of the Securitization Act. The Motion was allowed by 3 Hon'ble Mr.Justice A.M. Khanwilkar on 22nd June 2007.. The order of the Court permitted the Plaintiff to take recourse to its power under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Besides this, the order directed that the Court Receiver shall continue to be in symbolic possession until such time as the authorized officer of the Plaintiff took actual physical possession of the flat and that the Receiver shall stand discharged without passing accounts on the date on which the Plaintiff takes over actual physical possession of the flat. By another order, also dated 22nd June 2007, the Learned Single Judge allowed the Motion taken out by the First and Second Defendants for the deletion of the Third Defendant as a party to be appointed as agent together with the First and Second Defendants. Consequently, the earlier direction was modified so as to provide that the First and Second Defendants alone would continue to act as agents of the Court Receiver. 3. After the Learned Single Judge had passed an ad-interim order on 29th November 2003, appointing the Receiver, a 4 representative of the Receiver sought to take possession on 21st February 2004. At that stage, the intervenor, Mahendra Doshi, stated that the First Defendant was unavailable; that he (Mahendra Doshi) did not have a Power of Attorney to hand over possession to the representative and that the flat was in a locked condition. Significantly, at that stage, it was not the case of the intervenor that it was he who was in possession of the premises. The representative of the Receiver could not take possession, as a result. Eventually on 29th July 2004, the Receiver took formal possession of the premises from the First Defendant, who purported to do so on his behalf and on behalf of the Second and Third Defendants. An undertaking was executed before the Court Receiver on 29th July 2004. 4. The occasion for the report of the Court Receiver was a complaint that was lodged on 9th April 2009 by the Advocate for the First and Second Defendants complaining that the intervenor, Mahendra Doshi, has taken forcible possession of the flat from the First Defendant who was appointed as an agent of the Receiver. The report of the Receiver notes that when his representative visited the 5 flat on 13th April 2009, it has come to his notice that it was not the First Defendant, but the intervenor who was in possession and occupation. It is in these circumstances, that the receiver has sought a direction from the Court as to whether he should take forcible possession from the person who is found to be in occupation. The second prayer that the Receiver seeks is a direction to the Plaintiffs to take out appropriate proceedings under the Securitization Act upon which the Receiver would stand discharged. 5. As already noted earlier, by the order of Hon'ble Mr.Justice A.M. Khanwilkar, dated 22nd June 2007, the Court Receiver was directed to continue until such time as the original plaintiff, HDFC Ltd. took recourse to its power under the Securitization Act and upon the Plaintiff taking actual physical possession, the Receiver was to stand discharged. The original Plaintiff has, in the mean time, assigned its debt to the Second Plaintiff which is a Company by the name of Bengal Mills Stores Pvt. Ltd. against the payment of Rs. 39.40 lakhs. The Original Plaintiff has thereupon taken out a Chamber Summons (Chamber Summons 758 of 2009) for deleting it from the 6 array of parties with the result that the suit would continue to be prosecuted by the Second Plaintiff to whom the debt stands assigned. The continuance of the Receiver under the order dated 22nd June 2007 was for a limited purpose, until the Original Plaintiff took possession under the Securitization Act. Once the original Plaintiff has stepped out of the fray, there is no occasion now for recourse to be taken to the power under the Securitization Act since the debt has been assigned to the Second Plaintiff which is not governed by the Act. Even otherwise, Counsel appearing on behalf of the Second Plaintiff has stated before the Court that his client does not seek the continuance of the Receiver any further. But, quite apart from that concession, the appointment of the Receiver would have to necessarily come to an end in terms of the direction issued on 22nd June 2007. 6. The only question that survives on the report of the Receiver is the party to whom the Receiver must hand back possession. The First and Second Defendants have submitted before the Court that possession was taken from them by the Court Receiver in terms of the order of the Court which directed the appointment of 7 the First and Second Defendants as agents of the Receiver. Hence, it has been submitted that possession ought to be restored from them upon the discharge of the Receiver. However, this request has been opposed for and on behalf of the intervenor, Mahendra Doshi. At this stage, therefore, it would be necessary for the Court to consider as to whether the intervenor has made out any case in regard to the claim to be put in possession of the premises. An affidavit has been filed by the intervenor in response to the report of the Court Receiver on 2nd May 2009. In paragraph 3(d) of the affidavit, the intervenor admits that he came into possession in February 2005. For the sake of convenience, it would be appropriate to extract the relevant part of the affidavit: “(d) In February 2005 the intervenor as partner of “Bengal Mills Stores Supply Company” was put in possession by Defendant No.1. It was agreed that the expenses incurred/to be incurred for the renovation and for necessities in the said flat were to be the treated towards license fees payable by the intervenor to the Defendant No. 1. Thus, the Defendant No.1 created irrevocable license in favour of the intervenor with respect to the said Flat at Shatrunjay. The compilation of documents (Part-1) clearly demonstrates the residence of the intervenor at Shatrunjay.” 7. Counsel appearing on behalf of the intervenor fairly 8 concedes during the course of the hearing that the intervenor obtained possession of the premises after an order was passed by this Court on 29th November 2003 appointing the Receiver and, as a matter of fact, after the Receiver had taken possession on 29th April 2004. Learned Counsel fairly admits the factual position as stated in the intervenor's affidavit that the intervenor obtained possession in February 2005. That being an admitted position, it is impossible to accept the position that possession should be restored by the Court Receiver to the intervenor. Even according to his own case, the intervenor took possession of the premises when the property was custodia legis. The act of taking over such possession is clearly in breach and in defiance of the order of the Court and in terms of the law laid down by the Supreme Court in Anthony C. Leo vs. Nandlal Bal Krishnan,1 would be in contempt of the Court. This is not a case where intervenor claims a genuine source of his authority to occupy the premises either with reference to a claim of tenancy or otherwise originating in a transaction prior to the date on which the Court Receiver was appointed. The occupation of the intervenor is admittedly after the Receiver had taken charge on 29th July 2004. 1 (1996) 11 SCC 376 9 Counsel appearing on behalf of the intervenor submitted that the basis on which the First and Second Defendants had addressed a letter to the Court Receiver on 9th April 2009, complaining that the intervenor has forcibly taken possession on 14th March 2009 is false. But here again, the case of the intervenor himself is not entirely consistent. In the compilation of the original documents, the attention of the Court has been drawn to a statement made by the intervenor before the Sub Inspector of Police at Sion Police Station on 13th March 2009 that since the Second Plaintiff (Bengal Mills Stores Pvt. Ltd.) in which he has interest had paid all the dues of HDFC Bank, the latter has handed over possession of the premises to him. Now this is not a case by which the intervenor seeks to stand by in the course of the affidavit which has been filed in reply to the Report of the Court Receiver. The case which is made out in the affidavit is that the First Defendant had placed the intervenor in possession in February 2005 and that the partnership firm had made several payments to various parties for the purpose of renovating the premises and had paid the royalty charges to the Receiver from time to time. At this stage, it would be only necessary for the Court to take 10 note of the fact that a suit for dissolution and for accounts has been filed in this Court on the Original Side (Suit (Lodging) No.1174 of 2009) in which the contesting parties before this Court are parties. The disputes between the partners inter se and their rights and remedies, if any, in regard to the dissolution of the firm must abide by such orders as would be passed by the Court in those proceedings. Obviously, therefore, the order that will be passed in these proceedings would be subject to such orders that may be passed by the Court in the proceedings in the suit for dissolution. 8. The report of the Receiver would consequently have to be disposed of by directing the Receiver to hand back possession from the parties from whom possession was taken. The report of the representative of the Court Receiver dated 29th July 2004 makes it clear that the First Defendant had informed the representative that the Second and Third Defendants were “presently unavailable” and that he would sign a provisional undertaking on behalf of the Second and Third Defendants. The representative has recorded that he has taken forcible possession of the flat from the First Defendant on behalf 11 of the Second and Third Defendants. In these circumstances, the receiver shall hand back possession of the flat from the parties from whom possession was taken. 9. The Court Receiver stands discharged. Counsel appearing on behalf of the Plaintiff (Bengal Mills Stores Pvt.Ltd.) states that costs, charges and expenses of the Court Receiver shall be paid by his client. 10. In order to enable the intervenor to have recourse to his remedies against this order, the Court Receiver is directed not to implement the aforesaid direction until after the expiry of one week from the date on which an authenticated copy of the order is received by him. ....