R. S. A. No. 875 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : R. S. A. No. 875 of 2010 Date of Decision : February 25, 2010 Haryana Financial Corporation, Chandigarh and another .... Appellants Vs. M/s Jay Suitings and Sarees Mills and others .... Respondents CORAM : HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Mr. Kamal Sehgal, Advocate for the appellants. Mr. Jitender Dhanda, Advocate for respondent no.1 – Caveator. * * * L. N. MITTAL, J. (Oral) : This is second appeal by defendants no.1 and 2 – Haryana Financial Corporation (in short – HFC), through its Managing Director and HFC through its Branch Manager, Rewari. Respondent no.1 – M/s Jay Suitings and Sarees Mills filed suit for declaration and permanent injunction against the appellants and proforma respondents 2 and 3 i.e. State of Haryana and Director Industries, Haryana. The plaintiff's case is that it had raised some loans from HFC. Defendants no.3 and 4 were to give subsidy to be credited in the account of plaintiff with HFC. The plaintiff made certain payments to HFC. However, R. S. A. No. 875 of 2010 2 HFC adopted hostile and discriminatory attitude towards the plaintiff and took physical possession of the plaintiff's unit under Section 29 of the State Financial Corporations Act 1951 (in short – SFC Act). The plaintiff sought declaration that non-sanctioning of subsidy of Rs.13,00,000/- and subsidy of Rs.72,000/- on Generator set and non-sanctioning of additional loan by HFC and illegal adjustment of working capital of Rs.8.70 lacs with interest in one instalment and memo dated 19.05.1998 issued by defendant no.2 are illegal, arbitrary etc. The plaintiff sought permanent injunction restraining defendants no.1 and 2 from taking illegal physical possession of the plaintiff's unit and from selling the same under Section 29 of the SFC Act without first sanctioning subsidy and additional loan. The plaintiff also sought relief of mandatory injunction to restore possession of the unit with consequential relief of damages, if defendants no.1 and 2 succeed in taking possession of the unit during pendency of the suit. By amendment of plaint, sale made by defendants no.1 and 2 during pendency of suit was also challenged. Various other reliefs were also claimed. Learned Additional Civil Judge (Senior Division), Rewari, vide judgment and decree dated 30.08.2007, dismissed the suit of the plaintiff. However, first appeal preferred by the plaintiff has been allowed by learned Additional District Judge, Rewari, vide judgment and decree dated 28.10.2009. Sale of plaintiff's unit has been set aside. Defendants no.1 and 2 – appellants have been directed to hand over actual physical possession of the premises to the plaintiff in the same position. Three months' time has been granted to the plaintiff to sell the unit to repay the loan of the appellants. If the plaintiff fails to do so, the appellants shall be entitled to proceed in accordance with law. Feeling aggrieved by the judgment and decree of the lower appellate court, defendants no.1 and 2 have preferred the instant second appeal. I have heard learned counsel for the parties and perused the R. S. A. No. 875 of 2010 3 case file. During pendency of the suit, learned Additional District Judge, while disposing of a miscellaneous appeal, arising out of temporary injunction matter in the suit, vide judgment dated 16.10.1999, granted time of three months to the plaintiff-firm to bring a buyer of the plaintiff's unit and to ensure full payment of the HFC to its satisfaction and HFC was directed to permit the plaintiff to sell the unit on the said condition, but if the plaintiff failed to bring a buyer within three months, HFC was given right to proceed further in accordance with law for effecting recovery of its outstanding amount. As per aforesaid direction, the plaintiff had a right to bring a suitable buyer of plaintiff's unit up to 15.01.2000. However, the appellants, even before expiry of the said deadline, and in blatant violation of the judgment dated 16.10.1999, sold the unit of the plaintiff on 04.01.2000 during the pendency of the suit. The said sale, being in violation of express judgment dated 16.10.1999, has therefore been rightly set aside by the lower appellate court. The said direction of the lower appellate court cannot be said to be erroneous in any manner. In fact, the appellants have no explanation as to how they could sell the unit on 04.01.2000 in utter violation of judgment dated 16.10.1999, vide which the plaintiff was given three months' time to bring a suitable buyer. Judgment dated 16.10.1999 was frustrated by the appellants by sale of plaintiff's unit on 04.01.2000. Learned counsel for the appellants contended that the decree passed by the lower appellate court is inexecutable because appellants, who have been directed to hand over the physical possession of the unit to the plaintiff, cannot do so as physical possession of the unit has been delivered to the purchaser, who was not made party to the suit. The contention may appear to be attractive on first blush, but in fact, the contention is completely devoid of any substance. The situation in which the appellants find themselves, is of their own creation and that too, by violating express R. S. A. No. 875 of 2010 4 direction of the Court. Impleading of buyer of the plaintiff's unit was not mandatory because the unit was sold during pendency of the suit and therefore, the sale is hit by the doctrine of lis pendens. The buyer would also be bound by the decree passed by the lower appellate court. Consequently, the decree cannot be said to be inexecutable. It is also worth noticing that the lower appellate court has protected the interest of the appellants also because the plaintiff has been given three months' time to sell the unit to repay the loan of the appellants and if the plaintiff fails to do so, then the appellants have been given right to proceed in accordance with law. Before parting with the order, it has to be observed that the appellants, exercising statutory powers, have violated express direction and order of the Court by selling the unit on 04.01.2000, although the plaintiff had time till 15.01.2000 to bring a buyer for the unit. Accordingly, a copy of this order be sent to Managing Director of HFC, who shall take appropriate action in accordance with law against the officers/officials of HFC guilty for violating the order of the Court and thereby causing loss to HFC as well as to the plaintiff and thereby prolonging the litigation unnecessarily. In view of the aforesaid discussion, I find no merit in the instant second appeal, which is accordingly dismissed. February 25, 2010 ( L. N. MITTAL ) monika JUDGE