Civil Writ Petition No.20486 of 2009 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.20486 of 2009 Date of decision: 6.12.2011 M/s P.S.Silk Mills (Pvt.) Limited ...Petitioner Versus Punjab Financial Corporation ...Respondents CORAM: HON'BLE MR.JUSTICE HEMANT GUPTA HON'BLE MR.JUSTICE G.S.SANDHAWALIA Present: Mr. Sunil Chadha, Advocate for the petitioner. Mr. G.S.Gilll, Advocate for respondent. **** G.S.SANDHAWALIA, J. 1. The present writ petition is a classic example of how litigants try to abuse the process of Court and attempt to squeeze benefit from the Government Department on the strength of judicial orders passed by the Court. However, in the present case this effort has been nipped in the bud for which the consequences have to necessarily flow. 2. The petitioner in the present writ petition seeks a writ in the nature of Mandamus directing the Punjab Financial Cooperation (hereinafter after referred to as “the respondent-Corporation”) to settle the account of the petitioner company under the One Time Settlement Scheme, 2009 dated 2.3.2009 after crediting to the amount of the company a sum of Rs.9,10,000/- in the year 2001 instead of 9.12.2005. 3. The case of the petitioner is that it had raised a loan of Rs.20.50 lacs on 12.8.1994 from the respondent-Corporation but the same could not be paid in time which resulted the petitioner being declared as a Civil Writ Petition No.20486 of 2009 -2- **** defaulter and the proceedings by the respondent-Corporation were initiated under Section 29 of the State Financial Corporation Act, 1951(hereinafter referred to as “the Act”) against the mortgaged assets of the company and the same were taken over on 25.3.1998. It is the case of the petitioner that since the land and machinery of the company was not being sold at a higher price, therefore, the company arranged a buyer and, accordingly, one Smt. Ravinder Kaur offered to buy the mortgaged assets (land building and machinery) for the petitioner company for a sum of Rs.9,10,000/-, which fact was also noticed in Civil Writ Petition No.9881 of 2001 filed by the petitioner company, which was disposed of on 27.7.2001 and in pursuance of the direction issued in the said writ petition, the same bid was accepted by the respondent-Corporation vide letter dated 17.9.2001. It was further pleaded that Smt. Ravinder Kaur was to execute the sale deed and bond of guarantee and she deposited 25% of the said amount i.e. Rs.2,27,500/- but the Corporation did not execute the sale agreement in her favour though she requested the Corporation and it was only on 9.12.2005, the sale agreement was executed in her favour after the receipt of balance 75% amount. That on 2.3.2009, the respondent-Corporation floated the OTS scheme and intimation of the same was sent to the petitioner on 19.3.2009 wherein he was intimated that he could apply under the said scheme. Since its property had been sold and there was clause 'loans where properties/assets acquired and sold by PFC' and loanee could pay the 'outstanding principal plus expenses plus 10% of interest outstanding as on the last date of sale'. In pursuance of the said scheme, the petitioner asked for account statement and how much amount was payable under the OTS scheme on 28.4.2009 and it was vide letter dated 6.5.2009 he was intimated that a sum of Rs.26.48 lacs was payable as on Civil Writ Petition No.20486 of 2009 -3- **** 9.12.2005 and the petitioner company was requested to make a payment of Rs.3.98 lacs i.e. 15% as upfront amount. It was further alleged that the petitioner company wrote to the respondent-Corporation on 22.5.2009 that the account should be checked as the entry of Rs.2,27,500/- i.e. 25% amount of sale was not found mentioned. The Corporation vide letter dated 12.6.2009 intimated to the petitioner that the said sum has been kept in sundry deposit account as the purchaser had failed to execute the sale agreement and company had given credit of Rs.9.10 lacs only on 9.12.2005 in the company account on account of sale proceeds of the petitioner company. 4. In pursuance of this reply of the Corporation, the Company got a legal notice served upon the respondent-Corporation that the amount was liable to be credited to the tune of Rs.9,10,000/- in the year 2001 instead of on 9.12.2005 and after crediting the said amount, the benefit of OTS scheme had to be given after taking into consideration the said deposit in 2001 instead of 9.12.2005. In pursuance of this legal notice, the Corporation again took the stand that since the purchaser had failed to execute the sale agreement inspite of efforts made by the Corporation, therefore, the benefit of the same could not be given to the petitioner as the Corporation had also lost interest on the balance sale consideration being deposited after delay. In pursuance of this stand of the Corporation, the present writ petition, accordingly, came to be filed seeking the relief that the account of the petitioner under the OTS scheme dated 2.3.2009 should be settled after crediting the amount to the tune of Rs.9,10,000/- in the account of the company in the year 2001 instead of 9.12.2005. 5. The said writ petition was resisted by the Corporation on the ground that since the 25% of the sale consideration had been received on Civil Writ Petition No.20486 of 2009 -4- **** 28.9.2001, the same was kept in sundry deposit account as the purchaser has failed to pay the balance amount and get the sale deed executed. It was also mentioned that the said purchaser had filed a civil suit at Ludhiana and she had been asked to withdraw the civil suit and deposit the balance amount. It was also explained that Smt. Ravinder Kaur was not found available though various letters had been sent to her and personal visits had also been made by the officials of the Corporation and it was informed that she was not available at the two of her addresses and was reported to started business somewhere in Mumbai and it was only on 28.6.2004, a registered notice had been sent to her; wherein it was mentioned that the amount deposited by her would be forfeited and offer of purchase would be deemed to be rejected. When the matter was taken up on 4.11.2011, the record of the case was scrutinized as to why the Corporation had failed to get the sale deed executed for a period of four years and not made any efforts to ensure balance payment of 75% from Smt. Ravinder Kaur, then it transpired that there seems to be a relationship of Smt. Ravinder Kaur with the Director Daljit Singh of the petitioner-Company through whom the present writ petition has been filed. Accordingly, the following order on 4.11.2011 was passed directing both the Corporation and the petitioner to disclose the relationship and why the delay in executing the sale deed:- “Learned counsel for the petitioner seeks some time to file an affidavit to disclose the relationship, if any, of its Director, Mr. Daljit Singh with Mrs. Ravinder Kaur, the auction purchaser. On the other hand, Mr. Gill to file an affidavit as to why the sale deed was not executed after the confirmation of the sale by this Court as recorded in the noting of the Corporation dated Civil Writ Petition No.20486 of 2009 -5- **** 4.10.2001.” 6. In pursuance of the said direction, Daljit Singh, Director of the petitioner company has filed an affidavit wherein he has intimated that Smt. Ravinder Kaur is none other than his real brother's wife, namely, Gurdev Singh and has further sought to justify that she had been representing to the respondent-Corporation but they had failed to execute the sale agreement in her favour. Various correspondence was also attached to stress on this factor that it was the fault of the respondent-Corporation. The respondent-Corporation also filed additional affidavit of Sh. S.C.Sharma, Deputy General Manager reproducing the order passed in Civil Writ Petition No.9881 of 2001 dated 27.7.2001 and giving details that both the addresses of Smt. Ravinder Kaur were the residential address of the Director of the Company Sh. Daljit Singh and other address was the city office address of the petitioner company. It was also averred that several efforts have been made to contact Smt. Ravinder Kaur but the report was that she had left the house, gone abroad or started business in Mumbai. It was also now averred that Daljit Singh and Smt. Ravinder Kaur were hand in glove in delaying the matter and writ petition was filed by concealing true facts from this Hon'ble Court. Correspondence was also attached to show that efforts have been made to ensure that the sale agreement was executed at the earliest and the balance amount was also asked for during this period of four years. 7. This filing of the affidavit and calling for the records of Civil Writ Petition No.9881 of 2001 has let the cat out of the bag. A perusal of the said writ petition goes on to show that the property of the petitioner company measuring 1 kanal 5 marlas having covered area of 7356 sq. fts. after having been taken over on 25.3.1998 was being auctioned by Civil Writ Petition No.20486 of 2009 -6- **** advertisement dated 1.6.2001 and sealed offers had been invited by the Corporation. The Corporation vide letter dated 28.6.2001 had invited the Director of the petitioner company to get a better buyer since the highest offer was for Rs.5 lacs; which had been increased to Rs.8 lacs after negotiations. Accordingly, the petitioner filed aforesaid Civil Writ Petition seeking quashing of the said letter and offered to pay higher amount minimum by Rs.50,000/- more than the offer given by the highest bidder. Accordingly, in pursuance of the said offer this Court passed the following order on 27.7.2001:- “The counsel for the petitioner has produced a Bank draft of Rs.17,500/- on behalf of the intended higher bidder to meet the demand of respondent-Corporation so that the property in question is sold at a higher price than being offered in the auction sale. This Bank draft is in addition to the amount already deposited by Ravinder Kaur towards total sum of Rs.9,10,000/-. The counsel for the respondents, on instructions of Mr. Pawan Verma, Deputy Manager, Punjab Financial Corporation, accepts the bank draft. The Corporation shall complete the remaining formalities in accordance with its policy subsequently. This petition on the statement of the counsel for the parties has rendered infructuous and the same is dismissed as such.” 8. This order accordingly bound down the Corporation towards accepting the bid of Smt. Ravinder Kaur towards the property of the petitioner firm. It is pertinent to mention that in the said writ petition there is not a whisper as to the relationship of Smt. Ravinder Kaur with the promoter of the petitioner company. Infact in ground No.3 it is specifically Civil Writ Petition No.20486 of 2009 -7- **** averred that she is a 3rd party offerer brought by the petitioner company. Relevant pleading reads as under:- “Once vide letters dated 12.2.2001 (Annexures P/2 & P/3), Smt. Ravinder Kaur, third party offerer brought by the petitioner Company, agreed to buy the industrial unit of the petitioner company at a price higher than the highest offer received by the respondent Corporation to buy the same and the said third party offerer even deposited a sum of Rs.73,500/- i.e.10% earnest money then there was no occasion for the respondent Corporation to re-advertise the sale of the industrial unit of the petitioner Company. The said impugned act of the respondent Corporation shows its malafide in selling the unit of the petitioner company to some of its (respondent Corporation) favorite at a throw away price.” 9. Thus, from the above facts, it would be clear that Smt. Ravinder Kaur was initially propped up firstly to get the possession of the property which the Corporation had taken over by paying a paltry amount i.e. 25% of the bid amount of Rs.9,10,000/- which she deposited on 28.9.2001. Thereafter for the convenience of the petitioner company, she disappeared for a period of three years and it was only when the letter dated 28.6.2004 was written to her that the money would be forfeited that she surfaced along with stamp papers for the sale agreement which was then finally got executed on 9.12.2005. This further delay has been sought to be justified by the Corporation on the ground that there was a mistake in the Jamabandi and a letter was issued to the Assistant Collector Grade II, Ludhiana on 11.7.2005. Thus, it would be clear that Smt. Ravinder Kaur or if the cloak is lifted the petitioner company managed to retain the Civil Writ Petition No.20486 of 2009 -8- **** possession on payment of mere 25% of the auction amount and, thus, deprived the Corporation of the balance amount for a period of four years out of which for a period of three years it was apparently with a purpose and for the 4th year, it can be said that it was the fault of the Corporation. 10. Since greed has no limitation and to compound the matter, further the present writ petition now has also been filed seeking further financial benefit in the form that the Corporation was at fault in not getting the sale deed executed for four long years and, therefore, the benefit of deposit of Rs.9,10,000/- should be given from year 2001 and the OTS scheme should be settled with the petitioner company. This conduct of the petitioner company cannot be frowned upon and castigated as it seems that the possession also remained with the petitioner company and their relatives which would be clear from letter dated 23.4.2002 wherein Smt. Ravinder Kaur mentioned that there was machinery belonging to M/s M.Tech. Silk Mill lying in premises. This fact has been verified that M/s M.Tech. Silk Mill is the sister concern of the petitioner company. The Corporation had to make efforts to shift the machinery from the said premises to some other place in order to give formal possession to Smt. Ravinder Kaur It also transpires from the affidavit and from the record that Smt. Ravinder Kaur's residential address was the same as the address of the Director of the petitioner company and thereafter when she changed her address, the said address was the city office address of the petitioner company. All these facts have been concealed by the petitioner company while filing the present writ petition and also while filing the earlier writ petition though it was under a bounden duty to disclose all the relationships between the parties and rather in the earlier litigation it had put forward Smt. Ravinder Kaur as a third party. Civil Writ Petition No.20486 of 2009 -9- **** 11. Subsequently an effort has been made to place the account statement on record to show that the Corporation was charging security expenses in the account of the petitioner-company and, therefore, possession was never with the petitioner-company or with Smt. Ravinder Kaur and the security expenses were not charged after the date of sale i.e. 9.12.2005. This fact is of no consequence as to whether the possession remained with which of the parties as we are not adjudicating upon the expenses incurred for security purpose. Thus, from the above facts, it would be clear that the fraud has been attempted to be played upon this Court and an effort has been made to get financial benefits by withholding true facts and seeking double benefit. The Hon'ble Supreme Court in S.P.Chengalvaraya Naidu (Dead) by L.Rs. Vs. Jagannath (dead) by L.Rs. and others (1994) 1 Supreme Court Cases 1, held asunder:- “The Courts of law are meant for imparting justice between the parties. One who comes to the Court, must come with clean hands. We are constrained to say that more often than not, process of the Court is being abused. Property-grabbers, tax evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can summarily thrown out at any stage of the litigation.” 12. Similarly in Ramrameshwari Devi and others Vs. Nirmala Devi and others (2011) 8 Supreme Court Cases 249, the Hon'ble Supreme Court has laid down general principles regarding the conduct of the parties and as how interim orders are obtained from Court on the basis Civil Writ Petition No.20486 of 2009 -10- **** of false pleadings and costs to be imposed in such cases. Relevant portion is reproduced below:- “43. We have carefully examined the written submissions of the learned amicus curiae and the learned counsel for the parties. We are clearly of the view that unless we ensure that wrongdoers are denied profit or undue benefit from the frivolous litigation, it would be difficult to control frivolous and uncalled for litigations. In order to curb uncalled for and frivolous litigation, the courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that court's otherwise scarce and valuable time is consumed or more appropriately, wasted in a large number of uncalled for cases. xxxx xxxx xxxx 54. While imposing costs we have to take into consideration pragmatic realities and be realistic as to what the defendants or the respondents had to actually incur in contesting the litigation before different courts. We have to also broadly take into consideration the prevalent fee structure of the lawyers and other miscellaneous expenses which have to be incurred towards drafting and filing of the counter-affidavit, miscellaneous charges towards typing, photocopying, court fee etc. 55. The other factor which should not be forgotten while imposing costs is for how long the defendants or respondents were compelled to contest and defend the litigation in various courts. The appellants in the instant case have harassed the Civil Writ Petition No.20486 of 2009 -11- **** respondents to the hilt for four decades in a totally frivolous and dishonest litigation in various courts. The appellants have also wasted judicial time of the various courts for the last 40 years.” 13. It is also a matter of great regret that the Corporation has not bothered to closely examine the relationship inter-se the parties and has led the things drift so far which would not have occurred if their staff had been more vigilant. In such facts and circumstances, the present writ petition is dismissed as the petitioner company has not come to the Court with clean hands and has rendered itself liable to pay exemplary costs which are assessed at Rs.50,000/-. The costs be deposited with High Court Legal Aid Committee within a period of one month. In case the said amount is not deposited within the stipulated period, the Corporation shall ensure that the amount is recovered as arrears of land revenue and deposit the same with the High Court Legal Aid Committee. (G.S.SANDHAWALIA) Judge December 06, 2011 (HEMANT GUPTA) Pka Judge