IN THE HIGH COURT OF JUDICATURE AT PATNA LPA No.824 of 2010 ANOOP KUMAR S/O LATE MAHESH PRASAD LOHANI M/S BHARTIYA BHAWAN, G.B.ROAD, GAYA, P.S. KOTWALI, DISTT.- GAYA. ------PETITIONER/APPELLANT. Versus 1. BIHAR STATE FINANCIAL CORPORATION, FRASER ROAD, PATNA THROUGH ITS MANAGING DIRECTOR 2. BOARD OF DIRECTORS, BIHAR STATE FINANCIAL CORPORATION, FRASER ROAD, PATNA THROUGH ITS CHAIRMAN 3. MANAGING DIRECTOR, BIHAR STATE FINANCIAL CORPORATION, FRASER ROAD, PATNA 4. BRANCH MANAGER, BIHAR STATE FINANCIAL CORPORATION, GAYA, DISTT.- GAYA 5. ANIL KUMAR S/O LATE MAHESH PRASAD LOHANI M/S BHARTIYA BHAWAN, G.B.ROAD, GAYA, P.S. KOTWALI, DISTT.- GAYA 6. ALOK KUMAR S/O LATE MAHESH PRASAD LOHANI M/S BHARTIYA BHAWAN, G.B.ROAD, GAYA, P.S. KOTWALI, DISTT.- GAYA 7. KEDAR NATH LOHANI S/O LATE MAHESH PRASAD LOHANI M/S BHARTIYA BHAWAN, G.B.ROAD, GAYA, P.S. KOTWALI, DISTT.- GAYA. --------RESPONDENTS/RESPONDENTS. ----------- PRESENT- THE HON’BLE THE CHIEF JUSTICE THE HON’BLE MR. JUSTICE MIHIR KUMAR JHA. ORDER (20.05.2010) As per Mihir Kumr Jha, J. Heard counsel for the parties. (2)In this intra-Court appeal the appellant writ- 2 petitioner has assailed the order dated 15.4.2010 passed by the learned Single Judge in C.W.J.C. No.5900 of 2010, whereby and whereunder, his prayer for setting aside the same by the Bihar State Financial Corporation in exercise of its power under section 29 of the State Financial Corporation Act (hereinafter referred to as „the Act‟) has been rejected. (3)Mr. Mrigank Mauli, learned counsel appearing on behalf of the appellant submits that mortgaged property deed under sale is ancestor property of the appellant writ-petitioner which he has inherited along with his three brothers and therefore simply because his deceased mother was guarantor of the loan taken by the partnership firm of which his another brother, namely, Kedar Nath Lohani was a partner, could not have given authority to the Corporation to put the ancestors house of the appellant writ-petitioner on sale. In this context he has referred to the judgment of the Apex Court in the case of „Karnataka State Financial Corporation Vs. N. Narasimahaiah & Ors’ reported in AIR 2008 SC 1797. 3 (4)Par contra, Mr. P.K. Shahi, learned Advocate General appearing on behalf of the Financial Corporation has submitted that this is second attempt on the part of the promoter to disturb the same, inasmuch as, earlier elder brother, partner of the firm, had filed a writ petition, C.W.J.C. No.3164 of 2008, wherein order of the learned Single Judge dated 3.3.2008 for setting aside of the same having been allowed and the same has been reversed by the Division Bench by order dated 22.3.2010 in L.P.A. No.272 of 2010. He would also submit that the judgment in the case of Narasimahaiah (Supra) would not be applicable, inasmuch as, loan wad advanced to the partnership firm of M/S Kedar Nath lohani which had two partners, namely, Shushila Devi and Kedar Nath Lohani. He has also produced before us a letter of hypothecation of the tangible movable property to secure loan which goes to show that the property hypothecated was a property of the partnership firm of M/S Kedar Nath Lohani and the two brothers have jointly executed an agreement on 6th of September, 1998 wherein an equitable mortgage was created by them in respect of all 4 the buildings and structures as well as the plants and machinery to the B.S.F.C. The learned Advocate General therefore has contended that not only the two partners were guarantor rather they had taken loan and both of them pledged the land and house in question and therefore judgment of the Apex Court will have no application to the facts of the present case. (5)In our considered opinion, the appellant writ-petitioner seems to be a person who had made gallant effort to snatch the order from this Court by making a false statement in paragraph 7 of the writ application which reads as follows:- “That upon inquiry the petitioner came to know that one of his brother that respondent no.7 had taken loan from the respondent corporation in favour of his firm M/S Kedar Nath Lohani and as collateral his mother Late Sushila Devi has mortgage the house in favour of Bihar State Financial Corporation without the knowledge of the other legal heirs of Late Mahesh Prasad Lohani who had actually constructed the house and to which the petitioner along with respondent nos. 5, 6 and 7 had succeeded to after the death of their father Late Mahesh 5 Prasad Lohani.” (6)As noted above and is clear borne out from the agreement and deed of hypothecation that both Kedar Nath Lohani and Shushila Devi were partners of the firm and they had pledged their house and property in Schedule-A to the agreement dated 6.9.1988 in which M/S Kedar Nath Lohani through its parner Smt. Sushila Devi and Kedar Nath Lohani were the first party and the Bihar State Financial Corporation were the second party. Relevant portion of the agreement reads as follows:- “Whereas on 18.8.88 the First Party deposited original title deed of the land (free-hold/lease hold) with buildings constructed or to be constructed thereon in favour of the Second party by way of Equitable Mortagage and the same were entered in the Register of Equitable mortgage4 by the Second Party on 23.8.88 in respect of the property mentioned in Schedule „A‟ and „B‟. And whereas the First party gave a letter showing memorandum of deposit of title deed in question in favour of the second party by which Equitable Mortgage by deposit of original title deed was granted. And whereas by a letter of 6 hypothecation dated 6.9.88 the First Party has pledged and hypothecated all the plant and machinery brought or to be brought as mentioned in Schedule „C‟. And whereas this agreement is purely the record of already completed transaction made between the parties on 18.8.88 when the First Party deposited the original title with the Second Party for creating equitable Mortgage by deposit of title deed.” SCHEDULE „A‟ Free hold land by way of collatrial security situated at Mauza G.B. Road, thana No.6 Khata No.404 (2) Plot No.11439 and 11440 (Old) =567 (new) Ward No.2 holding No.41 Area 38‟x33‟. Butted and bounded as follows: North: M.S. Lane. South: House of Kanhai Sao and Ganpat Sao. East: House of Baijnath Pd. And Chotan Lal. West: Kameshwar Pd. Agrawal. SCHEDULE „B‟ Details of Building. All buildings constructed or to be constructed on the plot of land mentioned in Schedule „A‟. SCHEDULE „C‟ Details of Plant & Machinary. 7 All plant and machinery purchased and installed or to be purchased and installed on the plot of land and building mentioned in Schedule „A‟ and „B‟ above. WITNESS WHEREOF The First Party to these presents have hereunto set their hands and signed the day, months and year first above written. WITNESSES. 1.Shiv nath 1.Sushila devi MIthapur (Patna) 6.9.88 2.Arun Kumar 2.Kedar Nath Lohani. 6.9.88 6.9.88 B.S.F.C. Patna. (7)From the aforementioned document produced by the learned Advocate General who representing the Corporation, it becomes more than clear that the appellant writ-petitioner had knowingly described his mother as collateral and his brother as principal defector. Such dubious practice of the appellant writ-petitioner has not only to be deprecated but has to be dealt with seriously by this Court in order to discourage the litigants who want to cut loose in the judicial process of this Court. (8)As a matter of fact, the issue with regard to 8 the same action of sale of the property in question had already been decided by the Division Bench of this court in the order dated 22.3.2010 in L.P.A. No.277 of 2008 (Bihar State Financial Corporation & Ors. Vs. Kedar Nath Lohani) wherein the writ petition filed by him was dismissed by recording that the mortgaged house had already been sold for a sum of Rupees 28 lacs in favour of one Smt. Shusma Sinha, respondent no.2 of L.P.A. No.277 of 2008. (9)Thus, for the reasons recorded in L.P.A. No.277 of 2008 we would hold that the present appeal also is fit to be dismissed. (10)In view of the fact that we have found both Kedar Nath Lohani and mother of the appellant writ-petitioner and also mother of Kedar Nath Lohani to be the principal loanee by virtue of being two partners had themselves hypothecated and mortgaged the house in question, being claimant by the appellant writ- petitioner by way of his inheritance after death of his mother Shushila Devi, there would be no need to dwell upon the judgment of the Apex Court in the case of 9 Narasimahaiah (Supra), inasmuch as, from reading of the said judgment it becomes clear that recourse of section 31 of the Act would be applicable only as against the guarantor/surety, inasmuch as, it is the only surety or guarantor whose property cannot be put to an auction sale under section 29 of the Act. (11)Thus, in view of our factual analysis based on the appreciation of agreement executed by mother of the appellant writ-petitioner that she herself in the capacity of a partner of the firm M/S Kedar Nath Lohani was a principal debtor along with partner Mr. Kedar Nath Lohani, would leave us with no option but to hold that even the reliance placed by Mr. Mrigank Mauli, learned counsel for the appellant writ-petitioner in the aforementioned judgment was based on the same erroneous impression which he had carried had also sought to impose upon us that the mother of the appellant writ-petitioner was not a principal debtor but only collateral by way of surety or guarantor to the loan though that is not the case as has been held above. (12)We, therefore, find no merit in this appeal 10 and the same is accordingly dismissed. (13)Though, at one stage we had intended to impose heavy cost on the appellant writ-petitioner for making misleading statements, but then we would refrain from doing so. (Dipak Misra, C.J.) (Mihir Kumar Jha, J.) Patna High Court. The 20th May, 2010. Abhay Kumar/NAFR