IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1063 OF 2003 WITH NOTICE OF MOTION NO.407 OF 2005 WITH CHAMBER SUMMONS NO.4 OF 2008 1(a) Mrs.Shivangi D.Shah, adult Indian Inhabitant, 1(b) Master Eshan D.Shah, a minor thro’ mother & natural guardian Mrs.Shivangi D.Shah, both residing at : c/o Ashok Turakia, Flat No.006, Taurus, Jankalyan Nagar, Divya Park, Off.Marve Rd. Malad (West), Mumbai - 400 095. ...Petitioners Versus 1.The Greater Bombay Cooperative Bank Ltd. having its office at GBCB House 89, Off.Bhuleshwar, MUMBAI - 400 002. 2.M/s.Mahaganesh Texpro Ltd., a Company incorporated under the provisions of Companies Act 1956 having its registered office at: 18-J, MIDC, Taloja, Dist. Raigad. 3.Upendra Mahadik, The Special Recovery Officer, Attached to the Greater Bombay Cooperative Bank Ltd. GBCB House, 89, Off.Bhuleshwar, Mumbai-400 002. 4.State of Maharashtra 5.Mehta Trading Co., 68, Swastik Plaza, Vile Parle (West), Mumbai - 400 049. ...Respondents : 2 : AND Oman International Bank SAOG, a Bank constituted and functioning under the laws prevailing in Sultanate of Oman having its branch office at 201, Raheja Centre, Free Press Journal Marg, Nariman Point, Mumbai - 400 021. ...Intervenor ....... Mr.Owen Menezes i/b Mr.Chocko Joseph for Petitioners. Mr.V.R.Walawalkar i/b Mr.S.R.Bhalekar for Respondents 1 & 3. Mr.Milind More, A.G.P. for Respondent No.4. Mr.J.Reis, Sr.Counsel with Mr.Sean Wassooded for Respondent No.5. Ms.Priya Rathod with Mr.Rajeev Pandey i/b Bodhanwalla & Co. for intervenor. ...... CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. JANUARY 11, 2008. JANUARY 11, 2008. JANUARY 11, 2008. ORAL JUDGMENT : ORAL JUDGMENT : ORAL JUDGMENT : 1. Heard Counsel for the parties. 2. Before I deal with the main matter, I shall refer to the derivative proceedings which are also being disposed of by this order. Notice of : 3 : Motion No.407 of 2005 is filed by Oman International Bank SAOG praying for permission to intervene in the present Writ Petition. The said Bank claims that it has charge and claim in respect of the property in question. The Counsel appearing for the said Applicant stated across the Bar that the said Bank has already preferred proceedings before the Debts Recovery Tribunal for recovery of its claim amount. For the nature of proceedings that are pending before this Court, the intervenor cannot ask for relief higher than the one claimed by the Petitioners before this Court. Counsel for the Applicant Bank submits that the Applicant Bank would be satisfied if this Court were to set-aside the sale, in the event it was to be held that there is violation of any Rules. As mentioned earlier, the Applicant Bank has chosen only to be intervenor in the present proceedings and at best, can claim only through the Petitioners. For that reason, I had permitted the Counsel for the Applicant to address the Court who chose to take stand as recorded earlier. 3. Insofar as Chamber Summons No.4 of 2008 is : 4 : concerned, the Petitioners have taken out the said Chamber Summons for permitting amendment so as to allow them to insert Paragraph 27(b) in the Petition on lines mentioned in the Schedule appended to the Chamber Summons. In substance, by this amendment, the Petitioners intend to bring on record facts which would be relevant for considering the ground of challenge in the present Petition, which has been pressed today at the hearing. In the first place, it needs to be mentioned that the Petitioners have already amended the Writ Petition in terms of order dated 17th July 2007 passed below Chamber Summons 175 of 2007 in the present Writ Petition. By that order, the Petitioners have been permitted to amend the Writ Petition, keeping all points open for the Respondents with regard to merits of the said grounds. The amendment sought in the present Chamber Summons is statement of facts relevant to the said grounds as already indicated earlier. In the circumstances, we will proceed on the basis that this amendment is allowed to be carried out. 4. Reverting to the main matter, this : 5 : Petition involves chequered history. It is not necessary to burden this Judgment with all the events that have unfolded from the stage of Petitioners’ executing Bank Guarantees as Directors of the Company to facilitate the Company to avail of loan advance from the Respondent No.1 Bank. It is common ground that the Respondent No.1 Bank is a Cooperative Bank which is entitled to pursue remedy for recovery of its dues as per the provisions of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as ‘the Act’). The Respondent No.1 Bank initiated such proceedings against the principal borrower Company as well as the Petitioners herein and others. The Petitioners were Directors of the said Company when the loan facility was availed. The Petitioners claim to have resigned as Directors. The Competent Authority in the Recovery proceedings overturned the stand taken by the Petitioners that they were not liable to be proceeded for recovery against the principal borrower. On that finding, the Assistant Registrar proceeded to pass order in exercise of powers under Section 101 of the Act on 30th August 2001. That order was carried in Appeal before the : 6 : Divisional Joint Registrar unsuccessfully. The Divisional Joint Registrar was pleased to uphold the order passed by the Assistant Registrar on the basis of which Recovery Certificate came to be issued by order dated 10th December 2001. That order was confirmed in Writ Petition No.26 of 2002 on account of dismissal of the said Writ Petition due to non-compliance of the conditional order. The order passed by the Single Judge in the said Writ Petition was upheld by the Division Bench with some modification. However, even the conditional order of the Division Bench dated 23rd April 2002 in Letters Patent Appeal arising out of Writ Petition No.26 of 2002 was not complied with, for which reason, the same stood dismissed. The fact that the order dated 30th August 2001 passed by the Assistant Registrar became final, has been fairly accepted by the Advocate for the Petitioners. 5. On the basis of the said order, the Special Recovery Officer proceeded to take action in respect of the assets of the Petitioners. In the process, the Special Recovery Officer proceeded to issue order of attachment and sale in respect of : 7 : the assets of the Petitioners. The said properties were then put to sale. The sale in respect of the subject property was confirmed on 29th June 2003 in favour of the highest bidder. The confirmation of sale was subject matter of challenge in Revision filed before the Revisional Authority bearing No.608 of 2003 and the Revisional Authority was pleased to grant order of status-quo. The matter was carried before the Single Judge of this Court by way of Writ Petition No.5244 of 2003 by the Respondent No.1 Bank. The said Writ Petition was allowed by oral Judgment dated October 3, 2003. Against this decision, matter was carried in Appeal by way of Letters Patent Appeal (Stamp) No.3874 of 2003. In the said Appeal, Civil Application No.241 of 2003 was taken out for interim relief. The Division Bench dismissed the said Civil Application on 2nd July 2004 for reasons recorded in its order, amongst others, that the Petitioners did not approach the Court with clean hands. The Division Bench while dismissing the said Civil Application, imposed cost quantified at Rs.25,000/- (Rupees Twenty-five Thousand). It is common ground that the said cost amount has also not been paid by the : 8 : Petitioners so far. What is relevant for our purpose is that the Special Recovery Officer was directed to take necessary steps pursuant to the auction sale, if necessary, with the Police assistance in terms of the said order of the Division Bench. Significantly, the Petitioners have later on withdrawn the Letters Patent Appeal unconditionally. In that sense, even the order of confirmation of sale as passed has become final. Even this position is fairly accepted by the Counsel for the Petitioners. 6. The Petitioners through Counsel, however, submit that inspite of the above position, the Petitioners are entitled to pursue the present Petition as it is open to the Petitioners to argue that on the admitted facts on record, the Petitioners ought to succeed in their challenge-which stand is supported by the legal provision, which has been held to be mandatory. 7. Two points have been raised on behalf of the Petitioners in the context of the limited challenge available to them. The first contention : 9 : is that admittedly, on the date of sale, the highest bidder was required to immediately on the same day deposit 15% of the bid amount. That requirement has not been complied in the present case. It is next contended that as per the provisions of law, the highest bidder in whose favour sale is confirmed was required to pay the balance 85% of the consideration within fifteen days from the date of sale. Even this requirement has not been fulfilled. To buttress this submission, reliance is placed on Rule 107 (11)(g) and (h) which reads thus: "(g) A sum of money equal to 15 per cent of the price of the immovable property shall be deposited by the purchaser in the hands of the Sale Officer at the time of the purchase, and in default of such deposit, the property shall forthwith be re-sold: Provided that, where the applicant is the purchaser and is entitled to set off the purchase money under clause (k) the Sale Officer shall dispense with the requirements of this clause; (h) The remainder of the purchase money and the amount required for the general stamp for the sale certificate shall be paid within fifteen days from the date of sale: Provided that, the time for payment of the : 10 : cost of the stamp may, for good and sufficient reasons, be extended at the discretion of the Recovery Officer up to thirty days from the date of sale: Provided further that, in calculating the amounts to be paid under this clause, the purchaser shall have the advantage of any set off to which he may be entitled under clause (k)." 8. To support the contention that the above requirement is mandatory, reliance is placed on the decision of the Apex Court in the case of Shilpa Shilpa Shilpa Shares and Securities & Ors. vs. National Shares and Securities & Ors. vs. National Shares and Securities & Ors. vs. National Cooperative Bank Ltd. & Ors. reported in 2007 (3) Cooperative Bank Ltd. & Ors. reported in 2007 (3) Cooperative Bank Ltd. & Ors. reported in 2007 (3) Bom.C.R. 790. Bom.C.R. 790. Bom.C.R. 790. Reliance is also placed on the decision of our High Court in the case of Sunil Sunil Sunil Seth & Anr. vs. Niranjan D.Woody & Ors. reported Seth & Anr. vs. Niranjan D.Woody & Ors. reported Seth & Anr. vs. Niranjan D.Woody & Ors. reported in 2007(2) Bom.C.R.430. in 2007(2) Bom.C.R.430. in 2007(2) Bom.C.R.430. 9. For considering the above challenge, it will be apposite to advert to the relevant dates. The date of sale is 29th June 2003. The auction purchaser, however, deposited 15% amount being sum of Rs.24,00,000/- (Rupees Twenty-four Lakhs) on 7th July 2003. The remainder auction price was paid on 16th March 2005. Going by the aforesaid dates, the : 11 : Petitioners would be right in contending that both the requirements under clause (g) as well as under clause (h) of Rule 107 (11) of the Rules which are mandatory, have not been complied. The consequence of non-compliance of requirement of Clause (g) of depositing 15% of the price at the time of the purchase would necessitate resale of the property and the sale cannot be confirmed in favour of defaulting person, highest bidder though. In any case, there appears to be clear non-compliance of clause (h) of Rule 107 (11) of the Rules as the remainder purchase money came to be paid beyond 15 days from the date of sale as was required by that provision. Indeed, the Petitioners are also justified in contending that even if the challenge of the Petitioners to the sale of the properties has been overturned and has become final, that would not preclude the Petitioners to challenge the subsequent events posterior to auction resulting in non-compliance due to failure of the auction purchaser to comply with the requirements, amongst others, of clause (g) and (h) of Rule 107(11). 10. However, having regard to the fact : 12 : situation of the present case, the Petitioners would nevertheless fail in the present proceedings. This is so because the contesting Respondent Nos. 1 and 5 have rightly objected to entertaining any such argument at the instance of the present Petitioners on the ground that the Petitioners had raised same contentions before the Division Bench on the earlier occasion and chose to withdraw the said Appeal without seeking any liberty from the Division Bench to pursue that contention in the present Writ Petition which was pending in this Court at the relevant time i.e. from 2003, filed essentially to challenge the action of issuance of Recovery Certificate against the Petitioners. In the Writ Petition as filed, the Petitioners had prayed for setting aside notices dated 22nd February 2003 and 17th March 2003. It is only during the pendency of the present Petition, the Petitioners have now by way of amendment in terms of order dated 17th July 2007 have asked for further reliefs as pressed before me. It is rightly contended on behalf of the said Respondents that the Petitioners are not entitled for any discretionary relief from this Court in exercise of : 13 : writ jurisdiction, having regard to their consistent past conduct which has been frowned upon by this Court in different proceedings. Essentially, the Respondents, in particular, Respondents 1 and 5 have argued that the Petitioners are precluded from pursuing the contentions now raised in the present Writ Petition as referred to above on account of resjudicata or principles analogous thereto as also on account of conduct of the Petitioners. 11. It is additionally contended on behalf of Respondent No.5 that the Petitioners, at best, ought to have taken up the present contentions by way of appropriate proceedings within 30 days from the date of confirmation of sale as was required in terms of Rule 107 (14) of the Rules, which has not been done. Whereas, the Petitioners filed Misc.Application No.1 of 2006 before the Divisional Joint Registrar and chose to confine the challenge only with regard to issue about area of the suit plot. The contention now raised though available and could have been taken up in the said application, was not raised at all. It is also : 14 : contended on behalf of Respondent No.5 that in view of the direction given by the Division Bench in its order dated 2nd July 2004 to the Special Recovery Officer which direction has been allowed to become final, the Petitioners are precluded from raising any plea, much less, new plea challenging the sale of the suit property on any count. Besides, having regard to requirements under Rule 107 (14), as the Petitioners failed to take liberty from the Division Bench to raise the contention now agitated in the present Petition, are precluded from pursuing the same. 12. Insofar as the fact that the Petitioners had raised this very contention in the Appeal before the Division Bench can be spelt out from the contents of Civil Application No.154 of 2005 filed in Letters Patent Appeal No.125 of 2003 which arose from Writ Petition No.5244 of 2003 filed by the Petitioners. The said Civil Application was filed by the Petitioners. In Paragraph 3 of the said Application, it was specifically urged, as follows: "3. In the circumstances stated herein : 15 : above Appellant is making application before this Hon’ble Court. The sale conducted by Respondent No.2 is null and void for reason stated here under:- a. In a sale conducted on 29.6.2003 Dr.Kulkarni was declared as the highest bidder, under Rule 107(11)(g) purchaser has to deposit 15% at the time of purchase, however Dr.Kulkarni was given 2 days time from 30.6.2003 to deposit 15% of the purchase price, is contrary to Rule 107(11)(g). b. Dr.Kulkarni issued cheque of Rs.22,65,000/- dated 1.7.2003, the said cheque when deposited was dishonoured on 9.7.2003, however prior to dishonour of cheque Respondent No.2 on 7.7.2003 declared Respondent No.4 as successful bidder of the said property, which shows that Respondent No.2 sold said property in collusion with Respondent No.4. The Respondent No.2 ought to have re-sold the said property on default of payment of 15% by Dr.Kulkarni by issuing proclamation for sale and advertising or at least other bidders should have been opportunity to bid. c. Without conducting any resale on dishonour of cheque issued by Dr.Kulkarni, Respondent No.2 declared Respondent no.4 as successful bidder Respondent No.2 ought to have at least given opportunity to other bidders also to take part in the bidding. d. Even assuming without admitting the propriety of the sale of property to the Respondent No.4 on 7.7.03, the Respondent No.4 ought to have to under Rule 107(11)(h) deposited the balance 85% of sale price and amount required to general stamp for sale certificate within 15 days from the date of sale, the said provision is mandatory and in default of payment with the 15 days the Recovery Officer : 16 : after defraying the expenses of the sale ought to have forfeited the amount to the State Government and resold the property by issuing fresh proclamation. In the present case Respondent No.4 did not pay the balance amount till March 2005 i.e. 20 month from the date of sale, on failure of Respondent No.4 to deposit the balance 85% within 15 days Respondent No.2 ought o have resold the said property by issuing fresh proclamation and following the rule prescribed fro the sale of the property under Rule 107(11). e. The sale was postponed for more than seven days from 29.6.2003 to 7.7.2003 therefore under the rule 107(11)(e) Respondent No.2 ought to have issued a fresh proclamation, fresh proclamation can be waived only if defaulter consented to waive it. In the present case defaulter has not consented therefore sale of the said property is contrary to the provision as set out in the Rule 107 therefore ought to be set aside." 13. Besides taking that contention specifically in the said Civil Application, the Petitioners filed written submissions before this Court in Letters Patent Appeal No.125 of 2003. Even in the said written submission, the Petitioners agitated the same contention as can be discerned from Paragraphs V to VII of the written submissions which read thus: : 17 : "V. In auction held on 29.6.2003, one Dr Kulkarni was declared as highest bidder for Rs 1.51 Crore and Respondent No.4 did not take part in auction. Contrary to the provision of Rule 107(11)(g), (The said rule is analogous to Order 21 Rule 84) the said Dr. Kulkarni was given 2 day’s time to deposit 15% of purchase price. This can be reflected in the Panchanama of sale dated 29.6.2003 at page No.38 and English Translation at page No 41 of Civil Application No. 154 of 2005. The supreme court in Manilal Mohanlal V/s Sayed Ahmed (AIR 1954 SC 349) has held that the payment of 25% of purchase money immediately and balance within 15 day is mandatory and upon non-compliance with these provision there is no sale at all. The said Judgment of is marked and annexed as Exhibit "1" at page No.1 of illustration submitted to Hon’ble Court. (The relevant para 11 at page No.351). VI. The cheque issued by said Dr. Kulkarni of Rs.22,65,000/- towards the 15% deposit of purchase price was dishonoured on 9.7.2003, but prior to that on 7.7.2003, Respondent No.4 was declared as successful purchaser, without conducting any auction or inviting bid. This fact is reflected in Panchanama dated 7.7.2003 at page no.43 and page no.45 (English translation). VII. If Respondent No.4 was declared as highest bidder on 7.7.2003, then they ought to have paid balance 85% of the purchase price on or before 22.7.2003, they has failed to deposit the balance amount within 15 days as per Rule 107(11)(h) (which is analogous to Order 21 Rule 85) its mandatory to deposit the balance amount within 15 days. The Supreme Court in Sardara Singh V/s. Sardara Singh [ (1990)4SCC 90] while dealing with matter under Punjab Land Revenue Act, (having similar provision) : 18 : has held that "deposit contained in Sec 85, 86 and 88 of the Act, which are substantially the same as Order XXI Rules 84 and 85 of the Code, are mandatory and failure to comply with either of them render the sale non-est. Once the effect of non-payment of the amount is to render the sale nonexistent, it become the imperative duty of the authority to re-sell the property as the purchaser forfeits all claim to the property for default of payment. Where is no sale in the eye of law, there can be no question of applying for setting aside the sale on the ground of material irregularity "..... ..... "In fact technically speaking in such cases, it may not be necessary to have the sale set aside as in the eye of law there is no sale whatsoever" The said judgment is at page No 8, marked as Exhibit 3 in the illustration submitted. The balance amount in the present matter was paid on 16.3.2005 i.e. more than 20 months after. The Karnataka High Court has held even one day delay in payment of balance amount render sale as null and void. The said judgment is at page No.5 of illustration and marked as Exhibit "2"." 14. The Petitioners filed written submissions on facts in the said Letters Patent Appeal No.125 of 2003. As aforesaid, even in the said written submissions, the relevant issues which are raised in the present Petition were specifically taken, as can be discerned from Paragraphs V to VII thereof. : 19 : 15. The above position is indisputable. What is further relevant to note is that the said Letters Patent Appeal as well as the Civil Application came to be withdrawn in terms of order dated 14th March 2006 passed by the Division Bench which reads thus: "On oral motion made by the learned Advocate for appellant/applicant the appeal and the application are allowed to be withdrawn and stands disposed of as withdrawn. Interim order, if any, stands vacated. There will be no order as to costs." 16. With the unconditional withdrawal of the abovesaid Letters Patent Appeal and the Civil Application filed therein, in which proceedings, similar contention was raised, it is too late in the day for the Petitioners to agitate the same issue in the present Writ Petition. It would have been a different matter if the Petitioners were to seek liberty to raise those contentions afresh in the present Writ Petition, which is lacking in the present case. I have therefore no hesitation in taking the view that on this count alone, the Petitioners ought to fail. : 20 : 17. The Respondents have specifically taken this objection not only by way of reply affidavit but also reiterated the same at the time of arguments. I have therefore no hesitation in taking the view that the Petitioners cannot be heard on the limited questions now sought to be raised in the present Writ Petition. 18. I am also in agreement with the argument of the Respondents, in particular, Respondent Nos.1 and 5 that the Petitioners do not deserve any indulgence having regard to their conduct, especially taken note of on more than one occasion by this Court in Writ Petition No.5244 of 2003 decided on 3rd October 2003. Clear finding has been recorded about the conduct of the Petitioners having resorted to abuse of process of law.