Sadashiv Prasad Singh vs Harendar Singh & Ors

1. On 11.9.1989, The Allahabad Bank (hereinafter referred to as ‘the Bank’) sanctioned a loan of Rs.12.70 lac to M/s. Amar Timber Works, a partnership firm having three partners, Jagmohan Singh, Payam Shoghi and Dev Kumar Sinha. The above loan was sanctioned to M/s. Amar Timber Works, after its partners had mortgaged certain properties to secure the loan amount. Since the loan amount was not repaid in compliance with the commitment made by M/s. Amar Timber Works, nine years later, in 1998, the Bank preferred Original Application No.107 of 1998 before the Debt Recovery Tribunal for the recovery of the Bank’s dues. The above Original Application was allowed on 21.11.2000. Accordingly, a direction was issued for the recovery of Rs.75,75,564/- from M/s. Amar Timber Works. For the execution of the order passed by the Debt Recovery Tribunal, the Bank initiated recovery proceedings on 28.11.2000. During the pendency of the recovery proceedings, Jagmohan Singh, one of the partners of M/s. Amar Timber Works, died (on 27.1.2004). On 16.4.2004, the Recovery Officer attached plot No.722, located at Exhibition Road, P.S. Gandhi Maidan, Patna (hereinafter referred to as ‘the property’) measuring 1298 sq.ft. It would be pertinent to mention that the aforesaid plot was in the ownership of Jagmohan Singh, one of the partners in M/s. Amar Timber Works.

2. On 10.6.2004, Harender Singh, brother of Jagmohan Singh, filed an objection petition before the Recovery Officer alleging, that the attached property did not belong to the judgment debtors, but had been purchased by him from his brother Jagmohan Singh, by executing an agreement of sale dated 10.1.1991, which was duly notarized though not registered. It would be relevant to mention, that Harender Singh pursued the objection petition filed by him before the Recovery Officer till 26.10.2005, but chose to abandon the proceedings thereafter. The order passed by the Recovery officer when the Objector was represented for the last time on 26.10.2005 is being extracted below:

3. The recovery proceedings referred to above remained pending for a further period of more than two years. Finally, the Recovery Officer passed an order dated 5.5.2008, for the sale of the property by way of public auction on 4.7.2008. The Recovery Officer fixed Rs.12.92 lacs as the reserve price, and also fixed 28.8.2008 as the date of its auction. At the auction held on 28.8.2008, Sadashiv Prasad Singh, was the highest bidder. Accordingly, the Recovery Officer ordered the sale of the property in his favour on 28.8.2008. On 22.9.2008, the Recovery Officer, in the absence of any objections, confirmed the sale of the property in favour of Sadashiv Prasad Singh. The Recovery Officer also ordered, the handing over of physical possession of the property to the auction purchaser. Sadashiv Prasad Singh, the auction purchaser, took physical possession of the property on 11.3.2009.

5. On 27.11.2009, CWJC No.16485 of 2009 was filed by Harender Singh before the High Court of Judicature at Patna (hereinafter referred to as the ‘High Court’). In the aforesaid writ petition, Harender Singh assailed the order of the Recovery Officer dated 5.5.2008, whereby, the property had been ordered to be sold by public auction in discharge of the debt owed by M/s Amar Timber Works to the Allahabad Bank. Vide its order dated 23.3.2010, the High Court ordered the auction purchaser, i.e. Sadashiv Prasad Singh to be impleaded as a party-respondent. On 27.11.2010, the High Court dismissed the above writ petition by accepting the objections raised on behalf of the Bank, as well as, the auction purchaser by holding as under :

The same shall be sent by registered post with acknowledgment due. Thereafter the appellant shall deposit a further sum of Rs.32 lacs within a period of two years; sum of Rs.16 lacs by 25th March, 2011 and further sum of Rs.16 lacs by 25th March, 2012. Needless to say pro-rate interest shall accrue in favour of the Bank for the said period.

9. Sadashiv Prasad Singh, the auction purchaser, has assailed the impugned order passed by the Division Bench of the High Court in LPA No.844 of 2010 praying for the setting aside of the order by which he has been deprived of the property purchased by him in the public auction held on 28.8.2008, which was subsequently confirmed by the Recovery Officer of the Debt Recovery Tribunal on 23.9.2008. This challenge has been made by Sadashiv Prasad Singh by filing Special Leave Petition (C) No.23000 of 2010. The impugned order passed by the High Court on 17.5.2010, has also been assailed by Harender Singh by preferring Special Leave Petition (C) No.26550 of 2010. The prayer made by Harender Singh is, that order passed by the Division Bench places him in the shoes of the auction purchaser, and as such, he could have only been asked to pay a sum of Rs.17 lacs. Requiring him to pay a further sum of Rs.32 lacs is unsustainable in law, and accordingly, deserved to be set aside.

10. Leave granted in both the Special Leave Petitions.

11. For the narration of facts, we have relied upon the pleadings and the documents appended to Special Leave Petition (C) No.23000 of 2010.

For the reasons recorded hereinabove, we are of the view that the impugned order dated 17.5.2010 passed by the High Court allowing Letters Patent Appeal No.844 of 2010 deserves to be set aside. The same is accordingly set aside. The right of the appellant Sadashiv Prasad Sinha in Plot No.2722, Exhibition Road, P.S. Gandhi Maidan, Patna, measuring 1289 sq.ft. is hereby confirmed. In the above view of the matter, while the appeal preferred by Sadashiv Prasad Sinha stands allowed, the one filed by Harender Singh is hereby dismissed.

January 8, 2014