Case: Western Press Pvt. Ltd Vs. Custodian

2. The relevant facts insofar as they are necessary for a proper appreciation of the issues raised before us, need a brief mention before adverting to the grievance of the parties. M/s Dhanraj Mills Private Ltd., the 5th respondent in this appeal, is a notified party under the Act. On the information furnished by the Income Tax Department that public money belonging to Banks and Financial Institutions have been siphoned out into the accounts of the notified party and which, in turn, came to be successively siphoned to Kenilworth Investment Company Private Ltd., the 6th respondent herein, and from them to CIFCO Properties Private Ltd., CIFCO Fiance Ltd. and M/s Champaklal Investments (Respondent 2, 3, 4 and 6), the Custodian filed Miscellaneous Petition No. 30 of 1995 against all those respondents. When the petition reached the stage of hearing by consent of parties, Minutes of the Order dated 5.7.1995 came to be filed and recorded as per which, among other things Kenilworth Investment Company submitted to a decree in favour of Dhanraj Mills Private Ltd., in a sum of Rs. 11,82,81,316/- with interest @ 20% per annum from 24.4.1992 till date of payment and CIFCO Group of Companies and Champaklal Investment Company Private Ltd., submitted to a decree in favour of the 6th respondent and the decretal debts also stood charged in favour of Dhanraj Mills to receive payment from Kenilworth Investment.3. Clause 7 of the Minutes of the Order dated 5.7.1995 declared the ownership of the 3rd respondent herein, in the premises bearing unit Nos. 2, 3, 6, 7 and 8 at Regent Chambers, Nariman Point, Bombay, in 2nd floor admeasuring 4931 sq. ft. and unit No. 5 in ground floor admeasuring 451 sq. ft. as well as the residential flat bearing unit No. 36 in 3rd respondent of Anita Apartment in Mount Pleasant Road at Malabar Hills admeasuring 575 sq. ft. Clauses 8, 12 and 13 on which both parties fixed their hopes read as follows.The Respondent No. 2 declares that one Western Press Pvt. Ltd. (formerly known as Jayakrishna Pvt. Ltd.) is the owner of the premises admeasuring approximately 2030 sq. ft. and described in Scheduled A-3 hereunder written. The said premises are used and occupied by the Respondent Nos. 2 and 3 along with the said Western Press Pvt. Ltd. The Respondent Nos. 2 and 3 declare and undertake to this Honble Court that they will not claim any right, title or interest in the said premises mentioned in Schedule "A-3". The respondent Nos. 2, 3 and the said Western Press Pvt. Ltd. Undertake to this Honble Court that pending satisfaction of the decree the Respondent Nos. 2, 3 and the said Western Press Pvt. Ltd. will not alienate, encumber or part with possession of or create third party right, title or interest in the said property described in Schedule A-3 hereto or any part thereof, till the decree herein is marked satisfied.12. In the event of the decree herein becoming executable against the Respondent Nos. 1 and 2 or 3, the Respondent No. 2 and the Companies listed in Schedule "C" as well as the said Western Press Pvt. Ltd. and the said employee occupying the flat as per Schedule A-2, undertake to this Honble Court that on sale in execution being held and sanctioned by this Honble Court the Respondent No. 2 and the said companies mentioned in the Schedule B hereto shall hand over the possession of the premises mentioned in Schedule A-1 to A-3 hereto to the purchaser.13. The companies mentioned in the Schedules "B" and "C" and the said employee will within one week from today file separate affidavits declaring that they have no right, title or interest in the premises mentioned in Schedules "A-1 to A-3", hereto as also giving the undertaking to this Honble Court to vacate the premises in their occupation in the event happening as stated above.Pursuant to the above, the Chairman of the appellant-company Mr. Milan Dalal filed on 28.7.1995 an affidavit of undertaking not to alienate, encumber or part with possession of or create third party right, title or interest in the aforesaid property of the appellant-company, till the decree is satisfied and in case of events happening as provided in Clauses 12 and/or 13 of the Minutes of the Order further undertaking to vacate the premises in the occupation of the appellant.5. Since there was a default, the Custodian filed Miscellaneous Application No. 2030 of 1987 by way of execution proceedings against the respondent-companies which suffered a decree (of course not including or specifically initiating against the appellant and their property) and the Special Court passed an order on 24.9.1997 appointing a Receiver to take possession and to dispose of the properties by sale. At this stage, apparently apprehending similar course of proceedings for execution by the Custodian against the properties in question of the appellant, Miscellaneous Application No. 2 of 1999 came to be filed for the reliefs noticed supra. The sum and substance of the claim in this application of the appellant was (a) that the appellant-company is the absolute owner of the properties in question (b) that they have not created any interest in the properties in favour of the 3rd respondent herein, (c) that the undertaking given on behalf of the appellant was wrong and unauthorised, (d) that no such undertaking could have been given by any one else in respect of the property of the appellant unless duly authorised by the company (e) that at no point of time the appellant was a party to any of the proceedings or it was represented by any counsel or was ever been put on notice of the orders to be passed affecting its rights/interest, (f) that the appellant is neither a judgment debtor nor it claims through a judgment debtor, (g) that it neither agreed to give guarantee nor stand as surety for the payment of the debts of the judgment debtor and consequently the properties of the appellant cannot be attached or proceeded against in any manner for realisation of the dues under the decree in question.6. The Special Court after a careful consideration of the respective contentions of parties, held that the Minutes of the order dated 5.7.95 covered also units 3 and 4 belonging to the appellant and it would be open tot he Custodian to prefer an appropriate application for execution, as was done in the case of units 2, 5 to 8 as and when required. The Special Court also held that the said two units of the appellant also constituted an integral part of the compromise. As regards the ground based upon want of registration, the Special Court was of the view that the minutes of the order stood executed from compulsory registration and that in any event in view of Section 41 ofthe Maharashtra Co-operative Societies Act, 1960 it stood also exempted, having regard to the fact that the interest of the appellant in the properties being merely that of a tenant in co-partnership housing society and the right to occupy the flats flowing only from the ownership of shares, the same cannot be considered to be immovable property. Consequently, the application of the appellant came to be dismissed. Hence, this appeal.

Court's reasoning:
In our view, apart from the lack of merits in the challenge made to the well considered order of the Special Court, the appellants case does not merit countenance in our hands for another reason also. The parties before the Special Court having consented and invited the Court to pass the order dated 5.7.95 and obtained benefits by giving undertaking of their own and on behalf of the appellant-company, ought not to be allowed to take shelter under technicalities to overreach the Court, which believed the parties and counsel appearing on their behalf and acted in good faith by accepting the terms suggested by the partiesSo far as the challenge based on the want of registration under Section 17(1)(b) of the Registration Act is concerned, we are of the view that the same is neither genuine nor has any merit whatsoever or capable of being countenanced at our hands. The reasons assigned by the Court below to reject the said plea cannot be considered top be either unjust or untenable. Even otherwise, a careful analysis and consideration of the consent order dated 5.7.95 as also the affidavit of undertaking dated 28.795 made in this case disclose no intention, per se, to purport or operate to create, declare, assign, limit or extinguish in present or in future any right title or interest, whether vested or contingent in the immovable property of the value of Rs. 100 and upwards. On the other hand, there terms as well as the tenure of the above proceedings make clear the dominant intention and purpose of them to be merely an undertaking given by a third party to the proceedings to the Curt to abide by a particular course of action if the judgment-debtor fails to satisfy the decree. Even in cases of such default by the judgment-debtor in this case, the undertaking as well as the consent decree only enables th Custodian to initiate execution proceedings against the properties in question of the appellant-company and it is only in the event of such sale, the question of coming into existence any document which would require compulsory registration under Section 17 of the Act would arise and not at this stage. In substance and effect what has been undertaken to the Court is to preserve the properties intact for being proceeded against in a given eventuality and deliver peaceful possession of the property in the event of such action becoming necessary. Declaration or undertaking conceding such liberty of action cannot be construed to fall under clause (b) of Section 17(1) of Registration Act. It is important to note that both the consent decree as well as the undertaking do not, by itself, envisage the execution of any deed or document also to create, declare, assign, limit or extinguish, whether in present or in future any right, title or interest whether vested or contingent of the value of Rs. 100 or upwards in immovable property. The consent order as also the undertaking given in this case would squarely fall within the exempted category of `any decree or order of the Court envisaged under Section 17(2)(vi) and take it outside the excepted category of cases for the simple reason that it does not deal with, as such, any immovable property envisaged n the manner of clause (b) of Section 17(1) of the Registration Act. In the first instance, the decree/order in question does not comprise any immovable property as such. In any event, in a matter like the one before us where the consent order which came to be passed on agreement as well as the undertaking given in pursuance thereof, was an undertaking to the Court, the words "subject-matter of the suit" need not be confined to the subject-matter of the plaint or subject-matter of the dispute alone, but would include all that which is made to become part of the proceedings in order to finally and effectively settle all the disputes between the parties. Shorn of all these unnecessary controversies now raised, we are also of the view that in a case where an item of property is referred to in an undertaking given to the Court as one which can be proceeded against in the event of the judgment-debtor failing to pay the decretal amount within the stipulated time, the immovable property does to get ipso facto affected or suffer in anyone of the manner envisaged under Section 17(1) so as to require compulsory registration.14. That apart, the provisions contained in Section 145CPC also would ensure to the benefit of the Court as well as the Custodian to proceed against the appellant in enforcement of the undertaking given to the Court and there are no merits in the contentions sought to be urged to the contrary.