IMPORTANT POINT
Right of redemption and its extinction discussed.

Headnote:(a) Constitution of India – Article 136 – Availability of alternative remedy is not a ground for rejecting a SLP – SLP should also not be rejected merely because it is filed against order permitting withdrawal of writ petition. (Para 14)
        (1999) 3 SCC 115; (1999) 4 SCC 89 – Distinguished impliedly
        (b) Constitution of India – Article 136 – High Court was moved to consider the question whether in view of concluded contact between respondent no. 1 and the appellant, claim of respondent no. 3 to redemption could be considered – High Court not answering the issue allowing redemption and withdrawal of writ petition of the respondent no. 3 – This affected the right of the appellant – SLP is maintainable. (Para 14)
        (c) Transfer of Property Act, 1882 – Section 60 – Appellant not fulfilling all conditions of the contract – Sale of mortgaged property not concluded – Right of respondent no. 3 to redeem the mortgaged property cannot be deemed to have been lost. (Para 15)
        (d) Code of Civil Procedure, 1908 – Section 11 – Res judicata – The issues raised in present appeal, i.e., conclusion of contract between respondent no. 1 and the appellant; and right of redemption of respondent no. 3 were not gone into in the previous SLP – Principle of res judicata or constructive res judicata not applicable. (Para 17)
        (e) Transfer of Property Act, 1882 – Section 60 – Right of redemption is extinguished only on execution of conveyance and registration of transfer of the mortgagor’s interest by registered instrument – Right to redemption is not even extinguished at the expiry of the period. (Paras 20 and 22)
        (1953) SCR 377; (1977) 3 SCC 247; (2004) 7 SCC 151; (1985) 4 SCC 162 – Relied upon
        (f) Constitution of India – Article 226 – Respondent no. 3 praying for direction for redemption of the mortgaged property – High Court directing status quo – On acceptance of right of redemption of respondent no.3 by respondent no. 1, the grievance having been redressed, High Court modifying the order of status quo and permitting withdrawal of the petition by respondent no. 3 – No infirmity. (Paras 27 and 28)
        (g) Constitution of India – Article 129 r/w Order XLVII, Rule-3(C) Supreme Court Rules 1966, and Section 2(b) r/w Section 12, Contempt of Courts Act, 1971 – Supreme Court not passing any order/direction prohibiting the respondent Nos. 3 and 4 from exercising right of redemption nor restraining the respondent No.1 from considering the proposal of the Respondent No.3 to permit it to redeem the disputed Property – Therefore passing of resolutions by the respondent No.1 to permit respondent no. 3 to redeem mortgaged property can hardly be regarded as breach of direction given by the Supreme Court – No case having been made out contempt petition not maintainable. (Paras 30 and 31)
       Facts of the case:
        1. The respondent no. 1, i.e., EDC Ltd. is a Company registered under the Indian Companies Act, 1956. Earlier it was known as the Economic Development Corporation of Goa. It is an investment company in which the State of Goa holds majority shares.
        2. The respondent no. 3 is a Private Limited Company. It is engaged in the business of development/operation of hotel and tourism.
        3. During the years 1994 to 1999, the respondent no. 3 proposed to develop and to start hotel project in the property in revenue Village Arpora, in Taluka Bardez.
        4. The respondent no. 1, i.e. EDC Ltd. granted term loan of Rs.7.00 crores to respondent No. 3 against mortgage of aforesaid hotel property.
        5. Respondent No. 2 has also granted a loan of Rs. 5 crores to the respondent No. 3 against pari pasu charge of the hotel property.
        6. When the respondent no. 3 was not able to repay the loan amount, the respondent no. 1 company initiated coercive action for the recovery of loan amount and attached the property of respondent no. 3 company.
        7. The offer made by the respondent No. 3 for financial restructuring and/or one time settlement by payment of Rs.12.00 crores was rejected by the respondent No. 1 and the respondent No. 2.
        8. The respondent No. 1 accepted the proposal of appellant trust to sell the property in question for a sum of Rs.12.99 crores.
        9. Respondent no. 3 filed a writ petition on the ground that the offer made by the respondent no. 3 through third party i.e. Condor Polymeric for Rs. 14 crores was not being considered by the respondent no. 1 despite the said offer being the higher offer than made by the appellant trust.
        10. While the said petition was pending before the High Court, the appellant had filed an application for intervention and impleadment in the petition on the ground that the property in issue was already agreed to be sold to the appellant trust by the respondent no. 1 and part payment towards it was already made. This ptitio was allowed.
        11. The appellant trust issued cheques to the respondent No. 1, purporting to be in full payment of Rs.12,99,00,000/- as per the terms and conditions of sale.
        12. R.C. Mirchandani and others, who are unit holders in the hotel project of the respondent No. 3, filed Writ Petition No. 124 of 2006 challenging the action of the respondent No. 1 in selling the property to the appellant-trust. Those petitioners offered to pay higher amount than offered by the appellant-trust.
        13. The respondent no. 3 exercised its right of redemption and requested the respondent no. 1 to confirm the exact amount due from the respondent no. 3 payable to the respondent Nos. 1 and 2. Meanwhile, the respondent No. 3 enclosed banker’s cheque of Rs. 25 lakhs stating that the balance amount which was due on the date of attachment of the mortgaged assets would be paid in full on settlement of the amount. The respondent no. 1 informed the respondent no. 3 that, for the purpose of redemption of the mortgaged property, the outstanding dues were Rs.19,22,922.12.
        14. Board of Directors of respondent no.1 decided that the respondent no. 1 would conclude the sale transaction with the appellant-trust and go ahead with the conveyance and delivery of possession in favour of the appellant-trust.
        15. Respondent no. 3 filed writ petition wherein the High Court held that the order of status quo passed by the High Court shall not come in the way of respondent nos. 1 and 2 in considering the proposal of respondent no.3.
        16. Thereafter, the respondent no. 1 passed a resolution on April 8, 2008, accepting the offer of the respondent no. 3 to redeem the mortgage.
        17. High Court permitted the respondent No. 3 to withdraw the Writ Petition. The High Court also dismissed the Writ Petition No. 124 of 2006 preferred by Mirchandani as infructuous.
       Finding of the Court:
        Right to redeem the mortgage property which was available to the respondent No.3 had never extinguished at all.
       Result : Appeals and contempt petition dismissed.

JUDGMENT

J.M. Panchal, J. —

1. Leave is granted in each Special Leave Petition.

2. The appeal arising from Special Leave Petition (C) No. 10334 of 2008 is directed against order dated April 07, 2008 passed by the High Court of Bombay at Goa in Misc. Civil Application No. 165 of 2008 which was filed in Writ Petition No. 601 of 2006 by which it is clarified that the order of status quo passed by the High Court vide order dated December 18, 2006 shall not come in the way of EDC Ltd., i.e., the respondent no. 1 Company herein and the State Bank of India, i.e., the respondent No. 2 herein in considering the proposal of the respondent no. 3 Company who is mortgagor and the petitioner in Writ Petition No. 601 of 2006. The appeal arising from SLP (C) No. 10335 of 2008 is directed against order dated April 9, 2008 passed by the Division Bench of the High Court of Bombay at Goa in Writ Petition No. 601 of 2006 by which the resolution passed by the respondent no. 1 EDC Ltd. on April 8, 2008 had resolved to accept the proposal of respondent no. 3 the Falcon Retreat Pvt. Ltd. for redemption of mortgage and affidavit tendered by the State Bank of India, i.e., the respondent No. 2, stating that the State Bank of India has accepted the proposal of M/s. Falcon Retreat Pvt. Ltd. for redemption of mortgage on payment of Rs.12.87 crores to EDC Ltd. and Rs.9.18 Crores to the State Bank of India, are noticed and in view of the said resolution as well as the affidavit of the State Bank of India, the respondent no. 3, who was the original petitioner, is granted leave to withdraw the petition.

3. This Court proposes to refer to certain relevant facts, which are as under:

The respondent no. 1, i.e., EDC Ltd. is a Company registered under the Indian Companies Act, 1956. Earlier it was known as the Economic Development Corporation of Goa. It is an investment company in which the State of Goa holds majority shares. The main objects of the respondent no. 1 Company, as per its Memorandum of Association, amongst others, are providing financial assistance to the industrial enterprises and enterprises carrying on other economic activities whether for starting, running, expanding, modernizing etc. and to aid, assist, initiate, promote, expedite and accelerate the economic development of the State in various spheres. The respondent no. 3 is a Private Limited Company. It is also incorporated under the provisions of the Companies Act, 1956. The respondent No. 3 company is engaged inter alia in the business of development/operation of hotel and tourism. During the years 1994 to 1999, the respondent no. 3 proposed to develop and to start hotel project in the property admeasuring approximately 28000 sq. mtrs. of Survey Nos. 142/1 and 142/1 of Revenue Village Arpora, in Taluka Bardez. For the purpose of implementing the said hotel project, the respondent no. 1 company i.e. EDC Ltd. granted term loan of Rs.7.00 crores to respondent No. 3 against mortgage of aforesaid hotel property vide agreement dated February 8, 1999. Respondent No. 2 has also granted a loan of Rs. 5 crores to the respondent No. 3 against pari pasu charge of the hotel property.

4. The record indicates that about 80 per cent of the project was completed by the middle of the year 2001 but subsequently because of global recession in the tourism and real estate business, the development of the project was severely affected and project implementation was halted. In view of this hurdle, the repayment of the loan amount became difficult resulting in arrears of installments of loan with mounting interest liability.

5. When the respondent no. 3 was not able to repay the loan amount, the respondent no. 1 company initiated coercive action for the recovery of loan amount and attached the property of respondent no. 3 company on July 15, 2003 under Section 29 of State Finance Corporation Act, 1951. On the request of the respondent No. 3 that it would be able to sustain the adverse market conditions and convert th

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2011 Supreme(SC) 504

IMPORTANT POINT Right of redemption and its extinction discussed.

Cases Referred (6)

IMPORTANT POINT
Right of redemption and its extinction discussed.