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2012 (4) Supreme 425
SUPREME COURT OF INDIA
(Gyan Sudha Misra & J. Chelameswar & Altamas Kabir, JJ.)
Nitin Gunwant Shah — Petitioners
versus
Indian Bank & Ors. — Respondents
Special Leave Petition (C) No. 22785 of 2010
Decided on : 10-07-2012
(b) The Recovery of Debts due to Banks and Financial Institutions Act, 1993 – Section 31 – Claim of the Bank transferred by High Court to Tribunal – Claim of the Bank against the borrowers allowed by Tribunal – Tribunal declaring that claim against petitioner not amenable to its jurisdiction – Thus this pert of the claim remained pending before the High Court – Exact legal status of the petitioner vis-à-vis the property in dispute thus remaining undetermined. (Para 26)
(c) The Recovery of Debts due to Banks and Financial Institutions Act, 1993 – Section 25 r/w Order XXI, R. 98, Code of Civil Procedure, 1908 – The third party in possession of the property – Entitled to resist dispossession – But he is not resisting the delivery of possession but hindering the process of sale itself – Such sale cannot be subject to tenancy rights of the third party, alleged trespasser. (Para 37)
Per Altamas Kabir, J.
(d) Code of Civil Procedure, 1908 – Order XXIII, R.1 – Second suit filed after 13 years of dismissal of first suit for default, for same relief – Barred. (Para 2)
Facts of the case:
1. Respondent No. 5 is the wife of respondent No.4 who owned the property in dispute, a flat in Amar Jyoti Cooperative Society, 28-C, Ridge Road, Malabar Hills, Mumbai.
2. The petitioner entered into an agreement of “Leave and License” by which the respondents 4 and 5 agreed to lease the property in dispute to the petitioner.
3. The petitioner was not put in possession of the property in dispute immediately on the execution of the abovementioned agreement.
4. Respondent No. 4 owed certain amounts to the 1st respondent bank on account of an over draft facility for which purpose respondents 4 and 5 executed several documents in favour of the 1st respondent including a deed creating a mortgage over the property in dispute in favour of the 1st respondent Bank.
5. The 1st respondent Bank sought a declaration that the petitioner is a trespasser without any right, title or interest in the disputed property and further prayed for a decree for eviction of the petitioner and obtained an ex parte ad interim order
6. The receiver appointed by the Court took formal possession of property in dispute and allowed the petitioner herein to continue in possession of the property after obtaining an undertaking from him in terms of the order of the Court.
7. The claim of the Bank was allowed by Debts Recovery Tribunal, Mumbai. Sale of the property was proceeded with by the Recovery Officer and objection thereto by petitioner was dismissed. The appeal before the Tribunal was also dismissed.
8. The High Court disposed of the writ thereagainst directing that the petitioner should not be dispossessed till disposal of his application before Court of Small Causes for declaration of monthly tenancy.
Finding of the Court:
This is a typical case of the abuse of the process of the legal system by unscrupulous litigants.
Key Points: - The judgment holds that a second suit for same relief filed long after dismissal of the first suit is barred (Order XXIII, R.1(4)) and discusses barring of the second suit (!) (!) (!) - It explains that eviction of a third party in occupancy under recovery proceedings follows an alternative procedure established by law (Rule 39, Rule 40, Rule 41, Rule 42, Rule 43) and Section 25 of the 1993 Act, with possible civil suit to establish possession rights (!) (!) (!) (!) - It states that tenancy, licensee, or trespasser status must be determined in appropriate proceedings and cannot defeat recovery sale unless adjudicated; the Recovery Officer must examine tenability of objections and may allow suit to resolve rights (!) (!) (!)
JUDGMENT
Chelameswar, J.-Respondent No. 5 is the wife of respondent No.4. Both are said to be the residents of Florida, USA. It is asserted by all the parties to the present proceedings that the property in dispute, a flat in Amar Jyoti Cooperative Society, 28-C, Ridge Road, Malabar Hills, Mumbai, is owned by respondents 4 and 5 (hereinafter referred to as the property in dispute).
2. The petitioner claims that he entered into an agreement dated 6th May, 1989 styled as “Leave and License” Agreement by which the respondents 4 and 5 agreed to lease the property in dispute to the petitioner.
3. Admittedly, the petitioner was not put in possession of the property in dispute immediately on the execution of the abovementioned agreement. As regards the possession of the petitioner, it is stated by the petitioner in Writ Petition No. 1747/2009 from out of which the instant appeal arises as follows:
“At the time of execution of the said Agreement, the Respondent Nos. 4 & 5 informed the Petitioner that they intended to go to U.S.A. for an extended visit and they needed some time to make the necessary arrangements mainly for their furniture and articles. The Respondent Nos. 4 and 5, therefore, requested the Petitioner to allow them some time to do so before they would hand over the physical possession of the said premises. The Petitioner agreed to this, as he was helpless in the matter. Apparently, the Respondent Nos. 4 & 5 delayed their arrangements. Finally on or about 2nd February, 1990, the Petitioner was informed by one Yogesh M. Kamani and one Madhubai A. Gandhi, both the brothers-in- law of the Respondent No.4 that the Respondent Nos. 4 & 5 had removed their articles and the keys which were with them. They suggested that the Petitioner take the keys and take over the possession of the said premises. These two persons were known to the Petitioner and had been introduced to him by the Defendant No.4. They also told Petitioner that they were holding authority from the Respondent Nos. 4 & 5 and that the Respondent Nos. 4 & 5 had left for U.S.A. the previous day but had done so hurriedly and therefore had not contacted the Petitioner before their departure. Accordingly on 23rd February 1990, they gave the keys of the flat to the Petitioner and the Petitioner shifted into the said premises with his family and articles and continues to reside there and be in exclusive possession, enjoyment, use and occupation thereof till today.” (emphasis supplied)
4. It appears from the record that respondent No. 4 owed certain amounts to the 1st respondent bank on account of an over draft facility extended to him and certain other transactions (the details of which are not necessary for the present purpose). It appears that such liabilities were incurred for the benefit of the second respondent, a sole propriety concern owned by the HUF of which the fourth respondent is said to be the karta. It appears that respondents 4 and 5 executed several documents in favour of the 1st respondent in connection with the above transaction including a deed dated 27.09.1989 creating a mortgage over the property in dispute in favour of the 1st respondent Bank.
5. As the amounts due to the Bank under the above mentioned transaction were not repaid, the first respondent filed a suit No.3083/1992 in the High Court of Bombay against respondents 2 to 5 and also the petitioner herein for the recovery of an amount of Rs.33,71,862/- alongwith interest and various other reliefs. The first respondent, inter alia, sought a declaration that the amounts claimed and due to the first respondent are secured by “a valid and subsisting mortgage” of the property in dispute and further prayed that in the event of failure of the respondent 4 and 6 herein to repay the amount due to the first respondent Bank before the date of redemption to be fixed by the Court, “the property in dispute be sold and the sale proceeds be applied towards the satisfaction of the claim of the Bank”.
6. T
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