IMPORTANT POINT
Court will not countenanceplaying the system to orchestrate fraud to defeat a secured creditor.

G.S. Patel, J.—There is an error in the order dated 5th February 2018. In paragraph 1, line 2 the words “no party” are to be deleted.

2. There is some something very rotten in the state of our commercial litigation. It is exemplified by this case. If ever there was an example of a commercial fraud and a fraud on the Court, this is it.

3. I have before me a Chamber Summons No.993 of 2017 by one Fullerton India Credit Company Ltd, (“Fullerton”). It seeks to raise an attachment on Flat No. C-12, Cenced Apartment, 318, Union Park, Pali Hill Road, Khar (West), Mumbai 400 052. Fullerton says that it is a secured creditor of the Respondent, Jitenderpal Singh Chadha (“Jitenderpal”). The flat was mortgaged to Fullerton as security for the repayment of a loan of Rs.9,06,85,020/- sanctioned by Fullerton under a sanction letter dated 30th July 2014 in favour of one Tornado Motors Pvt Ltd (“Tornado”). Jitenderpal was the co-borrower. He offered this flat as security. Fullerton found from the society that the flat was already mortgaged to India Bulls Housing Finance Limited on 26th March 2013. Part of the loan amount sanctioned by Fullerton was thus agreed to be paid to India Bulls to release its claim, charge and mortgage on the flat. Fullerton and Jitenderpal executed a facility agreement dated 31st July 2014. As part of this, an amount of Rs.4,06,02,793/- was paid to India Bulls in redemption of the mortgage. A copy of the facility agreement is annexed. India Bulls executed a registered Deed of Reconveyance dated 20th August 2014 with the Respondent. It released its charge, lien and mortgage on the flat. This document is registered. On 20th August 2014, Jitenderpal executed a Deed of Simple Mortgage in favour of Fullerton. This deed was registered on the same date with the Sub- Registrar of Assurances, Andheri.

4. Tornado Motors and Jitenderpal defaulted in repayment of Fullerton’s loan. Fullerton initiated measures under the SARFAESI Act 2002 and in the course of that applied to the Chief Metropolitan Magistrate under Section 14(2) of the SARFAESI Act for an order of forcible possession.

5. It is at this stage that the Respondent, Jitenderpal, appeared and filed an application before the CMM saying there was an Arbitral Award of 6th November 2014 against him in favour of the Claimant, Prithipal Surenderpal Chadha (“Prithipal”). The CMM was told that Prithipal had put that award into execution by Execution Application Nos.765 of 2015 in this Court and obtained an order of 27th April 2016 (KR Shriram J) in Chamber Summons No.1468 of 2015, by which the Court Receiver was appointed of the flat. The CMM was told that the flat was thus in custodia legis with this Court, and therefore no order of possession ought to be passed.

6. But who is this Prithipal Surendersingh Chadha? As it turns out he is none other than Jitenderpal’s father-in-law. As if that is not convenient enough, let us have look at the award itself and what it is that Prithipal says he obtained against his son-in-law. A copy of the so-called award is annexed at Exhibit “F” to the Affidavit in Support of the Chamber Summons at page 66. The Arbitrator was, to my very great dismay, an Advocate of this Court, against whom I propose to issue notice quite separately for his role in what followed. The award is so astonishing and so utterly remarkable in what it set out to do, and actually did, as an entirely pre-planned exercise to perpetrate a fraud on the Court, that I can do better than quote the first two paragraphs of it.

“1. One Mr Prithipal Surindershingh Chadha, adult, Indian habitant, aged 60 years, residing at Pratap Kutir, 16th Cross Road, Khar, Mumbai 400 052 (hereinafter referred as ‘Claimant’ for sake of brevity), by his letters dated 4th November 2014 had forwarded me a copy of the agreement dated 4th November 2014 entered into between him on one hand and Mr Jitenderpal Singh Chadha, Indian habitants, (aged about 35 years), staying at C/12, Cenced Apartment, 318, U