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2019 Supreme(Del) 792
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIPIN SANGHI, REKHA PALLI, JJ.
Manju Jain and Another - Appellant
Versus
Bank of Baroda and Others - Respondent
Writ Petition (Civil) No. 8819 of 2014; Civil Miscellaneous No. 52616 of 2018
Decided On : 01-04-2019
Advocate Appeared:
Sanjiv Kakra, Adv., Sumehar Bajaj, Adv., Arun Aggarwal, Adv.
The central legal point established in the judgment is that a fraudulent transaction, in violation of the Transfer of Property Act, vitiates the standing of the petitioners to challenge the attachment of the property.
Headnote:
FRAUD - Property Dispute - Transfer of Property Act, 1882, Section 53 - Recovery of Debts due to Banks and Financial Institutions Act, 1993, Order 21 - The court discussed the fraudulent sale deed executed in favor of the petitioner, contrary to the resolution passed by the company to create a mortgage in favor of the bank. The court found the transaction to be a sham and vitiated by fraud, and held that the petitioners had no standing to prefer the petition.
Fact of the Case:
The petitioners challenged the order of the Debt Recovery Appellate Tribunal, Delhi, which upheld the rejection of their objections to the attachment of a property purportedly owned by them. The property was initially mortgaged to a bank, and a fraudulent sale deed was executed in favor of the petitioner, contrary to the company's resolution to create a mortgage in favor of the bank.
Finding of the Court:
The court found the transaction to be a sham and vitiated by fraud, and held that the petitioners had no standing to prefer the petition.
Issues: Validity of the sale deed, standing of the petitioners to challenge the attachment of the property, and the fraudulent nature of the transaction.
Ratio Decidendi: The court held that the transaction was fraudulent and in violation of Section 53 of the Transfer of Property Act, and the petitioners had no standing to challenge the attachment.
Final Decision: The writ petition was dismissed, and the interim orders were vacated.
VIPIN SANGHI, J.
1. Vide the present petition under Articles 226 and 227 of the Constitution of India, the petitioners assail the order dated 06.08.2014 passed by the Debt Recovery Appellate Tribunal, Delhi (DRAT) in Appeal No.16/2011, which was filed by the petitioners impugning the order dated 22.12.2010 passed by the Debt Recovery Tribunal-I (DRT) in Appeal Nos.32/2006 and 08/2008. By way of the aforesaid order dated 22.12.2010, the DRT had dismissed the petitioner's appeals challenging the rejection by the Recovery Officer of their objections to the attachment of the property purportedly owned by them.
2. The property in question, which is situated in Faridabad, was admittedly owned by M/s Jamuna Properties Pvt. Ltd., a company which has been arrayed as respondent no.2 in this writ petition. M/s Jamuna Properties Pvt. Ltd. mortgaged the said property on 21.02.1984 by a registered Mortgage Deed in favour of Traders Bank Limited, which subsequently merged with the respondent No.1 i.e. Bank of Baroda. The said mortgage was created in respect of loan advanced to M/s Maninder Construction.
3. On 01.07.1988, the owner of the property, i.e., M/s Jamuna Properties Pvt. Ltd., passed the following Resolution:-
"EXCERPTS OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS HELD ON 01.07.1988 AT ITS REGISTERED OFFICE 7A, RAJPUR ROAD, DELHI -110 054.
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PURSUANT TO THE AMALGAMATION OF THE ERSTWHILE TRADERS BANK LTD. WITH BANK OF BARODA, IN CONNECTION WITH THE OUTSTANDING IN THE FOLLOWING ACCOUNTS and at the request of the said Company, we are to stand as guarantor and to create equitable mortgage in respect of our property 7.25 acres (58 kanals of rocky land) situated in Moza Mewala Maharajpur, Tehsil Ballabgarh), Distt.-Faridabad bearing khata No.379/572 of the Jamabandhi 73-74 and 6 bighas (58 kanals of rocky land) situated in Mosa Mewala Maharajpur, Tehsil Ballabgarh, Distt. Faridabad, bearing khata No.379/572 of the Jambandhi 73-74.
S.No.
Branch advance located
Name of the borrower
Nature of facility
Amount outstanding
Rs.(lacs)
01.
Civil Lines Jallandhar
P.S. Jain Motor Co. (PB) Ltd.
C/C Limit
70.08
02.
-do-
V.K. Automobiles
-do-
43.97
03.
G Block Con. Cir. N. Delhi
Manindra Construction Pvt. Ltd.
-do-
6.15
04.
-do-
Raja Ram Bhasin & Co.
-do-
4.96
05.
Rohtak (Haryana)
Balwant Kumar Jain
H.P.
0.65
06.
-do-
Pawan Kumar Jain
-do-
0.36
07.
-do-
Jaswant Rai Jain
-do-
0.55
08.
-do-
Basant Kumar Goyal
-do-
0.17
126.89
to secure the outstanding of the said Bank.
The Board was also informed that the mortgage has already been created on 21.02.1984.
After noting the above it is unanimously resolved:
1. That the Company be and are hereby authorised to stand guarantor to secure the loans and advances of Bank of Baroda to the tune of Rs.126.39 with interest, costs, charges and expenses.
2. That the Board approved the General Form of guarantee and the Company be and are hereby authorized to execute the said documents under the common seal. Common seal of the Company shall be affixed in the presence of Mr.R.K. Jain and countersigned by Mr.Poonam Chand Jain.
3. That any one of the Director, namely Mr.R.K. Jain, Mr.R.C. Jain and Mr.N.C. Jain is hereby authorised to visit Bank of Baroda G, Block, Con. Circus, New Delhi formerly branch of Traders Bank Ltd. and to deposit the title deed in respect of the said property with an intent to create equitable mortgage. The said property is already mortgaged by way legal mortgage, to the said Bank.
4. That any of the aforesaid Directors is also singly authorised to register the Bank's charge on our said property with the Registrar of Companies and a certificate issued in respect thereof by the office of Registrar of Companies shall be deposited with the Bank of Baroda."
4.
