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2009 (2) GCD 1371 (Guj) (DB)
Hon’ble Mr. Chief Justice K.S. Radhakrishnan &
Hon’ble Mr. Justice Akil Kureshi
Lalitkumar Jivabhai Thakkar & Anr.
Versus
State Bank of India & Ors.
Letters Patent Appeal No. 218 of 20091—Decided on 30/03/20092
Recovery of Debts Due to Bank and Financial Institutions Act, 1993 — Section 19(25) — Prevent abuse of it’s process or to secure the ends of justice — Power of — Jurisdiction — Invoking of by third party — Scope of — Finding as to — Court held, that Tribunal is empowered to make such orders and issue such directions so that process of the Tribunal be not abused — Statute has not interdicted third parties to bring to the knowledge of Tribunal that it’s process is being abused and there is no stipulation in the Act that such powers can only be invoked at the instance of the parties to the proceedings — Question as to whether there has been an attempt to abuse the process of Tribunal depends upon facts and circumstances of each case — In the case Court found that auction in respect of properties had already taken place on 17.03.2008 and sales were confirmed as early as 23.04.2008 and sale certificates were issued to the auction purchaser and cross-objections were filed by petitioners on 03.03.2008 and 07.03.2008 for vacating the attachment of properties and those objection were ultimately rejected — Thus sale had been confirmed and sale certificates were issued to auction purchasers but auction purchasers have not been made party either before Tribunal or even before Single or before Court — Events indicate that appellants were not vigilant in invoking jurisdiction of the Tribunal — Court held, that third party can invoke the jurisdiction of Court under Section 19(25) but in the case no interference is caused for.
Held :
On facts no reason to set aside the order passed by the Tribunal. Facts clearly indicate that the appellants-petitioners have approached the City Civil Court, Ahmedabad by Civil Suit Nos. 1227 and 1226 of 2007 seeking a permanent injunction restraining the transfer of the properties and also for a declaration that the charge or mortgage created be declared as void and the suits are pending consideration. Further, Court may also notice that auction in respect of both tenements of properties had already taken place on 17.03.2008 and sales were confirmed, as earlier as on 23.04.2008 and sale certificates were issued to the auction purchasers and cross objections were filed by the petitioners on 03.03.2008 and 07.03.2008 for vacating the attachment of the properties and those objections were ultimately rejected.
When a property is sold by public auction in pursuance of an order of the Court, and the bid is accepted and the sale is confirmed by the Court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. So far as the facts of this case are concerned, sale had been confirmed and sale certificates were issued to the auction purchasers but auction purchasers have not been made party either before the Tribunal or even before the Single Judge or before us. Chronology of events also indicate that appellants were not vigilant in invoking the jurisdiction of the Tribunal under Section 19(25) of the RDB Act. [Para 11]
Court, therefore, hold that even though a third party can invoke the power of the Tribunal under Sub-section (25) of Section 19 of the RDB Act, so as to prevent the abuse of the process of the Tribunal and to secure ends of justice, in the facts and circumstances of the case, no case is made out for interference by this Court under Article 227 of the Constitution of India.
[Para 12]
Law Laid Down :
When a property is sold by public auction by Court and sale is confirmed, the purchaser of the sale becomes absolute owner and little vests in purchasers.
K.S. Radhakrishnan, CJ.—Question that is posed for our consideration is whether a third party can invoke the provisions of Sub-section (25) of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 so as to prevent the abuse of the process of the Tribunal and to secure ends of justice.
2. Division Bench of Bombay High Court in Anil Nandkishor Tibrewala & Anr. vs. Jammu and Kashmir Bank Ltd. [2007 (3) BomCR 941] interpreting Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short ‘RDB Act’) held as follows:
“A reading of this provision would indicate that there is a power in the Tribunal to give orders or directions to prevent abuse of its process or to secure the ends of justice. It is open to the Tribunal to lay down its own procedure and it is not hide bound by the procedural provisions of Code of Civil Procedure. At the same time, certain provisions of the Code of Civil Procedure, have been conferred on the Tribunal. The expression “prevent abuse of its process” or to secure the ends of justice in our opinion would be wide enough to cover a case where a financial institution has obtained an order or the certificate pursuant to a mortgage created by the judgment debtor based on a fraudulent document, like for instance the property not belonging to the judgment debtor. If such party comes before the Court and points out to the Court that the mortgage created is sham and/or bogus, the Tribunal to prevent abuse of its process, can assume jurisdiction under Section 19(25) to decide that issue and for that purpose exercise powers conferred under Section 22 of the Act. On a aggrieved person being allowed to participate in the proceedings, it will be open to the Tribunal to review the order or pass such other order to secure the ends of justice. We are, therefore, of the clear view that in those cases where the Recovery Officer cannot go beyond the certificate, a party like the petitioners who claims title in the property or interest in the property can move the Tribunal by invoking jurisdiction of the Tribunal under Section 19(25), and in such cases if a prima facie case is disclosed before the Tribunal, the Tribunal is bound to consider the application so moved and dispose it according to law, after giving an opportunity to all parties before it.”
3. Bombay High Court on the basis of the above reasoning directed the Tribunal to dispose of the application preferred by a person who was not a party to the proceedings before the DRT.
4. Appellants-petitioners approached the Debt Recovery Tribunal, Ahmedabad placing almost identical plea with prayer to entertain their application. Question whether such application is maintainable or not, was sole issue raised before the Tribunal and it held that Civil Misc. Application is not maintainable at law. With regard to the judgment of the Bombay High Court, Tribunal has opined as follows:
“According to me, judgment of the Hon’ble High Court of Bombay is having only persuasive value. The said judgment would not be binding on this Tribunal which falls within the jurisdiction of the Hon’ble High Court of Gujarat. The said judgment of the Hon’ble Bombay High Court is, therefore, required to be over-looked. The Act is special Enactment. The purpose and object of The Act is expeditious adjudication and recovery of debts. If the applications of third parties are entertained and adjudicated, the very purpose and object of The Act would be defeated and frustrated. In short, the Civil Miscellaneous Application is not maintainable in law. As far as merits are concerned, it would not be proper to go into it. It can be safely said that applicants are not remediless. Applicants shall have right to knock the door of Recovery Officer at the time the respondent No.1 would execute the Recovery Certificate. I am fully aware that the scope of the inquiry qua the third party would be very limited before the Recovery Officer. In short,
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