Amiya Prosad
Sanyal & Anr Vs. Bank of Commerce Limited & Ors [1996] INSC 10 (3 January 1996)
Ray,
G.N. (J) Ray, G.N. (J) Majmudar S.B. (J) G.N. Ray.J.
CITATION:
1996 AIR 1762 1996 SCC (7) 167 JT 1996 (1) 148 1996 SCALE (1)171
ACT:
HEAD NOTE:
Leave
granted.
Heard
learned counsel for the Parties.
These
appeals are directed against the order dated May 17, 1991 and June 18,1991
passed by a Division Bench of the Calcutta High Court in Appeal No. 436 of 1986
(Samarendra Nath Dass and Ors. versus Bank of Commerce Limited (in liquidation)
and Appeal No. 437 of 1986 (Smt. Anjali Paul and Ors. versus Bank of Commerce
Limited (in liquidation).
By the
first order dated May 17, 1991 both the said appeals were allowed whereby
certain properties numbering nine out of nineteen properties earlier sold to
the appellants pursuant to the Court's sale in execution proceedings are
excluded from such sale on the tinding that the said nine properties belonged
to the respondent Nos. 2 to 13. By the subsequent order dated June 18, 1991 passed in the said two appeals
leave was granted by the Division Bench to the Official Liquidator to take
steps for setting aside the auction sale by the Court and confirmed in favour
of the appellants in respect of the remaining properties and to reaction the
said properties.
In or
about 1949, the Bank of Commerce Limited (now in liquidation) had filed a suit
against one Bagala Prasad Sanyal Seing Suit No. 1794 of 1949 to recover a sum
of Rs.1,51,939,86 being the amount due for monies lent and advanced on an
overdraft account. The said Bank of Commerce Limited having gone in
liquidation. it is being represented by the Official Liquidator.
On May 20, 1954, the said Suit was decreed in favour
of the Bank for a sum of Rs.1,67,378,36 with interest @ 6% per annum from the
date of decree until realisation together with costs. The Official Receiver of
the Calcutta High Court was appointed Receiver over certain shares of certain
companies which were hypothecated by the judgment debtor Bagala Prasad with the
said Bank and it was directed that the said shares would be sold in the event
that the decretal dues were not paid. The Receiver was also detected to hand
over the sale proceeds of such sale of shares to the Bank with liberty to the
Bank to appropriate the sale proceeds in protanto satisfaction of its claim
under the said degree.
The
said shares were however of defunct companies and as such were not marketable.
No amount therefore could be realised by sale of the said shares. The degree
holder was not aware about the fact that there were immovable properties owned
by the judgment debtor. The Official Liquidator caused enquiries Pursuant to
the orders passed by the Court and it was revealed that the judgment debtor
owned nineteen several properties. After ascertaining the title of the judgment
debtor in respect of the said nineteen properties, the Official Liquidator
proceeded against the immovable properties belonging to the judgment debtor Bagala
Prasad in execution of the said degree and an application was taken out by the
Official Liquidator for appointment of a Receiver over the said immovable
properties and for the sale of the same. It may be noted here that the judgment
debtor Bagala Prasad had died in the meantime and steps were taken to serve the
notice of sale of the immovable properties on the heirs and legal
representatives of the said Bagala Prasad. A notice under Order 21 Rule 22 of
the Code of Civil Procedure was issued by the Master of the Calcutta High Court
for the purpose of sale of the immovable properties requiring the judgment
debtor to show cause why the said degree should not be executed by selling the
said properties.
In the
said execution proceedings, an order was passed on May 20,1970 whereby the Official Receiver of the Calcutta High Court
was appointed as Receiver over the right, title, and interest of the said heirs
and legal representatives of the deceased judgment debtor in respect of
nineteen properties with power to sale the same. Pursuant to the said order
dated May 20, 1979 a notice was also published in
October, 1986 in three leading newspapers of Calcutta for the sale of the said properties. The properties were
then put up for sale in the Court of the Company Judge. A joint offer was given
by the appellants and such offer was found to be the highest and the same was
accepted by the High Court, In compliance with the direction of the High Court,
the appellant also deposited a sum of Rs.1,40,000/- being the 25% of their
offer by October 3,
1987.
Prior
to that in or about November, 1986, two applications were filed, one by the
respondent Nos.2 to 6 and the other by the respondent Nos.7 to 13 claiming
right, title and interest in respect of nine properties out of nineteen
properties advertised in the said notice. A prayer was made in the said
applications for exclusion of the nine properties from the sale notice for
being auctioned. The properties sought to be excluded by the respondent Nos.2
to 13 are properties under Item Nos. 1,2,4,5,8,16,17,18 and 19 of the sale
notice.
The
respondent Nos.2 to 6 claimed for exclusion of the said properties on the
ground that they had purchased the same from the heirs and legal
representatives of the deceased judgment debtor between 6th May to 8th May, 1970.
The
respondent Nos.7 to 13 claimed exclusion of the other properties on the ground
that their vendor Manik Sanyal and others had purchased the said properties
from the heirs and legal representatives of the deceased judgment debtor
between 6th May and 8th May, 1970 and the said respondents thereafter purchased
the said properties from the said Manik Sanyal and others between 14th May and
July 23, 1986. The said two applications filed by the respondent Nos.2 to 6 and
7 to 13 were disposed of by the learned Single Judge of the Calcutta High
Court. No order was passed on the said applications but leave was granted to
the respondents to take appropriate steps in accordance with law against the
Official Liquidator.
Being
aggrieved by such order passed by the learned Single Judge, two appeals were
preferred to the Division Bench of the High Court being appeal Nos. 436 of 1986
and 437 of 1986. It has already been indicated that the orders impugned in
these appeals have been passed by the Division Bench in the said two appeals.
The
learned counsel for the appellants has submitted that the sale transaction made
in favour of the respondent Nos. 2 to 13 were sham and fraudulent transactions.
It is contended that the legal heirs and representatives of the deceased
judgment debtor were fully aware that the said properties were notified for
auction sale in execution of the degree passed against their
predecessor-in-interest, the judgment debtor. But in order to avoid the sale of
those valuable properties, the said legal heirs and representatives of the
judgment debtor entered into a sham transaction with the respondents and their
vendors between 6th May to 8th May, 1970.
Accordingly, such purported sale must be held as null and void. It has been
contended that on May
20,1970 in the
execution proceedings, a Receiver was appointed in respect of the said nineteen
properties.
Accordingly,
the subsequent sale transactions by the vendors. Manik Sanyal and others in favour
of the respondent Nos.7 to 13 between May 1986 to July 1986 must be held
illegal and void. It is contended that the said sale transactions between 6th
May and 8th May, 1970 by the legal heirs of the judgment
debtors had been made with ulterior motive for nullifying the execution
proceedings initiated by the degree holder respondent No.1. It is contended
that the Division Bench unfortunately failed to appreciate the facts and
circumstances of the case which speak for themselves.
Having
ignored the fraud practiced by the Respondents which is patent from the
purported sale transactions. the Court accepted the said sale transactions to
be valid and on such footing excluded the same from being auctioned although
such properties had in fact been already sold in auction to the appellants and
such sale had been confirmed. It has also been contended that the sale of the
said nine properties in auction in favour of the appellants having been effected
by the Company Judge of the High Court, the Division Bench should not have
allowed the appeals filed by the said respondents for assailing such sale. It
has also been contended that the offer of the appellants being highest, the
sale in favour of the appellants ought to have been finalised and the
applications made by the said respondents should have been rejected.
The
learned counsel appearing for the respondent Nos.2 to 13 has, however, refuted
such contentions. It has been submitted that the registered conveyances of nine
properties being item Nos.1,2,4,5,8,16 to 19 in favour of the said respondents
and their vendors by the heirs and legal representatives of the deceased Judgment
debtor are legal and valid. Accordingly, such properties cannot be sold in
auction in execution of the said degree.
The
learned counsel has submitted that admittedly the said registered conveyances
in respect of nine properties in favour of the respondents had been effected
long before any Receiver was appointed in respect of the said properties. By
the order of the Court, Receiver was appointed only on May 20, 1970. But the properties were sold
between 6th May and 8th
May, 1970.
It is
contended by the learned counsel for there respondents that as the title of the
respondents had been perfected earlier namely between 6th May and 8th May,
1970, the Division Bench in the impugned orders had rightly observed that when
the sale deeds were executed by the heirs and the legal representatives of the
deceased judgment debtor, no Receiver had been appointed by the Court. The
Division Bench has also come to a specific finding that the notice of the
application for issuing sale proclamation on which the order of May 20, 1970 was made by the Court had been
served on the heirs and legal representatives of the deceased judgment debtor.
The fact is that the notice stated to have been served was not on the legal
representatives of the judgment debtor who was then dead. The Division Bench
has therefore rightly held that no proper notice had been served on the legal
representatives of the judgment debtor and the sale transactions between the
parties could not be held invalid.
The
learned counsel for the respondents has also submitted that the Division Bench
has also held that the Official Liquidator had also not taken any step to set
aside the sale in respect of the said nine properties in favour of the said
respondents. Accordingly, there was no occasion for the Court to interfere with
such sale made in favour of the respondents Nos.2 to 13.
The
learned counsel has submitted that after noticing the said fact, the Division
Bench has held that unless the sale is set aside in appropriate proceedings by
any party aggrieved by such sale, the Court cannot at that stage interfere with
the said sale.
The
learned counsel has also submitted that in the said suit instituted by the Bank
prayer for sale of certain shares stated to have been hypothecated with the
plaintiff Bank was made. There was no allegation that the said nine properties
had been mortgaged with the Bank. No mortgage degree in respect of the said
nine properties had also been sought for in the suit. The said suit was decreed
in 1954.
The
sale of the said nine properties in favour of the respondents Nos.2 to 13 had
taken place after about sixteen Years from the date of degree between 6th May
and 8th May, 1970. Even after another sixteen Years
namely in 1986, an attempt was made for the first time by the Official
Liquidator to sale the said properties. Such sale, however, in respect of the
said nine properties cannot be held because the respondents Nos.2 to 13 had
already obtained valid title to the said properties on the strength of
registered conveyances executed between 6th and 8th May, 1970.
The
learned counsel for the respondents has also submitted that although the said
respondents had validly obtained title in respect of the said nine properties
even then, pursuant to the direction of the Court, the said respondents made
additional payment of Rs.84,000/- in favour of the degree holder. The learned
counsel has also submitted that the total price of the properties had been
fixed at Rs.5,51,000/- but as the nine properties had already been transferred
to the said respondents, the value of the remaining ten properties was fixed at
Rs.3,17,900/-. Such deduction in the value of the properties after excluding
the value of the said nine properties and there was no occasion for them to
suffer any prejudice by the exclusion of the said nine properties. The learned
counsel has, therefore, submitted that no interference against the impugned
judgment is called for and the appeals should be dismissed.
After
giving our careful consideration to the facts and circumstances of the case and
the submissions made by the learned counsel for the parties, it appears to us
that the degree holder Bank did not claim any mortgage right in respect of the
said nine properties. A simple money degree was obtained by the Bank in 1954.
Initially, the attempt was made to sale certain shares which had been
hypothecated with the Bank for realisation of the decretal amount but such
shares were issued by defunct companies and therefore they had no marketable
title. It was only after a long lapse namely after thirty two Years from the
date of degree an attempt was made by the Official Liquidator in 1986 to sale
the nineteen properties which were owned by the Judgment debtor after
ascertaining the title to such properties. On the prayer of the Official
Liquidator that the decretal amount would be satisfied by the sale of the said
properties belonging to the judgment debtor, the Court appointed a Receiver on
May 20, 1970, in respect of the nineteen properties which were owned by the
judgment debtor. It, however, appears that between 6th and 8th May, 1970, the said properties had been sold
by the heirs and legal representative of the deceased judgment debtor. On the
dates of sale of the said nine properties, there was no legal bar for the said
heirs of the judgment debtor to execute sale deeds in respect of the said
properties. Such properties had not been attached on the cates between 6th May
and 8th May, 1970. The Receiver was appointed only on
May 20, 1970. The Division Bench has also
clearly come to the finding that no notice about the proposed auction sale had
been served on the legal representatives of the deceased judgment debtor
between 6th May and 8th
May, 1970. As a matter
of fact initially a notice was issued in the name of the deceased judgment
debtor. There is also no material warranting a finding that the respondent
Nos.2 to 13 were aware about the steps taken to effect the sale of the
immovable properties of the judgment debtor in execution of the money degree on
the dates when the nine properties had been sold.
The
Division Bench has also not found as a fact that there had been any collusion
between the purchasers of the said nine properties and the heirs and legal
representatives of the deceased judgment debtor. In the aforesaid
circumstances, auction sale of the said nine properties in execution of the
said degree can not be held valid. The Division Bench of the High Court has
also indicated that although the said nine properties had been sold between May
6 and 8, 1970, the Official Liquidator had not taken any step to get the sale
transactions set aside in any appropriate proceedings. In the aforesaid facts
and circumstances of the case. we do not find any reason to interfere with the
impugned decision of the High Court. The appeals therefore fail and are dismissed
with no order as to costs.
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