Western
Press Pvt Ltd., Mumbai Vs. The Custodian & Ors [2000] INSC 620 (6 December
2000)
B.N.Kripal,
Doraswamyy Raju, Brijesh Kumar
Raju,
J.
L.I.T.J
The appellant before us was the unsuccessful applicant in Miscellaneous
Application No.2 of 1999 before the Special Court (Trial of offences relating to transactions in securities)
at Bombay (called for convenience as the Special Court). The appeal has been filed under
Section 10 of the Special Court (Trial of offences relating to transactions in
securities) Act, 1992 (hereinafter referred to as the Act) against the order of
the Special Court dated 16.2.2000, whereunder the relief sought to set aside
the Minutes of the Order dated 5.7.1995 in Miscellaneous Petition No.30 of 1995
and the Order dated 24.9.1997 in Miscellaneous Application No. 280 of 1997
earlier passed by the Special Court insofar as it related to the appellant and
the premises of the appellant situated at Regent Chambers, Nariman Point,
Bombay-400 021, on 2nd floor bearing unit Nos. 3 & 4 admeasuring
approximately 2030 sq. ft. came to be rejected.
The
relevant facts insofar as they are necessary for a proper appreciation of the
issues raised before us, need a brief mention before adverting to the grievance
of the parties. M/s Dhanraj Mills Private Ltd., the 5th respondent in this
appeal, is a notified party under the Act. On the information furnished by the
Income Tax Department that public money belonging to Banks and Financial
Institutions have been siphoned out into the accounts of the notified party and
which, in turn, came to be successively siphoned to Kenilworth Investment
Company Private Ltd., the 6th respondent herein, and from them to CIFCO
Properties Private Ltd., CIFCO Finance Ltd. and M/s Champaklal Investments
(Respondents 2, 3, 4 & 6), the Custodian filed Miscellaneous Petition No.
30 of 1995 against all those respondents.
When
the petition reached the stage of hearing by consent of parties, Minutes of the
Order dated 5.7.1995 came to be filed and recorded as per which, among other
things Kenilworth Investment Company submitted to a decree in favour of Dhanraj
Mills Private Ltd., in a sum of Rs.11,82,81,316/- with interest @ 20% per annum
from 24.4.92 till date of payment and CIFCO Group of Companies and Champaklal
Investment Company Private Ltd., submitted to a decree in favour of the 6th
respondent and the decretal debts also stood charged in favour of Dhanraj Mills
to receive payment from Kenilworth Investment.
Clause
7 of the Minutes of the Order dated 5.7.95 declared the ownership of the 3rd
respondent herein, in the premises bearing unit Nos. 2, 5, 6, 7 and 8 at Regent
Chambers, Nariman Point, Bombay, in 2nd floor admeasuring 4931 sq. ft and unit
No.5 in ground floor admeasuring 451 sq. ft. as well as the residential flat
bearing unit No.36 in 3rd floor of Anita Apartment in Mount Pleasant Road at
Malabar Hills admeasuring 575 sq. ft. Clauses 8, 12 and 13 on which both
parties fixed their hopes read as follows:
8. The
Respondent No.2 declares that one Western Press Pvt. Ltd. (formerly known as Jayakrishna
Pvt. Ltd.) is the owner of the premises admeasuring approximately 2030 sq. ft.
and described in Schedule A-3 hereunder written.
The
said premises are used and occupied by the Respondent Nos. 2 and 3 along with
the said Western Press Pvt. Ltd.
The
Respondent Nos. 2 and 3 declare and undertake to this Honble Court that they will not claim any right,
title or interest in the said premises mentioned in Schedule A-3.
The
respondent Nos. 2, 3 and the said Western Press Pvt.
Ltd.
undertake to this Honble Court that pending satisfaction of the decree the
Respondent Nos. 2, 3 and the said Western Press Pvt. Ltd. will not alienate,
encumber or part with possession of or create third party right, title or
interest in the said property described in Schedule A-3 hereto or any part
thereof, till the decree herein is marked satisfied.
12. In
the event of the decree herein becoming executable against the Respondent Nos.1
and 2 or 3, the Respondent No.2 and the Companies listed in Schedule C as well
as the said Western Press Pvt. Ltd. and the said employee occupying the flat as
per Schedule A-2, undertake to this Honble Court that on sale in execution
being held and sanctioned by this Honble Court the Respondent No.2 and the said
companies mentioned in the Schedule B hereto shall hand over the possession of
the premises mentioned in Schedule A-1 to A-3 hereto to the purchaser.
13.
The companies mentioned in the Schedules B and C and the said employee will
within one week from today file separate affidavits declaring that they have no
right, title or interest in the premises mentioned in Schedules A-1 to A-3,
hereto as also giving the undertaking to this Honble Court to vacate the
premises in their occupation in the event happening as stated above.
Pursuant
to the above, the Chairman of the appellant-company Mr. Milan Dalal filed on
28.7.95 an affidavit of undertaking not to alienate, encumber or part with
possession of or create third party right, title or interest in the aforesaid
property of the appellant- company, till the decree is satisfied and in case of
events happening as provided in Clauses 12 and/or 13 of the Minutes of the
Order further undertaking to vacate the premises in the occupation of the
appellant.
Since
there was a default, the Custodian filed Miscellaneous Application No.280 of
1987 by way of execution proceedings against the respondent-companies which
suffered a decree (of course not including or specifically initiating against
the appellant and their property) and the Special Court passed an order on
24.9.97 appointing a Receiver to take possession and to dispose of the
properties by sale.
At
this stage, apparently apprehending similar course of proceedings for execution
by the Custodian against the properties in question of the appellant,
Miscellaneous Application No.2 of 1999 came to be filed for the reliefs noticed
supra. The sum and substance of the claim in this application of the appellant
was (a) that the appellant- company is the absolute owner of the properties in
question, (b) that they have not created any interest in the properties in favour
of the 3rd respondent herein, (c) that the undertaking given on behalf of the
appellant was wrong and unauthorised, (d) that no such undertaking could have
been given by any one else in respect of the property of the appellant unless
duly authorised by the company (e) that at no point of time the appellant was a
party to any of the proceedings or it was represented by any counsel or was ever
been put on notice of the orders to be passed affecting its rights/interest,
(f) that the appellant is neither a judgment debtor nor it claims through a
judgment debtor, (g) that it neither agreed to give guarantee nor stand as
surety for the payment of the debts of the judgment debtor and consequently the
properties of the appellant cannot be attached or proceeded against in any
manner for realisation of the dues under the decree in question.
The
Special Court, after a careful consideration of the respective contentions of
parties, held that the Minutes of the order dated 5.7.95 covered also units 3
& 4 belonging to the appellant and it would be open to the Custodian to
prefer an appropriate application for execution, as was done in the case of units
2, 5 to 8 as and when required. The Special Court also held that the said two units of the appellant also
constituted an integral part of the compromise. As regards the ground based
upon want of registration, the Special Court was of the view that the minutes
of the order stood excepted from compulsory registration and that in any event
in view of Section 41 of the Maharashtra Co-operative Societies Act, 1960 it
stood also exempted, having regard to the fact that the interests of the
appellant in the properties being merely that of a tenant in co-partnership
housing society and the right to occupy the flats flowing only from the
ownership of shares, the same cannot be considered to be immovable property.
Consequently,
the application of the appellant came to be dismissed. Hence, this appeal.
Dr.
Rajeev Dhavan, learned senior counsel appearing for the appellant, strenuously
contended, while reiterating the stand taken before the Special Court, that the
appellant is an utter third party to the proceedings before the Special Court
it being neither a notified party nor claiming through any of the parties and,
as a fact, also not having been arrayed as one such, its properties cannot be
made liable for the recovery of the dues in question. It is also further contended
that neither the appellant gave any undertaking nor it stood as surety for the realisation
of the amount secured in the minutes of the order dated 5.7.95 and, therefore,
cannot be said to have encumbered its property by any specific thing in writing
and the undertaking, if any, given on its behalf is not only an unauthorised
one not binding upon the appellant but that it has been given also under a
mistaken view of facts and, therefore, the same could not adversely affect the
rights of the appellant. Argued the learned senior counsel further that in the
absence of registration as envisaged under Section 17 (1) (b) of the
Registration Act, it cannot in any manner affect the rights of the appellant in
immovable property and that the appellants property cannot be proceeded
against. Shri Shiraz Rustomjee, learned counsel for the Custodian, while
drawing inspiration from the reasoning of the Special Court, endeavoured to sustain the conclusions arrived at by the Special Court. It is the contention of the
learned counsel that the very object of the consent order passed on 5.7.95 was
to effectively ensure the recovery of the dues and it is too late in the day to
retrace steps to disown responsibility and liability in this regard. The case
on hand is said to squarely fall under Section 17 (2) (vi) of the Registration
Act and that the attempt of the appellant is to somehow delay indefinitely realisation
of the dues. The learned counsel on either side also elaborately invited our
attention to portions of the order under challenge to substantiate their
respective stand.
We
have carefully considered the submissions of the learned counsel appearing on
either side. In our view, apart from the lack of merits in the challenge made
to the well considered order of the Special Court, the appellants case does not merit countenance in our
hands for another reason also. The parties before the Special Court having
consented and invited the Court to pass the order dated 5.7.95 and obtained
benefits by giving undertaking of their own and on behalf of the
appellant-company, ought not to be allowed to take shelter under technicalities
to overreach the Court, which believed the parties and counsel appearing on
their behalf and acted in good faith by accepting the terms suggested by the parties
themselves.
The
questions, which loom large for consideration in this appeal, are as to what
are the legal consequences flowing from the consent order of the Special Court
dated 5.7.95 and the affidavit filed by Mr. Milan Dalal on 28.7.95 as the Chairman
of the appellant-company? and do they suffer any legal infirmities such as want
of registration, want of authority and mistake of fact so as to render them
either non- est or unenforceable? If it is held that the consent order dated
5.7.95 and the affidavit dated 28.7.95 are binding upon not only the parties
but upon the appellant, as one who has undertook to abide by certain
consequences and such an undertaking was given to secure any or some benefit
for any one or more of the parties from the Court, the facts such as the
appellant not being itself a party in the proceedings before the Court and it
was only a third party and that the property in question is of the appellant
and that the appellant is neither a notified party nor one claiming through such
notified party or the judgment debtor pale into insignificance and are rendered
wholly irrelevant in determining the actual issues arising.
The
Minutes of the order dated 5.7.95 came to be passed as a consent order,
decreeing for the recovery of Rs.11,82,81,316/- with interest @ 20% and the
manner in which such decree has to be satisfied as well as proportionate
liabilities, inter se, of the parties thereto.
The
permission for payment in instalments sought for has been countenanced. Clauses
8, 12 and 13 make it abundantly clear that Respondents 2 and 3 before the
Special Court declared that they will not claim any right, title or interest in
the premises in question (Schedule A3 properties) and Respondents 2 and 3
before the Special Court as well as the appellant undertook to the Special
Court, not to alienate, encumber or part with possession of or create third
party right, title or interest in or over the Schedule A3 properties or any
part thereof pending satisfaction of the decree passed therein. The consent decretal
order further stipulated that in the event of the decree becoming executable
the Companies including the appellant undertook to hand over possession of the
properties mentioned in Schedules A1 to A3 to the purchaser, on the sale being
held and sanctioned by the Special Court. In carrying out the directions
contained in the above consent decretal order, Mr. Milan B. Dalal, Chairman of
the appellant-company, filed the required affidavit of undertaking dated
28.7.95.
In the
said affidavit of undertaking, while affirming the factum of ownership of
Western Press Pvt. Ltd., to the property in question and noticing the factual
position that the said property is being used and occupied by M/s CIFCO Ltd.
and CIFCO Finance Ltd., it has been stated in unmistakable terms in paragraphs
2 and 3 as follows:-
2. In
terms of the Minutes of the order dated 5th July, 1995, passed by the Honble Special
Court, Western Press Pvt. Ltd., do hereby undertake that not to alienate,
encumber or part with possession of or create third party right, title or
interest in the aforesaid premises till the decree is marked satisfied.
3. On
behalf of the Company, I hereby undertake to this Honble Court that in the events happening as
provided in Clauses 12 and 13 of the said Minutes, the company undertake to
vacate the premises in their occupation.
Though
for fixing liability as such the mere fact that the judgment debtor companies
and the appellant-company being part of the same group of companies completely
controlled by Dalal family and its group concerns may not be sufficient as
such, the said factual information indicating that the cluster of companies is
a mere cloak for these groups will be a just and relevant piece of material in
appreciating the foul play and attempts on the part of the Directors of the
appellant and their opportunistic stands adopted, as it suits them, from time
to time, not only before the Court below but even in this Court. Mr.Milan B.
Dalal
has been found to be and seems to have been openly allowed by others without
demur to liberally play the multifarious roles he held in different companies
of Dalal group families. Though the authority of Milan B. Dalal as Chairman of
the appellant-company was seriously questioned by another Director of the
appellant at a later stage, the rejoinder filed in this appeal by the very same
Milan B.
Dalal,
in support of the stand of the appellant- company patently betrays the sinister
motive of all those who are fighting under the shadow of the appellant-company
harping upon some technicalities of law or otherwise unmindful of the fact
realities starring at them, who cannot disown their own responsibilities too in
the matter. We are constrained to observe that both the parties as well as
their advisers who have been responsible for the respective roles they seem to
have played in misguiding and misleading the Special Court to pass a particular
order, assuring the existence of certain obvious facts, ought not to be allowed
to either retrace their steps or derive, retain or enjoy the fruits of their
own machinations and manipulations by now assuming different postures and
asserting facts which they deliberately withheld from the Court and were found
to be giving a different picture altogether when such orders came to be passed.
This condemnable conduct of the parties alone, in our view, is more than
sufficient to reject their claims now made in desperateness under the cover of
pretended and invented illegalities.
On a
careful consideration of the events which occurred before the Special Court
which made the said Court to believe the existence of certain facts on the
representations made before it, the orders passed and the affidavits found and
noticed to have been filed from time to time before the Special Court, the
Special Court could not be either faulted for its conclusions or that the
specific findings arrived at that the consent order dated 5.7.95 taken together
with the affidavit of undertaking dated 28.7.95 covered within its fold the
property of the appellant-company in question for being proceeded against in
execution of the decree passed for recovering the amount due as declared in the
consent order dated 5.7.95, could not be said to be vitiated in any manner
warranting our interference. Consequently, it would be permissible for the
Custodian to proceed against the property comprised in Units 3 and 4 belonging
to the appellant- company also by means of an appropriate execution application
as and when he choose to do so. The plea of lack of authority in Milan B. Dalal
to bind the appellant needs mention only to be rejected even for the simple
reason that the Directors of the appellant-company, who allowed Milan B. Dalal
a free hand as Chairman of the appellant- company to deal with the matter,
cannot be permitted to blow hot and cold as it suits them. Equally untenable is
the pretended mistake of fact which, in our view, is nothing but a self-serving
attempt found to be made as a pure afterthought to wriggle out of the lawful
commitments made and retrace the position in which the Directors of the company
have allowed themselves to be landed in. So far as the challenge based on the
want of registration under Section 17(1) (b) of the Registration Act is
concerned, we are of the view that the same is neither genuine nor has any merit
whatsoever or capable of being countenanced at our hands. The reasons assigned
by the Court below to reject the said plea cannot be considered to be either
unjust or untenable. Even otherwise, a careful analysis and consideration of
the consent order dated 5.7.95 as also the affidavit of undertaking dated
28.7.95 made in this case disclose no intention, per se, to purport or operate
to create, declare, assign, limit or extinguish in present or in future any
right, title or interest, whether vested or contingent in the immovable
property of the value of Rs. 100 and upwards. On the other hand, the terms as
well as the tenure of the above proceedings make clear the dominant intention
and purpose of them to be merely an undertaking given by a third party to the
proceedings to the Court to abide by a particular course of action if the
judgment-debtor fails to satisfy the decree. Even in cases of such default by
the judgment-debtor in this case, the undertaking as well as the consent decree
only enables the Custodian to initiate execution proceedings against the
properties in question of the appellant- company and it is only in the event of
such sale, the question of coming into existence any document which would
require compulsory registration under Section 17 of the Act would arise and not
at this stage. In substance and effect what has been undertaken to the Court is
to preserve the properties intact for being proceeded against in a given
eventuality and deliver peaceful possession of the property in the event of
such action becoming necessary. Declaration or undertaking conceding such
liberty of action cannot be construed to fall under clause (b) of Section 17
(1) of the Registration Act.
It is
important to note that both the consent decree as well as the undertaking do
not, by itself, envisage the execution of any deed or document also to create,
declare, assign, limit or extinguish, whether in present or in future any
right, title or interest whether vested or contingent of the value of Rs.100 or
upwards in immovable property. The consent order as also the undertaking given
in this case would squarely fall within the exempted category of `any decree or
order of the Court envisaged under Section 17 (2) (vi) and take it outside the
excepted category of cases for the simple reason that it does not deal with, as
such, any immovable property envisaged in the manner of clause (b) of Section
17 (1) of the Registration Act. In the first instance, the decree/order in
question does not comprise any immovable property as such. In any event, in a
matter like the one before us where the consent order which came to be passed
on agreement as well as the undertaking given in pursuance thereof, was an
undertaking to the Court, the words subject-matter of the suit need not be confined
to the subject-matter of the plaint or subject- matter of the dispute alone,
but would include all that which is made to become part of the proceedings in
order to finally and effectively settle all the disputes between the parties.
Shorn
of all these unnecessary controversies now raised, we are also of the view that
in a case where an item of property is referred to in an undertaking given to
the Court as one which can be proceeded against in the event of the judgment-
debtor failing to pay the decretal amount within the stipulated time, the
immovable property does not get ipso facto affected or suffer in anyone of the
manner envisaged under Section 17 (1) so as to require compulsory registration.
That
apart, the provisions contained in Section 145 CPC also would enure to the
benefit of the Court as well as the Custodian to proceed against the appellant
in enforcement of the undertaking given to the Court and there are no merits in
the contentions sought to be urged to the contrary. For all the reasons stated
above, we see no merit whatsoever in the above appeal. The appeal is dismissed
with costs quantified at Rs.25,000/- to be paid to the Custodian.
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