Janki
Vashdeo Bhojwani & ANR Vs. Indusind Bank Ltd. & Ors [2004] Insc 739 (6 December
2004)
D.M. DHARMADHIKARI & H. K. SEMA H.K.SEMA,J.
This appeal is directed against the judgment of the Bombay High Court dated 23-4-2003. The appeal has been heard at length by a Bench in which one of us was a Member,
Sema,J and by an order dated 10-2-2004 reported as Janki Vashdeo Bhojwani And
Another vs. Indusind Bank Ltd. And others, (2004) 3 SCC 584) it was remitted to
the Tribunal with the following directions in paragraphs 24 at Page SCC 587:
"In our view, it is essential, before any further orders can be passed
to first decide whether or not the appellants have a share in this property. We
therefore remit the matter back to the Debt Recovery Tribunal to record a finding
whether or not on the date the decrees were passed, the appellants were
co-owners of the property at 38, Koregaon Park, Pune and if so, to what extent.
In so deciding the Debt Recovery Tribunal will undoubtedly ascertain whether
the appellants had any independent source of income and whether they had
contributed for purchase of this property from their own independent income.
The Debt Recovery Tribunal will also decide whether this property was the
residence of the appellants at the time possession was taken. The Debt Recovery
Tribunal shall permit the parties to lead evidence, both oral and documentary.
It must be clarified that the burden of proving that the appellants have a
share in the property will be on the appellants. The Debt Recovery Tribunal
shall then forward its decision to this Court within a period of six months
from today." (Emphasis supplied) Avoiding prolixity, but at the risk of
repetition the directions were founded on the following facts:
The 1st appellant is the wife of the 5th respondent and the 2nd appellant is
the wife of the 2nd respondent.
The respondent-bank extended loan facilities to the 6th and 7th respondents,
M/s Bhojwani Hotels Pvt. Ltd. and Hotel Amir Pvt. Ltd., which are run by
respondent Nos. 2 to 5 namely Dr. Laxmikant Rewachand Bhojwani, Mr. Sanjay
Laxmikant Bhojwani, Mr. Romy Laxmikant Bhojwani and Mr. Vashdeo Rewchand
Bhojwani. The loan facilities were to the extent of Rs. 22 crores in one case
and Rs.3.75 crores in the other. Respondents 2 to 5 were also guarantors and
some of the properties belonging to the parties have been mortgaged to the
bank. Initially, Plot No.38, Koregaon Park, Pune was also stated to have been
mortgaged to the bank. It is now admitted by the respondent-bank that the said
plot was not mortgaged to the bank.
As the loan had not been repaid, the respondent-bank filed a suit against
2nd and 7th respondents on 3.10.2000, OA No. 159-P of 2001 before the Debt
Recovery Tribunal (hereinafter referred to as the DRT) for recovery of a sum of
Rs.3.86 crores. The first respondent-bank also filed another suit against
respondent nos. 2 to 6 and one M/s Progressive Land Development Corporation, OA
No.
160-P of 2001 for recovery of a sum of Rs.27.5 crores. M/s Progressive Land
Development Corporation is a partnership firm of which the appellants are
partners, along with others. The DRT by an order dated 11-12-2000 passed an injunction order in an application made in OA No.160-P of 2001. The plot no.38, Koregaon
Park, Pune was one of the properties which the respondents were restrained
from alienating. The DRT also passed a decree on 13-9-2001 in OA No.159-P of 2001 in favour of the respondent-bank in which the property at 38, Koregaon Park,
Pune was shown as one of the mortgaged properties. A recovery certificate was
also issued by the DRT and pursuant thereto the properties were attached on
8.11.2001 in which the property at 38, Koregaon Park, Pune was also attached.
Thereafter, pursuant to attachment, a public notice was published in the
Times of India of 25.1.2002 publication, notifying that the properties of the
second respondent have been attached.
It is only at this stage, the appellants have filed objections before the
DRT against the attachment of the residential property at 38, Koregaon Park,
Pune on 16.4.2002, which were rejected by the Recovery Officer on the premise
that he could not go beyond the decree. In the application, the appellants
claimed that they came to know of the attachment through the advertisement
published in the Times of India of 25.1.2002.
As already noticed, the 1st appellant is the wife of the 5th respondent and
the 2nd appellant is the wife of 2nd respondent. On 3.10.2000 the
respondent-bank filed a suit against the 2nd respondent and the 7th respondent,
OA No.159-P of 2001 before the DRT for the recovery of a sum of Rs.3.86 crores.
Again on 25th October, the respondent-bank filed another suit against
respondent nos. 2 to 6 and one M/s Progressive Land Development Corporation, OA
No.160-P of 2001 for recovery of a sum of Rs.27.5 crores. M/s Progressive Land
Development Corporation is a partnership firm of which the appellants are the
partners along with others. Thereafter, as recited above the DRT passed an
injunction order in which one of the properties the respondents were restrained
from alienating was 38, Koregaon Park, Pune. On 13.9.2001, a decree was passed
in OA No.159-P of 2001 and in the said decree the property at 38, Koregaon Park,
Pune was shown as one of the mortgaged properties. All these proceedings
against their husbands and M/s Progressive Land Development Corporation which
is a partnership firm and in which the appellants are partners along with
others, were within the knowledge of the appellants. The appellants, however,
feigning ignorance of the facts and proceedings, took a plea that they came to
know about the attachment of the property at 38, Koregaon Park, Pune only
through the public notice published in the Times of India of 25.1.2002.
In the backdrop of given facts and circumstances, this Court has already
observed in its order dated 10.2.2004 at page 585 SCC as under:- "This
averment is impossible to believe. It is clear that they were aware of the
proceedings against their husbands and family concerned." The property at
38, Koregaon Park, Pune was purchased from Ms. Sushila Talera and the
consideration for the purchase was paid to her on 25.8.1987. It is not disputed
that the indenture of sale was executed on 5.9.1991. It is also not disputed
that payment on 25.8.1987 was entirely made by M/s Bhojwani Brothers, HUF, a
separate legal entity. It is the case of the appellants that the said amount
was paid by M/s Bhojwani Brothers on behalf of the appellants and the same was
treated as a loan extended to the appellants which was subsequently repaid by
the appellants in 1992.
In short, the appellants sought to build up a case, albeit belatedly, that
the appellants had contributed the consideration amount and they are the
co-owners in respect of property at 38, Koregaon Park, Pune. The appellants are
neither debtors nor guarantors and, therefore, the property in question to the
extent of their share in the property could not have been sold in the execution
of the decree.
Pursuant to the directions quoted above, the DRT has recorded a finding by
its order dated 2.8.2004. The parties have filed objections to the finding. The
Tribunal has framed the following issues, purportedly pursuant to the
directions by this Court:
(i) Whether the appellants have any share in the property (38, Koregaon Park,
Pune) subject matter of dispute? (ii) Whether on the date decrees were passed,
the appellants were co-owners of the said property? (iii) Whether the said
property was the residence of the appellants at the time possession was taken?
The fallacy of the Tribunal begins with the framing of the issues. The issues
as noticed above are inconsistent with the directions of this Court. The
directions contained in paragraph 24 are that the Tribunal was directed to
record a finding whether or not on the date the decrees were passed the
appellants were co-owners of the property at 38, Koregaon Park, Pune and if so
to what extent. In deciding the aforesaid issue, the DRT will ascertain whether
the appellants had any independent source of income and whether they had
contributed for purchase of this property from their own independent income.
The Tribunal was directed to permit the parties to lead evidence, both oral and
documentary. This Court further clarified that the burden of proving that the
appellants have a share in the property will be on the appellants.
The second fallacy of the order of Tribunal was allowing Mr.V.R.Bhojwani
(power of attorney holder), husband of appellant no.2 Ms.Mohini Laxmikant
Bhojwani, to appear in the witness box on behalf of the appellants. It may be
noted that that the appellants were shy away from gracing the box. The
respondent-bank vehemently objected to allowing the holder of power of attorney
of the appellants to appear in the witness box on behalf of the appellants.
This Court clarified that the burden of proving that the appellants have a
share in the property will be on the appellants and it was incumbent on the
appellants to have graced the box and discharged the burden that they have a
share in the property, the extent of share, the independent source of income
from which they have contributed towards the purchase of the property. The
entire context of the order dated 10.2.2004 was forwarded to the Tribunal for
the purpose. It is unfortunate that the Tribunal has framed its own issues not
consistent with the directions and recorded a finding contrary to the
directions as aforesaid.
Dr. Singhvi, learned senior counsel appearing for the respondent-bank
vehemently contended that the appellants did not grace the box to lead evidence
but authorised Mr. V.R. Bhojwani (power of attorney holder) to appear on behalf
of the appellants.
Learned counsel contended that Mr. Bhojwani was not an independent person to
the litigation but was a judgment debtor in the suit and a co-owner of the
property and there was a clash of interest between the husband and wife and as
such he could not have been permitted to grace the box on behalf of the
appellants. He further contended that under Order III Rules 1 & 2 CPC a
power of attorney holder can appear, apply or act in any court but such act
cannot be extended to depose in the witness box. He further submitted that in
the present case a power of attorney holder is not acting as a witness on
behalf of the principal but he is representing the principal himself.
He further contended that deposing in a witness box and being cross-
examined is a personal act and cannot be done through an agent/power of
attorney holder.
In the context of the directions given by this Court, shifting the burden of
proving on the appellants that they have a share in the property, it was
obligatory on the appellants to have entered the box and discharged the burden
by themselves. The question whether the appellants have any independent source
of income and have contributed towards the purchase of the property from their
own independent income can be only answered by the appellants themselves and
not by a mere holder of power of attorney from them.
The power of attorney holder does not have the personal knowledge of the
matter of the appellants and therefore he can neither depose on his personal
knowledge nor can he be cross-examined on those facts which are to the personal
knowledge of the principal.
Order III, Rules 1 and 2 CPC, empowers the holder of power of attorney to
"act" on behalf of the principal. In our view the word
"acts" employed in Order III, Rules 1 and 2 CPC, confines only in
respect of "acts" done by the power of attorney holder in exercise of
power granted by the instrument. The term "acts" would not include
deposing in place and instead of the principal. In other words, if the power of
attorney holder has rendered some "acts" in pursuance to power of
attorney, he may depose for the principal in respect of such acts, but he
cannot depose for the principal for the acts done by the principal and not by
him. Similarly, he cannot depose for the principal in respect of the matter
which only the principal can have a personal knowledge and in respect of which
the principal is entitled to be cross-examined.
Having regard to the directions in the order of remand by which this Court
placed the burden of proving on the appellants that they have a share in the
property, it was obligatory on the part of the appellants to have entered the
box and discharged the burden.
Instead, they allowed Mr. Bhojwani to represent them and the Tribunal erred
in allowing the power of attorney holder to enter the box and depose instead of
the appellants. Thus, the appellants have failed to establish that they have
any independent source of income and they had contributed for the purchase of
the property from their own independent income. We accordingly hold that the
Tribunal has erred in holding that they have a share and are co-owners of the
property in question. The finding recorded by the Tribunal in this respect is
set aside.
Apart from what has been stated, this Court in the case of Vidhyadhar vs.
Manikrao and Another, (1999) 3 SCC 573 observed at page 583 SCC that
"where a party to the suit does not appear in the witness-box and states
his own case on oath and does not offer himself to be cross-examined by the
other side, a presumption would arise that the case set up by him is not
correct".
In civil dispute the conduct of the parties is material. The appellants have
not approached the Court with clean hands. From the conduct of the parties it
is apparent that it was a ploy to salvage the property from sale in the
execution of Decree.
On the question of power of attorney, the High Courts have of Rajasthan,
1986 2WLL 713 it was held that a general power of attorney holder can appear,
plead and act on behalf of the party but he cannot become a witness on behalf
of the party. He can only appear in his own capacity. No one can delegate the
power to appear in witness box on behalf of himself. To appear in a witness box
is altogether a different act. A general power of attorney holder cannot be
allowed to appear as a witness on behalf of the plaintiff in the capacity of
the plaintiff.
The aforesaid judgment was quoted with the approval in the was held that the
word "acts" used in Rule 2 of Order III of the CPC does not include
the act of power of attorney holder to appear as a witness on behalf of a
party. Power of attorney holder of a party can appear only as a witness in his
personal capacity and whatever knowledge he has about the case he can state on
oath but be cannot appear as a witness on behalf of the party in the capacity
of that party. If the plaintiff is unable to appear in the court, a commission
for recording his evidence may be issued under the relevant provisions of the
CPC.
Dias reported in 2000 Vol.102 (1) Bom.L.R.908, the Goa Bench of the Bombay
High Court held that a power of attorney can file a complaint under Section 138
but cannot depose on behalf of the complainant. He can only appear as a witness.
Armando Luis & Anr. reported in 2002 (2) Bom.C.R.754 on which the
reliance has been placed by the Tribunal in the present case, the High Court
took a dissenting view and held that the provisions contained in order III Rule
2 of CPC cannot be construed to disentitle the power of attorney holder to
depose on behalf of his principal.
The High Court further held that the word "act" appearing in order
III Rule 2 of CPC takes within its sweep "depose". We are unable to
agree with this view taken by the Bombay High Court in Floriano Armando
(supra).
We hold that the view taken by the Rajasthan High Court in the case of
Shambhu Dutt Shastri (supra) followed and reiterated in the case of Ram Prasad
(supra) is the correct view. The view taken in the case of Floriano Armando
Luis (supra) cannot be said to have laid down a correct law and is accordingly
overruled.
In the view that we have taken we hold that the appellants have failed to
discharge the burden that they have contributed towards the purchase of property
at 38, Koregaon Park, Pune from any independent source of income and failed to
prove that they were co- owners of the property at 38, Koregaon Park, Pune.
This being the core question, on this score alone, the appeal is liable to be
dismissed.
Despite, we now proceed to consider the documentary evidence produced. The
admitted position is that the consideration for sale was paid by M/s Bhojwani
Brothers, a distinct legal entity.
M/s Bhojwani Brothers is a Hindu Undivided Family. The said HUF as a distinct
entity filed Income Tax Returns. Shri L.R. Bhojwani and his two sons Sanjay and
Romy Bhojwani had filed income tax returns showing themselves as owners of
1/4th share each in suit property.
In the photo copies of the income tax returns filed by Shri V.R.
Bhojwani (power of attorney holder) 1/4th is struck off and is interpolated
into 1/7th share. This fact was admitted by him in cross- examination, Vol. V
at page 115. He has also admitted that the correction is not depicted in the
original papers received from income tax office. The Tribunal also holds that
there was interpolation by pencil which was not depicted in the original papers
received from the Income Tax office.
Mr. Rohtagi, learned senior counsel, has drawn our attention to the
indenture for sale dated 5.9.1991 and submitted that the name of the appellants
appeared at Sl. Nos. 3 and 4 of the sale indenture.
According to the counsel they are the co-purchasers. We are unable to accept
this contention merely because their names appear in the sale indenture by
itself would not be a conclusive proof that they are the co-purchasers. Mr.
Rohtagi, learned senior counsel for the appellants, referred to the Income Tax
Return for the Assessment year 1988-89 in which at Sl.No.6 (Vol.V at page
No.144) it is shown that during the year the assessee, 2nd appellant, has paid
Rs.4,65,000/- to Mrs. Susheela Talera towards purchase of Plot No.
38, Koregaon Park, Pune, out of loan taken from M/s Bhojwani Bros.
Counsel also drew our attention to Sl.Nos. 3 and 4 at page 155 Vol.V showing
that the assessee has paid Rs. 45,000/- towards Stamp Duty for Plot at 38,
Koregaon Park, Pune, out of loan taken from M/s Bhojwani Bros. and deposited
Rs. 76,000/- in Dr.L.R.Bhojwani Jt. A/c towards the payment for plot at 38, Koregaon
Park, Pune, out of sale proceeds of 100 shares of Bajaj Auto Ltd. at Rs. 710
per share. He has also drawn our attention to Sl.No.5 at page 159 Vol.V showing
that during the year assessee has received the following foreign remittances
under Foreign Exchange (Immunities) Scheme 1991:
a) US$ 50,000 vide DD No. 484485 drawn on Marine Midland Bank dt 19.10.91,
NA, New York. The Indian currency equivalent to Rs. 12,88,660 has been
deposited in SB A/c NO.7930 with UBI, Pune Camp Branch. The xerox copy of Certificate
No.284 issued by UBI, Pune Camp Branch is attached.
b) US$ 25,000 vide TT No. 559271 drawn on Bank of India, Singapore. The
Indian currency equivalent to Rs.
6,43,902 has been deposited in SB A/c No. 7930 with UBI, Pune Camp Br. The
xerox copy of Certificate No.92 issued by UBI, Poona Camp Branch is attached.
At page 160 Vol.V, Sl.No.8 and 9 it is shown that the assessee has deposited
Rs. 3,47,465 in CA No. 22035 with Union Bank of India, Poona Camp Branch
towards the payment to be made for construction of residential house at 38
Koregaon Park, Pune, out of sale proceeds of shares and foreign remittances
received. The assessee has paid Rs. 15,03,290/- to M/s Bhojwani Brothers
towards the return of loan taken on CA out of foreign remittances received.
He has also shown at page 164 Vol.V, Sl.No.6 and 8 that the assessee has
invested Rs.75,000/- in construction of bungalow at 38 Koregaon Park, Poona,
out of rent and salary received and balance in SB A/c No. 7930 with UBI, Poona
Camp Branch and sale proceeds of shares. The Assessee has paid Rs. 2,26,995/-
to M/s Bhojwani Brothers vide Cheque No. 286141 dated 31.3.93 on Current
Account out of gift received from Mr. Arjan Khialani of Singapore. Counsel has
also shown at page 167 Vol.V, Sl.No.8 that during the year 1993- 94 the
assessee has acquired 1/7th share in bungalow at 38 Koregaon Park, Pune, which
was ready for possession in December 1993. The cost of her share comes to Rs.
21,25,966/- which was partly financed by M/s Bhojwani Brothers, Poona.
There is no proof that the source is from the independent income of the
appellants. As already noticed the figure 1/7th share has been interpolated
with pencil and no reliance can be placed on this document.
In respect of appellant No.1 Mrs. Janki Vashdeo Bhojwani, the learned
counsel submitted that during the assessment year 1988-89 it is shown at
Sl.No.1 page 169 Vol.V that the appellant has paid Rs.4,65,000/- to Mrs.
Susheela Talera towards purchase of Plot No.38 Koregaon Part out of loan taken
from M/s Bhojwani Brothers of Rs.4,65,000/-. It is also shown at Sl.No.3 at
page 178 Vol.V that the assessee has paid Rs. 45,000/- towards stamp duty for
plot at 38, Koregaon Park, Pune, out of loan taken from M/s Bhojwani Brothers.
At page 182 Vol.V, Sl.No.5 it is shown that the assessee has received the
following remittances under Foreign Exchange (Immunity) Scheme 1991:- ? US$
50,000 vide DD No. 484486 at 19.10.91 drawn on Marine Midland Bank, NA, New
York. The Indian Currency equivalent to Rs. 12,88,660 has been deposited in SB
A/c No. 14910 with UBI, Pune Camp Br. The xerox copy of the Cert No. 285 issued
by UBI, Pune Camp Branch is attached.
? US$ 25,000 vide TT No. 559271 Bk of India, Singapore.
The Indian Currency equivalent to Rs. 6,43,902 has been deposited in SB A/c
No.14910 with UBI, Poona Camp Br.
The xerox copy of Cert. No.92 issued by UBI, Poona Camp Branch is attached.
At Sl.no.8 it is shown that the assessee has deposited Rs. 2,87,037/- in CA
A/c No.22035 with Union Bank of India, Poona Camp Br.
towards the payment to be made for construction of residential house at 38
Koregaon Park, Pune out of LIC loan, sale of shares and partly from foreign
remittances received. At Sl.No.9 it is shown that the assessee has paid Rs.
13,90,383/- to M/s Bhojwani Bros towards the return of loan taken on CA out of
foreign remittances received.
The above figures do not disclose the source of income and that this income
is their own independent income and they had contributed for purchase of the
suit property. No reliance can be placed on the said documents.
Regarding the capital received from foreign remittances under Foreign
Exchange (Immunity) Scheme, 1991, learned counsel Mr.
Rohtagi contended that under the scheme the appellants are immune from
disclosing the source of receipt. It is true that as per the terms of the
scheme the recipient will not be required to disclose for any purpose the
nature and source of remittances and further no enquiry or investigation will
be commenced against the recipient under any law on the ground that he has
received such remittance. It only protects the appellant from prosecution under
FERA and income tax.
It does not prohibit the appellants from disclosing the sources.
Furthermore, the remittance, so received by the appellants, could not be
described as income, much less an independent income. As already noticed, in
the instant case, a duty is cast upon the appellants to discharge the burden of
proving that the appellants have a share in the property. The appellants could
have disclosed the source of remittance to discharge the burden.
At this stage we may also notice that the appellants relied upon the gifts
from relatives and friends see Vol.V pages 57-59 which show that the appellants
have received some amount of gifts in terms of US$ from foreign countries. Mr.
V.R.Bhojwani admitted that the three donors were not related by blood and two
donors were distant cousins. It is apparent that the so-called gifts made by
the donors were actually sent by the husbands of the appellants through name-
lenders and by no stretch of imagination it could be an income, much less an
independent income of the appellants. Similarly, the net income of the
appellants during the year 1992-93 shown at pages 57- 59 (Vol.V) was not
adequate to repay the loan.
For the reasons aforestated the appellants have miserably failed to
establish that on the date the decrees were passed, the appellants were the
co-owners of the property at 38, Koregaon Park, Pune. They further failed to
establish that they have any independent source of income and they have
contributed for purchase of the property at 38, Koregaon Park, Pune, from their
own independent income. Further the appellants failed to discharge the burden
of proving that the appellants have a share in the property. The other
connected issues are only consequential to this issue and it may not be
necessary for us to deal with them in view of our decision above.
Accordingly, the appeal fails and is dismissed with costs.
Back