National Bank Vs. Sahujain Charitable Society and Ors  Insc 727 (11 July
C.K. THAKKER & P.K. BALASUBRAMANYAN
CIVIL APPEAL NO. 2950 OF 2007 (Arising out of SLP(C) No.18483 of 2005) P.K.
1. Leave granted.
2. This appeal arises out of a suit for partition.
The appellant before us is the plaintiff in the suit.
3. The suit property consisted of two buildings and the land on which it
stood. The plaintiff held 66.94% of the shares therein. In terms of fraction,
this came to 83 out of 124 shares. Defendant No. 1 held 8 out of 124.
Defendants 2 to 7 each held 4 out of 124. Defendant No.
8 held 8 out of 124 and defendant No. 9 held 1 out of 124 shares. The total
extent was said to be 64333 sq. feet.
Out of this, the plaintiff - bank was in possession of an extent of 14930
sq. feet. On 22.6.1977, a preliminary decree for partition was passed. It was
declared that the plaintiff was entitled to 83 out of 124 shares and that the
same be allotted to the plaintiff. It also directed that other sharers be
allotted their respective shares. The preliminary decree became final. It is
necessary only to notice that respondent No. 1 before us was not a party to the
preliminary decree and no share was allotted to it.
But, it appears that subsequently, respondent No. 1 purchased the shares of
defendants 1 to 4 and 9 and respondent No. 5 acquired 8 out of 124 shares
taking an assignment from defendant No. 8. Thus, both respondents 1 and 5
before us who were impleaded in the final decree proceedings, were assignees
from sharers, subsequent to the preliminary decree.
4. A commission was issued for actual effecting of division pursuant to the
preliminary decree. The Commissioner assisted by a surveyor for valuation of
the property, found that a partition by metes and bounds could not conveniently
be made. The buildings were valued at Rs. 25,00,000/- At this stage, defendant
No. 8 owning 8 out of 124 shares, moved an application for sale of the
property. It is somewhat surprising that the plaintiff - bank which held upward
of a moiety of shares, did not seek to enforce its rights to buy the rights of
the other sharers in terms of Section 3 of the Partition Act.
The court, on that application by defendant No. 8, took note of the report
of the Commissioner that it was not convenient to divide the properties by
metes and bounds and directed by order dated 21.7.1987, that the property be
sold in public auction. The sharers were given liberty to participate in the
sale and to set off the purchase price to the extent of their shares. It
appears that this order was not implemented. It is difficult to understand why
the matter did not surface before the court for about 12 years and why the
court did not ensure that its order was complied with or if the parties were at
default to deal with that default in an appropriate manner. What is seen is
that respondent No. 5, the assignee from one of the sharers, moved a fresh
application for sale of the property.
On 1.3.2000, the court noticed the earlier order dated 21.7.1987 and
directed the implementation of that order but ordered a fresh valuation, in
view of the lapse of time.
The joint receivers were discharged. It is unfortunate that the joint
receivers were allowed to continue for more than 12 years in such a simple suit
for partition which was only awaiting the passing of a final decree after sale
of the properties as per order dated 21.7.1987 incurring unnecessary
expenditure for the estate. As we see it, the court was called upon to play a
more active role in dispensation of justice and should have ensured that this
suit for partition filed as early as on 12.5.1975 stood disposed of finally
within a reasonable time after the preliminary decree, especially when the
issue involved was such a simple one. We are constrained to make these
observations because of our unhappiness at the tardiness of the process of
court, which is one of the aspects that is held out as a discrediting one for
the judiciary. We do hope that the court concerned would ensure that such matters
periodically surface before it and they are dealt with in an appropriate
manner, but with a little more expedition.
5. The valuer submitted a fresh valuation and suggested that the value would
be Rs. 1,06,62,000/-. At this stage, wisdom seems to have dawned on the
plaintiff, who purported to make an application under Section 3 of the
Partition Act seeking to buy the shares of the other sharers. This petition was
rightly dismissed as the prayer was barred by the order for sale already made.
An application for review of that order was also dismissed.
6. Now, the plaintiff purported to file an appeal against the order dated
1.3.2000 by which the court directed the sale of the property pursuant to the
earlier direction dated 21.7.1987 but on the basis of a fresh valuation. In
that appeal, a Division Bench noticed that the parties had agreed to settle the
matter if a proper valuation was made and directed yet another valuation to be
made. This time, the valuer valued the property at Rs.
1,04,96,000/-, less by about Rs. 2 lakhs from the previous valuation as per
the report dated 12.9.2000. The Division Bench thereafter disposed of the
appeal by directing that the valuation submitted be accepted and the other
sharers execute conveyances in favour of the plaintiff Bank on the plaintiff
depositing the amount less its share and making it liable for meeting all
Municipal dues. The price payable was later corrected to show the purchase
price as Rs. 1,06,42,000/-, higher of the two subsequent valuations. Thus, the
property was directed to be taken by the plaintiff for the price of
Rs.1,06,42,000/-. The amount was deposited. The sale was affirmed on 24.6.2005
and the Commission for partition directed to handover possession of the vacant
portion on the third floor to the plaintiff, within a week.
7. At this stage, an application was made to recall the earlier orders and
to stay the implementation of the orders dated 4.5.2005 and 24.6.2005. On
6.7.2005, respondent No.1 herein, the assignee subsequent to the preliminary
decree, offered to purchase the property for Rs.1,25,00,000/- as against
Rs.1,06,42,000/- for which it was sold to the plaintiff. The court directed the
respondent to deposit Rs.1,25,00,000/- without prejudice.
The amount was deposited. On 26.7.2005, respondent No.1 herein offered to
purchase the property for Rs.2,00,00,000/-. Counsel for the plaintiff sought
time to get instructions from his client. Respondent No.3 who claimed that it
had no notice of the earlier order submitted that it could not offer anything
more than Rs.1,25,00,000/-. The plaintiff was not willing to make any higher
offer but raised the objection that the sale in its favour had been confirmed,
it has deposited the price and nothing more remained to be done. The Division
Bench of the High Court proceeded to set at naught everything that had happened
earlier including its own confirmation of the sale in favour of the plaintiff
and asserting that it could not keep its eyes shut to the enhanced price that
may be fetched for the property, proceeded to go back upon its earlier orders
and directed the property to be sold to respondent No. 1 at Rs. 2 crores and
granted time to respondent No. 1 to make the deposit.
It is this order of the Division Bench that is challenged by the plaintiff.
8. At the time of moving the Petition for Special Leave to Appeal, in
addition to taking the stand that the earlier order confirming the sale in
favour of the plaintiff had become final, the plaintiff appellant also offered
that it was willing to deposit a sum of Rs. 2,01,00,000/- in spite of the fact
that the sale in its favour had been confirmed for a price of Rs.
1,06,42,000/-. This Court while issuing notice on the Petition for Special
Leave to Appeal passed the following order on 5.9.2005:
"The learned counsel for the petitioner submits that there was a
concluded sale in favour of the petitioner and the order of confirmation was
made in the presence of all the parties, and it could not have been undone
merely because there was a revised higher offer. The learned counsel further
submits that the petitioner is prepared to revise its offer to Rs. 2 crores and
1 lakh, i.e., Rs. 1 lakh higher than the offer of the respondent No. 1 and this
offer deserves to be accepted inasmuch as the petitioner is in occupation of
the 66% of the property and owns 83/124 moity of shares in the property, has a
confirmed sale in its favour and the remaining 33% share is mainly in
occupation of the tenants and partly in occupation of the other co-sharers. The
learned counsel further submits that not only law but even the equities
substantially lie in favour of the petitioner and the petitioner is revising
the offer only to dislodge the offer made by the respondent No. 1 which in his
submission was not available to be accepted. We record this statement and issue
notice to the respondents returnable within two weeks.
Dasti service in addition is permitted.
Learned counsel for the respondent No.1 present on caveat takes notice.
Liberty to file additional documents.
Stay in the meanwhile."
9. Learned counsel for the plaintiff submitted that the confirmation of sale
in favour of the plaintiff on 24.6.2005 became final no one having challenged
it in the mode known to law either before this Court or before the same court
by way of review. It was therefore submitted that the subsequent order
nullifying that sale and directing the sale in favour of respondent No. 1
herein passed by the High Court was one without jurisdiction and was even
otherwise a perverse one. Learned counsel further submitted that sharers or
assignees from sharers could not go on making fresh offers and encouraging of
such fresh offers without reference to prior orders passed by the court would
make it a never ending process and in that view it was just and proper for this
Court to set aside the order of the High Court now passed and to restore the
order dated 24.6.2005. Learned counsel also pointed out that the plaintiff
after all, was entitled to 83 out of 124 shares and going by the spirit of
Section 3 of the Partition Act, was entitled to purchase the shares of the
others though the plaintiff had not taken proper steps in that behalf at the
appropriate time. But learned counsel submitted that the spirit of Section 3 of
the Partition Act pervades and that would also justify the confirmation of the
sale in favour of the plaintiff. Learned counsel also pointed out that there
will be no injustice caused to any of the sharers in view of the fact that
though the plaintiff was not legally liable to do so, has offered an enhanced
price of Rs. 2,01,00,000/- and in the circumstances this Court should accept
that enhanced offer and confirm the sale in favour of the plaintiff. It was
also emphasised that the plaintiff was in actual possession of a significant
portion of the premises and equity was in favour of the sale being confirmed in
favour of such an occupant who held the majority of shares. He also submitted
that it was time to put an end to this litigation involving a simple issue,
filed in the year 1975.
10. On behalf of the respondents, especially respondents 1 and 3, it is
contended that the earlier orders would justify the present order for sale in
favour of the respondent No.1 and since what was important was the best
advantage that may be derived by the various sharers, there was no reason for
this Court to interfere with the order of the Division Bench impugned in this
appeal. Learned counsel submitted that in the light of the stand adopted by the
plaintiff in the High Court it was too late in the day for the plaintiff to
raise an argument based on the alleged finality of the confirmation of the
earlier sale in its favour. The plaintiff had taken time pursuant to the order
of the court dated 26.7.2005 only to tell the High Court whether it was willing
to make a higher offer and by virtue of its conduct, the plaintiff had waived
the rights that allegedly accrued in its favour by the confirmation of the sale
on 24.6.2005. It was also submitted that in any event, it could be considered
that it was a review of the earlier order and there was no reason why in the
interests of justice, this Court should interfere.
Learned counsel for respondent No. 3 added that it had not been served with
notice prior to the earlier order and it was relevant to consider that all the
sharers would have an advantage if the properties were sold for Rs.2 crores as
against the price of Rs. 1,06,42,000/-. We may also notice that at the
conclusion of the hearing, learned counsel for respondent No. 1 offered to
purchase the property at Rs. 3 crores leaving out the portion held by the
plaintiff Bank in the building to be treated as owned by the plaintiff Bank
itself. Learned counsel for the plaintiff Bank after taking instructions has
filed an affidavit submitting that the Bank was not in a position to raise its
offer above Rs.2,01,00,000/- it had made when the above Petition for Special
Leave to Appeal was moved before this Court.
11. Nothing turns on the argument of counsel for respondent No.3 of no
proper notice being given to it before the passing of the order dated
24.6.2005, since respondent No.3 was not willing and is not willing to raise
any offer to purchase the property for above Rs.1,25,00,000/-. Of course, the
claim of lack of notice is seriously repudiated on behalf of the plaintiff. But
in the view we are taking on this question, we do not think it necessary to
pursue this aspect of notice. Suffice it to say, we see no reason to accept the
contentions of respondent No.3 based on this aspect or to re-open the earlier
orders based on the plea of want of notice.
12. To recapitulate, there was an order for sale of the property in auction
as early as on 21.7.1987 giving permission to the sharers to bid and set off.
There was a subsequent order on 1.3.2000 directing a sale based on a fresh
valuation. Instead of ensuring that the sale took place, the matter was allowed
to linger until the plaintiff sought assignment of the rights of the others by
belatedly invoking Section 3 of the Partition Act, which request was rightly
declined. It was then that the plaintiff brought up the matter before a
Division Bench by way of appeal, obviously belated, challenging the order for
sale on fresh valuation and in that appeal, it is seen that the Division Bench
ordered yet another valuation on agreement of parties and recorded by it and
then proceeded to pass an order confirming the sale in favour of the plaintiff
at the value suggested by the new valuer, of course, after correcting the
valuation to the higher figure shown by the second valuer. As we see it, the
matter should have stopped here. But then the Division Bench purported to
entertain an application from an assignee subsequent to the preliminary decree,
seeking a fresh sale of the property. It is in that proceeding that the
Division Bench has passed the order impugned in the present appeal. We have
already indicated that what should have been done was to ensure that the order
passed in the year 1987 and reiterated in the year 1999 was strictly complied
with and the matter brought to a close in accordance with law. But by adopting
the course it did, the matter was allowed to drag on. We are of the view that
there is no equity in favour of either of the two subsequent assignees while
considering the belated request of one of them for sale of the property afresh.
It is true that pursuant to the order for sale by public auction, the property
should have been sold. But, the Division Bench chose the method of directing a
fresh valuation to be made and then accepting the offer of the plaintiff to
purchase and then to pass an order confirming the sale in favour of the
plaintiff at the enhanced valuation. This was obviously done on consent as is
recorded in that order. It is in that context that respondent No.3 came up with
a plea of no notice, which we have discountenanced, in view of its failure to
put up any tenable higher offer. At that stage, it does not appear that any of
the other sharers including respondent No.1 herein, raised any objection or
made any higher offer.
It is also difficult to accept its contention of want of notice on the
materials available. After all, the parties were being represented by counsel
before the court and any responsible counsel taking care of the interests of
his client, would have certainly informed the client about the posting of the
case and the passing of the order by the court. The belated offer of respondent
No.1 to purchase the property for a higher price, does not appear to be bona
fide especially since respondent No.1 is an assignee from some of the sharers
after the preliminary decree and apparently is not in possession of any
significant portion of the property. We are satisfied that there is no equity
in favour of the respondent No. 1 and the High Court was in error in relying on
its conscience being troubled for setting at naught its own earlier order
confirming the sale in favour of the plaintiff, passed with the consent of
parties as recorded by it. We are of the view that the impugned order is not
13. For that matter, our conscience also need not be troubled by what we are
doing, because the plaintiff has offered that it will take the property, for an
enhanced price of Rs. 2,01,00,000/-, more than what has now been accepted by
the Division Bench of the High Court. We are therefore of the view that considering
the larger share held by the plaintiff and considering the area held in its
possession, it would be just and proper to accept the offer of the plaintiff
and restore the order dt.24.6.2005 to sell the suit property to the plaintiff
earlier made by the Division Bench of the High Court.
14. Learned Senior Counsel for the respondent No. 1 spent considerable time
on arguing the question of finality of earlier orders and their binding nature
and so on.
Those arguments, in our view, are double edged, they may help respondent No.
1 and they may also go against respondent No. 1. But, it is not necessary for
us to discuss those decisions in detail on the facts and in the circumstances
of the case. We are satisfied that taking note of the original holders of
shares, the contents of the preliminary decree, the conduct of the sharers
during the protracted proceedings in the High Court, it would be just and
proper to confirm the sale in favour of the plaintiff Bank for a price of Rs.
2,01,00,000/- subject to the plaintiff being in a position to set off the share
of purchase price due to its share and on deposit of the balance purchase
price, or making up the balance purchase price due to the other sharers.
15. After all, our jurisdiction under Article 142 of the Constitution of
India to do complete justice to the parties, in any event would enable us to
make such a direction on the facts and in the circumstances of the case. We
think that justice in the present litigation would be done by permitting the
plaintiff, the larger shareholder in possession of a significant portion of the
property, to purchase the rights of the other sharers rather than permitting an
assignee from some of the sharers subsequent to the preliminary decree to
purchase the property merely because it is in a position to offer a higher
price and has come forward with a belated higher offer.
16. In the result, the appeal is allowed. The decision of the High Court is
set aside and the plaintiff Bank is declared as the purchaser of the property
2,01,00,000/-. The plaintiff Bank is permitted to set off its share of the
value and is directed to deposit the value of the other sharers on the basis of
the purchase price now fixed by us. Whatever the amounts the plaintiff Bank
had deposited already in the High Court, will be given credit to and the
plaintiff Bank will be liable to deposit only the balance amount, if any,
remaining towards the shares of the purchase price of the other sharers. The
amount would be made up in four months.
The direction to the other sharers to execute sale deeds in favour of the
plaintiff contained in the order dated 24.6.2005 will stand affirmed. A final
decree on the above terms will be drawn up by the High Court in accordance with
the relevant rules. In the circumstances, the parties are directed to bear
their respective costs.