1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE24H DAY OF SEPTEMBER, 2019 BEFORE THE HONBLE MR. JUSTICE B.VEERAPPA WRIT PETITION No.330/2016 (GM-KSFC)
BETWEEN :N LAKSHMANA S/O LATE S NARAYANAPPA AGED ABOUT51YEARS No.5, GOVINDAPPA LANE THIGALARAPET BENGALURU560002. PETITIONER FINANCIAL CORPORATION No.1/1, THIMMAIAH ROAD BENGALURU560052. REP. BY ITS MANAGING DIRECTOR. (BY SRI M J ALVA, ADVOCATE)
AND:1. M/S.THE KARNATAKA STATE2 RESPONDENTS (BY SRI YOGESH D NAIK, ADVOCATE FOR R1 AND R2) THE DEPUTY GENERAL MANAGER KSFC, 8TH FLOOR JAYANAGAR SHOPPING COMPLEX4H BLOCK, JAYANAGAR BENGALURU560011. 2 IS THIS WRIT PETITION IS FILED UNDER ARTICLES226AND227OF THE CONSTITUTION OF INDIA, IMPUGNED NOTICE PRAYING TO QUASH THE DATED.30.11.2010 WHICH PRODUCED AT ANNEXURE-B, DIRECT THE RESPONDENTS TO MAKE OUT THE MARKETABLE TITLE IN RESPECT OF THE SCHEDULE PROPERTY AND TO EXECUTE THE SALE DEED IN FAVOUR OF THE PETITIONER AGAINST THE RECEIPT OF THE BALANCE SALE CONSIDERATION AMOUNT OF Rs.25,50,000/- IN TERMS OF E-AUCTION DTD.10.10.2010 AND DIRECT THE RESPONDENTS TO REFUND THE SUM OF Rs.8,50,000/- RECEIVED BY THEM FROM THE PETITIONER IN FURTHERANCE OF THE E-AUCTION DATED.10.10.2010 ALONG WITH INTEREST AT THE RATE OF18 PER ANNUM FROM THE DATE OF RECEIPT TILL THE DATE OF PAYMENT OF THE FULL AMOUNT. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN B GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDERThe petitioner who is the victim in the acts and fraud played by KSFC is before this Court seeking for a writ of mandamus directing the respondents to make out the marketable title in respect of the schedule property and to execute the sale deed in favour of the petitioner after receipt of the balance sale consideration amount of 3 Rs.25,50,000/- in terms of e-auction dated 10/10/2010 or alternatively to issue a writ of mandamus or direction, directing the respondents to refund the sum of Rs.8,50,000/- received by them from the petitioner in furtherance of the e- auction dated 10/10/2010 along with interest at the rate of 18% p.a. from the date of receipt till the date of payment of the full amount. I. FACTS OF THE CASE:
2. It is the case of the petitioner that, 2nd respondent-Deputy General Manager, KSFC, had published e-auction Tender Notification dated 27/10/2010 in Vijaya Karnataka Kannada Daily Newspaper notifying to sell the property at Item No.1, bearing No.8, (Old Nos. 3,4 and 5), situated at S.P.Road, P.M.Lane (Thigalarapet), Nagarathpet, Bengaluru 560 002, measuring 27 feet x 31 feet which is morefully described in the schedule to the present petition and other items fixing the bid 4 amount of Rs.34 Lakhs and EMD of Rs.3,40 lakhs, exercising powers under the provisions of Section 13(12) and (4) of SARFAESI Act, 2002, towards the recovery of dues, claiming that, it had already taken possession of the schedule property and other properties.
3. It is the further case of the petitioner that in the said Notification- Annexure-A, Sl.No.1 pertains to M/s. Manjunatha Apparels, which is said to have raised loan from the respondents- KSFC and fixed the sale amount of Rs.34 lakhs and EMD of Rs.3.40 lakhs. Property owner was shown as Mr. S. Gopal. The schedule property has given as collateral security for M/s Manjunatha Apparels which was being run in the schedule property. After consideration of the entire material on records, the respondents-KSFC had accepted the bid amount of the petitioner in respect of M/s. 5 Manjunatha Apparels and demanded the payment of 25% of the bid amount i.e. Rs.8,50,000/- in its letter dated 31/11/2010 vide Annexure-B. The petitioner has made payments to the respondents as under: (i) Rs.3,40,000/- was deposited through bankers cheque No.126668 dated 4.11.2010 issued by Sri. Charan C-operative Bank Ltd., Bengaluru; cheque (ii) Rs.5,10,000/- was deposited through bankers dated 10/11/2010 issued by Sri. Charan Co- operative Bank Ltd., Bengaluru. No.127718 4. It is the further case of the petitioner that, after making the said payment, petitioner came to know that O.S.No.325/2004 filed by one Mr.Shekar @ B.S.Chandrashekar, against the respondents and others before the City Civil Judge, Bengaluru, in respect of the very same property viz., all that piece and parcel of the property bearing No.8, (Old Nos. 3,4 and 5), situated at 6 S.P.Road, P.M.Lane (Thigalarapet), Nagarathpet, Bengaluru 560 002 measuring 27 feet x 31 feet which is morefully described in the schedule to the present writ petition) was pending and an interim order was granted by the trial Court directing the parties to maintain Status-quo. The same has not been disclosed by the respondents-KSFC at the time of putting the schedule property for sale and the said suit is still pending consideration.
5. It is the further case of the petitioner that immediately after getting the information about the pendency of the suit, he had lost interest in the property in anticipation of further litigations and the consequent enormous inconveniences being caused to him and made a representation to the 2nd respondent, demanding refund of the said amount on 21/1/2011 vide Annexure-D. 2nd respondent by reply dated 02/02/2011 vide 7 Annexure-E informed the petitioner that an amount of Rs.8,50,000/- paid by him is forfeited.
6. It is the further case of the petitioner that, 2nd respondent refused to refund the said amount of Rs.8,50,000/- and he was under a dilemma and repeatedly approached the 2nd respondent either to refund the amount or to get the suit in OS No.325/2004 dismissed in their favour at the earliest so as to enable him to make the further payment and to get the sale deed duly executed in his favour. But the respondents-KSFC failed to respond positively in the matter and the suit filed by Mr. Shekar against the respondents continued to linger. Finally on 28/9/2015 the petitioner got issued a notice to the respondents- KSFC through his counsel demanding them to expedite the proceedings in OS No.325/2004 and to make out the absolute marketable title, receive 8 the balance sale consideration amount of Rs.25,50,000/- and to execute the sale deed in favour of petitioner. The 2nd respondent issued a reply through its counsel on 31/10/2015 vide Annexure-G putting the blame on the petitioner that he had failed to make the payment of the balance amount within time.
7. It is the further case of the petitioner that with great difficulty he had adjusted the balance amount of Rs.25,50,000/- and he has given willingness to make the payment of the same. But in view of the pendency of the case, he cannot be compelled to purchase the litigation land keeping his interest in dole drums in the event of the suit going against the respondents on merits. Further, the petitioner cannot be compelled to purchase the litigation land and the respondents are not ready or willing to take up any such responsibility in the 9 matter and there is no assurance or guarantee given by the respondents whatsoever in the matter and due to all these complications the petitioner is not in a position to go ahead with the matter.
8. It is the further case of the petitioner that, he is doing petty business settled in the same locality from time immemorial. He found the schedule property suitable and convenient for him. But because of the circumstances, he is not in a position to take the risk of loosing the money in the event of purchasing the property. Hence, he is left with no other alternative remedy, except approaching the authorities with representations. Since the respondents have neither refunded the money nor have executed the sale deed in his favour, the petitioner is before this Court for the relief as sought for. 10 II. OBJECTIONS FILED BY THE RESPONDENTS KSFC:
9.
... RESPONDENTS-KSFC filed objections to the main writ petition and contended that M/s Manjunatha Apparels was a loanee and for repayment of the loan, property bearing No.No.8,(Old Nos. 3,4 and 5), situated at S.P.Road, P.M.Lane (Thigalarapet), Nagarathpet, Bengaluru 560 002, measuring 28 feet x 31 feet which is morefully described in the schedule to the present petition was offered as a collateral security. As loanee committed default, the collateral security was brought to sale under eauction as per the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The reserve price was fixed at Rs.34.00 lakhs. In pursuant to the e-auction notification issued by the respondents-KSFC, petitioner has made his offer offering to purchase 11 petition schedule property which was brought for sale for a sum of Rs.34.00 lakhs.
... Petitionerwas a successful bidder. He was issued with the letter dated 30/11/2010 vide Annexure-B, stating that the balance sale consideration has to be paid within 15 days from the date of the said and as on that date, the petitioner has paid Rs.8,50,000/- being 25% of the bid amount. It was also made clear in the said letter that, if the petitioner fails to pay the balance consideration amount within 15 days, the amount paid including the EMD will be forfeited without any further notice and the sale shall be cancelled. The petitioner did not make payment within the time stipulated therein, but requested for some time to pay the balance amount. His request was considered and the petitioner was permitted to pay the balance sale consideration of Rs.25.50,000/- on or before 31/12/2010 with interest for the delayed payment. It is intimated 12 that if the petitioner does not pay the amount, the amount of Rs.8,50,000/- already paid will be forfeited. The same was communicated to the petitioner on 27/12/2010 as per Annexure-R1.
10. It is the further case of the respondents that thereafter, the petitioner made representation on 21/01/2011 (Annexure-R2) to the Corporation stating that the amount paid by him i.e. Rs.8,50,000/- may be refunded contending that OS No.325/2004 is pending. The said request was rejected by the respondents by a communication dated 02/02/2011 as per Annexure-R3, wherein, it was made clear that the amount of Rs.8,50,000/- was forfeited as per the conditions of auction. Again, petitioner issued a notice on 11/01/2011 through his Advocate. To the said notice issued by the petitioner, the respondents have suitably replied on 24/2/2011. In the reply, it is made clear that 13 the request of the petitioner was rejected. Again, on 20/09/2011, the petitioner made a representation to the respondents-KSFC stating that he is ready to pay the balance amount of Rs.25,50,000/- within 30 days as per Annexure-R4. The said representation was considered and request of the petitioner was agreed subject to the condition that the petitioner shall pay the delayed period interest at the rate of 10% p.a. Accordingly, time was granted till 15/11/2011 to pay the balance sale consideration of Rs.25,50,000/- along with interest for the delayed period. Inspite of granting time, petitioner has not paid the amount with interest. Therefore, respondents by letter dated 15/12/2011 cancelled the time granted earlier as per Annexure- R5.
11. It is further contended that Security Interest (Enforcement) Rules, 2002 makes it clear that if the balance purchase price is not paid within 14 15 days from the date of confirmation of sale of immoveable property or such extended date, the same shall be forfeited. In the instant case, the petitioner has not paid the balance sale consideration within a period of 15 days or within the extended period, hence, the amount paid by the petitioner has been forfeited as per the terms and conditions of the sale confirmation. It is further contended that the petitioner having participated in the auction knowing fully well the injunction suit was pending in respect of the suit property, he cannot say subsequently that he is not interested to purchase the litigation property. Once the confirmation of sale and forfeiting of the amount paid by the petitioner is made, it is not open for the petitioner to say that he is ready and willing to pay the balance consideration and the respondents-KSFC shall made available the marketable title. The ground that respondents have 15 suppressed the pendency of litigation is not correct. The petitioner was made known pending litigation at the time of sale and after the purchase of the property he cannot say that he is not made known about the pendency of the litigation. The contention that the process of e- auction itself was the result of deception and it is bald is totally false and baseless. The contention that e-auction is hit by Section 54 of the Transfer of Property Act, would not stand to reason. The petitioner has not made out any case to interfere with the impugned order passed by the respondents. The petitioner is not entitled for any of the relief sought in the writ petition and is liable to be rejected.
12. I have heard the learned counsel for the parties to lis. 16 III. ARGUMENTS ADVANCED ON BEHALF OF THE PETITIONER.
13. Sri. M.J.Alva, learned counsel for petitioner reiterating the grounds urged in the writ petition has contended that the very impugned notification was issued by the respondents on 27/10/2010 notifying e-auction of certain properties, including the schedule property suppressing the fact that the schedule property was the subject matter of the suit in OS No.325/2004 filed by one Shekhar @ B.S.Chandrashekhar against respondents and another on 12/1/2004 itself and the trial court granted an interim order of status quo as on the date of notification and the injunction was operating. Therefore, the very notification issued notifying the general public is fraud on the society and hence, it cannot be sustained. He would further contend that conduct of respondents-KSFC offering the property for sale 17 deliberately suppressing the pendency of the litigation when the very question of title is highly deplorable cannot be justified under law. Taking benefit of its own misdeeds, the respondents cannot be permitted to put the blame upon the petitioner alleging non payment of the balance amount and take the shelter of forfeiture when they have played fraud on the society. Therefore, the impugned auction cannot be sustained.
14. He would further contend that respondents-KSFC published e-auction notice on 27/10/2010 to the entire world by suppressing the material facts about the pendency of the proceeding in respect of Manjunatha Apparels i.e. the schedule property morefully described in the schedule in O.S.NO.325/2004 and interim order was granted. Therefore, in all fairness the respondents-KSFC ought to have refunded the 18 amount of Rs.8,50,000/- i.e. 25% made by the petitioner at the time of e-auction. Inspite of the pendency of the suit was brought to the notice of respondents-KSFC by the petitioner by a representation dated 21/01/2011 as per Annexure- D, unfortunately, the KSFC without whispering anything in their reply has stated that the amount is forfeited as it is not paid within the time. Therefore, the impugned action of the respondents in notifying e-auction proceedings is bad and not with good intention. He would further contend that even now the petitioner is ready and willing to purchase the property free from all encumbrances and that was the notice issued requesting the respondents to clear title and he would purchase the property by paying the balance amount with interest and the same is not considered. He would further contend that when the petitioner has brought to the notice of KSFC, in all fairness, it 19 should have refunded the amount with interest. Instead of refunding the amount very strangely KSFC as per communication dated 02/02/2011 vide Annexure-E forfeited the amount and consequently, respondents have not refunded entire amount or executed the sale deed.
15. Mr. M.J.Alva, learned counsel for petitioner on instructions submitted that even today petitioner is ready to purchase the property and to get the sale deed executed by paying Rs.25,50,000/- with reasonable interest, if KSFC executes the sale deed free from all encumbrances in respect of the schedule property.
16. In support of his contentions, the learned counsel for petitioner relied upon the following judgments: (i) 2013 (6) Supreme Court Journal 1 (Devendra Kumar Vs. of Uttaranchal and others) Paras 14 and 18; State 20 (ii) (iii) (1994)1 Supreme Court Cases 1 (S.P.Chengalavaraya Naidu (Dead) by LRS VS. Jagannath (Dead) by LRs and others Para Nos. 5 and 6; 2009(6) Supreme Court Journal 211 (State of Orissa and others Vs. Harapriya Bisoi) para 35; (iv) 2010(7) Supreme Court Journal 161 (Meghmala and others Vs. G.Narasimha Reddy and others) para Nos. 20 and 26. Therefore, he sought to allow the writ petition. IV-ARGUMENTS ADVANCED ON BEHALF OF THE RESPONDENTS KSFC:
17. Per contra, Sri. Yogesh D. Naik, learned counsel for respondents-KSFC sought to justify the impugned communication and contended that the auction was held as is where basis. Once the bid is accepted, it is the duty of the petitioner to pay the amount and get register the property in question within time. Further, it is contended that the very relief sought by the petitioner in the writ petition 21 is not maintainable as the petitioner has alternative remedy to approach Debt Recovery Tribunal under the provisions of Section 17 of the SARFAESI Act. He would further contend that the petitioner made representation on 21/01/2011 to the Corporation stating that the amount paid by him i.e. Rs.8,50,000/- may be refunded contending that OS No.325/2004 is pending before the trial court. The said request was rejected by respondents-KSFC on 02/02/2011, wherein, it is made clear that an amount of Rs.8,50,000/- was forfeited as per the conditions of the auction, though on the request made by the petitioner, the time was granted till 15/11/2011 to pay the balance sale consideration of Rs.25,50,000/- along with interest at 10% p.a. for the delayed period, petitioner has not paid the amount with interest. Therefore, the respondents authorities were justified in passing the impugned 22 communication and therefore, petitioner is not entitled for any relief sought by him.
18. He would further contend that the writ petition filed after the lapse of nearly four years is liable to be dismissed on the ground of delay and laches. He has further contended that at the time of notification made as per Annexure-A for e- auction inviting bids is in respect of six items and the petitioner who was the successful bidder in respect of item No.1, namely M/s Manjunatha Apparels was knowing about the pending litigation at the time of sale.
... Petitionerknowing fully well about the litigation has purchased the property and now he cannot turn around and submit that he wants refund which is impermissible. Hence, the writ petition filed by the petitioner is liable to be dismissed on the law of estoppel as the petitioner has participated in the proceedings and successful bidder for item No.1 and he could not pay the 23 amount within the time. Therefore, he could not blame KSFC for his personal default. He would further contend that e-auction was conducted in transparency manner without hiding anything and petitioner has not made out any grounds to grant the relief by exercising the powers under Articles 226 and 227 of the Constitution of India, as such, he sought to dismiss the writ petition.
19. In support of his contentions, the learned counsel for respondent relied upon the decision of the Division Bench of this Court in the case Mr. E.Ali Vs. The Authorized Officer and Chief Manager, Syndicate Bank (Writ Appeal Nos. 1505/2008 and 2309/2008 disposed of on 26/03/2009). He would further contend that the suit filed in O.S.NO.325/2004 was only for injunction and there is no prohibition for KSFC to proceed further. He would further relied upon Annexure-E and contend that even after rejection 24 of the request of the petitioner and forfeiture of EMD amount as per Annexure-R4, petitioner is still agreed to pay Rs.25,50,000/- with interest within 30 days, but not paid the same, which clearly indicates that the petitioner is aware of the pendency of the proceedings. Therefore, petitioner is not entitled for any relief under the Extra-Ordinary writ Jurisdiction of this Court and sought for dismissal of the writ petition. V. POINTS FOR DETERMINATION:
20. In view of the aforesaid rival contentions urged by the learned counsel for the parties, the points that arise for consideration are: (i) Whether, this Court, in exercise of powers under Articles 226 and 227 of the Constitution of India, can grant the relief of writ of mandamus directing the respondents to make out marketable title in respect of the property and execute the sale deed in favour of the petitioner, after accepting the remaining 25 balance amount of Rs.25,50,000/- in terms of e -auction dated 10/10/2010?. (ii) Whether the petitioner has made out a case for issue of writ of mandamus directing the respondents to refund Rs.8,50,000/- received by them in furtherance of e-auction dated 10/10/;2010 along with 15% interest in the facts and circumstances of the case?. VI. CONSIDERATION21 I have given my anxious consideration to the arguments advanced by the learned counsel for the parties and perused the entire material on record carefully.
22. Before proceeding with the present case, it would suffice to rely upon the object of the State Financial Corporation Act, 1951. The Preamble is the key to open the mind of the maker of the law, if the Act is read with its Preamble would indicate the object which the 26 legislature seeks to achieve in enacting the act and its intention become plain and manifest. It is settled law that if the language in the Act or Section or Clause is clear and unambiguous it is not necessary to call back upon the statement of objects or reasons of the Act to cull out the intention. The legislations, Rules or Regulations are enacted to regulate the day-to-day activities. But they cannot be exhaustive and practical difficulties arising in working out these have to be resolved by developing principles by the Court which are justice oriented, serve public purpose and promote social interest, of course, without doing violence to the language of the Section and the objective of enactment and if the provisions was enacted to remedy any even then to construe it in a manner in which it may carryout the objective of the enactment which was intended to suppress the mischief. 27 23. It is undisputed fact that respondents- KSFC have published e-auction tender Notification on 27/10/2010 in Vijaya Karnataka Kannada Daily Newspaper, inviting applications to sell six items of properties and suit schedule property is at Serial No.1, i.e. property bearing No.8, (Old Nos. 3,4 and 5), situated at S.P.Road, P.M.Lane (Thigalarapet), Nagarathpet, Bengaluru 560 002, measuring 27 feet x 31 feet which is morefully described in the schedule to the present writ petition. It is also not in dispute that as per the notification Annexure-A, item No.1 reserve price fixed was Rs.35,40,000/- and EMD is Rs.3,40,000/-. After consideration of all the applications filed, respondents accepted the bid of the petitioner and demanded for payment of 25% of bid amount in terms and conditions of r-auction notice i.e. Rs.8,50,000/- by the letter dated 30/11/2010 as per Annexure-B. It is also not in 28 dispute that petitioner has paid Rs.3,40,000/- on 4/11/2010 and Rs.5,10,000/- on 10/11/2010 through Bankers cheque and totally Rs.8,50,000/-. It is also not in dispute that one Shekhar @ B.S.Chandrashekar filed O.S.No.325/2004 on the file of the City Civil Judge Court, Bengaluru, against KSFC, 1st respondent herein/1st defendant therein and others for restraining the first defendant/1st respondent from auctioning the schedule property since the third defendant did not possess any right of furnishing collateral security of the schedule property in favour of the 2nd defendant and grant such other reliefs. The property mentioned in the suit schedule and the property mentioned in Item No.1 of the Notification are one and the same. As on the date of notification issued on 27/10/2010 there is already dispute pending between KSFC and Shekhar @ B.S.Chandrashekar and trial Court granted interim order of status- quo 29 restraining the first defendant from auctioning schedule property.
24. Though, 1st respondent KSFC was a party in the original suit, suppressing the said fact, issued the notification on 27/10/2010 after the interim injunction is granted, notifying the general public clearly depicts KSFC has not notified with good intention, it is nothing but playing fraud on the entire society including the present petitioner. KSFC being a Financial Institution should not act as private litigant and deprive the general public who participated in e-auction Tender with great faith and confidence that they would get good title. At the inception of notification itself, there was no good intention on the part of the KSFC in notifying e- auction in respect of the suit schedule property morefully described in the schedule to the writ petition. It is also not in dispute after the petitioner 30 came to know the dispute between Shekar @ B.S.Chandrashekar and KSFC, filed an application on 21/01/2011 demanding refund of Rs.8,50,000/- paid by him. But very strangely, KSFC by letter dated 02/02/2011 sent a reply stating that since the petitioner failed to pay balance sale consideration within 15 days, EMD paid is forfeited. Even the petitioner issued a legal notice stating that as on the date of notification already suit in OS No.325/2004 was filed against KSFC by one Shekhar @ B.S.Chandrashekar in respect of the same property which was pending consideration and injunction was granted and inspite of that respondents-KSFC has not refunded the amount.
25. It is also not in dispute that, when it was brought to the notice of KSFC about the pendency of the proceedings in the original suit in their entire reply or in the notification issued as per 31 Annexure-E, KSFC has not disclosed whether the suit was disposed off or injunction granted or vacated as contended by learned counsel for respondents in Annexure-E. In Legal notice issued by the petitioner on 28/9/2015 he has mentioned in detail. But while communicating or replying by the respondents as per Annexure-G dated 31/10/2015 though at para-02, it is mentioned that, Your client has represented on 21/01/2011 to refund the amount paid by him stating that OS No.325/2004 is pending before the Court. The request of your client was rejected by letter dated 02.02.2011 stating that the sale is on as is where is condition and if the remaining amount is not paid 25% of the amount already paid will be forfeited. It is also stated that suit filed by Shekhar @ B.S. Chandrashekar in O.S.No.325/2004, an order of status-quo was vacated and there is no impediment for the sale of property. But it is not disclosed 32 anywhere in the Notification or the correspondence between the petitioner and respondents, except Annexure-G dated 31/10/2015 which is only an eye wash on the part of KSFC. The fact remains that even assuming the contentions of the learned counsel for respondents, when the auction was made as is where is basis, cannot amounts to include the pendency of litigation. When e-auction was conducted by KSFC to sell the other notified properties without mentioning the details and litigations, if any, KSFC cannot e-auction the property without disclosing and suppressing the material fact. Therefore, the very action initiated by KSFC was suppression of material facts and suppression of litigation pending in respect of Item No.1 of the notification i.e. the schedule property morefully described in the schedule to the writ petition. Therefore, KSFC could not have forfeited the amount when their intention in notifying the e- 33 auction was bad only to deprive the general public including the petitioner. Therefore, the impugned action of the respondents cannot be allowed to be continued, as it amounts to encourage the KSFC to cheat further to the general public which is not expected from KSFC which is a Financial Institution undertaken by the State Government.
26. Sri. Yogesh D. Naik, learned counsel for respondents-KSFC relied upon the dictum of the Division Bench of this Court in the case of Mr. E.Ali Vs. The Authorised Officer and Chief Manager, Syndicate Bank, in W.A.Nos.1505/2008 & 2309/2008 dated 26th March 2009 in para-8, it is stated that the petitioner having knowledge of the said facts has submitted his bid and has not complied with the terms of the contract of depositing 75% of the bid amount within the time extended for depositing the said amount therefore, 34 the writ appeals came to be rejected. It was a case of the petitioner therein and the Chief Manager, Syndicate Bank where the petitioner has borrowed the loan and where the petitioners bid and price was accepted and subsequently bid amount was not paid within the extended time. Admittedly, in the present case, since the litigation is pending between KSFC and one Shekhar @ B.S.Chandrashekar. The petitioner brought at the inception as long back as on 21/01/2011 to the notice of KSFC about the pendency of the suit and KSFC without considering the representation and pendency of the suit proceeded to forfeit the amount. The said case relied upon by the learned counsel for respondents has no application on the facts and circumstances of the case, as admittedly, in the present case, KSFC issued notification suppressing the pendency of the litigation in OS No.325/2004 wherein the injunction was granted by the trial court at the first 35 instance against the respondents KSFC and the same is represented by the KSFC while issuing e- auction Tender notification. On that ground alone the writ petition is liable to be allowed.
27. The Honble Supreme Court while considering the fraud, mis-representation/ dishonesty and suppression of material information in the case of Devendra Kumara V. State of Uttaramchal and otehrs reported in 2013(6) SCJ1at para Nos. 14,15,16 and 18 held as under:
"14. In United India Insurance Company Ltd. v. Rajendra Singh & Ors., AIR2000SC1165 this Court observed that Fraud and justice never dwell together (fraus et jus nunquam cohabitant) and it is a pristine maxim which has not lost temper over all these centuries. A similar view has been reiterated by this Court in M.P. Mittal v. State of Haryana & Ors., AIR1984SC1888 15. In Ram Chandra Singh v. Savitri Devi & Ors., AIR2004SC4096 this Court held that misrepresentation itself amounts to fraud, and further held fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a 36 fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. The said judgment was re-considered and approved by this Court in Vice-Chairman, Kendriya Vidyalaya Sangathan & Anr. v. Girdharilal Yadav, (2004) 6 SCC325. the 16. The ratio laid down by this Court in various cases is that dishonesty should not be permitted to bear the fruit and benefit those persons who have frauded or misrepresented themselves. In such circumstances the Court should not perpetuate fraud by entertaining petitions on their behalf. In Union of India & Ors. v. M. Bhaskaran, AIR1996SC686 this Court, after placing reliance upon and approving its earlier judgment in District Collector & Chairman, Vizianagaram Social Welfare Residential School Society v. M. Tripura Sundari Devi, (1990) 3 SCC655 observed as under: If by committing fraud any employment is obtained, the same cannot be permitted to be countenanced by a Court of Law as the employment secured by fraud renders it voidable at the option of the employer. Service Commission 18. In Kendriya Vidyalaya Sangathan v. Ram Ratan Yadav, AIR2003SC1709 and A.P. Public v. Koneti Venkateswarulu, AIR2005SC4292 this Court examined a similar case, wherein, employment had been obtained by suppressing a material fact at the time of appointment. The Court rejected the plea taken by the employee that the Form was printed in English and he did not know the language, and therefore, 37 could not understand what information was sought. This Court held that as he did not furnish the information correctly at the time of filling up the Form, the subsequent withdrawal of the criminal case registered against him or the nature of offences were immaterial. The requirement of filling column Nos. 12 and 13 of the Attestation Form was for the purpose of verification of the character and antecedents of the employee as on the date of filling in the Attestation Form. Suppression of material information and making a false statement has a clear bearing on the character and antecedent of the employee in relation to his continuation in service.
28. The Honble Supreme Court while considering the provisions of Sections 13,33 of CPC read with Rule (1) of Rule 4, the judgment and decree obtained by fraud to be treated as nullity and can be questions even in collateral proceedings, in the case of S P CHENGALVARAYA NAIDU(DEAD)BY LRs. V. JAGANNATH(DEAD) BY LRs. AND OTHERS reported in (1994) I SCC I, at para Nos. 5 and 6 has held as under:
5. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and 38 this circumstances of case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, S.P Chengalvaraya Naidu vs Jagannath on 27 October, - http://indiankanoon.org/doc/1151521/ 3 bank-loan-dodgers and other unscrupulous persons from all walks of life find the court- process a convenient lever to retain the illegal- gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation. Kanoon 1993 Indian 6. The facts of the present case leave no manner of doubt that Jagannath obtained the preliminary decree by playing fraud on the court. A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. Jagannath was working as a clerk with Chunilal Sowcar. He purchased the property in the court auction on behalf of Chunilal Sowcar. 39 He had, on his own volition, executed the registered release deed (Ex. B-15) in favour of Chunilal Sowcar regarding the property in dispute. He knew that the appellants had paid the total decretal amount to his master Chunilal Sowcar. Without disclosing all these facts, he filed the suit for the partition of the property on the ground that he had purchased the property on his own behalf and not on behalf of Chunilal Sowcar. Non-production and even non-mentioning of the release deed at the trial is tantamount to playing fraud on the court. We do not agree with the observations of the High Court that the appellants- defendants could have easily produced the certified registered copy of Ex. B-15 and non-suited the plaintiff. A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party.
29. The Honble Supreme Court in the case of State of Orissa and others v. Harapriya Bisoi reported in 2009(6) SCJ211considering the provisions of Section 107 of Transfer of Property Act, read with Section 17 of the Registration Act, and on fraud at para Nos. 34, 35,36,39,46 held as under:
40. 34. A Fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by anothers loss. It is a cheating intended to get an advantage. (See S.P.Changalvaraya Naidu V. Jagannath (1994) 1 SCC1 fraud. A35 "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury enures there from although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi and Ors. (2003 (8) SCC319.
36. "Fraud" and collusion vitiate even the most solemn proceedings in any civilized system 41 of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, `wing me into the easy hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster's Third New International Dictionary "fraud" in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Legal Dictionary, "fraud" is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date in fact. Section 17 of the Indian Contract Act, 1872 defines "fraud" as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false. In a leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER1what in substance and false 42 in transaction to evade commercial constitutes "fraud" was described thus: (All ER p. 22 B-C) "fraud" is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false". But "fraud" in public law is not the same as "fraud" in private law. Nor can the ingredients, which establish "fraud" transaction, be of assistance in determining fraud in Administrative Law. It has been aptly observed by Lord Bridge in Khawaja v. Secretary of State for Home Deptt. (1983) 1 All ER765 that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation of statutory law. "Fraud" in relation to statute must be a colourable the provisions of a statute. "If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope. Present day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. The misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which the power can be exercised. But non-disclosure of a fact not required by a statute to be disclosed may law or administration law, as it 43 to fraud. Even not amount in commercial transactions non-disclosure of every fact does not vitiate the agreement. "In a contract every person must look for himself and ensures that he acquires the information necessary to avoid bad bargain. In public law the duty is not to deceive. (See Shrisht Dhawan (Smt.) v. M/s. Shaw Brothers (1992 (1) SCC534.
39. Suppression of a material document would also amount to a fraud on the court. (see Gowrishankar v. Joshi Amba Shankar Family Trust (1996 (3) SCC310 and S.P. Chengalvaraya Naidu's case (supra). fraud effective involved, 46. In the background of the massiveness of apparent and participative role of officials of the State cannot be lost sight of. Without their active and effective participation manipulation of records, tampering with documents could not have been possible. The State would do well to pursue the matter with seriousness to unravel the truth and punish the erring all permissible actions(including criminal action) against every one involved. officials and take 30. The Honble Apex Court in the case of Meghmala and others Vs. G Narasimha Reddy and others, reported in 2010(7) SCJ161 while considering that the orders obtained by making mis-representation, playing fraud cannot be sustained and fraud is a cheating intended to get 44 an advantage at para Nos. 20,25, 26, 28 and 30 held as under:
20. It is settled proposition of law that where an applicant gets an order/office by making misrepresentation or playing fraud upon the competent Authority, such order cannot be sustained in the eyes of law. "Fraud avoids all judicial acts ecclesiastical or temporal."
(Vide S.P. Chengalvaraya Naidu (dead) by L.Rs. Vs. Jagannath (dead) by L.Rs. & Ors. AIR1994SC853. In Lazarus Estate Ltd. Vs. Besalay 1956 All. E.R. 349), the Court observed without "no judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud, for fraud unravels everything."
equivocation that 25. Fraud is an intrinsic, collateral act, and fraud of an egregious nature would vitiate the most solemn proceedings of courts of justice. Fraud is an act of deliberate deception with a design to secure something, which is otherwise not due. The expression "fraud" involves two elements, deceit and injury to the person deceived. It is a cheating intended to get an advantage. (Vide Dr.Vimla Vs. Delhi Administration AIR1963SC1572 Indian Bank Vs. Satyam Fibres (India) Pvt. Ltd. (1996) 5 SCC550 State of Andhra Pradesh Vs. T. Suryachandra Rao AIR2005SC3110 K.D. Sharma Vs. Steel Authority of India Ltd. & Ors. (2008) 12 SCC481 and Regional Manager, Central Bank of India Vs. Madhulika Guruprasad Dahir & Ors. (2008) 13 SCC170. 45 it is shown that a including res judicata. Fraud 26. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void abinitio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable is doctrine proved when false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether false. Suppression of a material document would also amount to a fraud on the court. (Vide S.P.Changalvaraya (supra); Gowrishankar & Anr. Vs. Joshi Amba Shankar Family Trust & Ors. AIR1996SC2202 Ram Chandra Singh Vs. Savitri Devi & Ors. (2003) 8 SCC319 Roshan Deen Vs. Preeti Lal AIR2002SC33 Ram Preeti Yadav Vs. U.P. Board of High School & Intermediate Education AIR2003SC4628 and Ashok Leyland Ltd. Vs. State of Tamil Nadu & Anr. AIR2004SC2836. true or it be Naidu 28. From the above, it is evident that even in judicial proceedings, once a fraud is proved, all advantages gained by playing fraud can be taken away. In such an eventuality the questions of non-executing of the statutory remedies or statutory bars like doctrine of res judicata are not attracted. Suppression of any material fact/document amounts to a fraud on the court. Every court has an inherent power to recall its own order obtained by fraud as the order so obtained is non est. 46 30.
... RESPONDENTShave never been able to show as under what circumstances they are interested in the suit land because before the Special Court in the first round they failed to show any document that land had ever been transferred by the tenure holders/owners in favour of the Society or the Society had made any allotment in their favour or they were member of the said Society or they obtained any sanction from statutory authority to raise the construction. for the said Shri M.V.Durga Prasad, Ltd. Counsel appearing respondents was repeatedly asked by us to show any document on record linking the said respondents with the suit land. Though, he argued for a long time, raised large number of issues but could not point out a single document which may reflect that respondents could have any claim on the suit land. Therefore, we are of the considered opinion that the application at their behest was not maintainable.
31. At this stage, Sri.Yogesh D. Naik, learned counsel for respondents submits the property in question was already returned to the original borrower who has settled the dispute by paying the amount due to KSFC by one time settlement. The said submission is placed on record. In view of the above, 1st point raised in the writ petition has to be 47 answered in negative holding that this Court under Articles 226 and 227 of Constitution of India, cannot direct respondents KSFC to make out marketable title in respect of the property in dispute and execute the sale deed in favour of the petitioner.
32. The Honble Supreme Court while considering the powers under Article 226 of Constitution of India, in the case of Maharashtra Chess Association v. Union of India reported in 2019 SCC Online SC932at para Nos. 13,14 and 16 held as under:
13. Echoing the sentiments of Lord Coke, this Court in Uttar Pradesh State Sugar Corporation Limited v Kamal Swaroop Tondon7 observed that:
35. t is well settled that the jurisdiction of the High Court under Article 226 of the Constitution is equitable and discretionary. The power under that Article can be exercised by the High Court to reach injustice wherever it is found.
14. The role of the High Court under the Constitution is crucial to ensuring the rule of 48 Ramchand its writ is its writ jurisdiction. jurisdiction Sobhraj Wadhwani8 law throughout its territorial jurisdiction. In order to achieve these transcendental goals, the powers of the High Court under its writ jurisdiction are necessarily broad. They are conferred in aid of justice. This Court has repeatedly held that no limitation can be placed on the powers of the High Court in exercise of In A V Venkateswaran, Collector of Customs, Bombay v a Constitution Bench of this Court held that the nature of power exercised by the High Court under inherently dependent on the threat to the rule of law arising in the case before it:
10. e need only add that the broad lines of the general principles on which the court should act having been clearly 6 James Baggs Case (1572) 77 ER12717 (2008) 2 SCC418 (1962) 1 SCR7537 laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible Rules which should be applied with rigidity in every case which comes up before the court.
16. While the powers the High Court may exercise under its writ jurisdiction are not subject to strict legal principles, two clear principles emerge with respect to when a High Courts writ jurisdiction may be engaged. First, the decision of the High Court to entertain or not entertain a particular action under its writ jurisdiction fundamentally discretionary. Secondly, limitations placed on the courts decision to exercise or refuse to exercise its is 49 its territorial writ jurisdiction are selfimposed. It is a well settled principle that the writ jurisdiction of a High Court cannot be completely excluded by statute. If a High Court is tasked with being the final recourse to upholding the rule of law within it must necessarily have the power to examine any case before it and make a determination of whether or not its writ jurisdiction is engaged. Judicial review under Article 226 is an intrinsic feature of the basic structure of the Constitution. jurisdiction, 33. In view of the Dictum of the Honble Supreme Court stated supra the contention of the learned counsel for respondents that the petitioner has for alternative remedy cannot be accepted. Admittedly, at the inception, KSFC proceeded to notify e-auction Tender Notification, suppressing the pendency of the original suit in respect of Item No.1 i.e. schedule property morefully described in the schedule to the writ petition and therefore, the intention of KSFC was not clean in notifying e- auction. Therefore, the contention of the learned counsel for the respondents cannot be accepted and 50 when the petitioner has brought to the notice of this court that injustice is done by KSFC while notifying e- auction procedure and they have not mentioned the pendency of the original suit. No person in the world purchases litigation property ignoring his mental peace and at the cost of loosing his health and money. Since, it was brought to the notice of KSFC, in all fairness, KSFC ought to have refunded the deposited amount with interest to avoid further litigation, but the same has not been done by KSFC in the present case.
34. Even after hearing the matter for some time on 29/5/2019 this Court provided an opportunity to KSFC to come forward and show their fairness and refund the amount. Still KSFC has not come forward and wanted the litigation to continue and contended that the writ is not maintainable which clearly indicates that KSFC is 51 not before this Court with clean hands, clean mind and clean heart in notifying e-auction proceedings. Therefore, the very action initiated by KSFC is nothing but fraud on the Society including the petitioner and the same is not sustainable and the petitioner has made out statutory and enforceable right, accordingly, the point No.2 raised in the writ petition has to be answered in the affirmative in part holding that the petitioner has made out a case to issue of mandamus, directing the respondents- KSFC to refund a sum of Rs.8,50,000/- with 6% p.a. from the date of receipt of the same amount by the respondents-KSFC. VIII CONCLUSION:
35. In view of the above, writ petition is allowed insofar as petitioner is concerned and Writ of mandamus is issued to the respondents-KSFC to refund a sum of Rs.8,50,000/- received from the 52 petitioner in furtherance of e-auction dated 10/10/2010 along with interest at 6% p.a. from the date of the amount received i.e. from 10/11/2010 till its payment. 36.The respondents-KSFC has unnecessarily encouraged for the litigation and abused the process of law on its own fault notifying e-auction Tender to the general public suppressing the pendency of the litigation i.e., O.S No.325/2004 and driven the petitioner before this Court. Therefore, the petitioner is entitled to the expenses and cost of the litigation. In view of the aforesaid facts and peculiar circumstances of the case, respondents - KSFC have to pay the litigation expenses and costs Rs.1,00,000/-(Rupees one lakh) payable to the petitioner within a period of one month from the date of the receipt of this order, failing which, it is always open for the petitioner 53 steps to recover the same take appropriate action in accordance with law. Ordered accordingly. JUDGE Sd/- tsn*