Indrajit Mahanty, J.
1. In the present writ application, the Petitioners-the Mahajan brothers seek to challenge the notice under Section 13(2) of the NPA Act issued to M/s. Chirag Alankar Pvt. Ltd.-Opposite Party No. 2 (partnership farm) under Annexure-11 to the writ application.
2. From the facts narrated in the writ application and various documents appended thereto, it appears that M/s. Chirag Alankar Pvt. Ltd.-Opposite Party No. 2 obtained a loan from Opposite Party No. 1-Bank, namely, State Bank of Bikaneer and Jaipur and for such purposes, Smt. Narmada Devi Patodia (Mother of the promoters of the company) created equitable mortgage by submitting title deeds of the land in question with the Opposite Party-Bank on 21.7 .1999. The impugned notice under Section 13(2) of the NPA Act under Annexure-11 pertains to the said land mortgaged by Smt. Narmada Devi Patodia and issued since the loanee-company defaulted in repayment of their loans.
3. Mr. S.P. Mishra, Learned senior advocate appearing for the Petitioners submitted that the said Narmada Devi Patodia had entered into an unregistered agreement with one Kantilal Jhunjhuwadia on 20.8.1998, i.e. allegedly prior to the mortgage made by her in favour of the Opposite Party No. 1-Bank. Sri Mishra further alleged that pursuant to the agreement between Narmada Devi Patodia and Kantilal Jhunjhuwadia on 20.8.1998 and on receipt of part payment for consideration, possession of the land had been delivered to the said Kantilal Jhunjhuwadia. It is further submitted that the said Kantilal Jhunjhuwadia instituted T.S. No. 239 of 2001 in the Court of Civil Judge (Sr. Division), 1st Court, Cuttack for specific performance of contract against Narmada Devi Patodia and since the said Narmada Devi Patodia passed away subsequent to the institution of the suit but prior to filing of her written statement, Opposite Parties 3 to 9 were substituted as her legal heirs in the suit in her place. It appears that the aforesaid suit was decreed on 31.1.2002 and Opposite Parties 3 to 9 (Judgment Debtors) executed the registered sale deed in favour of the Plaintiff therein, namely, Kantilal Jhunjhuwadia.
It is further submitted that the said Kantilal Jhunjhuwadia executed the registered sale deed for a part of the said land, in favour of the present Petitioners, i.e. the Mahajan brothers. Learned Counsel for the Petitioners submitted that the present Petitioners (Mahajan brothers) are bona fide purchasers who purchased part of the property from the said Kantilal Jhunjhuwadia and in turn, had acquired the title of the property by way of execution of a decree passed by a Court of competent jurisdiction. Learned Counsel for the Petitioners submitted that after purchase of the property, the Mutation Patta in favour of the Petitioners have been issued and in the year 2007, since the Petitioners learnt that their land is going to be sold in R.P. Case No. 147 of 2005 arising out of O.A. No. 340 of 2001 pending before the Recovery Officer, DRT, Cuttack, as well as an order of attachment dated 1.3.2007, passed by the Recovery Officer, DRT, the Petitioners filed an application before the Recovery Officer praying for recalling the order of attachment and to investigate the claim of the Petitioners and declare the property in question to be on attachable in terms of the provisions of the DRT Act on 20.3.2007.
Apart from that the Petitioners further filed an application before the Recovery Officer to direct the Certificate Debtors, i.e. Opposite Parties 3 to 9 to produce the copy of the purported agreement of sale said to have been executed on 28.8.1998 by Late Narmada Devi Patodia In fovour of Kantilal Jhunjhuwadia and by a common Order Dated 22.8.2007, the Recovery Officer, DRT, Cuttack was pleased to reject both the applications of the Petitioners under the impugned orders passed in Annexures 8 and 9 to the writ application.
Apart from the aforesaid facts, Learned Counsel submitted that it can no longer to be said that any loan is outstanding or due to the Bank since the claim amount before the DRT has been concluded by way of passing the decree and Mr. Mishra submitted that once a decree has been passed, no loan can be said to remain outstanding. In the light of the argument, Sri Mishra submitted that once no loan can be said to be substituting after the passage of a decree under the DRT Act, it was no longer open to the Opposite Party No. 1-Bank, to resort to exercise its jurisdiction under Section 13(2) of the NPA Act for issuing the impugned notice. In other words Sri Mishra submitted that the notice under Section 13(2) of the NPA Act impugned as Annexure-11 to the writ application was passed without jurisdiction and hence, ought to be quashed as illegal in the eyes of law. Mr. Mishra, Learned Counsel also submitted that once the Bank had initiated a proceeding under the DRT Act and have also obtained a decree therefrom, which awaits execution through recovery proceeding, it is not permissible for such a Bank to initiate a proceeding under Section 13(2) of the NPA Act.
4. Sri Shakti Prasad Das, Learned Counsel appearing for the Opposite Party No. 1-Bank, on the other hand, submitted that the issue as to whether the Bank could resort to exercise its rights under the NPA Act even after initiating a proceeding under the DRT Act is no longer res integra. In this respect, Sri Das placed reliance upon the Judgment of the Hon'ble Supreme Court in the case of M/s. Transcore v. Union of India and Anr. : AIR2007SC712 and in particular on the observation of the Hon'ble Supreme Court in Paragraph-51 thereof, which is quoted hereinbelow:
51. For the above reasons, we hold that withdrawal of the O.A. pending before the DRT under the DRT Act is not a pre-condition for taking recourse to NPA Act. It is for the bank/FI to exercise its discretion as to cases in which it may apply for leave and in cases where they may not apply for leave to withdraw. We do not wish to spell out those circumstances because the said first proviso to Section 19(1) is an enabling provision, which provision may deal with myriad circumstances which we do not wish to spell out herein.
Sri Das further seriously countered the claim of the Learned Counsel for the Petitioners that the Petitioners were the bona fide purchaser. In this respect, Sri Das submitted that Smt. Narmada Devi Patodia had offered her property as mortgage for a loan given to a company promoted by her own children, namely, M/s. Chirag Alankar Pvt. Ltd.. It is these children of Smt. Narmada Devi Patodia who had been substituted in her place as Opposite Parties 3 to 9 in T.S. No. 239 of 2001 before the Civil Judge (Sr. Division), 1st Court, Cuttack. On a perusal of the Judgment and decree passed by the said Court, it is clear that none of the Opposite Parties had ever brought to the notice of the Court that their Late mother Smt. Narmada Devi Patodia had, in fact, mortgaged the very self-same property which was the subject matter of the suit with the Opposite Party No. 1-Bank. Apart from that neither in the present proceeding nor in the proceeding before the DRT, the unregistered agreement dated 20.8.1998 said to have been entered into between Narmada Devi Patodia and Kantilal Jhunjhuwadia, has ever been produced. Sri Das, in essence, submitted that the Petitioners' conduct clearly establishes totally lack of bona fide and in fact, T.S. No. 239 of 2001 was a collusive suit, to which the Bank was not a party, even though the land which was the subject matter of the suit had already been mortgaged in favour of the Bank prior thereto.
He further submitted that the Petitioner himself claims to have purchased the property from one Kantilal Jhunjhuwadia on 12.5.2004 whereas the Opposite Party-Bank had already filed O.A. No. 340 of 2001 before the DRT, Cuttack in order to realize the loan dues of M/s. Chirag Alankar Pvt. Ltd.. In this regard, Sri Das further submitted that the Petitioner should not be permitted to question the notice under Annexure-11, since the Petitioners own objections before the Recovery Officer was rejected by the Recovery Officer vide Order Dated 22.8.2007 and while no challenge to the said order by way of appeal has been preferred. The said order has also not been impugned in the present writ application.
5. In consideration of the submissions advanced, we are of the view that the present challenge is a clear attempt to try and frustrate the Bank from enforcing its rights to the mortgaged property for recovery of its dues. We have given our anxious consideration to the contentions advanced by the Learned Counsel appearing for the parties in the present case and are of the view that while the order of the DRT dated 22.8.2007, is an appealable order under the DRT Act, no appeal admittedly has been filed. We also took note of the fact that no challenge to the same i.e. Annexures-8 and 9 has been made even in the present application. Therefore we do not intend to pass any order relatable to the said directions.
6. From the Judgment of the Hon'ble Supreme Court in the case of M/s. Transcore (supra), it is clear that the object behind introducing the first proviso and the third proviso to Section 19(1) of the DRT Act was to align the provisions of DRT Act, the NPA Act (Securitisation Act) and Order 23 CPC. Their Lordships of the Apex Court also noted that even after assuming that an O.A. is filed in the DRT for recovery of an amount on a term loan, after filing of O.A. and during its pendency if the Bank finds that the account of the loanee has become substandard/loss, in such a case the Bank can invoke the NPA Act, with or without the permission of the DRT.
7. In view of the above, we are left with no other alternative other than to reject the contentions advanced by the Learned Counsel appearing for the Petitioners and while rejecting the same we hold that the impugned notice under Section 13(2) of the NPA Act is within the jurisdiction of the Bank. The Hon'ble Apex Court has in clear and categorical terms permitted the Bank to invoke its remedies under the NPA Act, 2002 even after having elected to seek remedy in terms of the DRT Act, 1993, for realizing the secured assets even without withdrawing or abandoning the O.A. filed before the DRT under the DRT Act. Thus the petition is liable to be dismissed.
8. From the facts of the present case as noted herein above, it is an undisputed fact that late Narmada Devi Patodia executed a letter of guarantee in favour of the Opp. Party-Bank and created equitable mortgage by submitting title deeds of the land in question in order to secure the loan obtained by M/s. Chirag Alankar Pvt. Ltd. Even if for the sake of argument, it is accepted that she had earlier thereto, i.e. on 20.8.1998 executed an agreement with Kantilal Jhunjhuwadia, this fact was obviously never brought to the notice of the bankers in whose favour she mortgaged the property. Therefore, no interest in property could be said to have been transferred in favour of Kantilal Jhunjhuwadia, pursuant to their agreement, a suit was instituted by him before the Civil Judge (Sr. Division), 1st Court, Cuttack for specific performance of contract on 13.7.2001 and the same was registered as T.S. No. 239 of 2001. In that suit although late Narmada Devi Patodia had been impleaded as a Defendant, she passed away without filing any written statement and it is only pursuant to the decree of the Court that sale deed No. 1312 dated 27.3.2002 was executed in favour of Kantilal Jhunjhuwadia.
We are of the considered view that since the property in question had been mortgaged in favour of the Bank, execution of the sale deed pursuant to the decree of the Court, cannot and does not vest any propriety right in favour of Kantilal Jhunjhuwadia since, the property in question had already become encumbered by the mortgage prior thereto i.e. since 21.7.1999, and, therefore, even though the sale was effected by way of execution of a decree, the same cannot pass on any better title than what Smt. Narmada Devi Patodia and therefore, the execution of the sale must be held to be a lis pendens sale. Unless the mortgage was redeemed, Smt. Narmada Devi Patodia had no valid title, which she could transfer in favour of anyone. It was a case of misrepresentation on the part of Smt. Narmada Devi patodia. Therefore, since we hold that Kantilal Jhunjhuwadia acquired no propriety rights in the property in question, he could not, in turn, pass on any better title than what he possessed by virtue of the sale deed in his favour. Any Judgment or decree, which is not in conformity of law is void and remains unexecutable as it defeats the public policy (vide Ferozi Lai Jain v. Man Mai and Anr. AIR 1970 SC 794; K.K. Chari v. R.M. Seshadri AIR 1973 SC 1311; Smt. Nai Bahu v. Lala Ramnarayan and Ors. AIR 1978 SC 22; and Natraj Studios (P) Ltd. v. Navrang Studios and Anr. AIR 1981 SC 537).
In the instant case, the Civil Court had no opportunity to examine and determine the issue as to whether after executing the mortgage deed with the Bank, Smt. Narmada Devi Patodia could validly transfer the title over the property even by execution of decree of the Civil Court in a suit for specific performance. Therefore, in our opinion, the decree could not be worth execution. More so, the suit was decreed on 31.1.2002 during the pendency of the recovery proceedings before the Debt Recovery Tribunal in O.A. No. 340 of 2001.
Accordingly, we are of the view that since the present Petitioners claim their title through a subsequent sale effected by the said Kantilal Jhunjhuwadia in their favour, they are, merely 'lis pendens purchasers' and cannot derive any better title than what was vested with by their vender.
9. In this fact situation, we dismiss the writ application and also hold that the notice under Section 13(2) of the NPA Act, does not suffer from any jurisdictional error.
10. We may further observe that it remains open for the Petitioners to approach the Bank and submit their offer for settlement of the dispute and it remains open for the Bank to consider the same in accordance with law or to make recovery of the consideration amount from the purchasers in accordance with law.
B.S. Chauhan, C.J.
I agree