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Shri Rakesh Madan and anr. Vs. Rajasthan Financial Corporation and ors. - Court Judgment

SooperKanoon Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberI.A. No. 14090/2008 in CS(OS) No. 513/2008
Judge
Reported in159(2009)DLT539
ActsState Financial Corporation Act, 1951 - Sections 29, 30, 31 and 31(1); Code of Civil Procedure (CPC) - Sections 11 - Order 9, Rule 7 - Order 39, Rules 1, 2 and 4; Constitution of India - Article 51
AppellantShri Rakesh Madan and anr.
RespondentRajasthan Financial Corporation and ors.
Appellant Advocate A.K. Singh and; Vimal Dubey, Advs
Respondent Advocate Shyam Moorjani and ; Ananya Poddar, Advs. for Defendant No. 1
DispositionApplication allowed
Cases ReferredU.P. Financial Corporation v. Gem Cap
Excerpt:
- - 1. a second application of the plaintiffs under section 39 rules 1 & 2 of the cpc, after dismissal of the first application as well as appeal there against before the division bench is for consideration. 3 failed to make repayment of loans; 2 and his wife as well as by shri des raj madan and now by his legal representatives; patil [1977]1scr320 held that it is well settled that principles of res judicata can be invoked not only in separate subsequent proceedings, they also get attracted in subsequent stage of the same proceedings; some like orders of stay, injunction or receiver are designed to preserve the status quo pending the litigation and to ensure that the parties might not be prejudiced by the normal delay which the proceedings before the court usually take. 23. in my view,.....rajiv sahai endlaw, j.1. a second application of the plaintiffs under section 39 rules 1 & 2 of the cpc, after dismissal of the first application as well as appeal there against before the division bench is for consideration.2. the principle contention of the counsel for the defendant no. 1 is that a second application does not lie and especially after the order dismissing the earlier application for the same relief has merged in the order of the division bench in appeal.3. the factual matrix in which the aforesaid question has arisen is as under. the plaintiffs are the son and daughter of late shri des raj madan. the only other natural heir of shri des raj madan, as per the plaintiffs is the defendant no. 2 being the other son of shri des raj madan and the brother of the plaintiffs. shri.....
Judgment:

Rajiv Sahai Endlaw, J.

1. A second application of the plaintiffs under Section 39 Rules 1 & 2 of the CPC, after dismissal of the first application as well as appeal there against before the Division Bench is for consideration.

2. The principle contention of the counsel for the defendant No. 1 is that a second application does not lie and especially after the order dismissing the earlier application for the same relief has merged in the order of the Division Bench in appeal.

3. The factual matrix in which the aforesaid question has arisen is as under. The plaintiffs are the son and daughter of late Shri Des Raj Madan. The only other natural heir of Shri Des Raj Madan, as per the plaintiffs is the defendant No. 2 being the other son of Shri Des Raj Madan and the brother of the plaintiffs. Shri Des Raj Madan was admittedly the owner of property No. 152, Jagriti Enclave, New Delhi. Shri Des Raj Madan is stated to have died on 19th December, 2001 leaving the plaintiffs and the defendant No. 2 as his only natural heirs. The plaintiffs No. 1 & 2 and the defendant No. 2 are thus after the demise of Shri Des Raj Madan stated to be owners of 1/3rd undivided share each in the aforesaid property. The plaintiff No. 1, however, claims to be in exclusive possession of the property.

4. The cause of action for institution of the suit was the notice issued by the defendant No. 1 a State Financial Corporation within the meaning of State Financial Corporation Act, 1951, under Sections 29 & 31 of the said Act to take over the aforesaid property and to dispossess the plaintiff No. 1 therefrom and to sell the said property. It is the case in the plaint that in March, 2003, the plaintiff No. 1 had come across a notice dated 26th February, 2003 issued by the defendant No. 1 stating inter alia that Shri Des Raj Madan had executed a deed of mortgage with respect to the aforesaid property in favour of the defendant No. 1 in consideration of the advances made to the defendant No. 3 Company. The plaintiff No. 1 claims to have replied to the aforesaid notice on 15th April, 2003 informing that Shri Des Raj Madan was never the director, proprietor or partner of the defendant No. 3 Company and also informing of the demise of Shri Des Raj Madan. It is further pleaded that the defendant No. 1 did not take any action after receiving the aforesaid reply of the plaintiff No. 1; however, after five years, another notice dated 1st February, 2008 addressed to the plaintiff No. 1 and the defendant No. 2 as legal heirs of Shri Des Raj Madan was received in which it was stated that Shri Des Raj Madan had stood guarantor to secure the loans by the defendant No. 1 to the defendant No. 3 Company, that the defendant No. 3 Company had not repaid its loans and a sum of Rs. 2,28,20,471/- was outstanding and that if the said amount was not paid till 20th February, 2008, the defendant No. 1 would initiate proceedings under Sections 29 & 31 (supra) to take possession of the property. The plaintiffs instituted the suit pleading that the stand of the defendant No. 1 that Shri Des Raj Madan had stood guarantee for the loans by the defendant No. 1 to the defendant No. 3 Company or had mortgaged the aforesaid property was false inter alia for the reason that Shri Des Raj Madan was at the time of the alleged mortgage in June 2001 was physically handicapped and not of sound disposing mind owing to a paralytic attack, old age and illness. It was further pleaded that the officials of the defendant No. 1 in collusion with the defendant No. 2 had forged and fabricated the documents of mortgage. In this context, para 23 of the plaint is as under:

23. That the defendant No. 1 cannot give notice under Section 29 & 31(1)(aa) of the SFC Act to the plaintiffs and defendant No. 1 also cannot proceed against the plaintiffs or their properties under Section 29 & 31(1)(aa) of the State Financial Corporation Act. The plaintiff No. 1 cannot be evicted from his only place of residence.

5. The plaintiffs thus claimed the relief of declaration that Shri Des Raj Madan had not stood as guarantor or surety for the dues, if any, of the defendants No. 2 & 3 to the defendant No. 1 and had not executed any mortgage deed with respect to the property and of injunction restraining the defendant No. 1 from initiating any recovery proceedings against the plaintiffs or their properties and from dispossessing the plaintiff No. 1 from the property and from selling the property and also for a direction to the defendant No. 1 to return the original title documents of the property. Along with the plaint, the plaintiffs filed IA No. 3529/2008 under Order 39 Rules 1 & of the CPC for restraining the defendant No. 1 from interfering in the plaintiff No. 1's possession or the plaintiffs' ownership of the aforesaid property and from selling or creating any third party interest with respect to the same.

6. No ex parte injunction was granted in favour of the plaintiffs. The statement of the plaintiff No. 1 was also recorded on 24th March, 2008, presumably under Order 10 of the CPC. The defendant No. 1 filed its written statement and documents stating inter alia that the suit was not maintainable being for stalling the recovery of public funds; that the defendant No. 1 had sanctioned and advanced loans of the total sum of Rs. 5.16 crores to the defendant No. 3; that the defendant No. 3 and its directors, namely, defendant No. 2 and his wife had executed the loan documents and had also mortgaged the plant and machinery of the defendant No. 3's works at Bhiwadi in favour of the defendant No. 1; that in addition Shri Des Raj Madan being the father of the defendant No. 2 had also stood guarantee for repayment of the said loans and had mortgaged the aforesaid property in favour of the defendant No. 1 by deposit of title deeds; that the defendant No. 3 failed to make repayment of loans; that the defendant No. 1 had taken over and sold in February/March, 2006 the land, building, plant and machinery by the defendant No. 1 in exercise of power under Sections 29, 30 and other provisions of the aforesaid Act; even thereafter a sum of Rs. 2,28,17,362/- was outstanding as on 8th March, 2006 and it was payable by the defendant No. 2 and his wife as well as by Shri Des Raj Madan and now by his legal representatives; that the said amount was liable to be recovered by sale of mortgaged property, namely, 152, Jagriti Enclave, New Delhi; that the defendant No. 1 had for the said purposes served the notice under Sections 29 & 30 of the Act and also affixed the notice at the premises on 1st February, 2008; that the defendant No. 1 was entitled in law to take over the possession of the property and to sell the same. The defendant No. 1 in its written statement in reply to para 23 as set out hereinabove of the plaint stated that action taken by it i.e. under Sections 29 & 30 of the Act was in accordance with law and it was entitled to take possession of the property and sell the same.

7. The first application aforesaid of the plaintiffs under Order 39 Rules 1 & 2 of the CPC was dismissed by a detailed reasoned order dated 26th May, 2008. This Court, prima facie, disbelieved the case set up by the plaintiffs that Shri Des Raj Madan at the time of execution of the mortgage of his property in June 2001 in favour of the defendant No. 1 being incapacitated owing to illness or age from doing so. It was prima facie found that the plaintiffs were having full knowledge of the entire transaction and the present suit had been instituted merely to help the defendant No. 2 who owed huge amounts to the defendant No. 1. It was further held that the defendant No. 1 was entitled to enforce the mortgage as long as the loans subsisted and could not be injuncted from taking action against the mortgaged property 'in accordance with the provisions of State Financial Corporation Act'. It was further observed 'if plaintiff has any grievance, he can approach the appropriate forum only under the said Act'. The plaintiffs preferred an appeal being FAO (OS) No. 281/2008 against the dismissal of first application for interim relief. The Division Bench of this Court vide order dated 22nd July, 2008 inter alia held that the plaintiffs and their brother defendant No. 2 did not appear to have intention to repay the dues of defendant No. 1; that no case for interfering in appeal in the discretion exercised by the Single Judge in dismissing the application was made out.

8. IA No. 14090/2008 also under Order 39 Rules 1 & 2 of the CPC was filed again for the same relief as claimed in the earlier application i.e., for restraining the defendant No. 1 from interfering in any manner in possession and ownership of the plaintiffs of the property and from selling the same. The reliefs in the second application under Order 39 Rules 1 & 2 of the CPC is identical to that claimed in the first application. The reason for moving the second application as set out therein is that the plaintiffs, after the dismissal of their appeal aforesaid had come across the judgment of the Apex Court in Karnataka State Financial Corporation v. N. Narasimahaiah : AIR2008SC1797 wherein it has been held that the provisions of Sections 29 & 30 of the Act cannot be invoked against a surety or a guarantor.

9. The plaintiffs thus argued that without prejudice to their pleas subject matter of adjudication in the suit that Shri Des Raj Madan had not stood guarantee and mortgaged the property, the defendant No. 1 was in any case not entitled to take possession of the property and sell the same in exercise of powers under Sections 29 & 30 of the Act. The application came up first before this Court on 19th November, 2008 when it was informed that the officials of the defendant No. 1 were sitting outside the aforesaid property being the residence of the plaintiff No. 1 to take possession thereof. In spite of advance copy of the application to the counsel for the defendant No. 1, he did not appear on that date and in the circumstances, the defendant No. 1 till the next date was restrained from taking possession of the property. It is the admitted position that the plaintiff No. 1 continues to be in possession of the property. On the next date, the counsel for the defendant No. 1 stated that no reply was required to be filed and the counsels for the plaintiffs and the defendant No. 1 were heard. Till the disposal of this application the order dated 19th November, 2008 was continued and the plaintiffs and the defendant No. 2 were also restrained from dealing with the property in any manner or parting with the possession thereof.

10. The counsel for the defendant No. 1 besides the objections first above noted of second application being not maintainable and at least not before this Court in view of appeal having been preferred and dismissed against the order of dismissal of the first application for interim relief, also urged that the conduct of the plaintiffs and the defendant No. 2 who were in collusion with each other was mala fide. It was stated that on 19th November, 2008 the defendant No. 2 under cover of his letter dated 19th November, 2008 had promised to settle the matter and make payments as mentioned in the said letter but after obtaining the order dated 19th November, 2008 from this Court had not even delivered the cheques which he had promised to deliver in settlement.

11. The first question to be considered is whether a second application for the same relief as in the first is maintainable under Order 39 Rules 1 & 2 of the CPC. The purpose of the said provision is protection of the property during the adjudication of the lis. Though the Code does not contain any express bar to a second application under Rule 1 of the CPC or a second interlocutory application under any other provision thereof and contains such a bar only in respect of a second suit only, the subject matter whereof has been directly and substantially an issue in a former suit between the same parties (Section 11 of the CPC), but the courts have held that the principles of Section 11 of the CPC are applicable to successive stages of the same proceedings also. The Apex Court in Y.B. Patil v. Y.L. Patil : [1977]1SCR320 held that it is well settled that principles of res judicata can be invoked not only in separate subsequent proceedings, they also get attracted in subsequent stage of the same proceedings; once an order made in the course of a proceedings becomes final, it would be binding at the subsequent stage of the same proceedings. Even earlier thereto in Satyadhyan Ghosal v. Deorajin Dabi : [1960]3SCR590 , it was held that the principle of res judicata applies also as between two stages in the same litigation to this extent that a court whether a trial Court or a higher court having at an earlier stage decided a matter in one way will not allow the parties to re-agitate the matter again at a subsequent stage of the same proceeding. It was, however, clarified that it did not mean that because at an earlier stage of the litigation a court has decided an interlocutory matter in one way and no appeal has been taken therefrom or no appeal did lie, a higher court cannot at a later stage of the same litigation consider the matter again.

12. The Apex Court yet again in Prahlad Singh v. Col. Sukhdev Singh : 1987(29)ELT490(SC) , while reiterating the principles laid down in Satyadhyan Ghosal (supra) however observed 'we are not also concerned here with orders of an interlocutory nature such as orders granting temporary injunction, appointing receiver, etc which do not purport to decide the rights of the parties finally'. The Apex Court thus carved out an exception to the general rule, in relation to orders in the nature of interlocutory injunction, appointment of receiver, etc.

13. It will be noticed that Rule 4 of Order 39 itself does not attach any finality to the orders in the nature of interlocutory injunction. Rule 4 enables the court to discharge or vary or set aside an order of interlocutory injunction, on finding the same to be necessary by a change in circumstances or if the order is found causing undue hardship to any party. The legislature has thus itself, not intended the principle aforesaid of finality or res judicata in relation to successive stages of the same proceeding to order under Order 39 of the CPC. Though Rule 4 deals only with vacation or modification of an interlocutory injunction granted, but in my view, the purport thereof being interim protection of the property, even if the Court had earlier not found enough reason to grant interim protection, the court on finding a change in the circumstances or undue hardship having been caused to a party who had been declined the interim injunction earlier, is competent to entertain a second application and to grant such injunction.

14. The power of the Court, is however, circumscribed by the aforesaid parameters of change in circumstances or undue hardship. Without any change in circumstances or without any case of undue hardship having been made out, the court is not competent to, in the same facts grant an interlocutory injunction, which was declined earlier. Caution has to be exercised that such power does not lead to filing applications before successive presiding officers. There is no element of wager to be attached to such successive applications.

15. A Single Judge of this Court in P.S. Prasad and Family HUF v. Bharat Bijili Ltd. Manu/De/9331/2006 has also while reiterating that principles of res judicata and estoppel applied to different stages of the same litigation and once a question/contention of the parties is decided by a court, the same issue/contention cannot be raised again before the same Court at a subsequent stage of the same proceeding carved out an exception 'unless there is a change in law, pronouncement of Supreme Court or High Court or change in facts constituting a new cause of action or fraud that entitles the party concerned to move another application for the same relief'.

16. At this stage it will be apposite to set out the following from Arjun Singh v. Mohinder Kumar : [1964]5SCR946 :

21. ...that interlocutory orders are of various kinds; some like orders of stay, injunction or receiver are designed to preserve the status quo pending the litigation and to ensure that the parties might not be prejudiced by the normal delay which the proceedings before the court usually take. They do not, in that sense, decide in any manner the merits of the controversy in issue in the suit and do not, of course, put an end to it even in part. Such orders are certainly capable of being altered or varied by subsequent applications for the same relief, though normally only on proof of new facts or new situations which subsequently emerge. As they do not impinge upon the legal rights of parties to the litigation the principle of res judicata does not apply to the findings on which these orders are based, though if applications were made for relief on the same basis after the same has once been disposed of the court would be justified in rejecting the same as an abuse of the process of court. There are other orders which are also interlocutory, but would fall into a different category. The difference from the ones just now referred to lies in the fact that they are not directed to maintaining the status quo or to preserve the property pending the final adjudication, but are designed to ensure the just, smooth, orderly and expeditious disposal of the suit. They are interlocutory in the sense that they do not decide any matter in issue arising in the suit, nor put an end to the litigation. The case of an application under Order IX, Rule 7 would be an illustration of this type. If an application made under the provisions of that rule is dismissed and an appeal were filed against the decree in the suit in which such application were made, there can be no doubt that the propriety of the order rejecting the reopening of the proceeding and the refusal to relegate the party to an earlier stage might be canvassed in the appeal and dealt with by the appellate court. In that sense, the refusal of the court to permit the defendant to 'set the clock back' does not attain finality. But what we are concerned with is slightly different and that is whether the same Court is finally bound by that order at later stages, so as to preclude its being reconsidered. Even if the rule of res judicata does not apply it would not follow that on every subsequent day on which the suit stands adjourned for further hearing the petition could be repeated and fresh orders sought on the basis of identical facts. The principle that repeated applications based on the same facts and seeking the same reliefs might be disallowed by the court does not however necessarily rest on the principle or res judicata. Thus if an application for the adjournment of a suit is rejected, a subsequent application for the same purpose even if based on the same facts, is not barred on the application of any rule of res judicata, but would be rejected for the same grounds on which the original application was refused. The principle underlying the distinction between the rule of res judicata and a rejection on the ground that no new facts have been adduced to justify a different order is vital. If the principle of res judicata is applicable to the decision on a particular issue of fact, even if fresh facts were placed before the Court, the bar would continue to operate and preclude a fresh investigation of the issue, whereas in the other case, on proof of fresh facts, the court would be competent, nay would be bound to take those into account and make an order conformably to the facts freshly brought before the court.

17. In the light of aforesaid position of law, it has to be seen whether the second application for interlocutory injunction in the present case is barred on the general principle of applicability of res judicata to interlocutory orders also or can fall in the exceptions carved out including change in circumstance, law or undue hardship.

18. The plaintiffs had approached this Court with a case of the mortgage of the property claimed by the defendant No. 1 to be void. It was prima facie view of that case only of the plaintiffs which was taken by this Court while dismissing the first application for interlocutory injection. Though para 23 as set out hereinabove existed in the plaint but it appears that that was not the contention of the plaintiffs. The plaintiffs did not claim any relief that even if there was a mortgage, the defendant No. 1 was not entitled to invoke the provisions of Section 29 & 30 of the State Financial Corporation Act with respect to the property. The said case was naturally not considered by this Court while dealing with the earlier application. The Appellate Court also was not seized of the said matter and in fact dismissed the appeal primarily on the ground of no case for interfering with the discretion exercised, having been made out. Naturally when there was no reference to the applicability of the Sections 29 & 30 of the Act in the order of the Single Judge, no question of consideration of the same by the division Bench arose.

19. The counsel for the defendant has also not urged that the said matter was considered by this Court while dealing with the first application. He has otherwise not disputed the proposition of law as laid down in Karnataka State Corporation (Supra). He has also not sought to justify that in spite of dicta aforesaid of the Apex Court, the defendant No. 1 is entitled to proceed against the property under the said provisions of the Act.

20. The Apex Court in Daryao v. The State of U.P. : [1962]1SCR574 held that the general principle underlying the doctrine of res judicata is ultimately based on consideration of public policy. The Apex Court in Forward Construction Company v. Prabhat Mandal : AIR1986SC391 held that the plea of res judicata could not be negatived on the ground that one of the grounds taken in the second petition was conspicuous by its absence in the earlier petition. Reference in this regard was made to explanation (IV) to Section 11 of the CPC. It was held that an adjudication is conclusive and final not only as to the actual matter determined but as to every other matter which the parties might and ought to have litigated and have decided as incidental or essentially connected with the subject matter of the litigation and every matter coming within the legitimate purview of the original action. What has to be tested is whether the said principle applies to applications for interlocutory injunction inasmuch as it was open to the plaintiffs at the time to disposal of the first application also to contend that the provisions of Sections 29 & 30 of the State Financial Corporation Act were not applicable and which the plaintiffs admittedly did not do, though basis thereof, to enable the plaintiff to agitate now, can be found in para 23 of the plaint.

21. Yet another principle to be borne in this regard is that where the question is one purely of law and relates to a decision of the court sanctioning something which is illegal by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata, for a rule of procedure cannot supercede the law of land as held in Smt. Isabella Johnson v. M.A. Susai : AIR1991SC993 and Sundermani v. Devaji Shankar Desh Raj : AIR1954SC82 .

22. Res judicata is but a branch of the law of estoppel. The Apex Court in Gopal Prasad Sinha v. State of Bihar : 1971CriLJ420 held that the basic principle underlying the rule of issue estoppel and res judicata is that the same issue of fact and law must have been determined in the previous litigation; however, the question which then arises is: was it the same issue of fact which was determined in earlier case. It was held that if there was no change in facts and condition, there can be no issue estoppel.

23. In my view, the principle underlying estoppel being of public policy and justice, justice cannot be permitted to be defeated on the ground of issue estoppel. The question raised in the present case by this second application for interlocutory injunction is a pure question of law and which admittedly has not been considered by this Court while considering the first application for interlocutory injunction. The judgment of the Apex Court in Karnataka State Financial Corporation (supra) appears to be taking a view with respect to the applicability of Sections 29 & 30 of the Act against the properties of the guarantor for the first time. There does not appear to be any earlier pronouncement on this aspect. While it can be argued that the counsel for the plaintiffs in this case also ought to have taken the said plea before this Court or before the Appellate Court while pressing for the first application for interlocutory injunction, but in my view, justice should not suffer and interlocutory injunction ought not to be denied to the plaintiffs because of the aforesaid interpretation of law by the Apex Court, published after the disposal of the first application by this Court and by the Appellate Court. It is not as if while dismissing the application a view was taken by this Court or by the Appellate Court on the applicability of the said provisions and which cannot be reviewed owing to a different view having been taken by a subsequent decision of the Apex Court. Present is a case where no view at all was taken. Since the suit is still pending, the plaintiffs, on the parity of Rule 4 of Order 39 of the CPC becomes entitle to move a second application for interlocutory injunction.

24. In this regard, I may notice that even though the Apex Court in Hope Plantations Ltd. v. Taluk Land Board : (1999)5SCC590 while refusing to follow the decision of the House of Lords in Arnold v. National Westminster Bank 1991 (2) AC 93 in toto still gave an opportunity to the appellant/petitioner to approach the State Government to seek exemption.

25. There is yet another reason which leads me to hold that the plaintiffs in the present case are entitled to move second application. This Court while dismissing the first application held that the defendant could not be injuncted from taking action against the mortgaged property in accordance with the provisions of State Financial Corporation Act and if the plaintiff has any grievance, he can approach the proper forum only under the said Act. The Apex Court has now held that under the State Financial Corporation Act the action as threatened cannot be taken. If in spite of the same the defendant No. 1 insists upon taking said action, the plaintiffs would be naturally aggrieved by the same and were given liberty to approach the appropriate forum and which can be this Court only, since the lis is pending before this Court.

26. Next question which arises is as to whether this Court is precluded from entertaining the second application owing to the appeal having been preferred and dismissed; whether the doctrine of merger comes in the way of this Court exercising the power. While there can be no doubt that the order of this Court dismissing the first application has merged in the order of the Appellate Court, but in my view, a second application on the grounds culled out above would still not lie before the Appellate Court but would lie before this Court only. Firstly, as aforesaid Order 39 Rule 4 of the CPC is expressly empowering the Court which granted the injunction. There can be cases where the proceedings of interlocutory injunction have gone right till the Court of last resort. The legislature could have provided that the application under Rule 4 would lie only before the Court last dealing with the said matter. However, it is not so provided. There is yet another reason for the same. The whole purpose of providing a hierarchy of appeal is to obviate a human error and provide remedy thereagainst. The purpose is for the Appellate Court to examine the matter brought before it in this perspective. However, when it has not been examined by the first Court as to whether the injunction is to be granted or vacated owing to change in circumstances or undue hardship, requiring the second application to be filed before the Appellate Court only which had last dealt with the matter would amount to doing away with the provisions of appeal. Unless this Court gives reasons for entertaining, allowing, dismissing the application, no appeal there against would be possible.

27. I, therefore, find that two legal objections raised by the defendant No. 1 to be untenable and further find that in the facts of the present case the second application lies before this Court.

28. Having held so, there was no opposition to the proposition that the defendant No. 1 is not entitled to proceed against the property of the plaintiffs under the provisions of Sections 29 & 30 of the Act. The defendant No. 1 as an instrumentality of the state ought to respect the dicta of the Apex Court in Karnataka State Financial Corporation (Supra) and is not expected to act in contravention thereof. It is not as if that the defendant No. 1 is being left remediless. All that Karnataka State Financial Corporation (supra) lays down is that the possession shall not be taken of the mortgaged property of the guarantor or surety in exercise of powers under Sections 29 & 30 of the Act. The defendant No. 1 is thus restrained to the said extent only. The defendant No. 1 shall remain free to take action in accordance with law.

29. It is relevant to emphasise that the property in question is the residence of the plaintiff No. 1. The right to residence and the right to property are human rights under the Universal Declaration of Human Rights, 60th year of adoption of which has been celebrated last year. Article 51(c), Constitution of India provides that the State shall endeavour to foster respect for treaty obligations in the dealings of organized people with another. Indian Courts, particularly the Apex Court have consistently construed statutes so as to ensure their compatibility with international law, conventions and treaties. In Chairman Railway Board v. Chandrima Das : 2000CriLJ1473 it was held that our constitution guarantees all the basic and fundamental human rights set out in the Universal Declaration of Human Rights to its citizens and judges have a duty of familiarizing themselves with growing international jurisprudence of human rights and enforcement thereof. I find that in the present case, not restraining the defendant No. 1 from acting against the plaintiff in a manner in the teeth of the law laid down by the Apex Court for the reason of technicality of the earlier application having been dismissed would be also violative of the human rights of the plaintiffs.

30. The plaintiffs will suffer irreparable injury if dispossessed from their residence in a manner contrary to law. The balance of convenience is also in favour of plaintiffs. Though the Apex Court has in U.P. Financial Corporation v. Gem Cap (India) Pvt. Ltd. AIR 1993 SC 1435 held that State Finance Corporation are unlike ordinary money lenders and banks but restraining the defendant No. 1 from acting in a manner in which it is not entitled to, does not prejudice its rights as aforesaid.

31. That leaves the arguments of the counsel for the defendant No. 1 that the application being mala fide and the plaintiffs having misused the process of the Court. Though the conduct of the defendant No. 2 of relegating from the settlement as offered after obtaining the order dated 19th November, 2008 is reprehensible but the same would not entitle the defendant No. 1 to do what it is not entitled to do in law.

32. The application is therefore allowed to the extent that the defendant No. 1 and its officers and agents are restrained from proceeding against property No. 152, Jagriti Enclave, New Delhi in exercise of provisions of Sections 29 & 30 of the State Financial Corporation Act and from forcibly dispossessing the plaintiffs from the said property; the defendant No. 1 shall, however, be entitled to proceed in accordance with law in exercise of its rights with respect to the said property; this is further subject to the conditions that the plaintiffs and the defendant No. 2 stated to be the owners of the property shall not alienate, encumber or part with the possession of the suit property.

33. The application is disposed of.


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