Judgment:
K.S. Radhakrishnan, C.J.
1. Question that is posed for our consideration is whether a third party can invoke the provisions of Sub-section (25) of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 so as to prevent the abuse of the process of the Tribunal and to secure ends of justice.
2. Division Bench of Bombay High Court in Anil Nandkishor Tibrewala and Anr. v. Jammu and Kashmir Bank Ltd. : 2007 (3) Bom.CR 941, interpreting Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'R.D.B. Act') held as follows:
A reading of this provision would indicate that there is a power in the Tribunal to give orders or directions to prevent abuse of its process or to secure the ends of justice. It is open to the Tribunal to lay down its own procedure and it is not hidebound by the procedural provisions of Code of Civil Procedure. At the same time, certain provisions of the Code of Civil Procedure, have been conferred on the Tribunal. The expression 'prevent abuse of its process' 'or to secure the ends of justice' in our opinion would be wide enough to cover a case where a financial institution has obtained an order or the certificate pursuant to a mortgage created by the judgment debtor based on a fraudulent document, like for instance the property not belonging to the judgment-debtor. If such party comes before the Court and points out to the Court that the mortgage created is sham and/or bogus, the Tribunal to prevent abuse of its process, can assume jurisdiction under Section 19(25) to decide that issue and for that purpose exercise powers conferred under Section 22 of the Act. On a aggrieved person being allowed to participate in the proceedings, it will be open to the Tribunal to review the order or pass such other order to secure the ends of justice. We are, therefore, of the clear view that in those cases where the Recovery Officer cannot go beyond the certificate, a party like the petitioners who claims title in the property or interest in the property can move the Tribunal by invoking jurisdiction of the Tribunal under Section 19(25), and in such cases if a prima facie case is disclosed before the Tribunal, the Tribunal is bound to consider the application so moved and dispose it according to law, after giving an opportunity to all parties before it.
Bombay High Court on the basis of the above reasoning directed the Tribunal to dispose of the application preferred by a person who was not a party to the proceedings before the D.R.T.
3. Appellants-petitioners approached the Debt Recovery Tribunal, Ahmedabad placing almost identical plea with prayer to entertain their application. Question whether such application is maintainable or not, was sole issue raised before the Tribunal and it held that Misc. Civil Application is not maintainable at law. With regard to the judgment of the Bombay High Court, Tribunal has opined as follows:
According to me, judgment of the Hon'ble High Court of Bombay is having only persuasive value. The said judgment would not be binding on this Tribunal which falls within the jurisdiction of the Hon'ble High Court of Gujarat. The said judgment of the Hon'ble Bombay High Court, is therefore, required to be over-looked. The Act is special Enactment. The purpose and object of the Act is expeditious adjudication and recovery of debts. If the applications of third parties are entertained and adjudicated, the very purpose and object of the Act would be defeated and frustrated. In short, the Miscellaneous Civil Application is not maintainable in law. As far as merits are concerned, it would not be proper to go into it. It can be safely said that applicants are not remediless. Applicants shall have right to knock the door of Recovery Officer at the time the respondent No. 1 would execute the Recovery Certificate. I am fully aware that the scope of the inquiry qua the third party would be very limited before the Recovery Officer. In short, Miscellaneous Civil Application is required to be dismissed. I, therefore, answer the points accordingly.
4. Learned Counsel Mr. D.C. Dave appearing for the appellants- petitioners submitted that the Tribunal is not justified in dismissing the application, which according to Counsel is clearly maintainable under Section 19(25) of the R.D.B. Act. Learned Counsel submitted that the Tribunal was not justified in overlooking the decision of the Division Bench of Bombay High Court stating that it has only persuasive value. Learned Counsel submitted that facts of the present case are identical to the facts of the case dealt with by the Bombay High Court, and therefore, the principles laid down by the Bombay High Court should have been followed by the Tribunal.
5. Learned Counsel submitted that the appellants-petitioners are sole owners of the properties bearing Nos. 9/A and 9/B, Chandra Bhaga Society, Nava Vadaj, Ahmedabad respectively. Learned Counsel submitted that appellants-petitioners had no direct or indirect interest with M/s. Patdi Ginning Factory and they have not mortgaged above-mentioned apartments for obtaining any loan from the first respondent Bank. Appellants-petitioners further contended that the properties in question were purchased by Father and Mother of the appellants and respondent Nos. 2 & 3 and they expired in the year 1974. Consequently, as per the Hindu Succession Act, three brothers and a sister become Class-I successors of their parents. Further, it is also stated that when parents expired, petitioner No. 1 was a minor and when all the successors became major, in consultation with the relatives, they entered into the understanding of distribution of properties of their parents including the above two items of properties. Further, it is also stated that as per the understanding and the family arrangement, the appellants have become the sole and absolute owners of the properties i.e. Block Nos. 9/A and 9/B, Chandra Bhaga Society, Nava Vadaj, Ahmedabad. Further, it is stated that as soon as they came to know that their properties were mortgaged clandestinely, they approached the City Civil Court, Ahmedabad and preferred Civil Suit Nos. 1226 and 1227 of 2007 for a permanent injunction restraining the respondents from transferring or selling, mortgaging or in any way dealing with the suit properties. Later, they also came across an advertisement published on 4-3-2008 in the daily newspapers 'Gujarat Samachar' and 'D.N.A.' for proposed auction of their properties. Objections were filed immediately before the Recovery Officer and they also approached the Debt Recovery Tribunal. But the application submitted by the appellants-petitioners was dismissed by the Tribunal as not maintainable. Learned Counsel submitted that the order passed by the Tribunal is illegal and the same be set aside and Tribunal be directed to entertain their application in accordance with law as per Section 19(25) of the R.D.B. Bank.
6. Learned Counsel Ms. Nalini Lodha appearing for the Bank submitted that there is no illegality in the view taken by the Tribunal. Learned Counsel submitted that the Tribunal has rightly rejected the application of the third party and if the application of the third party is entertained, then the same would defeat the object and purpose of the Act, and would also delay the recovery. Learned Counsel for the Bank has also referred to the object and purpose of the Act and submitted that the Tribunal has been established for expeditious adjudication and recovery of the Banks and financial institutions. Learned Counsel submitted that there was wide publicity for public auction of the properties in question and the same was held on 17-3-2008. M/s. Kanan Infrastructure Pvt. Ltd. bid in auction Tenament No. 9/A for Rs. 24.71 lacs and Tenament No. 9/B was bid by Ratilal M. Thakkar and Bhupendrakumar R. Gavani for Rs. 28.40 lacs respectively. Learned Counsel also submitted that the entire bid amounts along with poundage fee were paid by the auction purchasers and sales were confirmed and made absolute vide order dated 23-4-2008 and sale certificates were also issued to the auction purchasers. Learned Counsel also referred to chronology of events starting from the date of mortgage to the date of disposal of CM.A. Learned Counsel submitted that in any view of the matter, appellants-petitioners have not cared to implead the auction purchasers as parties to any of these proceedings in whose favour the sale certificates were also issued, hence, no relief as prayed for be granted to the appellants-petitioners.
7. We are primarily concerned with the question whether an application by a third party can be entertained by the D.R.T. under Sub-section (25) of Section 19 of the R.D.B. Act, if the Tribunal is convinced that the orders passed by it would amount to an abuse of its process. Sub-section (25) of Section 19 of the R.D.B. Act reads as follows:
The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.
Every Court or Tribunal is obliged to see that its process shall not be abused or misused. Improper and tortious use of a legitimately issued process of a Tribunal to obtain a result that is either unlawful or beyond the process and scope would amount to its abuse. Expression 'ends of justice' means not only justice to the parties, but also to witnesses and others which may be inconvenienced. Tribunal is empowered to make such orders and give such directions as may be necessary or expedient to give effect to the orders lawfully passed. Tribunal is also empowered to make such orders and directions so as to secure ends of justice. Tribunal is also empowered to make such orders and issue such directions so that process of the Tribunal be not abused. Statute has not interdicted third parties to bring to the knowledge of the Tribunal that its process is being abused and there is also no stipulation in the Act that such powers can only be invoked at the instance of the parties to the proceedings. Question as to whether there has been an attempt to abuse the process of Tribunal depends upon facts and circumstances of each case which a third party can bring to the notice of the Tribunal. Tribunal if finds that mortgage has been created fraudulently and sham and bogus documents were produced before the Tribunal to get favourable orders to the prejudice of a third party, that fact can always be brought to the notice of the Tribunal. Tribunal has an obligation to see that its process be not abused. Tribunal would also be guarded against, abuse of its process, by a third party to defeat the object and purpose of the Act which is expeditious adjudication and for recovery of debt of the Banks and financial institutions.
8. Learned Counsel appearing for the Bank has submitted that if a third party is aggrieved, the remedy open to him is to approach the Civil Court or to raise an objection before the Recovery Officer. Counsel also referred to Section 29 of the R.D.B. Act which states that the provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962 would apply, but no such provision was invoked by the appellants-petitioners. We find that the appellants-petitioners had raised objections before the Recovery Officer which were rejected by the Recovery Officer vide order dated 4-4-2008 and the entire amount along with the poundage fee was paid by successful bidders and since mandatory period of 30 days from the date of auction was over and no application under Rules 60, 61 and 62 of Second Schedule to Income Tax Act, 1961 was pending, sale was confirmed and made absolute vide order dated 23-4-2008 and sale certificates were issued to the auction purchasers.
9. We, therefore, find on facts no reason to set aside the order passed by the Tribunal. Facts clearly indicate that the appellants-petitioners have approached the City Civil Court, Ahmedabad by Civil Suit Nos. 1227 and 1226 of 2007 seeking a permanent injunction restraining the transfer of the properties and also for a declaration that the charge or mortgage created be declared as void and the suits are pending consideration. Further, we may also notice that auction in respect of both tenaments of properties had already taken place on 17-3-2008 and sales were confirmed, as earlier as on 23-4-2008 and sale certificates were issued to the auction purchasers and cross-objections were filed by the petitioners on 3-3-2008 and 7-3-2008 for vacating the attachment of the properties and those objections were ultimately rejected. First Appeals were preferred. In view of the decision of the Apex Court in B. Arvind Kumar v. Government of India and Ors. 2007 AIR SCW 4080, when a property is sold by public auction in pursuance of an order of the Court, and the bid is accepted and the sale is confirmed by the Court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. So far as the facts of this case are concerned, sale had been confirmed and sale certificates were issued to the auction purchasers but auction purchasers have not been made party either before the Tribunal or even before the learned single Judge or before us. Chronology of events also indicate that appellants were not vigilant in invoking the jurisdiction of the Tribunal under Section 19(25) of the R.D.B. Act.
10. We, therefore, hold that even though a third party can invoke the power of the Tribunal under Sub-section (25) of Section 19 of the R.D.B. Act, so as to prevent the abuse of the process of the Tribunal and to secure ends of justice, in the facts and circumstances of the case, no case is made out for interference by this Court under Article 227 of the Constitution of India.
11. Letters Patent Appeal lacks merits and is dismissed.
Consequently, Civil Application also stands rejected.