Shaikh Sikandar Sk. Haidar and ors. Vs. Saraswati Education Society and ors. - Court Judgment

A.H. Joshi, J.

1. The respondent No. 1 is a Public Trust which owns Agricultural Land Survey No. 50 (Gat No. 197), admeasuring 32 acres and 35 Gunthas, and Land Survey No. 49 (Gat No. 196), admeasuring 20 acres and 36 Gunthas at village Gaigaon, Taluka - Balapur, District - Akola amongst other properties. This land is hereinafter referred, for brevity, as 'suit land.'

2. It was not possible for the Trust to manage the property, and to earn income from the agricultural lands. At the same time, the Trust was in need of funds for developing a plot in its possession by raising a hostel for students of Polytechnic College run by it, to carry out repairs to the college building, in order to upgrade the building to the requirements laid down by the Indian Council of Technical Education, and all this needed raising of funds.

3. Due to these financial compulsions, the respondent No. 1 resolved in its meeting dated 5th January, 1994 to sell some of its immovable properties, and for this purpose, gave a Public Notice in the newspaper inviting tenders. Offers were opened on 23rd January, 1994 in presence of tenderers. It was seen that the offer made by the appellants was of Rs. 11,50,000-00 which was the highest. This offer was accepted and agreement of sale dated 28th September, 1994 was executed and earnest money of Rs. 3,45,000/- was received by the Trust.

4. Thereafter the Trustees furnished application to the Joint Charity Commissioner seeking permission under Section 36(1)(b) of the Bombay Public Trusts Act to sell the property.

When the application filed by the Trust was in the process of hearing, certain objections were received by the Joint Charity Commissioner. After scrutiny of record and hearing the parties, the Joint Charity Commissioner found that the petitions raising objections did not merit consideration for want of any substance and genuineness and also that any objection from any of the trustees or any person having interest in the Trust, contending that 'the sale was not intended for advancement of object of the Trust' was not received. The need of money by the Trust for fulfilment of its objects was duly proved. The Joint Charity Commissioner, in the result, passed order dated 11th September, 1998 and allowed the application of the Trust and granted permission to sell the suit land for the price of Rs. 11,50,000/- in favour of plaintiffs, and also for sale of plot in favour of other bidder. He directed that sale-deed be executed within a period of six months.

5. It is seen that a Writ Petition was filed in the name of the respondent No Society by its President, being Writ Petition No. 2480 of 2000, wherein the order of permission granted by Joint Charity Commissioner was challenged. The said Writ Petition was dismissed by Judgment and Order dated 30th July, 2001.

6. There were certain developments which had taken place parallel to the invitation of offer, acceptance and application by the Trust for seeking permission from the Joint Charity Commissioner etc.

7. It is seen that the respondent-Trust was sanctioned by the defendant No. 9-Allahabad Bank loan for working Capital, as well as another loan of Rs. 14,00,000-00 and of Rs. 4,40,000-00 respectively. Details as to what is the exact amount of availment have not come on record.

Admittedly, the suit property was not mortgaged, or otherwise charged etc. in favour of defendant No. 9 to secure this loan. Since the amount was not repaid in time, the Bank filed Special Civil Suit No. 129 of 1996 against the Society and its trustees who were also the guarantors. The suit was transferred to the Debts Recovery Tribunal, Mumbai, and was registered as Original Application No. 1782 of 1999 after constitution of the Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Thereafter, said Original Application No. 1782 of 1999 was transferred to Debts Recovery Tribunal, Nagpur, and was registered as Original Application No. 243 of 2001.

In the said O.A. No. 243 of 2001, though the Trust and the trustees had filed the Written Statement, did not file affidavit in support of their Written Statement. The Tribunal treated it as a case where plaintiff-Bank's affidavit of evidence went unchallenged.

8. At the stage of final hearing of Original Application No. 243 of 2001, present appellants learnt about pendency thereof. Appellants herein thinking that any order that may be passed in this Original Application was likely to prejudice their claim in suit for specific performance and ultimate relief therein, they thought it proper to move, and filed an application for intervention, which was opposed by the Bank. The Tribunal decided this application simultaneous to the Original Application itself by its order dated 28th February, 2003, holding it to be not maintainable.

9. Tribunal found while rejecting said application for intervention that the Debts Recovery Tribunal was constituted as revealed from preamble of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, namely that the Act was enacted:

for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto.

The Debts Recovery Tribunal recorded in Para 9 of the said Order at page 53 of record of this Appeal against Order, as follows:

9. .Again, the Tribunal is constituted only to receive applications from the Banks and other financial institutions, and the power is limited only to adjudicate and recover the amount due to it. Being a Tribunal formed under statute, its powers are also limited.

(quoted from page 53 of the Paper-Book of Appeal).

Relying upon Asha Rajkumar and Ors. v. South Indian Bank Limited and Ors. 1998 Banking Journal 824, the Tribunal held that a suit for declaration is not barred and hence rejected the application for intervention.

10. In the result, the D.R. Tribunal decreed the claim in toto, holding that defendants are jointly and severally liable to pay a sum of Rs. 35,09,743-00 with future interest at the rate of 20.75 per cent per annum till realisation, and ordered issue of Recovery Certificate by Judgment and Order dated 28th February, 2003.

11. It is seen that though the permission was granted by Joint Charity Commissioner on 11th September, 1998 and the period of six months was about to expire, for reasons best known to the trustees, they were not coming forward to execute the sale-deed.

It is seen that plaintiffs wrote letters dated 23rd January, 1999, 5th February, 1999, 17th February, 1999, and then served a notice through Advocate on 3rd March, 1999. Though plaintiffs persuaded-requested the trustees to execute the sale-deed, they did not comply. Plaintiffs, therefore, filed the suit, i.e., Special Civil Suit No. 81 of 1999 for specific performance of agreement of sale of suit property. The suit has been opposed by all the defendants. Issues are framed, and the suit has already become mature for hearing.

12. In the said background of rejection of application for intervention by Debts Recovery Tribunal by Order dated 28th February, 2003, and simultaneous decree therein, present appellants, who are plaintiffs in Special Civil Suit No. 81 of 1999, filed application on 20th March, 2003 at Exh.37 with a prayer that the respondent No. 9-Bank or its officers be restrained from auctioning suit property or from dealing with suit property or dispossessing the plaintiffs therefrom.

13. Crux of the application (Exh.37) can be summarized as follows:

(a) There was an Agreement of Sale after proper publication of notice inviting tenders, plaintiffs' highest tender was accepted. The plaintiffs had entered in said transaction in good faith, the transaction, was done for higher than the market value available at the given moment, more than 65 per cent amount of agreed consideration was parted with by the plaintiffs, fruits whereof were enjoyed by the Trust;

(b) competent statutory authority had granted permission under Section 36(1)(b) of the Bombay Public Trusts Act. The said permission was found to be correct and upheld by High Court;

(c) due to indifference of the trustees, the sale-deed was not executed;

(d) the suit property was not mortgaged, nor was it under any attachment when the Agreement of Sale was executed, plaintiffs' right of specific performance was superior in nature;

(e) the plaintiffs were always ready and willing and even now are ready and willing to pay the balance amount, they were entitled for a decree of specific performance;

(f) if the property is sold by the defendant No. 9 for recovering its dues, plaintiffs' right would be perished, while the Bank had other securities available at its disposal to liquidate its loan etc.

(g) plaintiffs deserve protection from the Court, as prima facie there is nothing on record to reveal that plaintiffs' suit may not be decreed;

14. Application (Exh.37) was opposed by the defendant No. 9-Bank, urging that any challenge to Debts Recovery Tribunal's order/decree or execution thereof by way of a suit is not maintainable. Section 41(b) of the Specific Relief Act, 1963 bars such relief, as well that alternate remedy of damages is available to the plaintiffs etc.

The Trust as well opposed it, apparently allured due to increased market price.

The said application (Exh.37) was rejected by learned trial Court by Judgment and Order dated 15th April, 2003, which order has led to present appeal which has been filed on 19th April, 2003.

15. During pendency of this appeal, it seems that the plaintiffs and trustees had reached some consensus upon execution of sale-deed, and completing the transaction. It is also seen that on 6th May, 2004 stamp duty was paid and stamp papers were purchased by the Trust, for which, according to the appellants, they had paid for stamp duty of Rs. 65,600-00. The stamp papers were purchased and received for the Trust by Mr. Keshavrao Joshi, and the sale-deed was scribed thereon. Photo copy of draft sale-deed as well photo copy of sale-deed scribed on stamp papers are placed on record of this Appeal at pages 151 to 153 and 154 to 168 respectively. From these copies, it reveals that the agreed consideration of Rs. 11,60,000/- is shown and payment of earnest money of Rs. 3,45,000-00 as well as further payment of Rs. 4,00,000-00 is acknowledged and balance of Rs. 4,15,000-00 is shown as being paid on the day of execution. It is seen that though the procedure of execution of sale-deed had reached the stage of execution and lodgment for registration, latter two steps were not taken at all, and the appellants herein have filed on 11th March, 1999 Special Civil Suit No. 81 of 1999 claiming a decree of specific performance after obtaining necessary permission from the Joint Charity Commissioner, and upon receiving balance consideration. These facts brought on record by way of affidavit and are not denied or explained by the defendant No. 1-Trust or the Trustees.

16. On perusal of Order passed below Exh.37, it is seen that the Judgment of trial Court is based on Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, read with Section 34 and Section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Trial Court found that the jurisdiction of Civil Court is ousted and the provisions of these two enactments have overriding effect.

Appellants-plaintiffs' Submissions

17. The submissions, which are advanced in support of appeal, only part whereof can be gathered from the Memorandum of Appeal. It shall suffice to reproduce for convenience grounds (a), (d), (e), (f) and (h), which read as follows:

(a) The learned Court committed grave error of law in rejecting the application by relying on Sections 34 and 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 which is not at all applicable to the facts of the case.

(b) ....Omitted.

(c) ....Omitted.

(d) The learned Court should have considered that the agreement between the appellants and the respondent No. 1 - Trust took place in the year 1994 and the suit was filed by the Bank in the year 1996 and, therefore, the suit property cannot be saved to the encumbered with the Bank at the relevant time.

(e) The learned Court should have considered that as the appellants are possession of the properties in part performance of agreement and as they have parted with substantial amount, a right is created in their favour over the properties and their possession over the properties is in exercise of their right and, therefore, they are entitled to protect the same at least during the pendency of the suit.

(f) The learned Court also committing grave error of law in holding that plaintiffs can recover the damages when admittedly it is settled law that decree for money or damages cannot be saved to be end equitable relief if the transactions pertain to immovable properties.

(g) ....Omitted.

(h) The learned Court should have considered that the trust is having other property also sufficient to satisfy the claim of Bank and, thus, it is not necessary to permit the Bank to auction the suit property.

(quoted from pages 9, 10, and 11 of the Paper-Book of Appeal).

18. In addition to averments contained in above grounds, and points referred to by this Court in Para No. 13 above, learned Advocate Mr. R.L. Khapre advanced oral submissions, summary whereof is as below:

(a) The appellants have demonstrated willingness to bring about onetime settlement by paying Rs. 25,00,000-00 over and above the agreed consideration taking into consideration the time that was lost. Bank's interest will not, in any way, be prejudiced, since the appellants-plaintiffs have demonstrated by raising a sum of Rs. 20,00,000-00 and pass-book showing credit of that amount from prospective purchasers of the plots in suit property were already placed on record of the Court.

(b) The Bank has other securities in hand. Similarly, the Trust has many other properties, from which Bank's loan can be recovered.

(c) The order impugned exhibits a scare in the mind of the trial Court that by restraining execution of a decree, the trial Court was almost committing the sin and, therefore, without discussing any of the arguments and any of the oral submissions, citations etc., the learned trial Court simply noted the submissions in a slipshod manner, and rejected plaintiffs' application without recording reasons whatsoever.

(d) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has no application, inasmuch as the suit property is not mortgaged, and this being an admitted position, any of the provisions contained in the said Act has no application.

(e) That, the Debts Recovery Tribunal does not have jurisdiction available to it under Section 17 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, to try the suit for specific performance.

(f) Admittedly, suit property not being mortgaged, was totally outside the compass of enquiry in application before Debts Recovery Tribunal and the question of attaching the property for recovery would come into play only after it is taken up for attachment, sale etc.

(g) The relief that suit property is not liable for attachment and sale on the basis that the agreement of sale is a prior charge on the property than liable for attachment and sale in execution is a matter which is not capable of adjudication under Section 17.

(h) A suit by a person who is not bound by Recovery Certificate was maintainable in view of Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which applies provisions of Schedule-II of Income Tax (Certificate Proceedings) Rules, 1962 and Second and Third Schedules to the Income-tax Act, 1961, make it explicit that the suit is maintainable in contrast with all proof bar of suit incorporated in Section 47 of the Civil Procedure Code needs to be honoured.

(i) The trustees have not shown any reason as to why the decree for specific performance ought not be granted. Plaintiffs had sold their properties to be able to purchase suit lands and they have offered best ever price to the suit property as against rates ruling on relevant time. They have already lost their assets. The damage, which they shall suffer, can never be compensated and restituted. Alternate relief for damages sought by them is by requirement of procedural law and decree for damages cannot be even consolation, much less due and full compensation. Therefore, there are no circumstances borne on record which would enable anyone to preempt that the suit for specific performance may not be decreed.

19. Learned Advocate Mr. R.L. Khapre placed reliance on various reported judgments. These judgments have been classified and discussed as below:

(1) Fargo Freight Ltd. v. Commodities Exchange Corporation and Ors. : AIR2004SC4109 .

This judgment is relied upon by learned Advocate to contend that in a dispute of enforcement of foreign awards, when the question arose as to whether the issue of enforcement was liable to be considered between the parties to Award, as against a person, who is not a party, and a question as to its enforceability against third party, such issues could independently be gone into. This proposition is sought to be relied upon as a simile. This citation can be looked upon as a general rule. This Judgment, therefore, will not have much bearing on case on hand.

(2) Pawan Kumar Gupta v. Rochiram Nagdeo : [1999]2SCR767 .

This Judgment is relied upon to show that the Judgment rendered by Debts Recovery Tribunal against the borrower does not operate as a res judicata, since in a subsequent suit, which is filed by the appellants, issues, which fell for adjudication before the Debts Recovery Tribunal, were not one and the same, nor between the same parties or parties claiming insofar as it relates to plaintiffs.

(3) Dhulabhai etc. v. State of Madhya Pradesh and Anr. : [1968]3SCR662 , and (4) Dwarka Prasad Agarwal (D) by L.Rs. and Anr. v. Ramesh Chandra Agarwala and Ors. : AIR2003SC2696 .

These judgments are relied upon to contend that the extent of jurisdiction of Civil Court is to be presumed. One who claims ouster, has to prove it. There is no presumption as to ouster. On the other hand, presumption is otherwise. By this proposition, appellants argue that on plain reading of provisions contained in Sections 17 and 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, it is clear that a suit for specific performance does not fall within the compass of jurisdiction available to Debts Recovery Tribunal and a suit for decree of specific performance is always maintainable. Though the defendant No. 9 has raised a shield of Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the provisions of said Act do not even remotely come into play, including for citing as a simile.

(5) Manohar Lal Chopra v. Seth Hiralal Bahadur Rao Raja Seth Hiralal : AIR1962SC527 , and (6) Anand Prasad Agarwalla v. Tarkeshwar Prasad and Ors. : AIR2001SC2367 .

These two judgments are relied to urge that grant of injunction under Rule (2) of Order 39 is a matter of inherent jurisdiction unlike under Rule (1) of said Order. It can be considered on merits of case, finding source from Section 94 of Civil Procedure Code.

(7) Narayanrao Marotirao Pimpalkar v. Waman Nathuji Wankhade and Anr. : AIR1974Bom319 ; (8) Madan Mohan v. Revti Prasad and Anr. ; and (9) Kongbrailapatpam Benimadhob Sarma v. Konbrailapatpam Madhsudon Sarma AIR 1969 Manipur 21.

These three judgments are relied upon to urge that on the face of a decree, injunction is not impermissible, it would always be governed by facts of the case.

(10) Mahaveer Dass v. Ganeshmal Jeevraj , and (11) Commissioner-cum-Secretary, Department of Animal Husbandry' v. Smt. K. Rinzing AIR 1998 Sik 7.

These two Judgments are relied to urge that for grant of temporary injunction, it is not as a general rule that the prayer for perpetual injunction must be part and parcel of main prayers in the plaint. Whether perpetual injunction will have to be prayed for enabling the party to pray for temporary injunction will be governed by the facts of each case.

(12) Bai Dosabai v. Mathurdas Govinddas and Ors. : [1980]3SCR762 .

The plaintiffs' right is of equitable ownership, as Indian Courts do not recognize the concept of dual ownership, as recognized in English Law. The equitable ownership needs recognition of law, particularly when the purchaser is without notice of previous agreement or transaction etc.

(13) Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Anr. : [1990]1SCR832 .

When an agreement is prior in time, it can claim a right superior to the attachment by the Court, either during pendency of suit, or in the course of execution of a decree, since an agreement to sell is an obligation attached to the property.

(14) John Tinson and Co. Pvt. Ltd. and Ors. etc. v. Mrs. Surjeet Malhan and Anr. etc. : [1997]1SCR842 ;

(15) Sangli Sahakari Bank Ltd. Bombay v. Divisional Joint Registrar, Bombay and Ors. : (2002)3BOMLR651 ;

(16) Zoroastrian Co-operative Housing Society Ltd. and Anr. v. District Registrar, Co-operative Societies (Urban) and Ors. : AIR2005SC2306 ;

(17) Abdulla Bin Ali and Ors. v. Galappa and Ors. : AIR1985SC577 , and

(18) Jagdish Singh v. Natthu Singh : AIR1992SC1604 .

These five judgments, though relied upon for various reasons, this Court considers that those have no bearing, whatsoever, with this case, particularly when this Court considered the application for temporary injunction.

Submissions of respondent No. 9/defendant No. 9

20. The appeal is opposed by the respondent No. 9-Bank, represented by learned Advocate Mr. Pillai, who has supported the Judgment

The bone of contention of learned Advocate Mr. Pillai is as follows:

(a) Though a relief and decree sought is for specific relief, present prayer for temporary injunction is hit by Section 41(b) of the Specific Relief Act, 1963.

(b) On the face of existence of adjudication of recovery by Debts Recovery Tribunal and the Order thereon, prima facie, plaintiffs have no case.

(c) The remedy before the plaintiffs was to carry the order of Debts Recovery Tribunal rejecting its intervention, to the High Court, and failure to do so results in accepting the position.

(d) That, the outer limit of six months granted for sale has expired and no right, whatsoever, in favour of plaintiffs was surviving, and, therefore, the Bank had absolute right to recover the money by selling the property in question. Therefore, no injunction could be ordered.

(e) Bank's one-time settlement offer is not surviving as it was not acted upon by parties.

(f) Suit and claim against Order of Debts Recovery Tribunal is barred in view of provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

21. Learned Advocate Mr. Pillai was not able to make a statement as to whether and from which date the property was under attachment. Moreover, it is an admitted fact that when the agreement was entered between the plaintiffs and the Trust and permission was sought, the property was not subject-matter of any attachment.

22. Learned Advocate Mr. Pillai placed reliance on following reported Judgments and Orders:

(a) Cotton Corporation of India Limited v. United Industrial Bank Limited and Ors. : [1983]3SCR962 .

This Judgment is relied upon to show that the injunction sought being contrary to enforcement of a decree, the inherent powers under Order 39, Civil Procedure Code, are not liable to be exercised. Injunction prayed for is clearly barred due to Section 41(b) of the Specific Relief Act.

(b) Dalpat Kumar and Anr. v. Pralhad Singh and Ors. : AIR1993SC276 .

This Court finds that this judgment does have a bearing on the facts of the case.

(c) Wander Ltd. and Anr. v. Antox India P. Ltd. .

Appellate Court will not interfere with exercise of discretion of the First Court unless it is found that the discretion has been shown to have been exercised arbitrarily, capriciously or perversely and in disregard to settled principles of law regarding the grant of interim relief.

(d) Chandrabhan Chunnilal Gour v. Dr. Shrawan Kumar Khunnolal Gour and Anr. : AIR1980Bom48 .

This Judgment is relied upon to show that in absence of valid permission from the Joint Charity Commissioner, sale, if executed, is void ab initio. This being a settled position of law, does not call for any discussion. Moreover, in the present case, suit is for specific performance and legality of sale transaction, which is duly completed, is not arising at all.

(e) Swastik Griha Nirman Sanstha, Akola v. Allahabad Bank, Akola, Writ Petition No. 2281 of 2005 decided on 21-12-2005 (Coram : B.P. Dharmadhikari, J.).

In this case, the petitioner-Co-operative Society, who was owner of plot, had consented to the borrower for mortgage of plot in favour of Bank. When Bank initiated sale proceedings, the Society objected. This Court held that the Bank's action could not be hindered. It cannot be judged how this judgment helps the defendant No. 9.

(f) Sitaram Tukaram Dandgaval and Ors. v. Sumatilal Chindulal Burad and Anr. 1997 (21) Civil L.J. 772.

This judgment is relied upon to urge that when the decree of specific performance was sought by suppressing the fact that the property was already under attachment of the Court, this Court found that exercise of discretion for grant of decree of specific performance cannot be permitted.

On the facts of the case, this Judgment has no application, particularly when parties are not able to tell this Court as to if the property was under attachment, and if so, since when.

Submissions of Trust - respondent Nos. 1 to 3/defendant Nos. 1 to 3.

23. The Trust - respondent No. 1 has opposed the appeal on the ground that the prices of the property have grown manifold. There are buyers willing to pay a sum of Rs. 1 crore and it cannot be reasonably expected that the decree of specific performance may be granted and in that eventuality, it would be futile to protect the possession of the plaintiffs.

Learned Advocate Mr. Ghare placed reliance on following reported Judgments:

(i) M. Meenakshi and Ors. v. Metadin Agarwal (D) by LRS. and Ors. : (2006)7SCC470 .

Supreme Court found that exercise of discretion while decreeing a suit for specific performance when the permission for sale of property was expressly refused by the Competent Authority, was wholly unjustified. On facts, this Judgment does not govern the circumstances at hand.

(ii) Janki Vashdeo Bhojwani and Anr. v. Indusind Bank Ltd. and Ors. : (2004)3SCC584 .

This Judgment has dealt with a situation where with the process of implementation of Judgment of Debts Recovery Tribunal, rights of the parties were not adjudicated which the executing authority was bound. It, therefore, cannot be spelt out as to how defendant No. 1 relies upon this Judgment.

(iii) Pramod Purushottam Tarekar of Nagpur v. Purushottam Mahadeo Tarekar and Ors. Appeal against Order No. 86 of 2004, decided on 25-2-2005 (Coram : B.P. Dharmadhikari, J.), and

(iv) Pramod Purushottam Tarekar of Nagpur v. Purushottam Mahadeo Tarekar and Ors. Misc. Civil Application No. 260 of 2005 decided on 25-7-2006, arising out of Appeal against Order No. 86 of 2004, decided on 25-2-2005 (Coram : B.P. Dharmadhikari, J.).

These are cases where relying upon the Judgment of Mardia Chemicals, this Court declined to interfere in Bank's taking action under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Admittedly, present is not a case under SRFA ESI Act, 2002, and reliance on this judgment is wholly misplaced.

Questions for determination

24. The questions, those arise for consideration of this Court, are as follows:

(a) Whether prima facie plaintiffs' suit and application for temporary injunction are not maintainable due to bar created by Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993?

(b) Whether plaintiffs have made out a prima facie case for grant of injunction?

(c) Whether balance of convenience lies in favour of plaintiffs?

(d) Have plaintiffs shown that if injunction is not granted, they shall suffer irreparable loss?

(e) Whether the Judgment and Order of trial Court is legal and proper?

(f) If, for any reason, the order is liable to be set aside and case deserves to be considered on merit, in that event, what order shall be passed?

Reasons and Findings

25. This Court gave a peaceful consideration to all the points addressed by respective parties.

26. This Court finds that the scheme of Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, needs to be discussed first. On perusal of these sections, it is seen that these sections carve out the jurisdiction as to recovery of subject-matter specified and put into Section 18 of the said Act from the jurisdiction of the Civil Court, and vests it in the Tribunal. Thus, the Tribunal is a Forum constituted for deciding the disputes falling within the jurisdiction carved out for it. It is, therefore, clear that a suit for specific performance based on a contract, which is prior in time, refers to a right which falls squarely outside the jurisdiction of the Debts Recovery Tribunal.

The provisions of Section 18 being eloquent enough, do not require any external aid for its interpretation. Question (a) framed by this Court is, therefore, liable to be answered in favour of plaintiffs.

27. Points (b), (c) and (d) are discussed together.

28. This Court finds that admittedly the plaintiffs' agreement of sale is prior in time. The plaintiffs' plea that they have a case of bona fide transaction arrived at after public contest is based on facts which are duly borne on record. The transaction relied upon by the plaintiffs has even been permitted by the Joint Charity Commissioner, and permission granted by him is upheld by the High Court. The failure on the part of trustees to execute the sale-deed within time, on the face of their having received almost 85 per cent of consideration amount, cannot be viewed as a conduct, of which fault or failure is attributable to the plaintiffs as purchasers.

29. Prima facie, plaintiffs' readiness and willingness is overwhelmingly borne on record. If the transaction is viewed from any angle, it would be difficult to pre-empt that plaintiffs' suit would be dismissed. Plaintiffs' contention that they have sold out their properties for enabling them to raise funds to purchase this property is a matter which would certainly weigh in the mind of the Court while considering whether and in what manner the discretion to grant or refuse the relief of specific performance be exercised.

Insofar as the plaintiffs' case is concerned, the plaintiffs have, therefore, made out prima facie a strong case for protecting their rights.

30. The Court will have to see as to how is the balance to be struck between rival contentions and rights.

Exh.37 is mainly against defendant No. 9 who has secured a decree in its favour against the Trust for recovery of arrears of loan.

It is a common ground that the suit property is not a security offered by way of mortgage towards the said loan. The Bank - defendant No. 9, who is entitled in law during pendency of suit, or in the process of execution of a decree to take recourse to Sub-section (4) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has not taken any such action, for the reason that - vis-a-vis the suit property - the defendant No. 9 is not a secured creditor.

31. Admittedly, the defendant No. 9 has not taken out execution to take recourse to sell, dispose of or otherwise liquidate its debt towards the Trust, may be because it has a choice to wait to take recourse to those assets where liquidation thereof would be convenient and/or beneficial. Admittedly, the purchasers were not put to notice that any such loan is in process, or availed and that the suit property is liable for any charge thereon.

32. Relying on the reported Judgment of the Supreme Court in case of Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Anr. : [1990]1SCR832 , this Court finds that plaintiffs have a strong case, since agreement of sale is a prior liability and obligation attached to the property. The market price of property having appreciated, could be a matter of judicial notice which has to be taken collaterally, namely the prices of properties which the plaintiffs have sold for acquiring the suit property have also appreciated, and plaintiffs have lost those properties perpetually. The Trust has already been benefited by availing about 65 per cent of sale proceeds. The fact that the plaintiffs have shown willingness to pay Rs. 25,00,000-00 more over and above the agreed price, would the Trust move for permission which is a matter which is liable to be weighed favourably to the plaintiffs. The admitted fact that the plaintiffs had arranged for prospective purchasers and had secured bank deposit of a sum of Rs. 25,00,000-00 and deposited said amount with the defendant No. 9, hoping one-time settlement and expecting positive steps for and on behalf of the Trust shows sincerity and bona fide act on the part of the plaintiffs.

33. This Court has to recognize defendant No. 9's right to wait and choose the security it would like to liquidate. It seems that by not filing the execution and by preferring to proceed against suit property, the defendant No. 9 has preferred to wait, instead of taking recourse to other securities, this fact by itself is a ground which would weigh in favour of granting injunction and asking the defendant No. 9 to wait, if it is keen on security which is a subject-matter of present suit. When parties come with a plea that the market price of the suit property is increasing day by day, the irreparable loss, if any, will be suffered by the plaintiffs and not at all by the defendants.

34. This Court, therefore, reaches the conclusion that the points (b), (c) and (d), namely whether plaintiffs have made out a prima facie case for grant of injunction?, whether balance of convenience lies in favour of plaintiffs?, and have plaintiffs shown that if injunction is not granted, they shall suffer irreparable loss? All three are liable to be answered in favour of plaintiffs.

35. This Court finds that the trial Court seemed to have carried a scare of the fact of existence of the decree passed by the Debts Recovery Tribunal, and thought that it would be gravely inappropriate to pass an order of temporary injunction. It is seen that the trial Court simply took brief resume of facts and without recording reasons, whatsoever, passed the order of dismissal of application (Exh.37). This Court is of the opinion that considering the nature of contest, it was certainly necessary for the trial Court to have addressed upon the issues involved and recorded the findings thereon.

36. This Court, therefore, reaches a conclusion that as the plaintiffs have made out a strong case for grant of injunction, Exh.37 is liable to be allowed by setting aside the order under appeal.

37. Considering the fact that the suit is now ready for hearing, parties should be directed to proceed to the trial Court. Parties have shown willingness to proceed with the trial if it is expedited.

38. In this background, this Court passes following order:

(a) The Appeal is allowed. Order dated 15th April, 2003 passed by Joint Civil Judge (Senior Division), Akola, below Exh.37 in Special Civil Suit No. 81 of 1999 is set aside.

(b) Exh.37 is allowed in terms of prayers, and defendants are restrained from interfering with plaintiffs' possession, in any manner, including in the process of execution of order dated 28th February, 2003 passed by the Debts Recovery Tribunal in Original Application No. 243 of 2001.

(c) Trial of Special Civil Suit No. 81 of 1999 is expedited. Parties are directed to appear before the trial Court on 11th December, 2006 for taking a date of hearing, and the suit shall be decided by day-to-day hearing, within three months from aforesaid date of appearance.

(d) In the peculiar facts of the case, this Court directs that parties shall bear their own costs.