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2002 DIGILAW 342 (PNJ)

Bank of India v. State of Punjab

2002-03-27

KARL REDDY

body2002
ORDER Karl Reddy, F.C. - The applicant-petitioner Bank advanced loans to respondent No. 4-M/s. Jagatjit Fasteners (P) Ltd., Kapurthala. The Company mortgaged its property/land situated in Khasra No. 6391/5367 (39K 14M) with the Bank on 3.9.1980 and 30.9.1982. The Bank filed a suit for recovery of Rs. 21,42,290.94 along with interest against the Company on 17.9.1985, and obtained a decree front the Debt Recovery Tribunal on 17.9,1998. 2. In the meantime, Recovery Certificates No. 3112 dated 15.12.1985 for Rs. 2,11,374 and No. 2949 dated 18.6.1985 for Rs. 3,48,344.52, being dues of Provident Fund, ESI, and wages of workers, were sent by the Labour-cum- Conciliation Officer, Jalandhar to the Collector Kapurthala. The workers filed a Writ of Mandamus CWP No. 1276 of 1987 in the High Court of Punjab and Haryana for early recovery of their dues. The writ petition was dismissed as infructuous by the High Court vide order dated 1.6.1987 on the written undertaking of the Collector Kapurthala that the workers dues would be recovered at an early date. The property was attached under Section 72 of the Punjab Land Revenue Act, 1887 (hereinafter the Act) by the Collector Kapurthala vide order dated 11.5.1987. The property was put to auction on 13.6.1988 and 20.7.1988 but did not attract sufficient bids. 3. The Collector Kapurthala vide order dated 27.1.1994 attached the land/property bearing Khasra No. 6391/5267 min measuring 20K 9M, gair mumkin karkhana under Section 72 of the Act. After attachment of the property, notice of auction was sent to the Directors of the Company by Registered Post, which was returned undelivered. Then a copy of the auction notice was pasted on the last known address of the Directors. Thereafter, mushtri munadi was effected though the tehsil agency, and auction notice was published through the DPRO, Kapurthala. Copies of the proclamation were pasted at conspicuous places on the property and at the site of auction. The property was auctioned on 14.2.1994. Respondent No. 5 was the highest bidder at Rs. 7,15,000. 1/4th of the bid amount was deposited by him. The Commissioner confirmed the sale on 14.5.1996. 4. The Bank filed ROR No. 423 of 1995-96 seeking to revise the order of the Commissioner. The Financial Commissioner Revenue vide order dated 6.10.1997 dismissed the petition. The Bank filed Misc. Respondent No. 5 was the highest bidder at Rs. 7,15,000. 1/4th of the bid amount was deposited by him. The Commissioner confirmed the sale on 14.5.1996. 4. The Bank filed ROR No. 423 of 1995-96 seeking to revise the order of the Commissioner. The Financial Commissioner Revenue vide order dated 6.10.1997 dismissed the petition. The Bank filed Misc. No. 10 of 1997-98 for review on the ground that its Counsel was unintentionally absent on the date of hearing, as he had been informed of the date 4 days later. The Financial Commissioner Revenue vide order dated 9.2.1998 dismissed the review application. Against those orders, the Bank filed CWP No. 5412 of 1996. The High Court of Punjab and Haryana vide order dated 15.9.1999 held that it was incumbent on the Financial Commissioner to hear the Bank before passing any order, particularly when notice of the date of hearing had been conveyed to the Banks counsel 4 days later, and remanded the matter for fresh decision. 5. The Bank applied to the Deputy Commissioner Kapurthala on 4.3.1994 for setting aside the auction sale. Counsel for the Bank did not appear before the Deputy Commissioner Kapurthala on 26.4.1994, the date fixed for consideration and arguments. The application was dismissed, as not maintainable under Section 91 of the Act. The Bank applied to the Commissioner on 16.8.1994 under Section 91 of the Act to have the auction sale set aside. The application was therefore not made within the period stipulated in Section 91 of the Act i.e. 30 days. No explanation for the delay was offered. 6. The grounds taken were : (i) that the property had been auctioned without following the prescribed procedure. No proclamation had been effected or published prior to the auction. No notice was given to the Company or the Bank; (ii) that the Company had created an equitable mortgage on the property in favour of the Bank. The original title deeds had been deposited by the Company with the Bank. The mortgage is the first and prior charge over the property. It could not be sold without notice to the mortgagee; (iii) that the Labour Department could not effect recovery of its dues except by order of a Court of competent jurisdiction; (iv) that the auction for Rs. 7,15,000 is collusive since the property is valued at Rs. The mortgage is the first and prior charge over the property. It could not be sold without notice to the mortgagee; (iii) that the Labour Department could not effect recovery of its dues except by order of a Court of competent jurisdiction; (iv) that the auction for Rs. 7,15,000 is collusive since the property is valued at Rs. 20 lakhs; and, (v) that the property stands attached in civil suit titled as Bank of India v. Jagatjit Fasteners pending in the Court of Sub Judge Ist Class, Kapurthala. 7. The Collector Kapurthala submitted a report denying any defect in the conduct of the sale and affirming that the bid amount was reasonable having regard to land prices in the locality. No evidence was tendered or led by the Bank in support of its allegations. In particular, the Bank did not submit any documentation in support of (iv) and (v) above. The Jamabandi for 1990-91 does not record that the property has been mortgaged to the Bank. Therefore notice to the Bank before attachment and auction sale was not mandatory. The Commissioner vide order dated 14.5.1996 confirmed the auction sale, holding that the recovery of Government dues for discharge of Court decree is a statutory priority, and the Bank has no right to question it just because the land was mortgaged as security for loan. 8. The grounds taken in ROR No. 423 of 1995 were the same as before the Commissioner. Through an application dated 5.7.1997, the Bank requested for amendment of the grounds of revision, and for taking additional evidence on record. The additional evidence consists of copies of statements and orders in Execution No. 179 of 4.12.1990 M/s. Manohar Ltd Hira Lal (P) Ltd. Ghaziabad (UP) v. M/s. Jagatjit Fasteners (P) Ltd. Kapurthala, for recovery of Rs. 38,392.45, in the Court of Senior Sub Judge, Kapurthala, decided on 10.9.1994. From the additional evidence it appears that the property mortgaged by the Company in favour of the Bank was put to auction in satisfaction of the decree. There were no bidders since the property was already under attachment. The objector-Bank did not appear on 16.1.1933 or file any document about till encumbrances on the property. The Senior Sub Judge, Kapurthala allowed the decree-holder to bid for the purchase of the property, and rescheduled the auction. The decree-holder bid Rs. 44,000/-. There were no bidders since the property was already under attachment. The objector-Bank did not appear on 16.1.1933 or file any document about till encumbrances on the property. The Senior Sub Judge, Kapurthala allowed the decree-holder to bid for the purchase of the property, and rescheduled the auction. The decree-holder bid Rs. 44,000/-. In view of the statements of counsel, the sale was confirmed vide order dated 10.9.1994 subject to the decretal amount of the objector-Bank being a charge over the property. 9. The applicant-petitioner has not established that the property sold to the decree-holder under the order of the Senior Sub Judge, Kapurthala is the same as the property currently in dispute, or indicated the amount that is due to the Bank under the decree in its favour. As earlier mentioned, the decree of the Debt Recovery Tribunal is dated 18.6.1996. The applicant-petitioner has not brought on record any material to controvert the report of the Deputy Commissioner, Kapurthala, annexed to the ROR, that the property currently in dispute was lying un-auctioned, and that the bid amount was reasonable having regard to land prices in the locality. 10. In the circumstances, there is no reason to disagree with the Financial Commissioner Revenue. The applicant-petitioner has not established any material irregularity in publishing or conducting the sale. He has not shown that he has sustained substantial injury by reason of such irregularity or mistake. The dues of the workers have been realized against only part of the mortgaged property. The High Court had ordered early recovery of wages and EPF/ESI dues as far back as 1987. The applicant-petitioner has not controverted the finding that the workers dues are the first charge on the assets of the Company under the Companies Act. The recovery of amounts declared to be arrears of land revenue is a statutory priority. The claim of the Bank under equitable mortgage is secondary. 11. Accordingly, the review application is dismissed. To be communicated. Application dismissed.