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2005 DIGILAW 497 (MAD)

Andrew Yule and Company Limited represented by its Deputy General Manager and others v. The Recovery Officer, Debts Recovery Tribunal-I, Chennai, and others

2005-03-21

PRABHA SRIDEVAN

body2005
ORDER: The challenge in all these writ petitions is made by the persons in possession of the property which is the subject matter of the Sale Certificate dated 9.8.2002, claiming to be the tenants of the said property. The Sale Certificate dated 9.8.2002 reads as follows: "This is to certify that M/s.A.R.Housing Private Limited. has been declared the purchaser through a sale by public auction held on 29.8.2001 of the under-mentioned immovable property. The property described is situated in T.S.No.11, Urur Village, Mylapore-Triplicane Taluk, Chennai District." Pursuant to this sale certificate, the Recovery Officer issued several letters to the petitioner herein calling upon them either to "hand over vacant possession of the property" or informing the petitioners that if vacant possession is not handed over, they would be "evicted from the premises forcibly...". 2. Mr.G.Masilamani, learned senior counsel appearing for the petitioners in W.P.Nos. 39649 of 2002 and 27303 of 2003 and Mr.Abudu Kumar Rajaratnam as well as Mr. A.J.Jawad, learned counsel appearing on behalf of the petitioners in W.P. Nos.17736 and 20357 of 2004 respectively, submitted that the aforesaid order is liable to be quashed and relied on a judgment of this Court reported in A. Stephen Samuel, Proprietor, M/s.Industrial Seauity Agency, Coimbatore v. Union of India,(2003)2 M.L.J.220. The learned senior counsel also raised, inter alia, objections relating to the procedure adopted by the Debts Recovery Tribunal in bringing this property to sale. 3. The relevant facts for the purpose of this case are as follows: M/s.Global Trust Bank Limited filed O.A. No.271 of 2001 against M/s.Triveni Garments Private Limited and others for recovery of debt. A memorandum of compromise was filed and an order was passed on 25.7.2001. The decree was for the recovery of a sum of Rs.5,25,00,000. This order refers to the willingness of the first respondent to purchase the property at Villivakkam and also to the payments by the first respondent made in advance. Thereafter, a public notice was effected on 18.8.2001 for the sale to be conducted on 29.8.2001. As far as the records show, there is only one publication of notice for the Villivakkam property. On 3.5.2002, the first respondent filed an application before the Debts Recovery Tribunal to substitute the Adyar property for the Villivakkam property. The petitioners claim to be the tenants in respect of the Adyar property. This application was ordered ex parte. As far as the records show, there is only one publication of notice for the Villivakkam property. On 3.5.2002, the first respondent filed an application before the Debts Recovery Tribunal to substitute the Adyar property for the Villivakkam property. The petitioners claim to be the tenants in respect of the Adyar property. This application was ordered ex parte. Another joint memorandum of compromise signed on 16.9.2003 was filed before the Debts Recovery Tribunal. Para.5 of the said memorandum of compromise reads thus: "M/s.A.R.Housing Private Limited took part in the public auction held on 29.8.2001 and declared as successful bidders and the auction price was fixed at Rs.370 lacs for purchase of 4.3 acres being the first portion (Part-I) of the Villivakkam land. As per the terms and conditions of the auction, the said A.R. Housing Private Limited had paid 25% of the bid amount. i.e. Rs.92,52,500 on 10.9.2001." This joint memorandum contains Schedules ‘A’ ‘B’ and ‘C’ properties. Schedules ‘A’ and ‘B’ relate to the Villivakkam property and Schedule ‘C’ relates to the Adyar property. This memorandum does not refer to any auction after 29.8.2001. the report however reads thus: "REPORT OF THE RECOVERY OFFICER ON THE JOINT MEMO FILED BY THE PARTIES IN O.A.No. 271 OF 2001 AND AFFIDAVIT FILED BY M/S. A.R. HOUSING PRIVATE LIMITED. In O.A No. 271 of 2001, final order has been passed and D.R.C.No.45 of 2002 has been issued for recovery of a sum of Rs.5,25,00,000 from the defendants. The "C" Schedule property has been sold for a total sale consideration of Rs.3,70,10,000 to M/s. A.R.Housing (P) Ltd., in the public auction held on 21.8.2003. The sale was confirmed in two stages on 9.8.2002 and on 18.7.2003. The sale proceeds were passed on to the applicant bank on 17.9.2003. The balance amount is yet to be recovered by sale of the remaining properties. (R. Pandiyan) RECOVERY OFFICER" The one and only aspect that is relevant in the impugned order, is that it refers to a sale dated 29.8.2001, the memo of compromise refers to the same sale, the records contain only one newspaper announcement of public sale, which is dated 29.8.2001. It is nobody’s case there was any other sale. The sale dated 29.8.2001 did not refer to Adyar property. 4. The l earned senior counsel submitted that several factors vitiate the sale. It is nobody’s case there was any other sale. The sale dated 29.8.2001 did not refer to Adyar property. 4. The l earned senior counsel submitted that several factors vitiate the sale. These relate inter alia to the validity of the equitable mortgage, the validity of the power of attorney, the under-valuation of the Adyar property, etc. The jurisdiction of writ Court cannot be invoked to decide these issues. 5. Mr.Abudu Kumar Rajaratnam, learned counsel appearing for the Meerabai Dawson Tenants’ Welfare Association would submit that though ordinarily Associations cannot maintain writ petitions in respect of independent causes of action of their members, in this case, the order threatening forcible dispossession is contrary to all principles of law and therefore, the writ petition can be maintained. Learned counsel also submitted that the Recovery Officer had issued notices to all the tenants and therefore, this Court shall not stand on technicalities of locus standi. 6. Mr.T.V.Ramanujam, learned senior counsel appearing for the purchaser would submit that it is not open to the petitioners to question whether the debt should be recovered or whether there was a debt at all. That was between the bank and the judgment debtor. Learned senior counsel also submitted that it was curious that a General Manager had sworn to the affidavit filed in support of W.P.No.27303 of 2003 claiming rights of a city tenant and offering to purchase the property, when the balance sheet of the Company shows that it is running into loss. The learned senior counsel seriously questioned the locus standi of Meerabai Dawson Tenants’ Welfare Association to file a writ petition. However, as regards the applicability of the decision in A.Stephen Samuel, Proprietor, M/s. Industrial Security Agency, Coimbatore v. Union of India,(2003)2 M.L.J.220 to the instant case, the learned senior counsel would submit that while the purchaser may not be entitled to actual possession, he will definitely be entitled to symbolic possession. 7. In A.Stephen Samuel, Proprietor, M/s. Industrial Security Agency, Coimbatore v. Union of India, (2003)2 M.L.J.220 the properties which were under the occupation of the tenants were sold in public auction and at the instance of the successful bidder, the Recovery Officer directed the tenants therein to hand over vacant possession to the purchaser, failing which suitable action would be taken for their eviction. After consideration of the relevant legal provisions, the Division Bench held as follows: “In our view, it is impermissible for the auction purchaser to get actual possession of the property by throwing the tenants out of the property. The auction purchaser in our view, will be entitled to possession in accordance with Rule 40 of the ITCP Rules and the delivery contemplated in the Rules is not actual delivery, but symbolical delivery of the property to the auction purchaser.” The impugned order was, therefore, quashed. 8. In D.S.Nakara v. Union of India, A.I.R 1983 S.C.130, the Supreme Court, relying on the majority decision reported in S.P.Gupta v. Union of India, A.I.R. 1982 S.C.149, held that any member of the public having sufficient interest can maintain an action for judicial redress for public injury arising from breach of public duty or from violation of some provision of the Constitution or the law and seek enforcement of such public duty and observance of such constitutional or legal provision. Tamil Nadu Livestock Inspectors’ Association v. Government of Tamil Nadu, (1983)1 M.L.J.453, it was held as follows: “If therefore, by the impugned notification the rights of any of the members of the Association have been prejudiced or exercised without the authority of law by any act on the part of the State Government, certainly it would be open to the Association to come forward and protect the rights of its individual members, whom it represents.” 9. As regards locus standi, the following paragraphs in Jasbhai Motibhai Desai v. Roshan Kumar, (1976)3 S.C.R.58, are relevant: “In order to have the ‘locus standi’ to invoke the extraordinary jurisdiction under Art.226, an applicant should ordinarily be one who has a personal or individual right in the subject matter of the application, though in the case of some of the writs like habeas corpus or quo warranto, this rule is relaxed or modified. The expression ‘ordinarily’ indicates that this is not a cast-iron rule. It is flexible enough to take in those cases where the applicant has been pre-judicially affected by an act of omission of an authority, even though he has no propriety or even a fiduciary interest in the subject matter. The expression ‘ordinarily’ indicates that this is not a cast-iron rule. It is flexible enough to take in those cases where the applicant has been pre-judicially affected by an act of omission of an authority, even though he has no propriety or even a fiduciary interest in the subject matter. That apart, in exceptional cases, even a stranger or a person who was not a party to the proceedings before the authority, but has a substantial and genuine interest in the subject matter of the proceedings will be covered by this rule. In the context of locus standi to apply for a writ of certiorari, an applicant may ordinarily fall in any of these categories: (i) person aggrieved; (ii) stranger; (iii) busybody or meddlesome interloper. Persons in the last category are easily distinguishable from those coming under the first two categories inasmuch as they interfere in things which do not concern them, masquerading as crusaders for justice in the name of pro bono publico, though they have no interest of the public or even of their own to protect. The distinction between the first and second categories though real, is not always well-demarcated. Assuming that the appellant is a stranger, and not a busybody, then also there are no exceptional circumstances in the present case which would justify the issue of a writ of certiorari at his instance. On the contrary, the result of the exercise of these discretionary powers, in his favour, will, on balance, be against public policy. It is true that in the ultimate analysis, the jurisdiction under Art.226 is discretionary.” The impugned order seeks to affix a seal of approval on a public auction which was never held in respect of this property. The order in the present case, threatening forcible dispossession, is unsustainable and therefore, the writ petitions cannot be dismissed merely on the ground of locus standi or maintainability. 10. On a cursory look, it would seem that the present lis involves disputed questions of fact which cannot be decided by a writ Court. Even then, in appropriate cases, the writ Court has the jurisdiction to entertain the writ involving disputed questions of fact. It has been so held in A.B.L.International Limited v. Export Credit Guarantee Corporation of India Limited,(2004)3 S.C.C.553. Even then, in appropriate cases, the writ Court has the jurisdiction to entertain the writ involving disputed questions of fact. It has been so held in A.B.L.International Limited v. Export Credit Guarantee Corporation of India Limited,(2004)3 S.C.C.553. In that case, the Supreme Court relied on the judgment in Gunwant Kaur v. Municipal Committee, Bhatinda, (1969)3 S.C.C.769, wherein it has been held that the High Court will not be justified in requiring the party to seek the relief by a lengthy, dilatory and expensive process if the questions of fact in the case are elementary. 11. Actually, there is no dispute here; in fact, the documents speak themselves. The question is whether the Debts Recovery Tribunal could have substituted another property, which is stated to be more valuable, without bringing the said property for sale in a public auction. 12. The scope of public policy is classified in "Chitti on Contract (26th Edition - Volume I)" as follows: "Objects which on grounds of public policy invalidate contracts may, for convenience, be generally classified into five groups; first, objects which are illegal by common law or by legislation; secondly, objects injurious to good government either in the field of domestic or foreign affairs; thirdly, objects which interfere with the proper working of the machinery of justice; fourthly, objects injurious to marriage and morality; and, fifthly, objects economically against the public interest." It appears that the substitution done is contrary to law, the rules and also to public policy. No doubt the jurisdiction under Art.226 is discretionary, but discretion must be exercised when something has happened ‘against public policy’. 13. This is why, in Gurmukh Singh v. Amar Singh, (1991)3 S.C.C.79, the Supreme Court, while upholding the sale, observed as follows: - "The object of conducting public sale is to secure as much price or revenue as possible to redeem the debt of the debtor or to secure maximum price to the exchequer for use of public purpose. If such a contract to form a ring among the bidders was to peg down the price and to have the property knocked out at a low price, it would defeat the above economic interest of the debtor or public welfare". 14. If such a contract to form a ring among the bidders was to peg down the price and to have the property knocked out at a low price, it would defeat the above economic interest of the debtor or public welfare". 14. In a case of flagrant misuse of the process of law in T. Arivanandam v. T.V. Satyapal,A.I.R. 1977 S.C.2421, the Supreme Court held that the long arm of the law must throttle such litigative caricatures if the confidence and credibility of the community in the judicature is to survive. 15. The Sale Certificate dated 9.8.2002 is patently incorrect since the sale allegedly conducted on 29.8.2001 was not in respect of the Adyar property. Therefore, it is false to state in the certificate that the property was purchased at the public sale held on 29.8.2001. When illegality, is writ large in an auction, then technicalities such as alternative remedy, locus standi etc. have to be ignored. It is clear there has been misuse of the process of law here. 16. Samir K.Shah v. Union of India, (2004)7 Scale 491, the Supreme Court has considered Sec.29 of the Income Tax Act along with Rules 52 and 53 of the Second Schedule to the Act. The following paragraphs are relevant: "7..... Sec.29 of the Act provides that the provisions of the Second and Third Schedules to the Income-Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962, as in force from time-to-time shall, as far as possible, apply with necessary modifications to proceedings for recovery of a debt under the Act. 8. Rules 52 and 53 of the Second Schedule to the Income-Tax Act, 1961, read as follows: “ Sale and proclamation of sale: 52.(1) The Tax Recovery Officer may direct that any immovable property which has been attached, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold. (2) Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a proclamation of the intended sale to be made in the language of the district. Contents of Proclamation: 53. (2) Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a proclamation of the intended sale to be made in the language of the district. Contents of Proclamation: 53. A proclamation of sale of immovable property shall be drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible, (a) the property to be sold; (b) the revenue, if any, assessed upon the property or any part thereof; (c) the amount for the recovery of which the sale is ordered; (cc) the reserve price, if any, below which the property may not be sold; and (d) any other thing which the Tax Recovery Officer considers as material for a purchaser to know, in order to judge the nature and value of the property.” 10. The debtor is entitled to notice only for the drawing up of the proclamation sale, presumably, the intention is to keep the debtor informed of the steps taken by the creditor to realize a fair value of the debtor’s property. “ 17. The impugned order refers to Rule 39 of the Income-Tax (Certificate Proceedings) Rules, 1962, Rule 39 can be invoked only when the immovable property is in the occupancy of the defaulter. The petitioners here are not defaulters. Part VI of the Income-Tax (Certificate Proceedings) Rules, 1962, deals with resistance or obstruction to delivery of possession to the purchaser, and the following rules are relevant: ” Resistance or obstruction to possession of immovable property:41. (1) Where the purchaser of immovable property sold in execution of a certificate is resisted or obstructed by any person in obtaining possession of the property, he may make an application to the Tax Recovery Officer complaining of such resistance or obstruction within thirty days of the date of such resistance or obstruction. (2) The Tax Recovery Officer shall fix a day for investigating the matter and shall summon the party against whom the application is made to appear and answer the same. Resistance or obstruction by defaulter: 42. (2) The Tax Recovery Officer shall fix a day for investigating the matter and shall summon the party against whom the application is made to appear and answer the same. Resistance or obstruction by defaulter: 42. Where the Tax Recovery Officer is satisfied that the resistance or obstruction was occasioned without any just cause by the defaulter or by some other person at his instigation, he shall direct that the applicant be put into possession of the property, and where the applicant is still resisted or obstructed in obtaining possession, the Tax Recovery Officer may also, at the instance of the applicant, take steps to put the applicant into possession of the property by removing the defaulter or any person acting at his instigation. Resistance or obstruction by bonafied claimant: 43. Where the Tax Recovery Officer is satisfied that the resistance or obstruction was occasioned by any person (other than the defaulter) claiming in good faith to be in possession of the property on his own account or on account of some person other than the defaulter, the Tax Recovery Officer shall make an order dismissing the application. Resistance or obstruction by purchaser: 44. (1) Where any person other than the defaulter is dispossessed of immovable property sold in execution of a certificate by the purchaser thereof, he may make an application to the Tax Recovery Officer complaining of such dispossession within thirty days of such dispossession. (2) The Tax Recovery Officer shall fix a day for investigating the matter and shall summon the party against whom the application is made to appear and answer the same. Bona fide claimant to be restored to possession. 45. Where the Tax Recovery Officer is satisfied that the applicant was in possession of the property on his own account or on account of some person other than the defaulter, he shall direct that the applicant be put into possession of the property. Rules not applicable to transferee lite pendente: 46. Nothing in Rules 43 and 45 shall apply to resistance or obstruction by a person to whom the defaulter has transferred the property after the service of a notice under Rule 2 of the principal rules or to the dispossession of any such person. Right to file a suit: 47. Rules not applicable to transferee lite pendente: 46. Nothing in Rules 43 and 45 shall apply to resistance or obstruction by a person to whom the defaulter has transferred the property after the service of a notice under Rule 2 of the principal rules or to the dispossession of any such person. Right to file a suit: 47. Any party not being a defaulter against whom an order is made under Rule 42 or Rule 43 or Rule 45 may institute a suit in a Civil Court to establish the right which he claims to the present possession of the property. “ 18. The sale certificate issued was not in pursuance of a sale conducted in accordance with Rules 52 and 53 of the Income-Tax (Certificate Proceedings) Rules, 1962. The conditions prescribed in the above rules have not been followed. The statutory power conferred on an authority for public purposes - in the instant case, to recover the decree debt - is conferred as it were upon trust, not absolutely. The power must be used validly and only in the way which the law, while conferring it, intended it to be used vide Porter v. Magill,(2002)1 All E.R. 465. 19. The recovery officer had a duty to act in accordance with the statutory provisions and if he violated the duty, then the petitioners had a corresponding right which, if not explicit, must be imported by implication. So by the impugned order, they had suffered a wrong. In R.(G). v. Immigration Appeal Tribunal, (2004)3 All. e.R.. 286, we find some interesting observations regarding statutory and judicial review. It is observed therein that a legislation which removes the right of judicial review is inimical to the rule of law, and that” no certiorari clauses “ cannot prevent review of decisions which in law are nullities.” In the circumstances of that case, to have allowed the objection to judicial review to have prevailed would have allowed procedural obstacles to defeat justice,. . . . The ghosts clanking their medieval chain referred to by Lord Atkin would have indeed been abroad to defeat justice - United Australia Limited v. Barclays Bank Limited,(1940)4 All E.R.20: 1941 A. C. 129“. 20. . . . The ghosts clanking their medieval chain referred to by Lord Atkin would have indeed been abroad to defeat justice - United Australia Limited v. Barclays Bank Limited,(1940)4 All E.R.20: 1941 A. C. 129“. 20. In Cellular Operators Association of India v. Union of India, (2003)3 S.C.C. 186 , and in several cases, the scope of judicial review has been dealt with and what follows is that if there is illegality, irrationality or impropriety in the procedure adopted, the writ Court shall not fold its hands and watch. Justice covers her eyes, not to blind herself to injustice, but to be blind to anything that comes in the way of rendering justice and she holds the sword to lop off the obstacles. 21. In State of Uttar Pradesh v. Mohammed Nooh, A.I.R. 1958 S.C.86, the Supreme Court has referred to the following observations of Harries C.J. made in 56 C W.N.453: ”There can, I think, be no doubt that Court can refuse to issue a certiorari if the petitioner has other remedies equally convenient and effective. But it appears to me that there can be cases where the Court can and should issue a certiorari even where such alternative remedies are available. Where a Court or tribunal, which is called upon to exercise judicial or quasi-judicial functions discards all rules of natural justice and arrives at a decision then it appears to me that the Court can and must interfere." In Gunwant Kaur v. Bhatinda Municipality, A.I.R. 1970 S.C. 802, the Supreme Court held as follows: "The High Court is not deprived of its jurisdiction to entertain a petition under Art.226 merely because in considering the petitioner’s right to relief, questions of fact may fall to be determined. In a petition under Art.226, the High Court has jurisdiction to try issues both of fact and law. Exercise of the jurisdiction, though discretionary, the discretion must be exercised on sound judicial principles." In Bharat Petroleum Corporation v. N.R.Vairamani, (2004)4 M.L.J.(S.C.) 147: (2004)5 C.T.C. 74, the Supreme Court, while referring to the "peril of treating words in a judgment as though they are words in a legislative enactment," referred to the words of Lord Denning which have become locus classicus. In particular, I am guided by the following words: "My plea is to keep the path to justice clear of obstructions which would impede it." 22. In particular, I am guided by the following words: "My plea is to keep the path to justice clear of obstructions which would impede it." 22. In Ghulam Qadir v. Special Tribunal, (2002)1 S.C.C. 33 , the Supreme Court has held as follows: "The orthodox rule of interpretation regarding the locus standi of a person to reach the Court has undergone a sea change with the development of Constitutional Law in our country and the Constitutional Courts have been adopting a liberal approach in dealing with the cases or dislodging the claim of a litigant merely on hyper-technical grounds. If a person approaching the Court can satisfy that the impugned action is likely to adversely affect his right, which is shown to be having source in some statutory provision, the petition filed by such a person cannot be rejected on the ground of his not having the locus standi. In other words, if the person is found to be not merely a stranger having no right whatsoever to any part of property, he cannot be non-suited on the ground of his not having the locus standi." In Harbanslal Sahnia v. Indian Oil Corporation Limited, (2003)2 S.C.C.107, it was held as follows: " The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights.; (ii) where there is failure of principles of natural justice.; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged .The present case attracts applicability of the first two contingencies." In that case, the petitioner’s dealership, which was his bread and butter, was terminated for an irrelevant and non-existent cause. In the case on hand, the possession of the petitioners was sought to be violently taken away from them by an impugned order which is "a nullity." 23. Since there was no sale of the immovable property on 29.8.2001 or any other date in a manner known to law, even symbolic possession cannot be granted. In the case on hand, the possession of the petitioners was sought to be violently taken away from them by an impugned order which is "a nullity." 23. Since there was no sale of the immovable property on 29.8.2001 or any other date in a manner known to law, even symbolic possession cannot be granted. The counsel appearing for the parties informed the Court that Global Trust Bank, which had filed the proceedings before the Debts Recovery Tribunal was now taken over by the Oriental Bank of Commerce. It is open to the party, which is entitled to recover the debt under the Act, or any other party to file appropriate applications if so advised for sale of the judgment debtor’s property. And if the Adyar property is subject of such application, the petitioners shall be heard before ordering possession. Resistance or obstruction to delivery of possession can be dealt with only after hearing the parties as provided for in Part VI of the Income -Tax (Certificate Proceedings) Rules. 24. The disputed questions of fact which have been raised are left open, for they do not fall within the decision-making province of the writ Court. It is interesting to note that neither the decree holder, viz. the Bank which seeks to recover the debt, nor the judgment debtor has seriously contested this writ petition. 25. For all the above reasons, the sale certificate dated 9.8.2002 and the impugned orders directing dispossession of the petitioners are quashed. The writ petitions are accordingly allowed. However, there will be no order as to costs. Consequently, the connected W.M.Ps. are closed.