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2010 DIGILAW 2487 (PAT)

Kanti Devi v. State of Bihar

2010-11-15

RAMESH KUMAR DATTA

body2010
ORDER Heard learned counsel for the petitioners and learned counsels for the respondent Corporation as also for the State of Bihar. 2. Although the petitioners had earlier filed the writ petition for quashing the notice dated 1.12.2009 under Sections 29 and 30 of the State Financial Corporation Act, 1951 but in the meantime on an auction sale having been made, the sale order dated 20.7.2010 was issued under which the petitioners were granted 21 days’ time for retaining the unit on matching terms and conditions, pursuant to which certain undertakings were given by the petitioners in the Court for making payment of the amount within certain times, which was noted in the order dated 9.8.2010 passed by this Court. Subsequently on 17.8.2010, the respondent Corporation floated its O.T.S. Scheme, 2009, which is valid till today, i.e., 15.11.2010, upon which I.A. No.8156/2010 was filed by the petitioner for amendment of the prayer in order to be given the benefit of the said O.T.S. Scheme, 2009 which prayer for amendment was allowed by order dated 2.11.2010. 3. Learned counsel for the petitioners submits that the Unit of the petitioners had not been sold till the date when the O.T.S. Scheme, 2009 had been floated by the Corporation and thus, the petitioners were entitled to the benefit of the said O.T.S. Scheme, as the owners of the Unit. 4. The stand taken by the respondent Corporation is that once the Unit has been sold in favour of the purchaser irrespective of whether the purchaser has paid consideration money or the Corporation has not delivered possession of the purchased unit, the original promoter would not be entitled to take benefit of O.T.S. Scheme, 2009. It is submitted that the original promoter having committed default, the mortgaged property was auction sold by order dated 20.7.2010 of the Managing Director of the Corporation although the same was stayed by order dated 2.9.2010 of this Court and in the said circumstances, the petitioners are not entitled for consideration under O.T.S. Scheme,2009 as the owners of the Unit. 5. Learned counsel for the petitioners, meeting the aforesaid stand of the respondent Corporation, relies upon a decision of a learned single Judge of this Court in the case of M/s. Dayal Fuel Industry Vs. Bihar State Financial Corpn. & Ors.: 2009(1)PLJR 800. He specifically relies upon paragraph Nos. 5. Learned counsel for the petitioners, meeting the aforesaid stand of the respondent Corporation, relies upon a decision of a learned single Judge of this Court in the case of M/s. Dayal Fuel Industry Vs. Bihar State Financial Corpn. & Ors.: 2009(1)PLJR 800. He specifically relies upon paragraph Nos. 4,9,10 & 11 of the said decision, which are quoted below: “4. Petitioner’s prayer in the writ petition was that the Corporation came out with BSFC OTS Scheme, 2006. Petitioner, with due application money, made an application for settlement of all outstanding due under the said One Time Settlement Scheme. It had offered to take the settlement under Scheme 1A but the Corporation treating it to be a case under Scheme FA, ordered that the entire outstanding could be settled but petitioner would not be entitled to get back the unit, as the unit had been sold. In other words, the Corporation’s stand is that petitioner may pay the outstanding under settlement and forgo the unit as well. Thus, in other words, the mortgage is foreclosed with liability to liquidate the due outstanding, which on the face of it appears to be peculiar. Thus, in my view, the question is whether the unit was sold or not? 9. Provision of sub-section (2) of Section 29 in no way retracts from the provision of Transfer of Property Act. For a sale, the transfer of property has to be absolute in terms of Transfer of Property Act and that is to be achieved only by a document in writing duly registered. Section 29 of the State Financial Act authorizes the Corporation to execute such a document but even then such a sale takes place only when a transfer document is executed and duly registered as contemplated under the Transfer of Property Act, which has not been done in the present case. 10. I fail to understand on what basis Corporation took the stand that the property was sold by virtue of the sale letter. If the property was sold by virtue of sale letter then this Court fails to appreciate why in the very sale letter is stated that the petitioner had a right to retain the property on matching term. If the sale was already made and the property sold to respondent no.6 by the sale letter how could the property be retained by the petitioner after the sale had been made. If the sale was already made and the property sold to respondent no.6 by the sale letter how could the property be retained by the petitioner after the sale had been made. Then again where is the consideration for sale. It was said that it was sold for a consideration of Rs.3.41 lakh but what happened to that money. The Corporation admits that after payment of initial amount of Rs.78,000/-no further amount was deposited by respondent no.6, who had abandoned the transaction without completing the legal formality. There was no documentation for sale nor registration thereof. 11. If on Corporation own showing legal formalities for sale were not completed, i.e., is neither was consideration received nor any document transferring the property executed nor any such document having been registered in terms of Transfer of Property Act, I fail to understand that on what basis Corporation takes the stand that the property was sold. The stand is misconceived in fact and in law and has no legs to stand. It is only a pretence for denying honorable exit to the petitioner from the debt trip laid out by the Corporation, where for a disbursement of Rs.82,000/- the petitioner had a liability to discharge now of over Rs.25 lakh. This Court can say no more. The stand of the Corporation being misconceived in fact and in law that the property was sold, the stand of the Corporation for settling the due under clause FA cannot be sustained either on fact or in law. The application of the petitioner for settlement otherwise was proper and had to be acted upon. Failure on the part of the Corporation to permit the petitioner to settle the due under the said scheme as per petitioner’s option was thus wrongly denied to the petitioner. The Corporation is thus be liable to grant the facility to the petitioner to compound his liability in terms of BSFC OTS, 2006 as per his application or as per his desire under any of the scheme because choice is that of the defaulter under the scheme.” 6. The Corporation is thus be liable to grant the facility to the petitioner to compound his liability in terms of BSFC OTS, 2006 as per his application or as per his desire under any of the scheme because choice is that of the defaulter under the scheme.” 6. In the aforesaid decision it was clearly held by this Court that unless the formalities of sale are completed by the receipt of consideration, execution of document transferring the property and the document having been registered in terms of the Transfer of Property Act, it is not open to the Corporation to take the stand that the property was sold. The said stand of the Corporation is erroneous and misconceived on the facts and in law and has no legs to stand. It has been held by this Court in the said case, where the facts were substantially similar, that permission on the part of the Corporation to settle the dues under the said scheme as per petitioner’s option was wrongly denied to the petitioner. 7. Learned counsel for the respondent Corporation is unable to distinguish the present matter from the facts of the said decision. 8. Apart from what has been laid down in the aforesaid decision, it is evident that under Section 60 of the Transfer of Property Act a mortgagor’s right of redemption cannot be taken away as long as there is no transfer of property by sale by the execution and registration of a deed of conveyance. It is based upon the principle “once a mortgage always a mortgage” and the right of redemption cannot be fettered, except in the manner as laid down in the said Section. The said proposition has been laid down by a three Judges Bench of the Supreme Court in the case of Narandas Karsondas Vs. S.A. Kamtam and another: A.I.R. 1977 S.C. 774, in paragraph Nos. 35 and 37 of the said decision in the following terms: “35. The mortgagor’s right to redeem will survive until there has been completion of sale by the mortgagee by a registered deed. In England a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. In England a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. Further Section 69 (3) of the Transfer of Property Act shows that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale. Therefore, until the sale is complete by registration the mortgagor does not lose right of redemption. 37. In view of the fact that only on execution of conveyance, ownership passes from one party to another it cannot be held that the mortgagor lost the right of redemption just because the property was put to auction. The mortgagor has a right to redeem unless the sale of the property was complete by registration in accordance with the provisions of the Registration Act.” 9. In view of the aforesaid proposition, there being no denial of the fact that there has been no registration or even execution of a deed of sale in favour of the auction purchaser, the petitioner’s right to redeem the mortgaged property continues and was in existence on 17.8.2010 when the OTS Scheme, 2009 was floated by the respondent Corporation and still continues to exist. So long as the right to redeem the mortgaged property remains and in the meantime any OTS is floated by the Corporation then it would be open to the promoter of the Unit to take the benefit of the said OTS Scheme as the owner of the said Unit. 10. It is stated by learned counsel for the petitioner that though the application could not be filed earlier, as the authorities of the Corporation were not accepting the same, but today (15.11.2010), which is the last date of the said OTS Scheme, 2009, the same has been received by the authorities of the respondent Corporation. 11. In the above facts and circumstances, this Court is of the view that the petitioners are entitled to the benefit of the OTS Scheme, 2009 in terms of clause 5.1(a) of the said Scheme as the original promoter/guarantor of the Unit in question. 11. In the above facts and circumstances, this Court is of the view that the petitioners are entitled to the benefit of the OTS Scheme, 2009 in terms of clause 5.1(a) of the said Scheme as the original promoter/guarantor of the Unit in question. The sale order dated 20.7.2010 is, thus, liable to be quashed and it is, accordingly, quashed. The respondent authorities of the Corporation are directed to consider the application of the petitioners accordingly. 12. The writ application is, thus, disposed of in terms of the aforesaid observations and directions. ?