Aarti Mehra vs Rajesh Dhirajlal Vora

Dharmadhikari S.C., J.—These two Notices of Motion are seeking the following reliefs:

Notice of Motion No. 33/2011:

(a) that this Hon''ble Court be pleased to issue warrant of arrest against the Insolvent u/s 34 of the Presidency Towns Insolvency Act, 1906 and commit the Insolvent to civil prison till such time as this Hon''ble Court may deem fit.

(b) that this Hon''ble Court be pleased to issue direction to the Senior Police Officer of the Cuffe Parade Police Station to arrest the Insolvent for such time as this Hon''ble Court may determine and on such terms as this Hon''ble Court may deem fit and proper.

Notice of Motion No. 34/2011:

(a) that this Hon''ble Court be pleased to direct the Official Assignee, High Court, Mumbai to sell the right, title and interest of the Insolvent in the Flat No. 151/B, Maker Tower, Cuffe Parade, Mumbai-400005 attached by order dated 19th March, 2001 passed in Notice of Motion No. 1514 of 1999 in Summary Suit No. 1455 of 1999 and pursuant to order dated 21st March, 2001 of this Hon''ble Court in Summary Suit No. 3844 of 1999 and Summary Suit No. 3828 of 1999 to satisfy the claims/ dues of the Creditors of the Insolvent

(b) this Hon''ble Court be pleased to direct Dena Bank, Assets Recovery Branch, Dena Bhauan, 3rd Pasta Lane, Shahid Bhagat Singh Marg, Colaba, the respondent No. 1 and Mrs. Aruna Vora, the respondent No. 2 C/o Piyush Vora, 52, Gimar Building, Dongarsi Road, Malabar Hill, Mumbai to disclose on oath and furnish details of settlement arrived between Dena Bank and the Insolvent and details of the financial support given by the respondent No. 2, Mrs. Aruna Vora to the Insolvent to settle the dues of the respondent No. 1 Bank.

(c) that this Hon''ble Court do order and direct the Dena Bank, the respondent No. 1 herein, Assets Recovery Branch, Dena Bhavan, 3rd Pasta Lane, Shahid Bhagat Singh Marg, Colaba to deposit in this Hon''ble Court the entire sum of Rs. 2,30,00,000/and/or such sum as this Hon''ble Court may determine and which is paid over by the Insolvent to Dena Bank, the respondent No. 1 after the order dated 5th August, 2003.

As far as the Notice of Motion No. 33/ -2011 is concerned, it is placed today for hearing and final disposal.

What has been argued by Mr. Parikh on behalf of the creditor/applicant is that with great difficulty the Court could ensure that the amount is brought in by the Insolvent (Rajesh Vora). Now it is disclosed by none else than the Insolvent himself that he is owner of a flat in the building "Maker Tower" at Cuffe Parade and more particularly described in prayer Clauses reproduced above. It has been argued by Mr. Parikh that conveniently and whenever it suits the Insolvent, he states that the property is not exclusively owned by him, but by HUF. That HUF is stated to have been consisting of father of Insolvent and one Shalin Vora. My attention is invited to the fact that the Insolvent owns a flat No. 154-B, Maker Tower. In relation to this flat, what has transpired is that the Insolvent had entered into a Memorandum of Understanding (MoU) along with his father Dhirubhai Vora with one M/s Spire Builders Private Limited. The recitals in this agreement are eloquent enough inasmuch as it has been stated that this flat would be sold for a price of Rs. 19.50 crores and that the said amount will be paid by the Transferee to the Transferors who are none else than the father of Insolvent and the Insolvent himself. The premises were acquired in the year 1979 in the joint names of Hakmichand Vora (HUF), Rajesh Vora (Insolvent) and Shalin Vora. Then recitals state that the Share Certificate dated 23.1.1988 issued by the Society stands in the names of Hakmichand Vora, Rajesh Vora and Shalin Vora. Although the names of Rajesh and Shalin were added in the names of purchasers, the said premises were acquired exclusively out of the funds of the HUF and Rajesh & Shalin never had any financial stake or interest in the said premises. It is contended by Mr. Parikh that the next recital is that at the time of acquisition of the premises and even till the date of MoU, this HUF consists of Dhirubhai Vora and his son Rajesh Vora. Thus, Shalin does not have any right, title and interest in the property and it is only HUF who is claiming the same as is indicated in Clauses (e), (f) and (g) of this agreement.

It is stated that when this flat was not being sold as agreed, M/s. Spire Builders Private Limited filed a complaint alleging the offences punishable under sections 415,420 of the Indian Penal Code, namely, cheating and criminal misappropriation of funds etc. and the Insolvent was arrested. When the Insolvent was arrested, he filed an application for bail in the Court of Sessions at Mumbai being Bail Application No. 1717/ 2011 and in the application he stated thus:

(f) The applicant states that he is placing on record a copy of the Civil Suit filed in the Hon''ble High Court of Judicature at Bombay being Suit No. 3188 of 2009 which was filed on 11th November, 2009. A copy of which is hereto annexed hereto and marked as Exhibit F. A bare perusal of the suit and its annexure indicates that since 22nd February 2007 there has been correspondence exchanged between the Complainant and applicant relating to the flat in question. The applicant has never disputed his liability and has never disputed the fact that he is ready to sell the flat to the complainant side. There were some legal obstacles and hurdles which the applicant was hopeful of clearing and hopeful of giving free and marketable title to the complainant with respect to his flat Even today the applicant without prejudice to his rights and contentions and without admitting any facts in the case of the complainant, but admitting the entire case of the complainant to be taken as gospel truth admits unequivocally that he is ready to fulfill his obligation with respect to the said flat in question if the complainant is ready to pay the balance amount, by taking the insolvency Court into confidence and making appropriate applications therein to clear out various persons whose dues are due from and to see that clear and marketable title is given to the First Informant. Without prejudice to this it is submitted that the applicant is ready to also explore the possibility of moving the insolvency Court by getting another buyer if the First Informant is not interested in this premises and with the permission of the Court selling the premises to make good the dues his creditors in the insolvency proceedings as well as the First Informant in the present case.

Mr. Parikh submits that when this Insolvent was adjudicated as such by an order dated 5.8.2003 and he was aware of obligations and duties in law, namely, to handover the schedule of assets and liabilities and all such transactions and dealings that he has undertaken, he has misled the Official Assignee by not setting out the correct particulars and he has gone even to suppress his bank account. He has admittedly received monies under the MoU after he was adjudicated as Insolvent and now conveniently it is argued that it is a HUF who has got monies and the same have not been deposited in the bank account of the Insolvent.

Mr. Parikh submits that even during the pendency of the insolvency proceedings, this Insolvent has discharged his liabilities towards the Dena Bank and when details thereof were sought to be relied upon, the necessary particulars were held back. The information that is taken, reveals that on behalf of the Insolvent, substantial sums have been paid so as to settle the claim of the Dena Bank. In these circumstances, the Schedule of assets and liabilities filed before the Official Assignee and the statements in these proceedings, so also, the bail application would disclose that the Insolvent has misled this Court and has made false statements on oath. The Insolvent has, with a view to obtain favourable orders and to avoid being detained in civil prison, repeatedly made such statements which would misguide and mislead this Court into believing that the Insolvent is not to be blamed for the state of affairs in the present proceedings and he is willing to settle all claims. Apart from the claim in the present petition, there are creditors who have to recover large sums of Rs. 13 crores approximately from the Insolvent, is the submission of Mr. Parikh. For all these reasons, he submits that both motions be made absolute.

Mr. Gole, learned Counsel appearing for the Insolvent, submits that the Insolvent has complied with earlier statements recorded by this Court. Once he has paid the costs and outstanding dues towards the interest as stated in the earlier orders, then, opportunity be given to him to discharge his debts and liabilities and no drastic order including detaining him in civil prison and directing sale of immovable properties be passed at this stage.

On attention of Mr. Gole being invited to the statements made in the recitals of the agreement and the statements made in the affidavit in reply and the contents of the bail application, what is argued by Mr. Gole, on taking instructions from the Insolvent who is present in the Court, is that the statements in the bail application were made because unfortunately the father of Insolvent expired in September, 2011, therefore, being a only earning member of the family, he has to secure his release on bail. At that time, without prejudice to the rights and contentions and fully disclosing the insolvency proceedings, that he has made the statements in the bail application. It was never intended to mislead this Court or make false statement that he has no right, title and interest in the flat at Cuffe Parade. The said Shalin is also claiming right, title and interest in this flat and is also residing with the family. In these circumstances this Court should not pass any orders and particularly directing the Official Assignee to take forcible possession of the flat and other properties of the Insolvent One opportunity be given to the Insolvent to bring in substantial sums before this Court passes orders making these motions absolute. With the assistance of Mr. Parikh and Mr. Gole, I have perused the motions and the affidavits placed on record. It has been very clearly asserted in the affidavits by the applicant that the flat at Cuffe Parade was acquired out of the funds belonging to the Insolvent. It has been stated that the Insolvent and his father received a sum of Rs. 2.51 crores as Earnest Money for transfer of the flat. Thus, the private sale was sought to be concluded by keeping in dark this Court and the Official Assignee. The valuable immovable property at Cuffe Parade, Mumbai which was stated to be sold at Rs. 19.50 crores in the year 2006, is now sought to be disposed of by undervaluation to avoid public auction as if the Insolvency Court need not be approached nor its permission is necessary. Prima facie, an attempt has been made to overreach this Court. The Insolvent has proceeded on the basis that pending the insolvency proceedings he can deal with the immovable property belonging to him and more particularly by not disclosing the details thereof. He feels that he is not obliged to disclose his rights, title and interest in the flat. Once it has come on record that HUF is nobody other than his lather, still the Insolvent has not thought it fit to correct the particulars of the assets which are filed by him. No apology can be accepted from the Insolvent for the manner in which he is conducting the proceedings. The Insolvent conveniently holds back the material, relevant facts and documents from this Court at relevant times and it is only when the Insolvent is confronted with the statements made in the bail application and the agreement, that he states that he does not have any interest in the property, but Shalin is residing therein. When it was stated before me that Shalin is residing at distinct premises and particularly at Gitanjali Building, Walkeshwar, Mumbai, on taking instructions from the Insolvent, Mr. Gole states that the Insolvent is residing in this flat, but Shalin also resides with him. To my mind, these are the state of affairs in which this Court cannot perpetuate wrongs and particularly allow the sale of flat in favour of the purchaser, namely, M/s. Spire Builders Private Limited. The property must come in the hands of the Official Assignee as it forms a part of the assets of the Insolvent. However, since Mr. Gole once again requested for lenient view of the matter being taken and passing of drastic order be postponed, the interest of justice would be served if the following order is passed:

(a) The Insolvent shall deposit in this Court a sum of Rs. 2 crores on or before 16th January, 2012. If the same is deposited, the Official Assignee to postpone taking forcible possession of the immovable property, namely, Flat 151-B, Maker Tower, Cuffe Parade together with attached Garage.

(b) Needless to state that if the amount is not brought in, the Official Assignee may seek assistance of the Cuffe Parade Police Station and take forcible possession of this flat by dispossessing the Insolvent The Official Assignee not to dispose of the flat thereafter, but await further directions and orders of this Court.

(c) Until further orders of this Court, it is directed that the Insolvent shall not alienate, encumber, part with possession or transfer the flat or any of his movable and immovable properties including under the purported MoU of 2006.

(d) Stand over to 17th January, 2012 high on board.