Dena Bank vs Madhu Babbar And Ors

P.K. Bhasin, J

Today hearing was continued further and concluded also on the point whether the appellant Bank played fraud and abused the process of this Tribunal while obtaining an ex parte order of stay of the operation of the order dated 14th February, 2017 of the DRT whereby the appellant Bank was directed to maintain status quo regarding the sale of the properties in question for which e-auction was already fixed for 15th February. On 2.6.2017 when the appeal was taken up for ex parte hearing for the first time the main grievance raised by the learned Counsel or the appellant was that even though after the filing of the S.A. by the respondents 1-4 herein when earlier e-auction was fixed for 30.12.2016 the learned Presiding Officer of DRT-II, Delhi had not granted them any interim relief. However, no bid was received at that time but subsequently when fresh e-auction was going to be held on 15th February, 2017 the learned Presiding Officer on 14th February, 2017 had passed an order of status quo Regarding sale of the mortgaged shops out which four shops the respondents 1-4 herein were claiming to be owned by them and not mortgaged with the appellant Bank. While issuing notice of the appeal to the respondents, which include some other Banks also who were also claiming to be having charge over the shops in question, on 2.6.2017 for 27.6.2017, this Tribunal had stayed the operation of the impugned order of the DRT passed on 14.2.2017.

It appears that feeling aggrieved by the ex parte stay of the operation of the order of the DRT by this Tribunal, the respondents 1-4 herein had approached the Hon'ble Delhi High Court by filing a writ petition against the order dated 2.6.2017 of this Tribunal That writ petition (being CWP No. 6100/2017) came to be taken up for hearing by Hon'ble High Court on 20.7.2017 but on that date that writ petition was withdrawn by the respondents. Counsel for respondents 1-4 says that writ petition was withdrawn to move this Tribunal itself for appropriate orders since the order of this Tribunal impugned before the High Court was an ex parte order. Accordingly they are now before this Tribunal to oppose this appeal and also to point out that a serious fraud has been played upon this Tribunal by the appellant Bank while obtaining an ex parte stay order from this Tribunal and abusing the process of this Tribunal and after obtaining that order the Bank has sold their four shops mysteriously by way of private treaty and remaining eight shops have been up for public auction.

In order to examine this allegation levelled against the appellant Bank the record pertaining to the sale of four shops by way of private treaty was required to be produced by the Appellant Bank and the officials of the Bank who sold the shops by private treaty after obtaining ex parte order from this Tribunal were also required to appear before this Tribunal. The record has been produced and three Bank officers who had recommended sale of four shops by way of private treaty have also appeared before this Tribunal and it is agreed by them that it was pursuant to their decision taken that four shops in question came to be sold by private treaty.

In this case, the Bank had fixed the first auction in which the public in general could participate for 30.12.2016 for selling 12 shops in all including the four shops over which the respondents 1-4 herein/security applicants are claiming ownership but on that date no bidder came forward to purchase the same. Thereafter, a fresh date of e-auction was fixed as 15.2.2017 but this time the learned DRT restrained the Bank from putting the shops in question to auction vide order dated 14.2.2017. i.e., a day before the date of auction.

After the DRT had stayed the proposed auction to be conducted on 15.2.2017 and this Tribunal had stayed that order of the DRT on 2.6.2017 the appellant Bank has fixed fresh auction for 19th August, 2017 but only in respect of eight shops. How remaining four shops were left out has come to examined since the respondents have raised a grievance that the left out four shops have been sold by way of a private understanding/treaty with two persons, namely, Mr. Amandeep Singh and Mr. Harmik Singh and that action of the Bank amounts to abuse of process of this Tribunal as also an act of fraud. Learned Counsel for the appellant Bank has however strongly refuted these allegations of the Counsel for the respondents 1-4 and submitted that sale of four shops by private treaty was very much permissible in law as well as under the relevant guidelines/policy of the Bank in this regard and the these respondents have no locus standi to challenge that decision of the Bank and as far as the borrower/mortgagor is concerned it has not raised any grievance about sale by private treaty despite the fact that they were duly notified by the Bank to clear the Bank's dues before 20th July, 2017 failing which the four shops will be sold by private treaty on 20th July, 2017 to the two persons who had already approached the Bank for purchase of four shops at the reserved price which was earlier fixed by the Authorised Officer of the Bank.

On a prime facie view of the matter I feel that the appellant Bank has abused the process of this Tribunal and that can also be said to playing fraud upon this Tribunal when the Bank had on 2nd June, 2017 expressed before this Tribunal that it was seriously prejudiced and aggrieved since the DRT had brought to a halt its efforts to sell the mortgaged shops publicly. It appears that the appellant in fact by that time had taken a decision to sell four shops to two private persons who were known to some Bank officials at the helm of affairs as far as sale of the secured assets of this case in particular is concerned but that object could not have been achieved unless stay granted against public auction by the DRT, which was a hurdle in the way of the concerned officials of the Bank, was vacated. Few papers were produced by the appellant Bank before this Tribunal during the hearing in compliance of the direction of this Tribunal and which according to the Bank's Counsel were the only relevant documents concerning sale of four shops by private treaty. Those papers totalling 17 in number have been examined by me and which are taken on record.

One very significant point comes to light from 17 the documents produced by the Bank and perused by me is that for the auction (e-auction) which was open everybody willing to buy the shops proposed to be auctioned and fixed for 15th February, 2017 and which was stayed by the DRT a day before on 14th February at the instance of the respondents 1-4 herein/security applicants. That fact is that for the auction fixed for 15th February, 2017 the Bank had received bids for four shops, which are now the subject matter of present ongoing controversy between the Bank and Security Applicants/appellants, namely, shop Nos. 9, 10, 11 and 12 being part of a building in Krishna Nagar, Delhi. So, when the appellant Bank had succeeded on 2.6.2017 in getting an ex parte order of stay of the operation of the impugned order of DRT from this Tribunal the appellant Bank became free to examine those bids and it Could have gone ahead to accept the highest bid if it was not below the reserve price and to sell the shops to the highest bidder instead of ordering a fresh public auction for 19th August and that too for eight shops only. What could be the intention of the Bank officials in not considering the bids which had already been received for 15th February, 2017 is known to them only and as far this Tribunal is concerned the only inference which can be drawn on a prima facie view of the matter is that the vacation of the DRT's order by this Tribunal was used to benefit someone known to the Bank officials without, requiring them to compete with others in the fresh auction and the fact is that four shops were in fact sold not by way of public auction but directly to two known persons. That way, prima facie, the Bank appears to have abused the process of this Tribunal by getting an ex parte relief by not putting a case that the Bank was intending to sell four shops to two persons without any public auction and that the Bank could legally do that after stay granted by DRT is vacated.

The DRT had only passed an status quo order which meant that whatever bids might have been received will not be given effect to till further orders of the DRT.

The papers produced by the appellant Bank also show that after this Tribunal had on 2.6.2017 stayed order of DRT staying the auction to be held on 15.2.2017, two persons, namely, Mr. Amandeep Singh and Mr. Harmik Singh approached the appellant Bank through separate e-mails sent to the Bank on 13th and 14th June, 2017 claiming that they had already submitted their bids in respect of four shops in question for the auction which was to be held on 15th February, 2017 but the Bank had cancelled that auction. They also disclosed the bid amounts and requested the Bank to allot those shops to them. In one e-mail sent by Amandeep Singh who had in their e-mails also had given the figures at which they were willing to purchase the shops. The appellant Bank while deciding to sell eight shops in a fresh public auction accepted the requests of these two persons who had approached the Bank without any fresh auction having been fixed and sold four shops to them. Prima facie that decision to sell some shops by fresh public auction and some by private understanding does not appear to be legally permissible also and particularly in the mysterious circumstances that has been done. So, this is another circumstance justifying the inference that the process of this Tribunal had been attempted to be used by the Bank to achieve some personal gain by the Bank officials and not for public good they succeeded in their attempt and that public money appears to have been put at stake since the Bank has not brought on record any material to show as to why the price at which four shops only have been sold by way of a private understanding (treaty) was justified price which it could have shown that the bids received for 15th February, 2017 were much less than what price had been offered by these two individuals to whom four shops have been sold. One document produced before this Tribunal is the final approval document dated 22.6.2017 whereby the proposal of one Senior Manager (Legal) and Chief Manager (RMB) and Dy. Zonal Manager to sell four shops by way of private treaty to Mr. Amandeep Singh and Mr. Harmik Singh (2 shops each) by way of private treaty as per loan recovery policy of the Bank was made for the approval of the Zonal Manager and that proposal was approved also by the Zonal Manager of the appellant Bank accepting the justification for sale of four shops only by way of private treaty despite the fact that in that proposal itself it had been mentioned that some bids had been received for the auction which was to be held on 15th February, 2017. It thus appears that during after the passing of the order on 2.6.2017 by this Tribunal the Bank officials started the exercise of sale of four shops to two persons known to them and which exercise was not a bona fide exercise in public interest.

Since I have come; to a prima facie conclusion only at this stage that a fraud has been played upon this Tribunal and its process has been abused by a public sector Bank, I deem it fit to proceed further in the matter to examine the question of fraud and to take a final decision against the appellant Bank and concerned Bank officials who, prima facie, appear to be the officers who had signed the Note dated 22nd June, 2017 of sale by private treaty I deem it appropriate to give a show cause notice to the appellant Bank and the Bank officers who had signed the above referred Note of Sale by Private Treaty dated 22nd June, 2017 to show cause as to why they be not proceeded against for having abused the process of this Tribunal and played fraud upon this Tribunal. The three Bank officers present in person accept the show cause notice and on behalf of the Bank Mr. Arun Aggarwal, Advocate accepts notice. They can give their responses by way of separate affidavit. Bank can also file its reply affidavit on the next date.

This, however, is not the end of the matter. Since prima facie this Tribunal has come to the conclusion that a fraud has been played upon this Tribunal and as a result thereof the Bank officials have been successful in selling 4 shops by way of private treaty to two private persons who, prima facie, appear to be known to them and the whole exercise appears to have been undertaken to benefit the two individuals, who according to the Counsel for the respondents 1-4 are related to each other and are dealing in such like properties being sold by the Banks, so that other members of public do not come in their way to compete with them in a public auction and they get the shops at the price to be determined by them. Therefore, possession of the four shops need to be once again taken over by the Bank till further orders of this Tribunal. Since the beneficiaries of this illegal transaction appear to be hands in glove with the Bank officials it can be safely presumed that they must be aware of these proceedings also and are watching the present proceedings through the eyes of the Bank officials present today. Therefore, I also deem it appropriate and in the fitness of things to immediately direct taking over of the physical possession of the four shops in question and for that purpose I direct the Zonal Manager of the appellant Bank to immediately take over the physical possession of the four shops in question and to retain its possession subject to further orders in the present proceedings. In any event, the Zonal Manager shall also get collected notices to be served upon the so called purchasers, namely, Amandeep Singh and Harmik Singh requiring them also to show cause as to why the alleged sales of four shops in their favour by the appellant Bank under a private treaty be not declared to be a nullity in the event of this Tribunal arriving at a final conclusion that a fraud has been played upon this Tribunal in the process of sale of shops in their favour. Alongwith the notices to be served upon them a copy of this order shall be attached as also the 17 papers submitted by the appellant Bank, referred to in the preceding paras.

The appellant Bank is also directed to deposit with this Tribunal the entire sale proceeds which it has received from the aforesaid two private persons which deposit will be subject to the final orders of this Tribunal. That deposit be made by way of a Banker's cheque/DD in the name of Registrar of this Tribunal by tomorrow and that deposit also will be subject to further directions of this Tribunal. However, it is being made clear that passing of the aforesaid order will not be construed as even a prima facie view about the genuineness of the case of the respondents 1-4 that the title documents in their possession are the genuine documents while the documents based on which mortgages were created in favour of the appellant Bank were forged and fabricated. All these aspects will be examined at the subsequent appropriate stage in the present proceedings. Similarly the appellant Bank and its officers, who have been given only a show cause notice, should not consider this order as a rejection of the submissions made by their Counsel that there has been no fraud played upon this Tribunal by the Bank or any of its officials.