Mohammed Hanif vs Rajasthan Financial Corporation and Others

Dr. Vineet Kothari, J.—The appellant-plaintiff Mohd. Hanif S/o. Ahmedji has filed the present first appeal under Section 96 of the Code of Civil Procedure aggrieved by the rejection of his suit by the learned Additional District Judge No. 2, Bhilwara on 04.03.2014 dismissing the Suit No. 117/2011 (53/2008) which was filed by the plaintiff-appellant Mohd. Hanif seeking cancellation of the sale deed of his industrial unit which was executed by the defendants-Rajasthan Financial Corporation (''RFC'') in favour of the defendant No. 3- Akil Ahmed Sheikh S/o. Badruddin Sheikh on 15.09.2006. The unit in question was taken over by the defendant-RFC while exercising its powers under Section 29 of the State Financial Corporation Act, 1951 (''the S.F.C. Act'') and the same was put to public auction and was ultimately sold to the defendant No. 3-Akil Ahmed Sheikh, since the appellant-plaintiff had defaulted in re-payment of the loan amount taken by him.

The facts leading to filing of the present suit, as noticed by the learned Trial Court in the impugned order dated 04.03.2014 are quoted herein below for ready reference:--

The reasons assigned by the learned Additional District Judge No. 2, Bhilwara for dismissal of the suit aforesaid, while deciding issue No. 1 and the other relevant findings are also quoted herein below for ready reference:--

The learned counsel Mr. Arvind Samdariya appearing for the plaintiff-appellant vehemently submitted that the industrial unit in question of the plaintiff has been sold at throwaway price of Rs. 90,000/- only even though the land rate as per the DLC rates itself would go over Rs. 2,00,000/- and besides this, there were some constructed portions on the land in question and, therefore, the sale deed dated 15.09.2006 which was executed by the defendant-RFC at Rs. 90,000/- in favour of the defendant No. 3 deserves to be set aside. The learned counsel also submitted that the other aspirants who sought to purchase the industrial unit in question were not even allowed by the defendant-RFC and their offers were not entertained by the defendant-RFC and, therefore also, for this reason, the present first appeal filed by the plaintiff-appellant deserves to be allowed. The learned counsel read the statements of the witnesses DW-1 and DW-2 before the Court in the present first appeal.

On the other hand, the learned counsel Mr. Rakesh Sinha appearing for the respondents-defendants-RFC, as nobody appeared for the defendant No. 3-Akil Ahmed despite service of notice, contended that the respondents-RFC has exercised its statutory powers conferred by the S.F.C. Act. The learned counsel submitted that the defendants-respondents-RFC had taken over the possession of the industrial unit on 22.12.1994 upon the plaintiff-appellant having failed to re-pay the loan amount which given to him in the years in between 1982 to 1984. The learned counsel also submitted that several efforts were made to fetch the reasonable price of the said industrial unit and the same has been put to public auction approximately for 20 times but ultimately, by negotiations only, the defendant No. 3-Akil Ahmed could be brought to the level of Rs. 90,000/- and since there was no other purchaser available with the respondents-RFC, they sold the industrial unit in question to the defendant No. 3 at the price of Rs. 90,000/- in accordance with the provisions of the S.F.C. Act. The learned counsel also read out the detailed examination-in-chief and cross-examination of Mr. Om Prakash S/o. Tara Chand Jain, General Manager (Technical) of the respondent-RFC. The learned counsel Mr. Rakesh Sinha further submitted that the respondents-RFC had put the industrial unit in question to auction after due publication of notices in the newspapers and even after finalising the auction, the plaintiff was given an opportunity to bring buyers of higher price but he failed to do so. The learned counsel submitted that as per the Exhibit-22, a letter addressed by the plaintiff to the Manager on 26.06.2006 would indicate that the plaintiff was ready to pay Rs. 47,000/- only, as one-time settlement ignoring the interest altogether, whereas even after realising the amount of Rs. 90,000/- from the defendant No. 3 for the aforesaid industrial unit, according to the respondents-RFC, the dues including the interest against the plaintiff were found to be Rs. 2,62,318/-, as stated in para 9 of the affidavit dated 30.08.2013 of DW-1 Om Prakash Jain. The relevant para Nos. 5 to 9 of the affidavit dated 30.08.2013 of Shri Om Prakash Jain are quoted herein below for ready reference:--

The letter Exhibit-22 of the plaintiff-Mohd. Hanif dated 26.06.2006 is also quoted herein below for ready reference:--

The learned counsel Mr. Rakesh Sinha appearing for the respondents-defendants-RFC submitted that upon perusal of the record, it cannot be said that the industrial unit of the plaintiff-appellant had been sold out by the defendants at an thrown-away price and rather it can be said that the best possible price was realised by the respondents-defendants-RFC from the defendant No. 3-Akil Ahmed after making several efforts for auction of the said unit and, therefore, the learned counsel submitted that the suit of the plaintiff seeking cancellation of the sale deed dated 15.09.2006 has rightly and correctly rejected by the learned Trial Court and no interference is called for in the present first appeal. The learned counsel also submitted that the possession of the unit in question has already been handed over to the bona fide purchaser, the defendant No. 3 way back in the year 2006 when the sale deed was executed in his favour.

I have heard the learned counsels for the parties at length and upon perusal of the record of the case including the impugned judgment and decree dated 04.03.2014, this Court is of the opinion that there is no contra evidence available on record to declare the legitimate sale-deed in question as null and void. It is noticed that several efforts for fetching the reasonable price of the unit in question were made by the respondents-RFC after due publication of the auction notices in the newspapers in between the period of 1994 to 2006 and even the unit in question was put to auction for 20 times, therefore, it cannot be believed that the plaintiff-appellant would know all these developments but at the same time, he was supposed to square-up the loan account with the respondents-RFC in the year 1994 when his unit was taken over by the respondents-RFC in accordance with Section 29 of the S.F.C. Act. The exercise of the statutory powers cannot be held to be illegal just for askance of the defaulter, the plaintiff-Mohd. Hanif. This Court is of the view that merely because of the possession of the unit in question had been taken over by the respondents-RFC and the full price, as per the DLC Rates of the land, may not have been realised by the respondents-RFC that does not become a ground for the borrower/defaulter for annulling the sale-deed, which was validly executed in favour of the respondent-defendant No. 3. It is also noticed that for ten years, the unit in question and its assets were remained in a junk position with the defaulter, the plaintiff Mohd. Hanif and the same was ultimately taken over by exercising the statutory powers under Section 29 of the S.F.C. Act by the respondents-RFC. It is also noticed that, as stated in the affidavit of the Manager, DW-1 Shri Om Prakash Jain, even the price offered by the defendant No. 3-Akil Ahmed at the initial stage of the auction proceedings was much less (Rs. 60,000/- only) and only after negotiations, the price of the unit in question could be brought up to the level of Rs. 90,000/- and as there were no other purchaser available with the respondents-RFC, the auction was struck in favour of the defendant No. 3 and the sale-deed dated 15.09.2006 was executed in the office of Sub-Registrar and the possession of the unit in question had been handed over to the bona fide purchaser, the defendant No. 3-Akil Ahmed. Upon perusal of the record of the case, the non-appearance of the defendant No. 3-Akil Ahmed before the learned Trial Court for contesting the suit cannot enure to the benefit of the plaintiff-appellant, the defaulter. The defendant No. 3-Akil Ahmed is a bona fide purchaser of the unit in question from a public authority, like the RFC. The respondents-defendants-RFC had put the unit in question into auction and finalise the same in favour of the defendant No. 3 as per the statutory provisions contained in the S.F.C. Act. Therefore, this Court is of the opinion that the reasons assigned by the learned Trial Court on the basis of evidence led before it for upholding such auction proceedings and consequent sale in favour of the defendant No. 3 is unassailable and the same is not liable to be set aside in the present appeal and the appeal of the plaintiff is thus found to be devoid of merit and, therefore, the same is liable to be dismissed.

Accordingly and in view of the above, the present First Appeal filed on behalf of the plaintiff-appellant-Mohd. Hanif S/o. Ahmed stands dismissed. No costs. A copy of this order be sent to the Trial Court concerned and to the parties concerned forthwith.