Punjab National Bank vs Ashok Kumar And Ors.

J.M. Malik, J

Whether the law strikes a snap in DRT's reviewing its own order when the review application evinces the commission of a fraud is the main question which dwells on this appeal.

Vide order dated 15.10.2010, Mr. A.K. Tripathi, the learned Presiding Officer, DRT-II, Delhi issued a recovery certificate in the sum of Rs. 3,48,66,409 together with costs and interest @ 10% p.a. (simple) from the date of filing of the application till realization of the entire amount against the defendants, namely, M/s. A.S. Alloys and Steels Pvt. Ltd., defendant No. 1, Shri Ashok Kumar, defendant No. 2, Smt. Raj Rani, defendant No. 3 A, Shri Sanjeev Jain, defendant 3B, Shri Praveen Jain, defendant No. 3C, Smt. Meenu, defendant No. 3D, Smt. Manju Bansal, defendantNo. 4, Smt. Lata Rani, defendantNo. 5, Smt. Raj Rani, defendant No. 6 and in favour of the Bank. Defendants 3A to 3D are the legal heirs of late Shri Chander Prakash, defendant No. 3. It was also held that the liability of the defendants would be joint and several. It was further clarified that the liability of Shri Ashok Kumar, defendant No. 2 and Smt. Lata Rani, defendant No. 5 to pay the decretal amount would be limited only until 20.1.1996, i.e., date of withdrawal of guarantee. The liability of legal representatives of original defendant No. 3 was limited to the extent of the property they would inherit from the said deceased defendant No. 3. It was further ordered that the amount of Rs. 70.40 + 44.05 = 114.45 lacs recovered through the sale of the secured assets during the trial of the O.A. would be adjusted towards the dues and the interest mentioned above would be charged on the balance amount.

Aggrieved by that order, Mr. Ashok Kumar and Smt. Lata Rani moved a review petition, which was accepted by the learned trial Court vide its order dated 3.2.2011. Aggrieved by that order, Punjab National Bank has filed the present appeal.

I have heard the learned Counsel for the parties on the admission of this appeal. In the order passed on review application, the trial Court was pleased to record the following findings:

13.... but now the defendants/applicants herein pointed out a serious kind of fraud committed upon the Court by the Court Receiver/Auctioneer in the sale of the property.

It is noted from the perusal of the record that the Tribunal vide order dated 29.11.2000 directed the sale of the mortgaged assets. I would like to reproduce the relevant part of the said order--

Chief Manager, Punjab National Bank, GT Road, Ludhiana, Punjab is appointed as Receiver in this case to take possession of the hypothecated goods and mortgaged properties of the defendants, except Defendant Nos. 2 and 5 and to sell the same by issuing advertisement in the newspaper and by calling tenders from the open market.

Thus, the then Chief Manager who was appointed proceeded with to auction the mortgaged property. In pursuance thereto Proclamation of sale was published. The said proclamation of sale has been filed along with IA No. 1062/2010 which reveals that the auction was to be conducted in respect of property mentioned at S. No. 2 i.e. land measuring 4 kanal out of land measuring 12 kanals in property No. Khewat No. 139-237, Khatauni Nos. 267-462, Khasra Nos. 358 to 367, 377,379,380-383 and 617 situated in Village Jugiana, Tehsil and District Ludhiana registered with Sub-Registrar, Ludhiana on 23.4.1985 vide Wasika No. 1176, Addl. Book No. 7, Volume No. 174 at Page No. 366. Accordingly the reserve price was kept at Rs. 78 lacs.

Thus, it is evident that the proclamation for sale is against the order passed by the Tribunal on 29.11.2000 which require the mortgaged properties mentioned at S. Nos. (i), (ii), (iii) and (v) were to be sold.

Surprisingly, as against the proclamation for sale the Court Auctioneer sold the entire 12 kanal land for a meagre sum of Rs. 70.40 lacs approximately which was even below reserve price. The learned Registrar Mr. Anil Srivastava has also issued the sale certificate in which the description of the property is as below--

Property bearing Khasra Nos. 139-237 and Khasra Nos. 358 to 366, 368, 379, 380, 377, 383 and 367 located at Village Jugiana, Tehsil and District Ludhiana (Admeasuring 12 kanals).

It is thus established that the land which was sought to be sold as per proclamation for sale was only 4 kanals out of 12 kanals whereas 12 kanals were actually sold by him and sale certificate was issued for 12 kanals.

Therefore, I hold it is a serious kind of fraud which was never highlighted by any party prior to filing of the application and this is the first time that the defendant Nos. 2 and 5 have come up with this plea which is well proved from the documents filed by the Bank itself. I further hold that there is a mistake apparent on the face of the record.

The learned trial Court also referred to thejudgment rendered by the Hon'ble Supreme Court in case of S.P. Chengalvaraya Naidu v. Jagannath, II : (1993) BC 546 : AIR 1994 SC 853. The learned trial Court also held that the question of limitation does not come into play because the allegation of fraud has been made against the appellant. The learned trial Court also observed that it did not rule out the possibility that actual owners/mortgagors/defendants might have purchased the property Benami and, therefore, they did not come forward to challenge the sale. The learned trial Court also came to the conclusion that all these facts and circumstances required full probe. The learned trial Court opined that the patent error revealed could not be overlooked by the Tribunal. Again, had the entire property of 12 kanals, which was ordered to be sold by the Tribunal, been shown in the proclamation for auction, it would have attracted other buyers to participate in the auction and, in that eventuality, it could have fetched much more price and the entire liability of defendants 3 and 5 might have stood discharged as guarantors. The learned trial Court, consequently, allowed the application for review, the judgment was recalled and the O.A. was restored to its original number. The Bank was granted an opportunity to file its explanation with regard to the alleged fraud. The learned trial Court issued notice to Auctioneer/Receiver and also directed Mr. B.R. Allagh, the then A.G.M. of the Bank to be present on the next date of hearing and granted him an opportunity to fi le his explanation with regard to the observations made by the Tribunal in the impugned order. Notice was also issued to the auction purchaser of the property, i.e., M/s. Vivek Industrial Corporation, D-235, Phase-VII, Focal Point, Ludhiana to remain present on the next date of hearing.

The learned Counsel for the appellant vehemently argued that both the orders passed by the learned trial Court are divergent. It was explained that the Tribunal committed an error by travelling beyond the powers vested in it. It was further submitted that the Tribunal has very limited powers so far as the power to review its order is concerned. The attention of the Court was invited towards Section 22(2)(e) of the RDDBFI Act. The above said section unequivocally lays down that the Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil Court under the Code of Civil Procedure, 1908, while trying a suit in respect of reviewing its decisions. It is, therefore, clear that Section 114 and Order 47 of Code of Civil Procedure are applicable to the facts of the present case.

I see no merit in the arguments urged by the learned Counsel for the appellant. Prima facie it appears that the persons detailed above have committed contempt of Court. It appears that there is enough force in the allegations of fraud committed by the Bank. The questions raised in the impugned order cannot be dismissed out of hand. The problem has to be investigated and discussed down to the ground. It is duty of the Court to reckon with reality. The Court has to be empirical and practical in confronting reality. The Court cannot afford to wink at or to be blind at such a serious offence. The amenability of the concerned person and its consequences are yet to be found out. It would be too early to speak one's piece on this knotty matter. The appeal is, therefore, dismissed in limine. The parties are directed to appear before the learned trial Court on 25.5.2011. Since the issue involved is of a serious nature, therefore, the learned trial Court is directed to expedite the case. The Bank is directed to comply with the order passed by the learned trial Court by 25.5.2011 by producing the above said persons,

Copies of this order be furnished to the parties as per law and another copy be sent to the learned DRT.