Satyawati vs Jain Co-operative Bank Ltd.

The appellant is aggrieved by an order passed by the tribunal below(DRT) in the Securitisation Application(S.A.) filed by her under Section 17(1) of SARFAESI Act whereby the S.A. has been dismissed.

The facts leading to the filing of the S.A. by the appellant have been noticed by the learned Presiding Officer of DRT in the impugned order and to avoid repetition of narration of those facts I deem it appropriate to re-produce the impugned order itself.

The impugned order of DRT reads as under:-

"The present securitization application has been filed by the third party applicant against the action of the respondent bank initiated under the SARFEASI Act, 2002 qua the property bearing shop measuring 6.½ ft. X 10ft., on Ground Floor, upto ceiling level, part of Build-up property on IX/5417, Out of Khasra No. 291, situated at abadi Nank Basti, Old Seelampur Illaqa Shahdara, Delhi - 110003 (hereinafter the property in question).

The brief facts of the case are that the applicant is wife of Sh. Bishambhar Dayal is the owner and in possession of the property in question initially belongs to Sh. Nain Singh who sold the same to Sh. Gurmukh Singh and thereafter was sold to Sh. Sasnt Ram. The property initially was 66 sq. yds. Thereafter, the said property was sold to Sh. Anil Kumar Jain and he sold to Sh. Mukesh Kumar Jain and Smt. Kamla Rani.

Thereafter, Sh. Mukesh Kumar Jain and Smt. Kamla Rani sold one shop on ground floor upto sealing level measuring 6.½ ft. X 10ft. on ground floor upto ceiling level part of build up property No. IX/5417, out of khasra no. 291, situated at Abadi Nanak Basti, Old Seelampur, Illaqa Shahdara, Delhi - 110031 on 31.05.1999 to Sh. Santosh Kumar Mishra thereafter, he sold the same to Sh. Karan singh on 27.01.2000, thereafter he sold on 20.11.2001 to Smt. Satyawati the applicant herein. In support of her claim, the applicant has filed her chain of documents since 1999.

The Ld. Counsel for respondent bank submits that Sh. Vinod Kumar had requested the respondent bank for grant of cash credit facility for Rs. 5.00 lacs and the same was granted by the bank. In compliance thereof Sh. Vinod Kumar has created mortgaged on his property i.e. one shop 8' ½ X 10' on ground floor, two side open property no. IX/5417 out of Khasra no. 291 situated at main raghuwarpura no. 2, old seelampur, Gandhi Nagar, Delhi - 110031 by way of deposited the original sale deed dated 18.10.1999 executed by Sh. Jagbir in his favour and same was deposited with the respondent bank on 28.12.1999.

It is submitted that Sh. Raju and Sh. Laxmi Narayan are stood as guarantors in respect of the aforesaid loan facilities granted to Sh. Vinod Kumar and the same was declared NPA on August, 2006. It is further submitted that Sh. Vinod Kumar who is the member of the applicant bank has mortgaged his aforesaid property and deposited the original sale deed dated 18.10.1999 executed by Sh. Jagbir being the general attorney of Sh. Santosh Kumar Mishra dated 15.10.1999 on behalf of Mr. Mukesh Kumar Jain and Smt. Kamla Rani vide GPA on 31.05.1999, regd. GPA on behalf of Sh. Anil Kumar Jain vide GPA on 17.06.1998 and also general attorney of Smt. Saroj Verma vide GPA regd No. 15912 on 19.05.1997 having attorney the said property by Smt. Saroj Verma and Sh. Sant Ram vide GPA dated 24.09.1979 and Sh. Sant Ram having purchased the said property from Sh Gurmukh Singh vide sale deed registered on 13.11.1969 in Sub Registrar IV, Delhi.

Thereafter, the respondent bank has filed its evidence by way of affidavit of Sh. Anil Kumar Jain, chief Executive officer who has proved and exhibits the power of attorney as RW-1/A as RW-1/B, sale deed dated 18.10.1999 as RW- 1/C, mortgaged deed dated 28.12.1999 as RW-1/D, Arbitrator award as RW- 1/E, statement of NPA Account as RW-1/F, notice dated 16.09.2005 as RW- 1/G and statement of account as RW-1/H respectively.

It is submitted that Sh. Omi Shankar the General Attorney of Smt. Satyawati, the applicant has also filed her evidence and exhibited the General Power of Attorney, agreement deed, receipt, WILL of Sh. Mukesh Kumar Jain and Smt. Kamla Rani as AW-1/1 to AW-1/5, General Power of Attorney, agreement deed, receipt, WILL of Sh. Santosh Kumar Mishra as AW-1/6 to AW-1/10, General Power of Attorney, agreement deed, receipt, WILL of Sh. Karan Singh as AW1/11 to AW-1/15, power of attorney of Smt. Satyawati as AW-1/16 and possession notice as AW-1/17 respectively.

Heard the Ld. Counsel for both the parties at length, perused the records and in the present matter both the parties are claiming their respective charge over the property in question and the question raises before this Tribunal is that who is having better title over the property in question. That Sh. Santosh Kumar Mishra was the attorney of Sh. Mukesh Kumar Jain and Smt. Kamla Rani vide general power of attorney dated 31.05.1999 and he executed a general power of attorney, agreement to sell etc. dated 15.10.1999 in favour of Sh. Jagbir Singh who in turn executed the sale deed dated 18.10.1999 in favour of Sh. Vinod Kumar who is the borrower/mortgagor of the respondent bank. The applicant is also claiming that the then attorney Sh. Santosh Kumar Mishra executed general power of attorney, agreement to sell etc. dated 27.01.2000 in favour of Sh. Karan Singh who in turn executed the general power of attorney, agreement to sell etc. on 15.10.1999 in favour of Sh. Jagbir Singh he did not have any legal rights over the property in question and to execute further general power of attorney, agreement to sell etc. dated 27.01.2000 in favour of Sh. Karan Singh as per the Section 48 of the Transfer of Property Act, 1882 which is reproduced herein below:

".....if two contracts have been entered in regards to one property, the first contact will prevail over the second contract....."

If we apply this principle to the present case the documents executed in favour of the securitization applicant is non -est, illegal and untenable in the eyes of law because Sh. Santosh Kumar Mishra has already transferred his legal rights / interest in the property in favour of Sh. Jagbir Singh from whom Sh. Vinod Kumar, who is the borrower / mortgage of the respondent bank, purchased the property in question vide registered sale deed dated 18.10.1999 and in view of the same Sh. Santosh Kumar Mishra was not supposed to create further charge qua the property in question in favour of Sh. Karan Singh from whom the applicant has purchased the property.

Thus, in view of the aforesaid legal position this Tribunal is having no hesitation to dismiss the present securitization application and the same is hereby dismissed with liberty to the respondent bank to proceed further under the SARFEASI Act, 2002 in accordance with law."(highlighting is by me)

Feeling aggrieved the appellant has come up in appeal. I have heard counsel for the parties and perused the record of DRT which was made available digitally by the counsel for the appellant and about correctness of which no objection was raised by the counsel for the respondent bank.

The main point urged before me by Mr. Ashish Sharma, learned counsel for the appellant was that the property over which the respondent bank claims its charge as a mortgagee by deposit of title deeds by its borrower Vinod Kumar is totally different that the one which is in occupation of the appellant, both of which have been noticed in the impugned order, and, therefore the bank cannot take possession of her property claiming the same to be its secured asset, under SARFAESI Act. Mr. Sharma submitted that the DRT has not even touched this aspect of the matter and has gone on a tangent by invoking Section 48 of the Transfer of Property Act which was not even referred to from either side either in the pleadings or during the course of arguments before the DRT.

Learned counsel for the respondent bank on the other hand submitted that there are no two properties as was being sought to be projected by the appellant and the appellant is confusing the matter to see that the bank is unable to recover public money from its defaulting borrower.

In this case the securitisation applicant has not herself given evidence in support of her case that the property which she claims to be in her possession and the property which the bank claims to be its mortgaged asset and seeks to take over is different. She was the best witness in support of her case but no explanation is coming forward from her side as to why she did not come forward to establish her case. Learned counsel for the appellant was also asked to justify as to why the appellant herself has no filed her own affidavit to show that this is a case of two separate properties and the reply was that when the notice of possession given by the court receiver and the address of the appellant where her tenant was in occupation was different then non- examination of the appellant is immaterial and evidence of her attorney is sufficient to discharge the burden which lay upon her shoulder. However, this submission is not tenable. It was held by the Hon'ble Supreme Court in a judgment rendered in "Vidhyadhar vs Manikrao & Anr. Vs , reported in AIR 1999 SC 1441, that non- examination of the plaintiff in support of his case is fatal. The relevant paras from this judgment are re-produced below :-

"15. It was defendant No. 1 who contended that the sale deed, executed by defendant No. 2 in favour of the plaintiff, was fictitious and the whole transaction was a bogus transaction as only Rs. 500 were paid as sale consideration to defendant No. 2. He further claimed that payment of Rs. 4,500 to defendant No. 2 at his home before the registration of the deed was wholly incorrect. This plea was not supported by defendant No. 1 as he did not enter into the witness box. He did not state the facts pleaded in the written statement on oath in the Trial Court and avoided the witness box so that he may not be cross examined. This, by itself, is enough to reject the claim that the transaction of sale between defendant No. 2 and the plaintiff was a bogus transaction.

Where a party to the suit does not appear into the witness box and states his own case on oath and does not offer himself to be cross examined by the other side, a presumption would arise that the case set up by him is not correct as has been held in a series of decisions passed by various High Courts and the Privy Council beginning from the decision in Sardar Gurbakhsh Singh v. Gurdial Singh and Anr. . This was followed by the Lahore High Court in Kirpa Singh v. Ajaipal Singh and Ors. AIR (1930) Lahore 1 and the Bombay High Court in Martand Pandharinath Chaudhari v. Radhabai Krishnarao Deshmukh AIR (1931) Bombay 97. The Madhya Pradesh High Court in Gulla Kharagjit Carpenter v. Narsingh Nandkishore Rawat also followed the Privy Council decision in Sardar Gurbakhsh Singh's case (supra). The Allahabad High Court in Arjun Singh v. Virender Nath and Anr. held that if a party abstains from entering the witness box, it would give rise to an inference adverse against him. Similarly, a Division Bench of the Punjab & Haryana High Court in Bhagwan Dass v. Bhishan Chand and Ors. , drew a presumption under Section 114 of the Evidence Act against a party who did not enter into the witness box."

This judgment was later on referred and relied upon by the Hon'ble Supreme Court in "Janki Vashdeo Bhojwani & Anr vs Indusind Bank Ltd. & Ors." decided on 6 December, 2004 (Appeal (civil) 6790 of 2003) that based on the evidence of a power attorney holder the plaintiff cannot succeed. The relevant paras from this judgment are re- produced below:-

"The second fallacy of the order of Tribunal was allowing Mr.V.R.Bhojwani (power of attorney holder), husband of appellant no.2 Ms.Mohini Laxmikant Bhojwani, to appear in the witness box on behalf of the appellants. It may be noted that that the appellants were shy away from gracing the box. The respondent-bank vehemently objected to allowing the holder of power of attorney of the appellants to appear in the witness box on behalf of the appellants. This Court clarified that the burden of proving that the appellants have a share in the property will be on the appellants and it was incumbent on the appellants to have graced the box and discharged the burden that they have a share in the property, the extent of share, the independent source of income from which they have contributed towards the purchase of the property. The entire context of the order dated 10.2.2004 was forwarded to the Tribunal for the purpose. It is unfortunate that the Tribunal has framed its own issues not consistent with the directions and recorded a finding contrary to the directions as aforesaid.

Dr. Singhvi, learned senior counsel appearing for the respondent-bank vehemently contended that the appellants did not grace the box to lead evidence but authorised Mr. V.R. Bhojwani (power of attorney holder) to appear on behalf of the appellants. Learned counsel contended that Mr. Bhojwani was not an independent person to the litigation but was a judgment debtor in the suit and a co-owner of the property and there was a clash of interest between the husband and wife and as such he could not have been permitted to grace the box on behalf of the appellants. He further contended that under Order III Rules 1 & 2 CPC a power of attorney holder can appear, apply or act in any court but such act cannot be extended to depose in the witness box. He further submitted that in the present case a power of attorney holder is not acting as a witness on behalf of the principal but he is representing the principal himself. He further contended that deposing in a witness box and being cross- examined is a personal act and cannot be done through an agent/power of attorney holder.

In the context of the directions given by this Court, shifting the burden of proving on the appellants that they have a share in the property, it was obligatory on the appellants to have entered the box and discharged the burden by themselves. The question whether the appellants have any independent source of income and have contributed towards the purchase of the property from their own independent income can be only answered by the appellants themselves and not by a mere holder of power of attorney from them. The power of attorney holder does not have the personal knowledge of the matter of the appellants and therefore he can neither depose on his personal knowledge nor can he be cross-examined on those facts which are to the personal knowledge of the principal. Order III, Rules 1 and 2 CPC, empowers the holder of power of attorney to "act" on behalf of the principal. In our view the word "acts" employed in Order III, Rules 1 and 2 CPC, confines only in respect of "acts" done by the power of attorney holder in exercise of power granted by the instrument. The term "acts" would not include deposing in place and instead of the principal. In other words, if the power of attorney holder has rendered some "acts" in pursuance to power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross-examined.

Having regard to the directions in the order of remand by which this Court placed the burden of proving on the appellants that they have a share in the property, it was obligatory on the part of the appellants to have entered the box and discharged the burden. Instead, they allowed Mr. Bhojwani to represent them and the Tribunal erred in allowing the power of attorney holder to enter the box and depose instead of the appellants. Thus, the appellants have failed to establish that they have any independent source of income and they had contributed for the purchase of the property from their own independent income. We accordingly hold that the Tribunal has erred in holding that they have a share and are co- owners of the property in question. The finding recorded by the Tribunal in this respect is set aside.

Apart from what has been stated, this Court in the case of Vidhyadhar vs. Manikrao and Another, (1999) 3 SCC 573 observed at page 583 SCC that "where a party to the suit does not appear in the witness-box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct". In civil dispute the conduct of the parties is material. The appellants have not approached the Court with clean hands. From the conduct of the parties it is apparent that it was a ploy to salvage the property from sale in the execution of Decree. On the question of power of attorney, the High Courts have divergent views. In the case of Shambhu Dutt Shastri Vs. State of Rajasthan, 1986 2WLL 713 it was held that a general power of attorney holder can appear, plead and act on behalf of the party but he cannot become a witness on behalf of the party. He can only appear in his own capacity. No one can delegate the power to appear in witness box on behalf of himself. To appear in a witness box is altogether a different act. A general power of attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.

The aforesaid judgment was quoted with the approval in the case of Ram Prasad Vs. Hari Narain & Ors. AIR 1998 Raj. 185. It was held that the word "acts" used in Rule 2 of Order III of the CPC does not include the act of power of attorney holder to appear as a witness on behalf of a party. Power of attorney holder of a party can appear only as a witness in his personal capacity and whatever knowledge he has about the case he can state on oath but be cannot appear as a witness on behalf of the party in the capacity of that party. If the plaintiff is unable to appear in the court, a commission for recording his evidence may be issued under the relevant provisions of the CPC.

In the case of Dr.Pradeep Mohanbay Vs. Minguel Carlos Dias reported in 2000 Vol.102 (1) Bom.L.R.908, the Goa Bench of the Bombay High Court held that a power of attorney can file a complaint under Section 138 but cannot depose on behalf of the complainant. He can only appear as a witness.

However, in the case of Humberto Luis & Anr. Vs. Floriano Armando Luis & Anr. reported in 2002 (2) Bom.C.R.754 on which the reliance has been placed by the Tribunal in the present case, the High Court took a dissenting view and held that the provisions contained in order III Rule 2 of CPC cannot be construed to disentitle the power of attorney holder to depose on behalf of his principal. The High Court further held that the word "act" appearing in order III Rule 2 of CPC takes within its sweep "depose". We are unable to agree with this view taken by the Bombay High Court in Floriano Armando (supra).

We hold that the view taken by the Rajasthan High Court in the case of Shambhu Dutt Shastri (supra) followed and reiterated in the case of Ram Prasad (supra) is the correct view. The view taken in the case of Floriano Armando Luis (supra) cannot be said to have laid down a correct law and is accordingly overruled. In the view that we have taken we hold that the appellants have failed to discharge the burden that they have contributed towards the purchase of property at 38, Koregaon Park, Pune from any independent source of income and failed to prove that they were co- owners of the property at 38, Koregaon Park, Pune. This being the core question, on this score alone, the appeal is liable to be dismissed."

This appeal is, also therefore, liable to be dismissed in view of the fact the appellant/securitisation applicant herself did not file her own affidavit by way of evidence and the affidavit filed by her attorney cannot be considered as her evidence in view of the aforesaid judgments of the Hon'ble Supreme Court. Therefore, I need not go into the submission made with force by Mr. Ashish Kumar Sharma, learned counsel for the appellant, that the DRT has not decided the core point/objection raised by the appellant herein that the bank was attempting to take over a property which was owned by the appellant and is not the mortgaged property.

This appeal is accordingly dismissed.