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Judgment
The appellant claiming himself to be a tenant of respondent no.3 herein in respect of Flat No. 3 in Taj Apartments, built on plot nos.2-B and Flat No. 3 in Taj Apartments built on plot no. 2-C, Rao Tula Marg, Sector 12, R.K.Puram New Delhi had filed a Securitisation Application No. 78/2020(S.A.) before the DRT under Section 17 of the SARFAESI Act when he was being sought to be dispossessed therefrom by the respondent no.1 herein as an assignee of debt by Canara Bank in exercise of its powers under Section 13(4) of SARFAESI Act to recover the outstanding dues in the loan account of its defaulting borrowers, respondents no. 2 and 3 herein. The two flats in question in which the appellant was claiming himself to be a tenant had been mortgaged in favour of the Canara bank which subsequently had assigned the debt in question in favour of the respondent no.1 ARC herein.
The appellant had sought an order of interim protection against his threatened dispossession from the two flats in question but the learned DRT declined to protect his possession and rejected the prayer for interim relief vide impugned order dated 28.10.2020. Feeling aggrieved, the present appeal came to be filed by the appellant with a prayer for setting aside of the impugned order of the DRT and grant of an order of stay against the dispossession of the appellant during the pendency of the appeal/S.A.
At the time of admission hearing of the appeal on 09.11.2020 this Tribunal had passed the following order:-
"This matter has been taken up by me from my residential office through Video Conferencing (VC) because of suspension of physical hearing of cases in DRAT due to continuous spread of Corona virus in the city.
Today, the appeal has been got listed for early hearing by the appellant since there is apprehension of his being dispossessed from the property in question by the court receiver.
The appellant is trying to protect his possession of the property in question in which he claims himself to be a tenant of the respondent no.3-mortgagor herein. The property in question is situated at a posh location of the capital city.
The respondent no.1 FI has disputed the genuineness of so-called tenancy being relied upon by the appellant as sham and collusive.
Ld. DRT has also rejected the claim of the appellant being tenant inter- alia on the ground that no rent receipts have been produced on record to establish the claim of the appellant of being tenant.
Mr. Dobhal, Ld. Counsel representing the respondent no.1 FI submits that in the present case the property in question is mortgaged in one of the loan accounts of the borrower of the respondent no.1 FI wherein the dues are to the tune of Rs.4.55 crores.
Mr. Pallav Saxena, Ld. Counsel for the respondent no.3 - mortgagor has disputed that the property in question is involved in many accounts of the borrower.
This Tribunal is, however, of the view that these disputed questions will need some detailed hearing. Therefore, appeal will now be listed on 12.11.2020, the date already fixed, for final hearing.
As far as the apprehension of the appellant that he can now be dispossessed at any time is concerned, this Tribunal is of the view that balancing the equity between the parties, it is directed that the appellant shall not be dispossessed from the property in question by the court receiver till the disposal of this appeal provided that the appellant tenders to the court receiver at the time of his visit for taking physical possession a payment of Rs.2.00 crores. In case the payment is not tendered, the court receiver will be at liberty to take physical possession of the property in question. It is, however, clarified that order will operate only in respect of the loan account which is subject matter of the present appeal. As far as other loan accounts are concerned, the respondent no.1 FI will be at liberty to proceed with its legal actions to recover its dues in different accounts which are stated to be to the tune of over hundred crores.
Re-notify on 12.11.2020, the date already fixed. In the meanwhile, parties shall submit by email scanned records on which they would be relying upon during the course of hearing. The registry in any case will provide me scanned records of DRT before the next date.
This order will not be treated as expression of any opinion on the merits of respective cases. Mr. Dobhal, Ld. Counsel for respondent no.1 FI will communicate this Tribunal's order to the court receiver and in any case the appellant can download this order from the website of the DRAT for being shown to the court receiver, who is expected to visit the property in question by tomorrow."
The appellant did not deposit the amount of Rs. two crores as was directed to be done by him by this Tribunal. Instead, he challenged the said order of deposit by filing a writ petition in Hon'ble Delhi High Court but did not get any relief from there and writ petition was dismissed on 24.11.2020. After losing in the writ petition the appellant moved an application before this Tribunal seeking permission to accept payment of Rs. thirty lacs and sought time for making the balance deposit of Rs.1.70 crores so as to make complete deposit of Rs. two crores which he was earlier directed to make as a condition for grant of interim protection against his dispossession from the two flats in question. That application, being IA.No. 66/2021, was, however, dismissed vide order dated 03.02.2021.
On 17.12.2020 this Tribunal passed the following order:-
"Today, I am informed that the appellant after obtaining the interim protection order against his dispossession from this Tribunal subject to his paying to the respondent ARC a sum of Rs.2.00 crores did not comply with that condition. He had also given an undertaking in the DRT to vacate the premises in question, but he has not honoured that undertaking also. The appellant, though, filed a writ petition before the Hon'ble High Court of Delhi challenging the order of this Tribunal directing him to pay to the respondent ARC a sum of Rs.2.00 crores, but the Hon'ble High Court, vide its order dated 24.11.2020 passed in Writ Petition (C) no.9329/2020, which was read before me by Ld. Senior Advocate for respondent FI, dismissed the writ petition.
Today, when it was put to Ld. Counsel for the appellant as to why show cause notice should not be given to appellant on account of his non-compliance the condition of payment of Rs.2.00 crores as directed by this Tribunal and for not honouring the undertaking given before the DRT to vacate the property, Mr.Anand Aggarwal submits that the appellant could not comply with the direction for payment of Rs.2.00 crores to the respondent FI within the time given by this Tribunal and, therefore, the appellant cannot be said to have availed of any benefit of any order of this Tribunal, more particularly when the writ petition was also dismissed by the Hon'ble High Court and, therefore, no action can be taken against him on any count as far as the present appeal is concerned and the ARC could take advantage of non-compliance of the condition of stay imposed in this appeal.
However, I do not agree with this submission of Ld. Counsel for the appellant that no order can be passed by this Tribunal for the aforesaid non- compliance. In the similar circumstances, the Hon'ble Supreme Court in its judgement in the case of " Prestige Lights Ltd. vs State Bank of India, (Civil Appeal no.3827/2007) decided on 20.08.2007, had held that such kind of litigants commit contempt in case they fail to comply with the directions of the court while obtaining some interim relief and that defaulting litigants are not entitled for any hearing till they purge the contempt. However, before I pass any final orders on this aspect, I deem it fit and appropriate to give a show cause notice to the appellant as to why he should not be proceeded against for non compliance of the direction of this Tribunal, as aforenoted, and this appeal as well as his securitization application which is stated to be pending before the DRT be not dismissed straightway for flouting the order of this Tribunal and not honouring the undertaking given by him before the DRT, as noted above, regarding which Mr. Anand Aggarwal has submitted that the undertaking was given as he had no other alternate but to give such an undertaking, otherwise, the DRT would not have granted any protection to the appellant. The appellant is also being called upon to show cause as to why the physical possession of the property in question be not taken over from him by appointing a court receiver here itself in the present proceedings. The appellant is directed to file his response either in person or through his counsel. In case Mr. Aggarwal furnishes the email ID of appellant, a copy of this order shall be sent to him through that email, otherwise, the respondent ARC Authorized Officer shall download the copy of this order from the website of DRAT and serve it upon the appellant personally as well as by affixation outside the property in question.
Re-notify on 24.12.2020."
Thereafter after hearing the parties order on the show cause notice was reserved and the same is being passed now. The only submission made on behalf of the appellant by his learned counsel Mr. Anand Aggarwal was that since the appellant had not been able to make the deposit of Rs. two crores and he also could not get any relief even from the Hon'ble High Court this Tribunal could pass any appropriate orders though the appellant was still making efforts to arrange for the balance payment of Rs. 1.70 crores as he had already deposited with this Tribunal Rs. thirty lacs by way of demand drafts while making a request to this Tribunal for extension of time for compliance of the direction of deposi, which request though was rejected.
In "Prestige Lights Ltd. Vs State Bank of India" Civil Appeal No. 3827/2007 decided by the Hon'ble Supreme Court on 20.08.2007(supra) under similar circumstances the Hon'ble Supreme Court had refused to hear the defaulting litigant who had obtained interim relief on some condition which the concerned litigant had failed to comply with. The following paragraphs from the judgment of the Hon'ble Supreme Court need to be noticed in this regard:-
"17. But, there is an additional factor also as to why we should not exercise discretionary and equitable jurisdiction in favour of the appellant. It is contended by the learned counsel for the respondent-Bank that having obtained interim order and benefit thereunder from this Court, the appellant- Bank has not paid even a pie. The appellant is thus in contempt of the said order. The Company has never challenged the condition as to payment of amount as directed by this Court. Thus, on the one hand, it had taken benefit of the order of interim relief and on the other hand, did not comply with it and failed to pay instalments as directed. Neither it raised any grievance against the condition as to payment of instalments nor made any application to the Court for modification of the condition. It continued to enjoy the benefit of stay ignoring and defying the term as to payment of money. The Company is thus in contempt of the order of this Court, has impeded the course of justice and has no right of hearing till it has purged itself of the contempt.
As already noted, stay of dispossession was granted by this Court on mention being made on April 28, 2005. The matter was then notified for admission- hearing on May 6, 2005. A two-Judge Bench of which one of us was a party (C.K. Thakker, J.) passed the following order;
"Permission to file additional documents is granted.
Issue notice.
Subject to the petitioner's depositing an amount of Rs.20 lakhs per month in this Court, there will be stay of the operation of the impugned order. First of such payment shall be made by 6th June, 2005 and the subsequent payments by 6th of each succeeding month. In default of payment of any one instalment, the stay will stand vacated."
From the above order, it is clear that notice was issued to the other side and stay granted earlier was ordered to continue on the appellant's depositing a sum of Rs. 20 lakhs per month in this Court. It was also made clear that first of such payment should be made by 6th June, 2005 and subsequent payments by 6th of each succeeding month. A default clause was also introduced in the order that if such payment would not be made, the stay would stand vacated. It is an admitted fact that the order has not been complied with and no payment as per the order has been made by the appellant-Company to the respondent- Bank. The said fact has also been reflected in the order of this Court passed on July 25, 2007, wherein it was stated;
"It is recorded that the stay is transgressed by reason of the admitted non- compliance with the order dated 6th May, 2005".
The original order was of May, 2005 and the matter was heard finally in May, 2007. Thus, about two years had passed and the order has been thwarted with impunity. In our opinion, therefore, the learned counsel for the respondent-Bank is right that such appellant does not deserve sympathy from the Court.
An order passed by a competent court interim or final- has to be obeyed without any reservation. If such order is disobeyed or not complied with, the Court may refuse the party violating such order to hear him on merits. We are not unmindful of the situation that refusal to hear a party to the proceeding on merits is a 'drastic step' and such a serious penalty should not be imposed on him except in grave and extraordinary situations, but some time such an action is needed in the larger interest of justice when a party obtaining interim relief intentionally and deliberately flouts such order by not abiding the terms and conditions on which a relief is granted by the Court in his favour.
In the leading case of Hadkinson v. Hadkinson, (1952) 2 All ER 567, the custody of a child was given to the mother by an interim order of the court, but she was directed not to remove the child out of jurisdiction of the Court without the prior permission of the Court. In spite of the order, the mother removed the child to Australia without prior permission of the Court. On a summons by father, the Court directed the mother to return the child within the jurisdiction of the Court. Meanwhile, an appeal was filed by the mother against that order.
A preliminary objection was raised by the father that as the appellant was in contempt, she was not entitled to be heard on merits.
Upholding the contention and speaking for the majority, Romer, L.J. observed;
"I am clearly of the opinion that the mother was not entitled, in view of her continuing contempt of court, to prosecute the present appeal and that she will not be entitled to be heard in support of it until she had taken the first and essential step towards purging her contempt of returning the child within the jurisdiction.
In a concurring judgment, Denning, L.J. also stated;
"The present case is a good example of a case where the disobedience of the party impedes the course of justice. So long as this boy remains in Australia, it is impossible for this court to enforce its orders in respect of him. No good reason is shown why he should not be returned to this country so as to be within the jurisdiction of this Court. He should be returned before counsel is heard on the merits of this case, so that, whatever order is made, this court will be able to enforce it. I am prepared to accept the view that in the first instance the mother acted in ignorance of the order, but nevertheless, once she came to know of it, she ought to have put the matter right by bringing the boy back. Until the boy is returned, we must decline to hear her appeal."
(emphasis supplied)
That, however, does not mean that in each and every case in which a party has violated an interim order has no right to be heard at all. Nor the court will refuse to hear him in all circumstances. The normal rule is that an application by a party will not be entertained until he has purged himself of the contempt. There are, however, certain exceptions to this rule. One of such exceptions is that the party may appeal with a view to setting aside the order on which his alleged contempt is founded. A person against whom contempt is alleged must be heard in support of the submission that having regard to the meaning and intendment of the order which he is said to have disobeyed, his actions did not constitute a breach of it.
In Gorden v. Gorden, (1904) 73 LJ 41 : 90 LT 597 : 16 Dig 90, 1128, Cozens Hardy, L.J. put the principle succinctly in the following words; ".I desire expressly to limit my judgment to a case in which the [party in contempt] is saying that the order complained of is outside the jurisdiction of the court, as distinguished from the case of an order which, although it is within the jurisdiction of the court, ought not, it is said, to have been made."
Lord Denning made the following pertinent observations in Hadkinson;
"It is a strong thing for a court to refuse to hear a party to a cause and it is only to be justified by grave considerations of public policy. It is step which a court will only take when the contempt itself impedes the course of justice and there is no other effective means of securing his compliance."
For the foregoing reasons, we hold that by dismissing the petition in limine, the High Court has neither committed an error of law nor of jurisdiction. The appellant-Company is not entitled to any relief. Though the respondent-Bank is right in submitting that the appellant has suppressed material facts from this Court as also that it has not complied with interim order passed by the Court and it has, therefore, no right to claim hearing on merits, we have considered the merits of the matter also and we are of the considered view that no case has been made out for interference with the action taken by the respondent-Bank or the order passed by the High Court.
The appeal, therefore, deserves to be dismissed and is accordingly dismissed with costs."
So, in the present case also the appellant has forfeited his right of being heard not only in this appeal but also in his S.A. by not complying with the condition of stay imposed upon him by this Tribunal while accepting his prayer for grant of an interim order of protection against his threatened dispossession from the flats in question. The appellant having disobeyed the direction of the appellate Tribunal the DRT also, even otherwise cannot be expected to entertain such a litigant
Resultantly, not only this appeal is dismissed but even the pending S.A. of the appellant before the DRT will stand rejected without any formal order of dismissal by the learned DRT and the S.A. proceedings will stand terminated in view of the present order and the DRT shall simply close the proceedings taking on record the present direction. This Tribunal is also of the further view that for a litigant like the appellant who has no respect for the orders of this Tribunal which had been approached by him for some interim relief and got also mere dismissal of his appeal and S.A. will not serve any real purpose. The litigants like the appellant will be encouraged in obtaining some reliefs from the Tribunal conditional upon their complying with the conditions of interim protection and after getting the reliefs submissions will be made like the one made by the learned counsel for the appellant here that since because of non compliance of the condition of payment of two crores of rupees the financial institution could only take advantage of non compliance by dispossessing the appellant which the respondent FI in the present case had not been able to do and, therefore, this Tribunal can do nothing but to leave the matter as it is leaning the FI to take benewfit of Section 14 of SARFAESI Act. This kind of stand being taken amounts to abuse of process of law. That cannot be permitted. So besides ordering dismissal of this appeal as well as the S.A. itself further direction is being issued that the amount of Rs.thirty lacs deposited in the Registry of this Tribunal by the appellant, as noticed already, will stand forfeited now and released in favour of the respondent no.1 ARC to be adjusted towards of the outstanding dues of its borrower. Though at one stage this Tribunal had given the liberty to the appellant to withdraw the deposited bank drafts of that much value but the appellant had not got the same returned from the Registry and now that this Tribunal has come to the conclusion that the appellant has not been fair in his conduct and has taken a ill advised stand that in such like situation this Tribunal cannot do anything except to treat the interim protection granted to the appellant as withdrawn this Tribunal would have otherwise also imposed exemplary costs upon the appellant even if he had taken back the bank drafts. The Registry shall now get the six demand drafts, which I am informed are lying in the Registry, transferred in the name of respondent no.1 ARC by way of endorsement etc.
This Tribunal had also given notice to the appellant as to why he be not dispossessed by appointing a receiver here itself since it had been been submitted by the respondent ARC's senior counsel Mr. Amit S.Chadha during one of the hearings that the appellant was so powerful and influential a person that even the police was not lending any assistance to the ARC for getting possession of the flats in question despite there being an order of the CMM under Section 14 of SARFAESI Act. That submission had led to the summoning of the SHO concerned but when he appeared before this Tribunal through video conferencing he had refuted this allegation of the respondent ARC and had assured this Tribunal that the police cannot afford not to obey the orders of either the CMM or of any tribunal including the DRT. However, now I need not pass any order on this aspect since today Mr. Dobhal, learned counsel for the respondent no.1 ARC had informed this Tribunal by mentioning the matter before pronouncement of the present order that physical possession of the flats in question has already been taken by the ARC under Section 14 of SARFAESI Act.