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Judgment
StateBank of India has filed one application in its disposed of appeal for the implementation of direction given to respondents 2 to 6 herein on 12.02.2019 while disposing of the said appeal of State Bank of India for paying to this bank or depositing with this Tribunal a sum of Rs. 21 crores. It was ordered that in case non compliance of the said direction given to the respondents within a week the appellant Bank will be at liberty to take appropriate steps for ensuring that the aforesaid direction given by this Tribunal to the respondents is complied with within a week.Accordingly State Bank of India moved thisapplicationwhich can be said to be in the nature of an execution application as contemplated under Order XXI Rule 32 of the Code of Civil Procedure for enforcing an order of injunction since in the present case the direction given to the respondents 1 to 6 by this Tribunal can be said to a kind of mandatory injunction/command to pay to State Bank of India or deposit with this Tribunal Rs. 21 crores
Very briefly stated the facts leading to the moving of this application, may only be noticed. Respondent No. 6 herein M/s Gee Cee Metals Pvt. Ltd. owed Rs. 13.5 croresto Kotak Mahindra Bank, respondent no.7 herein. Respondent No. 6 M/s Gee Cee Metals Pvt. Ltd. had secured the re-payment of the loan which Kotak Mahindra Bank had extended to it by creating equitable mortgage of one huge property in Maharani Bagh, New Delhi(D-8, Maharani Bagh, New Delhi) Since there was a default in repayment of the loan money by the said corporate borrower of Kotak Mahindra Bank it declared its account as NPA and then proceeded to sell itssecured/mortgaged asset in Maharani Bagh to recover its dues from respondent no.6. At that stage some 'strategic buyers' came forward to buy the said entire property by way of a private treaty for Rs. 35 crores and Kotak Mahindra Bank and the mortgagor Company agreed to the proposal of the so called 'strategic buyers'. That understanding between the borrower Company and the so called 'strategic buyers' has subsequently been found by this Tribunal to be an act of 'hoodwinking the system' and which view of this Tribunal has already been affirmed by the Hon'ble Delhi High Court which was approached by the so called 'strategic buyers' of the mortgaged property in Maharani Bagh against the order dated 12.02.2019 passed by this Tribunal wherein it was observed that the abovenamed borrower of Kotak Mahindra Bank and the so called 'strategic buyers' had 'hoodwinked the system'.
State Bank of India had also advanced huge amount of loan to respondent no.1 M/s Gee Cee Corporation Pvt. Ltd. Both these Companies belong to one Mittal family comprising of respondents 2 to 5 herein. However, there was no mortgage created in favour of State Bank of India by anyone to secure repayment of the loan extended by it to the said corporate borrower. Respondentno.6 M/s Gee Cee Metals Pvt. Ltd,, which was the borrower of Kotak Mahindra Bank had given simple corporate guarantee in favour of State Bank of India. Since the said borrower of State Bank of India had also defaulted in repayment of its dues amounting a whopping sum of Rs. 55 crores odd this Bank(SBI) had to take recourse to legal remedies for recovery of its dues. Accordingly it filed an Original Application(O.A.) before the DRT under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993('RDDBFI Act' in short). During the pendency of that O.A. State Bank of India came to know that its corporate guarantor M/s Gee Cee Metals Pvt. Ltd. in fact owned the property in Maharani Bagh which was being sought to be auctioned under SARFAESI Act by Kotak Mahindra Bank since it was mortgaged in its favour and value of only a part of the property was sufficient to clear off the dues of Kotak Mahindra Bank. The borrower/mortgagor Company of Kotak Mahindra Bank during that phase wanted to see that its mortgaged property is saved from being auctioned for recovery of a small amount of loan payable to Kotak Mahindra Bank. Accordingly, it had filed a Securitisation Application(S.A.) under Section 17(1) of SARFAESI Act before the same DRT before which the O.A. of State Bank of India was pending.The O.A. of the State Bank of India as well as the S.A. were being taken almost together on most of the dates of hearing before the same DRT.
State Bank of India having come to know that the property belonging to its corporate guarantor was going to be sold moved an application for attachment before judgment in respect of the property in Maharani Bagh claiming that it would be entitled to the amount which would be recovered in excess of the dues of Kotak Mahindra Bank which were only to the tune of Rs.13.5crores and which could be recovered from sale of only one floor while the price at which the so called 'strategic buyers' were offering to buy the entire property was Rs.35 crores. However, the learned Presiding Officer of the DRT did not show any sensitivity towards the dues of State Bank of India and permitted the sale of the entire Maharani Bagh property to the so called 'strategic buyers' for Rs. 35 crores vide its order dated 10.01.2019 without ensuring that the amount of Rs. 19 crores out of the sale proceeds is paid to State Bank of India by the 'strategic buyers'which they had on 05.01.2019 categorically undertaken to pay to State Bank of India and not to the seller/owner of the property i.e. respondent no.6 herein, the corporate guarantor of State Bank of India, after paying off the dues of Rs. 13.5 crores ofKotak Mahindra Bank and without which payment the so called 'strategic buyers' knew they will not be in a position to the buy the property in Maharani Bagh. Thus, State Bank of India stood deprived of its money by 'strategic buyers' and the entire sale proceeds after payment of Rs. 13.5crores to Kotak Mahindra Bank came to be pocketed by the borrower/ mortgagor since the learned Presiding Officer of DRT permitted that to happen by giving a green signal to the mortgagor to go ahead with the sale of the entire property in favour of the so called 'strategic buyers' without paying anything to State Bank of India vide his order dated 10.01.2019 despite the fact that earlier he himself had vide his order dated 05.01.2019 given permission to the sale transaction by private treaty but with the rider that out of the money to be recovered from that sale the dues of Kotak Mahindra Bank to the tune of Rs. 13.5 crores will be cleared and Rs. 19 crores will go to State Bank of India which had to recover fifty five crores from its borrower Company.
State Bank of India had immediately approached this Tribunal with an appeal against the order dated 10.01.2019 of DRT. That appeal was taken up for ex parte hearing on 14.01.2019 when this Tribunal passed the following order:-
"Learned counsel for the appellant has argued that appellant has to recover a sum of Rs.55 crores odd from respondent no.1 to 6 herein and for recovery of those dues, the appellant had filed an O.A. in which an application for attachment of one of the properties belonging to the respondent no.6 (corporate guarantor) was sought to be attached before judgment. However, learned DRT is not even taking up that application for consideration and in the meanwhile has permitted some private parties to purchase the property of which an order for attachment before judgment was being sought, merely on payment of Rs.13.50 crores even though value of that property was around Rs.33.0 crores odd and the appellant is in any event entitled to recover the amount in excess of the recoverable dues of the Kotak Mahindra Bank. However, the property has been permitted by the learned DRT to be sold to some third party who however not in any way concerned with the pending S.As. filed by the Kotak Mahindra Bank's borrowers for a mere sum of Rs.13.50 crores. W.P.(C.) No. 2083/2019 Page 12 of 35 Issue notice to the respondents, returnable on 21.01.2019. In the meanwhile, status quo shall be maintained in respect of the title as well as possession of property no.D-8, Maharani Bagh Colony, New Delhi - 100065 and no title documents shall be executed in particular by the appellant bank's borrowers in respect of the aforesaid property in favour of so called strategic buyers namely, G.L. Bajaj Educational Trust, Sh.Ram Kishore, Sh. VinayAgrawal and Mrs.AnshuAgarwal. As requested, appellant will be at liberty to submit a copy of this order in the office of the Sub-Registrar concerned also, so that no title documents in respect of the aforesaid property is got registered by the so called strategic buyers in order to defeat the recovery of pubic dues of the appellant bank. Dasti."
Then while allowing the Bank's appeal vide order dated 12. 02.2019 this Tribunal had observed the submissions made on behalf of the borrowers/guarantors of SBI and passed the following directions:-
"..............the learned counsel Mr. Sanjeev Bhandari who was assisted by the learned counsel MrAnand Aggarwal came out with certain technical objections which conveyed to this Tribunal that as far as the sales which already had taken place in respect of the property in Maharani Bagh cannot be attached by this Tribunal at least in the present appeal because the sale deeds once having been executed could not be set aside by this Tribunal or for that matter even by the DRT even if this Tribunal were to hold that the DRT was not justified in passing impugned order dated 10.1.2019. The learned counsel submitted that as far as the appellant Bank's applications for attachment moved in its O.A. are concerned, the same were still pending and were listed for hearing on 29.1.2019 and there being no stay against sale of Maharani Bagh property by the debtor of Kotak Mahindra Bank in favour of the 'strategic buyers', the sale deeds executed on 11.1.2019 were legal documents of debtor which made the 'strategic buyers' owners of the portions of property No.D-8 bought by them.
However, the aforesaid submissions made on behalf of the defaulting debtors of State Bank of India do not have any substance and, in fact, the same are made to mislead this Tribunal into accepting totally unfounded argument that this Tribunal cannot do substantial and complete justice under any circumstances and 'strategic' litigants under the shelter of hyper technical objections cannot stop this Tribunal from passing any directions which will result in complete justice and secure 'public interest'. Learned senior counsel for the appellant had rightly submitted that technicalities should not deter this Tribunal from doing substantial and complete justice between the parties even in the present proceedings. Under Section 17(7) of the SARFAESI Act, the proceedings in securitisation applications are to be governed by the provisions applicable for the disposal of original applications under the Recovery of Debts Due to Banks and Financial Institutions Act,1993. One of the provisions of law contained in the said Act of 1993 is Section 19 and its sub-section (25) gives ample powers to DRTs as well as to Appellate Tribunal (DRAT) to pass any order to secure the interests of justice and to see that process of law is not abused by any defaulter. In any event, the aforesaid submissions made by Mr. Sanjeev Bhandari and Mr. Anand Aggarwal gave an impression to this Tribunal that their clients are still conceiving a fresh strategy to ensure that State Bank of India does not get any money from them at least in the present proceedings, which will also ensure that the efforts of State Bank of India in getting any kind of interim relief/directions from this Tribunal become infructuous because of the sale deeds having already been executed in favour of the so called 'strategic buyers'. In fact, it also appears to this Tribunal that in this case the so called 'strategic buyers' had in connivance with each other to deprive the State Bank of India of its legitimate dues. As noticed already, the total dues of Kotak Mahindra Bank were only Rs. 13.50 crores and a sum of Rs. 14 crores was recovered by the owner of property in Maharani Bagh by sale of only two floors i.e. Basement and Ground Floor. However, this fact was not brought to the notice of the DRT nor the learned Presiding Officer had shown anxiety to find out as to how much money was recovered and from the sale of how many floors. Undisputedly, on 11.01.2019 the owner/debtor M/s Gee Cee Metals Pvt. Ltd. without informing the DRT that it had recovered the full amount which was sufficient to clear the entire outstanding dues of Kotak Mahindra Bank by sale of only two floors went ahead to sell First Floor, Second Floor and Third Floor also to different set of buyers for a sale consideration of Rs. 21 crores. State Bank of India was already claiming attachment of the property and alternatively of excess amount to be received from the sale of the property. Therefore, it becomes clear that at least sale of these three floors was not genuine sale and particularly considering the fact that the owner had earlier represented before the High Court that the value of third floor itself was approximately Rs. 20 crores."
Considering all the facts and circumstances, the impugned order of the learned DRT permitting the sale of property in Maharani Bagh without payment of Rs.19 crores to State Bank of India cannot be sustained. In fact, because of that order the 'strategic buyers' and the mortgagor, who can also now be called as 'strategic mortgagor', have started taking advantage of that order of the DRT by claiming that they have done nothing illegal by going ahead with the sale transactions since the DRT itself had given green signal to them. Consequently, the order dated 10.1.2019 is set aside. However, the setting aside of the order dated 10.1.2019, complete and substantial justice cannot be said to have been done and further consequential directions will also have to be given, as was also submitted by Mr.Mehra, not only to respondents who are sitting pretty with payment of Rs.21 crores in their pockets as well as against the 'strategic buyers' who have been successful in hoodwinking the system by buying three floors for a sum of Rs.21 crores even though the understanding between all the parties right from the beginning was that the property in Maharani Bagh was to be sold to the 'strategic buyers' only to clear the outstanding dues of Kotak Mahindra Bank and not to confer a fortune upon them.
Thus, respondents 1 to 6 are directed either to pay to State Bank of India or to deposit in the Registry of this Tribunal a sum of Rs.21 crores which they have received in excess of the amount which was payable to Kotak Mahindra Bank. This deposit should be made within one week. Since this Tribunal has also come to the conclusion that this is a case of connivance between the owner of the property in Maharani Bagh and so-called 'strategic buyers' to defeat the efforts of State Bank of India to recover huge amount of public money from its defaulting buyer / guarantor M/s.Gee Cee Metals Pvt. Ltd, the buyers shall not be entitled to get the physical possession of the properties sold by M/s.Gee Cee Metals Pvt. Ltd. on 11.1.2019 from Kotak Mahindra Bank, nor will this Bank hand over the title deeds to them. In case the aforesaid directions are not complied with within a period of one week, the appellant Bank will be at liberty to take appropriate steps for ensuring implementation of the same of the same in accordance with law. 33. This appeal stands disposed of accordingly."
This order of this Tribunal was challenged not by the borrower/guarantors of State Bank of India but by the so called 'strategic buyers', namely, G.L.Educational Trust(Regd.) which bought basement and ground floor of the property in Maharani Bagh for Rs. 14 crores, which sale consideration was more than the dues of Kotak Mahindra Bank, Ram Kishore Aggarwal, Mrs. Vinay Aggarwal and Mrs.Anshu Aggarwal who had jointly purchased bought rest of the property i.e. entire first floor, second floor and third floor with terrace for a sum of Rs. 21 crores. These buyers had filed a joint writ petition(being W.P.(C) NO. 2083/2019) before the Hon'ble Delhi High Court but thatwrit petition was dismissed by the High Court vide its order dated 28.02.2019. A perusal of that order would show that before the High Court submissions were made on behalf of State Bank of India by its learned senior counsel Mr. Rajeeve Mehra, who has been representing the Bankbefore this appellate Tribunal also, that the this is a case of blatant collusion and connivance between the writ petitioners, who were being described throughout as the 'strategic buyers', and the sale transaction between them was a deliberate and calculated move to defeat the rights of State Bank of India which had to recover 55 crores from the owner of the property in Maharani Bagh i.e. Gee Cee Metals Pvt. Ltd. and that the so called strategic buyers were introduced after the last dated fixed by Kotak Mahindra Bank for submissions of bids by general public with a view to circumvent the impending attachment and to outbid the highest bidder in the e-auction process marginally and to flee with the balance sale consideration without even their participating in the auction process. Mr. Mehra had also submitted before the High Court that theorder of the DRT permitting sale of the entire property in Maharani Bagh to the strategic buyers would shock the conscience of any court. It was also argued there on behalf of State Bank of India that the buyers were not entitled to enjoy the fruits of their collusive actions with the borrowers.
Hon'ble High Court dismissed the writ petition of the so called strategic buyers and affirmed the order dated 12.02.2019 and the directions given in that order that the buyers of the property will not get possession of the property bought by them as also the title deeds in the custody of Kotak Mahindra Bank. While dismissing the writ petition the Hon'ble High Court had observed that the writ petitioners, strategic buyers, had not acted in good faith and that the mala fides in the conduct of the writ petitioners were glaring. It was further observed that the writ petitioners had rushed to complete the sale transaction immediately on the passing of the order dated 10.01.2019 by the DRT permitting execution of the sale deed in favour of the 'strategic buyers' and which order of the DRT had shocked the Court's conscience, appeared to be to 'facilitate the respondent no.8 fleeing with the balance sale consideration. They, in collusion with respondent No.8 contrived to present fait accompli to the State Bank of India.High Court further observed that "Inview of the above, we find merit in the submission of Mr. Mehra that the petitioners appear to have been introduced as prospective purchasers with the design of keeping the sale of the Maharani Bagh property out of the e Auction process conducted by Kotak Mahindra Bank............These aspects clearly bring out the collusion between petitioners on the one hand, and respondents 3 to 8 on the other hand. Thus, we find that there is absolutely no bona fide in the conduct of the petitioners when they proceeded to make the payment of the entire sale consideration for the purchase of the Maharani Bagh property on 11.01.2019 to respondent no.8 and to get the sale deed executed and registered."
Further dealing with the demand of the buyers for delivery of title deeds, which was prohibited by this Tribunal vide order dated 12.02.2019, the High Court observed that "We are also clear in our mind that they not having acted with the prudence of a common man, have no equity in their favour to demand thatthetitle deeds of the Maharani Bagh property and the actual physical possession thereof be given to them, irrespective of whether, or not, respondent Nos. 3 to 8 comply with the conditions imposed upon them by the DRAT while passing the impugned order. We are thus of the view that there is no justification to interfere with the impugned order and we affirm the said view of the DRAT."(highlighting is mine)
After the dismissal of the writ petition of the strategic buyers State Bank of India moved the present Application No. 380/2019 with the following prayers:-
"That under the aforesaid facts and circumstances, it is prayed to this Hon'ble Appellate Tribunal that this Hon'ble Appellate Tribunal may be pleased to pass the following directions in favour of the Appellant:-
a. Allow the present Application without prejudice to the rights and contentions of the Appellant herein
b. Ex-parte initiate contempt proceedings against the Respondent No.1 to 6 for non-compliance of the Order dated 12.02.2019 or in alternative refer the Application to the Hon'ble High Court of Delhi for initiating appropriate contempt proceedings against the Respondent No.1 to 6 under Section 11 & 12 of the Contempt of Court Act.
c. Or in the alternative/and Set-aside the Sale dated 11.01.2019 conducted by the Respondent No.6 in favour of the Strategic buyers namely G.L. Bajaj Education Trust, Sh. Ram Kishore, Sh.Vinay Aggarwal and Mrs. Anshu Agarwal.
d. Any other and such further Order may be passed in favour of the Appellant Bank and against Respondent No.1 to 6 & the Strategic Buyers."
This application was taken up for ex parte consideration by this Tribunal on 16.04.2019 when the following order was passed:-
"Misc. Case No.380/2019
This application has been moved by the appellant bank in the disposed of appeal for ensuring the compliance of the directions of this Tribunal given to the non-applicants / respondents no.1 to 6 in the application vide order dated 12th February, 2019 which stands affirmed by the Hon'ble High Court of Delhi in Writ Petition No.2083/2019 filed by the so-called strategic buyers of the property in question challenging the directions given by this Tribunal that they will not be entitled to get possession as well as the title documents in respect of the property which they purchased from the borrowers of Kotak Mahindra Bank and they have failed to deposit the share of the State Bank of India out of the sale proceeds. Respondents no.1 to 6, however, did not challenge this Tribunal's order.
Issue notice of this application to respondents no.1 to 6 as well as to their counsel, who is representing them in State Bank of India's O.A. pending before the DRT-II, Delhi to show cause as to why appropriate directions be not given by this Tribunal to ensure the compliance of the aforesaid directions given to them for making payment of Rs.21 crores either to the State Bank of India or to be deposited with the Registry of this Tribunal, either by way of sending them to the civil prison or attachment / sale of their assets, movable as well as immovable including the bank accounts etc. Notice shall also contain a direction for respondents no.2 to 5 to appear in person before this Tribunal. Respondent no.1 Company, which happens to be the borrower Company, shall be served through its Managing Director, who shall also appear in person on the next date.
Notice shall also go to Kotak Mahindra Bank directing them to deposit in the Registry of this Tribunal the title deeds in respect of Maharani Bagh property to be kept here in sealed cover and also the keys of the property which earlier this Tribunal had restrained it from delivering the same to the buyers.
The Director(s) of respondent no.6, which is a Corporate Guarantor of respondent no.1 Company, shall also appear in person on the next date of hearing. Respondents no.1 & 6 Companies shall also be required to file affidavits as to how the money received by them from the buyers of Maharani Bagh property has been utilized if it is not lying in their bank accounts. The Authorized Officer of the appellant bank shall collect dasti notices and ensure that they are duly served for 29th April, 2019."
Then on 29.04.2019 the following order was passed:-
"Affidavit of service has been filed.
Mr. Madan Mohan Mittal, the Managing Director of respondents 1 and 6, who is also respondent no.2 in the present proceedings, is present in compliance of the directions given to him by this Tribunal. Mr. Akhil Mittal, guarantor/respondent no.5 is also present in person.
On behalf of Ms. Rekha Mittal and Mr.Gaurav Mittal, counsel Mr. B. DevSekhar has appeared and moved an application for exempting them from personal appearance today because of their being not well. Some medical papers of Medanta Hospital have been annexed with the application. He says that he has filed his Vakalatnama in the Registry today. He undertakes that they will appear before this Tribunal on the next date whatever this Tribunal may fix. They are exempted frompersonal appearance today.
Time has sought on behalf of respondents for responding to the show-cause notice given to them by this Tribunal. Let response to the show-cause notice be field in the form of affidavits before the next date with advance copy to the counsel for State Bank of India. While seeking time to give his response, Mr.Madan Mohan Mittal says that money received from buyers has been paid to other creditors of the borrower Company.
Now, respondents/ borrowers/ mortgagors shall stand restrained from withdrawing any money from their bank accounts. Their bankers will, however, permit deposits to be made in their accounts. Mr. Madan Mohan Mittal states that his account is with Indian Overseas Bank, Preet Vihar, Delhi, but he does not remember the account number. The authorised officer of State Bank of India shall deliver a copy of today's order at the concerned branch of Indian Overseas Bank.
Mr. Madan Mohan Mittal states that he is residing at SC 2/104, Sea Court, Jay Pee Greens, Greater Noida, U.P. and this property has been taken on rent from its owner Mr.Chander Prakash.
Both the respondents present today will appear on the next date also as also the other respondents whose personal appearance has been exempted for today.
Today, a further show-cause notice is being given to respondents 2 to 5 to show cause as to why an order for their interim custody in civil prison be also not passed.
Counsel for Kotak Mahindra Bank has also appeared today. This bank was directed to deposit in the Registry of this Tribunal the title deeds in respect of Maharani Bagh property, to be kept herein sealed cover, and also to hand over the keys. He says that he has deposited the title deeds in original in the Registry as also the keys of the property in question. Registry shall ensure that the original title deeds are kept in a sealed cover while photocopies thereof are kept in the file of the ongoing proceedings.
Counsel for Kotak Mahindra Bank has moved one application today, seeking certain directions. Copy given to counsel for State Bank of India which can respond to the prayer made therein on or before the next date. Other respondents can also respond to this application, if they so desire. They shall be given copy of the application moved today on behalf of Kotak Mahindra Bank.
Re-notify on 6.5.2019.
Dasti."
In compliance of the said direction given to Kotak Mahindra Bank it has deposited in the Registry of this Tribunal the keys of the Maharani Bagh property as also its title deeds which were kept at its disposal by respondent no.6 herein to secure the repayment of the dues of the said Bank by it(respondent no.6). Thus, Maharani Bagh property has become custodia legis.
In response to the show cause notice the respondents 1 to 6 filed their reply supported by an affidavit of respondent no.2 Shri M.M.Mittal, who claims to be all-in-all in the running of the cor[orate borrower(respondent no.1 herein) as well as the corporate guarantor(respondent no.6 herein) and subsequently written submissions also were filed on 22.05.2019 signed by Ms. Reena Jain Malhotra, advocate in which their main explanation tendered was that they never had any intentions not to comply with the direction given to them by this Tribunal vide order dated 12.02.2019 but that direction to pay Rs. 21 crores to State Bank of India or to deposit with this Tribunal could not be complied with since the money received by them from the buyers of the property in Maharani Bagh had already been utilized in liquidating the liabilities of other creditors upon receipt of the sale consideration of Maharani Bagh property over and above the amount which stood paid to Kotak Mahindra Bank to clear its dues payable by its corporate borrower, respondent no.6 herein, and before passing of the directions by this Tribunal on 12.02.2019. It was also their stand that even now they have the intentions to comply with the directions of this Tribunal and reasonable time should be given to them for making the payment as directed by this Tribunal. In order to show that they really have the intentions to comply with the direction of this Tribunal the respondents were willing to sell their one property in DLF Galleria (Gurgaon) at a fair market price as being offered by builder(DLF) in respect of other properties in the same building. They also offered that their two other rented properties in Ansal Plaza also could be sold and its rent could also be directed to be paid to State Bank of India by the tenants. Respondent no.2 Mr. M.M.Mittal, claiming himself to be Managing Director of the SBI's borrower Company, respondent no.1, and also a Director of corporate guarantor, respondent no.1 Company, filed his affidavit alongwith the reply to the show cause notice. In a way he admitted that he was representing all the other respondents also who are his wife and sons.
Responding to this explanation of the respondents Mr. Rajeeve Mehra, learned senior counsel for State Bank of India strongly submitted that the explanation was nothing but a lame excuse to get some mercy from this Tribunal and to delay the recovery of public money from them. It was also submitted that the respondents 1 to 6 had in fact indulged in 'money laundering' while dealing with the money received by them from the so called 'strategic buyers' who have also already been found by this Tribunal in the order dated 12.02.2019 to be hands in glove with the respondents 1 to 6 herein and which view had also been affirmed by the High Court when the strategic buyers had filed a writ petition against the order dated 12.02.2019 allowing the appeal of State Bank of India against the order dated 10.1.2019 of DRT and while dismissing the writ petition of strategic buyers, the Hon'ble High Court had passed severe strictures against the Presiding Officer's knowledge and competence to deal with such like matters involving recoveries of public monies running into crores of rupees. Mr.Mehra submitted that though SBI had also sought initiation of contempt proceedings but his submission was that non-compliance of the direction of this Tribunal attracts penal consequences and so respondents 2 to 5 and directors of respondents 1 and 6 have rendered themselves liable to be sent to jail and additionally all the movable and immovable properties including bank accounts of respondents 1 to 6 herein are also liable to be attached and sold in order to ensure that the direction of this Tribunal given on 12.02.2019 is implemented and which implementation can be ensured only by this Tribunal as provided under Section 19(17) &(25) of RDDBFI Act, which would apply to appellate tribunal also since appeal proceedings are continuation of original proceedings, and not by any other forum.
From the foregoing narration the position which emerges is that State Bank of India had filed an Original Application for recovery of its dues of fifty five crores odd from respondent no.1 herein, its corporate borrower and the same is still pending decision in the DRT. S.A. filed by the borrower of Kotak Mahindra Bank was also pending before the same DRT and both the cases were being taken up together. In the O.A. State Bank of India had moved two applications seeking an order of attachment before judgment of the property in Maharani Bagh owned by its corporate guarantor, respondent no.6 herein, and also for a direction to Kotak Mahindra Bank to pay to State Bank of India the sale proceeds of Maharani Bagh property in excess of its recoverable dues from its borrower, respondent no.6 herein, and corporate guarantor of State Bank of India in respect of the loan granted to respondent no.1 herein. Thos two applications of State Bank of India have till date been kept pending by the DRT and in the meanwhile the owner of the Maharani Bagh property was permitted by the DRT to sell that property to the already named 'strategic buyers' without insisting upon the payment of Rs. 19 crores to State Bank of India. Though the O.A. proceedings and S.A. proceedings were going on together but on the 10.01.2019 only S.A. was taken up and property in Maharani Bagh was permitted to be sold and then S.A. was adjourned to 29.01.2019 for which date O.A. was already listed as also the two attachment applications moved by SBI. While observing that the sale transaction between respondent no.6 herein and the so called 'strategic buyers' was a collusive transaction this Tribunal vide final order dated 12.02.2019 had directed that the possession of the Maharani Bagh property as also its title deeds shall not be delivered to the buyers till the time respondents 1 to 6 herein pay to State Bank of India or deposit Rs. 21 crores with this Tribunal for which purpose one week's time was given respondents 1 to 6.
Mr. Rajeeve Mehra rightly submitted that the direction given to respondents 1 to 6 herein on 12.2.2019, when SBI's O.A. was still pending, was in the nature of directions contemplated under Section 19(13A) of RDDBFI Act non compliance of which directions attracts penalty of imprisonment as well as attachment of the properties of the violator of the directions of the Tribunal as provided under Section 19(17) and further that in exercise of the powers conferred under Section 19(25) of the RDDBFI Act and Rule 22 of the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994 also this Tribunal can pass any kind of orders to give effect to the direction given on 12.02.2019 and that power is wide enough even to send anyone to jail in case of violation of any directions of this Tribunal like the one given to respondents 1 to 6 herein on 12.02.2019.
Respondents 1 to 6 herein have undisputedly not complied with the direction of this Tribunal given on 12.02.2019 and which direction is in the nature of a mandatory injunction. Though Section 19(17) of RDDBFI Act does not provide that non compliance of the directions of the Tribunal has to be shown to be intentional before the violator is punished but in the present case the respondents 1 to 6 herein have not even claimed that non compliance was unintentional. In the facts and circumstances the non compliance of the direction given on 12. 02.2019 has to be held to be held as intentional having been committed only to show that such like directions are mere 'paper tigers' which nobody should be scared of. The entire defence raised by these respondents in their reply is to show that they had utilized Rs. 21 crores received by them from the strategic by them to liquidate other various creditors of the corporate guarantor, respondent no.6 herein. Except for trying to show how they had utilized the money received from the strategic buyers, which attempt also on their part was nothing but an attempt to mislead this Tribunal and the alleged money transactions, according to Mr. Mehra were acts of money laundering for which the Bank will be taking appropriate steps as advised, respondents 1 to 6 have not uttered even a word as to why they had not complied with the direction to pay to SBI or deposit with this Tribunal Rs. 21 crores. Even if these respondents, violators of the direction of this tribunal, had spent the money received by them from buyers because there was no stay against spending of that money they were still obliged to comply with the direction of this Tribunal. They have not given any reason at all for not complying with the direction of this Tribunal. They have not claimed that they had become 'paupers' after paying off their other creditors by utilising the sale proceeds of Maharani Bagh property and they had only the money which they received from the buyers and nothing else and they having spent entire sale consideration before passing of the direction on 12.02.2019 they were left with no or assets to comply with the direction of this Tribunal. In fact, in their written submissions it had been claimed that some other properties of good value were available with the respondents which could be sold. Despite that they did not come forward to sell those properties and to give the sale proceeds to State Bank of India. Therefore, non-compliance of the direction of payment of Rs. 21 crores by respondents 1 to 6 was definitely intentional and mala fide.
Additional reason for that conclusion is that even during the hearing on the show cause notice given to respondents 1 to 6 they were asked to make the payment of Rs. 21 crores but their counsel simply kept on submitting that they had all the intentions of making that payment but some reasonable time should be given to them. Considering the fact that the directionof payment was given on 12.02.2019 and even show cause notice was given to them more than two months back as to why they should not be sent to prison and/or their properties be not attached and sold but till date they have not payment even of a single rupee. If the non compliance of the direction given on 12.02.2019 was bona fide and unintentional and the guilty respondents really wanted to purge the non compliance they could have very well done that by now since period of more than four months was certainly more than reasonable period for the compliance of the direction given on 12.02.2019.
Learned counsel for the respondents 1 to 6 did not dispute the legal submission of Mr. Rajeeve Mehra that only this tribunal can get its direction implemented and that too either by attaching the properties of the respondents or even by sending them to prison though it was argued that there is no intentional non compliance of the command given to them on 12.02.2019 and so no penal order should be passed against them and some reasonable time should be given for payment.
Relevant parts of Section 19 of RDDBFI Act invoked by the appellant Bank read as under:-
Application to the Tribunal-
(1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal...................................................
(13) (A) Where, at any stage of the proceedings, the Tribunal is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him,-
(i) is about to dispose of the whole or any part of his property; or
(ii) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Tribunal; or
(iii) is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest, the Tribunal may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Tribunal, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt, or to appear and show cause why he should not furnish security.
(B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.
(17) In the case of disobedience of an order made by the Tribunal under sub-sections (12), (13) and (18) or breach of any of the terms on which the order was made, the Tribunal may order the properties of the person guilty of such disobedience or breach to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Tribunal directs his release.
(18) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order-
(a) appoint a receiver of any property, whether before or after grant of certificate for recovery of debt;
(b) remove any person from the possession or custody of the property;
(c) commit the same to the possession, custody or management of the receiver;
(d) confer upon the receiver all such powers, as to bringing and defending suits in the courts or filing and defending application before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and
(e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.
(25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice."
Since every command given to a litigant be it by a Court or even by a quasi judicial tribunal, like DRAT, is a kind of injunction the same has to be executable also and manner of execution of a decree on injunction is provided under Order XXI Rule 32 also this Tribunal can keep that provision also in mind while considering the request of the State Bank of India which in the facts and circumstances can be said to a decree holder having in its favour a decree for mandatory injunction. Order XXI Rule 32 provides as under:-
"Decree for specific performance for restitution of conjugal rights, or for an injunction
(1) Where the party against whom a decree for the specific performance of a contract, or for restitution of conjugal rights, or for an injunction, has been passed, has had an opportunity of obeying the decree and has wilfully failed to obey it, the decree may be enforcedin the case of a decree for the restitution of conjugal rights by the attachment of his property or, in the case of a decree for the specific performance of a contract or for an injunction] by his detention in the civil prison, or by the attachment of his property, or by both.
(2) Where the party against whom a decree for specific performance or for an injunction has been passed is a corporation, the decree may be enforced by the attachment of the property of the corporation or, with the leave of the Court by the detention in the civil prison of the directors or other principal officers thereof, or by both attachment and detention.
(3) Where any attachment under sub-rule (1) or sub-rule (2) has remained in force for [six months] if the judgment-debtor has not obeyed the decree and the decree-holder has applied to have the attached property sold, such property be sold; and out of the proceeds the Court may award to the decree-holder such compensation as it thinks fit, and shall pay the balance (if any) to the judgment-debtor on his application.
(4) Where the judgment-debtor has obeyed the decree and paid all costs of executing the same which he is bound to pay, or where, at the end of [six months] from the date of the attachment, no application to have the property-sold has been made, or if made has been refused, the attachment shall cease.
(5) Where a decree for the specific performance of a contract or for an injunction has not been obeyed, the Court may, in lieu of or in addition to all or any of the processes aforesaid, direct that the act required to be done may be done so far as practicable by the decree-holder or some other person appointed by the Court, at the cost of the judgment-debtor, and upon the act being done the expenses incurred may be ascertained in such manner as the Court may direct and may be recovered as if they were included in the decree."
Hon'ble Supreme Court has held that the Tribunals established under the RDDBFI Act can also exercise powers of a Court as contained in the Civil Procedure Code and in fact the powers enjoyed by the Tribunals are far more wider than those enjoyed by ordinary Civil Courts. That judgment is reported in 1999(3) SCR 759, "Industrial Credit And Investment vs Grapco Industries Ltd." and the relevant observations are as under:-
"We, however, do not agree with the reasoning adopted by the High Court. When Section 22 of the Act says that the Tribunal shall not be bound by the procedure laid by the Code of Civil Procedure, it does not, mean that it will not have jurisdiction to exercise powers of a Court as contained in the Code of Civil Procedure, Rather, the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice.".
So, now the stage has reached when this Tribunal has to take a decision as to what orders need to and should be passed to ensure that the direction given to respondents 1 to 6 vide order dated 12.02.2019 to pay to State Bank of India or to deposit with this Tribunal a sum of Rs. 21 crores is complied with and is given effect to. Though these respondents have also tendered apology in response to the show cause notice while claiming that there is wilful non-compliance of the direction of this Tribunal but in my view this certainly is not a fit case where the guilty respondents should be let off by accepting their apology and allowing them to run away with public money of over 55 crores for which SBI had filed its O.A. They will be the happiest persons this earth in case their apology is accepted and the greatest sufferer will be 'public interest' and there will be a great loss of 'public money' which cannot be allowed to happen. They have to be punished.
One form of punishment is attachment of the properties of the guilty respondents 1 to 6. Respondent no.6, corporate guarantor of State Bank of India and owner of the Maharani Bagh property has very smartly tried to project is that its property in Maharani Bagh, value of which on a prima facie view of the matter can be said to be much more than sixty crores considering the fact that this respondent had itself claimed before the Hon'ble Delhi High Court which was approached by with a writ petition when Kotak Mahindra Bank was going to auction it to recover its dues of Rs. 13.5 crores that value of one floor only was more than 20 crores. This property in Maharani Bagh, which is one of the most expensive areas of the capital city, has a basement, ground floor, first floor, second floor and third floor and is built upon a huge plot of 800 sq. yds., having already been sold to the so called 'strategic buyers' is left with no assets which could be attached. This stand adopted by this respondent which has also not complied with the direction given on 12.02.2019 by this Tribunal is an attempt to mislead this Tribunal and to get a finding that there is nothing belonging to this respondent which this Tribunal can now attach/sell to ensure that this Tribunal's direction is complied with and fully given effect to. Property in Maharani Bagh which respondent no.6 claims to have sold in fact still belongs to it. This Tribunal has already come to the conclusion in the order dated 12.02.2019 that so called sale transaction between it and the so called 'strategic buyers' was a collusive transaction strategized to see that State Bank of India is not in a position to lay its claim over that property and it keeps on fighting for decades to recover its dues. As has been noticed already, none of the respondents 1 to 6 challenged that order/view of this Tribunal and, therefore, they have accepted the position that the alleged sale transaction was a fraudulent and collusive transaction. As also noticed already, even Hon'ble Delhi High Court had while dismissing the writ petition of the 'strategic buyers' had come to the conclusion agreeing with the conclusion of this Tribunal that the sale transaction in respect of Maharani Bagh property was entered into to facilitate the owner of Maharani Bagh property fleeing away with the sale consideration without paying anything to State Bank of India as was their undertaking and understanding when the DRT had permitted them on 05.01.2019 to go ahead with the sale transaction by way of private treaty. The relevant observations of the High Court have been highlighted in para no. 8 of this order which clearly affirmed the view of this Tribunal that the respondents 1 to 6 herein and the so called 'strategic buyers' had entered into a conspiracy and 'hoodwinked the system' to defeat the recovery efforts of State Bank of India which had to recover fifty five crores odd from its corporate borrower, respondent no.1 herein and the guarantors, respondents 2 to 6 herein including the corporate guarantor and owner of the Maharani Bagh property. Their joining hands with each other was an act of fraud and even exchange of the alleged sale consideration was also a 'stage managed affair' to 'hoodwink the system' in which attempt they of course had succeeded also at the DRT level but all their hopes to finally achieve their ill conceived strategy stood dashed to the ground with the passing of the order dated 12.2.2019 by this Tribunal and with the rejection of writ petition of the 'strategic buyers' by the Hon'ble High Court which order proved to be the final nail in the coffin. It is now well settled that fraud vitiates everything. The so called sale deeds between respondent no.6 herein and G.L.Educational Trust, Ram Kishore Aggarwal, Mrs. Vinay Aggarwal and Mrs. Anshu Aggarwal, so called strategic buyers, being products of fraud are a nullity and has no legal sanctity at all. Those sale deeds have simply to be ignored for intents and purposes. This view of mine gets further support from the circumstance that even the so called strategic buyers appear to have now abandoned their legal fight to have a finding from any superior Court that the sale transaction in question was a genuine transaction and this Tribunal was not justified in directing that they will neither be handed over physical possession of the property nor will they be delivered its title deeds by Kotak Mahindra Bank. If actually they were genuine buyers and not conspirators with respondents 1 to 6 herein they would have certainly demanded back their money from respondent no.6 which they do not even claim to have done till the present moment. In fact, they knew from the beginning that the money given to respondent no.6 was no more with it and cannot be even otherwise returned to them since this Tribunal has already restrained them from operating any of their bank accounts. Respondents no. 1 to 6 never challenged the findings of this Tribunal arrived at in its order dated 12.02.2019 and their conspirators/colluders, the so called 'strategic buyers'. Thus, that takes care of the one of the prayers made in the present application by State Bank of India that sale deeds executed in respect of the Maharani Bah property on 11.01.2019 by respondent no.6 in favour of the 'strategic buyers' named already, be set aside. With the passing of the order by this Tribunal on 12.02.2019 when appeal of State Bank of India was allowed and it was directed that the strategic buyers will neither get possession of the property in Maharani Bagh nor will they get its title deeds from Kotak Mahindra Bank and upon affirmation of that order by the Hon'ble High Court while rejecting the writ petition of the strategic buyers the alleged papers purporting to be sale deeds dated 11.02.2019 in respect of Maharani Bagh property had already ceased to have any legal sanctity and there is no necessity of passing of such a declaration in the present proceedings, which as already observed, in the nature of execution proceedings initiated by the State Bank of India for the implementation of the directions given to respondents 1 to 6 vide order dated 12.02.2019. Thus, Maharani Bagh property is now very much available to be dealt with by this Tribunal and is already custodia legis having been taken over from Kotak Mahindra Bank before its physical possession could be handed over to the so called 'stratetgic buyers' , in any manner which can ensure that the direction of this Tribunal is complied with.
It is the primary responsibility of this Tribunal to ensure that its directions are given effect to and implemented by the litigants to whom the directions were given on 12.02.2019 irrespective of the nature of prayers made by the litigant for whose benefit the directions were given and which litigant in this case is State Bank of India. Since the Maharani Bagh property is already custodia legis there is no need of passing any attachment order in respect thereof. The question. however, is whether the property remaining simply custodia legis will the serve the purpose sought to be achieved i.e. recovery of Rs. 21 crores which was directed to be paid to State Bank of India or to be deposited in the Registry of this Tribunal by the guilty respondents 1 to 6 herein. The answer is simply 'no'. Then what should be done with the Maharani Bagh property. As noticed already Section 19(25) of RDDBFI Act read with Rule 22 of the Debt Recover Appellate Tribunal(Procedure) Rules, 1994 this Tribunal is competent to pass any orders to give effect to its own orders which have been disobeyed by the litigant before it who was obliged to obey and comply with the same. Section 19(18) of RDDBFI Act authorizes the Tribunal to appoint a Receiver of any property with power to sell the same even before issuance of any recovery certificate issuance of which is any event not to be considered at present stage when the question only is what orders to be passed to ensure that the direction given to respondents 1 to 6 on 12.02.2019 gets complied with. This Tribunal, therefore, invokes the power under Section 19(18) of RDDBFI Act and appoints the Authorised Officer of State Bank of India as the Receiver of the Maharani Bagh property with full powers to sell the same to recover Rs. 20 crores for the recovery of which amount this Tribunal had passed necessary direction on 12.02.2019 and which direction was to be complied with by respondents 1 to 6 within a week but had failed attach any importance to that direction and consequently that compliance is being ensured by this Tribunal itself. The Authorised Officer of State Bank will receive the keys of the property in Maharani Bagh from the Registrar of this Tribunal as also its title deeds which are also lying in the Registry in sealed cover. The learned Registrar of DRAT shall open the sealed envelop and before handing over the original documents to the authorized officer their photocopies shall be prepared and retained on record. Proper documentations hall be done by the Registrar regarding handing over of keys and documents to the authorized officer of State Bank of India who shall also place on record his authorization/appointment as the Authorised Officer of the Bank. Thereafter the authorized officer shall take necessary steps to sell the Maharani Bagh and will ensure that it fetches maximum price after giving wide publicity in at least four English newspapers(Delhi Edition) having vast circulation in Delhi and NCR region. All the terms and conditions of sale, including deposit of EMDs and reserve price etc. will be fixed by the authorized officer/receiver.
Experience of this Tribunal shows that once any order is passed in favour of banks their officials become lethargic instead of becoming more active to ensure speedy recoveries of public monies. To see that this does not happen in this case where this Tribunal is taking steps to maintain the sanctity of its own directions it is directed that during the process of sale to be initiated by the receiver/authorized officer of Bank he will submit his interim action taken report also within a period of two weeks. The whole exercise of sale of the Maharani Bagh property however, must be completed within a period of three months. If property gets sold the sale proceeds shall be deposited in the Registry of this Tribunal in the name of Registrar, DRAT to be utilized as per further directions which may be given.
Now, the further question which arises is whether this Tribunal should stop at this stage after holding that the title in the Maharani Bagh property never stood transferred to the name of so-called 'strategic buyers' and so it was only a paper transfer and, therefore, this property is liable to be sold for which appropriate directions for appointing the authorized officer of State Bank of India as Receiver have already been passed or any further orders need to be passed. Considering all the facts and circumstances and the enormity of the fraud played by the respondents 1 to 6, out of whom respondents 2 to 5 happen to be directors of either respondent no.1 Company or respondent no.6 Company, and their failure to come out with any defence in reply to the show-cause notice given to them, this Tribunal is also of the view that further penal consequences they must face. Consequently, it is also ordered that each one of respondents 2 to 5 herein shall suffer imprisonment for a period of two months. The execution of this order, however, shall remain in abeyance for a period of two weeks to enable them to approach the superior Court against this sentence imposed upon them. They will surrender before this Tribunal on 16.7.2019 in case they do not get any stay order from a superior Court against the sentence of imprisonment awarded to them. In the meanwhile, the authorized officer of the Bank can find out about the money which the Bank may have to pay to Jail Authorities for keeping the respondents 2 to 5 in prison for a period of two months. As far as the directions given to the authorized officer of the Bank who has been appointed as Receiver is concerned, he shall proceed with the duty assigned to him for collection of the keys as well as the title deeds of Maharani Bagh property from the Registry of this Tribunal and take necessary steps for sale of the property as observed already. It is hoped that the Receiver performs his duty expeditiously considering the fact that the sale which he will be effecting is pursuant to the directions of this Tribunal and so, he need not take any kind of directions from any of his superior officers. The Receiver/authorized officer of the Bank shall immediately after taking the keys of the property from the Registry of this Tribunal will depute security staff at Maharani Bagh property to protect the same.
This matter shall now be taken up for further directions on 16. 7.2019.