HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE K. LAKSHMAN
CONTEMPT CASE NO.254 OF 2020
O R D E R:
(Per Sri Justice M.S.Ramachandra Rao) This Contempt Case is filed alleging willful disobedience of the order dt.06.11.2019 in W.P.No.2455 of 2019. The events leading to filing of W.P.No.2455 of 2019
2. The petitioners herein had purchased the subject property under a registered sale deed dt.04.09.2017 from their previous vendors and they were in possession of the said property.
3. It appears that the vendors of the petitioners suppressed from the petitioners that the said property had been mortgaged with Union Bank of India (for short, 'the Bank') by deposit of it's title deed/registered sale deed No.10565 of 2008 for a loan taken by their vendors; and on coming to know of the same, the petitioners lodged a complaint on 12.01.2018 before the Station House Officer, Medipally Police Station alleging that their vendors committed offences of Cheating and Criminal Breach of Trust.
4. The said Bank invoked the provisions of the SARFAESI Act, 2002 for auction of the subject property on 28.02.2018 on the ground that the property has been mortgaged to it and there was a default in payment of the loan by the vendors of the petitioners.
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5. Though the petitioners requested the Bank to stop the auction, the auction went ahead and the 3rd respondent herein became the highest bidder by quoting Rs.82,25,000/-.
6. Though only small part of the bid amount of (i) Rs.4,10,000/- was paid on 16.08.2018, and (ii) Rs.8,00,000/- was paid on 17.08.2018, still letter of confirmation dt.20.08.2018 was issued to the 3rd respondent without payment of balance sale consideration by him. The 3rd respondent paid the remaining sale consideration of Rs.60,15,000/- on 29.01.2019, long after the confirmation of sale was done. In spite of the same, the Bank had even issued sale certificate on 30.01.2019 and delivered physical possession of the property to the 3rd respondent though the sale certificate was not registered.
7. The petitioners credited Rs.40,00,000/- on 21.08.2018 to the Bank and attempted to redeem the property, and though the amount was received by the Bank, it was not credited to the loan account in view of the auction held on 10.08.2018.
8. Petitioners therefore filed W.P.No.2455 of 2019 in this Court challenging the said action of the Bank and sought setting aside of the said sale in favour of the 3rd respondent by it. The order in W.P.No.2455 of 2019
9. This Court heard all the parties and by its order dt.06.11.2019 allowed the Writ Petition, holding that there was violation by the Bank of the mandatory conditions contained in Rules 9(3), 9(4) and MSR,J & KL,J ::3:: cc_254_2020 9(5) of the Rules framed under SARFAESI Act because the 3rd respondent did not adhere to the schedule of payments prescribed in the said Rules.
This Court also found that the Bank and the Assistant General Manager showed undue favoritism to the 3rd respondent by allowing him to deposit the sale consideration as per his whims and fancies and not within the 15 day period from the date of confirmation of sale as prescribed in the above referred Rules It also gave a finding that the petitioners are innocent purchasers who believed their vendors who had told them that their link/title document was lost, and the petitioners only later came to know about suppression of fact by their vendors of the deposit of the original title deed of the subject property with the Bank for the loan transaction. This Court also noted that they were willing to clear the balance loan amount and the Bank had already received Rs.40,00,000/- from them on 21.08.2018 and so permitted the petitioners to pay the balance amount due to the Bank within one week.
This Court directed the petitioners to pay the balance loan amount of Rs.17,58,711/- (payable by the vendors of the petitioners) to the Bank along with interest within one week from the date of receipt of a copy of it's order; the amount already deposited by the petitioners as well as the amount of Rs.17,58,711/- and interest if any MSR,J & KL,J ::4:: cc_254_2020 paid, was directed to be adjusted by the Bank to the loan dues of the borrower and the loan account of the borrower was directed to be closed.
This Court also set aside the confirmation of sale of the property in favour of the 3rd respondent made on 20.08.2018 and the sale certificate issued on 30.01.2019 in his favour and directed the 3rd respondent to redeliver possession of the subject property to the Bank/its Assistant General Manager (respondents 2 and 3); and the latter were directed to handover possession of the subject property to the petitioners along with original link documents of the subject property on the payment of the balance dues by petitioners. The Bank was also directed to refund the amount deposited by the 3rd respondent immediately after receipt of the balance amount from the petitioners without interest.
Contentions of petitioners in the Contempt Case
10. In this Contempt Case, it is the contention of the petitioners that pursuant to the said order, the petitioners approached the 2nd respondent, who was the then Branch Manager of the Bank, on 08.11.2019 along with a sum of Rs.17,58,711/- for complying with the direction contained in this Court's order for deposit, but the Bank asked them to produce a copy of the judgment in the Writ Petition; that on receipt of the judgment by the petitioners, they approached the Bank on 12.11.2019 with the balance amount; that the petitioners were again asked to approach on 13.11.2019 with the amount and a MSR,J & KL,J ::5:: cc_254_2020 challan was filled and furnished to the petitioners, and they then deposited Rs.17,65,695/- as calculated by the Bank to the credit of the loan account of the borrower/vendors of the petitioners. The petitioners contended that they were asked to approach the Bank after a week for receipt of original link documents and on 21.11.2019 original documents were handed over to the petitioners.
11. The petitioners contended that on receipt of the original documents, they requested the Bank to hand over possession and loan clearance certificate, but the 2nd respondent informed that possession was not given to the Bank by the 3rd respondent, and the 3rd respondent might have approached the Supreme Court of India questioning the orders passed by this Court on 06.11.2019 in the Writ Petition.
12. The petitioners contended that the 3rd respondent did file SLP No.30278 of 2019 in the Supreme Court challenging the order passed by this Court in W.P.No.2455 of 2019 dt.06.11.2019, but the SLP was also dismissed on 07.01.2020.
13. The petitioners contended that they even submitted the order of the Supreme Court on 08.01.2020 to respondent No.s 1 and 2 but they did not take any steps to hand over possession taking a plea that the 3rd respondent did not give them possession.
14. The petitioners therefore contended that non-compliance with the direction of this Court in its order dt.06.11.2019 in W.P.No.2455 MSR,J & KL,J ::6:: cc_254_2020 of 2019 is willful disobedience by the respondents and they are all liable to be punished under the Contempt of Courts Act for the same.
15. In the Contempt case the petitioner impleaded the authorized officer of the Bank at it's Regional Office, Punjagutta as respondent no.1, the then Branch Manager of the Saifabad Branch of the Bank as respondent no.2 and the auction purchaser as the respondent no.3. Events after filing of the Contempt Case
16. The Contempt Case was listed before this Bench on 07.02.2020 and this Court issued notice to the respondents.
17. Notices were served on respondents 1 and 2 in February, 2020 itself. Sri A.Krishnam Raju, counsel entered appearance for respondents 1 and 2 on 04.03.2020.
18. But there was a delay in service of notice on the 3rd respondent on account of the 3rd respondent having been moved to a new place of residence. The 3rd respondent appears to have been served only in 2021 and he engaged Sri R.K.Chittaa, counsel who filed Vakalat on 14.06.2021.
19. As things stand today, possession of the property as directed in this Court's order dt.06.11.2019 in W.P.No.2455 of 2019 has not been delivered to the petitioner though more than 19 months have elapsed since the passing of the said order.
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The stand of the respondents and it's consideration by this Court
20. Admittedly under the order dt.6.11.2019 in WP.No.2455 of 2019 we had directed redelivery of possession of the subject property by the 3rd respondent to respondent nos.1 and 2 and the latter were directed to hand over possession of the property to the petitioners along with original documents of the borrower on payment of balance dues by the petitioners, which occurred on 14.11.2019.
21. So, we shall first see what the 3rd respondent had done to discharge his duty to deliver possession of the subject property to the Bank.
22. A perusal of his counter-affidavit shows that though the SLP filed by him was dismissed on 07.01.2020, he did not attempt to deliver possession of the property to the Bank and wrote a letter Ex.R.2 - dt.10.02.2020 to respondent nos.1 and 2 stating that after SLP was dismissed, the order in the Writ Petition is subsisting, and 'there is no order preventing so far the order of the High Court in the above matter'.
23. Thus, he never came forward to deliver possession of the subject property to the Bank after his SLP was dismissed.
24. No doubt, this Court had directed the respondent nos.1 and 2 to refund the amount which the 3rd respondent had paid them in the auction which had been set aside by the High Court in the order dt.06.11.2019 in Writ Petition No.2455 of 2019. As per the order MSR,J & KL,J ::8:: cc_254_2020 passed by this Court the said refund of amount deposited by the 3rd respondent was to be done immediately after receipt of the balance amount from the petitioners, without interest.
25. Therefore, the respondent nos.1 and 2 ought to have refunded the amount deposited by the 3rd respondent to him without interest either on 14.11.2019 (when the petitioners had deposited as per the direction granted by this Court) or at least on 07.01.2020 (when the SLP No.30278 of 2019 filed by the 3rd respondent in the Supreme Court was dismissed) when they came to know about it on 08.01.2020 when the petitioner informed the 2nd respondent about such dismissal of SLP.
26. The D.D.No.38296674 dt.07.02.2020 was prepared and handed over only on 10.02.2020 to the 3rd respondent. Why the respondent nos.1 and 2 waited to refund the amount deposited by the 3rd respondent till 10.2.2020 i.e., for more than a month is not explained by them.
27. It was incumbent on the 3rd respondent to hand over possession of the property to respondent nos.1 and 2 after the dismissal of the SLP by the Supreme Court on 07.01.2020.
28. When the 3rd respondent did nothing, the 2nd respondent merely addressed (i) a letter dt.09.01.2020 by RPAD to the 3rd respondent requesting for handing over of physical possession, and (ii) another letter on 10.02.2020 again to him enclosing the Demand Draft for MSR,J & KL,J ::9:: cc_254_2020 Rs.80,25,000/- reiterating its request to him to hand over possession and then kept quiet, when the 3rd respondent did not do anything.
29. In our opinion, it was the duty of the respondent nos.1 and 2 to take steps for compliance of the order passed by this Court on 06.11.2019 in Writ Petition No.2455 of 2019 by moving a Contempt application in this Court against the 3rd respondent for his non- compliance after 7.1.2020.
30. When the 3rd respondent received the auction amount deposited by him on 11.02.2020, he too only endorsed on the covering letter dt.10.02.2020 of the Bank denying some statements made by the Bank about his inaction to deliver physical possession of the property to the Bank, but maintained silence about delivery of possession of the property to the Bank.
31. Cleverly, the 3rd respondent wrote a letter Ex.R.4 on 25.02.2020 to respondent nos.1 and 2 stating that he re-delivered possession of the subject property on the date of receiving the Demand Draft from the Bank on 11.01.2020 when he received the Demand Draft.
32. There is no basis for this assertion on the part of the 3rd respondent.
33. The further statement in the last paragraph of Ex.R.4 letter dt.25.02.2020 that respondent nos.1 and 2 should not pressurize him for delivery of possession of the property is clearly an attempt on his MSR,J & KL,J ::10:: cc_254_2020 part to create a false impression that he had delivered possession of the property.
34. The respondent nos.1 and 2 have filed a Panchanama dt.02.03.2020 stating that when its representatives visited the subject property on 02.03.2020, they noticed that the entrance door in the ground floor was locked both from inside and outside, and that they observed that 'Joy and Joy Bar' is using the ground floor by putting tables and chairs, that there was a generator set belonging to the Bar in the ground floor, and when they requested the people to remove the same, they refused to do so. The said Panchanama recorded that the Bank could not take re-possession of the property. Photographs have also been filed in support of the said Panchanama.
35. Instead of reporting the said fact to this Court or to the petitioners, the 2nd respondent wrote a letter dt.04.03.2020 to the 3rd respondent mentioning these facts, and making an allegation that he had given possession to the people running the Bar instead of the Bank, and demanding that he give possession. On the same day, respondent nos.1 and 2 had entered appearance in this contempt Case through counsel Sri A. Krishnam Raju.
36. This case was listed on 06.03.2020, and even on that date the counsel for respondent nos.1 and 2 did not inform the Court of the information which was already in possession of 2nd respondent about a Bar being run in the subject property.
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37. More importantly, when matter was listed next on 26.04.2021 and again on 04.06.2021, no counter-affidavits were filed by respondent nos.1 and 2 informing the Court about this event, though more than 1 year has elapsed.
38. No doubt, on account of COVID-19 pandemic there was a disruption in Court work for a short time and the matter could not be listed.
39. But, admittedly from July, 2020, through virtual mode the Court had been functioning and all counsel were aware of it. So, it was incumbent on respondent nos.1 and 2 to have brought to the notice of the Court what they knew even by 02.03.2020 about third- parties being in possession of the property. During the intervening period from 02.03.2020 till 04.06.2021, the respondent nos.1 and 2 maintained a stony silence and did nothing. They filed counter- affidavits only on 10.06.2021 stating these facts showing their utter disregard to the implementation of the orders passed by this court.
40. We strongly deprecate not only the conduct of 3rd respondent but also the inaction on the part of respondent nos.1 and 2 during this entire period.
41. The stand of respondent no.1 in the Contempt Case is that the 1st respondent had worked as Regional Head of Union Bank of India at Regional Office, Hyderabad from 14.10.2019 to 30.06.2020 and even thereafter; that the Regional Office, Hyderabad at Panjagutta was MSR,J & KL,J ::12:: cc_254_2020 where the 1st respondent was posted, but it was the Regional Office, Hyderabad at Koti which was the Controlling Office in respect of Saifabad Branch of the Bank which was a party in the Writ Petition.
But this, even according to the 1st respondent, happened only from 01.07.2020 and only thereafter the Regional office where the 1st respondent was working ceased to be the Controlling Authority of the Saifabad Branch of the Bank.
So, the 1st respondent cannot wash his hands off the obligation to restore possession to the petitioner after the SLP was dismissed on 07.01.2020.
As a Regional Head of the Bank, it was the duty of the 1st respondent to take the initiative and guide the 2nd respondent and neither of them can escape their culpability for inaction in regard to informing this Court and taking steps to implement the order of this Court in the Writ Petition.
We do not accept the plea of the 1st respondent that he could not have been made a party in the Writ Petition for the aforesaid reasons.
The 1st respondent cannot throw the blame on the 2nd respondent and seek to escape his culpability.
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We also decline to accept the apology tendered by the 1st respondent for the above reasons and also because we are of the opinion that there is no contrition or genuine repentance by him.
42. Coming to the 2nd respondent, except writing letters to the 3rd respondent to deliver possession on 09.01.2020 and another letter on 10.02.2020, he did nothing except blaming the 3rd respondent forgetting his own obligation to seek direction from this Court if there was any impediment for complying with the orders passed by it in the Writ Petition No.2455 of 2019.
When the 3rd respondent was, according to 2nd respondent, avoiding delivery of possession, the 2nd respondent cannot keep quiet and do nothing.
Moreover, no reason is assigned why the 2nd respondent did not inform the counsel Sri A. Krishnam Raju engaged by him in the contempt case while handing over Vakalat signed by him on 04.03.2020, about the events recorded in the Panchanama dt.02.03.2020, so that the said counsel could have informed the same to the Court through an affidavit, when the matter was listed on 06.03.2020. This would have enabled this Court to give appropriate directions for delivery of possession to the petitioners.
The fact that the 2nd respondent got transferred to Bareilly Regional Office in Uttar Pradesh on 12.06.2020 does not absolve him of inaction either prior to that date or after that date. He cannot MSR,J & KL,J ::14:: cc_254_2020 simply plead helplessness for his inaction and seek to escape the consequences of such inaction.
We disagree with his plea that he had discharged his obligation and complied with the orders passed by this Court or there was no willful negligence or wanton delay on his part in delivering property to the petitioners.
We also refuse to accept the unconditional apology tendered by him for the same reason that we did not accept such apology of the 1st respondent.
43. For the aforesaid reasons, we hold that respondent nos.1 to 3 have willfully disobeyed the order dt.06.11.2019 in Writ Petition No.2455 of 2019 and they are liable to be punished for the same.
44. Accordingly, the Contempt Case is allowed; the 3rd respondent is sentenced to suffer 2 months imprisonment and to pay a fine of Rs.2000/- within 4 weeks. The petitioners are directed to deposit subsistence allowance @ Rs.250/- per day within four (04) weeks. The sentence of imprisonment imposed on respondent no.3 is suspended for six (06) weeks.
45. The respondents 1 and 2 are sentenced to fine of Rs.2000/- within four (04) weeks. The Union Bank of India rep. by it's Chairman , Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai - 400 021, Maharashtra, India is directed to initiate disciplinary action against the respondents 1 and 2 for their negligence MSR,J & KL,J ::15:: cc_254_2020 and inaction in implementing the order dt.6.11.2019 in W.P.2455 of 2019.
46. The respondents 1 and 2 shall approach immediately and take the assistance of the Commissioner of Police, Rachakonda Police Commissionerate and the Station House Officer, Medipally, secure possession of the subject property from any third party who is currently in enjoyment/occupation thereof and deliver the same to the petitioners under a panchnama within one week from today.
47. The respondents 1 to 3 shall each pay costs of Rs.20,000/- each to petitioners.
48. As a sequel, miscellaneous petitions pending if any, in this contempt case, shall stand closed.
____________________________ M.S.RAMACHANDRA RAO, J ____________________ K. LAKSHMAN, J Date: 25-06-2021 Note : CC to be furnished in two (2) days to the parties. Copy of this order be sent to :
(i) The Chairman, Union Bank of India, Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai - 400 021, Maharashtra, India;
(ii) The Commissioner of Police, Rachakonda Police
Commissionerate; and
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(iii) Station House Officer, Police Station, Beside the
Grampanchayat Office, Medipally, Medipally Mandal, Medchal District.
B/o.
SVV / NDR