Lcl Jewellery Ltd.Lko. Thru Amit ... vs Debts Recovery Tribunal Lucknow ...
2011 Latest Caselaw 3371 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

RESERVED
 

 
Writ Petition No. 6272 (MS) of 2010
 

 
LCL Jewellery Ltd.	      			.........	Petitioner
 
Versus
 
Debts Recovery Tribunal and others 	..........	Respondents	
 

 
******
 
Hon'ble Rajiv Sharma, J.

Heard Sri S.M.H. Qazmi, Senior Advocate, assisted by Sri Shalabh Singh, learned Counsel for the petitioner and Sri Anil Tewari, Senior Advocate, assisted by Sri Amit Jaiswal for respondent No. 8 and Mr. N.K. Seth, Senior Advocate, assisted by Sri Sachin Garg, for respondent Nos. 5 and 6 and Sri G.S. Misra for respondent No. 4.

The instant writ petition is illustrative of how a defaulting borrower can use the Court process for frustrating the action initiated by a Bank under Recovery Debts Due to Banks & Financial Institutions Act, 1993.

By means of instant writ petition under Article 226 of the Constitution of India, the petitioner has assailed the order dated 16.9.2010 passed by respondent No.2-Debts Recovery Appellate Tribunal, Allahabad [hereinafter referred to as 'DRAT'], whereby the ad interim order dated 8.12.2009 and 13.4.2010 against confirmation of sale passed by the respondent No.1-Debts Recovery Tribunal, Lucknow [hereinafter referred to as 'DRT'], have been vacated. Further, it has been prayed that the DRT may be directed to dispose of the Appeal No. 12 of 2009 and pending miscellaneous applications made therein.

Bereft of unnecessary details, the facts, which are relevant for the purposes of the disposal of the instant writ petition are that the petitioner is a public limited Company. For the purposes of setting up a mechanized unit for manufacturing Gold Jewelery and selling thereof in the domestic and international markets, the petitioner's company, namely, LCL Jewelery Ltd. entered into a technical collaboration with M/s SISMA, Italy and for part finance of the project, the petitioner submitted a proposal to the Bank of Baroda, Narhi Branch, Lucknow, for sanction of loan in foreign currency for import of plant and machinery and for non-fund facilities like letter of credit, bank guarantees etc. The requisite loan and facilities as requested were sanctioned by the Bank of Baroda. Subsequently, it was found that it would not be feasible for the Bank of Baroda to grant the said foreign currency loan from Narhi (Lucknow) Branch. Accordingly, a sanction letter dated 9.3.1997 was issued by the Bank of Baroda and the formal agreement for the loan facilities was entered into between the Bank of Baroda, London Branch and the petitioner. For the disbursement of loan and extension of facilities for which sanction letter dated 9.5.1997 was issued, the petitioner was required to complete requisite formalities including execution of security document, which were duly executed by the petitioner.

According to the petitioner, the plant and machinery which was financed by the Bank of Baroda, London were dispatched in terms of the Agreement and the same had reached Mumbai port but the consignment could not be cleared because of the dispute about the applicable rate of customs duty and as such, the matter was referred to the Ministry of Finance, Government of India.

The Ministry of Finance, Government of India took a considerable time to clear the objection raised by CONCOR and as such, the logistical agents for the Department of Customs threatened the petitioner to auction the imported plant and machinery for recovery of demurrage. Against the said action, the petitioner approached this Court by filing a writ petition No. 199 (MB) of 2000 praying therein for restraining CONCOR from selling off the plant and machinery. This Court, vide order dated 18.1.2000, as an interim measure, provided that in case the petitioner deposits the demurrage as charged within a fortnight, the goods stored in containers shall not be auctioned and shall be released to the petitioner, if there is no other legal impediment. Further, the deposit so made shall be subject to the further orders of this Court. It appears that the petitioner failed to comply with the directions so issued by this Court in the above referred writ petition.

On account of the aforesaid facts, the said plant and machinery remained in the custody of Customs Department. It also comes out from the record that the petitioner did not make any payment towards the repayment of the loan even after the completion of moratorium period as per terms and conditions of the agreement. Thus, Bank of Baroda made an application to the DRT under Section 19 of Recovery Debts due to Banks and Financial Institutions Act, 1993 [hereinafter referred to as 'Act'] for recovery of the debts from the petitioner. Notice was issued and in response thereof, the petitioner appeared before DRT and raised a preliminary objection that DRT has no territorial jurisdiction to adjudicate the matter and it was only the Court at London, which had the territorial jurisdiction to decide the matter. The DRT, after hearing the parties, vide order dated 31.3.2003, repelled the contention of the petitioner and held that Courts in India at Lucknow had the jurisdiction to try the case.

Against the order dated 31.3.2003, the petitioner approached DRAT but no stay order was granted to him. In the meantime, the DRT proceeded to decide the case on merits and the DRT, after hearing the parties and perusal of the record, allowed the application preferred by the Bank of Baroda and issued the recovery certificate against the petitioner for recovery of a sum of Rs.8,94,06,371/- [Eight Crores Ninety Four Lacs Six Thousand Three Hundred Seventy One] together with pendente lite and future interest at the contractual rate with quarterly rest till the realization of the said amount. It was further held that all the hypothecated machinery and movable and immovable property which was mortgaged shall remain attached in pursuance to the orders of the DRT. Further the petitioner was also restrained from selling of, transferring or alienating the mortgaged /hypothecated properties.

Against the orders dated 31.3.2003 and 30.9.2003, the petitioner approached this Court by filing writ petition No. 3889 (MS) of 2003. This Court, vide order dated 23.10.3003, dismissed the writ petition on the ground of availability of alternative remedy. Consequent to the said order, the petitioner filed an appeal along with an application for dispensing with the condition of pre-deposit under Section 21 of the Act before DRAT. The DRAT, vide order dated 27.7.2004, allowed the said waiver application partly and directed the petitioner to deposit 25% of the dues within a period of one month.

Being not satisfied with the aforesaid order dated 27.7.2004, the petitioner approached this Court at Allahabad by filing Civil Misc. Writ Petition No. 33361 of 2004. This Court at Allahabad, vide judgment and order dated 20.8.2004, disposed of the writ petition with the following observations:

"In the facts of the present case ends of justice be served in directing the appeal filed by the petitioners to be entertained and considered without insisting for any pre-deposit. The order of the Debts Recovery Appellate Tribunal insofar as it does not allow the waiver application in toto cannot be sustained and is set-aside upto that extent. The appeal filed by the petitioners be entertained and considered on merits. The tribunal may also consider the stay application filed by the petitioners in the said appeal. It is made clear that this Court is not expressing any opinion with regard to claim of the petitioners in the stay application or in the appeal pending before the Debts Recovery Appellate Tribunal. The tribunal shall consider the application and appeal on merits and decide the same in accordance with law. The counsel for the petitioners has also undertaken that no adjournment shall be taken by the petitioners in the appeal and the appeal be directed to be decided by the Debts Recovery Appellate Tribunal, expeditiously.

In view of the above, it is observed that the appeal of the petitioners shall be expeditiously decided preferably within a period of three months from the date of production of a certified copy of this order."

At this juncture, it would be relevant to mention that a new development took place as on 19.1.2006, a Joint Compromise Application was filed by the petitioner and Bank of Baroda and on the date itself, DRAT passed a final order disposing of the appeal in terms of the compromise filed before him.

On 26.6.2006, the petitioner filed an application before DRAT for computing time of 180 days from the date of dis-attachment/delivery of machinery to the petitioner for payment of the compromise amount to the Bank of Baroda and for staying further proceedings in consideration of the fact that the decree dated 30.9.2003 of the DRAT as well as the said plant and machinery became sub judice in writ petition No. 5586 (MB) of 2004 filed by CONCOR, to which the Bank of Baroda filed an objection stating therein that the compromise had failed. Accordingly, the DRAT, vide order dated 6.7.2006, rejected the petitioner's application. Subsequently, the petitioner filed a review application for review of its order dated 6.7.2006 on the ground that the DRAT in its order dated 19.1.2006 observed that fresh recovery certificate be issued in case the compromise failed. However, the review application was dismissed in default on 11.9.2006.

Against the order dated 6.7.2006, the petitioner filed an appeal before DRAT, Allahabad but the DRAT, vide order dated 31.7.2006, declined to admit the appeal and as such, the petitioner approached this Court at Allahabad by filing writ petition No. 43216 of 2006, praying therein to issue a direction to the DRAT for admission of the appeal and disposing the interim relief application. This Court at Allahabad, vide order dated 10.8.2006, disposed of the writ petition with the following directions :

"(i) On filing the certified copy of this order before the appellate authority, in the event petitioner's stay application has not been disposed of and that was filed along with the memo of the appeal, it will be the concern of the concerned authority to pass appropriate orders in accordance with law after giving opportunity of hearing to the parties preferably within a period of fifteen days from today.

(ii)It will be also the concern of the appellate authority to take up the matter on the next date and to pass appropriate orders on the appeal itself in the event petitioner co-operate in the hearing and if it is not possible to take up the matter on the next date then the dates in quick succession may be fixed so as to conclude the hearing of the appeal."

Pursuant to the aforesaid order dated 10.8.2006 of this Court, the DRAT admitted the appeal and further as an interim measure, directed the petitioner to deposit Rs.2.50 crore. Petitioner again being aggrieved by the aforesaid order of the DRAT, preferred writ petition No. 53255 of 2006. This Court at Allahabad, vide order dated 13.10.2006, disposed of the writ petition with certain arrangement, which were to be complied with by the petitioner and the Bank.

Due to non-delivery of machinery and for circumstances beyond the control of the petitioner, the Bank of Baroda declared the compromise as having failed and immediately thereafter, the Bank of Baroda moved an application, seeking liberty to proceed in respect of the matter in issue before the DRT/DRAT and also to take punitive action against the petitioners, who have mislead this Court by their conduct and having played with the discretion and indulgence shown by this Court at Allahabad.This Court at Allahabad, vide order dated 10.7.2007, allowed the application moved by the Bank of Baroda; dismissed the writ petition; withdrawing the order dated 13.10.2006; permitted Bank of Baroda to proceed with the matter in the Court of DRAT; and DRAT was also directed to proceed in the matter expeditiously in accordance with law. Subsequently, the appeal filed by the petitioner was withdrawn by the petitioner on 30.7.2007 with liberty to press for review of the order dated 6.7.2006 of the DRT. Thereafter, the petitioner moved an application for recall of the order dated 6.7.2007 before the DRT, which was allowed by the DRT and restored the review application to its original number. However, the review application was dismissed by the DRT vide ex parte order dated 2.11.2007.

Under these circumstances, the matter again reached to the DRAT as the petitioner preferred an appeal against the order dated 2.11.2007. The DRAT vide order dated 12.12.2007, admitted the appeal and stayed the recovery proceedings. Feeling aggrieved, the Bank of Baroda approached this Court at Allahabad by filing writ petition No. 25216 of 2008. This Court at Allahabad, vide order dated 22.5.2008, as an interim measure, stayed the order dated 12.12.2007 as well as the order dated 6.2.2008 and 8.2.2008 and directed the recovery officer to proceed with the recovery.

Pursuant to the order dated 22.5.2008, Recovery Officer proceeded with the matter and issued notice to the petitioner and fixed the matter on 30.7.2008. The petitioner was required to come with an intended buyer to purchase the property over the reserve price of Rs.5.25 crores but the petitioner failed to do so. On 5.5.2009, auction was held but no bidder offered to bid over and above the reserved price and as such, reserve price was reduced to Rs.4.25 crores. Thereafter, petitioner was given another opportunity to come with an intended buyer but again they failed to produce. Consequently, the recovery officer passed an order for proclamation of sale on 5.11.2009, in which, respondent Nos. 5 and 6, namely M/s Viraj Construction Pvt. Ltd. and M/s S. Gupta Buildtech Ltd were declared highest bidder and paid bid amount to the tune of Rs.4.27 crores on 23.9.2009.

On 4.11.2009, petitioner moved an application for recall of the order dated 23.9.2009 and issuance of sale proclamation on the ground that Bank of Baroda had assigned the loan to IFCI on 2.9.2009, which was rejected by the recovery officer in the month of November, 2009. Feeling aggrieved, the petitioner filed an appeal before the DRT, Lucknow without impleading the auction purchaser as party. The DRT, Lucknow stayed the confirmation of sale by the order dated 8.12.2009.

Against the order dated 8.12.2009, auction purchaser i.e. respondent Nos. 5 and 6 moved an application for vacation of the stay order dated 8.12.2009, which was rejected by the DRT, Lucknow by the order dated 13.4.2010. Feeling aggrieved, the respondent Nos. 5 and 6 filed an appeal before the DRAT, Allahabad. The DRAT, Allahabad, vide order dated 16.9.2010, after hearing the parties and perusing the records, vacated the stay order dated 8.12.2009 and further transferred all the cases between the parties to the Presiding Officer, DRT, Allahabad and parties were directed to appear before DRT, Allahabad on 6.10.2010 and DRT, Allahabad was directed to expedite the case and if possible, decide the case on a day-to-day hearing.

Validity of the aforesaid order dated 16.9.2010 has been questioned by the petitioner in the instant writ petition inter alia on the ground that DRAT Allahabad, while passing the impugned order, had preempted, prejudged and prejudiced the outcome of the appeal pending before the competent court I.e. DRT Lucknow. The impugned order has the trappings of final order which is pending before the DRT and the DRT was hearing merits of appeal on a day-to-day basis.

Sri S.M.H. Qazmi, Senior Advocate, appearing on behalf of the petitioner submits that the Bank of Baroda has misled the DRT to pass the judgment and decree dated 30.9.2003 against the petitioner to its own benefit, by distortion and misrepresentation and by suppressing material facts about the identity of the actual lender and concealing evidence about actual disbursement, which information was in their possession, and which should have been disclosed to the DRT. He submits that the Bank of Baroda filed a claim at DRT which was premature and anticipatory, causing immense financial loss to the petitioner by illegally detaining the plant and machinery imported from Italy, at the dry-port at ICD, Container Corporation of India, Tughlakabad, New Delhi. Various other grounds like territorial jurisdiction, conduct of the bank and prejudices caused to the petitioner were also highlighted by the Counsel. It has also been asserted that recovery certificate was issued as the Bank of Baroda gave an impression that it is a money decree and the same impression has also been canvassed before this Court.

Sri Qazmi further submits that the recovery certificate issued by the DRT vide judgment and order dated 30.9.2003 is because of misrepresentation by the Bank of Baroda as a money decree.

Placing reliance upon various cases, namely, Valji Khimji and Co. Versus Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. and others [2005 (145) Comp. Cas 36 (SC)], D.J. Enterprises Ltd. & another Versus I.F.C.I. Ltd. & others [ 2009 (2) D.R.T.C. 749 (DRAT, Delhi)], Sunrise Plaza & Others Versus C.N. Paramasivam & Ors. [II (2008) BC 35 (DRAT)], Counsel for the petitioner argued that respondent Nos. 5 and 6 being the auction bidders/purchasers are claiming confirmation of sale as a matter of right, while no rights have accrued to them till date as auction is yet not complete and no rights occur until the sale is confirmed.

It has also been vehemently argued that the Tribunal committed error of law in vacating the interim order overlooking the fact that the very purpose of filing the appeal would be frustrated. On the strength of the decision rendered in Income-Tax Officer, Cannanore Versus M.K. Mohammad Kunhi [71 ITR 815 (SC)], Gujarat Maritime Board Versus Assistant Commissioner of Income Tax [220 CTR 390 (Guj.)], Dr. Shashi Kant Garg Versus Commissioner of Income-Tax and others [2006 (285) ITR 158 (All.)], and L. Hirday Narain Versus Income-Tax Officer, A Ward, Bareilly [78 ITR 26 SC], he argued that recovery proceedings needs to be stopped in the ends of justice if a bona fide appeal and its issue are still to be adjudicated. It has also been urged that the Tribunal fell into error in not considering that objections were raised much prior to sale and they ought to have been decided before the auction sale took place, therefore, the entire proceedings of auction are vitiated by law.

Refuting the submissions made by Sri. S.M.H. Qazmi, Senior Advocate, appearing on behalf of the petitioner, Sri N.K. Seth, Senior Advocate, appearing on behalf of auction purchaser i.e. respondent Nos. 5 and 6, submits that petitioner has suppressed the material facts and documents from this Court insofar as the petitioner has not annexed the material documents which have been enclosed as Annexure Nos. C-1, C-2, C-3, C-4, C-5, C-6, C-7, C-8, C-9 and C-10 to the counter affidavit dated 13.10.2010 of Sri Alok Kumar Gupta filed on behalf of the respondent Nos. 4 and 5 and further they have also not filed order dated 30.3.2003 passed by the DRT, Lucknow on the point of jurisdiction as well as judgment and order dated 30.9.2003 passed by DRT, Lucknow and judgment and order dated 23.10.2003 passed by this Court in writ petition No. 3889 of 2003. He further submits that the petitioner has also suppressed the sale of machinery. Thus it has been vehemently argued that the petitioner has not come with clean mind and as such he is not entitled to any relief from this Court.

Relying upon the judgment of the Apex Court in the case of S.P. Changalwariya Naidu (dead) by Lrs Versus Jagannath (dead) by Lrs reported in 1994 (1) SCC 1, Sri Seth submits that the petitioner was under legal obligation to file the copies of the aforesaid orders in the writ petition and having withhold those documents, the petitioner would be guilty of playing fraud on the court as well as on the opposite party and his petition is liable to be thrown on this ground alone.

Sri Seth also pointed out that the petitioner has always been involved in misuse of process of law insofar as whatever the orders were passed, same were never complied with and instead either an application for recall of the order or review application was preferred on misconceived grounds. He submits that the writ petition is liable to be dismissed at the threshold on account of non-joinder and mis-joinder of the parties. According to him, Smt. Uma Rastogi wife of Sri Ganga Kant Rastogi and Sri Amit Rastogi, who were the parties before the DRT/DRAT and are also the judgment debtors are necessary parties to the writ petition but they have deliberately been omitted from array of the parties and a new party, namely, Akhilesh Das Gupta- respondent No. 7, who was neither the party before the DRT, Lucknow nor before DRAT, Allahabad has been arrayed in the writ petition for the first time. To strengthen his arguments, reliance has been placed on 2006 (12) SCC 724;Rashmi Mishra vs. M.P.Public Works Commission.

Lastly, Sri Seth has contended that this Court, vide order dated 28.1.2011, after considering the peculiar facts, long litigation and above all that there is a money decree, directed the petitioner to deposit a sum of Rs. One Crore to prove his bona fide and good conduct but instead of complying with the order dated 28.1.2011, raised objection that the Bank of Baroda has not supplied the complete statement of accounts i.e. date-wise entry(s) for each transaction such as the amount of loan disbursed to the petitioner on a particular date; the amount of interest accrued on a daily product basis on the petitioner's amount on specified dates; the cumulative carried-over balance outstanding as on that date; and adjustment of amount deposited by the petitioner, appropriated by FDRs etc. against the principal outstanding on specified/respective dates. Even after supply of aforesaid documents by the Bank of Baroda, the petitioner did not comply with the order dated 28.1.2011, which shows that the petitioner is in habit of flouting the orders passed by this Court as also by the court below by moving one application or the other. Thus, the petitioner is not entitled to any relief and the writ petition is liable to be dismissed on this ground also.

Sri Anil Kumar Tiwari, Senior Advocate, appearing on behalf of respondent No.8-auction purchaser submits that under Section 19 (22) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 [hereinafter referred to as "Act"], once the Presiding Officer of the DRT, Lucknow issued a recovery certificate for recovery against the defendant, the recovery officer is required to recover the amount specified in the certificate and under Section 19 (23) of the Act when the recovery certificate is issued by the Tribunal, the same is sent before the Recovery Officer for its execution, wherein it means that the execution is the continuation of the original proceedings and it is not so that an application to this effect has to be made before the Recovery Officer for the execution of the order passed by the Tribunal, unlike the provisions provided under Order XXI of the Code of Civil Procedure Code, wherein a fresh application for the execution/enforcement of the decree has to be made before the patent court to satisfy/honour the decree passed by the Court.

In view of the aforesaid legal position, Sri Tewari argued that , it is the bounden duty of the recovery officer to recover the amount specified in the recovery certificate and neither the Bank nor any party is required to pursue the recovery certificate.

Lastly, it has been urged by Sri Anil Tewari that even otherwise looking to the past conduct of the petitioner, he has rendered himself dis-entitle for getting any relief in the instant writ petition as the petitioner has once again tried to agitate the questions which have already been decided by this Court in previous writ petitions preferred by the petitioner as well as concealing those orders at the time of filing this writ petition.

Pointing out another defect in the writ petition, it has been argued on behalf of the Bank that the auction took place pursuant to the order dated 22.5.2008 and 22.1.2009 and liberty was granted to the judgment debtor to challenge the validity of the auction but the same has not been assailed. Therefore, in view of the judgment of the Apex Court in Janak Raj Versus Gurdayal Singh [AIR 1967 SC 608], the auction is liable to be confirmed.

As lengthy arguments were advanced by the learned Counsel for the petitioner regarding maintainability of the proceedings on account of territorial jurisdiction to adjudicate the matter, this Court feels to first examine the aforesaid preliminary question. According to the petitioner, all disbursement were made by the Bank of Baroda, London to the suppliers of the equipment i.e. M/S SISMA Spa, Italy and not a single penny was received by the petitioner directly. The Bank of Baroda, London will not be deemed to be resident, domiciled, carrying on business or subject to taxation in India by reason only of the jurisdiction, performance and/or enforcement of any financing document or the Guarantee. It was also added that any judgment procured by the Bank in India is enforceable in India in terms of Section 13 of the Code of Civil Procedure. According to him, it was only Courts at London under English law which were vested with the jurisdiction to decide the controversy, therefore, the Tribunal not only exceeded its jurisdiction but also usurped jurisdiction in contravention of Class 35 (1) of the Facility Agreement. Under these circumstances, it has vehemently argued that the proceedings drawn against the petitioner and the impugned orders are not sustainable in the eyes of law.

A perusal of various orders passed by this Court and the Tribunal shows that similar arguments were advanced before the DRT but the same was rejected by the Tribunal vide its judgment and order dated 31.3.2003. In writ petition No. 3889 of 2003 (MS), this question again cropped up and this Court after examining the relevant material and the legal position passed a detailed order dated 23.10.2003 and observed that Class 35 (1) of the Facility Agreement does not oust the jurisdiction at Lucknow. The relevant paragraphs dealing with the jurisdiction of the Court at Lucknow reads as under :

"....In A.B.C. Laminart (Supra), which has been relied upon and and followed in Angel Insulations, supra, the principle laid down by the Apex Court was that where two or more Courts which can entertain the suit consequent upon a part of the cause of action having arisen there within, if the parties to the contract agreed to vest jurisdiction in such Courts to try the dispute which may arise between the parties, the agreement may not be opposed to public policy, but, any dispute arising shall be subject to the jurisdiction, if exclusive words like, 'exclusive', 'alone' 'only' can be applied under the facts and circumstances of the case. Clause-35(1) of the Facility Agreement does not postulate that the English Courts alone, will have the jurisdiction to the exclusion of those courts where part of cause of action may have arisen. The said clause in the agreement does not oust the jurisdiction at Lucknow where admittedly part of cause of action has arisen.

Where two or more Courts have jurisdiction to try a suit or a proceeding, an agreement between the parties that the dispute between them shall be tried in one such courts may not be contrary to the public policy, but to say that the Court, where part of cause of action has arisen, has no jurisdiction runs contrary to the dictum laid down in the said decisions.

In the case at hand the entire process of documentation was done at Lucknow. The property of the petitioners which was hypothecated to secure the loan is also situated at Lucknow and necessary orders regarding sanction of loan was also made at Lucknow. This being so, part of cause of action arose at Lucknow. This Court, therefore, is of the considered opinion that Clause 35 (1) in the Facility Agreement does not oust the jurisdiction at Lucknow."

In view of the above, it was not open for the petitioner to again raise the same issue which has already been dealt with and has attained the finality. It may be noted that the aforesaid writ petition No. 3889 of 2003 (MS) was dismissed on the ground that against the order dated 31.3.2003 and 30.9.2003 passed by the DRT, appeal is maintainable under the Act.

The next question to be examined is as to whether the petitioner has put forward all the facts before the court without concealing or suppressing anything while seeking relief.

In Prestige Lights Ltd. v. State Bank of India : (2007) 8 SCC 449, the Apex Court held that in exercising power under Article 226 of the Constitution of India, the High Court is not just a court of law, but is also a court of equity and a person who invokes the High Court's jurisdiction under Article 226 of the Constitution is duty bound to place all the facts before the court without any reservation. If there is suppression of material facts or twisted facts have been placed before the High Court then it will be fully justified in refusing to entertain petition filed under Article 226 of the Constitution. The Apex Court Court referred to the judgment of Scrutton, LJ. in R v. Kensington Income Tax Commissioners, and observed:

"In exercising jurisdiction under Article 226 of the Constitution, the High Court will always keep in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise-guilty of misleading the Court, then the Court may dismiss the action without adjudicating the matter on merits. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of Court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible."

In Welcome Hotel and Ors. v. State of Andhra Pradesh and Ors. etc. AIR 1983 SC 1015, the Apex Court has held that a party which has mislead the Court in passing an order in its favour, is not entitled to be heard on the merits of the case.

In K.D. Sharma v. Steel Authority of India Ltd. and Ors.,[2008 (12) SCC 481] the Apex Court has held that the jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary and it is imperative that the petitioner approaching the Writ Court must come with clean hands and put forward all the facts before the Court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the Court, his petition may be dismissed at the threshold without considering the merits of the claim. The same rule was reiterated in G. Jayshree and Ors. v. Bhagwandas S. Patel and Ors.: (2009) 3 SCC 141.

In a recent decision of Dalip Singh Versus State of Uttar Pradesh and others [(2010) 2 Supreme Court Cases 114], the Apex Court has held that the making of patently false statement on oath by the appellant tenure-holders is amazing. The appellant's efforts to mislead the authorities and the courts got transmitted through three generations and the conduct of the appellant and his son to mislead the High Court and the Supreme Court cannot, but treated as reprehensible.

On perusal of the records, it reflects that contention raised by Sri N.K. Seth with regards to concealment and suppressing the material facts are correct insofar as the petitioner has not filed the order dated 24.12.2007 passed by the DRT, Lucknow in Appeal No. 20 of 2007 canceling the proclamation of sale and directing the recovery officer to proceed a fresh;the petitioner has not mentioned about the order dated 31.3.2003 passed by DRT and the order dated 23.10.2003 passed by this Court. Petitioner has also not filed the order dated 30.3.2003 passed by the DRT, Lucknow on the point of jurisdiction as well as the judgment and order dated 30.9.2003 passed by DRT Lucknow and judgment and order dated 23.10.2003 passed by this Court in writ petition No. 3889 of 2003. Thus, there is no candid disclosure of relevant and material facts and the petitioner is guilty of misleading the court.

This case has a long history of litigation. Number of orders have been passed by various Courts but end of the road has yet not reached. As averred above, the petitioner had applied for loan in the year 1997 from Bank of Baroda. As the petitioner failed to pay any of the installments as per agreement, the Bank of Baroda moved to the DRT by making an application for recovery. It is also to be noted that when the Custom Authorities were going to auction the goods, the petitioner approached this Court by filing writ petition 199 (MB) of 2000. This Court, which is the first order in judicial proceeding, provided that goods stored in the containers shall not be auctioned and shall be released to the petitioner, provided petitioner deposits demurrage charges within the time prescribed by the Court.

Thereafter, various other orders were passed in the pending litigation and during pendency of the proceeding, good sense prevailed upon the parties as the petitioner and Bank of Baroda presented a compromise application in Appeal No. R-362 of 2003, praying therein that the said appeal may be disposed of in the light of the terms and conditions of the compromise, as mentioned above. One of the condition of the compromise was that the petitioner will deposit the offered amount of Rs.533 lacs within 180 days from the date of acceptance of sanction. The DRAT disposed of the appeal in terms of the compromise vide order dated 19.1.2006, which reads as under :

"Camp Court at Lucknow on 19.01.2006

At long last the parties could come to a settlement of the dispute and a joint compromise petition has been filed duly signed by the parties and countersigned by the Counsel (as Mr. R.D. Agarwal was absent due to inconvenience, in his place another counsel Mr. Pramod Kumar Tewari has filed Vakalatnama and countersigned the joint compromise petition). The appellants are present in person and the terms and conditions of the compromise have been verified by them and the same is accepted. The joint compromise petition is marked as 'X'. The appeal is disposed of on the basis of a joint compromise petition, which shall be a part of the recovery certificate to be issued by the original Tribunal. If the terms are not being satisfied within the time frame made as per terms and conditions of the joint compromise petition. The order of this Appellate Tribunal of disposal of the appeal on the basis of the joint compromise being arrived at shall replace the original order/judgment of the Tribunal...."

It appears that in terms of the compromise, payment was not made and the matter again reached to the Tribunal, thereafter, the appellate Tribunal and ultimately to this Court through writ petition No. 53255 (MS) of 2006, which was disposed of vide order dated 13.10.2006, providing therein that the recovery proceedings by taking coercive process shall remain stayed, which will revive only on there being any default in compliance of any of the terms as contained in that order. It would be useful to reproduce the relevant portion of the order dated 13.10.2006, which reads as under :

"....In view of the aforesaid petitioner has come to this court by mainly pleading the fact that as attachment was not immediately lifted after the order of the D.R.A.T. dated 19.1.06 he could not get reasonable time to get plant and machinery utilized to get the huge money arranged for payment to the respondent bank and therefore reasonable time if is allowed petitioner may be able to honour the term of compromise.

To the aforesaid, on time having been given, respondent bank has filed an affidavit as noticed above and in para 20 there is a clear statement that there is no attachment of the plant and machinery by the D.R.T.

Sri Agarwal, learned Advocate who appeared in support of the writ petition submitted that there may be some confusion on the part of the authority/petitioner in respect to attachment/its withdrawal but as this has been throughout stand of the petitioner before the D.R.T. And D.R.A.T. in respect to imposition of attachment on account of which petitioner not being in a position to get the benefit of the provision as made in the compromise about withdrawal of the attachment if three months time is allowed, Sri Amit Rastogi, Managing Director who is present before this court undertakes to pay entire amount in terms of the compromise dated 19.1.2006.

To the aforesaid, Sri Singh submits that to show bonafidies petitioner is to deposit reasonable amount immediately and if it is undertaken before this court that no further application will be moved for the purpose before any forum and within the time so allowed petitioner will deposit the entire money so agreed then this court may consider petitioner submission, exercising equity jurisdiction.

In view of the aforesaid this court is to balance the equity between the parties.

Submission of Sri Agrawal is that a Fixed Deposit to a tune of Rs.40,00 lack is lying with the respondent bank which on having received interest also may not be less than about 45.00 lakh, can be very well utilized by the respondent bank and at the same time an amount of Rs.20,00 lakh can be deposited by the petitioner immediately. It is pointed out that as, on today, petitioner is to incur expenses running into about a crore in getting various exercises for getting the company on line and thereafter by making arrangement of remaining amount petitioner is to deposit full and final amount in terms of the compromise order within three months which can be said to be just and reasonable.

In view of the aforesaid, this Court need not go into various other aspects as this appears to be quite fair and equitable. If respondent is permitted to recover entire amount by coercive process then that may cause irreparable and irreversible injury to the petitioner and at the same time respondent bank may not be very much beneficiary and by accepting aforesaid submission of Sri Agarwal, respondent bank may not be looser for the simple reason that the reasonable amount, respondent bank is to get immediately and entire balance amount within a period of three months as undertaken by the petitioner's side.

Thus on consideration of the aforesaid this Court disposes of this petition by giving following directions -

1.Respondent bank is to utilize the amount of fixed deposit of petitioner as stated before this Court.

2.Petitioner is to deposit an amount of Rs. 20.00 lakh within one month from today directly with the respondent Bank.

3.Irrespective of any dispute/ controversy about lifting of attachment in terms of the compromise/order dated 19.1.2006 as it has been admitted by the respondent bank in para 20 of the short counter affidavit, the position is being made clear that there will be no attachment in respect to the plant and machinery henceforth.

4.Entire remaining amount is to be finally paid by the petitioner to the respondent bank within three months from today.

In view of the aforesaid directions the recovery proceedings by taking coercive process will remain stayed and that can only revive on there being default in compliance of any of the terms as contained in this order in respect to which petitioner states that he will not move any application before any forum. It is made clear that defiance of this order will be treated to be violation of the order of this court and the person who has given undertaking before this Court may be suitably dealt with on filing application by the respondent bank.

In view of the aforesaid arrangement, proceedings before the DRT and DRAT stands concluded and this can only be revived under directions of this Court, if occasions so arises

With the aforesaid, this petition stands disposed of."

Pursuant to the order of this Court dated 13.10.2006, the petitioner deposited Rs. 20 lacs but the remaining amount as provided in arrangement, was not paid by the petitioners to the respondent-Bank on various excuses as such an application (Civil Misc. Application No. 64944 of 2007) was moved by the Bank seeking permission to proceed in respect to the matter in issue before the DRT/DRAT and also to take punitive action against the petitioner, who have mislead this Court by their conduct and have tried to play with the discretion as shown by this Court. A single Judge of this Court, namely, Hon'ble S.K.Singh, J. who was seized with the matter, after hearing the parties allowed the aforesaid application, withdrew the order dated 13.10.2006 and dismissed the writ petition vide order dated 10.7.2007. The relevant portion of the order dated 10.7.2007 reads as under:-

".... In the background of the facts stated above this is clear that this Court granted enough indulgence and about nine months has already passed and therefore, now keeping in mind all the facts, this court has to withdraw its order dated 13.10.2006 so that the proceedings before the D.R.A.T. Which were permitted to be closed in view of the arrangements recorded by this Court in view of the consent given by the counsel for the petitioners is to start.

Accordingly, application moved by the respondents bank to permit the proceedings to proceed in the court of DRAT is hereby allowed. On the facts, this Court do not propose to take any further action against the petitioners and that will be a consolation for the petitioners for the time being.

As a result of allowing the application moved by the respondent, the order dated 13.10.2006 stands withdrawn and writ petition stands dismissed. D.R.A.T. is directed to proceed in the matter with all expedition in accordance with law."

In subsequent development, the petitioner withdrew the Appeal No.R-694, preferred against the order dated 6.7.2006 with the liberty to press review petition before the DRT. The Review Petition preferred against the order dated 6.7.2006 was dismissed by the DRT vide order dated 2.11.2007 and as such, this order was assailed by the petitioner by filing an appeal. As the DRT stayed the recovery proceedings, vide order dated 12.12.2007, the Bank of Baroda approached this Court at Allahabad by filing a writ petition No.25216 of 2008. In this writ petition, this Court vide order dated 22.5.2008, stayed the orders passed by the Appellate Tribunal dated 12.12.2007 and directed that the Recovery Officer may proceed with the recovery. The relevant extract of the order is reproduced herein:-

"....Until further orders, the effect and operation of the impugned orders dated 12.12.2007 (annexure-12 to the writ petition) as well as the order dated 6.2.2008 and 8.2.2008 (Annexure 13 to the writ petition) passed by respondent no.1 in appeal No. R-888 of 2007 LIC Jewellery Limited and another Versus Bank of Baroda and others, MA No.89 of 2007-RA No.6 of 2006, shall remain stayed. The Recovery Officer may proceed with the recovery."

It may be noted that when all these proceedings were going on, the Bank of Baroda, on 2.9.2009 executed a deed of assignment in favour of M/s IFCI Limited (opposite party No.8) whereby all the rights, titles or interest in the financing documents together with security interest in the mortgage property of such loans were assigned to M/s IFCI Limited.

At this juncture, it is relevant to point out that the Tribunal passed orders requiring the petitioner to produce any prospective/intended buyer to purchase the mortgage property but the petitioner failed to do so and as such, the Recovery Officer, Debt Recovery Tribunal passed an order for proclamation of sale whereby the mortgage property was put to auction.

On 23.9.2009, the Recovery Officer issued order for proclamation of sale of immovable property bearing plot No.55, measuring about 30000 sq. ft. The opposite party Nos.5 and 6 were declared successful bidders in the auction proceedings. In interregnum, the petitioner filed an application for recall of the order of proclamation of sale but the same was rejected and as such, the petitioner filed an appeal bearing No.12/2009 under Section 30 of the Act before the learned DRT. Vide order dated 8.12.2009, the DRT stayed the confirmation of sale. When the opposite parties came to know about the pendency of appeal, they moved an application for impleadment under Section 19 (25) of the Act read with Order 1 Rule 10 CPC and Section 155, 151 of the CPC. On 8.2.2010, these applications were allowed by the DRT. However, the application for vacation of interim order moved by the opposite party nos.5 and 6 were rejected by the DRT by the order dated 13.4.2010.

Aggrieved by the aforesaid order, the opposite party Nos.5 and 6, i.e. M/s Viraj Constructions (P) Ltd. and M/s S. Gupta Buildtech Ltd. preferred an appeal before the DRT, Allahabad which was registered as Appeal No. R-1197/2010. This appeal was allowed by the DRT vide its judgment and order dated 16.9.2010, which is impugned in the instant writ petition.

As averred above, Counsel for the petitioner has stated that the Tribunal while allowing the appeal failed to consider the material points raised before him regarding maintainability of the appeal as they are third party impleader, as they are yet not the auction purchasers and would become auction purchasers only after confirmation of sale. The Tribunal has also failed to consider that M/s IFCI Limited, the alleged assignee has not been impleaded. In the assignment deed, it is mentioned that it is subject to the decision taken by the Apex Court in ICICI Bank Versus Official Liquidator of A.P.S. STAR Indus Limited. It was also argued that the reserve price was reduced arbitrarily just to give advantage to the bidders, i.e. opposite party nos.5 and 6. On behalf of the respondents, it has been argued that there is no illegality in the impugned order for the reasons disclosed in preceding paragraphs

The assertion of the petitioner regarding assignment is wholly misconceived in view of the final judgment rendered by the Apex Court in ICICI Bank Versus Official Liquidator (supra), the petitioner being a borrower has no jurisdiction, right or authority to challenge the transfer of account/asset by the Bank of Baroda to IFCI Ltd. While deciding SLP (Civil) No. 2240 of 2009 [ICICI Bank Ltd. Versus Official Liquidator of APS Star Industries Ltd. & others] along with other connected SLPs, the Apex Court, in paras 48, 49 and 50, has held that the borrower, who had committed default, on account whereof his account has become NPA, is not entitled to participate in the transfer of account receivable from one bank to the other. Thus, the petitioner as borrower has no jurisdiction, right or authority to challenge the transfer of account/asset by the Bank of Baroda to IFCI Ltd.

Counsel for the petitioner while questioning the assignment has also argued that the Bank of Baroda cannot prosecute the recovery proceedings any more after the assignment in favour of M/s IFCI Ltd. On the other hand, Respondent Bank has submitted that assignment is an internal matter between the Bank and M/s IFCI and the borrower has no jurisdiction, right or authority to question it.

It is surprising that on one hand, the petitioner is disputing the rights of Bank of Baroda to recover its dues and on the other hand, questioning the assignment, petitioner himself is in dwindle. An account receivable becomes an NPA because of the default committed by the borrower, who fails to repay. In other words, when the borrower violates his obligation to repay the debts. It may be noted that in APS Star Industries Ltd. (supra), the Apex Court while examining the provisions of B.R. Act came to the conclusion that it cannot be said that assignment of debts/NPAs is impermissible under the 1949 Act. The assignment of a debt is not considered to be contrary to public policy solely on the ground that the assignee has purchased the debt for a considerably discounted price or because that price is only payable after a period of credit. In my opinion the Bank of Baroda being a Certificate holder bank has a right to proceed with its execution. The assignee-Bank by reason of assignment does not loses his right to continue the proceedings. To put it differently, in the event, even if the assignee does not choose to become party, the assignee-Bank is bound by the decision against the assignor.

As regard to auction, it may be mentioned that sanctity of public auction should be upheld and interference with the sale held at the auction, only because some party wishes to give higher offer, is not in the interest of sanctity of public auction, otherwise such process may go on endlessly. Here, it would be relevant to mention that the Executing Court must take the decree according to its tenor and it cannot travel beyond its scope. Therefore, I find force in the contention of Counsel for the Bank that Recovery Officer has committed no irregularity.

As regards to the right of auction-purchaser, in my opinion, the Tribunal has committed no error as it is an established principle of law that auction-purchaser's interest in the auctioned property continues to be protected. Respondents Nos. 5 and 6 herein are the auction purchasers and they can be termed as "agreed person" on account of interim order having been passed by the Tribunal as due to operation of the interim order, their rights were adversely affected.

A prerogative remedy is not a matter of course. While exercising extraordinary power a writ court would certainly bear in mind the conduct of the party who invokes the jurisdiction of the Court. At this juncture, it may be mentioned that this Court is conscious of the fact that during pendency of an appeal, the operation of an order having serious civil consequences must be suspended but at the same time, conduct of a party before the Court is also to be scrutinized and in the event the court is not satisfied with the conduct, it may dismiss the writ petition without examining other aspect of the matter.

It is settled law that one should approach the Court with a clean heart and clean mind to get a relief and one who does not come with a clean heart and clean mind dis-entitles himself from getting any relief from the Court. The petitioner was bound to honour the orders and judgment passed by the court of law. In the instant case, the respondents have highlighted number of documents, referred to above, which were deliberately concealed to mislead this Court and I am not satisfied with the explanation so tendered by the petitioner. Even otherwise the petitioner has also dis-entitled himself from getting any relief from this Court in view of the fact that on number of earlier occasions, this Court granted indulgence to the petitioner but the orders were not complied with insofar as this Court, vide order dated 28.1.2011, granted time to deposit Rs. 1 Crore to prove his bona fide and good conduct but instead of making compliance, petitioner raised objection that statement of account has not been provided to the petitioner and as such, this Court directed the Bank to furnish the statement of account to the petitioner, which was made available to him. Surprisingly, even thereafter the petitioner did not comply with the order, referred to above. Instead, on 17.3.2001, a statement was made on behalf of the petitioner that he is not able to arrange ` One Crore till date. However, he has prepared a cheque of ` 1 lakh and ` 20 lakhs for the month of April, 2011 and as such, further time may be granted for depositing the balance of the amount. Despite all these opportunities having been given to the petitioner by this Court, he failed to comply the order dated 28.1.2011. At the cost of repetition, here it is again stated that earlier also the petitioner did not honour the compromise, which was reduced in writing and consequent to that the appeal before the Tribunal was disposed of in terms of the compromise deed. Several other orders were passed by this Court at Allahabad as also by the DRAT/DRT but the petitioner failed to comply the same in its letter and spirit. It is a well-settled law that if a party fails to comply the orders of the Court, he is not entitled for any relief from the Court.

From the facts narrated above, it is imminently clear that the conduct of the petitioner is not over board. Needless to say that a party should not suppress any material fact, but also should not take recourse to the legal proceedings over and over again which amounts to abuse of the process of law. He failed to comply number of orders passed in his favour, which shows the contumacious character of the petitioner and as such I am not inclined to exercise discretionary writ jurisdiction. For this reason also, the writ petition is liable to be dismissed. .

Apart from above, the most important fact is that the Parliament enacted the Act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of banks and financial institutions.

Assertion of the petitioner that the respondent Bank had not treated them fairly sans credibility can be of no avail as it is the petitioner who had failed to repay the outstanding dues. Not only this, after various orders and compromise deed, petitioner failed to fulfill his commitment and delayed the repayment of loan. The Court cannot loose sight of the fact that the Bank is a trustee of public funds and as such, it cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the Bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the Bank is not only entitled to recover the amount by adopting all legally permissible methods. The Parliament enacted the Act, 1993 because it was found that legal mechanism available till then was wholly insufficient for recovery of outstanding dues of Banks and financial institutions. The petitioner while initiating the litigation must be conscious of the fact that it will not be possible for him to avoid the inevitable for a long time.

It is also relevant to mention that in D.P. Maheshwari Versus Delhi Administration and others [(1993) 4 Supreme Court Cases 293], the Hon'ble Supreme Court has observed that the nature of jurisdiction under Article 226 is supervisory and it is not open for the Court to exercise jurisdiction of the Trial Court or the Tribunals. Moreover, the Court issuing a writ of certiorari acts in exercise of a supervisory and not appellate jurisdiction. One consequence of this is that the Court will not review the findings of fact reached by the inferior Court or Tribunal, even if they be erroneous.

For the reasons aforesaid, I find no infirmity or illegality in the impugned orders and the writ petition is liable to be dismissed.

The writ petition is dismissed. Costs easy.

2nd August, 2011					[Rajiv Sharma, J.]