Bombay High Court

National Agricultural Co-Op. ... vs Swarup Group Of Industries And Anr on 8 July, 2021

Bench: A. K. Menon

                  IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     ORDINARY ORIGINAL CIVIL JURISDICTION


                            SHERIFF REPORT NO.35 OF 2021
                                             IN
                           CHAMBER SUMMONS (L) NO.1 OF 2019
                                            WITH
                     CHAMBER SUMMONS (L) NO.902 OF 2019
                                             IN
                    EXECUTION APPLICATION NO.581 OF 2020


National Agricultural Co-op. Marketing
Federation of India (NAFED)                              .. Claimant

         v/s.
Swarup Group of Industries & Ors.                        .. Respondents



Mr. Snehal Shah, Sr. Advocate, a/w Parimal Shroff, D.V. Deokar i/b.
Parimal K. Shroff & Co. for the applicant.

Mr. Girish Godbole a/w Shashipal Shankar & Vivek Agarwal for the
Claimant.

Mr. Rahul Narichania, Sr. Advocate, a/w Ms. Kainaz Irani i/b. Das
Associates for respondent nos.1 & 2.
Mr. D.S.Chaudhari, Deputy Sheriff.

Mr. D.N. Kher, Court Receiver.


                                               CORAM : A. K. MENON, J.

DATED : 8TH JULY, 2021.

(THROUGH VIDEO CONFERENCE)

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P.C. :

1. Mr. Shah on behalf of respondent no.3 supports the report

but seeks extension of time to file a formal reply pursuant to order

dated 23rd June, 2021. Time to file reply is extended upto 12 th July,

2021.

2. This is a report filed by the Sheriff seeking directions for

conducting fresh auction of suit property consisting of 21 units at

Mega Mall, Pahadi Village, Oshiwara, Goregaon (W), Mumbai.

The sale is being effected on the basis of the interim award which

specifies the area of the property comprised of 21 units.

3. On behalf of the judgment debtors, Mr. Narichania, learned

Senior Counsel, seeks to contend that the sale should not proceed

without a clarification of the area of the units is carpet area. In

this behalf, he submits that under Order XXI Rule 66 it is

necessary that the description of the area be correctly shown and

according to him the manner in which the sale proposed to be

conducted does not disclose the area correctly. He has invited my

attention and so has Mr. Godbole, to the interim Award passed by

the Sole Arbitrator on 3rd December, 2008.

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4. The proposed sale was sought to be challenged in Special

Leave Petition no.3521 of 2019 which was filed against the final

judgment dated 23rd January, 2019 in Appeal no.31 of 2019. The

Supreme Court disposed the appeal by clarifying as follows;

"We have been informed that auction sale of the premises is going to take place.

We make it clear that (1) the area of the premises will be as per interim Award dated 03.12.2008, and (2) the reserve price will be 64 crores of rupees. Both these details together with other details are to be published afresh in three leading newspapers tomorrow, the 9 th of February, 2019.

The special leave petition stands disposed of."

5. Thus, the area was correctly intended to be as specified in

the Interim Award. What is sought to be contended today by Mr.

Narichania is that the area of 45,745 sq.ft. is correctly described

in a Deed of Mortgage. My attention has been invited to the Deed

of Mortgage dated 13th June, 2005 between the respondent and

the petitioner wherein respondents are the mortgagors and the

claimants mortgagees. Mr. Narichania invites my attention to the

Second Schedule and the particulars of the agreements listed

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therein. In column 4 of the tabulation which provides the

particulars of original agreements, the heading of the column is

described as "Area/sq.ft./carpet" The total area is shown 45,745.

sq.ft. This leads Mr. Narichania to contend that the description in

the proposed advertisement should clarify that the area is carpet

area. Quite apart from the fact that the order of the Supreme

Court specifies the area will be as per interim Award, different

orders have been passed in other proceedings in execution,

including Chamber Summons (L) no.1 of 2019 in which this

Court has noted that Supreme Court has laid the issue to rest by

referring to the area of the premises as that specified in the

Interim Award. Paragraphs 2 and 3 of the order dated 24 th April,

2019 records the agreement of both parties that the 21 units to be

sold have been identified with reference to the specific provisions

of the interim Award. This order was passed after hearing all

parties.

6. An earlier order passed by this Court on 13 th February,

2019 also records submissions on behalf of the judgment debtors.

In paragraph 4 to the area of the units to be sold are as mentioned

in a valuation report dated 12 th July, 2018 issued by one Amol

Bora and Company. A copy of the report of Amol Bora and

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Company has also been shown to me by the Deputy Sheriff. This

is a valuation report of the property which records the

observations of the valuer and determines the market value. An

annexure to that report sets out the identity of the units but

discloses the total area as 36,847 sq.ft.

7. In my view, it is not necessary to refer to this to the

valuation report since the order of the Supreme Court clearly

identifies the area mentioned in the Interim Award and that is

final. There is no challenge to that aspect of the matter that

brings me to deal with the objections of Mr. Narichania who

invites my attention to clause 1(a) read with clause 1(b) of the

interim Award. According to Mr. Narichania, reference to 45,745

sq.ft. would mean 45,745 sq.ft. carpet area as per the annexure to

the Mortgage Deed and that should be taken as final. The

description of the property should be accordingly specified in the

proposed advertisement. Referring to clause 1(d) of the Interim

Award, Mr. Narichania submits that where the area is built-up

area, the Interim Award clearly describes it as such. He invites my

attention to the description of an area of 3283 sq.ft. in the same

premises which Mr. Narichania submits was not subject matter of

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mortgage. He invites me to hold that reference to "built-up area"

in respect of 3283 sq.ft. and absence of those words in clause 1(a)

would entail that reference to 45,745 sq.ft. in clause 1(a) would

mean it was carpet area. For ease of reference clause 1(a), (b), (c)

and (d) are reproduced below;

"(a) The Respondent shall transfer absolutely to the Claimant the area of 45745 sq.ft. in Mega Mall, Goregaon, Mumbai already mortgaged to the Claimant. The parties agree that its valuation is Rs.68.85 crores.

(b) The Respondent shall further transfer built up area of 3283 sq.ft. in the same premises, (the documents of which have already been handed over to the Claimant by the Respondent), at the agreed valuation of Rs.4.58 crores.

(c) The total area thus transferred to the Claimant shall be 49028 sq.ft. for an agreed value of Rs.73.43 crores.

(d) Upon transfer of the aforesaid area of 49028 sq.ft. in the said premises by the Respondent to the Claimant, the Respondent's liability to the extent of Rs.73.43 crores shall be set off against the admitted liability of the Respondent of Rs.104.25 crores."

8. The area of all units is collectively 49,028 sq.ft. and this is

clearly specified as the area to be transferred to the claimant. This

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area is once again repeated in clause 1(d). If it was to be carpet

area then it would have been so specified. This is a consent

Award, the respondents in the arbitration not being lay persons

would have been conscious of this fact and would have

accordingly submitted to the Interim Consent Award. It is

therefore obvious that one cannot go behind the interim Award

or seek to ascertain the area afresh.

9. Mr. Narichania also relied upon the affidavit in rejoinder

filed by the proprietor of respondent no.1 dated 21 st June, 2021.

Referring to the copy of Articles of Agreement for Sale dated 30 th

November, 2004 between the developers of the Mall and the

respondent no.1, Mr. Narichania invites my attention to the copy

of Index II evidencing registration of a document described as

"Declaration" dated 8th October, 2010 made by respondent no.1

whereby the Articles of Agreement dated 30th November, 2004 is

sought to be submitted for registration. This Index-II at item 3

refers to the area as 4000 sq.ft. carpet. He invites me to hold that

this reference to carpet area in the Index II extract would justify

his clients contention that the entire 45,745 sq.ft. is carpet area.

10. I have heard the submissions of counsel. In my view, the

area disclosed in the Interim Award having been questioned in

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the SLP and having been expressly upheld, the Sheriff's auction

sale would be on the basis of the units described and the area

appearing in the Interim Award. Although it is not necessary to

enter upon the controversy as to whether it is the carpet area or

built-up area, the indications are that it would be a built-up area

since the interim award clearly provides the total area at 49,028

which includes 3823 built-up area. If that were not to be so, the

interim Award would have so specified and the respondent would

not have agreed to submit to such an award. Moreover, reference

to the Deed of Mortgage is not relevant for the present purposes

since this is not a case where a mortgagee is seeking foreclosure.

Reference to the Mortgage Deed in the Interim Award is merely

for identifying the property which had been mortgaged. Thus, in

my view controversy must rest after having considered the order

of the Supreme Court which makes clear reference to the Interim

Award.

11. I am afraid that reference to Index II evidencing registration

of document cannot alone be relied upon for determining area

contemplated in the Interim Award. On a query from the Court,

Mr. Narichania has fairly admitted that Articles of Agreement

itself does not specify the area to be the carpet area or otherwise.

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The Articles of Agreement was sought to be registered along with

a declaration. What is effectively registered being the declaration

and not the agreement, the declaration contains a Schedule and

that schedule specifies the area as 4000 sq.ft. It does not specify

that it is carpet area. Thus, I am of the view that reference in the

Index II to an area of 4000 sq.ft. carpet will not assist the

respondents in any manner. The proposed advertisement need

not mention carpet area.

12. In the circumstances, I pass the following order;

(i) Sheriff report is made absolute in terms of prayer clauses (a)

and (b). Sheriff's proposed schedule of auction submitted

today is approved. Copies shall be provided to the parties.