New Bank Of India And Ors. vs Faridabad Manufacturing (Engg. ...
1993 Latest Caselaw 689 Del

JUDGMENT

Sat Pal, J.

(1) This is an application filed on behalf of M/s. Khandelwal & Company Private Limited and its two directors S/Shri Amir Chand Jain and Shubh Chand Jain under section 151 of the Code of Civil Procedure (hereinafter referred to as 'the Code') and in this application the applicants have prayed for recalling/modifying the order dated 28th April, 1992 for opening and closing of the locks put by the local commissioner at plot No.68, Industrial Area. Sector-6, Faridabad (Haryana) and for direction to the plaintiff bank to pay damages for use and occupation amounting to Rs.38,256.00 of the said premises before the goods and articles lying in the said premises are removed. The application has been opposed on behalf of the plaintiff bank in its reply to the application.

(2) Briefly stated, the fads of the case are that the plaintiff bank has filed mortgage suit for recovery of Rs. 1.11,32,694.98 under Order 34 of the Code against M/s. Faridabad Manufacturing (Engineering Producls) Private Limited and others. In the plaint, inter alia, it has been slated that the defendants had created an equitable mortgage/charge by depositing the title deed of the properly bearing Municipal No.6926/A situated at Roshanara (Chandrawal) Road. Delhi in order to secure the accounts. In view of this averment the plaintiff bank has filed the present suit in this Court.

(3) Along with the plaint the plaintiff bank had filed an application bearing I.A. No.5114/ 83 under Order 23 Rule 5, Order 40 Rule 1 read with Section 151 of the Code for appointment of a receiver to take charge of the hypothecated goods and pledged goods or to appoint a local commissioner to prepare an inventory of the stocks lying at the factory premises at Industrial Plot No.68, Sector-6, Faridabad (Haryana) and the goods also lying at plot No.91 of M/s. G.S. Kochhar & Company, Sector-6, Faridabad (Haryana). In this application it was also prayed that the plaintiff bank be further allowed to sell all the hypothecated and pledged goods by private sale or by calling quotations. This application came up for hearing on 7th December, 1983 and on that date Shri B.R. Prashar, advocate, was appointed as local commissioner for going on the spot and making inventory of the stocks and goods both hypothecated and pledged and machinery and plant lying at the factory premises mentioned hereinabove. It was also stated in the order that in case the local commissioner found the premises locked during the working hours, he would have the power to break open the lock arid complete the job and then put fresh locks. On the same date the defendant were also restrained from selling, alienating or in any way disposing of or parting with the aforesaid properties. In terms of the order dated 25th January. 1984 passed by this Court the local commissioner was directed to keep the keys of the locks mentioned hereinabove with him till further orders because it might be possible to pass an order in respect of those goods when the defendants put in appearance or were served. Pursuant to the said order the keys of the premises at Faridabad (Haryana) were kept by the local commissioner. It may, however, be pointed out that though the defendants put in their appearance through counsel on 23rd April, 1984, no further orders in respect of keeping the keys by the local commissioner were passed.

(4) As per the allegations made in this application the Court of Principal Civil Judge, Bangalore had passed an ex parte decree in favor of Bharat Freight Werner Private Limited and against the defendant company in the sum of Rs. 11,604.00 plus 6 per cent interest with effect from 9th November, 1977 till the dale of realisation along with costs of Rs. 1209.25. It has then been stated that the decree holder sought the execution of the said decree in the Court of Senior Sub Judge, Faridabad (Haryana) and this Court attached the property of the defendant company bearing No.68, Sector-6, Faridabad (Haryana) and finally ordered the auction of the said property. In the auction, the applicant M/s. Khandelwal & Company, Private Limited was a successful auction purchaser and a sale certificate dated 9th April, 1985 was issued by the Court of Senior Sub Judge, Faridabad under Order Xxi Rule 24 of the Code with all rights, title and interest appurtenant thereto in the aforesaid plot and the building existing thereon. That the applicant company moved the Court of Senior Sub Judge, Faridabad for obtaining orders for the purpose of taking physical possession of the said property and on 19th April, 1985 the Senior Sub Judge appointed Shri Krishan Murari Khandelwal. the then director of the applicant company as the superdars of all the goods and articles lying at Industrial Plot No.68, Sector-6, Faridabad (Haryana). It is then stated that after Shri Krishan Murari Khandelwal resigned from the directorship of the applicant company, the applicants No.2 and 3, namely, S/Shri Amir Chand Jain and Shubh Chand Jain were appointed as superdars in place of Shri Krishan Murari Khandelwal.

(5) It has been stated in this application that on 12th May, 1992 the applicants received a letter from the defendant company informing the applicants that this Court vide orders passed on 28th April, 1992 in I.A.No.9807/91 has directed Shri B.R.Prashar, advocate, the local commissioner to visit the premises mentioned hereinabove and after unlocking the locks put by the local commissioner, prepare an inventory of the stocks lying there and give an inspection of the goods to the prospective buyers, if any, and thereafter put his locks on the said premises. On receipt of this letter the present application has been filed on behalf of the applicants.

(6) This application came up for hearing on 20th May, 1992 and on that date the non- applicants were given two weeks time to file the reply. The learned counsel for the applicants also informed the Court that the local commissioner appointed by this Court would be allowed to inspect the goods and to prepare the inventory and the applicants would have no objection to the prospective buyers having a look at the articles lying in the premises. He, however, submitted that the applicants should be allowed to lock the premises again. By way of interim arrangement the suggestion of the learned counsel for the applicants was accepted and it was ordered that after the local commissioner had prepared the inventory and given inspection to the prospective buyers of the articles lying at the premises, the applicants shall be entitled to' re-lock the premises. The application was, however, directed to be listed for arguments on 8th July, 1992. Finally the arguments on this application were heard on 29th October, 1st November, 3rd November, 4th November, 9th November, 10th November and 16th November, 1993.

(7) During the pendency of this application, an application being I A 4805/93 was filed on behalf of defendant No.1 and in this application it was stated that the goods continued to be stored in the premises of the third parties who had either got eviction orders/or were claiming compensation or damages/demurrage/storage charges for the goods and it was prayed that the goods be sold as per prayer made in the earlier application being Ia 2383/ 91. This application came up for hearing on 28th May, 1993 and on that date the local commissioner, who was present in the Court, was directed to submit a report which should indicate the state of goods and the space which was required to store them at a new place. The local commissioner was also directed to make further arrnagement, if necessary, to store the goods at a new place. On that date the learned counsel for the defendant also submitted that he had received offers for the sale of the hypothecated and pledged goods for a sum of Rs.30 lakhs and the learned counsel for the plaintiff bank was directed to find out from the plaintiff bank whether any better offer was available so that the goods could be sold without further delay.

(8) On 19th August, 1993 the local commissioner submitted in the Court that an advertisement regarding the sale of the goods had already been given and pursuant to that advertisement prospective buyers had fixed the time for 4th September, 1993 to inspect the goods and make their offers. On 15th September, 1993. three offers were taken on record and the parties who had given these offers were directed to bring a bank draft for Rs.5 lakhs in the name of the Registrar of this Court on the next dale of hearing and it was made clear that only the offer of those persons who would bring the bank draft of Rs. 5 lakhs would be considered. On 1st October, 1993 the local commissioner submitted in the Court that he had also received two offers directly and he was directed to produce those offers on the next date of hearing. On 5th October, 1993 it was pointed out that two offers each accompanied by a bank draft of Rs.5 lakhs had been received and two offers were not accompanied by any bank draft. Since the case was not shown in the regular cause list on that date, the case was adjourned to 6th October, 1993 and the time for submission of offers was also extended by 6th October, 1993. On 6th October, 1993 the sealed covers containing offers were opened and the offer of M/s. New Metal & Ferrow Alloys being of the maximum amount was accepted. The Registry was directed to deposit the amount of bank draft of Rs. 5 lakhs submitted by the said concern in the shape of Fixed Deposit Receipt for a period of three months.

(9) It may also be pointed out here that applicants filed a review application being Ra 16/93 on 13th October, 1993 and in this application it was prayed that the order dated 6th October, 1993 regarding acceptance of the offer be recalled. Another review application Ra 17/93 was also filed on behalf of the applicants wherein it was prayed that the operation of the order dated 6th October, 1993 be stayed till the disposal of the review application Ra 16/93. Reply to the application Ra 16/93 has been filed on behalf of the plaintiff bank.

(10) Mr. Dhir, the learned counsel appearing on behalf of the applicants drew my attention to section 16 of the Code and submitted that a suit can be instituted in the Court within the local limits of whose jurisdiction the property is situated. He submitted that the property in the present case i.e. industrial plot No.68, Sector-6, Faridabad is situated in the State of Haryana and as such this Court had no jurisdiction to entertain and try this suit. He further submitted that a decree passed by a Court without jurisdiction is a nullity and its validity can be challenged whenever it is sought to be enforced or relied upon. He, therefore, contended that the order passed by this Court directing the sale of the hypothecated goods lying at the premises mentioned hereinabove was without jurisdiction in and the applicants cannot be directed to permit the buyer to remove the said goods. In support of this contention the learned counsel relied upon two judgments of the Supreme Court Kiran Singh and others vs. Chaman Paswan and others, and Sunder Dassvs. Ram Prakash, .

(11) The learned counsel further submitted that in terms of the orders dated 5th and 25th January, 1984 the local commissioner was permitted to keep the keys of the locks with him till further orders and keeping of keys does not a mount to possession by the p73 local commissioner. In this connection he drew my attention to section 75(f) and Orders 26 Rule 10-C and Order 39 Rules 6 and 7 of the Code and submitted that the Court can issue a commission, inter alia, to conduct sale of property which is subject to speedy and natural decay and which is in the custody of the Court but in the present case neither this Court has jurisdiction over the property, nor the Court had appointed any receiver in terms of Order 40 Rule 1 and as such the property was not in the custody of the Court. He further submitted that the property involved in this case is steel which was not subject to speedy and natural decay. He, therefore, contended that the order passed by this Court directing the sale of the hypothecated goods was illegal and without jurisdiction.

(12) The learned counsel further submitted that the applicants company had purchased the property and had taken over the possession in terms of the orders passed by the Court of Senior Sub Judge, Faridabad. He also submitted that applicants 2 and 3 were appointed superdars by the said Court and at the time when the applicants had approached the Court of Senior Sub Judge, Faridabad to take over the possession, they were not aware of any order passed by this Court with regard to the appointment of Mr. B.R. Prashar, advocate, as a receiver. He further contended that in terms of Sections 70 and 170 of the Indian Contract Act, the applicants have a right to retain the goods in question until they receive due remuneration for the services they have rendered for providing storing space in respect of the said goods. He also submitted that the storage charges for the period 9th April, 1985 to 8th May, 1992 come to Rs.38,25,000.00 and the applicants claim further damages for use and occupation of the premises at the rate of Rs.5/ - per square foot with effect from 9th May, 1992 till the date on which the goods are removed,

(13) Mr. Bhel, the learned counsel appearing on behalf of defendant No. 1 submitted that though the said defendant No. 1' had approached this Court for the sale of the' mortgaged goods lying at the above mentioned premises, yet this was with out prejudice to the contentions of the said defendant on the question of jurisdiction which was raised by it in I.A 1083/85.

(14) Mr. Dhall, the learned counsel appearing on behalf of the plaintiff bank drew my attention to section 17 of the Code and submitted that where the suit is in respect of property situated within the jurisdiction of different Courts, the suit may be instituted in any Court within the local limits of whose jurisdiction any portion of the property is situated. He also drew my attention to para 16 of the plaint which shows that one of the suit property bearing No.6926/A, Roshanara (Chandrawal) Road, Delhi is situated in the National Capital Territory of Delhi. He. therefore, contended that this Court has jurisdiction to entertain and try this suit.

(15) The learned counsel further submitted that in terms of the orders dated 7th December, 1983 and 5th and 25th January, 1984 Mr. Prashar, who was appointed as local commissioner was permitted to break open the locks and then put fresh locks and was further permitted to keep the keys of the locks with him till further orders. He submitted that since the keys of the premises where the pledged goods were lying, were with the local commissioner, the properly came under his custody and since he was put in possession of the property by this Court the property came in the custody of this Court. He submitted that in case the applicants had any grievance about this properly which was in possession of the local commissioner, they could approach this Court for redressal of their grievance. He further contended that when the applicants approached the Court of the Senior Sub Judge, Faridabad for taking over the possession of the property they had not brought to the notice of that Court that the keys of the property were with the local commissioner appointed by this Court. Since the fact of appointment of the local ' commissioner was not brought to the notice of the Court of the Senior Sub Judge, Faridabad, the applicants obtained the order from that Court to take over the possession. He further submitted that a copy of the alleged order regarding appointment of the applicants 2 and 3 as superdar by the Court of Senior Sub Judge, Faridabad has not been placed before this Court, and even such an order was passed by that Court that order will not be sustainable as the pledged goods were already in the custody of this Court at the time when the order is alleged to have been passed by that Court. Regarding the damages claimed by the applicants the learned counsel, submitted that question of damages can be gone into at the time of the final disposal of the suit as for the present, the purchaser has to deposit the amount in this Court. In support of his submissions the learned counsel placed reliance on two judgments of the Supreme Court in Everest Coal Company Pvt. Ltd. vs. State of Bihar and others, , Kanhaiyalal vs. Dr. D.R. Banaji and others, and one judgment of Calcutta High Court in Bank of Commerce Ltd. vs. Arun Kumar Chowdhary and others, and a judgment of Orissa High Court in Bibijan and others vs. Durga Bai and others, .

(16) I have given my thoughtful consideration to the submissions made by the learned counsel for the parties and have perused the records. As per the averments made in para 16 of the plant it is clear that one of the suit property is situated in the National Capital Territory of Delhi. I am, therefore, of the view that this Court has jurisdiction to entertain and try the suit in terms of section 17 of the Code.

(17) I.A 5114/83 under Order23 Rule 5 and Order 40 Rule 1 read with Section 151 of the Code was filed on behalf of the plaintiff bank for appointment of a receiver to take charge of the hypothecated goods and pledged goods or in the alternative to appoint local commissioner to prepare an inventory of the stocks lying at the factory premises mentioned hereinabove. In this application it was also prayed that the plaintiff bank be allowed to sell the hypothecated and pledged goods by private sale or by calling quotations. It was on this application that this Court vide orders dated 7th December, 1983 appointed Mr. B.R. Prashar, advocate as local commissioner for going on the spot and for making inventory of the stocks and goods both hypothecated and pledged and plant lying at the aforesaid premises and at another premises. It was also stated in this order that in case the commissioner found the premises locked he was authorised to break open the locks and complete the job and then put fresh locks. By order dated 25th January, 1984 the local commissioner was directed to keep the keys of the locks with him till further orders because it might be possible to pass an order in respect of those goods when the defendants put in appearance or were served. As stated earlier even after the defendants had put in appearance no further orders in respect of keeping of the keys were passed and in terms of the order dated 25th January, 1984 the local commissioner kept the keys of the locks. :

(18) Since the keys of the locks were with the local commissioner under the orders of this Court, the hypothecated and mortgaged goods lying at the premises mentioned hereinabove were in custody of (his Court as the local commisisoner was merely an officer or agent of the Court. As held by the Supreme Court in the case of Everest Coal Company Pvt.,Ltd., (supra) when a Court puts a receiver for possession of a property, the property comes under Court's custody, the receiver being merely an officer or agent of the Court. As stated hereinabove I.A. 5114/83 was for the appointment of a receiver and in the alternative for appointment of a commissioner. Though the nomenclature of the receiver was not used by this Court but since the commissioner was directed to put fresh locks and keep the keys of the locks with him till further orders, I hold that the hypothecated and mortgaged goods were in possession of the local commissioner and as such were under the custody of this Court. In the case of Kanhiyalal (supra) the Supreme Court held that the proceedings taken in respect of the property which was in possession and management of a receiver, without the leave of that Court were illegal, in case such proceedings are without the leave of the court concerned. Since the goods in question were already in the custody of this Court, the order, if any, passed by the Court of the Senior, Sub Judge, Faridabad appointing the applicants 2 and 3 as superdars is illegal and is not sustainable. Besides as stated hereinabove, the applicants have not even placed a copy of such order on the record of this case. Further the learned counsel for the applicants has himself admitted that the applicants being not aware of the orders passed by this Court appointing Mr.Prashar as local commissioner and the keys of the premises being with the said local commissioner, could not inform the Court of Senior Sub Judge. Faridabad about the orders passed by this Court when the applicants approached that Court for taking over the possession of the premises and for the appointment of the applicants as superdars.

(19) I also do not find any merit in the contention of the learned counsel for the applicants that the order of sale of the hypothecated goods is illegal as the said goods are not subject to speedy and natural decay. In this connection reference may be made to Order 39 Rule 6 of the Code wherein it is stated that sale of such goods could be ordered in case it is desirable to do so for just and sufficient cause. In the present case, the applicants themselves have claimed damages at the rate of Rs.5.00 per square foot for use and occupation of the premises. To avoid the future claim for damages it was just and proper to order the sale of the hypothecated and pledged goods.

(20) As regards the claim of the applicants for damages for use and occupation of the premises, I am of the view that this question need not be decided at this stage. Vide my order dated 6th October, 1993 the purchaser has been directed to deposit the amount in this Court which is to be kept in the shape of FDR. The question regarding the claim of the applicants for damages shall be gone into at the time of final disposal of the suit. Accordingly, except for the relief of claim for damages, the application of the applicants is dismissed with no order as to costs. I

(21) Since I have held that this Court has jurisdiction to entertain and try this suit and in view of my Findings in I.A. No. 7043/92 I do not find any merit in R.A. Nos. 16 and 17 of 1993. Accordingly, both these applications are also dismissed.

(22) It is, however, made clear that the observations given herein with regard to jurisdiction are only for the purpose of deciding the above applications.