Shri Rakesh Madan & Anr. vs Rajasthan Financial Corporation ...
2009 Latest Caselaw 55 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

          + I.A. No. 14090/2008 in CS(OS) No. 513/2008
          *
%                                              Date of decision: 13.01.2009

SHRI RAKESH MADAN & ANR.                                              ....Plaintiffs

                                           Through: Mr. A. K. Singh and Mr. Vimal
                                                    Dubey, Advocates


                                              Versus

Rajasthan Financial Corporation & Ors.                               ....Defendants

                                           Through: Mr. Shyam Moorjani and
                                                    Ms. Ananya Poddar, Advocates for
                                                    the Defendant No. 1


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.       Whether reporters of Local papers may
         be allowed to see the judgment?       Yes

2.       To be referred to the reporter or not?                Yes

3.       Whether the judgment should be reported
         in the Digest?                        Yes


RAJIV SAHAI ENDLAW, J.

1. A second application of the plaintiffs under Section 39 Rules 1

& 2 of the CPC, after dismissal of the first application as well as

appeal there against before the Division Bench is for consideration.

2. The principle contention of the counsel for the defendant No. 1

is that a second application does not lie and especially after the

order dismissing the earlier application for the same relief has

merged in the order of the Division Bench in appeal.

3. The factual matrix in which the aforesaid question has arisen is

as under. The plaintiffs are the son and daughter of late Shri Des

Raj Madan. The only other natural heir of Shri Des Raj Madan, as

per the plaintiffs is the defendant No. 2 being the other son of Shri

Des Raj Madan and the brother of the plaintiffs. Shri Des Raj Madan

was admittedly the owner of property No. 152, Jagriti Enclave, New

Delhi. Shri Des Raj Madan is stated to have died on 19th December,

2001 leaving the plaintiffs and the defendant No. 2 as his only

natural heirs. The plaintiffs No. 1 & 2 and the defendant No. 2 are

thus after the demise of Shri Des Raj Madan stated to be owners of

1/3rd undivided share each in the aforesaid property. The plaintiff

No. 1, however, claims to be in exclusive possession of the property.

4. The cause of action for institution of the suit was the notice

issued by the defendant No. 1 a State Financial Corporation within

the meaning of State Financial Corporation Act, 1951, under

Sections 29 & 31 of the said Act to take over the aforesaid property

and to dispossess the plaintiff No. 1 therefrom and to sell the said

property. It is the case in the plaint that in March, 2003, the plaintiff

No. 1 had come across a notice dated 26th February, 2003 issued by

the defendant No. 1 stating inter alia that Shri Des Raj Madan had

executed a deed of mortgage with respect to the aforesaid property

in favour of the defendant No. 1 in consideration of the advances

made to the defendant No. 3 Company. The plaintiff No. 1 claims to

have replied to the aforesaid notice on 15th April, 2003 informing

that Shri Des Raj Madan was never the director, proprietor or

partner of the defendant No. 3 Company and also informing of the

demise of Shri Des Raj Madan. It is further pleaded that the

defendant No. 1 did not take any action after receiving the aforesaid

reply of the plaintiff No. 1; however, after five years, another notice

dated 1st February, 2008 addressed to the plaintiff No. 1 and the

defendant No. 2 as legal heirs of Shri Des Raj Madan was received in

which it was stated that Shri Des Raj Madan had stood guarantor to

secure the loans by the defendant No. 1 to the defendant No. 3

Company, that the defendant No. 3 Company had not repaid its loans

and a sum of Rs. 2,28,20,471/- was outstanding and that if the said

amount was not paid till 20th February, 2008, the defendant No. 1

would initiate proceedings under Sections 29 & 31 (supra) to take

possession of the property. The plaintiffs instituted the suit pleading

that the stand of the defendant No. 1 that Shri Des Raj Madan had

stood guarantee for the loans by the defendant No. 1 to the

defendant No. 3 Company or had mortgaged the aforesaid property

was false inter alia for the reason that Shri Des Raj Madan was at

the time of the alleged mortgage in June 2001 was physically

handicapped and not of sound disposing mind owing to a paralytic

attack, old age and illness. It was further pleaded that the officials

of the defendant No. 1 in collusion with the defendant No. 2 had

forged and fabricated the documents of mortgage. In this context,

para 23 of the plaint is as under:-

23. That the defendant No. 1 cannot give notice under Section 29 & 31 (1) (aa) of the SFC Act to the plaintiffs and defendant NO. 1 also cannot proceed against the plaintiffs or their properties under Section 29 & 31 (1) (aa) of the State Financial Corporation Act. The plaintiff no. 1 cannot be evicted from his only place of residence.

5. The plaintiffs thus claimed the relief of declaration that Shri

Des Raj Madan had not stood as guarantor or surety for the dues, if

any, of the defendants No. 2 & 3 to the defendant No. 1 and had

not executed any mortgage deed with respect to the property and of

injunction restraining the defendant No. 1 from initiating any

recovery proceedings against the plaintiffs or their properties and

from dispossessing the plaintiff No. 1 from the property and from

selling the property and also for a direction to the defendant No. 1 to

return the original title documents of the property. Along with the

plaint, the plaintiffs filed IA No. 3529/2008 under Order 39 Rules 1 &

of the CPC for restraining the defendant No. 1 from interfering in the

plaintiff No. 1's possession or the plaintiffs' ownership of the

aforesaid property and from selling or creating any third party

interest with respect to the same.

6. No ex parte injunction was granted in favour of the plaintiffs.

The statement of the plaintiff No. 1 was also recorded on 24 th March,

2008, presumably under Order 10 of the CPC. The defendant No. 1

filed its written statement and documents stating inter alia that the

suit was not maintainable being for stalling the recovery of public

funds; that the defendant No. 1 had sanctioned and advanced loans

of the total sum of Rs. 5.16 crores to the defendant No. 3; that the

defendant No. 3 and its directors, namely, defendant No. 2 and his

wife had executed the loan documents and had also mortgaged the

plant and machinery of the defendant No. 3's works at Bhiwadi in

favour of the defendant No. 1; that in addition Shri Des Raj Madan

being the father of the defendant No. 2 had also stood guarantee for

repayment of the said loans and had mortgaged the aforesaid

property in favour of the defendant No. 1 by deposit of title deeds;

that the defendant No. 3 failed to make repayment of loans; that the

defendant No. 1 had taken over and sold in February/March, 2006

the land, building, plant and machinery by the defendant No. 1 in

exercise of power under Sections 29, 30 and other provisions of the

aforesaid Act; even thereafter a sum of Rs. 2,28,17,362/- was

outstanding as on 8th March, 2006 and it was payable by the

defendant No. 2 and his wife as well as by Shri Des Raj Madan and

now by his legal representatives; that the said amount was liable to

be recovered by sale of mortgaged property, namely, 152, Jagriti

Enclave, New Delhi; that the defendant No. 1 had for the said

purposes served the notice under Sections 29 & 30 of the Act and

also affixed the notice at the premises on 1st February, 2008; that the

defendant No. 1 was entitled in law to take over the possession of

the property and to sell the same. The defendant No. 1 in its written

statement in reply to para 23 as set out hereinabove of the plaint

stated that action taken by it i.e. under Sections 29 & 30 of the Act

was in accordance with law and it was entitled to take possession of

the property and sell the same.

7. The first application aforesaid of the plaintiffs under Order 39

Rules 1 & 2 of the CPC was dismissed by a detailed reasoned order

dated 26th May, 2008. This Court, prima facie, disbelieved the case

set up by the plaintiffs that Shri Des Raj Madan at the time of

execution of the mortgage of his property in June 2001 in favour of

the defendant No. 1 being incapacitated owing to illness or age from

doing so. It was prima facie found that the plaintiffs were having full

knowledge of the entire transaction and the present suit had been

instituted merely to help the defendant No. 2 who owed huge

amounts to the defendant No.1. It was further held that the

defendant No. 1 was entitled to enforce the mortgage as long as the

loans subsisted and could not be injuncted from taking action against

the mortgaged property "in accordance with the provisions of State

Financial Corporation Act". It was further observed "if plaintiff has

any grievance, he can approach the appropriate forum only under

the said Act". The plaintiffs preferred an appeal being FAO (OS) No.

281/2008 against the dismissal of first application for interim relief.

The Division Bench of this Court vide order dated 22nd July, 2008

inter alia held that the plaintiffs and their brother defendant No. 2

did not appear to have intention to repay the dues of defendant No.

1; that no case for interfering in appeal in the discretion exercised by

the Single Judge in dismissing the application was made out.

8. IA No. 14090/2008 also under Order 39 Rules 1 & 2 of the CPC

was filed again for the same relief as claimed in the earlier

application i.e., for restraining the defendant No. 1 from interfering

in any manner in possession and ownership of the plaintiffs of the

property and from selling the same. The reliefs in the second

application under Order 39 Rules 1 & 2 of the CPC is identical to

that claimed in the first application. The reason for moving the

second application as set out therein is that the plaintiffs, after the

dismissal of their appeal aforesaid had come across the judgment of

the Apex Court in Karnataka State Financial Corporation vs. N.

Narasimahaiah AIR 2008 SC 1797 wherein it has been held that the

provisions of Sections 29 & 30 of the Act cannot be invoked against a

surety or a guarantor.

9. The plaintiffs thus argued that without prejudice to their pleas

subject matter of adjudication in the suit that Shri Des Raj Madan

had not stood guarantee and mortgaged the property, the defendant

No. 1 was in any case not entitled to take possession of the property

and sell the same in exercise of powers under Sections 29 & 30 of

the Act. The application came up first before this Court on 19 th

November, 2008 when it was informed that the officials of the

defendant No. 1 were sitting outside the aforesaid property being

the residence of the plaintiff No. 1 to take possession thereof. In

spite of advance copy of the application to the counsel for the

defendant No. 1, he did not appear on that date and in the

circumstances, the defendant No. 1 till the next date was restrained

from taking possession of the property. It is the admitted position

that the plaintiff No. 1 continues to be in possession of the property.

On the next date, the counsel for the defendant No. 1 stated that no

reply was required to be filed and the counsels for the plaintiffs and

the defendant No. 1 were heard. Till the disposal of this application

the order dated 19th November, 2008 was continued and the

plaintiffs and the defendant No. 2 were also restrained from dealing

with the property in any manner or parting with the possession

thereof.

10. The counsel for the defendant No. 1 besides the objections first

above noted of second application being not maintainable and at

least not before this Court in view of appeal having been preferred

and dismissed against the order of dismissal of the first application

for interim relief, also urged that the conduct of the plaintiffs and the

defendant No. 2 who were in collusion with each other was mala

fide. It was stated that on 19th November, 2008 the defendant No. 2

under cover of his letter dated 19th November, 2008 had promised to

settle the matter and make payments as mentioned in the said letter

but after obtaining the order dated 19th November, 2008 from this

Court had not even delivered the cheques which he had promised to

deliver in settlement.

11. The first question to be considered is whether a second

application for the same relief as in the first is maintainable under

Order 39 Rules 1 & 2 of the CPC. The purpose of the said provision

is protection of the property during the adjudication of the lis.

Though the Code does not contain any express bar to a second

application under Rule 1 of the CPC or a second interlocutory

application under any other provision thereof and contains such a

bar only in respect of a second suit only, the subject matter whereof

has been directly and substantially an issue in a former suit between

the same parties (Section 11 of the CPC), but the courts have held

that the principles of Section 11 of the CPC are applicable to

successive stages of the same proceedings also. The Apex Court in

Y. B. Patil vs. Y.L. Patil AIR 1971 SC 392 held that it is well settled

that principles of res judicata can be invoked not only in separate

subsequent proceedings, they also get attracted in subsequent stage

of the same proceedings; once an order made in the course of a

proceedings becomes final, it would be binding at the subsequent

stage of the same proceedings. Even earlier thereto in Satyadhyan

Ghosal vs. Deorajin Dabi AIR 1960 SC 941, it was held that the

principle of res judicata applies also as between two stages in the

same litigation to this extent that a court whether a trial Court or a

higher court having at an earlier stage decided a matter in one way

will not allow the parties to re-agitate the matter again at a

subsequent stage of the same proceeding. It was, however, clarified

that it did not mean that because at an earlier stage of the litigation

a court has decided an interlocutory matter in one way and no

appeal has been taken therefrom or no appeal did lie, a higher court

cannot at a later stage of the same litigation consider the matter

again.

12. The Apex Court yet again in Prahlad Singh v Col. Sukhdev

Singh AIR 1987 SC 1145, while reiterating the principles laid down

in Satyadhyan Ghosal (supra) however observed "we are not also

concerned here with orders of an interlocutory nature such as

orders granting temporary injunction, appointing receiver, etc which

do not purport to decide the rights of the parties finally". The Apex

Court thus carved out an exception to the general rule, in relation to

orders in the nature of interlocutory injunction, appointment of

receiver, etc.

13. It will be noticed that Rule 4 of Order 39 itself does not attach

any finality to the orders in the nature of interlocutory injunction.

Rule 4 enables the court to discharge or vary or set aside an order of

interlocutory injunction, on finding the same to be necessary by a

change in circumstances or if the order is found causing undue

hardship to any party. The legislature has thus itself, not intended

the principle aforesaid of finality or res judcata in relation to

successive stages of the same proceeding to order under Order 39 of

the CPC. Though Rule 4 deals only with vacation or modification of

an interlocutory injunction granted, but in my view, the purport

thereof being interim protection of the property, even if the Court

had earlier not found enough reason to grant interim protection, the

court on finding a change in the circumstances or undue hardship

having been caused to a party who had been declined the interim

injunction earlier, is competent to entertain a second application and

to grant such injunction.

14. The power of the Court, is however, circumscribed by the

aforesaid parameters of change in circumstances or undue hardship.

Without any change in circumstances or without any case of undue

hardship having been made out, the court is not competent to, in the

same facts grant an interlocutory injunction, which was declined

earlier. Caution has to be exercised that such power does not lead to

filing applications before successive presiding officers. There is no

element of wager to be attached to such successive applications.

15. A Single Judge of this Court in P.S. Prasad and Family HUF

vs. Bharat Bijili Ltd. manu/de/9331/2006 has also while reiterating

that principles of res judicata and estoppel applied to different

stages of the same litigation and once a question/contention of the

parties is decided by a court, the same issue/contention cannot be

raised again before the same Court at a subsequent stage of the

same proceeding carved out an exception "unless there is a change

in law, pronouncement of Supreme Court or High Court or change in

facts constituting a new cause of action or fraud that entitles the

party concerned to move another application for the same relief".

16. At this stage it will be apposite to set out the following from

Arjun Singh v Mohinder Kumar AIR 1964 SC 993:

21. "......that interlocutory orders are of various kinds; some like orders of stay, injunction or receiver are designed to preserve the status quo pending the litigation and to ensure that the parties might not be prejudiced by the normal delay which the proceedings before the court usually take. They do not, in that sense, decide in any manner the merits of the controversy in issue in the suit and do not, of course, put an end to it even in part. Such orders are certainly capable of being

altered or varied by subsequent applications for the same relief, though normally only on proof of new facts or new situations which subsequently emerge. As they do not impinge upon the legal rights of parties to the litigation the principle of res judicata does not apply to the findings on which these orders are based, though if applications were made for relief on the same basis after the same has once been disposed of the court would be justified in rejecting the same as an abuse of the process of court. There are other orders which are also interlocutory, but would fall into a different category. The difference from the ones just now referred to lies in the fact that they are not directed to maintaining the status quo or to preserve the property pending the final adjudication, but are designed to ensure the just, smooth, orderly and expeditious disposal of the suit. They are interlocutory in the sense that they do not decide any matter in issue arising in the suit, nor put an end to the litigation. The case of an application under O. IX. r. 7 would be an illustration of this type. If an application made under the provisions of that rule is dismissed and an appeal were filed against the decree in the suit in which such application were made, there can be no doubt that the propriety of the order rejecting the reopening of the proceeding and the refusal to relegate the party to an earlier stage might be canvassed in the appeal and dealt with by the appellate court. In that sense, the refusal of the court to permit the defendant to "set the clock back" does not attain finality. But what we are concerned with is slightly different and that is whether the same Court is finally bound by that order at later stages, so as to preclude its being reconsidered. Even if the rule of res judicata does not apply it would not follow that on every subsequent day on which the suit stands adjourned for further hearing the petition could be repeated and fresh orders sought on the basis of identical facts. The principle that repeated applications based on the same facts and seeking the same reliefs might be disallowed by the court does not however necessarily rest on the principle or res judicata. Thus if an application for the adjournment of a suit is rejected, a subsequent application for the same purpose even if based on the same facts, is not barred on the application of any rule of res judicata, but would be rejected for the same grounds on which the original application was refused. The principle underlying the distinction between the rule of res judicata and a rejection on the ground that no new facts have been adduced to justify a different order is vital. If the principle of res judicata is applicable to the decision on a particular issue of fact, even if fresh facts were placed

before the Court, the bar would continue to operate and preclude a fresh investigation of the issue, whereas in the other case, on proof of fresh facts, the court would be competent, nay would be bound to take those into account and make an order conformably to the facts freshly brought before the court."

17. In the light of aforesaid position of law, it has to be seen

whether the second application for interlocutory injunction in the

present case is barred on the general principle of applicability of res

judicata to interlocutory orders also or can fall in the exceptions

carved out including change in circumstance, law or undue hardship.

18. The plaintiffs had approached this Court with a case of the

mortgage of the property claimed by the defendant No. 1 to be void.

It was prima facie view of that case only of the plaintiffs which was

taken by this Court while dismissing the first application for

interlocutory injection. Though para 23 as set out hereinabove

existed in the plaint but it appears that that was not the contention

of the plaintiffs. The plaintiffs did not claim any relief that even if

there was a mortgage, the defendant No. 1 was not entitled to invoke

the provisions of Section 29 & 30 of the State Financial Corporation

Act with respect to the property. The said case was naturally not

considered by this Court while dealing with the earlier application.

The Appellate Court also was not seized of the said matter and in

fact dismissed the appeal primarily on the ground of no case for

interfering with the discretion exercised, having been made out.

Naturally when there was no reference to the applicability of the

Sections 29 & 30 of the Act in the order of the Single Judge, no

question of consideration of the same by the division Bench arose.

19. The counsel for the defendant has also not urged that the said

matter was considered by this Court while dealing with the first

application. He has otherwise not disputed the proposition of law as

laid down in Karnataka State Corporation (Supra). He has also

not sought to justify that in spite of dicta aforesaid of the Apex Court,

the defendant No. 1 is entitled to proceed against the property under

the said provisions of the Act.

20. The Apex Court in Daryao vs The State of U.P. AIR 1961 SC

1457 held that the general principle underlying the doctrine of res

judidcata is ultimately based on consideration of public policy. The

Apex Court in Forward Construction Company vs. Prabhat

Mandal AIR 1986 SC 391 held that the plea of res judicata could not

be negatived on the ground that one of the grounds taken in the

second petition was conspicuous by its absence in the earlier

petition. Reference in this regard was made to explanation (IV) to

section 11 of the CPC. It was held that an adjudication is conclusive

and final not only as to the actual matter determined but as to every

other matter which the parties might and ought to have litigated

and have decided as incidental or essentially connected with the

subject matter of the litigation and every matter coming within the

legitimate purview of the original action. What has to be tested is

whether the said principle applies to applications for interlocutory

injunction inasmuch as it was open to the plaintiffs at the time to

disposal of the first application also to contend that the provisions of

Sections 29 & 30 of the State Financial Corporation Act were not

applicable and which the plaintiffs admittedly did not do, though

basis thereof, to enable the plaintiff to agitate now, can be found in

para 23 of the plaint.

21. Yet another principle to be borne in this regard is that where

the question is one purely of law and relates to a decision of the

court sanctioning something which is illegal by resort to the rule of

res judicata a party affected by the decision will not be precluded

from challenging the validity of that order under the rule of res

judicata, for a rule of procedure cannot supercede the law of land as

held in Smt. Isabella Johnson vs. M.A. Susai AIR 1991 SC 993

and Sundermani vs. Devaji Shankar Desh Raj AIR 1954 SC 82.

22. Res judicata is but a branch of the law of estoppel. The Apex

Court in Gopal Prasad Sinha vs. State of Bihar AIR 1971 SC 458

held that the basic principle underlying the rule of issue estoppel

and res judicata is that the same issue of fact and law must have

been determined in the previous litigation; however, the question

which then arises is: was it the same issue of fact which was

determined in earlier case. It was held that if there was no change

in facts and condition, there can be no issue estoppel.

23. In my view, the principle underlying estoppel being of public

policy and justice, justice cannot be permitted to be defeated on the

ground of issue estoppel. The question raised in the present case by

this second application for interlocutory injunction is a pure question

of law and which admittedly has not been considered by this Court

while considering the first application for interlocutory injunction.

The judgment of the Apex Court in Karnataka State Financial

Corporation (supra) appears to be taking a view with respect to the

applicability of Sections 29 & 30 of the Act against the properties of

the guarantor for the first time. There does not appear to be any

earlier pronouncement on this aspect. While it can be argued that

the counsel for the plaintiffs in this case also ought to have taken the

said plea before this Court or before the Appellate Court while

pressing for the first application for interlocutory injunction, but in

my view, justice should not suffer and interlocutory injunction ought

not to be denied to the plaintiffs because of the aforesaid

interpretation of law by the Apex Court, published after the disposal

of the first application by this Court and by the Appellate Court. It is

not as if while dismissing the application a view was taken by this

Court or by the Appellate Court on the applicability of the said

provisions and which cannot be reviewed owing to a different view

having been taken by a subsequent decision of the Apex Court.

Present is a case where no view at all was taken. Since the suit is

still pending, the plaintiffs, on the parity of Rule 4 of Order 39 of the

CPC becomes entitle to move a second application for interlocutory

injunction.

24. In this regard, I may notice that even though the Apex Court in

Hope Plantations Ltd v Taluk Land Board 1999 (5) SCC 590

while refusing to follow the decision of the House of Lords in Arnold

v National Westminster Bank 1991(2) AC 93 in toto still gave an

opportunity to the appellant/petitioner to approach the State

Government to seek exemption.

25. There is yet another reason which leads me to hold that the

plaintiffs in the present case are entitled to move second application.

This Court while dismissing the first application held that the

defendant could not be injuncted from taking action against the

mortgaged property in accordance with the provisions of State

Financial Corporation Act and if the plaintiff has any grievance, he

can approach the proper forum only under the said Act. The Apex

Court has now held that under the State Financial Corporation Act

the action as threatened cannot be taken. If in spite of the same the

defendant No. 1 insists upon taking said action, the plaintiffs would

be naturally aggrieved by the same and were given liberty to

approach the appropriate forum and which can be this Court only,

since the lis is pending before this Court.

26. Next question which arises is as to whether this Court is

precluded from entertaining the second application owing to the

appeal having been preferred and dismissed; whether the doctrine of

merger comes in the way of this Court exercising the power. While

there can be no doubt that the order of this Court dismissing the first

application has merged in the order of the Appellate Court, but in my

view, a second application on the grounds culled out above would

still not lie before the Appellate Court but would lie before this Court

only. Firstly, as aforesaid Order 39 Rule 4 of the CPC is expressly

empowering the Court which granted the injunction. There can be

cases where the proceedings of interlocutory injunction have gone

right till the Court of last resort. The legislature could have provided

that the application under Rule 4 would lie only before the Court last

dealing with the said matter. However, it is not so provided. There

is yet another reason for the same. The whole purpose of providing

a hierarchy of appeal is to obviate a human error and provide

remedy thereagainst. The purpose is for the Appellate Court to

examine the matter brought before it in this perspective. However,

when it has not been examined by the first Court as to whether the

injunction is to be granted or vacated owing to change in

circumstances or undue hardship, requiring the second application

to be filed before the Appellate Court only which had last dealt with

the matter would amount to doing away with the provisions of

appeal. Unless this court gives reasons for entertaining, allowing,

dismissing the application, no appeal there against would be

possible.

27. I, therefore, find that two legal objections raised by the

defendant No. 1 to be untenable and further find that in the facts of

the present case the second application lies before this Court.

28. Having held so, there was no opposition to the proposition that

the defendant No. 1 is not entitled to proceed against the property of

the plaintiffs under the provisions of Sections 29 & 30 of the Act.

The defendant No. 1 as an instrumentality of the state ought to

respect the dicta of the Apex Court in Karnataka State Financial

Corporation (Supra) and is not expected to act in contravention

thereof. It is not as if that the defendant No. 1 is being left

remediless. All that Karnataka State Financial Corporation (supra)

lays down is that the possession shall not be taken of the mortgaged

property of the guarantor or surety in exercise of powers under

Sections 29 & 30 of the Act. The defendant No. 1 is thus restrained

to the said extent only. The defendant No. 1 shall remain free to

take action in accordance with law.

29. It is relevant to emphasise that the property in question is the

residence of the plaintiff No.1. The right to residence and the right

to property are human rights under the Universal Declaration of

Human Rights, 60th year of adoption of which has been celebrated

last year. Article 51(c), Constitution of India provides that the State

shall endeavour to foster respect for treaty obligations in the

dealings of organized people with another. Indian Courts,

particularly the Apex Court have consistently construed statutes so

as to ensure their compatibility with international law, conventions

and treaties. In Chairman Railway Board v Chandrima Das AIR

2000 SC 988 it was held that our constitution guarantees all the

basic and fundamental human rights set out in the Universal

Declaration of Human Rights to its citizens and judges have a duty of

familiarizing themselves with growing international jurisprudence of

human rights and enforcement thereof. I find that in the present

case, not restraining the defendant No.1 from acting against the

plaintiff in a manner in the teeth of the law laid down by the Apex

Court for the reason of technicality of the earlier application having

been dismissed would be also violative of the human rights of the

plaintiffs.

30. The plaintiffs will suffer irreparable injury if dispossessed from

their residence in a manner contrary to law. The balance of

convenience is also in favour of plaintiffs. Though the Apex Court

has in U.P. Financial Corporation v Gem Cap (India) Pvt Ltd

AIR 1993 SC 1435 held that State Finance Corporation are unlike

ordinary money lenders and banks but restraining the defendant

No.1 from acting in a manner in which it is not entitled to, does not

prejudice its rights as aforesaid.

31. That leaves the arguments of the counsel for the defendant No.

1 that the application being mala fide and the plaintiffs having

misused the process of the Court. Though the conduct of the

defendant No. 2 of relegating from the settlement as offered after

obtaining the order dated 19th November, 2008 is reprehensible but

the same would not entitle the defendant No. 1 to do what it is not

entitled to do in law.

32. The application is therefore allowed to the extent that the

defendant No. 1 and its officers and agents are restrained from

proceeding against property No. 152, Jagriti Enclave, New Delhi in

exercise of provisions of Sections 29 & 30 of the State Financial

Corporation Act and from forcibly dispossessing the plaintiffs from

the said property; the defendant No. 1 shall, however, be entitled to

proceed in accordance with law in exercise of its rights with respect

to the said property; this is further subject to the conditions that the

plaintiffs and the defendant No. 2 stated to be the owners of the

property shall not alienate, encumber or part with the possession of

the suit property.

33. The application is disposed of

RAJIV SAHAI ENDLAW (JUDGE) January 13, 2009 rb