Delhi High Court
Cement Corporation Of India Ltd. vs Raj Kishan And Co. on 1 September, 2009
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
EX.P. 265/2002 & EAs 24,33,237-38, 601-02, 611, 645/2007,
137, 344,458/2009
Reserved on : August 20, 2009
Decision on : September 1, 2009
CEMENT CORPORATION OF INDIA LTD.
..... Decree Holder
Through Mr. Rakesh Tiku with
Ms. Nivedita Bora and
Ms. Sangmitra Sawant, Advocates.
versus
RAJ KISHAN AND CO. ..... Judgment Debtor
Through Mr. R.P. Kapur, Advocate for
Objector/Teknow Consultants & Engs. Ltd.
in EA No.601/2007.
Mr. Ajay Kohli, Advocate for
Skyways Builders with Mr. Kalicharan, A.R.
Mr. Rajesh Manchanda, Advocate for
Auction Purchaser/Kadam Marketing Ltd.
Mr. Puneet Agrawal, Advocate for Objector
in EA No.611/2007.
CORAM:
HON'BLE DR. JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in Digest? Yes
JUDGMENT
01.09.2009
S. Muralidhar, J.
1. This petition by the Cement Corporation of India (CCI), the Decree
Holder (DH) seeks execution of the decree dated 2nd August 2002 in Suit
No.1743 of 1993. By the said decree, the Award dated 21st June 1993 of
the learned Arbitrator was made Rule of Court. In terms of the Award,
the counter-claim filed by the DH in the said arbitration against M/s Raj
Kishan & Company, the Judgment Debtor (JD), was allowed and it was
directed that the JD should pay the DH a sum of Rs.44,08,115.80 within
thirty days of publication of the award failing which interest @ 18% per
annum shall be payable. In the event of the JD returning the materials to
the DH as stated in the reasons to Claims No.2 and 3, the aforementioned
amount would stand reduced depending on the quantities of the materials
returned.
The execution petition
2. This execution petition was filed on 11th October 2002, shortly after
the expiry of two months after the decree. In the execution petition in
Column 5, it was indicated by the DH that a total sum of Rs.23,78,957/-
had been received from the JD by way of three demand drafts and that
the amount with the interest due in terms of the decree worked out to
Rs.62,54,799/-. The DH has since filed the calculations of the amount
due to it as on 31st August 2009 and this works out to Rs.88,97,813/-.
3. In Column 10, it was stated that the JD owned and possessed Flat
No.206 at Kaisons House, 84, Nehru Place, New Delhi110019.
Accordingly, at the hearing of the execution petition on 29th November
2002, this Court prohibited the JD till further orders from transferring or
creating a charge on the aforementioned property. At the hearing on 13th
November 2003, this Court was informed that the warrant of attachment
had been returned unexecuted as the DH did not assist the bailiff. A fresh
warrant of attachment was issued returnable on 9th February 2004.
4. The DH filed EA No.33 of 2004, seeking modification of the order
dated 29th November 2002. In the said application, it is stated that the
aforementioned property did not belong to the JD and accordingly on
enquiry the DH found that the JD was owner of the Flat Nos.302 to 305
at the third floor of the Kaisons House, 84 Nehru Place, New Delhi.
Accordingly, it was prayed that the attachment on the property No.206,
Kaisons House, be released and fresh warrants of attachment be issued in
respect of the Flat Nos.302 to 305, Kaisons House.
5. On 9th March 2004, EA No.33 of 2004 was allowed to the extent that
the property at flat No.206, Kaisons House, Nehru Place was released
from attachment. As regards the issue of warrants of attachment in
respect of the Flat Nos.302 to 305, it was directed that the DH will file an
affidavit in support of the said assertion. The affidavit came to be filed on
4th November 2004. It was stated in the affidavit that the DH had engaged
the services of M/s Lancers Network Ltd., for verifying the address of the
JD and that an investigation report had been submitted by the said
organization on 10th August 2004.which revealed that properties at Flat
Nos.302 to 305, 3rd Floor, Kaisons House, 84 Nehru Place, New Delhi
belonged to the JD. Flat No.302 was its registered office. The Directors
of the Company were Mr. Roshan Lal Gupta (Managing Director); Mr.
Santosh Kumar Garg and Mr. Ashwani Kumar Gupta. It was further
pointed out that the aforementioned immovable properties were
registered with the House Tax Department in the name of Mr. Raj Kishan
Aggarwal.
6. On the basis of the said affidavit, this Court by an order dated 14th
January 2005 directed issuance of warrants of attachment against the
aforementioned properties, returnable on 11th April 2005.
7. On 11th October 2006, it was directed by this Court that in view of the
attachment having been effected, the properties should be sold. The case
was directed to be listed before the Joint Registrar (JR) on 15th November
2006 for taking steps for sale of the properties.
Applications by the objectors
8. An EA No. 24 of 2007 was filed by the DH under Order XXI Rule 64
CPC in this Court for directing sale by public auction of the properties.
By an order dated 18th January 2007, notice was directed to issue to the
JD and the matter was directed to be re-notified for completion of the
pleadings qua the said auction on 6th March 2007. On 23rd August 2007
none appeared for the JD and it was noticed on that date by the learned
JR that the process fee had not been filed. On a perusal of the case file, it
was noted that the property had already been directed to be sold. It was
directed that the proclamation of the auction sale be affixed on a
conspicuous portion of the property as well as on the notice board of this
Court. The proclamation was also to be published in the local newspapers
in the English and Hindi editions for 12th October 2007. It was directed
that "the attached immovable property of the judgment debtor be sold in
an open auction by the Court Auctioneer in the manner prescribed on 30th
November 2007 on taking steps by the Decree Holder". The case was re-
notified for 10th January 2008.
9. EA No.601 of 2007 was filed by M/s Teknow Consultants &
Engineers Pvt. Ltd. (Teknow) under Order XXI Rules 59, 66 and 54 of
the CPC, praying for stay of the proclamation and sale of the properties.
The said EA was filed on 17th November 2007. On the same date, EA
No.602 of 2007 was filed by Teknow under Order 1 Rule 10 CPC,
seeking impleadment of Teknow as a party in the execution petition. In
both the applications, the averments were similar. It was stated that after
coming to know of the sale proclamation, Teknow learned that the
property at Flat Nos.302 to 304 were being put up for public auction sale
on 30th November 2007; the said properties stood in the name of Teknow
which was not arrayed as a party. Regarding Flat No.304 papers were
under process. It was asserted that the Teknow had a right to be served
notice and also to be heard. In para 9 of the application, it was stated as
under:
"That the properties being Flats Nos.302, 303 and 304,
3rd Floor, Kaisons House, 84, Nehru Place, New Delhi-
110 019 were never nor are the properties of Judgment-
debtor nor are belonging to Judgment-debtor nor the
Judgment-debtor has power to dispose of the same. Even
otherwise, the attachment and sale is the extreme step
and it was only fair to require the Judgment-debtor or
may be said M/s. Raj Kishan & Co's partners (Mr.
Santosh Kumar Garg son of Mr. Dev Dutt Aggarwal and
Mr. Ashwani Kumar Gupta son of Mr. Raj Kishan Dass)
in accordance with law and procedure to satisfy the
decree. There is nothing on record to show that
Judgment-debtor has resisted the execution."
10. It was asserted that Teknow had nothing to do with the JD and that
someone claiming to have read the public notice about the sale
proclamation of the properties and picked the notice dated 8th October
2007 and gave it to Teknow. Thereafter Teknow downloaded the order of
this Court from the internet. It was then asserted in para 13 as under:-
"The decree is dated 02-08-2002. As per partnership
deed, the partnership is only liable to satisfy the decree.
The applicant has not come in the way of Petitioner
realizing the satisfaction from the partnership firm/its
partners. M/s. Raj Kishan & Co. and M/s. Teknow
Consultants & Engineers Private Limited are wholly
different and unrelated in all respects. There was no order
binding retired partner Mr. R.L. Gupta - HUF."
11. The other details given by Teknow in its applications were that the
last that applicant heard of the said Judgment-debtor firm was that it has
two partners, viz., Mr. Santosh Kumar Garg son of Mr. Dev Dutt
Aggarwal and Mr. Ashwani Kumar Gupta son of Mr. Raj Kishan Dass
since 01-04-1994. Flats No.304, 3rd Floor, Kaisons House, 84, Nehru
Place, New Delhi-110 019 had been disposed of to Teknow in
satisfaction of certain other proceedings pending before the Criminal
Court. During the pendency of the proceedings in this Court in Suit
No.1743 of 1993, there was no communication from the High Court or
the DH to Mr. R.L. Gupta-HUF or to Teknow. The first liability to satisfy
the decree was only on Mr. Santosh Kumar Garg and Mr. Ashwani
Kumar Gupta. There was no notice to attach the properties of the partners
of M/s Raj Kishan & Co. The said application of Teknow was supported
by the affidavit of Mr.Sushil Gupta, s/o Mr.Roshan Lal Gupta. Even in
the supporting affidavit, the contention was that Flat Nos.302 to 304 were
"neither at present nor ever were the properties of Judgment-debtor (firm)
nor that of R. L. Gupta-HUF. Nor is it true that said properties were ever
attached." It was further asserted that the said properties were always free
from any kind of seizure/attachment and were/are available to Teknow.
12. Annexure A-4 to the application was the copy of the Deed of
Retirement dated 31st March 1994 between R.L. Gupta, s/o Late Dev
Dutt Aggarwal Karta of R.L. Gupta HUF; Mr. Santosh Kumar Garg, s/o
Late Dev Dutt Aggarwal, Karta of S.K. Garg - HUF and Mr. Ashwani
Gupta s/o Late Mr. Raj Kishan Dass Aggarwal, Karta of Raj Kishan Dass
& Sons - HUF. In the retirement deed it was stated in the preamble that
the said parties entered into a partnership on 8th April 1988 under the
name and style of Raj Kishan & Co. By the retirement deed, the first
party, i.e., R.L. Gupta retired from partnership from 31st March 1994,
relinquishing his rights in the firm. The second and third parties
relinquished their rights and interests in the contracts mentioned in the
deed of retirement in favour of Mr. R.L. Gupta and his assignees Mr.
Shekhar Gupta and Mr. Shishir Gupta. They were contracts with the
Haryana State Electricity Board. Annexure A-5 was a copy of the
partnership deed dated 1st April 1994 between Mr.Santosh Kumar Garg,
s/o Dev Dutt Aggarwal representing Karta of HUF and Mr. Ashwani
Kumar Gupta, s/o late Mr. Raj Kishan Dass representing Karta of HUF -
Raj Kishan Dass & Sons, reconstituting the partnership of Raj Kishan &
Co., with effect from 1st April 1994. The profit and losses of firm were to
be divided in the ratio of 50:50.
13. EA No.611 of 2007 was filed on 23rd November 2007 by Deepti
Gupta under Order XXI Rules 58 and 59 CPC. She asserted that she was
the lawful owner of the Flat No.305, 3rd Floor, Kaisons House, 84 Nehru
Place, New Delhi. She had recently come to know through public notice
dated 12th October 2007 that the said property was the subject matter for
public auction to be conducted on 30th November 2007. It was stated that
Mr. Santosh Kumar Garg in his individual capacity was the sole owner of
the said property allotted to him by an Agreement dated 31st March 1978
flat Nos.302, 303, 304 and 305, 3rd Floor, Kaisons House, 84 Nehru
Place, New Delhi were jointly purchased by Mr. Santosh Kumar Garg,
Mr. R.L. Gupta and Mr. Raj Kishan Dass having 1/3rd share each in the
said properties in their individual capacities. Later in the year 2006 the
said three persons divided their joint shares in the properties and Flat
No.305 came to the share of Mr. S.K. Garg, the father of Ms. Deepti
Gupta. Thereafter on the request of Mr. S.K. Garg, M/s. Skyway Builders
executed a fresh agreement dated 12th April 2007 in respect of the said
Flat No.305 in favour of Mr. S.K. Garg which he was holding in his
individual capacity. It was submitted that while S.K. Garg - HUF was a
partner of JD firm, the property in question was not held by the said
entity but by Mr. S.K. Garg in his individual capacity. It was further
added that the JD firm had been paying rent to Mr. S.K. Garg in his
individual capacity. In para 4 of the application, it was stated that "S.K.
Garg who is also the father of the Applicant, has given the said property
to the Applicant and vide letter dated 6.8.2007 has requested to the said
M/s Skyway Builders to substitute the name of the Applicant in his place
as intending purchaser/Owner". A copy of the said letter has been
annexed to the application. It is stated that since Ms. Deepti Gupta was
neither a partner nor has any interest in the JD firm, the DH may not have
any claim against Flat No.305. Accordingly, a stay of the proclamation of
sale and release of attachment in relation to Flat No.305 was sought.
14. EA Nos.601 and 602 of 2007 by Teknow were listed on 26th
November 2007. Notice was accepted in the applications by the DH. The
applications were directed to be listed on 12th May 2008. Likewise EA
No.611 of 2007 which was listed on 28th November 2007 was directed to
be listed on the same date, i.e. 12th May 2008. Thereafter EA No. 645 of
2007 was filed by one D. Moitra claiming to be the owner of Flat No.304
objecting to the auction sale of the flat. Notice was issued and the said
application was also directed to be listed on 12th May 2008.
15. The auction sale did take place on 30th November 2007. A note was
put up by the Registry seeking directions for keeping the amount
received in a fixed deposit. By an order dated 8th January 2008 it was
directed that the Registry may keep the amount received from the auction
purchaser in a fixed deposit initially for a period of one year subject to
further directions of the Court. On 10th January 2008, the Report of the
learned Court Auctioneer was taken on record.
16. A fresh EA No.237 of 2008 was filed by Mr. R.L. Gupta. EA No. 238
of 2008 was filed by Mr. Shishir Gupta seeking stay of the sale
proclamation. In these applications notice was directed to issue returnable
on 7th August 2009.
Orders of this Court
17. At the hearing on 5th February 2009, the Auction Purchaser
represented by Mr. Rajesh Manchanda, learned Advocate also appeared.
A detailed order was passed on that date by this Court as under:
"In this execution of money decree Flats No. 302, 303,
304 and 305 on the third floor of Kaisons House, 84,
Nehru Place, New Delhi, stated by the decree holder to
be belonging to the judgment debtor M/s Raj Kishan &
Co. a partnership firm, were first attached and thereafter
ordered to be auctioned. Auction was held on 30th
November, 2007 and M/s Padam Marketing Ltd. gave the
highest bid of Rs. 1.36 crores for all the flats and was
declared as the Auction Purchaser.
EA No. 601/2007 was filed by M/s. Teknow Consultants
& Engineering Pvt. Ltd. claiming to be owner of Flats
No. 302 & 303; EA No. 645/2007 was filed one Sh.
Ashwani Gupta claiming to be owner of Flat No. 304 and
EA No. 611/2007 was filed by one Ms. Deepti Gupta
claiming to be owner of Flat No. 305. It was ordered on
26th November, 2007 that the auction may go on but the
sale of the aforesaid flats will be subject to the condition
that the sale shall be confirmed only after the applications
are disposed of. The matter is since pending at that stage
only.
The counsel for the auction purchaser M/s Padam
Marketing Ltd. has argued that in spite of having paid the
entire sale consideration of Rs. 1.36 crores in terms of the
auction and having complied with other terms of the
auction, he has not been put into possession of the flats
and the flats are lying locked. He has submitted that if the
disposal of the objections of three separate objectors
aforesaid is likely to take time, the sale consideration
minus some earnest deposit be returned to him, though he
continues to be interested in purchasing the flats and
undertakes to deposit the balance sale consideration
immediately on the objections being disposed of. His
grievance is justified.
During the hearing, it has been informed that EA No.
601/2007 on behalf of M/s. Teknow Consultants &
Engineering Pvt. Ltd. has been filed by one Sh. Shishir
Gupta who is the son Sh. R.L. Gupta. It is not disputed
by the counsel for the M/s. Teknow Consultants &
Engineering Pvt. Ltd. that Sh. R.L. Gupta HUF of which
Sh. R.L. Gupta was the karta, was the partner of the
judgment debtor firm up to 31st March, 1994. Sh. R.L.
Gupta is the Chairman and the Managing Director of the
said M/s. Teknow Consultants & Engineering Pvt. Ltd.
It is also the admitted position that the applicant in EA
No. 645/2007 namely Sh. Ashwani Gupta is son of Late
Sh. Raj Kishan Dass Gupta who was a partner in the
judgment debtor firm till his demise in 1988. The said
Sh. Ashwani Gupta thereafter became a partner in the
judgment debtor firm and continued to be a partner of the
judgment debtor. It is stated that in fact Sh. Raj Kishan
Dass Gupta HUF was a partner in the judgment debtor
firm.
The applicant in EA No. 611/2007 Ms. Deepti Gupta is
daughter of Sh. Santosh Kr. Garg and it is stated that Sh.
Santosh Kr. Garg HUF was the partner in the judgment
debtor firm.
Neither of the three objectors have filed the Flat Buyers
Agreement with respect to the flats of which they claim
ownership. Judicial notice can be taken of the fact that
ordinarily, there are no registered sale deeds of the flats
such as these; they are normally transacted through a Flat
Buyers Agreement. Neither of the three objectors have
filed any original documents of title in their favour with
respect to the flats of which they claim the ownership and
with respect to which they have filed objections, holding
up the delivery of possession of the flats to the Auction
Purchaser. On being quizzed about the same, the counsel
for the applicant in EA No. 601/2007 states that the
original title documents were handed over to Mr. Anil
Sachdeva in pursuance to an agreement to sell by the said
M/s. Teknow Consultants & Engineering Pvt. Ltd. of
Flats No. 302 & 303 to the said Mr. Anil Sachdeva. It is
not disputed that Mr. Anil Sachdeva is the Managing
Director of the Auction Purchaser M/s Padam Marketing
Ltd. It is stated by the objector in EA 601/2007 that the
buyer Mr. Anil Sachdeva after entering into an agreement
to sell did not pay the balance sale consideration, as such
the agreement to sell did not fructify but the original title
documents remained with Mr. Anil Sachdeva.
The counsel for the Auction Purchaser M/s Padam
Marketing Ltd. confirms that Mr. Anil Sachdeva had
prior to auction entered into an agreement to purchase all
the four flats from Mr. Roshan Lal Gupta, Mr. Santosh
Kr. Garg and Mr. Ashwani Gupta (on behalf of the late
Sh. Raj Kishan Dass Gupta).
The decree holder has filed replies to all the three sets of
objections.
Before the said three objections are put to trial, this Court
has to be prima facie satisfied of the title of the objectors
to the aforesaid flats which were attached and
subsequently auctioned. Since it has transpired that the
objectors are closely related to the judgment debtor, and
further since it is the contention of the decree holder that
the objections are merely a device to delay the execution,
and further since the objections are found to be cryptic
and without original documents, it is deemed expedient
to direct as under:-
1. All the three objectors, since they have already for the
last over one year held up the delivery of possession of
the flats to the Auction Purchaser, to file an undertaking
in this Court in the form of their affidavit, specifying the
properties and assets held by them and from which the
damages which would accrue to the Auction Purchaser
for the delay caused by them can be satisfied.
2. The Auction Purchaser to file an affidavit stating the
letting value of the aforesaid flats in the year 2008 and at
the present.
3. The objectors to in their undertaking aforesaid, to
undertake to this Court that in the event of their
objections not succeeding, they will pay to the Auction
Purchaser damages calculated at the letting value of the
said flats as disclosed by the Auction Purchaser. If the
objectors differ with the letting value disclosed by the
Auction Purchaser, the objectors to in their own
affidavits state the letting value of the said flats.
4. The objector M/s. Teknow Consultants & Engineering
Pvt. Ltd. to file an affidavit disclosing the share holding
and the position of the directors of the said company
from time to time.
5. All the three objectors to file affidavits disclosing as to
on which date they acquired title to the respective flats
claimed by them, by what documents and against what
consideration and from whom.
6. All the three objectors to also file documents of their
respective titles along with their affidavits and to state in
the affidavit that besides the said documents there are no
other documents in their power and possession.
The affidavit by the Auction Purchaser be filed within
one week and the affidavits/undertaking be filed by the
objectors within three weeks from today. Further
directions on the request of the Auction Purchaser for
refund of the sale consideration are deferred for the time
being.
Court notice be also issued to M/s Skyway Builders
stated to be the builders of Kaisons House and who are
stated to have issued certificates relied upon by the
objectors, at the address of 1 Babar Road, New Delhi-
110001 and also at the address of Mangalam, R -50,
Vikas Marg, Delhi-110092 directing them to file an
affidavit before this Court of their authorized person
disclosing as per their records to whom were the
aforesaid Flats No. 302-305 sold/ allotted in the first
instance and the dates of transfer, if any, of the said four
flats from time to time along with documents in proof
thereof. The authorized person of M/s Skyway Builders
is also directed to be present before the Court with the
original documents on the next date of hearing.
The counsel for the objector M/s. Teknow Consultants &
Engineering Pvt. Ltd. who has filed a certificate dated
20th August, 2007 of the said M/s Skyway Builders in
support of his objections to ensure service of the said
notice on M/s Skyway Builders and compliance thereof.
It appears that initially the decree holder had disclosed
the judgment debtor to be owner of Flat No. 206 in the
same building and given the same address of judgment
debtor. However, subsequently it was informed that the
judgment debtors are owners of Flats No. 302-305 and
not of Flat No. 206. The counsel for applicant in EA No.
601/2007 sought to make much out of it. The said fact is
not found relevant for present purpose
List on 26th March, 2009."
18. Pursuant to the aforementioned order, the auction purchaser M/s
Kadam Marketing Ltd. (which has been wrongly mentioned in the order
dated 5th February 2009 as "Padam Marketing Ltd.") has also filed an
affidavit dated 11th February 2009. At the hearing on 26th March 2009, a
last opportunity was given by the Court for the directions issued in the
order dated 5th February 2009 to be complied with. The Court was
informed that the Flat Nos.302-305 were lying vacant under lock and key
of the police under the complaint of the auction purchaser. The objectors
as well as the auction purchaser were directed to bring proposals for
letting out the flats to the prospective tenants. The offer of the auction
purchaser to take the flats on rent of Rs.50 per sq. ft. per month with
effect from 1st April 2009 was objected to by the objectors. The amount
placed in the fixed deposit was renewed on 28th May 2009 for one year.
19. At the hearing on 8th July 2009 this Court perused the affidavit of M/s
Skyways Builders and passed the following order:
"1. From the affidavit of M/s. Skyway Builders filed on
23rd March 2009 it appears that in respect of Flat Nos.
302, 303, 304 and 305 in Kaisons House, Nehra Place,
New Delhi, four separate flats buyer's agreements, each
dated 28th July 2006, were executed in the names of
S/Mr. Ashwani Gupta, Roshan Lal Gupta and Santosh
Kumar Garg. Later, on 26th February 2007,
upon these allottees claiming that they had misplaced/lost
their respective copies of the agreements, duplicate
agreements appear to have been issued. It is now stated
that the agreement pertaining to Flat Nos. 302 and 303
was in the name of Roshan Lal Gupta, in respect of Flat
No. 304 in the name of Ashwani Gupta and Flat No. 305
in the name of Santosh Kumar Garg. Further changes
appear to have been made at the request of these allottees
and current status in respect of the allotment of the flats
is stated to be as under:
"9 (a) Flat No. 302-303 measuring 535 sq.ft. in name of
M/s. Technow Consultants & Engineers Pvt. Limited
through its Director Mr. Shishir Anand Gupta son of Sh.
Roshan Lal Gupta having its registered office at A-8,
Ground Floor, Sector-33, Noida - 201301.
(b) Flat No. 304, measuring 533 sq.ft. in name of M/s.
Technow Consultants & Engineers Pvt. Ltd through its
Director Mr. Shishir Anand Gupta son of Mr. Roshan lal
Gupta having its registered office at A-8, Ground Floor,
Sector-33, Noida - 201301.
(c) Flat No. 305, measuring 533 sq.ft. in name of Mrs.
Dipti Gupte wife of Mr.Nishit Gupta, resident of 107,
New Rajdhani Enclave, Vikas Marg, Delhi - 110 092."
2. It is requires to be examined whether in relation to the
Judgment Debtor the flats belonging to the above
individuals were amenable to be sold in execution of the
decree obtained by the Petitioner/Decree Holder,
Cement Corporation of India Limited. Mr. Tikku, learned
counsel for the Decree Holder states that he will address
detailed arguments on this aspect on the next date of
hearing.
3. Copies of the affidavit of M/s. Skyways Builders have
been supplied to learned counsel for the other parties. A
representative of M/s. Skyways Builders will remain
present in Court along with the original documents on the
next date of hearing.
4. List on 11th August 2009."
20. The submissions of the learned counsel were heard at length on 19th
and 20th August 2009. On 20th August 2009, the learned Court
Auctioneer Mr. K.L. Chaudhary was present in Court and made a
statement in continuation of the report submitted by him to the Court on
8th January 2008. The said statement is placed on record.
21. After the orders were reserved, a fresh EA No.458 of 2009 was filed
by Teknow seeking to place on record their written submissions and
certain decisions relied upon by them. This application was heard on 26th
August 2009 and orders were reserved.
Submissions of counsel
22. Mr. Rakesh Tiku the learned counsel appearing for the DH submits
that the plea of the objectors that they had nothing to do with the JD firm
and therefore the properties which stood in their names should not be
attached, was unacceptable. He submitted that a careful perusal of the
transactions through which the objectors are now claiming title, would
show that these transactions had been entered into only to defeat the
execution of the decree. The objectors are all related in one way to each
other or to the JD firm. The JD itself had not come forward to object to
the execution of the decree. In the circumstances, the applicants could not
possibly question the decree itself. If the decree was valid and
executable, then it was for the objectors to show that they had valid title
to the properties in question having purchased them for consideration. If
the objectors were not able to satisfy the court that the transactions
through which they were claiming title were bona fide, then the auction
sale had to be confirmed and the consequences had to ensue.
23. According to Mr. Tiku, it was plain from the affidavit of M/s Skyway
Builders that although initially the four flats were jointly in the names of
Mr. Raj Kishan Dass, Mr. Roshan Lal Gupta and Mr. Santosh Kumar
Garg, the substitution thereafter of other parties was not for any
consideration but merely by letters being written to the builders to
substitute their names. Thus on the death of Mr. Raj Kishan Dass on 17th
September 1987 a letter was written by his wife Smt. Prakashmati in
March 2006 stating that none of the legal heirs had any objection to the
substitution of Mr. Ashwani Gupta as an allottee along with the co-
allottees. Accordingly, the builder complied with this request and
appended an endorsement to the original Agreement dated 31st March
1978. Further, again on the request of the co-allottees, four separate
agreements were executed in respect of each of the said four flats on 28th
July 2006. However, the co-allottees continued to be Mr. Ashwani Gupta,
Mr. Roshan Lal Gupta and Mr. Santosh Kumar Garg.
24. On 27th February 2007, the co-allottees wrote to the builder stating
that they had misplaced/lost their copy of the said agreements and
produced a copy of the FIR (vide Page No.30/2007) and DD 15 dated
26th February 2007 filed to that effect. Fresh agreements were drawn up
whereby Flat Nos.302-303 measuring 534 sq. ft. was in the name of Mr.
Roshan Lal Gupta; Flat No.304, measuring 533 sq. ft. in the name of Mr.
Ashwani Gupta and Flat No.305, measuring 533 sq. ft. in the name of
Mr. Santosh Kumar Garg. On 6th August 2007 Mr. Roshan Lal Gupta co-
allottee in respect of Flat Nos.302-303, 3rd Floor, Kaison House, 84
Nehru Place requested for substitution of the name M/s Teknow
Consultants & Engineers Pvt. Ltd. through its Director, Mr. Shishir
Gupta s/o Mr. Roshan Lal Gupta. Mr. Ashwani Gupta on 20th August
2007 requested for substitution of M/s.Teknow in respect of Flat No.304.
On 6th August 2007 Mr. Santosh Kumar Garg requested for substitution
of the name of allottee in respect of Flat No.305 in favour of Ms. Deepti
Gupta, his daughter. These requests were all carried out.
25. Mr. Tiku points out that the chain of the above transactions can leave
no manner of doubt that the original partners were simply making
requests to the builder to change the name of allottees. None of these
allottees could be said to have derived title bonafide by making purchases
of those properties for consideration. The cloak of the transactions has to
be lifted and the auction sale of the properties should be confirmed.
26. As regards the liability of the partners of the firm, Mr. Tiku refers to
Section 25 of the Indian Partnership Act, 1932 (Act) and in particular the
judgment of the Supreme Court in Ashutosh v. State of Rajasthan (2005)
7 SCC 308. Reference is also made to the judgment in Dena Bank v.
Bhikhabhai Prabhudas Parekh & Co. (2000) 5 SCC 694. It is submitted
that it is possible in law for a HUF to be the partner of a firm and for
enforcing the liability of the firm, it was possible to proceed against the
karta of HUF. A reference is made to the judgment in Rashiklal & Co. v.
Commissioner of Income Tax, Orissa (1998) 2 SCC 49.
27. On behalf of the objectors, Mr. R.P. Kapur, the learned counsel
appearing for Teknow first submitted that there was in fact no executable
decree in the present case. He submits that no decree was drawn up by
this Court in accordance with law and where there is no executable
decree, the execution petition is misconceived. It is submitted that the
non-drawing of a decree prevented the aggrieved litigant from appealing
against it under Section 96 of the CPC. Therefore it was fatal to the
execution proceedings. Reliance is placed upon the judgment in 78
Indian Cases 996.
28. Secondly, it is pointed that there was a misdescription in the
execution of the property alleged to belong to the JD. This petition was
never amended subsequently. Once warrant of attachment of the
property mentioned in the execution petition was returned unexecuted,
there was no occasion for this Court to proceed to attach the properties at
Flat Nos. 302-305 Kaison House, 84 Nehru Place, New Delhi.
29. It is then submitted that under Order XXI Rule 64 CPC the learned
Court Auctioneer was under a bounden duty to ensure that only so much
of the attached property which is sufficient to satisfy the decretal amount
is put up for auction sale. The court auction sale in the instant case had
fetched Rs.1,36,00,000/- which was far in excess of the decretal amount.
The learned Court Auctioneer accordingly had failed in his duty to make
an appropriate assessment of the extent and value of the attached
property. Therefore the entire court auction sale stands vitiated.
30. It is repeatedly urged by the counsel for the other objectors that the
partners of the JD were HUFs and not individuals whereas these flats
belonged to individuals. Therefore, these flats cannot be made subject
matter of the auction sale to satisfy the decree. It is submitted that the
change of substitution of these objectors as allottees of the flats may not
have got title for consideration but the transfer of the flats in their
respective names should be treated as `gifts'. On behalf of Mr. Ashwani
Gupta, it was submitted that both the award as well as the decree were ex
parte. A wrong address was given in the execution petition for the JD.
No prior notice was served on the JD. Consequently, the auction sale was
not valid.
Prior notice to the JD
31. To take up the last point urged, a reference may be made to Order
XXI Rule 22 CPC which implicitly dispenses the issuance of any notice
to the JD if the execution petition is filed within a period of two years
from the date of the decree. In the present case, it is not in dispute that the
execution petition was filed soon after the expiry of two months from the
date of the decree. Therefore, there is no merit in the contention that prior
notice ought to have gone to the JD in the execution proceedings.
32. It needs to be noted that in the present case that the publication in the
newspapers of the issuance of a proclamation of sale resulted in a spate
of applications by the objectors, many of whom are related to the JD or
are partners. It is unlikely therefore that the JD is not aware of these
proceedings. The JD is also a firm in which all these persons have an
interest and therefore there is no question of the JD not being in the know
of the pendency of the present proceedings. The JD has not come forward
till date to raise any objection.
Misdescription of the property in the execution petition
33. A serious objection has been raised as to the mis-description of the
property in the execution petition. While it is true that the execution
petition mentioned Flat No.206 as belonging to the JD, that position was
corrected by filing an affidavit of the DH. That affidavit explains the
circumstances in which it came to be discovered that Flat Nos.302-305 of
Kaisons House belonging to the JD. In the considered view of this Court
in view of an affidavit having been filed pursuant to the directions issued
by this Court, the objection that the initial description of the property in
the execution petition was erroneous, pales into insignificance.
The Objectors' claims to the properties sold by public auction
34. The central issue in this case is really about the properties that have
been sold through auction. The affidavit of M/s Skyway Builders
explains in great detail how the changes in the name of allottees took
place vis-à-vis these flats. It is plain that at various stages the original
allottees got the builder to issue fresh agreements either on the ground
that there was a new allottee to be substituted in place of the earlier one
or that the original agreement was itself misplaced or lost. The second
important feature is that each of the allottees substituted is a close
relation of the original allottee. Mr.Ashwani Gupta, Mr.Roshan Lal
Gupta, Mr. Santosh Kumar Garg are all related to each other and the ones
substituting them are also closely related. Teknow is under the control of
the sons of Mr.R.L.Gupta. Ms.Deepti Gupta is the daughter of
Mr.S.K.Garg. Clearly the idea was that these properties will be kept
within the control of the family. It does not take very much to see what
the real nature of these transactions is. Although for the purposes of
income-tax, the HUF as a separate entity assumes significance, the
liability of the karta of an HUF, which is a partner of a firm, will have to
be determined with reference to the Partnership Act.
35. In Rashiklal & Co. v. Commissioner of Income Tax, Orissa, the
Supreme Court was dealing with a situation of a HUF being a partner in a
firm. It was observed in para 12 as under (SCC @ p.54):
"12. An HUF cannot be in a better position than a firm in
the scheme of the Partnership Act. The reasons that led
this Court to hold that a firm cannot join a partnership
with another "individual" will apply with equal force to
an HUF. In law, an HUF can never be a partner of a
partnership firm. Even if a person nominated by the HUF
joins a partnership, the partnership will be between the
nominated person and the other partners of the firm.
Having regard to the definition of "partnership" and
"partners" and in view of the principle laid down in
Dulichand's case (supra), it is not possible to hold that an
HUF being a fluctuating body of individuals, can enter
into a partnership with other individual partners. It cannot
do indirectly what it cannot do directly. If a Karta or
any other member of the HUF joins a partnership, he
can do so only as an individual. His rights and
obligations vis-a-vis other partners are determined by
the Partnership Act and not by Hindu law. Whatever
may be the relationship between an HUF and its
nominee partner, in a partnership, neither the HUF
nor any member of the HUF can claim to be a partner
or connected with the partnership through a nominee.
Where the Karta of an HUF enters into a partnership
agreement with a stranger, the Karta alone in the eye
of law is the partner. If any payment by the firm to a
partner is prohibited by law, the Karta cannot be heard to
say that the payment was received by him not as a partner
but in some other capacity. Within the partnership, the
Karta is a partner like any other partner with whom
he has entered into a partnership agreement
individually. It is essential to have an agreement
between the partners to form a partnership. An HUF not
being a "person" cannot enter into an agreement of
partnership. If the Karta of an HUF enters into
partnership with a stranger, upon the death of the Karta,
the partnership will stand dissolved. In the absence of a
contract to the contrary, another member of the family
cannot step into the shoes of the Karta claiming that the
Karta was merely representing the HUF and the real
partner was the HUF. A Karta who enters into a contract
of partnership with a stranger may be accountable to the
other members of the HUF for the profits received from
the partnership business. But that is something between
the Karta and the HUF. But so far as the partnership firm
is concerned, the Karta is a partner like any other partner.
If a commission is paid to a partner who happens to be a
nominee of an HUF, the commission is not paid to the
HUF. It is paid by the firm to one of its individual
partners. The partner may have to account for the monies
received from the firm to another person or another firm
or an association of persons or an HUF. But that will not
alter the fact that commission was paid by the firm to one
of its partners." (emphasis supplied)
36. A reference may at this stage be made to the provisions of the Indian
Partnership Act, 1932 (Act). Section 25 of the Act spells out the liability
of individual partners and reads as under:
"25. Liability of a partner for the acts of the firm.
Every partner is liable, jointly with all the other partners
and also severally, for all acts of the firm done while he
is a partner."
37. As observed in Rashiklal & Co. (supra), the partners are bound to
carry on the business of the firm to the greatest common advantage, and
carry out the duties diligently in the conduct of the business. In para 24 it
was explained that "the very fact that individual shares of the partners
have to be specified and that such partners must personally sign the
partnership deed and also the application for registration go to show that
even if a person joins a firm as a representative of an HUF or any other
body or association, within the firm his position is that of an individual".
38. In CIT v. Bagyalakshmi & Co. AIR 1965 SC 1708 the Supreme
Court explained (AIR @ p.57):
"A partnership is a creature of contract. Under Hindu law
a joint family is one of status and right to partition is one
of its incidents. The income-tax law gives the Income-tax
Officer a power to assess the income of a person in the
manner provided by the Act. Except where there is a
specific provision of the Income-tax Act which derogates
from any other statutory law or personal law, the
provision will have to be considered in the light of the
relevant branches of law. A contract of partnership has
no concern with the obligation of the partners to others in
respect of their shares of profit in the partnership. It only
regulates the rights and liabilities of the partners. A
partner may be the karta of a joint Hindu family; he
may be a trustee; he may enter into a sub-partnership
with others; he may, under an agreement, express or
implied, be the representative of a group of persons;
he may be a benamidar for another. In all such cases
he occupies a dual position. Qua the partnership, he
functions in his personal capacity; qua the third
parties, in his representative capacity. The third
parties, whom one of the partners represents, cannot
enforce their rights against the other partners nor the
other partners can do so against the said third parties."
(emphasis supplied)
39. Section 45 of the Act states that the partners continue to be liable as
such to third parties for any act done by any of them which would be the
act of the firm. In Dena Bank v. Bhikhabhai Prabhudas Parekh & Co.,
the Supreme Court explained the question of a liability of an individual
partner of the firm as under (SCC @ p. 706):
"18. The High Court has relied on Section 25 of the
Partnership Act, 1932 for the purpose of holding the
partners as individuals liable to meet the tax liability of
the firm. Section 25 provides that every partner is liable,
jointly with all the other partners and also severally for
all acts of the firm done while he is a partner. A firm is
not a legal entity. It is only a collective or compendious
name for all the partners. In other words, a firm does not
have any existence away from its partners. A decree in
favour of or against a firm in the name of the firm has
the same effect as a decree in favour of or against the
partners. While the firm is incurring a liability it can
be assumed that all the partners were incurring that
liability and so the partners remain liable jointly and
severally for all the acts of the firm." (emphasis
supplied)
40. The above law was reiterated by the Supreme Court in Ashutosh v.
State of Rajasthan which is of course closer to the facts on hand. There a
decree was passed in favour of a firm Sharma & Co and against the State
of Rajasthan for a sum of Rs.37,255.07p. in respect of certain
construction work undertaken for the irrigation department. The firm
filed an execution petition for recovery of the said sum. During those
proceedings security for the said sum was furnished on behalf of the firm
by Mr. Gurbachan Singh for Rs.2,927.57p. and by Smt. Kamla for
Rs.37,592.57p. An immovable property in the form of house was also
furnished as security. In the appeal filed by the State, Sharma & Co.,
Smt. Kamla Devi and Mr. Gurbachan Singh were impleaded as
Respondents. The house which was offered as security belonged to Smt.
Dhanwanti Devi, w/o Mr. Shiv Lal Sharma. She bequeathed the house to
her daughter's son Ashutosh by a Will. The States' appeal came to be
allowed. It then filed an application for restitution under Section 144
CPC. The court held that action could be taken against Smt. Kamla Devi
who had offered the house as security. It was held that the State was also
entitled to interest from Sharma & Co. An attachment order was then
passed in respect of the house. This was resisted by Ashutosh by stating
that Smt. Dhanwanti Devi who had bequeathed the house to him, was not
a party at any point of time to the suit and therefore the house could not
be attached. The application was dismissed by the District Judge. It was
held that Dhanwanti Devi had no right to execute a Will in respect of the
disputed house. One of the contentions raised was that the decree cannot
be executed against a partner when the decree was against the firm and
that the provisions of Order XXI Rules 49 and 50 CPC did not permit it.
These contentions were negatived by the Supreme Court. Referring to the
decisions in Dena Bank (supra) and ITO (III) v. Arunagiri Chettiar
(1996) 9 SCC 33 in which it was held that the "Section 25 of the
Partnership Act does not make a distinction between a continuing partner
and an erstwhile partner. Its principle is clear and specific viz. that every
partner is liable for all the acts of the firm done while he is a partner
jointly along with other partners and also severally". As regards the
second point regarding compliance with the Order 21 Rules 49 and 50
CPC a reference was made to the judgment in Mandalsa Devi v. M.
Ramnarain (P) Ltd. AIR 1965 SC 1718 in which it was held that "a
decree may be obtained against a firm under Order 30 of the Code of
Civil Procedure, and such a decree may be executed against the property
of the partnership and against all the partners by following the procedure
of Order 21 Rule 50 of the Code of Civil Procedure". On the facts of that
case, it was held that the requirement of the rule was that decree against a
firm can in execution be enforced against the partnership property. It may
also be enforced against the partner which would include the separate
property of the partners.
41. In the considered view of this Court, the judgments in Rashiklal &
Co. and Ashutosh are a complete answer to the contentions urged by the
objectors. Even though Mr. Santosh Kumar Garg, Mr. Ashwani Gupta,
and Mr. Roshan Lal Gupta may have been partners of the JD firm in their
capacity as kartas of their respective HUFs, their liability as partners will
continue in their individual capacity. The mere fact that the partners of
the JD firm were HUFs will make no difference to the position that those
kartas will continue to be liable as if they were individual partners of the
JD firm. Their liability for the acts of the firm is as explained in Dena
Bank, Ashutosh and Rashiklal & Co. Therefore, the mere fact that the
during the pendency of the proceedings in this Court as well as the
execution proceedings certain changes were effected by the builder in the
names of the allottees will not make any difference to the legal position
regarding the partners of the JD. These changes have been made by the
partners themselves by writing letters to the builder, asking for the
change to be effected. No consideration has been paid for these
transactions. There is no gift deed which can enable the Court to treat
these transactions as gifts. There can be no manner of doubt that these are
paper transactions entered into only to defeat the rights of the DH. It is
held that the properties were rightly attached and sold in public auction to
realise the decretal amount owing to the DH by the JD firm.
Drawing up of the decree
42. The submission on behalf of the objectors was that no decree was at
all drawn up in this case and, therefore, the execution proceedings are in
bad in law. A perusal of the records of suit CS (OS) No.1743 of 1993
shows that an ex parte decree was indeed passed on 2nd August 2002.
That decree made the Award dated 21st June 1993 rendered by Mr. N.C.
Jain, Sole Arbitrator rule of court. The Registry while preparing the
decree found that the original of the Award which was filed in Court had
gone missing. A copy of the Award certified to be a true copy by
Mr.A.K.Verma, the Advocate of the DH was then placed on record.
Upon a noting by the Registry the case was again placed before the Court
on 28th October 2004 when the following order was passed:
"On the basis of the office report the case is listed today.
The decree be drawn up on the basis of the award
produced by Mr. A.K. Verma and the same shall form
part of the decree."
43. Thereafter the decree was drawn up which forms part of the file. The
decree states that the copy of the award dated 21st June 1993 rendered by
Mr. N.C. Jain, Sole Arbitrator will be taken on record and made a rule of
the court. It has been specifically stated therein that "a decree is hereby
passed in terms of the said Award which shall form part of the decree".
44. In view of the above, the objection that there is no decree drawn up in
the present case is entirely without merit.
The Court Auctioneer
45. The objection that the Court Auctioneer did not perform his duties as
required under Order XXI Rule 64 CPC is without basis. The report of
the Court Auctioneer dated 8th January 2008 has been perused. It explains
the circumstances in which he visited the suit property and thereafter
conducted the auction sale. Supplementing this report, the learned Court
Auctioneer has the following statement in this Court on 20th August
2009:
"On 30th November 2007 when I inspected the property
in auction in order to conduct the sale then I noticed that
the property bearing Flat Nos.302-305 Kaison House, 84,
Nehru Place, New Delhi was one continuous large hall of
an area of approximately 1700 sq. ft. That flat Nos.302-
305 were not identifiable as separate flats and were not
divisible by metes and bounds."
46. If indeed the factual position was that the four flats were in fact one
whole unit, no fault can be found with the Court Auctioneer for
proceeding to put up for auction sale the whole unit. The excess money
after satisfying the decree will be dealt with in accordance with law upon
an application being made in that behalf by the JD.
47. As regards the fees of the learned Court Auctioneer, Rule XXII of
Vo.1 Chapter XII, Part-L, Delhi High Court Rules stipulates that where
the sale proceeds Rs.5,000/- a fee equivalent to 5% on Rs.5000/- and
2.5% on the remainder will be payable. This works out to Rs.3,40,125/-.
In terms of Rule XXII (2), 80% of the said sum will be paid to the Court
Auctioneer and 20% to the paid to the Government Treasury. In that view
of the matter, it is directed that a sum of Rs.2,72,000/- will be paid by the
Registry to the Court Auctioneer and the balance 20% i.e., Rs.68,125/0
be deposited in the Treasury of GNCT of Delhi by the Registry within a
period of two weeks from today.
Claim of the Auction Purchaser
48. The auction purchaser has filed EA No.344/2009 stating that the
interest that has accrued in the fixed deposit should be handed over to
him. There is no provision under which the auction purchaser can make
such a claim. The auction purchaser is only entitled to have the sale deed
executed in his favour after confirmation of the sale by the court. He may
independently proceed against any of the objectors for any loss he may
have suffered on account of the present proceedings and the delay that
has ensured in the sale deed being executed in his favour. The application
is accordingly dismissed.
Conclusion and Directions
49. For the above reasons, this Court in exercise of its powers under
Order XXI Rule 92 CPC confirms and makes absolute the auction sale of
the properties conducted by the learned Court Auctioneer on 30th
November 2007. Under Order XXI Rule 94 CPC, this Court directs that a
certificate shall be granted to the auction purchaser specifying the
property sold. The certificate shall bear the date of this order. Since the
property is vacant and lying under the lock and key, it is directed that
vacant possession of the property be delivered to the auction purchaser
within a period of two weeks after the corrected Flat Buyers' Agreement
is drawn up and issued.
50. It was noticed by this Court in the order dated 5th February 2009 that
"judicial notice can be taken of the fact that ordinarily there are no
registered sale deeds of the flats such as these; they are normally
transacted through Flat Buyers' Agreement" [see also the decision dated
28th May 2009 in CS(OS) No.2140/1998 - Guru Ram Das Bhawan v.
M/s Doon Apartments Pvt. Ltd.]
51. In that view of the matter, a direction is issued to M/s Skyway
Builders through its Proprietor Dr. Kusum S. Chand as represented by the
Power of Attorney, Kalicharan Mahto who is the Manager and who has
filed the affidavit dated 23rd March 2009 in the proceedings to enter the
name of the decree holder as the allottee of flat Nos.302-305 Kaison
House, 84 Nehru Place, New Delhi-110 019 and issue the necessary
corrected Flat Buyers' Agreement effecting this change within a period
of two weeks from today.
52. As per the calculation submitted by the DH on 29th August 2009, the
amount due to the DH as on 31st August 2009 works out to
Rs.88,97,813/-. This is after accounting for the amounts already received
by it through encashment of Bank Guarantees submitted by the JD. It is
accordingly directed that from the money accrued in the fixed deposit
(inclusive of interest), the DH will be paid an amount of Rs.88,97,813/-.
From the balance amount, the learned Court Auctioneer will be paid a
sum of Rs. 2,72,000/-. A sum of Rs.68,125/- will be deposited in the
Government Treasury, Govt. of NCT of Delhi. All the above payments
will be made, upon proper identification of the recipient, by the Registry
by way of banker's cheque/demand draft within a period of two weeks
from today. The balance amount will be kept in a fixed deposit and kept
renewed from time to time. As and when the JD applies for release of the
balance amount to it, then such application will be placed before the
Court for orders. A compliance report be placed on the file.
53. With the above directions, EA Nos.601, 611, 645 of 2007 are
dismissed with costs of Rs.10,000 each which will be paid by each of the
applicants to the DH within a period of four weeks from today. The
auction purchaser's EA No.344/2009 is dismissed. The other applications
i.e. EA Nos.24, 33/2007, 137/2009, 602/2007, 237, 238, 458/2009 stand
disposed of. The Execution Petition is closed.
54. Order dasti. A certified copy of this order be delivered to M/s.
Skyway Builders within three days for compliance with the directions
contained in para 51 of this judgment.
S. MURALIDHAR, J.
SEPTEMBER 1, 2009
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