Uttar Pradesh Financial ... vs M/S Nalini Sarees Pvt. Ltd & Ors
2010 Latest Caselaw 2425 Del

                                                      UNREPORTABLE


*      IN THE HIGH COURT OF DELHI AT NEW DELHI


                               FAO No.14/2008


                                      Date of Decision: May 05, 2010


       UTTAR PRADESH FINANCIAL CORPORATION ..... Appellant
                    through Mr. A.K.Singh, Advocate with
                    Mr. Gitanju Suraj & Mr. Akhtar, Advocates

                      versus


       M/S NALINI SAREES PVT. LTD & ORS       ..... Respondents
                     through Mr. Atul Nigam, Advocate for
                     respondent No.1.

       CORAM:
       HON'BLE MISS JUSTICE REKHA SHARMA

1.     Whether the reporters of local papers may be allowed to see the
       judgment? No
2.     To be referred to the reporter or not? No
3.     Whether the judgment should be reported in the 'Digest'? No

REKHA SHARMA, J. (ORAL)

Respondent No.1 before me had initially filed the suit in this

Court for a decree of declaration, permanent injunction and specific

performance in respect of property comprising of flat No.104 in

building No.E-544, Greater Kailash, Part-II, New Delhi. Subsequently,

on account of the pecuniary jurisdiction of the High Court having

been raised, the suit was transferred to the Court of the District Judge

for trial. However, while the suit was pending in this Court, the

parties were directed to maintain status-quo in respect of the suit

property.

It is the case of respondent No.1 before the trial Court that it

had entered into an 'Agreement to sell' with M/s Hydel Construction

Pvt. Ltd. in respect of the aforementioned flat on December 28, 1988

and that M/s Hydel Construction Pvt. Ltd. had earlier purchased the

said flat from M/s Amar House Builders. It is further its case that the

entire sale consideration of the property has been paid and the

respondent is in possession of the property since the date of the

agreement. However, it is alleged that M/s Hydel Construction Pvt.

Ltd. despite having received the full sale consideration of the suit

property had not executed the sale deed in favour of respondent No.1

and that is what led to the filing of the suit for specific performance

and for other reliefs.

The case of the appellant, namely Uttar Pradesh Financial

Corporation is that the entire building, i.e. E-544, Greater Kailash,

Part-II, New Delhi in which the flat in question and some other flats

have been built, was mortgaged by the partners of M/s Amar House

Builders with the appellant on May 15, 1996 and the title deeds were

also deposited with it. It is stated that the loan was taken by two

sister concerns of M/s Amar House Builders, namely, M/s Shiv Lok

Investment Private Limited and M/s Regency Tower India Private

Limited, for which the partners of M/s Amar House Builders stood

guarantors. According to the counsel, the loan having not been

repaid, the appellant in view of Section 29 read with Section 46 of the

State Financial Corporation Act, 1951 is entitled to auction the suit

property.

The respondent along with the suit had filed an application

under Order 39 Rules 1 & 2 of the Code of Civil Procedure

(hereinafter referred to as the 'Code') praying for status-quo in

respect of the suit property till the disposal of the suit. As already

noticed above, when the matter was pending before this Court, the

parties were directed to maintain status-quo. However, the

application under Order 39 Rules 1 & 2 of the Code was not finally

disposed of and in the meanwhile, the appellant had also filed an

application under Order 39 Rule 4 of the Code seeking vacation of the

status-quo order. Both these applications were heard by the learned

Additional District Judge who by order dated October 30, 2007 has

allowed the application under Order 39 Rules 1 & 2 of the Code and

has directed the parties to maintain status-quo in respect of the flat in

question. In so far as the application of the appellant under Order 39

Rule 4 of the Code is concerned, the same was dismissed.

It is the aforementioned order of October 30, 2007 which is the

subject matter of challenge before me.

It is submitted by the learned counsel for the appellant that the

suit for specific performance filed by respondent No.1 is, on the face

of it, barred by time, as it is the respondent's own case that the

'Agreement to sell' was entered into between the parties on

December 28, 1988 whereas the suit was filed in the month of

April, 1999. It is also submitted that the property in question being

mortgaged with the appellant and the loan amount having not been

paid, Section 29 read with Section 46 of the State Financial

Corporation Act, 1951 empowers the appellant to auction the property

and the procedure laid down therein gives a right to the respondent to

file objections, if any to such an auction.

Having heard the learned counsels for the parties, I am of the

view that in so far as the question of limitation is concerned, it is for

the trial Court to adjudicate upon the same and it is not for me to

comment either way on whether the suit is within time or barred by

time. As regards the submission that Section 29 read with Section 46

of the State Financial Corporation Act, 1951 empowers the appellant

to auction the suit property, it is again a matter which needs to be and

shall be gone into by the trial Court. The appellant has to first

establish that the loan was taken by M/s Amar House Builders or their

partners from whom respondent No.10 had purchased the suit

property and it thereafter sold the same to respondent No.1, and has

to further establish that the loan amount is still outstanding. It also

cannot be ignored that the order of status-quo was passed when the

matter was pending before this Court. I see no reason to disturb that

order when the parties are still in the process of trial.

For the fore-going reasons, I find no merit in the appeal. The

same is dismissed. The parties are directed to maintain status-quo

with regard to the suit property. They are directed to appear before

the trial Court on the date fixed. The trial Court is directed to dispose

of the suit as expeditiously as possible, preferably within one year

from now.

REKHA SHARMA, J.

MAY 05, 2010 ka