Sh. Satyendra Kumar vs M/S. Mik Finance & Chit Fund (P) ...
2011 Latest Caselaw 2685 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         FAO No. 352/2010

%                                                        May 19, 2011

SH. SATYENDRA KUMAR                                    ...... Appellant
                   Through:           Mr. Sanjeev Anand, Advocate with Ms.
                                      Sunita Bhardwaj, Advocate


                          VERSUS

M/S. MIK FINANCE & CHIT FUND (P) LTD. & ORS.             ...... Respondents

Through: Mr. B.L. Wali, Advocate with Mr. T.K.

Ganju, Advocate for the respondent No.2.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

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

VALMIKI J. MEHTA, J (ORAL)

FAO No.352/2010 and C.M. Nos.17032/2010(stay) and 17034/2010(condonation of delay)

1. The challenge by means of this first appeal under Order 43 Rule

1 of the Code of Civil Procedure, 1908 (CPC) is to the impugned order dated

17.2.2010 by which the application of the respondent No.2 herein under

Order 21 Rule 90 CPC was accepted and the auction sale proceedings in

execution of a money decree was set aside.

2. The facts of the case are that respondent No.1/finance company

advanced a loan to one M/s. Shama Airways Private Limited. On failure of

the said company to repay the dues, a suit for recovery was filed against the

said M/s. Shama Airways Pvt. Ltd. under Order 37 CPC impleading therein

three other defendants who were the directors and guarantors. This suit was

ultimately decreed ex-parte in favour of the respondent No.1 company.

However, before the suit was decreed, the respondent No.2 herein had

moved an application under Order 1 Rule 10 CPC for being impleaded in the

suit on the ground that he had purchased the rights in the suit property from

the defendants/judgment debtors. This application was however dismissed

and which resulted in the respondent No.2 filing the suit for declaration,

injunction etc. claiming rights to the suit property. Interest in the property

was claimed by the respondent No.2 under an agreement to sell dated

27.2.1998. It was also claimed that respondent No.2 was in actual physical

possession of the property inasmuch as the judgment debtors/defendants in

the suit filed by the respondent No.1 for recovery had in fact delivered

possession to the respondent No.2 herein under the agreement dated

27.2.1998. In this suit, the respondent No.2 was successful in getting an

injunction order dated 31.5.2004 restraining the respondent No.1/finance

company from in any manner creating third party interest in the property.

The respondent No.1 company, however, after the suit under Order 37 CPC

was decreed exparte, filed execution proceedings and in such proceedings

the suit property, in spite of the order of the Civil Court dated 31.5.2004, was

auctioned and was purchased by the present appellant. The respondent

No.2 thereafter filed objections in such execution under Order 21 Rule 90

read with Section 151 CPC (the same would also be under the relevant

provisions from Order 21(97) to Order 21(106) CPC) for setting aside the

auction sale proceedings and which auction sale proceedings have been set

aside by the impugned order, inter alia being in violation of provision of

Order 34 Rule 14 proviso CPC. Before this Court, learned counsel for the

respondent No.2 also states that auction sale proceedings are liable to be set

aside because they were in violation of the injunction order dated 31.5.2004

passed in favour of the respondent No.2 in the suit No.171/04 filed by him of

the declaration, injunction etc. with respect to the suit property. Learned

counsel for the appellant herein has argued in reply that the auction sale

proceedings are final and they confer title on the appellant by virtue of

provision of sub Rule 3 of Order 21 Rule 90 CPC. It is also argued by the

counsel for the appellant that the agreement dated 27.2.1998 was an illegal,

fraudulent/manipulated document and therefore no rights have been created

in favour of the respondent No.2 by means of such document. It is also

argued that auction sale proceedings are also final because the rights under

Order 34 Rule 14 proviso CPC can be waived and thus the fact that merely

because the auction sale proceedings have taken place in violation of the

interim order dated 31.5.2004 in the suit filed by respondent No.2 against

the finance company and others, would not mean that auction sale

proceedings can be set aside.

3. A resume of the above facts shows that there are highly disputed

questions of facts between the parties. These disputed questions of facts

include as to whether or not there is a valid agreement dated 27.2.1998 in

favour of respondent No.2 herein. If the said agreement is valid, then,

whether the auction sale proceedings could have been taken place in

violation of Order 34 Rule 14 proviso as also the interim injunction order

dated 31.5.2004 passed in suit No.171/04 filed by respondent No.2. There

are also other disputed questions of facts as to whether the respondent No.2

had notice of the auction sale proceedings so as to object to the same before

the auction sale proceedings were conducted, and which the counsel for the

appellant claims that if such objections were not filed, though the auction

sale proceedings were known to respondent No.2 may create certain vested

rights in favour of the appellant. The impugned order disposed of the

application under Order 21 Rule 90 CPC read with Section 151 CPC of the

respondent No.2 merely on the basis of the affidavits i.e. the application and

reply to such application. In my opinion, this procedure is clearly erroneous

because CPC was amended w.e.f. 1.2.1977 by Act No.104 of 1976 whereby

all questions as to title of a property which is sold in execution of a decree

have to be decided in the execution proceedings itself and not by means of

an independent suit. The Legislature has inserted different provisions, and

amended some of the existing provisions, laying down the procedure from

the provisions of Order 21 Rule 97 to Order 21 Rule 106 CPC and as per

which detailed procedure objections in execution by a person who claims

right independent to the judgment debtor in the suit in which the decree has

been passed have to be decided. The person whose property is sold, if he

claims right independent of the judgment debtor or independent of the

decree holder, may also seek to get the auction sale proceedings set aside.

The provision of Order 21 Rule 101 CPC makes it clear that all questions

including questions relating to right, title or interest in the property arising

between the parties to a proceeding on an application filed under the

relevant provisions will be decided not by a separate suit but in the

execution proceedings themselves.

4. Accordingly, it was necessary for the trial Court before it

disposed of the objections of the respondent No.2 herein to frame

appropriate issues, allow the parties to lead evidence including the right to

cross-examine the witnesses of the opposite party and only thereafter decide

such objections of the respondent No.2. Counsel for the parties agree to such

procedure now being followed by the trial Court.

5. Learned counsel for the respondent No.2 states that he should

be permitted to file comprehensive objections including to the auction sale

proceedings and which I find to be a very reasonable request inasmuch as

like a suit plaint can be amended, surely, objections which have to be dealt

with like a suit can also be amended. Accordingly, the respondent No.2 shall

on or before 10.7.2011 file its objections to the execution and the auction

sale proceedings and which will be treated as amended objections to the

objection petition already filed. To such objections, the present appellant will

have a right to file the reply and take all such defences as it seeks to take,

both in facts and law. On the pleadings being completed in such objection

petition, the trial Court will frame such issues as arise between the parties

inter alia considering the observations made in the present order. The

Executing Court will thereafter allow both the parties to lead their evidence

and give right of cross-examination of witnesses of one party to the other

party. Both the parties agree that none of the parties will take unnecessary

adjournments and in case if such unnecessary adjournments are sought, the

trial Court will be entitled to impose heavy costs on the parties taking

unnecessary adjournments. It is also agreed between the parties that the

trial Court/Executing Court be requested to dispose of the objections of the

present respondent No.2 as expeditiously as possible, and to the extent

possible within a period of one year from the date it receives the copy of the

present order subject to the condition that none of the parties will take any

unnecessary adjournments.

6. The appeal is accepted and the impugned order dated 17.2.2010

is set aside. The trial Court will dispose of the objections of the respondent

No.2 in accordance with law taking into consideration the observations made

in para 4 & 5 above. Nothing contained in today's order or in the impugned

order dated 17.2.2010 will be a reflection one way or the other on the merits

of the issues which will come up for decision and which will be ultimately

decided in the objections of the respondent No.2. Both the parties are fully

entitled to take all such defences in facts and law as are permissible to them

during the course of hearing. This objection petition will be heard and

disposed of in accordance with law.

With the aforesaid observations, the appeal and applications

stand disposed of.

MAY 19, 2011                                    VALMIKI J. MEHTA, J.
Ne