Delhi High Court
M/S Prem Enterprises vs M/S D.B.P Limited & Ors on 12 February, 2018
$~5 & 6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 12th February, 2018
+ FAO(OS) 72/2017
M/S D B P LIMITED ..... Appellant
Through: Mr. Davinder Singh with
Mr. Ashish Mittal, Advs.
versus
M/S D H A F P LIMITED & ORS ..... Respondent
Through: Mr. Saurabh Kirpal with Mr.
Pallav Pandey and Mr.
Sarthak Sachdev, Advs. for
respondent no.6.
+ FAO(OS) 147/2017 & CM No.18056/2017
M/S PREM ENTERPRISES ..... Appellant
Through: Mr. Saurabh Kirpal with Mr.
Pallav Pandey and Mr.
Sarthak Sachdev, Advs.
versus
M/S D.B.P LIMITED & ORS ..... Respondent
Through: Mr. Davinder Singh with
Mr. Ashish Mittal, Advs.
CORAM:
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE C.HARI SHANKAR
JUDGMENT (ORAL)
GITA MITTAL, ACTING CHIEF JUSTICE
CM No.18056/2017 (delay of 49 days) in FAO(OS) No.147/2017
For the reasons stated in the application, delay in filing the
appeal is condoned.
FAO(OS) Nos.72/2017 & 147/2017 Pg.1 of 24
This application stands disposed of.
FAO(OS) No.72/2017
FAO (OS) No.147/2017
1. These two appeals relate to the property bearing No.11, Ring
Road, Lajpat Nagar, Part - IV, New Delhi (hereinafter referred to
as "the suit property") which is the subject matter of CS(OS)
No.484/2016 titled M/s DBP Limited vs. M/s DHAFP Limited &
Ors.
2. In this suit, on 14th February, 2017, arguments were heard on
two applications and while the ld. Single Judge has rejected I.A.
No.11750/2016 (under Order XXXIX Rule 1 & 2 of CPC filed by
the plaintiff-M/s D.B.P. Limited), however, no orders stand passed
on I.A. No.12871/2016 (under Order VII Rule 11 of the CPC filed
by the defendant no.6-M/s. Prem Enterprises).
3. The facts necessary for adjudication of these appeals to the
extent necessary are noted hereafter. For expediency, we are
referring to the parties by the nomenclature as assigned to them in
CS(OS) No.484/2016.
4. We may also hasten to add that inasmuch as we have been
called upon to consider the application under Order VII Rule 11 of
the Code of Civil Procedure, we are referring to the facts as
brought on record only in the plaint in CS(OS)No.484/2016 as well
as the documents filed by the plaintiff (appellant in FAO(OS)
No.72/2017 herein) in that suit before the ld. Single Judge.
5. M/s DHAFP Limited (defendant no.1) had purchased the
said suit property in a court auction (conducted pursuant to an
FAO(OS) Nos.72/2017 & 147/2017 Pg.2 of 24
order passed in Suit No.585/1974 on 21st November, 1990), for an
amount of Rs.65,77,379/-. It is the case of the plaintiff that the
amount of sale consideration was advanced by it to DHAFP
Limited (defendant no.1) and that the defendant no.1 had created
an equitable mortgage by depositing the original title deeds and
handing over the possession of the said property in favour of the
plaintiff.
6. So far as the need to file the suit is concerned, in para 2 the
plaint contends the following:
"2. Immediate need to file the present suit has arisen
in view of the fact that on 08.09.2016, Defendant Nos.1
to 6 without any information and notice to the plaintiff
and for no rhyme started breaking the building by use of
Bulldozers, JCB machines and deployed huge man
power to remove debris by use of dumper trucks. Effect
of which is that the property in possession of the plaintiff
is partially broken resulting into dispossession and due
to the broken construction material/debris in the
property, which has fallen all over the access to the
basement floor is also impossible. All the records/files
papers/furniture/store items belonging to the plaintiff
have been illegally removed or are dumped inside the
debris. Instantaneously police complaint was made and
thereafter this Hon'ble Court is being approached to
protect the property and the security of the plaintiff. "
(Emphasis supplied)
7. It is essential to refer to some further portions of the plaint.
In paras 25 & 26, averments stand made as regarding the accrual of
the cause of action for filing of the suit in question and reads as
follows:
FAO(OS) Nos.72/2017 & 147/2017 Pg.3 of 24
"25. Apart from the protection and recovery of
possession of plaintiff at the two floors namely 2nd floor
and basement of the suit property being Plot no.11 at
Ring Road, Lajpat Nagar, New Delhi - 24, plaintiff is
entitled to the possession of complete security, namely
the complete suit property and for recovery of the
mortgage money by recovery of the principal amount
and interest thereupon at the rate of 24% per annum
apart from the cost charges and expenses incurred by the
plaintiff. Plaintiff is also entitled to get cancellation of
the documents illegally and fraudulently executed by the
Defendants so as to defraud the Plaintiff.
As on date of filing the present Suit, the amount due
from the mortgage of the suit property being Plot no.11
at Ring Road, Lajpat Nagar, New Delhi - 24, is a total of
Rs.65,00,000/- (Rupees Sixty Five Lacs) alongwith
interest at 24% per annum from 19.5.1997 till the date of
realization. The beneficiaries/Defendants (but for
Defendant No.7) are jointly and severally liable to pay.
26. That the CAUSE OF ACTION for filing of the
present suit arose on 08.09.2016, when the Defendants
started breaking the suit property and after which
present management of the Company became aware of
the fraud played upon by the Defendants as detailed in
Para 3 above. Prior to this vide order dated 11.03.2014,
present management of the company took over after a
long drawn litigation, when the Company Law Board
passed a judgment in the case of Arun Mehra & Anr
versus Durga Builders (P) Limited & Ors in C.P. No.112
(N.D.) of 2013, wherein the validity of the agreement
dated 19.05.1997 was upheld and Mr Arun Mehra and
his wife Mrs Seema Mehra were recognized as the
shareholders. The cause of action is continuing one."
(Emphasis supplied)
8. Mr. Davinder Singh, ld. counsel for the plaintiff has
FAO(OS) Nos.72/2017 & 147/2017 Pg.4 of 24
vehemently contended that the plaintiff is a victim of fraud at the
hands of Mr. R.K. Nanda as well as the defendant nos.2 to 4. It is
submitted that pursuant to an agreement dated 19th May, 1997,
100% shares of the erstwhile Directors in M/s Durga Builders (P)
Limited were purchased by Mr. Arun Mehra and his wife Mrs.
Seema Mehra. However, despite this agreement and the
transaction having been completed, Mr. R.K. Nanda continued to
exercise control over the company necessitating the proceedings
before the Company Law Board. Mr. Singh has contended that it
was on the 11th March, 2014, that the Company Law Board had
declared that Mr. Arun Mehra and his wife Mrs. Seema Mehra
were shareholders in the company and directed to hold a meeting
of the new Board which meeting was conducted on the 24th March,
2014.
9. In the plaint, the plaintiff has also made reference to a
complaint made by M/s Class Sales Pvt. Ltd. to the Economic
Offences Wing in the year 2016. It is submitted by Mr. Saurabh
Kirpal, ld. counsel for the defendant no.6 that Mr. Arun Mehra is
one of the Directors of M/s. Class Sales Pvt. Ltd. This fact is not
disputed by the ld. counsel for the plaintiff.
10. So far as the claim against the defendants is concerned, the
plaintiff refers to the sale of the suit property at approximately
Rs.70 lakhs by Mr. R.K. Nanda acting on behalf of the defendant
no.1 - DHAFP Limited to the defendant nos.2 & 3 purportedly in
the year 1998. There is a reference in para 15 of the plaint that
there are two Agreements to Sell, one dated 2 nd January, 1999 and
FAO(OS) Nos.72/2017 & 147/2017 Pg.5 of 24
the subsequent Conveyance Deed dated 24th January, 2000.
11. So far as defendant no.6 is concerned, we find that without
making any averments in the plaint regarding further transfer by
the defendant nos.2 to 4 in favour of the defendant no.6, in the
prayer clause, the plaintiff has sought decree of declaration
declaring the alienation dated 16.07.2011 through registered sale
deed of the suit property in favour of the defendant no.6 - M/s
Prem Enterprises as null and void.
12. It is submitted by Mr. Davinder Singh, ld. counsel for the
plaintiff, that the transfer of the suit property in favour of the
defendant nos.2 to 4 and the defendant no.6 were collusive and
fraudulent. The plaint makes an averment that the sale
consideration allegedly paid by the defendant nos.2 to 4 did not
even come into the accounts of the company and, further, that it
was sold at an extremely low price lending support to the plaintiff's
case that it was fraudulent.
13. The basic challenge on behalf of the plaintiff to the
transactions, rests on the contention that the conveyance deeds
were illegal, null & void and of no effect in the eyes of law
resulting in the deprivation the right of the plaintiff over the suit
property.
14. Premised on these assertions, the plaintiff filed CS(OS)
No.484/2016 on 20th September, 2016 seeking the following
prayers:
"(a) Pass a decree for the recovery of the mortgage
money and direct Defendant Nos.1 to 6 to pay the
FAO(OS) Nos.72/2017 & 147/2017 Pg.6 of 24
principal amount and interest in terms of the calculation
made at Para No.25 of the suit plaint alongwith pendent
lite interest at 24% per annum till actual payment;
and/or
(b) Pass an order injuncting Defendant Nos.2, 3 and
6 from interfering with the possession of the Plaintiff in
the 2nd floor and basement of the suit property being
Plot No.11, Ring Road, Lajpat Nagar - IV, New Delhi -
110024 and restoring the possession of the part of the
suit property already interfered with, and/or
(c) Pass a decree of declaration thereby declaring
that both Agreements to sell each dated 02.01.1999 in
respect of property being Plot No.11, Ring Road, Lajpat
Nagar-IV, New Delhi - 110024 are illegal, null and void
and cancel the same; and/or
(d) Pass a decree of declaration thereby declaring
that the Conveyance Deed dated 24.01.2000 executed by
Defendant No.7 in favour of Defendant Nos.2 and 3 in
respect of property being Plot No.11, Ring Road, Lajpat
Nagar-IV, New Delhi - 110024 is null and void and of no
effect and cancel the same; and/or
(e) Pass a declaration thereby declaring that the gift
deed dated 10.09.2008 in relation to the suit property in
favour of Defendant No.2 in respect of property being
Plot No.11, Ring Road, Lajpat Nagar-IV, New Delhi -
110024 is illegal, null and void and of no effect and
cancel the same; and/or
(f) Pass a decree of declaration thereby declaring
that the alienation in favour of M/s Prem Enterprises
(Defendant No.6) on 16.7.2011 through registered sale
deed of property being Plot No.11, Ring Road, Lajpat
Nagar-IV, New Delhi - 110024 is null and void and of no
effect and cancel the same; and /or
(g) Pass a decree in favour of Plaintiff and against the
FAO(OS) Nos.72/2017 & 147/2017 Pg.7 of 24
Defendants for restoration of possession thereby
directing Defendant Nos.2, 3 and 6 or their assignees,
representatives, agents or any person, whosoever is
found in possession of the property being Plot No.11,
Ring Road, Lajpat Nagar-IV, New Delhi - 110024, to
hand over the said property to the Plaintiff Company
forthwith; and/or
(h) Pass a decree of permanent injunction in favour of
the Plaintiff and against the Defendants thereby
restraining Defendant Nos.2, 3 and 6 or their assignees,
representatives, agents or any other person from in any
manner selling, transferring, alienating or parting with
possession of property being Plot No.11, Ring Road,
Lajpat Nagar-IV, New Delhi - 110024 in any manner
whatsoever to any person, except the Plaintiff; and/or
(i) Pass a decree granting damages/compensation to
the Plaintiff for the illegal acts on the part of Defendant
Nos.1 to 6 for which an enquiry should be ordered and
upon enquiry whatever damages compensation is found
to be reasonable, the Plaintiff hereby agrees and
undertake to pay the actual court fee on the amount of
damages which may be awarded in favour of the Plaintiff
at the time of passing the decree; and/or
(j) Cost of the suit be allowed to the Plaintiff;
(k) Any other relief which this Hon'ble Court deems fit
in the circumstances of the case may be granted to the
Plaintiff and against defendants."
(Emphasis by us)
15. Along with the plaint, M/s DBP Ltd. (the plaintiff) filed
I.A.no.11750/2016 under Order XXXIX Rules 1 and 2 of the CPC
praying for grant of interim injunctions against the defendants in
respect of the said property. On this application, when the suit
FAO(OS) Nos.72/2017 & 147/2017 Pg.8 of 24
came up for hearing for the first time on 22nd September, 2016 ex
parte ad interim injunction was granted. The defendants contested
this application.
16. The ld. Single Judge examined the prayers for interim
injunction made by the plaintiff by way of I.A. No.11750/2016
which was then rejected by the order dated 14th February, 2017.
17. So far as the prayer for grant of interim injunction
prohibiting transfer and alienation of the suit property, in the
impugned order dated 14th February, 2017, the ld. Single Judge was
of the opinion that in view of Section 68 of the Transfer of
Property Act, the right to sue for mortgaged money arises in favour
of the mortgagee in cases enumerated in Clauses 1(a) to 1(d)
thereof and that the only right given to a mortgagee under the
mortgage is to ensure the payment of the money. It was observed
that till this is done, the mortgagee can seek the
continuation/retention of the security. The ld. Single Judge has
also clearly noted that the very factum of there being a mortgage of
19th May, 1997 was itself a contentious issue. Ld. Single Judge has
also observed that the property may have been demolished in the
year 1997; that this fact was within the knowledge of the plaintiff
and that despite the fact that the plaintiff lost possession of its
security in the year 1997, it kept silent till 2016 when the suit was
filed. The court has also found that the knowledge of the plaintiff
of the subsequent transfers of the property to the various purchasers
was a contentious issue.
18. In this background, the ld. Single Judge accepted the
FAO(OS) Nos.72/2017 & 147/2017 Pg.9 of 24
willingness expressed by the defendants without prejudice to their
rights, to deposit the amount claimed by the plaintiff in Court,
observing that since the plaintiff has no right, title and interest in
the suit property other than part of it allegedly being handed over to
it as a security against the alleged mortgage amount, there was no
prima facie case in favour of the plaintiff to prohibit the defendants
from raising construction over the suit property.
19. The Court was also of the view that the defendants claimed
to be bona fide purchasers of the property and have a right in the
property and that they would be put to inconvenience when they
had undertaken to deposit the mortgaged money in the Court and
that it was the defendants who would suffer irreparable loss and
injury if the stay was granted.
20. In this background, by the order dated 14 th February, 2017,
the ld. Single Judge dismissed I.A. No.11750/2016 filed under
Order XXXIX Rule 1 and 2 by the plaintiff, subject to the
defendants depositing an amount of Rs.65 lakhs with the Registrar
General of this Court within seven days from the order with
information to the plaintiff of such deposit.
21. It is noteworthy that by the order dated 14th February, 2017,
the ld. Single Judge has passed no specific order on I.A.
No.12871/2016 which was filed under Order VII Rule 11 by the
defendant no.6. Instead, it has however been directed that the issue
framed relating to limitation shall be treated as a preliminary issue.
22. Aggrieved by the order dated 14th February, 2017, the
plaintiff has assailed the said order dismissing the I.A.
FAO(OS) Nos.72/2017 & 147/2017 Pg.10 of 24
No.11750/2016 by way of FAO(OS)No.72/2017 while the
defendant no.6 has filed FAO(OS) No.147/2017 assailing the order
dated 14th February, 2017 on I.A. No.12871/2016. We have heard
ld. counsels at length on these appeals who have carefully taken us
through the necessary record of suit.
23. On the 23rd May, 2017, in FAO(OS)No.72/2017, we had
recorded the following order:
"1. In the present case, the appellant claims to be the
mortgagee in respect of a loan of Rs.65 lakhs payable by the
respondent no.1-M/s DHAFP Ltd. to it. On the last date of
hearing, a doubt was raised with regard to the payment of
the said amount by the appellant to the respondent no.1. It
is submitted by Mr. Harish Malhotra, learned senior
counsel for the appellant that five documents have been filed
on record which include copy of the balance sheet as on 31st
March, 1997 of BDPL; copy of the order dated 10 th
October, 2012, true copy of balance sheet of 1996-1997 of
the payment on 31st March, 1996 of M/s DHAFP Ltd.; copy
of possession letter and copy of the advertisement dated 15th
December, 1999 in Times of India have been filed on
record.
2. It may be observed that no document evidencing
transfer of Rs.65 lakhs in the year 1996 by the appellant to
the respondent no.1 has been placed on record.
3. Let the record of CS(OS) 484/2016 be called for
before the next date of hearing.
4. List on 30th October, 2017."
24. Let us first examine the prayer for injunction made by M/s
DBP Ltd. in I.A.No.11750/2016 and the order passed by the Ld.
Single Judge thereon.
FAO(OS) Nos.72/2017 & 147/2017 Pg.11 of 24
25. Before considering the rival contentions, additional
important circumstances deserve to be considered. One aspect is of
the alleged payment of the amount by M/s DBP Limited (plaintiff)
to M/s DHAFP Limited (defendant no.1) against the creation of the
equitable mortgage. Another aspect is the claim of possession of
part of the property (second floor)and basement) by the plaintiff
and dispossession by M/s DBP Ltd. We shall also consider the
aspect of proceedings conducted before the Economic Offences
Wing on a complaint inter alia against Mr. R.K. Nanda and his
wife Mrs. Promila Nanda.
26. So far as the claim of payments made by M/s DBP Ltd. to
the defendant no.1-DHAFP Ltd. is concerned, we have noted above
the averments in the plaint that the mortgage was created for
"almost the same value" as the purchase price of the suit property
which was Rs.65, 77, 379/-.
27. We note that in para 3 of the plaint, reference is made to the
report dated 29th March, 2016 of the Economic Offences Wing
referring to the statement attributed to Mrs. Promila Nanda wherein
she has allegedly referred to "dues of Rs.65 Lacs".
28. To support the payment which formed the basis of the
creation of the alleged equitable mortgage, the plaintiff has placed
five documents in FAO(OS) No.72/2017 before us. Amongst these
documents are the two copies of the balance sheets as on 31 st
March 1995 of M/s Durga Housing & General Finance Pvt. Ltd.- a
sister concern of defendant no.1. This balance sheet contains
amongst the other, the following entries: (pg.544)
FAO(OS) Nos.72/2017 & 147/2017 Pg.12 of 24
"Durga Housing & General Finance Pvt. Ltd.
Balance Sheet as on 31st March, 1996.
Previous Year Liabilities Current Year
Ended 31-03-95 Ended 31-03-95
61,97,016.20 M/s Durga 65,03,339.20"
Builders Pvt.
Ltd.
Thus according to this Balance Sheet, the plaintiff - M/s
Durga Builders Pvt. Ltd. had a liability of Rs.61,97,016.20 on the
year ending 31st March, 1995 which has gone up to
Rs.65,03,339.20 at the year ending 31st March, 1996. This
document was never placed before the ld. Single Judge. However,
even if we could take the same into consideration, the document
does not support the case set up in the plaint which is to the effect
that around Rs.65 lakhs were was advanced by the plaintiff to the
defendant no.1 on 19th May, 1997 when the equitable mortgage
was created.
29. Ld. counsel for the plaintiff has drawn our attention to an
undated letter captioned as "Possession Letter" (at pg.337 of the
record). This letter makes a reference to the "amount of Rs.65
lacs". This possession letter is referred to in para 8(i) of the plaint.
30. Despite a close scrutiny of the entire record, we are unable to
find a definite disclosure of either the exact amount of the loan
against which the defendant no.1 had allegedly created an equitable
mortgage in favour of the plaintiff in the plaint or the exact date on
which this was done.
31. We now examine the plaintiff's claim of possession having
FAO(OS) Nos.72/2017 & 147/2017 Pg.13 of 24
been handed over to it and subsequent dispossession. To support
its pleadings on this aspect, the plaintiff has placed on record copy
of a possession letter which was executed by Mr. R.K. Nanda on
19th May, 1997, which reads as follows:
"Possession Letter
In consideration for an amount of Rs.65.00 lacs due to
M/s. DURGA BUILDER PVT. LTD., we confirm having
handed over possession of property No.11, Lajpat Nagar-
4, Ring Road, New Delhi along with necessary titles
deed.
The complete, vacant space of over five thousand sq.ft.,
unencumbered peaceful possession and keys of the
Basement and second floor is hereby handed over to Mr.
Arun Mehra at New Delhi, today.
HANDED OVER
Sd/-
Mr. R.K. Nanda
for Durga Housing & General Finance (P) Ltd.
TAKEN OVER
Sd/-
ARUN MEHRA
Witnesses:
Dr. Bhasin
Mr. Gauba. "
32. It is noteworthy that the above letter makes no reference to
the creation of a mortgage. The same is also undated. It refers to
no specific portions of the property
33. Mr. Davinder Singh, ld. counsel for the plaintiff would
contend that the date is mentioned on the backside of the
document. A perusal thereof shows that on the back of the
FAO(OS) Nos.72/2017 & 147/2017 Pg.14 of 24
document, only the date of the purchase of stamp paper is
mentioned. The ld. Single Judge has noted this date as
'19.05.1997'.
34. So far as the creation of the mortgage is concerned, in the
plaint, which was filed on 20th September, 2016, we find the
following contradictory averments made by the plaintiff:
"1. ...... Plaintiff is a mortgagee by deposit of original
title deed(s) as against the value of the entire sale
consideration mentioned in the title deed(s) of property
in question i.e. Property No.11, Ring Road, Lajpat
Nagar-IV (hereinafter referred to as the 'suit property'),
New Delhi. Suit property was purchased on 08.11.1990
for a value of Rs.65,77,379/- (Rupees Sixty Five Lacs
Seventy Seven Thousand Three Hundred Seventy Nine
Only) i.e. almost the same value for which mortgage was
created. It is pertinent to note that Defendant No.1 on
19.05.1997 created a mortgage as indicated above and
in order to further secure the plaintiff handed over
possession of two floors in the property (mortgage
security), by executing a separate possession letter. In
effect, plaintiff holds both the original title deeds as well
as the possession along with the possession letter
towards the mortgage security of the amount so paid by it
as a mortgagee.
xxx xxx xxx
8(b)...... It was thereafter that suit property was permitted
to be purchased on 21.11.1990 by M/s Durga Housing
& General Finance Private Limited. That a mortgage
by deposit of original title deeds and by giving
possession of two floors (2nd floor and basement) was
created by the Defendant No.1 in favour of Plaintiff
Company."
(Emphasis supplied)
FAO(OS) Nos.72/2017 & 147/2017 Pg.15 of 24
This date does not tally with the dates of payment.
35. It is trite that consideration of an application under Order
XXXIX Rules 1 and 2 of the Code of Civil Procedure rests on three
basic principles. The Court would require an examination as to
whether the plaintiff had made out a prima facie case in its favour;
whether the plaintiff would suffer irreparable loss and damage in
case injunction was not granted; and whether the balance of
convenience was in favour of the plaintiff.
In the present case, the plaintiff hopelessly fails to satisfy
any of the three basic requirements entitling grant of injunction.
So far as the plea of equitable mortgage is concerned, we have
found no disclosure at all of even the amount which was advanced
by the plaintiff to the defendant no.1, the date on which the same
was paid or when became due and payable.
36. The plaintiff is unable even to give the date on which the
equitable mortgage was created, let alone the specific terms
thereof. It is important to note that none of the terms of creation of
the mortgage has been disclosed anywhere in the plaint. The plaint
also does not make a statement as to when the money which was
allegedly advanced to the defendant no.1 became due and payable
by it. There is a reference in para 25 of the plaint that as on the
date of filing of the suit, the amount due from the mortgage of the
suit property is a total of Rs.65 lakhs along with interest @ 24%
per annum till the date of realization.
37. Our attention stands drawn to the proceedings before the
FAO(OS) Nos.72/2017 & 147/2017 Pg.16 of 24
Economic Offence Wing, the plaintiff refers to a report dated 29 th
March, 2016 of the Economic Office Wing. The plaintiff has
placed a copy of this report on the suit record as well as before us.
This report makes a reference to a "previous final report". This
report has unfortunately not been placed on record by the plaintiff.
However, a copy thereof appears to have been filed on the suit
record by the defendant no.6 as an annexure to the I.A.
No.12871/2016 (under Order VII Rule 11 of CPC) filed by it,
which is dated 16th May, 2013.
38. Being a document filed by a defendant, while we would
stand precluded from considering it for the purposes of examining
the prayer in I.A.No.1287/2016 under Order VII Rule 11 C.P.C.,
we can certainly consider this report for examination of the
plaintiff's prayer for injunction by way of I.A.No.11750/2016.
This report was premised on investigation conducted by the
Economic Offence Wing on the complaint made by DBP Ltd.
(plaintiff). Statements made in this report are relevant so far as the
plea regarding possession is concerned. It has been stated as
follows :
"..... However, on our further and persistent follow up,
they started avoiding us. Recently in the month of
September 2009, when we visited the said Property
No.11, Lajpat Nagar-4, Ring Road, New Delhi for
inspection to our shock & surprise, we found the
signboard of one M/s Global School of Management
Science displayed over there. On making enquiries, we
came to know that M/s Global School of Management
Science have taken the property on lease from M/s Sonal
Developers Pvt. Ltd., who had taken/purchased the said
FAO(OS) Nos.72/2017 & 147/2017 Pg.17 of 24
property from M/s Durga Housing & Finance Ltd. On
further inquiry from own sources we came to know that
Mr. R.K. Nanda & Mrs. Promila Nanda have illegally
handed over/sold/transferred the aforesaid property to
M/s Sonal Developers Pvt. Ltd. Thus the
agreement/arraignment entered into with us was
violated. Mr. S.K. Modi, the Accused No.4 is the
Director and key person of M/s Sonal Developers Pvt.
Ltd. and is the architect of the said illegal
deal/transaction between Mr. R.K. Nanda & Mrs.
Promila Nanda and M/s Sonal Developers Pvt. Ltd. and
all the accused persons were working in collision &
conspiracy and in active connivance with each other....."
(Emphasis supplied)
39. At page 24 of the above report of the Economic Offence
Wing, reference is contained to certain disputes between M/s Class
Sales Pvt. Ltd. and the plaintiff in the following terms:
"Several documents and reply in response to the
allegations made in the complaint have also been
obtained from the alleged persons. It has been informed
by the alleged R.K. Nanda (F/A) that he did not sign any
agreement with M/s Class Sales Pvt. Ltd. He has further
informed that Mr. Arun Mehra, Director of M/s Class
Sales P. Ltd. has been claiming that he had advanced
some loan against some of the plots and the plots were
kept as security for the said loan. This fact was admitted
hy him in WS filed by him being director Class Sales P.
Ltd. in suit No.961/2004. He has also claimed that no
payments were received by M/s Durga Builders P. Ltd.
from M/s Class Sales P. Ltd. against sale of the plots in
question. It has also been claimed that no documents
were ever executed by M/s Durga Housing & Finance P.
Ltd. in favour of M/s Class Sales P. Ltd. in respect of
property No.11, Lajpat Nagar-IV, Delhi and that the said
property was sold sometimes in the year 1999-2000."
(Emphasis supplied)
FAO(OS) Nos.72/2017 & 147/2017 Pg.18 of 24
40. So far as the suit property is concerned, the Economic
Offences Wing has stated thus:
"Regarding Claim Property No.11
The property bearing No.11, Ring Road, Lajpat Nagar-
IV, New Delhi was owned by M/s Durga Housing and
General Finance Pvt. Ltd. The said company did not
have any concern with Mr. Arun Mehra or any of his
companies, including Class Sales Pvt. Ltd. and
Hindustan Commercial Investment Trust Limited. In fact
the said property alongwith property bearing No.12,
Ring Road, comprised of a huge commercial complex,
comprising of a number of shops, which were built and
sold to the shopkeepers during 1992-93. The Municipal
Corporation of Delhi while taking demolition action on
10.11.1997 and 11.11.1997 demolished the entire
commercial complex. The same finds mentioned in the
MCD, house Tax Assessment Order, the copy of which is
annexed herewith. The said complex comprising of
various shops was sold to the Shopkeepers, much prior
to Mr. Mehra's entering into the agreement with me,
R.K. Nanda, in the year 1997 (copy of the agreement
enclosed). When all the shops and structure were
demolished by MCD, the shopkeepers wanted the refund
of their money. They identified a new buyer, with my
consent and the property was sold to M/s Sonal
Developers Pvt. Ltd. by executing a Sale deed, as the
said M/s Sonal Developers Pvt. Ltd. had refunded the
entire money to the shopkeepers whose shops were
demolished and the shopkeepers surrendered all their
claims in favour of M/s Sonal Developers Pvt. Ltd."
(Emphasis by us)
41. The proceedings and reports of the Economic Offence Wing
FAO(OS) Nos.72/2017 & 147/2017 Pg.19 of 24
are significant. Though the plaintiff has extracted portion of the
report dated 26th March, 2016 in the plaint itself, the plaintiff has
consciously skipped the previous report dated 16th May, 2013 filed
by the Economic Offence Wing which has been placed by the
defendant no.6 before the ld. Single Judge. In this report, the
Investigating Officer has reported to the effect that the suit property
was demolished in its entirety by the Municipal Corporation of
Delhi while taking demolition action on the 10th and 11th
November, 1997. It is further reiterated that this fact stands
mentioned in the MCD House Tax Assessment order which was
also annexed with the report.
42. According to the investigation conducted by the Economic
Offence Wing, the entire suit property was demolished in the year
1997. Thus, the property of which the plaintiff claims to have
received possession from M/s DHAFB Ltd. appears to have been
demolished. The plaintiff (or its Directors), who claim to have
been in possession of the property, would have been aware of the
demolition of the suit property in the year 1997 if they actually had
an equitable mortgage in its favour of the suit property, which
formed security therefrom or were ever in actual possession of any
potion thereof.
43. The above report of the Economic Offences Wing would
show that the plaintiff became aware of the sale of the suit property
in the year 1999.
44. No action stands taken either with regard to title or
possession or demolition of the suit property.
FAO(OS) Nos.72/2017 & 147/2017 Pg.20 of 24
45. We are informed by Mr. Saurabh Kirpal, ld. counsel for the
defendant no.6 that the suit property in question was let out to one
M/s Global School of Management Science at the time of the first
demolition in 1997 by the MCD and that in June, 2016, the suit
property in question was being demolished for the second time, at
the instance of the defendant no.6.
46. Clearly, the plaintiff had failed to make out a prima facie
case for grant of an injunction.
47. Defendant no.6 has staunchly opposed not only the grant of
injunction, but also the maintainability of the suit on the ground of
limitation.
48. It has been contended at length by Mr. Saurabh Kirpal that
even if the glaring false information in the plaint was believed, the
pleas in the plaint and the documents relied upon by the plaintiff,
clearly manifest that the suit has been filed hopelessly beyond the
period of 12 years as envisaged under Article 62 of the Schedule II
of the Limitation Act, 1963 and is therefore, barred by limitation.
49. Article 62 of Schedule II of the Limitation Act, 1963 which
prescribes the limitation to enforce a money claim premised on a
mortgage or charge reads as follows:
"Article 62
Description of suit Period of Time from which
limitation period begins in
run
FAO(OS) Nos.72/2017 & 147/2017 Pg.21 of 24
To enforce Twelve years When the money
payment of money sued for becomes
secured by a due."
mortgage or
otherwise charged
upon immovable
property.
(Emphasis supplied)
50. A bare reading of the plaint would show that according to
the plaintiff, 19th May, 1997 was the date on which equitable
mortgage was actually created in favour of the plaintiff.
51. Clearly, in terms of the above, it was open for the plaintiff to
file the suit for recovery of the amount of the mortgage within 12
years of the date when the money became due and payable to it.
The plaint is hopelessly silent on the specific date when the amount
became due and payable.
52. As set out above, no dates are disclosed in the plaint. Only
in para 25 of the plaint wherein the plaintiff has quantified the
liability of the defendant no.1, we find that a reference is made that
the interest became payable from 19th May, 1997 till the date of
realization. If this could be treated as the date wherefrom the
amount became due and payable by the defendant no.1, it was open
for the plaintiff to file a suit within limitation only within 12 years
of 19th May 1997, which is on or before 18th May, 2009. In the
present case, the suit has been filed thereafter on the 20th
September, 2016, i.e. more than seven years after the expiry of the
prescribed period of limitation.
53. It appears that in order to extend the period of limitation, the
FAO(OS) Nos.72/2017 & 147/2017 Pg.22 of 24
plaintiff has attempted to refer to an alleged demolition of the suit
property on 8th September, 2016. So far as demolition is
concerned, we have noted above the report dated 16th May, 2016 of
the Economic Offence Wing which refers to demolition of the
entire properties having been taken place on 10 th and 11th
November, 1997 by the MCD. The demolition was of property,
allegedly mortgaged would then have to be treated as destruction of
claimed security. This demolition, therefore, would also be accrual
of the cause of action to a mortgagee to bring a suit for securing the
mortgaged property. The suit filed on 20th September, 2016 has
been filed almost 19 years after accrual of the cause of action.
54. It is also well-settled that injunction shall not be granted if
the same is barred in law. The suit itself thus was barred by the
law of limitation. In view thereof, the plaintiff was additionally
disentitled to the relief of injunction for this reason.
55. FAO(OS)No.147/2017 has been filed by Prem Enterprises
complaining against the failure to grant relief to the defendant no.6
by the impugned order dated 14th February, 2017. As noted above,
the consideration of the application being I.A.No.12871/2016
under Order VII Rule 11 of the CPC for rejection of the plaint
which had been filed by M/s Prem Enterprises (defendant no.6) has
to be confined to the averments of the plaint and that the defence in
the written statement as well as documents filed by the defendants
cannot be considered.
56. We find that even the ld. Single Judge has directed that the
issue of limitation be treated as a preliminary issue. No order has
FAO(OS) Nos.72/2017 & 147/2017 Pg.23 of 24
been recorded on the prayer for rejection of the plaint.
57. This being the position and the above discussion as well as
our findings that the suit itself was barred by limitation, there was
no option for the Court but to reject the same in view of the
provisions or Order VII Rule 11 (d) of the CPC.
58. It is directed as follows :
(i) The challenge in FAO(OS) No.72/2017 to the impugned
order dated 14th February, 2017 assailing on I.A. No.11750/2016 in
CS(OS) No.484/2016 filed under Order 39 Rule 1 and 2 of CPC by
the plaintiff is hereby dismissed.
(ii) FAO(OS) No.147/2017 assailing the impugned order dated
14th February, 2017 on I.A. No.12871/2016 in CS(OS)
No.484/2016 filed under Order VII Rule 11 of CPC filed by the
defendant no.6 is hereby allowed, and consequently I.A.
No.12871/2016 shall stand allowed.
(iii) As a consequence, it is directed that the plaint in CS(OS)
No.484/2016 shall stand rejected.
(iv) In view of the above order, the Registry is directed to refund
the amounts of Rs.65 lakhs deposited by the defendant no.6 along
with accruals, if any, thereon through the counsel.
Both these appeals are disposed of in the above terms.
ACTING CHIEF JUSTICE
C.HARI SHANKAR, J
FEBRUARY 12, 2018/pmc
FAO(OS) Nos.72/2017 & 147/2017 Pg.24 of 24
