Telangana High Court

Nisha Arora, Hyderabad Another vs M. Krishna Das, Hyderabad 3 Others on 7 April, 2022

Bench: Satish Chandra Sharma, Abhinand Kumar Shavili

HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                               AND
    HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI

           W.A.Nos.1558, 1560, 1563 & 1564 of 2013

COMMON JUDGMENT:       (Per Hon'ble Sri Justice Abhinand Kumar Shavili)


     These Writ Appeals are being disposed of by way

of common Judgment as all the Writ Appeals are

arising out of common order passed by the learned

Single Judge in W.P.Nos.11862, 13872, 13883 of 2008

and 16650 of 2011 dt.23-07-2013.


      2.     Heard Sri N.V. Anantha Krishna, learned

counsel for the appellants, Sri Vijay Kumar Heroor,

learned      counsel    for      1st       respondent,                learned

Government Pleader for Co-operation appearing for 2nd

respondent and Sri P.V.L. Bhanu Prakash, learned

counsel for 3rd respondent.

3. It has been contended by the appellants that

their mother Smt. Veera Valli has availed loans from

Vasavi Co-operative Urban Bank Limited (for short 'the

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Bank') amounting to Rs.11,50,000/- each under loan

account Nos.542, 541 and 540 and mortgaged two

items of properties to the bank viz., (i) a house bearing

No.1-7-390, admeasuring 1,186 sq. Yds. situated at

Bakaram, Hyderabad and (ii) shops bearing Nos.

1-7-392/1 to 1-7-392/22 situated at Bakaram,

Hyderabad, and the mother of the appellants has

expired on 01-05-1996 leaving behind the appellants

as legal heirs. When the appellants and the

appellant's mother could not repay the loan amount,

the bank has initiated proceedings under Section 61 of

the Andhra Pradesh Cooperative Societies Act, 1964

(for short, 'the Act') before the Dy. Registrar/Arbitrator

of Co-operative Societies, City Circle, Hyderabad, and

the same were numbered as ARC Nos.410/96.J1,

412/96.J1 and 411/96.J1 for recovery of outstanding

amount from the appellants and the appellants have

stated before the Arbitrator that since they are not in a

position to repay the loan amount, they have requested

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the bank to sell the property and recover the said

amounts and accordingly an award to that extent was

passed on 27-02-1997.

4. The appellants had further contended that

the bank has auctioned the properties in item (i) on

06-08-1997 and 12-10-1997 and on both the days, the

auction failed for want of bidders. Again the auction

was held on 06-08-1998, but that has also failed for

want of bidders. The appellants had challenged the

auction before the Cooperative Tribunal, Hyderabad

(for short, 'the Tribunal') by filing CTA No.249 of 1997

and a joint memo was filed by the appellants as well as

bank before the Tribunal, and the Tribunal vide orders

dt.24-06-1998, had issued certain guidelines to the

Sale Officer as to how the auction is to be conducted in

respect of item (i). On 01-03-1999, the

appellants/borrowers filed I.A.No.123 of 1999 before

the Tribunal praying to direct the sale officer to

conduct the sale of item (i) by public auction as per the

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orders passed by the Tribunal and on the joint memo

dt.24-06-1998 and to direct the Sale Officer to issue

sale proclamations by giving wide publicity for the

public auction. On 07-04-1999, the Tribunal directed

the Sale Officer to follow certain guidelines while

conducting auction in respect of item (i). An attempt

was made to sell the property by conducting auction

on 20-08-1999. Again the auction was failed for want

of bidders. Finally, CTA No.249 of 1997 was dismissed

by the Tribunal on 19-01-2000 holding that the

guidelines which were issued in I.A.No.123 of 1999

dt.07-04-1999 should be followed by the bank for the

future auctions also. Finally, the properties in respect

of item (ii) could be sold in the public auction on

21-11-2006 and the unofficial respondents stood as

highest bidders and the unofficial respondents have

deposited the amounts in two instalments. The bid of

unofficial respondents was accepted by the Sale Officer

and the borrowers/ appellants have also participated

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in the said auction under protest and contended that

the sale was not being conducted in accordance with

guidelines framed by the Tribunal in CTA No.249 of

1997 and the following objections were raised:

"It is submitted that the Dy. Registrar-cum-Officer on Special Duty has conducted auction of 3 mulgies bearing Mulgi Nos.1, 18 and 20 in House No.1-7-392/1 to 1-7-392/21 on 21st November 2006. Prior to that the sale notice was served on the Judgment Debtor about the proposed sale. The Judgement Debtor has submitted the objections to the Sale Notice on 08.11.2006. The Sale Officer without considering the objections raised by the Judgment Debtor has conducted the sale on 21.11.2006 subject to confirmation.

1. The Judgment Debtor submits the following objections for the sale conducted by the Sale Officer.

2. In the Sale Notice referred to above, the Sale Officer proposed to auction all the mulgies bearing Door Nos.1-7-392/1 to 1-7-392/22 admeasuring 335.33 x 3 Sq. yards situated at Bakaram, Musheerabad, Hyderabad.

3. In this regard, it is submitted that previously the Sale Officer has conducted sale of certain properties belonging to the J.Dr. on 02.03.2006 at 3.00 P.M. We filed objections before the sale officer at that time wherein it is said that the Sale Officer has to conduct the auction strictly as per the Guidelines by the Cooperative Tribunal in I.A.No.123/1999 in CTA No.249 of 1997 dated 7.4.1999. Inspite of our objections, the Sale Officer

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conducted the auction and issued the proposed sale notice in violation of the guidelines. It is submitted that the Honourable High Court in W.P.No.19598 of 2001 specifically directed to auction the property in accordance with the guidelines issued by the Cooperative Tribunal.

4. It is submitted that the Sale officer is not authorized to sell the 22 mulgies bearing H.Nos.1-7-392/1 to 1-7-392/22. This J.Dr. at the time of borrowing the loan has created a mortgage of the mulgies bearing Nos.1-7-392/1 to 1-7-392/7 only along with the other properties. Therefore the mulgies bearing H.Nos. other than 1-7-392/1 to 1-7-392/7 are not the properties that are covered by the Decree passed by the Tribunal against this J.Dr. Therefore, the Sale notice is defective and no sale can be conducted on such defective sale notice.

5. It is submitted that the procedure followed by the authority is in contravention of guidelines issued by the Tribunal and High Court Order. The proclamation of sale was also not published in local news papers and not followed the procedure under Order 21 of C.P.C.

6. It is submitted that while disposing the above Writ Petitioners, the Hon'ble High Court directed the authority to sell the property within (8) weeks. Thereafter the Bank has obtained extension of time on several occasions, but their efforts became futile in auction of the property. It is submitted that the bank has obtained extension of time in W.P.No.19616/2001, but the Bank has not obtained any extension order in other two cases. It is submitted that as per my knowledge there are no orders from the Hon'ble High Court for extension of time for auction of entire

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property. When the Judgements Debtor requested the copies of the order, the Bank refused to serve the same. It is submitted that the copies of Order along with publication may be supplied to Judgement Debtors and the Judgement Debtor is ready to pay necessary charges.

7. It is submitted that sale notice issued by the Sale Officer is defective as it does not contain the value of the property and upset price fixed for conducting the auction. Without there being the value of the property, the sale notice issued by Sale Officer is not valid in the eye of law.

8. The auction conducted by the Sale Officer is vitiated as they are contrary to the guidelines issued by the Cooperative Tribunal in I.A.No.123 of 1999 in CTA No.249/1997 dated 07.04.1999. In the said guidelines the Cooperative Tribunal has directed that the Ground Floor portion has to be auctioned first and if the sale price realized from the said auction is not sufficient, the two flats in the first floor have to be auctioned. There is no direction by the Cooperative Tribunal to auction the mulgies. The mulgies do not form part of the Ground Floor property which was directed to be auction by the Cooperative Tribunal. Therefore, the auction of the mulgies is contrary to the directives issued by the Cooperative Tribunal.

9. The Cooperative Tribunal has permitted the Sale Officer to reduce the upset price by 10% only, if no bidders are forthcoming to participate in the auction at the upset price fixed by the Sale Officer. In this case, the Sale Officer did not fix the upset price.

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10. In the pamphlet issued by the Sale Officer for conducting the auction, Clause 2 states that upset price will be fixed for the above mentioned properties and will be announced on the date of auction. This is quite illegal. In the sale notice and in the proclamation issued by the Sale Officer, the upset price has to be mentioned. The sale is vitiated by non-mentioning of the upset price in the proclamation.

11. No opportunity was given by the Sale Officer to the Judgement Debtor to mention their values in the proclamation. This is another infirmity which vitiates the auction.

12. At the time of conducting the auction, initially the Sale Officer fixed the upset price at Rs.1 Lakh which does not reflect the market value of the property. The mulgies are situated in a busy commercial area on the main road of Musheerabad. There are several commercial establishments all around the schedule property. The market value fixed by the Government in that area is Rs.20,000/- per Sq. yard. The Sale officer allowed the auction to start at Rs.1 Lakh and allowed the bidders to raise their bids as per their choice. No uniform procedure is followed by the Sale Officer in conducting the auction.

13. The way in which the auction conducted, the mulgies were knocked down at throw away prices, thereby injustice and monetary loss is caused to the Judgement Debtor.

14. The Sale Officer did not give any wide publicity about the sale. He did not publish the proclamation in widely circulated newspapers which is contrary to the guidelines issued by the Cooperative Tribunal. The Tribunal in its guidelines directed the

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Sale Officer to publish the sale notice in two daily newspapers, one in English and other in Regional language. Because of not giving wide publicity the genuine interested bidders did not know about the auction. The bidders that participated in the auction are set up by the Decree Holder.

15. Even in the Writ petitions filed before the High Court the Decree Holder has stated before the High Court that the auction will be conducted in accordance with the guidelines issued by the Cooperative Tribunal. The auction is quite contrary to the guidelines issued by the Cooperative Tribunal and as such the sale is vitiated.

16. The Sale Officer has acted as per the directions of the Decree Holder and the auction is not impartial. The Decree Holder has taken active role in the auction.

17. In the affidavit filed in W.P.M.P.No.10296 of 2004 in

W.P.No.19655 of 2001 the Decree Holder has admitted to auction the

Ground Floor of the property first and if the amount is not realized

by auctioning the Ground Floor, then he will auction Flats No.2 and

3 on first floor as per Commissioner's Report. Even by that auction

of the two flats in the first floor if the amount realized is not sufficient

to satisfy the decree they will approach the Cooperative Tribunal for

realizing the balance amount. Contrary to the affidavit filed in the

High Court, the sale is being conducted of the mulgies in the Ground

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Floor and this is contrary to the directives issued by the Cooperative

Tribunal."

The objections raised by the appellants were rejected

by the Deputy Registrar vide orders dt.15-12-2006.

Aggrieved by the said orders of the Deputy Registrar,

W.P.No.26511 of 2006 was filed and the said Writ

Petition was disposed of on 01-03-2007 directing the

borrowers/appellants to work out their remedies by

way of an appeal under Section 76 of the Act.

Challenging the orders of the Deputy Registrar

dt.21-12-2006 in E.P.Nos.349 to 351 of 1997 in

respect of property in item (ii), the

borrowers/appellants had filed CTA Nos.142, 143 and

144 of 2007 and the Tribunal vide orders

dt.18-04-2008, has allowed the said appeals holding

that the guidelines framed by the Tribunal in

I.A.No.123 of 1999 in CTA No.249 of 2007

dt.07-04-1999 were not followed and also Rule 52 (11)

of the Rules framed under the Act were also not

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followed by the Sale officer and consequently, set aside

the sale which was declared in favour of unofficial

respondents.

5. Challenging the same, W.P.Nos.11862,

13872 and 13882 of 2008 were filed by the unofficial

respondents and the Bank has also issued auction

notices again on 17-05-2011 in Form-8 for recovery of

the amounts in pursuance to the award passed in

favour of the bank on the ground that E.Ps were not

maintainable after 12 years of the award passed by the

Arbitrator and the appellants had also challenged the

action of the Bank by filing W.P.No.16650 of 2011.

6. Learned counsel for the appellants had

further contended that the learned Single Judge has

allowed the Writ Petitions preferred by the unofficial

respondents and dismissed the Writ Petition preferred

by the appellants without appreciating any of the

contentions raised by the appellants and the learned

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Single Judge failed to appreciate that the guidelines

framed by the Tribunal in I.A.No.123 of 1999 in CTA

No.299 of 2007 dt.07-04-1999 were not followed by the

Bank and the learned Single Judge has erroneously set

aside the orders passed by the Tribunal which was a

reasoned orders and the Tribunal has rightly allowed

the case of the appellants by appreciating the entire

facts and legal position.

7. Learned counsel for the appellants had

further contended that the unofficial respondents had

purchased the property of the appellants at low price

by participating in the auction in collusion with the

officials of the bank. Therefore, the appellants had

contended that appropriate orders may be passed in

the Writ Appeals by setting aside the orders of the

learned Single Judge and uphold the orders passed by

the Tribunal as admittedly the Bank has not followed

the guidelines prescribed by the Tribunal while

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conducting sale and also for violating the Rule 52 (11)

of the Rules framed under the Act.

8. Learned counsel for the unofficial

respondents had contended that they have purchased

property in an auction conducted by the Bank and the

Bank has followed the guidelines and the Rules framed

under the Act and the unofficial respondents are

bona fide purchasers and the Bank had contended

that the appellants' mother has taken a loan from the

bank and when the appellants could not clear the loan,

they have conceded before the Arbitrator that they

would pay to the Bank and in principle, they had

agreed to sell the property and to recover the

outstanding loan amount and thereafter, they have

filed 25 cases against the Bank and unofficial

respondents only to see the properties were not put to

auction and that the conduct of appellants itself would

demonstrate that they are filing cases only to ensure

that the bank would not recover the outstanding loan

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amount from the appellants. Therefore, there are no

merits in the Writ Appeals and the same are liable to

be dismissed.

9. This Court having considered the rival

submissions made by the parties is of the considered

view that the learned Single Judge has rightly allowed

the Writ Petitions preferred by the unofficial

respondents and dismissed the Writ Petition preferred

by the appellants with the following observations:

"50. As the awards/decrees obtained by the Bank have not been discharged by the borrowers nor has the Bank at any stage withdrawn the EP's, the Bank is entitled to continue the execution proceedings filed by it till all dues under the awards obtained by it from the borrowers are recovered. It is not necessary for the Bank to file fresh execution petitions merely because it could not realize the amounts within 12 years from the date of such awards/decrees.

51. As regards the contention of the borrowers that the petitioner in WP.No.11862 of 2008 had not participated in the auction at all, the contention found favour with the Tribunal. The counsel for the petitioner in WP.No.11862 of 2008 placed on record the authorization letter

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dt.21.11.2006 given by him to one Damodar Kasat to participate in the auction on his behalf. The proceedings of the auction recorded by the Sale Officer indicate that the said Damodar Kasat participated in the auction in respect of shop No.1 (1-7-392/1). Unfortunately, the said authorization letter was probably not placed before the Tribunal by the Sale Officer and therefore, the Tribunal came to an opinion that he did not participate in the auction at all. It is pertinent to notice that this contention was not raised at all in the objections filed by the borrowers before the Dy. Registrar in EP.No.351 of 1997-A, questioning the sale in respect of shop No.1-7-392/1. It was, therefore, not open to the borrowers to raise the said plea before the Tribunal. In any event, no prejudice is caused to the borrowers if the said petitioner's representative, instead of the petitioner himself in person, participated in the auction and bid for the said shop.

52. In the objections filed by the borrowers it is alleged that the market value fixed by the Government is Rs.20,000/- per Sq.yd. and that the property was sold in favour of the auction purchasers at throw-away price of Rs.5 lakhs/Rs.5.10 lakhs and the property would be worth more than Rs.30 lakhs. No scrap of paper is placed before the Tribunal by the borrowers regarding the market value of the property on the date of the sale. In fact, no such material is placed even before this Court to come to the conclusion that the properties were sold at a throw-away price. Without any evidence being placed by the borrowers to substantiate the said allegation, it is not possible to

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accept their contention that the properties would have fetched a very high value as on the date of sale. Assuming it to be so, nothing prevented the borrowers from fetching bidders to participate in the auction who would have quoted such high price. But they have not done so.

53. The Tribunal had held that the sale proclamation under Form - 8 did not indicate that the property which was being sold was free from encumbrance, that encumbrance certificate for twelve years was not filed, that it was not proved that there was publication by affixing the notice in Form - 9 in the Office of the Registrar of the District and Taluq Office of the area concerned thirty days before the date fixed for sale and that publicity by beat of drum in the village on two consecutive days previous to the date of sale and on the date of sale was not done. In fact, these contentions were not raised before the Deputy Registrar in the objections filed by borrowers. It was baldly stated in the objections that proclamation of sale was not published in the local newspapers, that procedure under Order XXI of CPC was not followed and that there was no proclamation in widely circulated newspapers. It appears that the Tribunal made out a new case for the borrowers in the appeal by going into aspects which were not even raised by the borrowers. Assuming for the sake of argument without admitting that they are true, at best these might be mere irregularities which even the borrowers did not claim in their objections to have resulted in substantial injury to them. As noted supra, there has been publication in newspapers viz., Hindu and Eenadu and copies of the

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publications were also filed in WP.No.11862 of 2008 by the petitioner therein. The Tribunal without noticing this fact and giving undue importance to publication by tom tom by beat of drum came to erroneous conclusion that there was no adequate publicity for the conduct of the sale. In the facts and circumstances of these cases, I am satisfied that there was adequate publicity for the sale held on 21.11.2006 by the Sale officer. Some minor irregularities are highlighted by Tribunal and an erroneous conclusion is arrived at by it that the properties were sold at a throw- away price. It is stated by the Bank in its counter that after adjusting the amounts recovered in the auction, still an amount of Rs.1,83,37,009.25 ps. is due as on 31.12.2009. The Bank cannot be expected to wait indefinitely to secure the maximum possible rate when the interest as per the award keeps mounting every day adding to the burden on the Bank, while the borrowers merrily thwart every attempt by the Bank to realise the amounts due to it. Admittedly, the borrowers even after lapse of fourteen years have not paid a single paisa to the Bank. The tactics adopted by the borrowers had also been criticised by this Court in its order dt.04.04.2003 in WP.No.19598 of 2001, WP.No.19616 of 2001 and WP.No.19655 of 2001 referred to above.

54. In Ritesh Tewari v. State of U.P.1, the Supreme Court declared:

"26. The power under Article 226 of the Constitution is discretionary and supervisory in nature. It is not issued merely because it is lawful to do so. The extraordinary power in the writ

(2010) 10 SCC 677

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jurisdiction does not exist to set right mere errors of law which do not occasion any substantial injustice.

A writ can be issued only in case of a grave miscarriage of justice or where there has been a flagrant violation of law. The writ court has not only to protect a person from being subjected to a violation of law but also to advance justice and not to thwart it. The Constitution does not place any fetter on the power of the extraordinary jurisdiction but leaves it to the discretion of the court. However, being that the power is discretionary, the court has to balance competing interests, keeping in mind that the interests of justice and public interest coalesce generally. A court of equity, when exercising its equitable jurisdiction must act so as to prevent perpetration of a legal fraud and promote good faith and equity. An order in equity is one which is equitable to all the parties concerned. The petition can be entertained only after being fully satisfied about the factual statements and not in a casual and cavalier manner. (Vide Champalal Binani v. CIT; Chimajirao Kanhojirao Shirke v. Oriental Fire and General Insurance Co. Ltd.; LIC v. Asha Goel; Haryana Financial Corpn. v. Jagdamba Oil Mills; Chandra Singh v. State of Rajasthan and Punjab Roadways v. Punja Sahib Bus and Transport Co.)

27. Where a party's claim is not founded on valid grounds, the party cannot claim equity. A party that claims equity must come before the court with clean hands as equities have to be properly worked out between parties to ensure that no one is allowed to have their pound of flesh vis-à-vis the others unjustly. (Vide Sikkim Subba Associates v. State of Sikkim)

28. In A.P. State Financial Corpn. v. Gar Re- Rolling Mills this Court observed: (SCC p. 662, para 18)

"18. ... Equity is always known to defend the law from crafty evasions and new subtleties invented to evade law."

29. In M.P. Mittal v. State of Haryana this Court held: (SCC p. 374, para 5) "5. ... it is open to the High Court to consider whether, in the exercise of its undoubted discretionary jurisdiction, it should decline relief to

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such petitioner if the grant of relief would defeat the interests of justice. The Court always has power to refuse relief where the petitioner seeks to invoke its writ jurisdiction in order to secure a dishonest advantage or perpetuate an unjust gain."

55. In the facts and circumstances of the case, this court is of the view that the borrowers are bent upon thwarting the sale of mortgaged properties having agreed to let the Bank sell them and recover it's dues and have succeeded in doing so for more that 14 years. Their conduct is not bonafides and they are not entitled to relief under Art.226 of Constitution of India.

56. Lastly, the counsel for the borrowers had contended that the failure to deposit the stamp duty amount within fifteen days from the date of sale of the property is a material irregularity in conducting the sale and therefore, the sale ought to be set aside. This contention was not raised by the borrowers before the Dy. Registrar in the objections filed by them. Therefore it could not have entertained by it in the appeal. In spite of this, the Tribunal allowed them to raise the said issue and in para.18 of its order and held that the sale was conducted on 21.11.2006 and the auction purchasers had not paid the stamp fee amounts within fifteen days as prescribed by Rule (52)(11)(h) of the Rules. In G.Venkata Reddy (1 supra), a learned Single Judge of this Court while considering the provisions of Order XXI Rule 85 and 90 of CPC, held that failure to deposit stamp duty amount within 15 days from sale of property did not constitute an irregularity in the conduct of a sale as the deposit of stamp

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duty is subsequent to conduct of sale. Therefore this finding of the Tribunal also cannot be sustained.

57. For the above reasons, WP.No.11862 of 2008, WP.No.13872 of 2008 and WP.No.13882 of 2008 are allowed. No costs.

58. In view of the fact that the EP's filed by the Bank did not terminate and can be continued, there is no impediment for the Bank to notify the properties which had not been sold on 21.11.2006 for sale by issuing notices dt.17.05.2011 in Form - 8. The borrowers have not established that the said notices of sale are contrary to law. Therefore, WP.No.16650 of 2011 is dismissed. No costs.

The appellants having obtained the loan from the

respondent-bank and having conceded before the

Arbitrator stating that the bank is entitled to recover

the amounts by selling away the property, the

appellants could not drag the issue for more than three

decades and the so-called complaint of the appellants

that the guidelines were not followed by the sale officer

while conducting sale in respect of the properties in

item Nos.(i) and (ii) is concerned, a perusal of the

guidelines in I.A.No.123 of 1999 in CTA No.299 of

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2007 dt.07-04-1999 are only in respect of item (i), but