J K CHAUDHARY Vs. SYNDICATE BANK

JUDGEMENT

(1.) The present case proves the proverbial saying that the travails of a decree-holder or an auction-purchaser start after obtaining a decree or after purchasing the auctioned property, as the case may be. In execution of a decree, obtained by the Haryana Financial Corporation (hereinafter to be referred as defendant No. 2) against M/s. Pan Indian Plastics (P) Ltd. (hereinafter to be referred as defendant No. 1 Shri J.K. Chaudhary (hereinafter to be referred as appellant) purchased 12-Kanals 16-Marlas of land with some building and machinery for a sum of Rs. 1,08,000/-. The auction-sale was conducted on 25.5.1982 and after the objections filed by the other creditor of defendant No. 1, i.e. Bank of Baroda were dismissed vide Exhibit P-5, the sale was confirmed in favour of the appellant on 18.12.1982. One month thereafter, i.e. on 15.1.1983, Syndicate Bank (hereinafter to be referred as plaintiff) brought a suit to set aside the sale conducted on 25.5.1982 and confirmed on 18.12.1982 and to declare the same as null and void. The plaintiff also prayed for issuance of permanent injunction directing defendant No. 3, i.e. the appellant, not to deal with the property or interfere with it in any manner as also not to take possession of the same.

(2.) The burden of the plaint was that the plaintiff being the biggest creditor of defendant No. 1, the sale in question was connived at between defendant Nos. 2 and 4 and the appellant with a view to defraud the plaintiff as also defendant No. 1, i.e. judgment-debtor. It was, inter alia, pleaded that a decree of Rs. 15,16,139.31 with costs and interest had since already been passed against defendant No. 1 on 5.8.1982 and that another suit for recovery of Rs. 5,00,000/- against the said defendant was pending in the Delhi High Court, which was likely to be decreed soon. With a view to substantiate the plea of connivance and fraud, it was stated that land measuring 12 kanals 16 marlas, situated at Delhi-Gurgaon road opposite Maruti Udyog, together with machinery and building was auctioned for Rs. 1,08,000/-, whereas price of land on the Delhi-Gurgaon road was something between Rs. 300/- to Rs. 500/- per square yard. The building was stated to be of 'A' class construction and was of approximate value of Rs. 2,00,000/-. The value of the machines, implements and various moulds, stated to be hypothecated with the plaintiff-bank and stored at the factory premises, was Rs. 1,00,000/-. It was further pleaded that the plaintiff had learnt that defendant No. 1 had earlier offered Rs. 2,00,000/- to the decree-holder (defendant No. 2), which was not acceptable to the said defendant for release of the land from its charge and yet all assets were sold for a sum of Rs. 1,08,000/- and no objections were filed by defendant No. 2. It was further pleaded that the plaintiff was not given any notion of the auction. In paragraph 18 of the plaint, it was also averred that no reserve price of the property was fixed for auction as was required by law. The conduct of sale was also pleaded to be fraudulent inasmuch as no place and time of auction was filed as also no publicity was given to the intended auction and the entire affair leading to the auction was styled to have been done secretly, which was also held at an unknown place. There are other grounds pleaded in the plaint challenging the auction proceedings, but inasmuch as the auction-sale was invalidated by the trial Court as also by the Appellate Court on some of the grounds, stated above, it is not necessary to refer to the other grounds. In ultimate analysis, it was stated that it is only on 8.2.1983 when an official of the plaintiff-bank was on routine inspection of the securities and had visited the premises of defendant No. 1, that the plaintiff came to know that the entire land measuring 12 kanals 16 marlas together with the factory building, machines and various moulds, which stood hypothecated with the plaintiff-bank, stood auctioned for a sum of Rs. 1,08,000/-.

(3.) Defendant No. 2, Haryana Financial Corporation, filed written statement wherein it was stated that it had obtained an order for recovery of Rs. 2,62,076.11 with future interest and costs on the basis of registered mortgage-deed dated 9.1.1973 against defendant No. 1 and in execution of the said order, auction of the mortgaged property was fixed on 24.8.1980 and proclamation of sale was published in the newspaper but the Superdar did not produce the property and auction could not be held on the date fixed. It was again fixed for 13.12.1980 and notice was published in 'Hindustan Times' on 1.12.1980 and in 'Indian Express' on 24.11.1980, but again auction could not be held. The auction was again fixed for 23.5.1982 and the notice was published in 'Indian Express' Delhi edition, on 14.5.1982 and in Chandigarh edition on 13.5.1982. Inasmuch as some items of the machinery, mortgaged with the Corporation, were not available, the sale was held only of the five items, i.e. one Nodel 7" x 5" ESV-1, NL-2 Single Stage Double acting water cooled non-lubricated Air Compressor, Stand for one hand operated injection Moulding machine, one scracutting and grinding machine, mould cylindrical jar including dig and blow mould rectangular jars, besides land with the factory building and the highest bid was Rs. 1,08,000/-. Bank of Baroda, claiming to be a creditor of defendant No. 1, filed objections under Section 21, Rule 90, C.P.C., which were dismissed and the auction was confirmed on 18.12.1982. It was further pleaded that the sale having been wide published was presumably known to the plaintiff, but it took no steps either to file its claim before the auction or to file its objections before the confirmation thereof. It is further pleaded that the plaintiff had not even mentioned as to what machinery was hypothecated with it or the date of such hypothecation or whether had any claim against the land and factory-building mortgaged with the Corporation under registered mortgage-deed dated 9.1.1973. The allegation of the plaintiff witty regard to sale being bogus and having been conducted in connivance with the Corporation and the Court-auctioneer was also denied. The offer of defendant No. 1 for Rs. 2,00,000/- the Corporation was also denied. Claim of the plaintiff on all scores was refuted.