GENESIS FINANCE SERVICE CO LIMITED vs USHA BANSAL AND ANR
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ EX.P. 67/2022
GENESIS FINANCE SERVICE CO LIMITED ..Decree Holder
Through: Mr. Tishampati Sen and Mr. Chaitanya, Advs. with Mr. Vinod Tayal, Authorized Representative
versus
USHA BANSAL AND ANR ….. Judgement Debtor
Through: Mr. Sandeep Sharma, Mr. Karanail Singh, Mr. Amit Choudhary, Ms. Kavya Dauk, Mr. Jatin Choudhary and Mr. Karan Bidhuri, Advs.
CORAM:
HON’BLE MR. JUSTICE C. HARI SHANKAR
JUDGMENT
% 03.07.2024
EX.APPL.(OS) 969//2024 (Exemption)
1. Allowed, subject to all just exceptions.
2. The application is disposed of.
EX.APPL.(OS) 968/2024 (Order XXI Rules 97,100 and 105 of the CPC) and EX.APPL.(OS) 967/2024 (Stay of auction)
3. The petitioner Genesis Finance Service Co. Ltd.1 advanced a loan to the respondents Usha Bansal and her husband, Sanjeev Bansal vide Agreement dated 30 September 2015. The loan was secured by an equitable mortgage of the entire freehold built up property of the respondents, admeasuring 66 sq. yds. and bearing Nos. 1722 1725, Dariba Kalan, Chandni Chowk, Delhi 110006. The original title documents of the said properties were deposited with the petitioner.
4. The petitioner recalled the entire loan amount along with due interest from respondents vide notice dated 29 October 2021. The respondents thereby became liable to pay an amount of ? 14,23,35,065/- to the petitioner. A legal notice was sent by the petitioner to the respondents on 29 October 2021, claiming the said amount. The respondents, in their responses, contested the petitioners claim.
5. The parties decided to avail of the facilities of pre-institution mediation, for which purpose, they approached the Delhi High Court Mediation and Conciliation Centre. With the intervention of the Mediation Centre, the dispute between the petitioner and the respondents was settled vide Settlement Agreement PIM No. 13/2022. In the Settlement Agreement, the respondents confirmed and acknowledged that, as on 28 December 2021, a total loan amount of ? 14,76,05,315/- was due and payable by them to the petitioner. The loan was settled for an amount of ? 7 crores, which the respondents undertook to pay to the petitioner in instalments with interest @ 24% per annum. The petitioner agreed, on receipt of the said amount of ? 7 Crores, to release the original title documents of the respondents properties which were mortgaged with it.
6. The disputes between the petitioner and the respondents were settled on the following terms:
1. That the schedule to repay INR 7.00 crores along with interest @ 24% per annum (reducing basis, monthly compounded) is as below
a) INR 1cr each to be paid on or before the end of the months of March 2022, April 2022, May 2022, and June 2022 respectively
b) INR3 crores to be paid in the month of July 2022. Further, in addition to the above-mentioned amounts, the borrower will also pay any interest applicable as per 24% per annum (reducing, monthly compounded) based on the dates of repayment of the said amounts in the month of July 2022.
2. That both parties had also agreed that the balance principal amount outstanding along with interest up to March l, 2022 shall be converted into a new term loan for a period of five years along with interest @ l5% p.a. (reducing basis, monthly compounded).
3. That the said loan restructuring agreement will now take effect from March 1st, 2022 and shall not stand revoked / cancelled due to non-repayment of the balance of INR 7 crores as per original MOU dated December 28th 2021.
4. That the EMI agreed to for the balance outstanding amount, converted into a new term loan as per loan restructuring agreement dated December 28th, 2021, shall be paid over and above the schedule of payments mentioned in point no. 1, starting March 1st,2022.
5. That the borrowers have agreed to unconditionally and completely withdraw their notices dated 26.11.2021 sent to the lender and have also withdrawn all the averments and allegations made therein.
6. That the borrowers agree to remain bound by this Amendments to the MOU, dated March 10, 2022 as well as the loan restructuring agreement dated December 28th, 2021, which shall now stand effective from March 1st, 2022 and shall not be revoked / cancelled.
7. That in case the borrowers fail to make the payment of the amount as per schedule agreed herein, including the schedule of payments mentioned in Point No. 1 and EMI repayment as per loan restructuring agreement, then the present Amendments to MOU shall stand revoked/cancelled, the property at the Dariba Kalan, Chandni Chowk, Delhi shall remain mortgaged with the lender as a security, and the borrowers shall remain liable to pay the entire loan liability along with interest @ 24% p.a. (reducing basis, monthly compounded) to the lender on the same terms and conditions as detailed in loan agreement dated September 30th, 2015.
7. On the said amount not being paid, despite the aforesaid settlement, the petitioner instituted Ex. P. 67/2022, in which the present applications have been filed, for execution of the award dated 14 March 2022 supra. The execution petition prayed that warrants of attachment be issued in respect of the movable and immovable properties of the respondents, including the property situated at 1722 1725, Dariba Kalan, Chandni Chowk, Delhi 110006.
8. Notice was issued, in the execution petition, to the respondents, by this Court on 28 July 2022.
9. Despite repeated opportunities, no affidavit of assets was ever filed by the respondents. Ultimately, on 12 December 2023, this Court directed thus:
2.1. The property bearing No. 1722, 1723, 1724 and 1725 Dariba Kalan, Chandni Chowk, Delhi-110006 shall be put for sale by way of public auction in accordance with the process elucidated in Order XXI of the Code of Civil Procedure, 1908. The reserve price for the auction is fixed at Rs. 5 crores.
2.2. Counsel for the Decree Holder shall draw up a draft proclamation for sale of the afore-noted property and, with advance notice to the Judgement Debtors, place the same before the Joint Registrar for approval, who shall finalise the proclamation of sale and direct its publication on a specified date.
2.3. Proclamation of sale, as settled by the Joint Registrar, shall be affixed at a conspicuous part of the property and displayed on the notice board of the Sub-Divisional Magistrate (SDM) of the district where the afore-noted property is located, as well as the notice boards of this Court and the District Courts of Delhi. The proclamation of sale shall also be published in two widely circulated newspapers in Delhi, in English and Hindi editions, and cost shall be borne by the parties and accordingly deducted from the sale consideration.
10. The respondents filed Ex. Appl. (OS) 199/2024 for recall of the above order dated 12 December 2023. By order dated 6 February 2024, this Court dismissed the said application.
11. Thereafter, draft proclamation for auction of the afore-noted properties of the respondents situated at 1722 1725, Dariba Kalan, Chandni Chowk, Delhi 110006 was filed before this Court. The respondents filed objections to the proclamation which were dismissed by the learned Joint Registrar by order dated 16 March 2024.
12. At this juncture, one Sanjay Malhotra filed Ex. Appl (OS) 860/2024, claiming to be a tenant of Respondent 1 in Property No. 1725, Dariba Kalan, Chandni Chowk, Delhi-110006. Inasmuch as the proceedings in the mediation had taken place without informing him, the said objector Sanjay Malhotra sought stay of auction of the suit properties.
13. Though Ex. Appl. (OS) 860/2024 was listed before this Court on 27 May 2024 and thereafter, on 1 July 2024, there was no appearance on behalf of the applicant Sanjay Malhotra on either dates. The application was, therefore, dismissed for non-prosecution.
14. The present applications have been filed by Rajiv Kumar Pandey, also claiming to be a tenant in Properties 1723 and 1724, Gali Piyaoi Wali Dariba, Chandni Chowk, New Delhi -110006, to consider the objections filed by him and amend the proclamation of sale to incorporate his details of tenancy, and to stay the auction.
Rival Contentions
15. I have heard Mr. Sandeep Sharma, learned Counsel for the applicant and Mr. Tishampati Sen, learned Counsel for the petitioner, at length.
16. Mr. Sharma submits that his client was completely oblivious to the pre-litigation mediation proceedings between the petitioner and the respondents, and became aware of the proceedings only when this Court directed auction of the suit properties. He submits that, by a succession of lease agreements, the entire property No. 1723 and 1724 has been leased out to the applicant, and that the lease is of over 13 years vintage. He submits that the petitioner and the respondents were well aware of the fact that the suit properties have been leased out, and deliberately concealed this fact from the Court, resulting in the entire pre-litigation mediation exercise being collusive in nature. Such as a person who has been in possession of the suit property under valid lease agreements, he submits that the suit properties cannot be permitted to be auctioned without granting an audience to his client.
17. Mr. Tishampati Sen, learned Counsel for the petitioner, strenuously opposes the present application. He submits that, far from the petitioner and the respondents being in collusion, the respondents, having executed the Settlement Agreement dated 14 March 2022, are putting up one tenant after another to ensure that restoration of possession of the suit properties to the petitioner is stymied as long as possible. He seriously questions the genuineness and validity of the lease deeds on which Mr. Sharma relies. He submits that all the lease deeds are unregistered. Moreover, the initial lease deed dated 7 April 2011 was only in respect of one office space admeasuring 10 feet by 12 feet, on the 2nd floor of the suit property. This was followed by extension of the lease deed, purportedly executed on 4 January 2020, which again pertains only to the office space admeasuring 10 feet by 12 feet on the 2nd floor. The rent, forming consideration for the lease deed, was ? 1800/, with monthly enhanced charge of ? 700/. Suddenly, by an Addendum dated 15 October 2021, the entire suit property is stated to have been leased out to the applicant, for a monthly rental of ? 3200/. None of these documents being registered, and the addendum dated 15 October 2021 not even having been executed on a stamp paper, he submits that they cannot constitute a basis for the applicant to prejudice the execution proceedings. The enhanced rent of ? 3200/ is also conveniently below ? 3500/, so as to enable the applicant to claim the benefit of the Delhi Rent Control Act, 1958 (the DRC Act).
18. Moreover, submits Mr. Sen, the proclamation of sale, as recorded by this Court, by order dated 16 May 2024 of the learned Joint Registrar, clearly stated that the property was being sold on as is where is basis. There was, therefore, no reason for the applicant to apprehend any prejudice to him as a result of the said sale. The auction purchaser would be purchasing the suit property in full awareness of the fact that it is tenanted if it is.
19. To emphasise the mala fides of the present application, Mr. Sen also draws attention to the Auction Proceeding Report dated 21 June 2024, in which the court appointed auctioneer has specifically recorded that attempts were made to contact the present applicant on his mobile number 9810446457, who refused to answer the call. There was, therefore, a deliberate attempt to block the auction.
20. In this context, Mr. Sen also invites my attention to order dated 16 March 2024, passed by the learned Joint Registrar in Ex. Appl.(OS) 294/2023, whereby the respondents objected to the draft proclamation of auction in respect of the suit properties. He specifically draws attention to the following paras from the said order:
Ex. APPL. (OS) 294/2023
Learned counsel for JDs through the objections filed by him, mainly raised objections regarding the draft proclamation that in the draft proclamation incorrect reserve price has been mentioned. According to him, the reserve price mentioned in the order dated 12.12.2023 i.e. Rs. 5 Crores has to be read for each of the four properties separately but in the draft proclamation, reserve price of Rs. 5 Crore has been mentioned for all the four properties. Learned counsel submitted that saleable value for the four properties is presently Rs. 26 Crores and in view of that reserve price of Rs. 5 Crore is very less. Learned counsel further submitted that tenants are residing in the properties in question but in the draft proclamation it is not clarified by the DH that properties are under the occupation of tenants.
On the other hand, learned counsel for DH submitted that the objections raised by the opposite party are baseless. In the order of Honble Court, it is not mentioned that the reserve price is Rs. 5 Crores for each property separately. He had mentioned all the clear facts in the draft proclamation. There is no document showing that there is any tenant in the properties under Auction. Therefore the objections may be rejected.
I have considered the submission of both the parties. I have also gone through the draft proclamation, objections, reply to the objections and order of Honble Court dated 12.12.2023. In Para no. 2.1, the order of Honble Court clearly reflects that all the four properties shall be put for sale by way of public auction and reserve price for the auction will be Rs. 5 Crore. It is nowhere mentioned that there will be four separate auctions and the reserve price of Rs. 5 Crore is fixed separately for each four properties.
Regarding the submissions of tenancy upon the properties, learned counsel for JDs had placed on record various orders of the court of Ld. ARC Central District Tis Hazari Court dated 18.03.2021, 06.02.2021, 17.10.2020, 08.10.2020, 18.05.2023 & 31.08.2023 respectively. Perusal of these order sheets reflects that in these orders nowhere it is mentioned that properties bearing No. 1722 to 1725, Dariba Kalan, Chandni Chowk, Delhi are presently under the tenancy. Moreover, an application filed on behalf of JDs seeking recall of the order dated 12.12.2023 passed by the Honble Court has already been dismissed by the Honble Court vide order dated 06.02.2024. No any other documents showing that the particulars/descriptions of the properties as mentioned in draft proclamation are incorrect is placed on record on behalf of JD as per their submissions mentioned in order dated 15.01.2024.
If, indeed, the suit properties, or part thereof, had been leased to the applicant, Mr. Sen submits that there was no reason for the respondents not to have disclosed this fact to this Court on 16 March 2024 or produced, before it, the lease agreements on which the applicant now places reliance. He also draws attention, in this context, to para 11 of the objections filed by judgment debtors, in which the they have only pleaded tenancy in respect of Property 1725, and not in respect of the Properties bearing Nos 1723 and 1724. The said paragraph reads thus:
11. It is submitted that when the captioned proceeding was listed before this Hon’ble Court on 17.1.2024, it was indicated that there are tenants in the said property. Accordingly, this Hon’ble Court had permitted the Judgment Debtors to place on record the correct position regarding the property. In this regard, the Judgment Debtors submit that at present the property no. 1725 Dariba Kalan, Chandni Chowk, Delhi-110006, which is one of the Mortgaged Properties is presently occupied by tenants.
21. In these circumstances, Mr. Sen submits that the applicant ought not to be permitted to obstruct the option of the suit properties at this late hour, on the basis of unregistered lease deeds, of which the Addendum dated 15 October 2021 is not even executed on Stamp paper.
22. Mr. Sharma, in rejoinder, reiterates the contentions earlier advanced by him and further submits that the law does not require the lease deed to be registered.
Analysis
23. I have heard learned Counsel and applied my mind to the material on record.
24. The present application has been filed under Rules 972, 1003 and 1054 of Order XXI of the Code of Civil Procedure, 1908 (CPC). Rules 100 and 105 of Order XXI merely refer to the manner in which the Application under Order XXI Rule 97 is to be proceeded with. Order XXI Rule 97, on its plain terms, does not entitle the applicant to file an application, as an application under Order XXI Rule 97 can be preferred only by a decree holder or an auction purchaser. The Supreme Court has, in its recent decision in Sriram Housing Finance and Investment India Ltd v. Omesh Mishra Memorial Charitable Trust5, clearly so added, in para 20.3 of the report:
20.3. The appellant Company cannot invoke proceedings under Order 21 Rule 97 as only the decree-holder or an auction-purchaser is entitled to make an application thereto. The appellant Company does not fall under both the categories. Further, for purpose of Rule 99, the applicant has to make a statement that he/she has been dispossessed of immovable property by either the decree-holder or the auction-purchaser. In the instant case, the appellant Company is very much in possession of suit property.
25. The present application, therefore, does not lie under the provisions which have been invoked therein.
26. Mr. Sharma sought, then, to submit that the reference to Order XXI Rule 97 in the application is somewhat unhappy, and prays that the application may be entertained under Order XXI Rule 58 of the CPC.
27. Order XXI Rule 58 applies only where a property, which is attached in execution of a decree, is alleged not to be liable to attachment. Mr. Sharma concedes that there is no specific averment, in the present application, that Properties 1723 and 1724 are not liable to attachment. Nonetheless, he submits that, in the application, his client has pleaded a right to remain in possession of the said properties, as a tenant whose possession is protected by the DRC Act.
28. An objection to execution of a decree on the ground that it dispossesses a person who is entitled to the vacant possession of the property can lay at the instance of the person so dispossessed only under Order XXI Rule 99 of the CPC, which Mr. Sharma does not even invoke. That provision applies only where the applicant is in fact dispossessed of the property by the auction purchaser, where the suit property is sold in auction. It cannot be invoked even before the auction has taken place.
29. The present application is, therefore, in fact not maintainable under any of the provisions of Order XXI of the CPC.
30. That apart, it is important to refer, in the present context, to the judgment of the Supreme Court in Rahul S Shah v. Jinendra Kumar Gandhi6 , in which the Supreme Court has taken serious note of the fact that, oftentimes, purported tenants of properties, in respect of which execution proceedings are under way, surface at the nth hour, seeking to obstruct execution. The Supreme Court has, in the various sub-paras of para 42 of the report in that case, enumerated directions which are required mandatorily to be followed by all courts dealing with suits and execution proceedings. In para 42.8, the following direction figures:
42.8 The Court exercising jurisdiction under Section 47 or Order XXI of CPC must not issue notice on an application of third-party claiming rights in a mechanical manner.
The Court, dealing with an application by a purported tenant, filed belatedly, as in the present case, is therefore required to be extremely circumspect even while issuing notice on the application. Notice on such an application is not a right. The Court has to be satisfied that the application is bona fide, and is not intended to be an instrument to obstruct execution. In Rahul S Shah itself, the Supreme Court has observed that the travails of a plaintiff actually commences after he obtains a decree, and has to suffer the exercise of having it executed.
31. The award dated 14 March 2022, of which the petitioner seeks execution, is in the nature of a money decree. The claim of the petitioner against the respondents is not for possession of property, or dispossession of anyone who is in possession of property. The petitioner had advanced a monetary loan to the respondents, and was intended to sue for recovery thereof. The Settlement Agreement dated 14 March 2022 envisaged discharge of the loan by payment of ? 7 crores along with interest in the manner contemplated in the Agreement and restructuring of the balance amount of the loan. It was only when this arrangement did not fructify that the petitioner has been constrained to move the present Execution Petition.
32. Auction of the suit properties has been directed by this Court, by order dated 12 December 2023, only so as to ensure recovery of the amounts due to the petitioner by the respondents. Once auction was so directed, one purported tenant after another has surfaced, to obstruct auction.
33. The present application has been filed towards the end of June 2024.
34. It is difficult for this Court to believe that the applicant was unaware of the proceedings relating to the suit properties. The reliance, placed by Mr. Sen, on the Auction Proceeding Report dated 21 June 2024 is also relevant in this context. It indicates that the applicant did not, despite repeated attempts, answer the phone, when the respondents attempted to contact him. Whether this was a decision of the applicant himself, or whether it was in concert with the respondents, is not an aspect which I need to concern myself. Suffice it to state that the facts do not persuade this Court to believe the applicants story of being an innocent tenant, who has been in occupation of the suit property in complete ignorance of the present proceedings.
35. Besides, none of the lease deeds, on which Mr. Sharma places reliance, are registered. Registration of a lease of immovable property may not be mandatory; that, however, is not the end of the matter. The lease deed dated 7 April 2011 and 4 January 2020 both related to a small space of 10 feet x 12 feet on the 2nd floor of Properties 1723 and 1724. Suddenly, by the Addendum dated 15 October 2021, the respondents purport to have leased out the entire Properties 1723 and 1724 to the applicant, for just ? 3200/ per month. By any reckoning, the rental of ? 3200/ per month is unbelievably low; it is, however, just fixed below the threshold figure of ? 3500/- per month which would enable the applicant to claim the benefit of the DRC Act.
36. The position is rendered additionally suspect by the fact that the Addendum dated 15 October 2021 is unstamped and unregistered. There is nothing, therefore, to indicate that it was even executed on 15 October 2021, as is contended.
37. Moreover, the Addendum is purported to have been executed more than 2 ½ years ago, and the applicant has not placed on record a single piece of evidence to indicate that any payment of rent was made by the applicant to the respondents in terms thereof. Rather, the applicant has placed on record copies of payment receipts purportedly issued by the respondents to the applicant, all of which indicate that the payment was made for one office space 10 x 12 sq ft + attached toilet on 2nd floor, 1723-1724, Dariba Kalan. If, indeed, by the Addendum dated 15 October 2021, the entire suit property at 1723-1724, Dariba Kalan had been leased out to the applicant, there is no reason why no similar rent receipts are placed on record.
38. All circumstances considered holistically, and keeping in mind the note of caution sounded by the Supreme Court in para-42.8 of Rahul S Shah, this Court is not persuaded to issue notice on the present application.
39. It is clarified, however, that this order only decides the right of the applicant to obstruct the execution proceedings presently pending, on maintainability and on merits. It does not deal with the issue of whether the applicant is entitled to continue in possession of the suit properties. No occasion arises for this Court to pronounce thereon, as no threat of dispossession has, as per the present application, been stated to have been held out to the applicant.
40. Subject to this limited caveat, both these applications are dismissed.
C.HARI SHANKAR, J
JULY 3, 2024
rb
1 hereinafter Genesis
2 97. Resistance or obstruction to possession of immovable property.
(1) Where the holder of a decree for the possession of immovable property or the purchaser of any such property sold in execution of a decree is resisted or obstructed by any person in obtaining possession of the property, he may make an application to the Court complaining of such resistance or obstruction.
(2) Where any application is made under sub-rule (1), the Court shall proceed to adjudicate upon the application in accordance with the provisions herein contained.
3 100. Order to be passed upon application complaining of dispossession.Upon the determination of the questions referred to in Rule 101, the Court shall, in accordance with such determination,
(a) make an order allowing the application and directing that the applicant be put into the possession of the property or dismissing the application; or
(b) pass such other order as, in the circumstances of the case, it may deem fit.
4 105. Hearing of application.
(1) The Court, before which an application under any of the foregoing rules of this Order is pending, may fix a day for the hearing of the application.
(2) Where on the day fixed or on any other day to which the hearing may be adjourned the applicant does not appear when the case is called on for hearing, the Court may make an order that the application be dismissed.
(3) Where the applicant appears and the opposite party to whom the notice has been issued by the Court does not appear, the Court may hear the application ex parte and pass such order as it thinks fit.
Explanation.An application referred to in sub-rule (1) includes a claim or objection made under Rule 58.
5 (2022) 15 SCC 176
6 (2021) 6 SCC 418
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