Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on : January 19, 2016
Judgment Delivered on : January 27, 2016
+ FAO (OS) 267/2014
RELIANCE INDUSTRIES LTD. .....Appellant
Represented by: Mr.B.B.Sawhney, Sr.Advocate
instructed by Mr.Somiran Sharma,
Mr.Biju P.Raman and Mr.Vishnu
Sharma, Advocates
versus
M/S.VIJAY CABLE INDUSTRIES & ORS. .....Respondents
Represented by: Mr.Rajesh Banati, Advocate with
Mr.Vikram Advocate for R-1 and
R-2
Mr.Pramod Kumar, Advocate with
Mr.Vikas Tomar, Advocate for
UPFC
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PRADEEP NANDRAJOG, J.
1. Challenge in the appeal is to the order dated May 07, 2014 passed
by the learned Single Judge dismissing IA No.7948/1998 filed by the
appellant (the plaintiff) and allowing IA No.11037/2007 filed by Uttar
Pradesh Financial Corporation (UPFC).
2. At the outset we must record our deep pain and anguish in the
manner in which learned counsel for the parties have prosecuted the
cause of their respective clients in the suit filed by the appellant, in which
FAO (OS) No.267/2014 Page 1 of 7
defendant No.1 is M/s.Vijay Cable Industries (a partnership firm), its
partners Vijay Kumar Bhatia and Tilak Raj Bhatia are defendants No.2
and 3. Priya Bhatia, a guarantor and M/s.Vijay Cables Ltd. are
defendants No.4 and 5. The suit, filed in the year 1998, is under Order
34 of the Code of Civil Procedure and pleads that for goods supplied to
the defendant No.1, a sum of ` 3,21,57,390/- (Rupees Three Crores
Twenty One Lacs Fifty Seven Thousand Three Hundred and Ninety only)
became due and payable and to secure repayment defendants No.2 to 4
created an equitable mortgage over property No.A-111, New Friends
Colony, New Delhi by depositing the title deeds of the property, which
comprised a perpetual lease-deed dated August 08, 1983 executed by the
Delhi Development Authority in favour of one Kunti Puri, an agreement
to sell dated August 28, 1996 whereunder Kunti Puri agreed to sell the
property to one R.B.Gupta; and an agreement to sell dated January 19,
1988 executed by R.B.Gupta in favour of Vijay Kumar Bhatia (and we
note that there was obvious typographic errors concerning the dates).
Alleging that sale tax liability in sum of ` 1,58,34,482.84 (Rupees One
Crore Fifty Eight Lacs Thirty Four Thousand Four Hundred Eighty Two
and Paisa Eighty Four only) was payable for the goods supplied and that
interest in sum of 1,41,01,949/- (Rupees One Crore Forty One Lacs One
`
Thousand Nine Hundred and Forty Nine only) had accumulated, total
amount claimed was ` 6,20,98,822.11 (Rupees Six Crores Twenty Lacs
Ninety Eight Thousand Eight Hundred Twenty Two and Paisa Eleven
only).
3. After the suit was filed IA No.7948/1998 was filed by the appellant
pleading therein that it had learnt that UPFC was taking steps to sell the
mortgaged property. Vide order dated September 14, 1998, UPFC was
FAO (OS) No.267/2014 Page 2 of 7
restrained from selling the mortgaged property, with notice issued to the
defendants.
4. Matter simply lingered on for years together with nobody bothering
to either prosecute the suit nor UPFC taking any steps to file any
application for having the injunction issued against it vacated. Counsel
engaged by UPFC appeared in the suit proceedings as per his
convenience, and we note that presence of the counsel is recorded in the
order dated May 10, 1999, April 18, 2000, July 11, 2000, July 24, 2002,
October 22, 2002, January 22, 2003, July 15, 2003, January 16, 2004,
March 10, 2004, May 18, 2004 and thereafter on September 25, 2007
when IA No.11037/2007 filed by UPFC for vacation of the ex-parte stay
against it was listed.
5. The learned Single Judge has held that though as per law an
injunction could be issued against a third party (not a party to the suit),
but it was an exception i.e. upon finding a fit case.
6. The learned Single Judge has thereafter reasoned that it was not a
fit case for confirming the injunction, and the reasoning is in para 22 and
its various sub-paras (I to VIII) as under:-
“22. As far as the merits of the injunction are concerned, I
am of the view that no case for granting interim injunction
restraining the UPFC from proceeding with the sale of the
subject property in exercise of powers under Section 29 of
the State Financial Corporations Act is made out, for the
following reasons:
(I) There is no challenge in the present suit to the right of
the UPFC to sell the property.
th
(II) As far back as on 4 September, 1998, upon public
notices of sale being issued by the UPFC in the
newspaper, the plaintiff became aware of the claim of the
FAO (OS) No.267/2014 Page 3 of 7
UPFC to the said property and of the right asserted by the
UPFC to sell the same and though the plaintiff applied for
and obtained injunction restraining UPFC from so selling
the property but the plaintiff till now i.e. for nearly 16
years has not made any such challenge, neither in this suit
by seeking amendment thereof nor by filing any other
proceeding. In fact, no steps for impleading UPFC as a
party to this suit also were taken till this Court during the
CS(OS) 1112/1998, EX.P. 126/1997 & EX.P. 96/2008
Page 14 of 19 hearing on 27th March, 2014 expressed
doubts about the right of the plaintiff to sustain interim
injunction against UPFC without the UPFC being a party
to the suit.
(III) Even now, no application for amendment of the plaint
to challenge such right/claim asserted by the UPFC has
been sought.
(IV) The right even if any of the plaintiff to challenge the
claim of the UPFC may now also be barred by time;
however, no final opinion thereon can be expressed
without the plaintiff even making such a challenge.
(V) Though UPFC also has filed a misconceived
application for impleadment as a party to this suit but only
for the purpose of having the stay order dated 14th
September, 1998 vacated; the same thus does not compel
me to take a different view.
(VI) When in the circumstances aforesaid, it does not fall
for adjudication in this suit, whether UPFC is entitled to
sell the property or not, this Court cannot continue any
further the interim injunction restraining the UPFC from
selling the said property; any continuance of the said
interim order would amount to this Court injuncting
during the pendency of the proceedings, what it is not
called upon to injunct CS(OS) 1112/1998, EX.P. 126/1997
& EX.P. 96/2008 Page 15 of 19 on the culmination of the
FAO (OS) No.267/2014 Page 4 of 7
said proceedings and which in my view is clearly
impermissible in law.
(VII) What has emerged during the hearing is that the
defendant No.2 Mr. Vijay Kumar Bhatia and the defendant
No.4 Ms. Priya Bhatia acquired the New Friends Colony
property vide General Power of Attorney and Special
Power of Attorney dated 5th April, 1996 in favour of the
defendant No.4 Ms. Priya Bhatia and Agreement to Sell in
favour of the defendant No.2 Mr. Vijay Kumar Bhatia and
upon introduction of the scheme for conversion of
leasehold rights in the land underneath the property into
freehold, got executed a Conveyance Deed of freehold
rights dated 24th October, 1996 executed in favour of the
defendant No.4 Ms. Priya Bhatia.
(VIII) Mortgage by deposit of title deeds was purported to
be created in favour of the plaintiff by depositing with the
plaintiff, the Agreement to Sell and the Power of Attorney
in favour of the defendants No.2&4 and mortgage by
deposit of title deeds is purported to be created in favour
of UPFC by deposit of the Conveyance Deed dated 24th
October, 1996.”
7. Since we are in an appeal, as per the law declared by the Supreme
Court in the decision reported as (1991) 1 PTC 1 Wander Ltd. & Anr. Vs.
Antox India Pvt. Ltd. , an appeal against an interim order granting
injunction by a learned Single Judge would require the same to be
considered by the Appellate Court on the principle of law : whether the
learned Single Judge has noted relevant material and applied the correct
principles of law to the same.
8. The document of title in favour of Vijay Kumar Bhatia qua the
mortgaged property is an agreement to sell executed in his favour by
R.B.Gupta in whose favour in turn the perpetual sub-lessee had executed
FAO (OS) No.267/2014 Page 5 of 7
an agreement to sell as also the original perpetual sub-lease. The deposit
of the title deeds was on May 22, 1996 and thereafter Vijay Kumar
Bhatia, as per policy of the DDA got the property converted from a lease-
hold tenure to a free-hold tenure and got a conveyance deed in his name
from October 24, 1996. This conveyance deed was the document of title
used by him for creating an equitable mortgage while obtaining a credit
from UPFC.
9. We need not note the decisions relied upon by the appellant on the
point that an injunction can be issued even against a third party in a suit,
because the learned Single Judge has also recognized law being so.
10. The point would be : whether the facts of the instant case justify
continuation of the ex-parte ad-interim injunction granted against UPFC
which was not impleaded as a party in the suit till when dawn of
realization came on the horizon of the appellant in the year 2014. IA
No.6220/2014 was thereafter filed to implead UPFC as a party, which has
been dismissed for the reason the appellant did not even bother to amend
the plaint incorporating pleadings qua UPFC as also on account of delay
and laches.
11. In the facts of the instant case noted by us the view taken by the
learned Single Judge does not require any intervention by the Appellate
Court in view of the law declared in Wander ’s case (supra). We may
only add that an agreement to sell is not a document of title, as held by
the Supreme Court in the decision reported as AIR 2012 SC 206 Suraj
Lamp & Industries Pvt. Ltd. Vs. State of Haryana . The so-called sales
under the agreement to sell violated the terms of the perpetual sub-lease
deed in favour of the original allottee because sale could be effected only
with the prior permission of the superior lessor and upon payment of up
to 50% of the unearned increase. No equitable mortgage could be created
FAO (OS) No.267/2014 Page 6 of 7
by depositing the agreements to sell. Assuming that by depositing the
perpetual lease-deed a mortgage could be created, as per the terms of the
perpetual sub-lease even the same required the prior permission of the
superior lessor. Besides, the original perpetual lessee i.e. Kanti Puri
could alone have offered the title deed of her property as security or could
have authorized her attorney to do so. It is not the case pleaded in the
plaint that the equitable mortgage was created by Kanti Puri herself or
through her attorney.
12. The appeal is accordingly dismissed with costs against the
appellant and in favour of UPFC.
(PRADEEP NANDRAJOG)
JUDGE
(MUKTA GUPTA)
JUDGE
JANUARY 27, 2016
mamta
FAO (OS) No.267/2014 Page 7 of 7
% Judgment Reserved on : January 19, 2016
Judgment Delivered on : January 27, 2016
+ FAO (OS) 267/2014
RELIANCE INDUSTRIES LTD. .....Appellant
Represented by: Mr.B.B.Sawhney, Sr.Advocate
instructed by Mr.Somiran Sharma,
Mr.Biju P.Raman and Mr.Vishnu
Sharma, Advocates
versus
M/S.VIJAY CABLE INDUSTRIES & ORS. .....Respondents
Represented by: Mr.Rajesh Banati, Advocate with
Mr.Vikram Advocate for R-1 and
R-2
Mr.Pramod Kumar, Advocate with
Mr.Vikas Tomar, Advocate for
UPFC
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PRADEEP NANDRAJOG, J.
1. Challenge in the appeal is to the order dated May 07, 2014 passed
by the learned Single Judge dismissing IA No.7948/1998 filed by the
appellant (the plaintiff) and allowing IA No.11037/2007 filed by Uttar
Pradesh Financial Corporation (UPFC).
2. At the outset we must record our deep pain and anguish in the
manner in which learned counsel for the parties have prosecuted the
cause of their respective clients in the suit filed by the appellant, in which
FAO (OS) No.267/2014 Page 1 of 7
defendant No.1 is M/s.Vijay Cable Industries (a partnership firm), its
partners Vijay Kumar Bhatia and Tilak Raj Bhatia are defendants No.2
and 3. Priya Bhatia, a guarantor and M/s.Vijay Cables Ltd. are
defendants No.4 and 5. The suit, filed in the year 1998, is under Order
34 of the Code of Civil Procedure and pleads that for goods supplied to
the defendant No.1, a sum of ` 3,21,57,390/- (Rupees Three Crores
Twenty One Lacs Fifty Seven Thousand Three Hundred and Ninety only)
became due and payable and to secure repayment defendants No.2 to 4
created an equitable mortgage over property No.A-111, New Friends
Colony, New Delhi by depositing the title deeds of the property, which
comprised a perpetual lease-deed dated August 08, 1983 executed by the
Delhi Development Authority in favour of one Kunti Puri, an agreement
to sell dated August 28, 1996 whereunder Kunti Puri agreed to sell the
property to one R.B.Gupta; and an agreement to sell dated January 19,
1988 executed by R.B.Gupta in favour of Vijay Kumar Bhatia (and we
note that there was obvious typographic errors concerning the dates).
Alleging that sale tax liability in sum of ` 1,58,34,482.84 (Rupees One
Crore Fifty Eight Lacs Thirty Four Thousand Four Hundred Eighty Two
and Paisa Eighty Four only) was payable for the goods supplied and that
interest in sum of 1,41,01,949/- (Rupees One Crore Forty One Lacs One
`
Thousand Nine Hundred and Forty Nine only) had accumulated, total
amount claimed was ` 6,20,98,822.11 (Rupees Six Crores Twenty Lacs
Ninety Eight Thousand Eight Hundred Twenty Two and Paisa Eleven
only).
3. After the suit was filed IA No.7948/1998 was filed by the appellant
pleading therein that it had learnt that UPFC was taking steps to sell the
mortgaged property. Vide order dated September 14, 1998, UPFC was
FAO (OS) No.267/2014 Page 2 of 7
restrained from selling the mortgaged property, with notice issued to the
defendants.
4. Matter simply lingered on for years together with nobody bothering
to either prosecute the suit nor UPFC taking any steps to file any
application for having the injunction issued against it vacated. Counsel
engaged by UPFC appeared in the suit proceedings as per his
convenience, and we note that presence of the counsel is recorded in the
order dated May 10, 1999, April 18, 2000, July 11, 2000, July 24, 2002,
October 22, 2002, January 22, 2003, July 15, 2003, January 16, 2004,
March 10, 2004, May 18, 2004 and thereafter on September 25, 2007
when IA No.11037/2007 filed by UPFC for vacation of the ex-parte stay
against it was listed.
5. The learned Single Judge has held that though as per law an
injunction could be issued against a third party (not a party to the suit),
but it was an exception i.e. upon finding a fit case.
6. The learned Single Judge has thereafter reasoned that it was not a
fit case for confirming the injunction, and the reasoning is in para 22 and
its various sub-paras (I to VIII) as under:-
“22. As far as the merits of the injunction are concerned, I
am of the view that no case for granting interim injunction
restraining the UPFC from proceeding with the sale of the
subject property in exercise of powers under Section 29 of
the State Financial Corporations Act is made out, for the
following reasons:
(I) There is no challenge in the present suit to the right of
the UPFC to sell the property.
th
(II) As far back as on 4 September, 1998, upon public
notices of sale being issued by the UPFC in the
newspaper, the plaintiff became aware of the claim of the
FAO (OS) No.267/2014 Page 3 of 7
UPFC to the said property and of the right asserted by the
UPFC to sell the same and though the plaintiff applied for
and obtained injunction restraining UPFC from so selling
the property but the plaintiff till now i.e. for nearly 16
years has not made any such challenge, neither in this suit
by seeking amendment thereof nor by filing any other
proceeding. In fact, no steps for impleading UPFC as a
party to this suit also were taken till this Court during the
CS(OS) 1112/1998, EX.P. 126/1997 & EX.P. 96/2008
Page 14 of 19 hearing on 27th March, 2014 expressed
doubts about the right of the plaintiff to sustain interim
injunction against UPFC without the UPFC being a party
to the suit.
(III) Even now, no application for amendment of the plaint
to challenge such right/claim asserted by the UPFC has
been sought.
(IV) The right even if any of the plaintiff to challenge the
claim of the UPFC may now also be barred by time;
however, no final opinion thereon can be expressed
without the plaintiff even making such a challenge.
(V) Though UPFC also has filed a misconceived
application for impleadment as a party to this suit but only
for the purpose of having the stay order dated 14th
September, 1998 vacated; the same thus does not compel
me to take a different view.
(VI) When in the circumstances aforesaid, it does not fall
for adjudication in this suit, whether UPFC is entitled to
sell the property or not, this Court cannot continue any
further the interim injunction restraining the UPFC from
selling the said property; any continuance of the said
interim order would amount to this Court injuncting
during the pendency of the proceedings, what it is not
called upon to injunct CS(OS) 1112/1998, EX.P. 126/1997
& EX.P. 96/2008 Page 15 of 19 on the culmination of the
FAO (OS) No.267/2014 Page 4 of 7
said proceedings and which in my view is clearly
impermissible in law.
(VII) What has emerged during the hearing is that the
defendant No.2 Mr. Vijay Kumar Bhatia and the defendant
No.4 Ms. Priya Bhatia acquired the New Friends Colony
property vide General Power of Attorney and Special
Power of Attorney dated 5th April, 1996 in favour of the
defendant No.4 Ms. Priya Bhatia and Agreement to Sell in
favour of the defendant No.2 Mr. Vijay Kumar Bhatia and
upon introduction of the scheme for conversion of
leasehold rights in the land underneath the property into
freehold, got executed a Conveyance Deed of freehold
rights dated 24th October, 1996 executed in favour of the
defendant No.4 Ms. Priya Bhatia.
(VIII) Mortgage by deposit of title deeds was purported to
be created in favour of the plaintiff by depositing with the
plaintiff, the Agreement to Sell and the Power of Attorney
in favour of the defendants No.2&4 and mortgage by
deposit of title deeds is purported to be created in favour
of UPFC by deposit of the Conveyance Deed dated 24th
October, 1996.”
7. Since we are in an appeal, as per the law declared by the Supreme
Court in the decision reported as (1991) 1 PTC 1 Wander Ltd. & Anr. Vs.
Antox India Pvt. Ltd. , an appeal against an interim order granting
injunction by a learned Single Judge would require the same to be
considered by the Appellate Court on the principle of law : whether the
learned Single Judge has noted relevant material and applied the correct
principles of law to the same.
8. The document of title in favour of Vijay Kumar Bhatia qua the
mortgaged property is an agreement to sell executed in his favour by
R.B.Gupta in whose favour in turn the perpetual sub-lessee had executed
FAO (OS) No.267/2014 Page 5 of 7
an agreement to sell as also the original perpetual sub-lease. The deposit
of the title deeds was on May 22, 1996 and thereafter Vijay Kumar
Bhatia, as per policy of the DDA got the property converted from a lease-
hold tenure to a free-hold tenure and got a conveyance deed in his name
from October 24, 1996. This conveyance deed was the document of title
used by him for creating an equitable mortgage while obtaining a credit
from UPFC.
9. We need not note the decisions relied upon by the appellant on the
point that an injunction can be issued even against a third party in a suit,
because the learned Single Judge has also recognized law being so.
10. The point would be : whether the facts of the instant case justify
continuation of the ex-parte ad-interim injunction granted against UPFC
which was not impleaded as a party in the suit till when dawn of
realization came on the horizon of the appellant in the year 2014. IA
No.6220/2014 was thereafter filed to implead UPFC as a party, which has
been dismissed for the reason the appellant did not even bother to amend
the plaint incorporating pleadings qua UPFC as also on account of delay
and laches.
11. In the facts of the instant case noted by us the view taken by the
learned Single Judge does not require any intervention by the Appellate
Court in view of the law declared in Wander ’s case (supra). We may
only add that an agreement to sell is not a document of title, as held by
the Supreme Court in the decision reported as AIR 2012 SC 206 Suraj
Lamp & Industries Pvt. Ltd. Vs. State of Haryana . The so-called sales
under the agreement to sell violated the terms of the perpetual sub-lease
deed in favour of the original allottee because sale could be effected only
with the prior permission of the superior lessor and upon payment of up
to 50% of the unearned increase. No equitable mortgage could be created
FAO (OS) No.267/2014 Page 6 of 7
by depositing the agreements to sell. Assuming that by depositing the
perpetual lease-deed a mortgage could be created, as per the terms of the
perpetual sub-lease even the same required the prior permission of the
superior lessor. Besides, the original perpetual lessee i.e. Kanti Puri
could alone have offered the title deed of her property as security or could
have authorized her attorney to do so. It is not the case pleaded in the
plaint that the equitable mortgage was created by Kanti Puri herself or
through her attorney.
12. The appeal is accordingly dismissed with costs against the
appellant and in favour of UPFC.
(PRADEEP NANDRAJOG)
JUDGE
(MUKTA GUPTA)
JUDGE
JANUARY 27, 2016
mamta
FAO (OS) No.267/2014 Page 7 of 7