NITIN GUNWANT SHAH versus INDIAN BANK & ORS.

20. Aggrieved by the order dated 13th June, 2010 of the Bombay High Court, the petitioner herein approached this Court by way of the instant special leave petition. On 7.9.2010, this C Court passed an interim order which has already been taken note of at para 11. Since the order was limited for a specified period in operation and as there was no further extension of the interim order, the respondent Bank filed an application on 13th December, 2011 before the Debts Recovery Tribunal-II, Mumbai once again seeking a direction to the petitioner herein to deliver the possession of the property in dispute. The said application was allowed by an order of the Debts Recovery Tribunal-II, Mumbai dated 4.1.2012 directing the petitioner to hand over possession of the portion of the dispute property. Thereupon the petitioner moved this Court in I.A. No.3/2011 and this Court by an order dated 6th January, 2012 directed that "till 6th February, 2012, the parties are once again directed to maintain status quo with regard to the flat in question".

21. It is argued by Mr. Bhaskar P. Gupta, learned senior counsel for the petitioner – (i) that the petitioner is a tenant of the property in dispute and, therefore, he cannot be evicted except in accordance with the procedure established by law; (ii) that the petitioner is not either a debtor or a guarantor of any debt due to the 1st respondent Bank and, therefore, the Debts Recovery Tribunal would be without any jurisdiction (as rightly held by the tribunal) to order the c eviction of the petitioner. Consequently, the Recovery Officer cannot evict the petitioner in the purported exercise of the recovery certificate; (iii) that the petitioner acquired the tenancy rights in the property in dispute at a point of time prior to which the landlord of the petitioner incurred the liabilities due to the bank and the mortgage created by the landlord is much later than the tenancy agreement between the petitioner and his landlord (respondent No.4). Therefore, it cannot be said that the petitioner's tenancy is subject to the rights of the mortgagee (the respondent Bank); (iv) assuming for the sake of arguments that the petitioner is not a tenant but only a trespasser, as contended by the respondent Bank, even then the petitioner is required to be evicted from the property in dispute by the procedure established by law. The recovery certificate issued by the Debts Recovery Tribunal is not a procedure established by law for evicting 'a trespasser' (petitioner); (v) that in view of the pendency of his suit RAD No.1389/ 2006, the petitioner cannot be evicted until the said suit is adjudicated upon.

22. On the other hand, it is argued by learned counsel for the respondent Bank: (i) that the conduct of the petitioner in allowing his Suit RAD No.1719/1990 to be dismissed for non-prosecution and filing a fresh Suit for the same relief 13 years thereafter while he is comfortably squatting in the property would disentitle the petitioner from raising an objection that until the fresh suit RAD No.1389/2006 is decided, his possession cannot be disturbed; (ii) the registered mortgage in favour of the respondent Bank for the property in dispute was created on 27.9.1989 NITIN GUNWANT SHAH v. INDIAN BANK & ORS. [J. CHELAMESWAR, J.] whereas the petitioner entered possession of the property, even according to his own assertion, on 23rd February, 1990, i.e. after a lapse of four months after the mortgage is created. (iii) the alleged Leave and License Agreement itself is a B bogus and sham transaction. (iv) the petitioner's possession is clearly that of a trespasser. (v) The mortgage in question is in the nature of an English C mortgage. In the mortgage deed the respondent No.4 clearly asserted that he was in the possession of the property in dispute. Therefore, he could not have legally inducted any person into possession of the property in dispute after the execution of the mortgage. o (vi) Lastly, the learned counsel submitted that in view of the language and Scheme of the 2nd Schedule to the Income Tax Act, which are made applicable to the recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, more specifically Rule 40 therein, the Recovery Officer is entitled to evict the petitioner, though the petitioner is not either a debtor to the bank or a guarantor to any debtor to the bank irrespective of the fact whether he is a trespasser or a tenant to the property in dispute.

23. In our opinion, this is a typical case of the abuse of the process of the legal system by unscrupulous litigants. The petitioner claims to be a tenant in the property in dispute. No doubt, the petitioner is in possession of the property in dispute. G However, the nature of his right to be in possession, the mode of his acquiring the possession and the legal character of his possession are yet to be ascertained .. The only certain fact is that the petitioner has been in possession of the property in dispute as on the date of the filing of the original suit No.3038 H (2012] 10 S.C.R. of 1992 in the High Court of Bombay by the first respono,ent Bank. Of course, the petitioner asserts that he was inducted into possession of the property in dispute on 23rd February, 1990 by one Yogesh M. Kamani and Madhubai A. Gandhi, allegedly the brothers-in-law of the fourth respondent. No forum so far examined the accuracy of such an assertion, both regarding the date, the alleged delivery of possession and also regarding the alleged relationship of the persons who are said to have given possession to the petitioner.

24. On the other hand, the case of the petitioner regarding the legal character of the possession of the property in dispute itself is not consistent. The agreement dated 6th May, 1989 alleged to have been executed by respondents 4 and 5 in favour of the petitioner (whose authenticity is yet to be established) the document is styled as an Agreement of "Leave and Licence". It purports to grant a "licence" in favour of the petitioner of the property in dispute to use and occupy the same on a "monthly compensation" of Rs.2000/- and for a period not exceeding "11 months commencing from 15th day of August, 1989" with a further specific stipulation which reads (in the copy filed before this Court) as follows: " … this writing shall only be construed as a tenancy agreement or lease nor otherwise creating any other right or interest in the said premises in favour of the Licencee. It is not at all the intention of the parties hereto who on the contrary merely a leave and Licence Agreement and/or arrangement so as to allow the licencee for the purpose of residential accommodation." The above extract, as it is, does not convey any meaning G to us. Whether the extract is an accurate copy of the original document or not is doubtful. On the other hand, reading the document as a whole gives an impression that the parties did not intend the document to be creating any tenancy or a lease. However, right from the plaint in RAD Suit No.1719/1990, the petitioner started describing himself as a tenant of the property. NITIN GUNWANT SHAH v. INDIAN BANK & ORS. [J. CHELAMESWAR, J.] But the case of the Bank has been consistent from the A beginning that the petitioner is a trespasser. Ultimately, these are all questions to be determined on an examination of all the material by an appropriate forum in an appropriate proceeding. Whether a person in possession of immovable property is a tenant or a licencee or a trespasser, he cannot be evicted except in accordance with the procedure established by law.

25. Adjudication of Civil disputes and enforcement of the rights of the parties to the dispute in terms of the adjudication are matters provided for under the Code of Civil Procedure- procedure established by law. The person entitled in law to the possession of any immovable property, which is in the occupation of some other persons whether a tenant, licencee or trespasser can evict such tenant, licencee or trespasser by obtaining a decree for eviction from a competent civil court.

26. Attachment and sale of immovable properties of a person, who is adjudged to be owing some amount to another person is one of the modes of securing the repayment of such judgment debt. (see Section 51 Order 21 of Civil Procedure Code). When an immovable property of the judgment debtor E is brought to sale in order to recover the amounts adjudicated to be due, the possibility of such a property being in the possession of a third party either pursuant to some legal right or otherwise is recognised by law. Law also recognises the possibility of such a third party objecting to or resisting his dispossession in.the process of delivering the possession of the property to the purchaser in the execution proceedings. When such resistance is offered, law also contemplates an examination whether the resistance is justified or not. Depending upon the conclusion arrived at such an examination, G the third party's possession is either protected or he is evicted. Elaborate provisions have been made in this regard under Order 21 of Code of Civil Procedure. However, the legislature can create special/alternative procedure for the eviction of either a judgment debtor or a third party such as the one H discussed above from immovable property. [2012) 10 S.C.R.

27. The first respondent Bank initially chose to seek a decree of eviction against the petitioner on the ground that he is a trespasser in the property in dispute by filing OS No.3038/ 1992 apart from seeking various other reliefs against respondents 4 and 5 in the said suit. However, such a suit came to be transferred in its entirety by an act of the Bombay High Court relying upon Section 31 of the Act 51 of 1993 to the tribunal constituted under the abovementioned Act. While allowing the claim of the respondent Bank for recovery of the amount due from respondents 4 and 5, the tribunal reached the c conclusion that the suit, insofar as the petitioner herein is concerned, is not amenable to the jurisdictior,:i of the tribunal. In which case, in the normal course, that part of the suit insofar as it pertains to the relief against the petitioner shall be deemed to be pending before the Bombay High Court. Unfortunately, this legal position was not examined either by the counsel appearing for the Bank nor the tribunal or for that matter even the Bombay High Court before transferring the abovementioned suit. The result is that the exact legal status of the petitioner vis-a-vis the property in dispute is not examined by any court so far. All submissions made before us seek an examination of the issue. We are of the opinion such an examination is not permissible in this Court for the first time in exercise of the jurisdiction under Article. 136 of the Constitution of India. It requires the establishment of basic facts which requires the framing of evidence.

28. Be that as it may. The fact situation as on today is that the findings of the tribunal established under the abovementioned Act is that the respondent Bank is entitled to recover the amounts claimed by it in the abovementioned suit (which came to be renumbered as OA No. 3583/2000 or transfer from the High Court to the tribunal). The operative portion of the tribunal's order in so far as it is relevant for this purpose reads as follows: "A. The application is allowed with costs against NITIN GUNWANT SHAH v. INDIAN BANK & ORS. [J. CHELAMESWAR, J.] Defendant no.1 to 4 and is rejected with costs against A Defendant No.5. (A) The Defendant No.1 to 4 do jointly and severally pay to the applicant an amount of Rs. 33,62,694.76 (Rs. Thirty Three Lacs Sixty Two Thousand Six Hundred 8 Ninety Four and paise Seventy Six only) with interest @ 18% p.a. with quarterly rest on Rs. 33.09,797.59 paise (Rs. Thirty Three Lacs Nine Thousand Seven Hundred Ninety Seven and Paise Fifty Nine only) from the date of filing original application till full C realisation. (B) It is declared that the above outstandings are secured by validly and legally created mortgage of flat No.14 aadmg.683 sq.ft. on lllrd floor of building known as Amar Jyoti CS No. 255 of Malabar Hill, D Mumbai-6. The mortgagor may pay the outstanding amount within three months for avoiding the sell of the mortgaged property. ( c) xxxx xxxx xxxx xxxx (D) Issue recovery certificate as per above terms and serve copies of judgment on the parties."

29. Once such a determination is made, the Presiding Officer of the tribunal is required to issue a certificate under Section 19(22)1 for the recovery of the amount of debt specified in the said certificate addressed to the Recovery Officer2• Such a certificate, as we have already taken note of, came to be G 1. Sec. 19(22) The Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer for recovery of the amount of debt specified in the certificate. 2. Sec. 2(K)-"Recovery Officer" means a Recovery Officer appointed by the Central Government for each Tribunal under sub-section (1) of section 7. issued. Thereafter the amounts due are required to be recovered by following an appropriate procedure established by law. The question is what is that procedure established by law.

30. Section 25 of the Act 51 of 1993 prescribes various modes of recovery of the amounts indicated in the certificate. One of them is attachment and sale of immovable property of the judgment debtor. c "S.25. The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of section 19, proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely:- (a) attachment and sale of the ***immoveable property of the defendant:" Section 29 of the Act 51 of 1993 declares that the provisions of the Second and Third Schedule of Income Tax Act, 1961 apply with necessary modifications for the recovery of the amounts due under the Act 51 of 1993. "29 Application of cerlain provisions of Income-tax Act The provisions of the Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the Income-tax: Provided that any reference under the said provisions and the rules to the "assessee" shall be construed as a reference to the defendant under this Act."

31. The Second Schedule of the Income Tax Act read with H the Income Tax Certificate Proceedings Rules, 1962, for short NITIN GUNWANT SHAH v. INDIAN BANK & ORS. [J. CHELAMESWAR, J.] 'the 1962 Rules', prescribe the procedure for recovery of the A amounts due pursuant to a certificate issued under Section 222 of the Income Tax Act. Part Ill of the Second Schedule prescribes the procedure for the attachment and sale of immovable property. Rule 92 thereof enables the making of the Rules. In the purported exercise of the powers granted B thereunder, the Income Tax Certificate Proceedings Rules, 1962 were made.

32. Rules 393 and 404 of the 1962 Rules recognise that the property which is brought to sale towards the recovery of the amounts due under the certificate could be in the occupation C of either the defaulter or persons other than the defaulter either claiming through the defaulter or independently. Rule 40 more 3. 39. Delivery of Immovable property in occupancy of defaulter:- ( 1) Where the immovable property sold is in the occupancy of the defaulter or of some person on his behalf or of some person claiming under a title created by the defaulter subsequently to the attachment of such property and a certificate in respect thereof has been granted under rule 65 of the principal rules, the Tax Recovery Officer shall, on the application of the purchaser, order delivery to be made by putting such purchaser or any E person whom the purchaser may appoint to receive delivery on his behalf in possession of the property, and if need be, by removing any person who refuses to vacate the same. (2) For the purposes of sub-rule(1), if the person in possession does not afford free access, the Tax Recovery Officer may, after giving reasonable warning and facility to any woman not appearing in public according to the customs of the country to withdraw, remove or open any lock or bolt or F break open any door or do any other act necessary for putting the purchaser, or any person whom the purchaser may appoint to receive delivery on his behalf, in possession. 4. 40. Delivery of immovable property in occupancy of tenant:- where the immovable property sold is in the occupancy of a tenant or other G person entitled to occupy the same and a certificate in respect thereof has been granted under rule 65 of the principal rules, the Tax Recovery Officer shall, on the application of the purchaser, order delivery to be made by affixing a copy of the certificate of sale in some conspicuous place on the property, and proclaiming to the occupant by b~at of drum or other customary mode, at some convenient place, that the interest of the defaulter has been tranferred to the purchaser. c [2012) 10 S.C.R. specifically deals with the property brought to sale being in the occupation of "a tenant or other person entitled to occupy". 33. Rule 41 5 deals with resistance to the delivery of possession of the property in execution of the recovery certificate. It stipulates that the purchaser is entitled to make an application to the Tax Recovery Officer complaining of resistance. Thereupon the Recovery Officer is obliged to investigate the matter and adjudicate whether the resistance was justified or not. 34. Both Rule 39 and Rule 42 stipulate that where the Recovery Officer is satisfied that the resistance is not justified he shall take necessary steps for putting the purchaser in possession of the property. On the other hand, under Rule 436, if the Recovery Officer comes to the conclusion that the resistance is justified, the application of the purchaser is required to be dismissed. 35. Rule 477 stipulates that any person other than the defaulter against whom an order under Rule 42 is passed is 5. 41 Resistance or obstruction to possession of immovable property:- ( 1) Where the purchaser of immovable property sold in execution of a certificate is resisted or obstructed by any person in obtaining possession of the property, he may make an application to the Tax Recovery Officer complaining of such resistance or obstruction within thirty days of the date of such resistance or obstruction. (2) The Tax Recovery Officer shall fix a day for investigating the matter and shall summon the party against whom the application is made to appear and answer the same. 6. 43. Resistance or obstruction by bona fide claimant:- Where the Tax Recovery Officer is satisfied that the resistance or obstruction was occasioned by any person (other than the defaulter) claiming in good faith to be in possession of the property on his own account or on account of some person other the defaulter the Tax Recovery Officer shall make an order dismissing the application. 7. 47 Right to file a suit:- Any party not being a defaulter against whom an order is made under rule 42 or rule 43 or rule 45 may institute a suit in a civil court to establish the right which he claims to the present possession of the property. NITIN GUNWANT SHAH v. INDIAN BANK & ORS. [J. CHELAMESWAR, J.] entitled to file a civil suit to establish his right for possession of the property. 36. The scheme of the above prov1s1ons clearly establishes an alternative procedure for the eviction of a person (3rd party to the proceedings) in occupation of a property which is brought to sale pursuant to a Recovery certificate issued under the 1993 Act. We have already taken note that there is a possibility of a person other than the judgment debtor being in possession of the property of the judgment debtor is recognised even under Order 21 of the Civil Procedure Code and under Rule 98. It provides for the eviction of such persons in an appropriate case where it is found that the person in possession is not legally entitled for the same8. The Rules under the Income Tax Act which are adopted for the purpose of the Recovery of debts due to the financial insttt:ution and Banks under the 1993 Act also provide a similar aLtthority of law. The law further provides under Rule 47 that aay person so evicted is entitled to file a separate suit to estabrtsh his legal claim. Obviously, such a right is acknowledged in recognition of the fact that an enquiry of the claim of the third party under the Rules is summary in nature by a Quasi Judicial Forum and therefore, 8. O.XXI R. 98 Orders after adjudication-(1) Upon the determination of the questions referred to in rule 101, the court shall, in accordance with such determination and subject to the provisions of sub-rule(2),– (a) make an order allowing the application and directing that the applicant be put into the possession of tile property or dismissing the application; or (b) pass such other order as, in the circumstance of the case, it may deem fit, (2) Where, upon such determination, the Court is satisfied that the resistance c or obstruction was occasioned without any just cause by the judgment- debtor or by some other person at his instigation or on his behalf, or by G any transferee, where such transfer was made during the pendency of the suit or execution proceeding, it shall direct that the applicant be put into possession of the property, and where the applicant is still resisted or obstructed in obtaining possession, the Court may also, at the instance of the applicant, order the judgment-debtor, or any person acting at his instigation or on his behalf, to be detained in the civil prison for a term which may extend to thirty days. A an examination of the issue by a Judicial Forum would adequately protect the interests of such third party or the purchaser, as the case may be. 37. Coming to the facts of the case on hand, it is in 8 pursuance of the above mentioned procedure established by law the property of the judgment debtors (respondents 4 & 5) is sought to be sold. The petitioner insists that such a sale should be subject to his rights of the alleged tenancy. The petitioner herein is not resisting the delivery of possession but C hindering the process of the sale itself. His application before the Recovery Officer praying that the proclamation of sale should indicate that the sale of the property in dispute would be subject to the tenancy rights of the petitioner, in our view is ill-conceived. The rules no doubt enable the petitioner to object to his dispossession on whatever grounds he believes are available D to him. The recovery officer is obliged to examine the tenability of such objections and take an appropriate decision. If such a decision is adverse to the interests of the petitioner, the petitioner is entitled to file a suit and seek an adjudication of his right to protect his interest. Whether the petitioner is a tenant E of a trespasser is a matter to be decided in such a suit. The petitioner had already approached the Bombay High Court by filing RAD Suit No. 1389 of 2006, wherein one of the prayers is for a declaration that the petitioner herein is a monthly tenant of respondents 4 and 5 herein of the property in dispute. 38. The issue whether the petitioner is a tenant or a trespasser is to be examined in the said suit. As of·today, his assertion that he is a tenant is refuted by the statutory authority. Admittedly, the Interlocutory Application filed by the petitioner G in RAD Suit No. 1389 of 2006 seeking interim protection of his possession of the property in dispute was dismissed. The objections of the petitioner were considered and refuted by the Recovery Officer and the tribunal in exercise of the statutory powers and confirmed by the High Court. Even if such a H conclusion is an erroneous conclusion, the same can be NITIN GUNWANT SHAH v. INDIAN BANK & ORS. corrected in the suit No. 1389/2006 subject, of course, to the maintainability of the suit on any one of the grounds available to the respondent bank. 39. For the above-mentioned reasons, interference in exercise of the jurisdiction under Article 136 with the judgment under appeal and protecting the petitioner's possession in the property in dispute would only delay the sale of the property in dispute thereby effectively postponing the recovery of the amounts due to the respondent-bank indefinitely. The first respondent-bank is a Nationalised Bank dealing With the moneys of the general public. 40. On the other hand, the petitioner is not absolutely remediless even if he loses the possession of the property in dispute pursuant to the recovery proceedings initiated by the respondent-bank. The petitioner can always seek restitution of D the possession of the property in dispute in the event of his success in RAD Suit No. 1389 of 2006. 41. We, therefore, see no reason to interfere in the judgment under appeal. The special leave petition is dismissed. The respondents are at liberty to proceed with the sale of the property in dispute and handover the possession of the property to the purchaser after evicting the petitioner herein. 42. We make it clear that the petitioner can seek restitution in the event of his success in RAD Suit No. 1389/2006. ALTAMAS KABIR, J. 1. I have had the privilege of going through the judgment prepared by my learned brother Chelameswar, J., and I entirely agree with the reasoning and the conclusion arrived at therein. However, in my view, two aspects of the matter relating to the second suit filed by the petitioner herein need to be highlighted. 2. There is no denying the fact that the status of the petitioner in regard to the suit premises is yet to be decided, but, as has been indicated by my learned brother, the petitioner A cannot take advantage of the fact that he has been in possession of the same, without his status being determined. The petitioner had filed a suit, inter alia, for declaration of his status as a monthly tenant in respect of the suit property, being R.A. No.1719 of 1990, in the Small Causes Court, Mumbai, B against the Respondent Nos. 4 and 5 herein. He also obtained an interim order on 9th March, 1990, directing the parties to maintain status-quo till 14th March, 1990. The said suit came to be dismissed on 19th February, 1993, for non-prosecution. The petitioner allowed the said dismissal to become final and c 13 years later filed a fresh suit, being RAD Suit No.1389/2006, against the Respondent Nos. 4 and 5 and the respondent Bank, for the same declaration that he was a monthly tenant of the disputed property. As indicated by my learned brother, in the plaint of the second suit, the petitioner had disclosed the fact 0 regarding the filing of the earlier suit and the dismissal thereof on ground of default. Prima facie, the second suit is barred under Order XXlll Rule 1 Sub-rule(4) of the Code of Civil Procedure, which, inter alia, provides as follows: "(4) Where the plaintiff- (a) abandons any suit or part of claim under sub-rule (1), or (b) withdraws from a suit or part of a claim without the permission referred to in sub-rule (3), he shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim." 3. The said question will no doubt be considered when the second suit is taken up for hearing, but the same, in my view, has a definite bearing on the grant of an interim order, as prayed for by the petitioner. 4. In addition to the above, it has also to be noted that on H account of the failure of the Respondent Nos. 4 and 5 to pay NITIN GUNWANT SHAH v. INDIAN BANK & ORS. [ALTAMAS KABIR, J.] the dues of the Bank, the Bank brought a suit for recovery of the said amount, along with interest, being Suit No.3083 of 1992, in the Bombay High Court, against the Respondent Nos. 2 to 5 and prayed for an order to be passed for the property in dispute to be sold and for the sale proceeds to be applied to the satisfaction of the claim of the Bank. 5. Furthermore, in the said suit, the Bank also sought a declaration against the petitioner herein, as the fifth defendant in the suit, that he was a trespasser in the suit premises without any right, title or interest and also prayed for a decree for his eviction therefrom. Unfortunately, with the enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the suit filed by the Bank came to be transferred to the Debt Recovery Tribunal, Bombay, in terms of Section 31 of the new Act and the same was numbered as OA No.358 of 2000. The Court and the parties appear to have overlooked the fact that in the suit relief had also been prayed for against the petitioner for declaring him as a trespasser in the suit property and for his eviction therefrom, which relief the Debts Recovery Tribunal was not competent to give. 6. On account of such a lapse on the part of all concerned, the relief sought by the Bank against the petitioner for declaration of his status vis-a-vis the suit property and his eviction therefrom, remained undecided. The petitioner, who abandoned his suit for decl~ration that he was a tenant of the suit premises, cannot at this stage of the proceedings, be allowed to take advantage of such lapse, in view of the provisions of Sub-rule (4) of Order XXlll Rule 1 CPC, and I fully agree with my learned brother that no interference is called for with the judgment under scrutiny. 7. The Special Leave Petition is accordingly dismissed, with the directions given by my learned brother. K.K.T. S.L.P. disimissed.