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Code of Civil Procedure, 1908 – Restitution of property – When decree holder himself auction purchaser in court auction sale held in execution of decree which is subsequently set aside Held: Restitution of property can be ordered in favour of judgment-debtor and decree-holder auction purchaser is bound to return property – If at court auction sale in execution of decree, properties are purchased by bona fide purchaser who is stranger to court proceedings, sale in his favour is protected and he cannot be asked to restitute property to judgment-debtor if decree is set aside – On facts, High Court stayed order of Registrar setting aside sale of mortgaged property, however, status quo in respect of the property during pendency of writ petition not granted – Such order was interim order in nature – Highest bidder in auction held by Bank deposited certain sum with bank and third party interest was created in the said property – Sale by auction not confirmed, entire sale consideration money not deposited by subsequent purchaser, no sale deed effected nor possession of property handed over to purchaser by bank – Thus, in the interest of justice, parties to maintain status quo as regards the property in the event judgment-debtor deposits amount in writ application pending before High Court and in the event said amount is deposited within the time specified, interim order would continue till the disposal of writ petition and in default of making deposit, interim order would stand vacated. Padanathil Rugmini Amma vs. P.K. Abdulla 1996 (7) SCC 668 – referred to. Case Law Reference 1996 (7) SCC 668 Referred to Para 9 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1830 of 2009 From the Judgement and Order dated 17.03.2008 of the High Court of Bombay at Goa in Writ Petition No. 138 of 2008. Venkateswara Rao Anumolu, for the Appellant. Rai Rodrigues, Santosh Paul, Arvind Gupta, K.K. Bhat, S.N. Bundela, M.J. Paul, Anupam Lal Das, for the Respondents.

REPORTABLE

The supreme court of india. Taken about 170 m ...

The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1730 OF 2009
(Arising out of SLP No.7531 of 2008)

Woods Beach Hotels Ltd. …Appellant(s)

VERSUS

Mapusa Urban Co-operative
Bank of Goa Ltd. & Ors. …Respondent (s)
JUDGMENT

TARUN CHATTERJEE,J.

1. Leave granted.

2. This appeal is filed against an interim order dated 17th of

March 2008 in Writ Petition No. 138 of 2008 passed by the

High Court of Bombay at Goa whereby the High Court

admitted the Writ petition filed by Respondent No.1 and

stayed the operation of order dated 16th of August 2007

passed by the Registrar of Co-operative Societies, Goa.

3. The relevant facts leading to the filing of this appeal as

emerging from the records of this case have been succinctly
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referred here for the better understanding and determination

of the instant appeal.

The MAPUSA Urban Cooperative Bank of Goa Ltd.

(Respondent No.1, hereinafter referred to as “the Bank”) had

extended credit facility of Rs.20 lacs to a proprietary firm

belonging to one of the Directors of the Woods Beach Hotel Ltd.

(hereinafter referred to as “the appellant”) and an immovable

property of the appellant namely “Soranto” was allegedly

mortgaged to cover the aforesaid credit facility. The appellant

was not the principal borrower. The name and constitution of the

appellant company was changed and notified to the bank in

1994 but the notice did not mention about the change of

shareholders. The Bank initiated the proceedings for recovery of

the due amount before the Asst. Registrar (Respondent No.3) of

the Multi State Cooperative Societies under section 74 of The

Multi State Cooperative Societies Act, 1984 wherein the

appellant was impleaded in the capacity of third party mortgagor.

The proceeding was initiated in the old name of the appellant

 
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company and it was alleged by the appellant that no notice was

served on the appellant.

 

4. After obtaining an award from the Assistant Registrar, the

Bank filed execution application on 23rd of September 1999

for a sum of Rs. 52.35 lacs wherein it sought attachment of

the immovable property of the appellant. After being aware of

the award, the appellant tried to settle the matter with the

Bank and paid Rs. 6.63 lacs to the Bank in the process.

However the recovery officer of the bank went ahead with the

sale of the mortgaged immovable property and due to non-

availability of buyers eventually the Bank itself purchased the

property for Rs.97,04,222/- and the appellant alleged non-

service of notice regarding the same.

 

5. In July 2004, the appellant was forcibly dispossessed from its

property. Aggrieved by the said action, the appellant preferred

an appeal on 7th of December, 2005 before the Registrar of

Cooperative Societies (Respondent No. 2 herein) as

 

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according to them the property was worth more than Rs. 10

Crores and no notice was given to them during the entire

process. The appellant had also filed a Writ Petition no. 378

of 2004 in the High Court of Bombay at Goa seeking orders to

restore the possession of the property and to direct the bank

to deal with the property after giving due notice to the

appellant. The High Court rejected the Writ petition by its

order dated 29th of March 2005. Against this, the appellant

filed Special Leave Petition No. 17486 of 2005 in this Court,

which was dismissed with the observation that the appeal was

filed in the Court of Registrar, Multi State Cooperative

Societies, Goa.

6. The Registrar, during the pendency of the appeal, granted an

interim stay of operation of the order of the Assistant

Registrar and directed stay of the sale of the property in

question. By an order dated 16th of August, 2007, the

Registrar had set aside the Judgment of Assistant Registrar

and directed the following :-

“(a) The award/Judgment dated 26th August, 1995
passed by the Asst. Registrar against the Appellant
Company is set aside subject to the appellant

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company making payment of Rs. One Lac as cost to
the Respondent Bank within a period of two weeks.

(b) The Asst. Registrar is directed to re-hear the case
and decide the same within 6 months.

(c) The appellant company is directed to deposit with
the Asst. Registrar the amount of the decretal dues
as on date of this order within 4 weeks from today
and this amount shall be held by the Asst. Registrar
in interest-earning deposit for 6 months pending
decision from the Asst. Registrar.”

 

Meanwhile, the Bank tried to find prospective buyers and tried

to sell off the property in question to a buyer named Softitel

Hospitality & Management which was found to be the highest

bidder having offered a price of Rs. 7.04 crores during the

auction conducted by the bank and they deposited an amount of

Rs.1 crore on 06th of May, 2006 with the bank in pursuance of

their bid. At the same time, the bank filed a review application

praying for review of the order before the Registrar, which was

also dismissed.

7. Against the aforesaid order of the Appellate Authority, the

Registrar of Cooperative Societies, Goa, the Bank has filed a

writ petition being W.P. No. 138 of 2008 before the High
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Court of Bombay at Goa, which is now pending decision. In

the said writ application, the Bank has taken a plea inter alia

that the Registrar had no jurisdiction to entertain the appeal

against the order of the Assistant Registrar.

8. While entertaining the prayer for interim relief, the High Court

prima facie found that the appeal itself was not maintainable

because the impugned order was passed nearly after 10

years when there was no right subsisting in favour of the

appellant bank on the day, the appeal was filed. Some other

findings were made in favour of the appellant bank prima

facie and for that purpose, the interim order of stay of the

operation of the order of the Registrar was granted by the

High Court. However, in the impugned interim order, it would

also be evident that a prayer was made by the appellant that

the status quo should be maintained by the parties during the

pendency of the writ petition in respect of the property in

question. The High Court by the impugned order rejected the

said prayer and the Special Leave Petition has been filed in

this Court against the said refusal, which, on grant of leave,

 

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was heard in the presence of the learned counsel for the

parties.

9. Since the appellant has already filed the writ petition, which is

pending before the High Court, in which the question of

jurisdiction of the Registrar to entertain the appeal filed

against the order of the Assistant Registrar shall be decided

finally by the High Court in the writ application, we are not

inclined to delve into the questions raised by the parties

before us in depth at this stage of the proceedings. The

learned Senior Counsel appearing on behalf of the appellant

sought to argue before us that during the pendency of the writ

application, the parties should be directed to maintain status

quo in respect of the property mortgaged by the appellant.

On the other hand, the learned senior counsel appearing for

the respondent bank sought to argue that since they have

already accepted a bid of Rs. 7.04 crores offered by Softitel

Hospitality & Management, they will suffer irreparable loss

and injury if status quo is granted till the disposal of the writ

application. Reliance was placed in a decision of this Court in

 

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the case of Padanathil Ruqmini Amma vs. P.K.Abdulla

[1996 (7) SCC 668] for the parties showing that when the

decree holder himself was the auction purchaser in a court

auction sale held in execution of a decree which is

subsequently set aside, restitution of the property can be

ordered in favour of the judgment-debtor and the decree-

holder auction purchaser is bound to return the property. In

that decision, it was also held that it is equally well settled that

if at a court auction sale in execution of a decree, the

properties are purchased by a bona fide purchaser who is a

stranger to the court proceedings, the sale in his favour is

protected and he cannot be asked to restitute the property to

the judgment-debtor if the decree is set aside. It was further

held in that decision that the ratio behind this distinction

between a sale to a decree-holder and a sale to a stranger is

that the court, as a matter of policy, will protect honest outside

purchasers at sales held in the execution of its decrees,

although the sales may be subsequently set aside, when

such purchasers are not parties to the suit. At this stage, the

 

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principle laid down by this Court in the aforesaid decision

need not be gone into in view of the fact that –

(1) The impugned order passed by the High Court was

the interim order in nature.

(2) The sale by the auction has not yet been confirmed

nor the Softitel Hospitality and Management has yet

deposited the entire sale consideration money nor

any sale deed has been effected relating to the

property in question ?

 

10. Considering the facts of the present case and taking into

account the fact that the Softitel Hospitality & Management was

the highest bidder in the auction held by the bank and they have

already deposited an amount of Rs. 1 crore with the bank, we

are of the view that a third party interest has now been created

in the aforesaid property. It is not in dispute that the Softitel

Hospitality and Management has not yet put in the balance

amount of Rs.6.04 crores nor the sale has yet been confirmed. It

is also not in dispute that the possession of the property in

 

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question has not yet been handed over to Softitel Hospitality and

Management by the bank. Under the aforesaid circumstances,

and considering the balance of convenience and inconvenience

and for meeting the ends of justice, we feel it proper to dispose

of this appeal in the following manner: –

(a) In the event, the appellant deposits a sum of Rs. 6.04

crores in the pending writ application before the High Court

within three months from this date, the parties shall be directed

to maintain status quo as regards the property in question

initially for a period of three months unconditionally from this

date and in the event the aforesaid amount is deposited within

the time specified hereinabove, the interim order shall continue

till the disposal of the writ petition or until further orders to be

passed by the High Court in the writ application.

 

(b) In default of making the deposit, as mentioned herein

above, the interim order, as granted, shall automatically

stand vacated.

 
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(c) We make it clear that we have not gone into the question

whether the impugned order granting ad interim stay of the

order of the Registrar was justified or not, as the parties

before us have restricted their arguments in respect of the

grant of status quo relating to the properties in question

only.

(d) The High Court is requested to decide the pending writ

petition within three months from the date of supply of a

copy of this order positively, after giving hearing to the

parties and after passing a reasoned order in accordance

with law.

11. We make it clear that whatever observations that have

been made by the High Court in the impugned order and any

observations, on the merits of the writ petition, if made by us in

this order, shall not stand in the way of the High Court from

deciding the writ application on merits without being influenced

by such observations, if any.

12. The appeal is thus disposed of. There will be no orders as

to costs.

 

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…………………………J.
[TARUN CHATTERJEE]
…………………………J.
[HARJIT SINGH BEDI]
NEW DELHI
March 24, 2009.

 
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