Reportable

THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4214-4215   OF 2011 (Arising out of S.L.P. (C) Nos. 10334-10335 OF 2008)

M/s. L.K.Trust          ... Petitioner(s) Versus

EDC Ltd. & Ors.                    ...  Respondent(s)

WITH

CONTEMPT PETITION (C) NO. 165 OF 2008

IN

SPECIAL LEAVE PETITION (C) NO. 4957 OF 2006

J U D G M E N T

J.M. Panchal, J.

1. Leave is granted in each Special Leave Petition.

2. The appeal  arising from Special  Leave Petition (C)  

No. 10334 of 2008 is directed against order dated

April 07, 2008 passed by the High Court of Bombay  

at Goa in Misc.  Civil  Application No. 165 of 2008  

which was filed in Writ Petition No. 601 of 2006 by  

which  it  is  clarified  that  the  order  of  status  quo  

passed  by  the  High  Court  vide  order  dated  

December 18,  2006 shall  not come in the way of  

EDC  Ltd.,  i.e.,  the  respondent  no.  1  Company  

herein  and  the  State  Bank  of  India,  i.e.,  the  

respondent No. 2 herein in considering the proposal  

of the respondent no. 3 Company who is mortgagor  

and the petitioner in Writ Petition No. 601 of 2006.  

The appeal arising from SLP (C) No. 10335 of 2008  

is directed against order dated April 9, 2008 passed  

by the Division Bench of the High Court of Bombay  

at Goa in Writ Petition No. 601 of 2006 by which the  

resolution passed by the respondent no. 1 EDC Ltd.  

on April 8, 2008 had resolved to accept the proposal  

of respondent no. 3 the Falcon Retreat Pvt. Ltd. for  

redemption  of  mortgage  and  affidavit  tendered by  

the State Bank of India, i.e., the respondent No. 2,  

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stating that the State Bank of India has accepted  

the  proposal  of  M/s.  Falcon  Retreat  Pvt.  Ltd.  for  

redemption  of  mortgage  on  payment  of  Rs.12.87  

crores to EDC Ltd. and Rs.9.18 Crores to the State  

Bank of India, are noticed and in view of the said  

resolution as well as the affidavit of the State Bank  

of India, the respondent no. 3, who was the original  

petitioner, is granted leave to withdraw the petition.  

3. This  Court  proposes  to  refer  to  certain  relevant  

facts, which are as under:

The respondent no. 1, i.e., EDC Ltd. is a Company  

registered  under  the  Indian  Companies  Act,  1956.  

Earlier  it  was  known  as  the  Economic  Development  

Corporation  of  Goa.   It  is  an  investment  company  in  

which the State of Goa holds majority shares.  The main  

objects  of  the  respondent  no.  1  Company,  as  per  its  

Memorandum  of  Association,  amongst  others,  are  

providing  financial  assistance  to  the  industrial  

enterprises and enterprises carrying on other economic  

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activities  whether  for  starting,  running,  expanding,  

modernizing  etc.  and  to  aid,  assist,  initiate,  promote,  

expedite and accelerate the economic development of the  

State  in  various  spheres.   The  respondent  no.  3  is  a  

Private Limited Company.  It is also incorporated under  

the  provisions  of  the  Companies  Act,  1956.   The  

respondent No. 3 company is engaged inter alia in the  

business of development/operation of hotel and tourism.  

During  the  years  1994 to  1999,  the  respondent  no.  3  

proposed  to  develop  and  to  start  hotel  project  in  the  

property admeasuring approximately 28000 sq. mtrs. of  

Survey   Nos.  142/1  and  142/1  of  Revenue  Village  

Arpora,  in  Taluka  Bardez.   For  the  purpose  of  

implementing the said hotel project, the respondent no. 1  

company  i.e.  EDC  Ltd.  granted  term  loan  of  Rs.7.00  

crores to respondent No. 3 against mortgage of aforesaid  

hotel  property vide agreement dated February 8,  1999.  

Respondent No. 2 has also granted a loan of Rs. 5 crores  

to the respondent No. 3 against pari pasu charge of the  

hotel property.   

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4. The record indicates that about 80 per cent of the  

project  was  completed  by  the  middle  of  the  year  

2001 but subsequently because of global recession  

in  the  tourism  and  real  estate  business,  the  

development of the project was severely affected and  

project implementation was halted.  In view of this  

hurdle, the repayment of the loan amount became  

difficult resulting in arrears of installments of loan  

with mounting interest liability.

5. When the respondent no. 3 was not able to repay  

the loan amount, the respondent no. 1 company initiated  

coercive  action  for  the  recovery  of  loan  amount  and  

attached the property of  respondent no. 3 company on  

July  15,  2003  under  Section  29  of  State  Finance  

Corporation Act, 1951.  On the request of the respondent  

No. 3 that it would be able to sustain the adverse market  

conditions and convert the project into profitable venture  

provided some time was granted, the property attached  

was released and, therefore, the respondent no. 1 handed  

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over the possession of the property to the respondent no.  

3  on  certain  conditions  stipulated  in  agreement  dated  

August  19,  2003,  but  subsequently  in  the  month  of  

October, 2003 the respondent No. 1 again attached the  

property.  The respondent no. 3 challenged the action of  

the respondent no. 1 in attaching the property by way of  

filing Writ Petition No. 608 of 2003 before the High Court.  

The said petition was, however, withdrawn subsequently.

6. The offer made by the respondent No. 3 for financial  

restructuring and/or one time settlement by payment of  

Rs.12.00 crores was rejected by the respondent No. 1 and  

the respondent No. 2.  Pursuant thereto, the respondent  

no. 1 made several attempts between 2004 to 2005 to sell  

the attached property,  which was mortgaged by way of  

public  auction,  but  in  none  of  the  public  auctions,  it  

received offers equivalent to market value of the property.  

Thereafter,  by private negotiation the respondent No. 1  

had accepted the proposal of appellant trust to sell the  

property in question for a sum of Rs.12.99 crores.   

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7. The  respondent  no.  3  thereafter  received  a  letter  

dated December 5, 2005 on December 13, 2005 from the  

respondent no. 1 whereby the respondent no. 1 notified  

that it had received an offer of Rs.12.99 crores from the  

appellant and was inclined to accept the said offer and in  

case the respondent no. 3 had any party with better offer,  

the same should be sent to respondent no. 1 within 3  

days  from  the  date  of  the  letter,  failing  which  the  

respondent  no.  1  would  proceed further  in  the  matter  

without prejudice to the rights of the respondent no. 1  

company to recover the balance outstanding dues from  

the  respondent  no.  3.   On  the  same  date  i.e.  on  

December 5, 2005 EDC Board while accepting the offer of  

the  present  appellant  trust,  the  respondent  No.  1  had  

also passed a resolution that only 3 days notice be given  

in future to borrowers to bring in matching offers in case  

of private auctions. The offer received by the respondent  

no.  1  from  the  appellant  was  subject  matter  of  Writ  

Petition  No.  19  of  2006  filed  by  the  respondent  no.  3  

before the High Court.  The ground raised in the petition  

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was that the offer made by the respondent no. 3 through  

third party i.e. Condor Polymeric for Rs. 14 crores made  

on January 18, 2006 was not being considered by the  

respondent no. 1 despite the said offer being the higher  

offer than made by the appellant trust.  The respondent  

no. 3 had prayed for a writ of mandamus directing the  

respondent no. 1 to consider and accept the proposal of  

the respondent no. 3 communicated vide a letter dated  

18.01.2006  and  restrain  the  respondent  no.  1  from  

proceeding to sell the property attached to the appellant.

8. While the said petition was pending before the High  

Court,  the  appellant  had  filed  an  application  for  

intervention  and  impleadment  in  the  petition  on  the  

ground that the property in issue was already agreed to  

be sold to the appellant trust by the respondent no. 1  

and part payment towards it was already made.  Upon  

hearing  the  parties  the  High  Court  had  directed  the  

impleadment  of  appellant,  i.e.,  L.K.  Trust  as  the  

respondent no. 3 in the Writ Petition pending before it.

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At the hearing of the said petition, the High Court  

questioned respondent no. 1 as to whether there was an  

agreement  to  sell  the  property  to  the  appellant.   The  

stand taken by the respondent no. 1 was that there was a  

concluded contract with the appellant.  In support of the  

said  stand,  the  respondent  no.  1  had relied  upon the  

resolution  dated  December  5,  2005  of  the  Board  of  

Directors  indicating  that  the  Board  of  Directors  had  

accepted the offer of the appellant and acceptance was  

communicated to the appellant on December 12, 2005.  

However, the respondent no. 1 did not bring to the notice  

of the Court the fact that 3 days time was granted to the  

respondent no. 3 to bring better offer and before expiry of  

the said period resolution was passed by the Board of  

Directors of respondent no. 1 company.  The respondent  

no. 1 company also concealed the fact that on January  

18,  2006  Condor  Polymeric  has  made  offer  of  Rs.  14  

crores  to  the  Board  of  Directors  of  respondent  no.  1  

company.  The High Court, therefore,  relying upon the  

stand taken by the respondent No. 1, held that there was  

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a concluded contract between the respondent no. 1 and  

the  appellant  and  in  view  of  the  said  conclusion  

dismissed the petition filed by the respondent no. 3 vide  

judgment and order dated February 22, 2006.  Feeling  

aggrieved, the respondent no. 3 approached this Court by  

filing  Special  Leave  Petition  on March 27,  2006 which  

was ultimately dismissed on August 24, 2006.  Thus the  

higher offer made by the respondent no. 3 through third  

party which was subject matter of Writ Petition No. 19 of  

2006 was not accepted when petition for special leave to  

appeal was dismissed on August 24, 2006.  During the  

pendency of  Writ  Petition No.  19 of  2006,  filed by the  

respondent No. 3 herein, the appellant trust, on February  

13,  2006  issued  cheques  to  the  respondent  No.  1,  

purporting to be in full payment of Rs.12,99,00,000/- as  

per  the  terms  and  conditions  of  sale.   After  the  High  

Court dismissed Writ Petition No. 19 of 2006 on February  

22,  2006,  R.C.  Mirchandani  and  others,  who  are  unit  

holders in the hotel project of the respondent No. 3, filed  

Writ Petition No. 124 of 2006 challenging the action of  

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the  respondent  No.  1  in  selling  the  property  to  the  

appellant-trust.   Those  petitioners  (Mirchandani  and  

others) offered to pay higher amount than offered by the  

appellant-trust in Writ Petition No. 19 of 2006, i.e., Rs..  

15 crores, which was conveyed to the respondent No. 1  

by letter dated January 3, 2006.  The respondent Nos. 3  

and 4 herein were impleaded as the respondent Nos. 4  

and 5 in Writ Petition No. 124 of 2006.

9. The Board of Directors of the respondent No. 1 was  

informed that offer of Rs. 14 crores was made by Condor  

Polymeric to sabotage the offer made by the appellant-

trust.  The record indicates that the Board of Directors  

was not informed that the appellant-trust had defaulted  

in  making  the  balance  payment  as  per  the  terms  of  

acceptance  dated  December  12,  2005  by  January  12,  

2006.   Because  of  this  concealment  and  wrong  

representation regarding Condor Polymeric, the Board of  

Directors of the respondent No. 1 in its meeting held on  

January 18, 2006 rejected the offer of Rs. 14 crores made  

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by the respondent No. 3 through Condor Polymeric.  In  

the  meeting  held  on  April  10,  2006,  the  Board  of  

Directors of the respondent No. 1 was informed that the  

cheques  issued  by  the  appellant-trust,  which  were  

delivered during the pendency of the Writ Petition No. 19  

of 2006, were subsequently deposited by the respondent  

No. 1 for realization but the same were dishonoured.  The  

Board  of  Directors  noted  this  default  and  resolved  to  

accept the higher bid of Rs. 14 crores offered by Condor  

Polymeric,  brought  by  the  respondent  No.  3.   This  

decision of Board of  Directors of  the respondent No.  1  

was not brought to the notice of this Court during the  

course of hearing of Special Leave Petition on April 12,  

2006, but an affidavit was filed stating as to why the offer  

of the respondent No. 3 was not acceptable.   

The respondent no. 3 was of the view that its right  

of redemption of the mortgaged property under Section  

60 of the Transfer of Property Act (‘T.P. Act’ for short) was  

not  defeated  by  mere  agreement  to  sell  the  property  

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between the respondent no. 1 and the appellant nor by  

the Judgment of the High Court which was confirmed by  

the Supreme Court because the said question was never  

raised  before  the  Court  and  was,  therefore,  not  

considered.  According to the respondent no. 3 such a  

right in law was recognized in Clause 16 of terms and  

conditions of tender document entered into between the  

appellant  and  the  respondent  no.  1.   Thereafter,  by  

addressing  a  letter  dated  August  25,  2006  to  the  

respondent No. 1, the respondent no. 3 exercised its right  

of  redemption  and  requested  the  respondent  no.  1  to  

confirm the exact amount due from the respondent no. 3  

payable to the respondent Nos. 1 and 2.  Meanwhile, the  

respondent  No.  3  enclosed  banker’s  cheque  of  Rs.  25  

lakhs stating that the balance amount which was due on  

the date of attachment of the mortgaged assets would be  

paid in full on settlement of the amount.  The respondent  

no. 3 addressed another letter dated September 27, 2006  

requesting  the  respondent  no.  1  to  issue  the  letter  of  

acceptance as it had received information that the Board  

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of  Directors  of  the  respondent  no.  1  company  had  

acknowledged the equity of redemption.  The respondent  

no. 3, by subsequent letter dated September 29, 2006,  

made  a  fair  estimate  of  outstandings,  on  the  basis  of  

outstanding amount quoted by respondent no. 1 before  

the Supreme Court on April  12, 2006 in Special  Leave  

Petition No. 4957 of 2006 read with resolution passed by  

the Board of Directors in its meeting held on August 27,  

2004 wherein it was recorded that the interest would not  

be  levied  on the  dues  if  the  property  was  attached or  

taken  possession  of,  from  the  date  of  taking  such  

possession read with Loan Settlement Scheme approved  

by Government of Goa as proposed by the respondent no.  

1 company in line with RBI Guidelines, and sent to the  

respondent  no.  1  an  amount  of  Rs.9,25,00,000/-  by  

cheque, in addition to earlier payment of Rs.25,00,000/-  

which was made on August 25, 2006.  The respondent  

no.  3  also  sent  an amount  of  Rs.5,90,00,000/-  to  the  

respondent no. 2 by a cheque.  The respondent no. 1 vide  

its  letter  dated  September  27,  2006  purportedly,  in  

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response  to  the  letter  dated  August  25,  2006  of  the  

respondent no. 3, informed the respondent no. 3 that, for  

the purpose of redemption of the mortgaged property, the  

outstanding  dues  were  Rs.19,22,922.12.   It  was  

mentioned  in  letter  dated  September  27,  2006  by  the  

respondent No. 1 that it was in the process of proceeding  

further  with  the  transaction  entered  into  with  the  

appellant-trust  as  the  appellant-trust  had  forwarded  

balance consideration to the respondent no. 1 subject to  

the  decision  of  the  Supreme  Court  dated  August  24,  

2006.   By  subsequent  letter  dated  09.10.2006  the  

respondent no. 1 company had acknowledged the right of  

the respondent no. 3 of redemption of mortgage but had  

stated  that  it  was  in  the  process  of  implementing  the  

Supreme Court order and therefore no further concession  

for extension of time to exercise the right of redemption  

could be considered in the case of the respondent no. 3.  

As mentioned above, the respondent no. 3 had sent an  

amount of Rs.9,72,00,690/- to the respondent no. 1 on  

August 24,  2006 and vide letters dated September 27,  

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2006  and  October  9,  2006  the  respondent  No.  1  had  

clearly  accepted  and  acknowledged  the  right  of  the  

respondent no. 3 to redeem the mortgaged property on  

the payment of liabilities due.  Meanwhile, the appellant  

trust received a letter from the President of Goa Chamber  

of Commerce, who was also Vice Chairman of respondent  

no. 1 company stating that the respondent no. 1 at its  

Board  Meeting  held  on  October  19,  2006  had  

acknowledged legal and inherent right of respondent no.  

3 to redeem the mortgaged property and that in light of  

one  time  settlement  policy  of  the  Government  of  Goa,  

which also had the effect of redemption of the mortgage,  

the  case  of  the  respondent  no.  3  was  referred  to  the  

Office of Advocate General whose opinion would be tabled  

before Board of Directors of respondent no. 1 company  

again for a decision.  The record further indicates that  

the  respondent  no.  3  had,  for  exercising  the  right  of  

redemption, shown willingness to pay an amount of Rs.  

18.40 crores to the respondent  nos.  1 and 2 and also  

agreed to pay Rs. 11.50 crores towards the liabilities of  

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unit  holders  and Court  creditors  etc.   Meanwhile,  SBI  

filed an affidavit on November 21, 2006 in Writ Petition  

No. 124 of 2006 that they were willing to accept offer of  

Rs.18.40 crores offered to EDC Ltd. and State Bank of  

India  by  the  respondent  no.  3.   By  its  letter  dated  

November 23, 2006, the respondent no. 3 again asserted  

its  right  of  redemption and informed that  its  financial  

supporters i.e. M/s. R N R Hotels Pvt. Ltd. had already  

deposited  Rs.25  lakhs  with  the  respondent  no.1.   The  

respondent no. 3 to show its bonafide, offered to deposit  

Rs.18.15 crores on or before December 8,  2006 in the  

Commercial Branch of the State Bank of India which was  

permitted by the High Court on November 28, 2006 in  

Writ Petition No. 124 of 2006.

10. The  opinion  of  Advocate  General  of  Goa  dated  

22.11.2006  mentioned  that  there  was  a  concluded  

contract between the respondent no. 1 and the appellant-

trust and the right of the respondent no. 3 of redemption  

stood  extinguished  by  its  conduct  as  envisaged  under  

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Section 60 of the Transfer of Property Act, 1882.  Acting  

upon the said opinion Board of Directors of respondent  

no.1  passed  a  resolution  dated  November  24,  2006  

deciding that the respondent no. 1 would conclude the  

sale transaction with the appellant-trust  and go ahead  

with the conveyance and delivery of possession in favour  

of the appellant-trust.  Thereupon, the respondent no. 3  

filed  W.P.  No.  601  of  2006  before  the  High  Court  of  

Bombay at Goa praying for writ of mandamus against the  

respondent  nos.  1  and  2  inter  alia  directing  them  to  

permit  the  respondent  No.  3  to  exercise  the  rights  of  

redemption of mortgaged property by accepting the offer  

of Rs.18.40 crores towards full and final settlement of the  

liability of the respondent No. 3 towards the respondent  

Nos. 1 and 2 to exercise the reconveyance and release the  

documents of title deposited with the respondent No. 1  

and  further  prayed  that  pending  hearing  and  final  

disposal  of  the  petition  the  respondent  No.  1  to  be  

restrained  from  proceeding  to  finalize  the  sale  of  the  

mortgaged property in favour of the appellant-trust.  Vide  

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order dated December 18, 2006, High Court of Bombay  

at Goa, while tagging Writ Petition (C) No. 601 of 2006  

with  Writ  Petition  (C)  No.  124  of  2006,  directed  the  

parties to maintain status quo and to list the matter in  

the second week after vacation, for final disposal at the  

stage of admission.  Thereafter, on February 19, 2008,  

the respondent no. 3 made representation to respondent  

no. 1 to permit it to exercise its right of redemption of  

mortgage  on  payment  of  Rs.12.99  crores  to  the  

respondent no. 1 and Rs. 9 crores to respondent no. 2,  

i.e.,  the  State  Bank  of  India.   The  respondent  no.  1  

considered the representation of respondent no. 3 in its  

309th Board  Meeting  and  passed  a  resolution  dated  

February  20,  2008  to  the  effect  that  the  offer  of  the  

respondent no. 3 to redeem the mortgage was favourably  

accepted  provisionally,  subject  to  the  approval  of  the  

High Court in Writ Petitions No. 601 of 2006 and 124 of  

2006 pending before the High Court.     

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11. Thereafter,  respondent  no.  1  preferred  Misc.  Civil  

Application No. 165 of 2008 in Writ Petition No. 601 of  

2006 on February 22, 2008 inter alia praying therein for  

appropriate  orders  directing  approval  of  the  Board  

resolution  dated  February  20,  2008  which  in  turn  

resolved  to  accept  the  offer  of  the  respondent  no.  3  

seeking  redemption  of  mortgage  in  terms  mentioned  

therein.   The  appellant-trust  filed  its  reply  to  the  said  

application on March 8, 2008 and opposed the grant of  

prayers made therein.  The High Court by the impugned  

order dated April 7, 2008 held that the order of status  

quo passed by the High Court shall not come in the way  

of respondent nos. 1 and 2 in considering the proposal of  

respondent  no.  3.   Thereafter,  the  respondent  no.  1  

passed a resolution on April 8, 2008, accepting the offer  

of  the  respondent  no.  3  to  redeem the  mortgage.   On  

April 9, 2008, the High Court took the resolution dated  

08.04.2008 passed by the respondent no. 1 as well as the  

affidavit  tendered by  the  State  Bank of  India,  i.e.,  the  

respondent No. 2,  stating that the State Bank of India  

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has accepted the  proposal  of  M/s.  Falcon Retreat  Pvt.  

Ltd. (the respondent No. 3) for redemption of mortgage on  

payment  of  Rs.12.87  crores  to  EDC  Ltd.  and  Rs.9.18  

crores to the State Bank of India, on the record of the  

Writ  Petition  No.  601  of  2006  and  permitted  the  

respondent No. 3 to withdraw the Writ Petition.  The High  

Court by an order dated April 9, 2008, also dismissed the  

Writ Petition No. 124 of 2006 preferred by Mirchandani  

as infructuous.  The above two orders dated April 7, 2008  

passed in Misc. Civil Application No. 165 of 2008 in Writ  

Petition  No.  601  of  2006  and  April  9,  2008  in  Writ  

Petition No. 601 of 2006 have given rise to the instant  

appeals.  

12. The learned counsel for the respondent Nos. 3 and 4  

had  spelt  out  a  preliminary  objection  as  to  the  

maintainability of the Special Leave Petition against the  

order  dated  April  7,  2008 passed in  M.C.A.  No.165 of  

2008 which was filed in Writ Petition (C) No. 601 of 2006  

by  which  the  status-quo  order  granted  earlier  was  

2

modified as well as special leave petition filed against the  

order dated April 9, 2008 passed in Writ Petition (C) No.  

601 of 2006 permitting the Respondent No. 3 who was  

original Petitioner therein to withdraw the Writ Petition.  

According to the learned counsel for the respondent Nos.  

3  and 4,  those  two orders  could  not  have  been made  

subject matter of challenge in petitions filed under Article  

136 of the Constitution and, therefore, the same should  

be dismissed.  Elaborating the said preliminary objection,  

it  was  argued  that  the  impugned  order  permitting  

respondent No. 3 to withdraw the Writ Petition cannot be  

construed as giving rise to any grievance to any person  

as it has not decided or adjudicated any lis or right and  

has  not  granted  any relief  whatsoever,  much less,  the  

reliefs  prayed  for  by  the  respondent  No.3  in  the  writ  

petition and, therefore, the Special Leave Petition should  

not be entertained at all.  What was claimed was that the  

learned counsel for the appellant could not point out that  

any of the rights of the appellant were infringed or sought  

to be affected when permission to withdraw the petition  

2

was granted to the respondent No. 3 nor could cite any  

case law to demonstrate that order permitting withdrawal  

of Writ Petition can be challenged under Article 136 of  

the Constitution and, therefore, the special leave petition  

should be dismissed at the threshold.   

13. As against this the learned counsel for the appellant  

submitted that the circumstances, namely, (a) the facts  

leading to judgment dated August 24, 2006 rendered by  

this Court in Special Leave Petition (C) No. 4957 of 2006,  

(b) the action of statutory corporation, i.e., EDC Limited  

(the respondent No. 1), in first seeking clarification of the  

order  granting  status  quo  dated  December  18,  2006  

pursuant to its Resolution dated February 20, 2008, (c)  

passing the Resolution on April 8, 2008 for accepting the  

proposal  of  the  respondent  No.  3  for  redemption  of  

mortgage,  (d)  producing  the  said  resolution  before  the  

Court on April 9, 2008 and (e) helping the respondent No.  

3 to withdraw the Writ Petition, indicate acts which are  

pulpably  and  manifestly  contrary  to  judgment  of  this  

2

Court reflecting grossest abuse of the process of law and,  

therefore,  petitions filed by the  appellant  under  Article  

136 of the Constitution are maintainable.  According to  

the  learned  counsel  for  the  appellant,  the  impugned  

orders passed by the High Court  though appear  to  be  

innocuous,  have  the  propensity  to  cause  grave  and  

irreparable  injury  to  the  appellant  and  as  the  orders  

impugned are  a  direct  affront  to  the  directions of  this  

Court which were binding upon the High Court as also  

upon the respondent No. 1 and the Respondent No. 3 by  

virtue  of  Article  141  read  with  Article  144  of  the  

Constitution, the petitions filed by the appellant should  

be entertained.   The  learned counsel  for  the  appellant  

asserted that by allowing its process to be abused in the  

manner that has been done by the respondent No. 3 in  

connivance  with  the  respondent  No.  1  and  the  

respondent No. 2, the High Court has lent its hands to  

such  unscrupulous  parties  to  defeat  and  destroy  the  

efficacy  of  the  judgment  of  this  Court.   Therefore,  

although the appellant may have an alternative remedy  

2

to assail  those actions by a separate writ  petition,  the  

filing  of  the  petitions  under  Article  136  of  the  

Constitution was the first  and proper remedy, because  

the  question  involved  is  about  the  binding  nature  of  

judgment of this Court and, therefore, it would be wrong  

to non-suit the appellant at the threshold.  The learned  

counsel  for  the  appellant  emphasized  that  the  

nationalized bank like the State Bank of India to help an  

unscrupulous defaulter like the respondent No. 3 and to  

defeat the crystallized rights of the appellant which were  

accepted and judicially acknowledged by this Court has  

caused  injury  to  the  appellant  and  in  order  to  avoid  

multiplicity  of  proceedings,  also  the  present  petitions  

should be entertained.  In support of these submissions  

the learned counsel for the appellant placed reliance on  

Executive  Officer,  Arthanareswarar  Temple Vs.  R.  

Sathyamoorthy, (1999) 3 SCC 115 and R.  Rathinavel  

Chettiar Vs. V. Sivaraman, (1999) 4 SCC 89.

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14. After taking into consideration the facts of the case  

and the points raised at the Bar by the learned counsel  

for  the  parties,  this  Court  is  of  the  opinion  that  the  

petitions  filed  under  Article  136  of  the  Constitution  

should not  be rejected on the  ground of  availability  of  

alternative  remedy  nor  it  should  be  rejected  on  the  

ground  that  the  special  leave  petition  is  filed  against  

order permitting withdrawal of writ petition.  Right from  

the beginning, the case of the appellant is that there was  

a  concluded  contract  between  the  appellant  and  the  

respondent No.  1 and,  therefore,  the respondent  No.  1  

could not have accepted proposal of the respondent No. 3  

to redeem the mortgage executed by the respondent No.  

3.  This was the issue which was raised by the appellant  

in Writ Petition No. 601 of 2006.  Without adjudicating  

the  said  claim  the  High  Court  has  permitted  the  

respondent  no.  3 to  withdraw the  petition  filed by the  

respondent  No.  3.   Further  it  is  also  the  case  of  the  

appellant  that  in  view  of  decision  of  this  Court  dated  

August 24, 2006 rendered in Special Leave Petition (Civil)  

2

No.4957  of  2006,  the  rights  of  the  parties  were  

crystallized  and,  therefore,  permission  to  withdraw the  

petition unconditionally should not have been granted to  

respondent No. 3.   In Writ Petition No. 601 of 2006 filed  

by  the  respondent  No.  3  and  another  against  EDC  

Limited,  i.e.,  respondent  No.  1  herein  and  others,  the  

prayer  was  to  issue  a  Writ  of  Mandamus  directing  

respondent No.1 to permit the respondent Nos. 3 and 4  

herein to exercise the right of redemption of mortgaged  

property  by  accepting  the  offer  of  Rs.  18.40  crores  

towards the full and final settlement of the liability of the  

respondent No.3 towards the respondent Nos. 1 and 2  

and to direct the respondent Nos. 1 and 2 to execute the  

reconveyance  and  release  the  documents  of  title  

deposited with the respondent No.1.  The interim relief  

which was claimed by the said respondent No. 3 in the  

writ petition was to restrain the respondent No.1 herein  

from  proceeding  to  finalize  the  sale  of  the  mortgaged  

property in favour of the present appellant.  The record  

shows that  by an order  dated December 18,  2006 the  

2

High Court had directed the parties to maintain status-

quo.  By the impugned order dated April 7, 2008 passed  

in M.C.A. No. 165 of 2008 filed in Writ Petition No. 601 of  

2006, the High Court has modified the same.  There is no  

manner of doubt that this modification of interim relief  

would have certainly adversely affected the claim of the  

appellant that in view of concluded contract between the  

appellant and the respondent No. 1, the respondent No. 1  

could not have been permitted to consider the claim of  

the  respondent  No.  3 for  redemption of  the  mortgaged  

property  and,  therefore,  Special  Leave  Petition  under  

Article  136  of  the  Constitution  would  certainly  be  

maintainable  against  that order.   Having regard to the  

facts and circumstances of the case this Court is of the  

opinion that it would not serve purpose of any party to  

dismiss the petitions on the basis preliminary objections  

raised  on behalf  of  the  respondent  Nos.  3  and 4 and,  

therefore, this Court has decided to entertain the Special  

Leave  Petitions  and  to  adjudicate  the  claims  raised  

therein on merits.   

2

15. The  first  contention  advanced  on  behalf  of  the  

appellant that Falcon Retreat Pvt. Ltd., i.e., respondent  

No.3, EDC Ltd., i.e., respondent No.1 and the State Bank  

of  India,  i.e.,  respondent  No.  2,  are  all  precluded  by  

principles of res judicata and principles of constructive  

res judicata, from re-opening the matter to overcome the  

sale of the mortgaged property in favour of the appellant-

trust  under  a  concluded  contract,  as  affirmed  by  this  

Court vide Judgment dated August 24, 2006 rendered in  

Special  Leave  Petition  (Civil)  No.  4957  of  2006  and,  

therefore, the impugned orders are liable to be set aside  

has no substance.  It may be mentioned that in Special  

Leave  Petition  (Civil)  No.  4957  of  2006  what  was  

impugned  by  the  respondent  No.3  and  another  was  

judgment and order dated February 2, 2006 rendered by  

the High Court of Bombay at Goa in Civil Writ Petition  

No.19 of 2006, whereby the writ filed by respondent No.3  

praying  that  its  proposal  contained  in  letter  dated  

January  18,  2006  be  considered  and  the  respondent  

No.1,  herein,  be  restrained  from  selling  the  assets  in  

2

question  to  the  appellant  was  dismissed.   It  was  not  

disputed that respondent No.3 had committed defaults in  

payment of dues of the respondent No.1 and therefore an  

action was taken under Section 29 of the State Financial  

Corporation  Act,  1951.   The  property  in  question  was  

attached and possession was taken over by respondent  

No.1.  The Judgment rendered in the said case further  

makes  it  evident  that  the  respondent  No.1  had  made  

efforts to put the property to sale by auction, but seven  

such  attempts  had  failed  either  on  account  of  non-

availability of purchaser or on account of postponement  

of the auction on the request of the respondent No.3 and,  

thereafter, on November 23, 2005 the appellant, i.e., L.K.  

Trust  had  made  an  offer  of  Rs.  12.99  crores  for  the  

property in question, which offer was considered by the  

Board of Directors of the respondent No.1 Company on  

December 5, 2005 and the Board had resolved to accept  

the offer on certain conditions.  The judgment in the said  

case further shows that the respondent No.3 herein was  

informed of the private offer made by the appellant and  

3

was called upon to get a better offer, if possible, within  

three days, but the letter of the respondent No.1 dated  

December 5, 2005 to this effect was perhaps received late  

by the respondent No.3, i.e., on December 13, 2005 and,  

therefore,  the  prayer  made  by  the  respondent  No.3  

seeking twelve months time to arrange a better buyer was  

not accepted by the respondent No.1.  It is evident from  

the judgment that on December 12, 2005 the offer of the  

appellant was accepted by respondent No.1 and the same  

was  communicated  to  the  appellant  incorporating  the  

relevant  conditions  for  the  sale  and  on  December  29,  

2005 the respondent No.1 had informed the respondent  

No.3 about the same to which the respondent No.3 had  

objected by saying that the price was ridiculously  low.  

On January 23, 2006, the respondent No.3 herein had  

filed Civil  Writ Petition No. 19 of 2006 before the High  

Court claiming the relief which is referred to earlier.  The  

High Court had dismissed the Writ Petition holding that  

the  respondent  No.1  had  already  entered  into  an  

agreement with the appellant for the sale of the assets for  

3

a sum of Rs. 12.99 crores and, therefore, there was no  

question of the same being cancelled or set aside since it  

represented  a  concluded  contract  between  the  parties.  

This  Court  after  hearing  the  learned  counsel  for  the  

parties  expressed the  view that  at  the  instance  of  the  

respondent No.3 herein the court should not interfere in  

the  exercise  of  its  discretion  under  Article  136  of  the  

Constitution  because  an  offer  had  been  made  by  the  

appellant herein and accepted by the respondent No.1.  

Though it was pointed out on behalf of the respondent  

No.3  to  the  Court  that  the  cheques  which  had  been  

issued by the appellant to the respondent No.1 had not  

been  honoured  by  the  Bank,  but  this  Court  had  

expressed  the  view  that  even if  that  be  so,  it  was  for  

respondent No.1 to consider what action it should take in  

such  an  event,  and  ultimately  if  the  respondent  No.1  

finds that the appellant is not in a position to fulfill its  

commitment  and pay the price  offered within the  time  

granted  by  the  respondent  No.1,  it  was  open  to  the  

respondent No. 1 to proceed to consider other options.  In  

3

the said matter, this Court expressed an opinion that it  

was expected of the respondent No.1 to act fairly and in  

accordance  with law but  as long as it  acts  within  the  

parameters of law and its actions were not found to be  

arbitrary  or  unreasonable,  it  was  entitled  to  take  a  

decision which was in its interest.  While disposing of the  

Special Leave Petition, it was observed in the judgment  

that  if  the  appellant  made  the  payment  as  promised  

within such time as might be granted by respondent No.1  

and fulfilled the conditions of sale, that might be the end  

of the matter, but if it failed to do so it was always open  

to  the  respondent  No.1  to  take  necessary  steps  to  

safeguard  its  interests,  which  included  inter  alia  the  

consideration of other offers made by the other parties.  

After making above stated observations, this Court had  

dismissed the special  leave petition.  If  this Court had  

intended that on mere payment by the appellant of the  

amounts, the first respondent had nothing further to do  

except to convey the property to the appellant, it would  

have  so  directed.   However,  this  Court  had  carefully  

3

avoided passing any such mandatory order and used the  

word ‘may’  and left  the matter to the discretion of the  

respondent No. 1 to take a decision in what it considered  

to be in its best interest as a public corporation.  Further,  

while deciding the said Special Leave Petition, this Court  

was never called upon to consider and in fact  did not  

consider the effect of Clause 16 of the General Terms and  

Conditions,  which  were  expressly  accepted  by  the  

appellant.   This  becomes  evident  if  one  looks  at  the  

resolution  dated  December  5,  2005  passed  by  the  

respondent  No.  1  read with the  Agenda Note.   As  per  

Clause  16  of  General  Terms  and  Conditions  the  

respondent No. 1 was to execute transfer documents only  

after  entire  offered amount  was received.   Further  the  

transfer documents were only to be as per the draft to be  

prepared by the respondent No. 1 and the appellant was  

required to execute transfer documents within thirty days  

of communication from the respondent No. 1 asking for  

such execution.  By the said Clause, the appellant was  

informed that the equity of redemption was existing in  

3

favour of the respondent No. 3 and the same would be  

extinguished only on execution of Deed of Conveyance.  

The appellant having accepted Clause 16 of the General  

Terms and Conditions is not justified at all  to contend  

that the sale of mortgaged property had concluded in its  

favour and that the respondent No. 3 had lost its right to  

redeem the mortgaged property.

16. A  fair  and  reasonable  reading  of  the  judgment  

delivered by this Court  on August 24, 2006 in Special  

Leave Petition (Civil)  No.4957 of 2006 makes it  evident  

that in fact this Court did not record any finding that a  

concluded contract had come into existence between the  

present appellant and the respondent No. 1 herein.  This  

Court noticed that on December 12, 2005 the offer made  

by the appellant was accepted by the respondent  No.1  

herein and the same was communicated to the appellant  

incorporating the relevant conditions for the sale.  It is  

nobody’s  case  that  those  conditions,  which  were  

stipulated, were complied with by the appellant nor any  

3

such  finding  was  recorded  by  this  Court.   What  is  

relevant  to  notice  is  that  in  the  operative  part  of  the  

judgment,  this  Court  observed  that  if  the  respondent  

No.3  herein,  i.e.,  the  appellant  makes  the  payment  as  

promised  within  such  time  as  might  be  granted  by  

respondent No.1 and fulfills the conditions of sale, that  

might be the end of the matter which means that at the  

time  when  the  judgment  was  delivered,  this  Court  

proceeded on the  footing that  there  was  no concluded  

contract between the appellant and the respondent No. 1.  

Further what is relevant to notice is that it was stipulated  

by this Court that if the appellant failed to do so it was  

always open to the Respondent No.1 to take necessary  

steps to safeguard the interests which included inter alia  

the  consideration  of  other  offers  made  by  the  other  

parties.  Such weighty observations would not have been  

made by this Court if this Court, in the said matter, had  

come  to  the  conclusion  that  there  was  a  concluded  

contract  of  sale  between  the  appellant  and  the  

respondent No. 1.  

3

17. A reasonable reading of the judgment delivered by  

this  Court  mentioned above,  makes it  more than clear  

that  this  Court  had never  recorded any finding  to  the  

effect that sale of the property mortgaged by respondent  

No.3  herein was  concluded  between the  appellant  and  

the respondent No.1 herein and the Court was essentially  

concerned with exercise of discretion under Article 136 of  

the  Constitution.   Further  the  question  whether  the  

respondent No.3 herein had subsisting right to redeem  

the property was never gone into by the Court in the said  

special leave petition because it was never raised either  

before the High Court or before this Court  in the said  

matter.  Thus this Court does not find any merits in the  

first  contention  and,  therefore,  the  same  is  hereby  

rejected.  

18. As this Court has come to the conclusion that there  

was  no  concluded  contract  of  sale  of  the  mortgaged  

property  in  favour  the  appellant  of  by  the  respondent  

No.1,  the  question  arises  as  to  whether  the  right  to  

3

redeem the mortgaged property conferred by Section 60  

of the Transfer of Property Act upon the mortgager, i.e.,  

respondent No.3 can be exercised or not.  It is argued on  

behalf  of  the  appellant  that  both  the  High  Court  of  

Bombay as well as this Court in the previous round of  

litigation had found that upon continued default on the  

part of respondent No.3 in making payment of amount of  

loan,  its  properties  mortgaged  with  respondent  No.1,  

were  attached  and  possession  thereof  was  taken  over  

legally  in  an  action  under  Section  29  of  the  State  

Financial Corporation Act, 1951, and, therefore, the right  

to  redeem  the  mortgaged  property  available  to  the  

respondent No.3 was clearly lost.   The learned counsel  

for the appellant contended that the respondent No.3 had  

never  sought  to  exercise  its  right  to  redeem  the  

mortgaged property before action under Section 29 of the  

State Financial Corporation Act, 1951 was taken or even  

thereafter till it lost upto this Court on August 24, 2006  

when Special Leave Petition (Civil) No.4957 of 2006 was  

dismissed and, therefore the exercise of right to redeem,  

3

which stood extinguished, was not only malafide but also  

to defeat the judgment of this Court.  According to the  

learned  counsel  for  the  appellant,  the  first  proviso  to  

Section 60 of the Transfer of Property Act 1882 applies  

with  great  vigour  to  the  facts  of  the  case,  clearly  

disentitling the respondent No.1 to apply for redemption  

of mortgaged properties on August 25, 2006 or thereafter  

and said right  of  redemption stood foreclosed,  both by  

the  acts  of  the  parties  and  by  a  decree  of  the  Court.  

What  was  stressed  was  that  non-execution  of  

Conveyance Deed by the respondent No.1 in favour of the  

appellant was illegal and thus, the respondent No.1 was  

estopped from taking advantage of its own wrong.  It was  

stressed that, in fact, no right to redeem the property was  

available to the Respondent No.3.

19. As against this it was argued by the learned counsel  

for the other side that in Writ Petition No.19 of 2006 from  

which  Special  Leave  Petition  (Civil)  No.4957  of  2006  

arose, the issue of right of redemption was never raised  

3

nor discussed nor gone into and, therefore, it is wrong to  

contend that the right of the respondent No. 3 to redeem  

the disputed properties stood extinguished.  According to  

the learned counsel for the respondent Nos.3 and 4 the  

Special Leave Petition (Civil) No. 4957 of 2006 filed by the  

Respondent No.3 against the order of High Court dated  

February 22, 2006 was dismissed with observation :-

“leaving the decision to the discretion of EDC  to  act  within  parameters  of  law  in  the  best  interest  of  EDC,  in  a  non-arbitrary  and  fair  manner”.   

There  was  not  even  a  whisper  in  the  said  order  

prohibiting  either  exercise  of  Right  of  Redemption  by  

Respondent No.3 or consideration thereof by Respondent  

No.1 in terms of Section 60 of the Transfer of Property  

Act  and  therefore  the  superior  right  to  redeem  the  

mortgaged property recognized in catena of the reported  

decisions  of  this  Court  was  rightly  considered  by  the  

respondent No.1.  The learned counsel for the appellant  

had placed reliance on decision in Mohanlal Goenka vs.  

4

Benoy Krishna Mukherjee and others (1953) SCR 377,  

to contend that right not agitated despite being available  

in earlier proceedings cannot be permitted to be raised in  

subsequent proceedings.  In reply to this, it was argued  

on behalf of Respondent Nos.3 and 4 that the ratio laid  

down in the said judgment would not apply to the facts of  

present case in as much as in the earlier Writ Petition  

No.19 of 2006, the issue of Right of Redemption could  

not have been agitated because it was neither available  

nor raised nor adjudicated and hence the said right was  

not  extinguished.   The  learned  counsel  for  the  

Respondent Nos. 3 and 4 had explained that the principle  

of law stated in  Mohanlal Goenka’s case (supra) would  

apply only if issue in both the proceedings were the same  

and adjudicated in both the proceedings giving rise to the  

grievance of res judicata.   

20. On  behalf  of  the  respondent  No.1,  its  learned  

counsel had placed reliance on Narandas Karsandas Vs.  

S.A. Kamtam, (1977) 3 SCC 247 to plead that in India it  

4

is only on execution of the conveyance and registration of  

transfer  of  the  mortgagor’s  interest  by  registered  

instrument that the mortgagor’s right of redemption will  

be extinguished and an agreement to sell,  does not, of  

itself, create any interest in, or charge on the property, as  

a result of which there is no equity or right in property  

created  in  favour  of  the  purchaser  by  the  contract  

between  the  mortgagee  and  the  proposed  purchaser.  

What was asserted on behalf of the respondent No.1 was  

that  the  mortgagor’s  right  to  redeem will  survive  until  

there has been completion of sale by the mortgagee by a  

registered  deed  and  until  the  sale  is  complete  by  

registration,  the  mortgagor  does  not  lose  his  right  of  

redemption just because the property was put to auction  

or proposed sale by private negotiation was in pipe line.   

21. On analysis of arguments advanced at the Bar, this  

Court finds that the proposition that in India it is only on  

execution of conveyance and the registration of transfer  

of the mortgagor’s interest by registered instrument that  

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the mortgagor’s right of redemption stands extinguished  

is well settled.  Further it is not the case of the appellant  

that a registered Sale Deed had been executed between  

the appellant-trust and the respondent No. 1 pursuant to  

the  Resolution  passed  by  the  respondent  No.  1  and,  

therefore,  in  terms  of  Section  54  of  the  Transfer  of  

Property  Act  1882  no  title  relating  to  the  disputed  

property had passed to the appellant at all.   

22. What  is  ruled  in  Narandas  Karsandas  (Supra) is  

that  in  India,  there  is  no  equity  or  right  in  property  

created  in  favour  of  the  purchaser  by  the  contract  

between the mortgagee and the proposed purchaser and  

in view of the fact that only on execution of conveyance,  

ownership passes from one party to another, it cannot be  

held that the mortgagor lost the right of redemption just  

because the property was put to auction.  In this case,  

the  respondent  Housing  Society,  the  mortgagor,  had  

taken loan from the co-respondent Finance Society and  

mortgaged the property to it under an English mortgage.  

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On default, the mortgagee exercised its right under the  

mortgage  to  sell  the  property  without  intervention  of  

Court and after notice, put the property to sale by public  

auction.  The appellant auction purchaser paid the sums  

due.  Before the sale was completed by registration etc.  

the mortgagor sought to exercise his right of redemption  

by tendering the amount due.  The appellant had based  

his  case  on  the  plea  that  in  such  a  situation  the  

mortgagee  acts  as  agent  of  the  mortgagor  and  hence  

binds him.  Rejecting the appeal, this Court has held that  

the right of redemption which is embodied in Section 60  

of  the  Transfer  of  Property  Act  is  available  to  the  

mortgagor unless it has been extinguished by the act of  

parties  or  by decree of  a  court.   What is  held  by this  

Court  is  that,  in  India  it  is  only  on  execution  of  the  

conveyance and registration of transfer of the mortgagor’s  

interest  by  registered  instrument  that  the  mortgagor’s  

right  of  redemption  will  be  extinguished  but  the  

conferment  of  power  to  sell  the  mortgaged  property  

without intervention of the Court, in a mortgage deed, in  

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itself,  will  not  deprive  the  mortgagor  of  his  right  of  

redemption.   This  Court  in  the  said  case  further  

explained that the extinction of the right of redemption  

has to be subsequent to the deed conferring such power  

and the right to redemption is not extinguished at the  

expiry of the period.  This Court emphasized in the said  

decision that the equity of redemption is not extinguished  

by  mere  contract  for  sale.   The  decision  rendered  by  

Three Judge Bench has been followed in case of  Gajraj  

Jain vs.  State of Bihar and others (2004) 7 SCC 151.  

Dealing with a case of sale under Section 29 of the State  

Financial  Corporation  Act,  it  is  held  therein  that  the  

action of the State Financial Corporation in handing over  

the estates to the respondent No. 4 therein under down  

payment of Rs.28.85 lakhs, did not prevent the appellant  

from exercising the right of redemption.  The pertinent  

observations  made  by  this  Court  in  para  15  of  the  

reported decision are as follows: -

“Under  Section  60  of  the  T.P.  Act,  equity  of  redemption existed in favour of the Company.  

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A  mere  agreement  of  sale  of  assets  cannot  extinguish the equity of redemption, it is only  on  execution  of  conveyance  that  the  mortgagor’s  right  of  redemption  will  be  extinguished.”

Applying the principles of law laid down by this Court in  

the  abovementioned  two  decisions,  to  the  facts  of  the  

present case it will  have to be held that no transfer of  

mortgaged  property  had  taken  place  in  favour  of  the  

appellant  and,  therefore,  the  statutory  right  of  

redemption available to the respondent No. 3 was never  

lost.  The record of the case indicates that the matter had  

rested  at  the  level  of  passing  some  resolution  by  the  

respondent No. 1 Company in favour of the appellant and  

nothing more than that.   If  the appellant was keen to  

complete  its  title  over  the  suit  properties,  nothing  

prevented it from instituting appropriate proceedings to  

compel the respondent No. 1 to execute a sale deed in its  

favour and getting it registered, but admittedly no such  

step was taken by the appellant.  The decision cited at  

the  Bar  by  the  learned  counsel  for  the  appellant  to  

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contend  that  the  respondent  No.  3  is  precluded  from  

asserting its rights of redemption as it was not claimed in  

the earlier proceedings, would not apply to the facts of  

this  case  for  the  relevant  reasons  pointed  out  by  the  

learned counsel for the respondent Nos. 3 and 4 and also  

because  vide  letters  dated  October  9,  2006  and  

September 27, 2006, the respondent No. 1 had already  

accepted and acknowledged the right of the respondent  

No. 3 to redeem the mortgaged property on the payment  

of  amount  due.   Further  by  filing  affidavit,  the  

respondent  No.  2,  i.e.,  the  State  Bank  of  India,  had  

declared  that  it  had  accepted  the  proposal  of  the  

respondent No. 3 for redemption of mortgage on payment  

of Rs.12.87 crores to the respondent No. 1 and Rs.9.18  

crores to the State Bank of India.  However, after receipt  

of  the  opinion  of  the  learned  Advocate  General,  the  

respondent  No.  1  had  drastically  changed  its  stand  

without  considering  the  subsisting  right  of  the  

respondent No. 3 to redeem the mortgaged property and  

was  inclined  to  proceed  with  completion  of  sale  

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transaction  in  favour  of  the  appellant.   It  was at  that  

stage that the respondent No. 3 had to file Writ Petition  

No.  601  of  2006  asserting  its  right  to  redeem  the  

mortgaged  property.   The  issues  in  the  earlier  

proceedings were quite different from those raised in Writ  

Petition No. 601 of 2006.  In fact, no relief is granted to  

the respondent No. 3 in Writ  Petition No. 601 of  2006  

and, therefore, the ratio laid down in Mohanlal Goenka’s  

case (supra) would not apply to the facts of the instant  

case.

23. The mortgagor under Indian law is the owner who  

had parted with some rights of ownership and the right of  

redemption is the right which he exercises by virtue of  

his residuary ownership to resume what he has parted  

with.   In  India  this  right  of  redemption,  however,  is  

statutory one.  A right of redemption is an incident of a  

subsisting  mortgage  and  subsists  so  long  as  the  

mortgage itself subsists.  The judicial trend indicates that  

dismissal  of  an earlier  suit  for  redemption whether  as  

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abated or as withdrawn or in default would not debar the  

mortgagor  from filing  a  second  suit  for  redemption  so  

long  as  the  mortgage  subsists.   This  right  cannot  be  

extinguished except by the act of parties or by decree of a  

court.   As  explained  by  this  Court  in  Jaya  Singh  D.  

Mhoprekar and another vs.  Krishna Balaji  Patil  and  

another (1985) 4 SCC 162, the right of redemption under  

a mortgage deed can come to an end only in a manner  

known to law.  Such extinguishment of the right can take  

place by contract between the parties, by a merger or by  

statutory  provision  which  debars  the  mortgager  from  

redeeming  the  mortgage.   The  mortgagor’s  right  of  

redemption is exercised by the payment or tender to the  

mortgagee at the proper time and at the proper place of  

the mortgage money.  When it is extinguished by the act  

of parties, the act must take the shape and observe the  

formalities which the law prescribes.  A mortgage being a  

security for the debt, the right of redemption continues  

although the mortgagor fails to pay the debt at the due  

date.  Any provision inserted to prevent, evade or hamper  

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redemption is  void.   Having  regard  to  the  facts  of  the  

instant case, it is difficult to hold that the respondent No.  

3 had lost its right to redeem the mortgaged property or  

that by the acts of the appellant and the respondent No.  

1,  the  right  of  the  respondent  No.  3  to  redeem  the  

property was extinguished.

24. Applying  the  principles  of  law  laid  down  by  this  

Court in the above quoted decisions this Court is of the  

opinion that no sale worth the name of the mortgaged  

property  had  taken  place  in  favour  of  the  appellant  

because there is no agreement of sale on the record of the  

case nor the facts indicate that the same was registered.  

Having regard to the  decision of  this  Court  mentioned  

above,  it  will  have to be held that right to redeem the  

mortgage property which was available to the respondent  

No.3  had never  extinguished  at  all  and,  therefore,  the  

acceptance of  proposal  of  the respondent No. 3 by the  

respondent  No.  1  to  permit  it  to  redeem the  property  

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dated April 8, 2008 cannot be said to be illegal in any  

manner.   

25. Further the contention raised by the appellant that  

reliance placed on Clause 16 of the General Terms and  

Conditions  by  the  learned  counsel  for  the  Respondent  

No.1 is misconceived and untenable in view of decision of  

this  Court  in  earlier  round  of  litigation,  has  no  

substance.  This Court while delivering judgment dated  

August 24, 2006 in Special Leave Petition (Civil) No. 4957  

of 2006 was not called upon and in fact did not consider  

the  effect  of  Clause  16  of  the  General  Terms  and  

Conditions.   The  record  shows  that  Clause  16  of  the  

General Terms and Conditions was expressly accepted by  

the appellant.  The Resolution dated December 5, 2005  

read with the Agenda Note records that the Appellant had  

agreed  to  follow  the  General  Terms  of  Auction.   The  

5

General Terms of Auction as contained in para 16 are as  

follows:-

“16. The  EDC  Ltd.  will  execute  transfer  documents  only  after  entire  accepted  offer  amount is received.  The transfer documents  will be only as per the draft prepared by EDC  Ltd.   The  successful  tenderers  shall  necessarily execute transfer documents within  30 days from the date of communication from  the EDC Ltd. requesting for such execution.  It  is  brought  to  the  notice  of  the  Successful  tenderer that in case of failure to execute the  Deed  of  Assignment  and  Sale,  the  Equity  of  redemption  exists  in  favour  of  the  original  mortgagor, and the same will be extinguished  only  on  execution  of  Deed  of  Conveyance,  which the successful tenderer may please take  note of.”

26. The record of the case shows that the actions of the  

Corporation that is respondent No.1 have been entirely in  

accordance and consistent with the provisions of Clause  

16 of the General Terms and Conditions.  It is important  

to remember that when the appellant-trust wrote a letter  

dated August 24, 2006 to the respondent No.1 and asked  

for possession of the property and to complete other legal  

formalities, the Corporation had informed the appellant  

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by its letter dated September 27, 2006 making it clear  

that  the  Corporation was in  the  process  of  proceeding  

further  with  the  sale  transaction.   The  record  would  

indicate  that  the  respondent  No.1  had  always  acted  

consistently with Clause 16.  On September 28, 2006 the  

respondent  No.1  had  informed  the  appellant  that  the  

borrower company had approached it for redemption of  

the mortgage.  This was the information supplied by the  

respondent No.1 in terms of Clause 16 of the Terms and  

Conditions.  On October 9, 2006 the Corporation that is  

respondent No.1 had informed the respondent No. 3 that  

they were in the process of implementing the judgment of  

this  Court  in  Special  Leave  Petition  (Civil)  No.4957  of  

2006  dated  August  24,  2006  and,  therefore,  all  legal  

formalities were required to be completed with respect to  

the transfer  of  the property in its  name in accordance  

with the law.  The resolution dated November 24, 2006  

on  which  the  learned  counsel  for  the  appellant  had  

placed  reliance  makes  it  clear  that  the  transactions  

would  have  to  be  concluded  by  execution  of  the  

5

conveyance and delivery of  possession in favour of  the  

appellant.   It  is  not  in  dispute  that  this  had  never  

happened.   The  record  does  not  indicate  that  the  

appellant  had  filed  any  proceedings  either  to  obtain  

specific performance of the agreement to sell entered into  

between it and the respondent No. 1 nor the appellant  

had initiated any proceedings for obtaining possession of  

the property in question.  If in fact the contract had been  

concluded  between  the  parties  as  is  claimed  by  the  

appellant the appellant would not have failed to obtain  

possession of  the property after  execution of  registered  

deed in its favour.  These facts, thus, indicate that there  

was no concluded contract between the appellant and the  

Respondent No.1.   

27. This Court cannot ignore the fact that on September  

27, 2006 the respondent No. 3 had deposited cheques of  

Rs.9.25  crores  in  favour  of  the  first  respondent  and  

Rs.5.90 crores in favour of the respondent No. 2.  The  

bonafide of the first respondent can be seen from the fact  

5

that these cheques were not immediately encashed, and  

as on January 2007, the total amount lying with the first  

respondent  and  the  respondent  No.  2  paid  by  the  

respondent  No.3  was  Rs.24.15  crores  as  against  the  

redemption  amount  of  Rs.18.40  crores.   As  the  

respondent  No.3  had  made  payment  to  redeem  the  

property which was accepted by respondent No.1 and as  

respondent  No.1  had  agreed  to  permit  the  respondent  

No.3 to redeem the property in question, a prayer was  

made  to  permit  respondent  No.3  to  withdraw  Writ  

Petition No. 601 of 2006 which can neither be regarded  

as arbitrary nor as illegal nor contrary to the decision of  

this  Court  dated August  24,  2006 rendered in  Special  

Leave  Petition  (Civil)  4957  of  2006.   Similarly,  as  the  

grievance  of  the  respondent  No.3  did  not  survive,  the  

modification of the order of status quo granted earlier at  

the instance of the respondent No. 3 who was petitioner  

in the writ petition,  also cannot be held to be bad in law  

because if  the status quo order had not been modified  

the respondent No.1 would not have been in a position to  

5

accept the offer of respondent No.3 to permit it to redeem  

the  property  which  would  have  been  in  derogation  of  

right of the respondent No. 3 to redeem the property as  

recognized by Section 60 of the Transfer Property Act.  

28. On over all view of the matter, this Court finds that  

there is no substance in the challenge to the two orders  

dated April 7, 2008 modifying the order of status quo and  

order dated April 9, 2008 permitting the Respondent No.3  

to  withdraw Writ  Petition  No.  601  of  2006  warranting  

inference  of  this  Court  in  appeals  arising  by  grant  of  

special leave filed under Article 136 of the Constitution.  

Therefore,  the  two  appeals  which  are  directed  against  

orders dated April 7, 2008 and April 9, 2008 respectively  

have no substance and are liable to be dismissed.   

29. The  Court,  further,  finds  that  the  appellant-trust  

has  filed  Contempt  Petition  under  Article  129  of  the  

Constitution  read  with  Order  XLVII  of  Supreme  Court  

Rules  1966  and  Rule-3(C)  and  Section  2(b)  read  with  

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Section 12 of the Contempt of Courts Act, 1971 against  

the  respondents  for  willfully  disobeying  and  acting  

against  the order  passed by this  Court  on August  24,  

2006 in Special  Leave Petition (Civil)  No.4957 of 2006.  

The  contention  raised  by  the  appellant  is  that  the  

respondents have deliberately  and willfully  violated the  

order  passed  by  this  Court  on  August  24,  2006  by  

passing resolutions dated February 20, 2008 and April 8,  

2008 passed by the Board of Directors of the respondent  

No.1  and,  therefore,  appropriate  action  should  be  

initiated  against  the  respondents.   On  behalf  of  the  

respondent  Nos.  3  and  4  it  was  contended  that  the  

Contempt Petition is not maintainable in as much as this  

Court  had not  passed any direction or  order  that  was  

needed  to  be  carried  out  by  the  respondents  and,  

therefore, the question of violation of order of this Court  

does not arise at all.  It was pointed out by the learned  

counsel  for  the  respondent  Nos.  3  and  4  that  some  

observations  made  by  this  court  here  and  there  while  

dismissing  the  Special  Leave  Petition  cannot  be  

5

construed  as  direction  of  the  Court  at  all.   It  was  

explained by the learned counsel for the respondent Nos.  

3 and 4 that this Court had neither modified the order of  

the High Court dated February 22, 2006 nor had given  

any direction to any of the parties to carry out its order  

or the order of the High Court but the Court had simply  

upheld the dismissal order passed by the High Court by  

dismissing Special Leave Petition.  What was pointed out  

by the learned counsel for the respondent Nos. 3 and 4  

was  that  contempt  under  the  Contempt  of  Courts  Act  

necessarily presupposes a clear and willful violation of a  

direction or order of the court or an undertaking given to  

a court and as those elements are missing so far as the  

facts  of  the  present  case  are  concerned  the  Contempt  

Petition filed by the Petitioner should be dismissed.   

30. On consideration of rival submissions advanced at  

the  Bar  this  Court  is  of  the  view  that  as  was  rightly  

pointed out by the learned counsel for the respondents  

the  exercise  of  right  of  redemption in  accordance with  

5

Section 60 of the Transfer of Property Act was neither a  

subject matter of Writ Petition No. 19 of 2006 nor it was  

subject matter of Special Leave Petition (Civil) No.4957 of  

2006 which is clear from the enumeration of the main  

points by the High Court in Writ Petition No. 19 of 2006,  

which was whether there was a concluded contract.  This  

Court had never prohibited the respondent Nos. 3 and 4  

from exercising  right  of  redemption  nor  restrained  the  

respondent  No.1  from  considering  the  proposal  of  the  

Respondent  No.3  to  permit  it  to  redeem the  disputed  

property  and  had  in  fact  expressed  strongly  that  the  

respondent No. 1 should take that action which is in its  

best interest.   

31. Under the circumstances the passing of resolutions  

by the respondent No.1 company can hardly be regarded  

as breach of direction given by this Court.  No case is  

made  out  by  the  petitioner  either  to  exercise  powers  

under Section 12 of the Contempt of Courts Act 1971 nor  

any case is made out to set aside the resolutions passed  

5

by  the  Board  of  Directors  of  the  respondent  No.1  

company.   The prayers made in the Contempt Petition  

therefore, cannot be granted.   

32. For the foregoing reasons the appeals as well as the  

Contempt Petition fail and are dismissed.  Having regard  

to the peculiar facts of the case the parties are ordered to  

bear their own costs.   

………………………………J. (J.M. PANCHAL)

……………………………….J. (CYRIAC JOSEPH)

NEW DELHI  May 10, 2011.

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