PRADEEP KUMAR SHARMA Vs U.P.F.C. RAJPUR ROAD DEHRADUN .
Bench: P. SATHASIVAM,RANJAN GOGOI
Case number: C.A. No.-007597-007597 / 2012
Diary number: 6487 / 2007
Advocates: Vs
SHRISH KUMAR MISRA
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELATE JURISDICTION
CIVIL APPEAL No. 7597 of 2012 (Arising out of SLP (Civil) 6521/2007)
PRADEEP KUMAR SHARMA … Appellant
Versus
U.P.F.C. RAJPUR ROAD, DEHRADUN & ORS … Respondents
WITH
CIVIL APPEAL No. 7598 of 2012 (Arising out of SLP (Civil) 11835/2007)
J U D G M E N T
RANJAN GOGOI, J
Leave granted.
2. Both the appeals are directed against the judgment and final order
dated 05.12.2006 passed by the High Court of Uttaranchal in Crl. Misc. Writ
Petition No. 196 of 2003 (M/B).
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3. A recital of the facts stated by the appellant Uttar Pradesh Finance
Corporation (UPFC) in the appeal filed by it would suffice for the purpose of
the adjudication that is required to be made in the present appeals.
4. A term loan of Rs. 4.55 lacs was sanctioned by the UPFC to one M/s.
Sangam Ice Cream (hereinafter shall be referred to as the borrower), a
proprietorship concern owned by one, Smt. Nisha Devi Jaiswal. To secure
the repayment of the aforesaid loan together with the interest due thereon, the
borrower had created an equitable mortgage, by deposit of title deeds, of land
measuring 192.34 sq. meter or 0.048 acres bearing Khasra No. 496 along
with the constructions standing thereon located at Mauza Niranjanpur,
Pargana Kendriya Doon Tehsil and District Dehradun.
5. After sanction of the aforesaid loan, the borrower availed a part thereof
but defaulted in payment of the installments due. As such default became
chronic and persistent, the UPFC invoking its power under Section 29 of the
State Financial Corporation Act, issued notice dated 20.12.1994, calling upon
the borrower to clear all the dues failing which recovery of proceedings
including sale of mortgaged property was contemplated. As despite the said
Notice the dues of the Corporation remained unpaid an advertisement was
issued in the newspaper “Doon Darpan” on 22.09.1996 for sale of the
mortgaged property. The Corporation, however, did not receive any suitable
offer pursuant to the advertisement issued. The fresh second advertisement,
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nevertheless, came to be issued only in the edition of “Amar Ujala” on
20.10.2002. It appears that, in the meantime, the sole proprietor of the
borrower firm, Smt. Nisha Devi Jaiswal, executed a sale deed in respect of
the land in favour of two other persons, i.e. Deepak Kumar Bishnoi and Smt.
Sarita Rani, who, in turn, sold the said property to one Vishnu Dutt Sharma by
sale deed dated 29.08.2001.
6. Pursuant to the second advertisement dated 20.10.2002 published in
the edition of Amal Ujala, one Pradeep Kumar Sharma submitted his offer of
Rs. 4.50 lacs along with a bank draft of Rs. 50,000/- as earnest money. The
UPFC issued another advertisement in the edition of “Dainik Jagaran” dated
01.11.2002 indicating a price offered by Pradeep Kumar Sharma for the
property in question and calling upon the borrower / members of the public to
submit their better offer, if any. Evidently, there was no response to the
aforesaid advertisement dated 01.11.2002 published in the “Dainik Jagaran”.
Therefore on 31.12.2002, the Corporation accorded its approval for the sale
of the land in favour of Shri Pradeep Kumar Sharma and on 14.01.2003, a
deposit of another sum of Rs. 1.75 lacs was made by the aforesaid Pradeep
Kumar Sharma. On 27.02.2003, the balance amount of the offered price i.e.
Rs.2.25 lacs was tendered to the Corporation.
7. While the matter was so situated, Vishnu Dutt Sharma who had
purchased the property by the sale deed dated 29.08.2001 instituted a suit,
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i.e. O.S. 75/2003 contending that on 06.02.2003, while he and his family
members were away, possession of the property in question was taken over
by the Corporation. Restoration of possession was the principal relief prayed
for in the aforesaid suit. Thereafter, stating that from the written statement
filed in the suit by the Corporation it transpired that the property purchased by
him (Vishnu Dutt Sharma) stood mortgaged in favour of the Corporation on
account of a loan taken by the original owner thereof and that pursuant to the
said Notice published in the newspaper “Dainik Jagaran” dated 20.10.2002,
the property had been purchased by one Pradeep Kumar Sharma, a Writ
Petition was filed impleading the UPFC and its Managing Director as the first
and second respondents, Deepak Kumar Bisnoi and Sarita Rani as the third
and fourth respondents and the purchaser Pradeep Kumar Sharma as the
fifth respondent.
8. In the said Writ Petition, the prayer made was for quashing of the sale
made in favour of the fifth respondent and for transfer of the property to the
writ petitioner and further for restoration of possession of the same. The High
Court while entertaining the Writ Petition passed an interim order dated
28.05.2003 permitting the writ petitioner Vishnu Dutt sharma to make a
deposit of Rs. 5 lacs in which event it was directed that the “accommodation
in question shall be handed over to the petitioner subject to further orders of
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this court.” By the said order, the High Court also directed that the sale deed
will not be executed in favour of the fifth respondent Pradeep Kumar Sharma.
9. The writ proceeding before the High Court of Uttaranchal was contested by
the UPFC as well as by the purchaser i.e. the fifth respondent, Pradeep
Kumar Sharma. The Corporation had taken a specific stand before the High
Court that the sale in favour of fifth respondent was finalized by the
Corporation and the entire offered price was tendered by the fifth respondent.
The Corporation had also contended that the property being subject to an
equitable mortgage by deposit of title deeds could not have been validly
transferred by the mortgager/ original owner i.e. Nisha Devi Jaiswal to the
third and fourth respondents in the Writ Petition and in turn the said
respondents could not have transferred the property in favour of the fifth
respondent so long as the mortgage subsisted.
10. Thereafter, by the impugned final order of the High Court dated
05.12.2006, the Writ Petition was disposed of by directing the UPFC to
withdraw the amount of Rs. 5 lacs deposited in the High Court by the writ
petitioner, Vishnu Dutt Sharma, and out of the said amount to repay the fifth
respondent, Pradeep Kumar Sharma, the amount of Rs.4.50 paid by him to
the Corporation along with 9% interest thereon. Specifically, the High Court
in its order dated 05.12.2006 had ordered that the sale made in favour of fifth
respondent, which had not been confirmed, stood cancelled. Aggrieved by
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the aforesaid order, two separate appeals have been filed by the UPFC and
the fifth respondent in the Writ Petition i.e. Pradeep Kumar Sharma. The writ
petitioner, Vishnu Dutt Sharma, is the principal respondent in both the
appeals.
11. We have heard Ms. Madhu Tewatia, learned counsel for the appellant –
fifth respondent and Mr. Shrish Kumar Misra, learned counsel for the
appellant Corporation. We have also heard Shri Naresh Kaushik and Shri
Akshay Verma, learned counsel for the respondents.
12. The detailed recital made hereinabove clearly indicates that the
property in question was duly advertised for sale pursuant whereto the fifth
respondent had offered the highest amount. On acceptance of the said offer
by the UPFC, the entire amount was paid and the sale was confirmed by the
Corporation. No sale deed was however executed by the Corporation in
favour of the fifth respondent. It also appears that before the property was put
up for sale by the Corporation, the original owner, Smt. Nisha Devi Jaiswal
had sold the same to the third and fourth respondents, who, in turn, had sold
the same to the writ petitioner by sale deed dated 29.08.2001. The aforesaid
sale by the original owners to the vendors of the writ petitioner and, thereafter,
by said vendors to the petitioner himself was made when the property stood
mortgaged in favour of the UPFC. It is in the above circumstances, that the
writ petitioner had approached the High court seeking interference with the
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sale of the property made in favour of the fifth respondent pursuant to the
advertisement dated 20.10.2002 issued by the UPFC and further for transfer
of the property in favour of the writ petitioner besides restoration of
possession thereof which was taken over by the Corporation.
13. The sale made by the UPFC in favour of the fifth respondent was in
exercise of the statutory powers vested in the Corporation by Section 29 of
the State Financial Corporation Act, 1951. Under the aforesaid provisions of
the Act default in re-payment of any loan by an industrial undertaking vests in
the Financial Corporation the right to take over the management or
possession or both of the industrial concern along with the right to transfer the
property pledged, mortgaged, hypothecated or assigned to the Financial
Corporation. By virtue of sub-section (2) of Section 29 of the Act such
transfer of property by the Corporation will vest in the transferee all rights in
the property as if the transfer had been made by the owner thereof.
14. No serious issue either with regard to the validity of the exercise of the
power under the Act or the manner of sale of the property by the
Corporation pursuant to the advertisement dated 20.10.2002 had
been raised in the Writ Petition. What was contended before the High
Court is that the Writ Petitioner, Vishnu Dutt Sharma, had purchased
the property by sale deed dated 29.08.2001 without any knowledge or
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information of the mortgage created by the original owner, Smt. Nisha
Devi Jaiswal in favour of the Corporation and that the sale pursuant to
the advertisement was also without notice to him. A right to the
property based on certain equitable principles was also claimed to
strengthen which, the offer covered by the interim order of the High
Court dated 28.05.2003 was made by the writ petitioner.
15. The issues raised by the writ petitioner before the High court really
pertained to the claim of better title of the writ petitioner to the property in
question on the basis of the sale deed dated 29.08.2001. The validity of the
sale deed dated 29.08.2001 executed in favour of the writ petitioner by his
vendors during the subsistence of the mortgage in favour of the Corporation
and the rights of the fifth respondent to the said property on the basis of the
sale made in his favour by the Corporation pursuant to the advertisement
dated 20.10.2002 are the issues that arose in the Writ Petition. Broad and
expansive though the powers of the High Court under Article 226 may be,
adjudication of the aforesaid questions, some of which also required proof of
certain basic facts, in our view, was not appropriate in the domain of public
law. Though the High Court in its order dated 05.12.2006 did not expressly
say so, the affect of the several directions issued by it, in fact, amounts to an
adjudication of the issues outlined above.
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16. The essence of the dispute between the parties denuded the lis a public
law character. Nor was any issue arising out of public law functions of the
State or its authorities involved. In such a situation resort to the public law
remedy should not have entertained by the High Court. (Vide Godavari
Sugar Mills Ltd. vs. State of Maharashtra1). Even if the vindication of the
writ petitioner’s rights under the sale deed dated 29.08.2001 is ignored and
we are to proceed on the basis that the writ petitioner questioned the sale
made by the Corporation, the writ petitioner would not be entitled to an
adjudication of the rights of the parties inter se but at best to a judicial review
of the administrative action of the Corporation with regard to the sale made
(Vide Kisan Sahkari Chini Mills Ltd. and ors. vs. Vardan Linkers and
others2 ) But as already noticed neither the exercise of the statutory power
under the Act by the Corporation in the matter of the sale of the property nor
the process of the sale transaction was questioned in the Writ Petition either
on account of lack of jurisdiction or abuse of authority. In the above facts, the
High Court should have refused an adjudication of the Writ Petition and,
instead, ought to have required the aggrieved parties to seek their remedies
in an appropriate manner and before the competent civil forum.
1 (2011) 2 SCC 439 [para 8 (vi) ] 2 2008) 12 SCC 500 - para 23
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17. In view of the above discussions, we allow both the appeals and set
aside the order dated 05.12.2006 passed by the High Court of Uttarakhand at
Nainital.
...……………………J. [P SATHASIVAM]
………………………J. [RANJAN GOGOI]
New Delhi, October 19, 2012.
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