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
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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,
3
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
4
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.
9
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
1
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
1
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
1
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
1
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
1
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
1
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,
1
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
1
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
1
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
1
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
2
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.
2
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.
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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
3
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
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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
4
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
4
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.
4
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
4
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.
4
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
4
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
4
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
4
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
5
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
5
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
5
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
5
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
6
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.