Misc. Appeal Nos. 36 and 52 of 2006. Case: Krishna Realtors and Anr. Vs United Commercial Bank and Ors.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)
| Case Number | Misc. Appeal Nos. 36 and 52 of 2006 |
| Counsel | For Appellant: Mr. S.S. Dube, Advocate and Mr. D.P. Desai, Advocate and For Respondents: Ms. Shabana Ansari, Advocate, Mr. Rohit Kapadia, Mr. Satish Shetye, Advocates and Mr. Santosh Kanchar, Advocate, Mr. V.J. Shah, Advocate, Ms. Shabana Ansari, Advocate, Mr. Rohit Kapadia and Mr. Lalit Kumar Jain, Advocate |
| Judges | S. S. Parkar, J. (Chairperson) |
| Issue | Banking |
| Judgement Date | August 22, 2008 |
| Court | Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals) |
Judgment:
S. S. Parkar, J. (Chairperson)
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These two appeals are filed by two different appellants impugning the common order dated 29th November, 2005 passed by the Presiding Officer, D.R.T.-I, Mumbai in their respective applications filed before him challenging the sale of the property in favour of the Everest Fincap Pvt. Ltd. (hereinafter referred to as the Everest/purchaser), impleaded as respondent No. 3 in Appeal No. 36/2006 and respondent No. 18 in Appeal No. 52/2006. Since both these appeals raise a common question for decision, they were heard together and are therefore being disposed off by this common judgment after hearing all the advocates representing the parties. The short question which arises for decision in these two appeals is whether the Presiding Officer could have passed conditional order while setting aside the sale of the property which according to him was allowed due to suppression of certain facts before him as the property was sold on the basis of valuation report which did not depict the true valuation and the order was obtained by misrepresentation and suppression of higher offer given earlier.
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The brief facts, leading to these appeals, are as follows: The respondent No. 1-bank in both these appeals had filed suit initially in the Bombay High Court in the year 1978 for the recovery of a sum of Rs. 13,62,88,181.08 against the Bradbury Mills Limited. In the said suit receiver was appointed of the assets of the said mill. While the matter was pending in the High Court the property of the said mill which was in liquidation was sought to be sold for which purpose the valuation report was submitted. One party by name Poonam Investment Company Limited had offered Rs. 35/- crores. Another party had offered to pay a sum of Rs. 50/- crores. However, auction sale did not take place as the defendant No. 9 had offered to pay the dues of the bank.
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After the D.R.Ts. were established under the provisions of the RDDBFI Act, 1993 the matter was transferred to the DRT. When the matter was pending in the DRT the defendant No. 9 had negotiated the sale of the said mill with the Everest with the consent of the respondent No. 1-bank for a sum of Rs. 41 crores. Accordingly the application was filed before the Presiding Officer on 31st March, 2005. The Presiding Officer passed the order on that very day i.e. on 31st March, 2005 for sale of the property in favour of the Everest for a sum of Rs. 41 crores on condition that the said party will pay the amount that can be demanded by the Official Liquidator within a period of six months. In the said order there is mention of the valuation report as per which the property was shown to be worth Rs. 39,95,07,000/-.
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Thereafter, the said order was challenged by two appellants by filing the applications before the Presiding Officer vide Ext. Nos. 167 and 183. Ext. No. 167 was filed by the appellant in Appeal No. 36/2006 and Ext. No. 183 was filed by the appellant in Appeal No. 52/2006. It may be mentioned here that the appellant in Misc. Appeal No. 52/2006 was original defendant No. 7 who was impleaded in the suit as the guarantor of the company. He also claims to be the shareholder and the director of the said mill. The appellant in Misc. Appeal No. 36/2006 is the intervener which was interested in purchasing the said property and offered to purchase the same for a sum of Rs. 45/- crores.
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The main contention raised on behalf of these two appellants was that the order dated 31st March, 2005 was obtained by the creditor bank, the defendant No. 9 and the purchaser by suppressing certain material facts from the Presiding Officer and therefore, it was liable to be set aside. The main thrust of the arguments of both the appellants was that the property was worth much more than Rs. 41 crores for which it was sold to The Everest. While the interest of the appellant Mr. Premnarayan Lakhani was that the property should fetch adequate price for which it was worth the interest of the other appellant i.e. Krishna Realtors was only in purchasing the property by offering higher prices.
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The case of the appellants was that when the matter was before the High Court in the year 1995 the offer of Rs. 55 crores was received, but that time the property was not sold because one of the defendants i.e. defendant No. 9 had given an application for revival of the company by offering to pay Rs. 50 crores. That application was opposed by the respondent - bank until 14th March, 2005 on the ground that the market value of the property was over Rs. 70 crores as per the valuation report dated 9th March, 2004 submitted by one Shri Shekhar L. Thite. Within short time thereafter the creditor Bank took somersault and obtained valuation report of M.B. Sabnis & Company valuing the property at Rs. 39,95,00,000/-. According to the appellants on the basis of valuation report of M.B. Sabnis & Company the bank had agreed to sell the property for a sum of Rs. 41 crores by colluding with the purchaser and defendant No. 9. The original defendant No. 7, the appellant Shri Premnarayan Lakhani had also objected to the appearance of one advocate by name Manoj Dalvi who had represented to the Tribunal that he was appearing for the said appellant though according to the said appellant he had never engaged the said advocate. The said advocate represented defendant Nos. 6 to 9 including the appellant Premnarayan Lakhani before the Presiding Officer when the order dated 31st March, 2005 was obtained.
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After considering all the arguments advanced on behalf of the parties the Presiding Officer has held in para 10 of the impugned order that after hearing the parties and going through the record of the Tribunal it was clear that certain facts were not brought to the notice of the Tribunal. According to him the Official Liquidator had failed in his duties in not seeking the time to consider the proposal of the...
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