UNION BANK OF INDIA vs CRS LOGISTICS PVT LTD on 29 May 2024

**JUDGMENT**

1. 1. This Appeal is preferred by the Appellant against the order dated 11/12/2023 passed by Ld. Recovery Officer,

DRT-II, Ahmedabad ("Ld. RO" for short) on I.A.No.269/2023 filed by Respondent No.1 in Recovery Proceedings No.207/2015.

1. 2. The Appellant Bank had filed O.A.No.384/2014 against Respondent No.2 & Ors., which was allowed vide judgment dated 11/06/2015 and Recovery Certificate was issued by this Tribunal for recovery of more than Rs.42.40 Crore from the Certificate Debtors. Ld. RO put the mortgaged properties to auction sale on 17/08/2023 in 15 lots and the auction sale has been successful qua properties bearing Lot No.3, 7, 11 & 15 and the successful Auction Purchasers have deposited the entire sale consideration with Ld. RO.

2. 3. Respondent No.1 herein, claiming herself to be a third party, filed her objections on 29/08/2023 vide I.A.No.269/2023 stating that she is the original owner of immovable properties shown at Lot No.7 to 15 of Sale Notice dated 05/07/2023 on the ground of non-receipt of sale consideration from the Certificate Debtors to whom she had sold the properties. Respondent No.1 filed Civil Suits for cancellation of the Sale Deeds, which came to be dismissed vide judgment dated 01/04/2021. Respondent No.1 preferred First Appeal against the said judgment before the Hon'ble High Court of Gujarat against Respondent No.2 herein only wherein the Hon'ble High

Court vide order dated 07/06/2022 directed the parties to maintain status quo.

1. 4. It is the case of Appellant that Ld. RO, vide impugned order dated 11/12/2023, directed the Appellant Bank to seek clarification from the Hon'ble High Court which is without jurisdiction, illegal and would tantamount to diversion of entire recovery proceedings on wrong track. Ld. RO has passed the impugned order in gross breach of provisions of Rule 60 & 61 of the ITCP Rules. Hence, the Appellant has requested to quash and set aside the impugned order.

2. 5. I have heard Ld. Counsel for the parties and perused the documentary evidences on record. Both the sides have filed their respective written submissions. Keeping in view the facts and circumstances of the present case, I have given thoughtful consideration to all the judgments relied upon by Ld. Counsel for the parties as law is to be applied on the facts and not devoid of facts.

3. 6. Ld. Counsel for the Appellant submitted that Ld. RO has completely failed to appreciate the fact that neither the Appellant Bank is a party to the proceedings before Hon'ble High Court of Gujarat nor there is any provision under the Code of Civil Procedure under which the Appellant can file an application for being joined as party to the proceedings before Hon'ble High Court of Gujarat. He further submitted that the impugned order suffers from the vice of patent illegality on the part of Ld. RO by ignoring well settled legal principle that when the order itself makes it clear that it is passed against parties to the proceedings, the same would not in any manner affect the rights of third parties. Hence, by no stretch of imagination, the said order passed by the Hon'ble High Court dated 07/06/2022 in First Appeal No.745/2022 or other allied matters can be made applicable or extended to the Appellant Bank who was never party to the original suits or Appeals.

7. In support of his submissions, Ld. Counsel for the Appellant Bank relied on the following judgments:

- • Judgment dated 29/04/2006 passed in SCA No.10620 of 2005 in the case of Meenaben Rajnishbhai Shah v/s Bank of India decided by Hon'ble Gujarat High Court.

- • Judgment dated 06/09/2021 in the case of Allahabad Bank v/s District Magistrate Ludhiana passed by Division Bench of Hon'ble Punjab and Haryana High Court reported in Manu/PH/1173/2021

- • Judgment dated 06/01/2023 in the case of Bank of Baroda and Ors. v/s State of Karnataka and Ors. in Writ Petition No.6327 of 2022 by the Hon'ble Karnatak High Court.

8. Per contra, Ld. Counsel for Respondent No.1-TPO submitted that the impugned order has not been passed by Ld. RO in exercise of his powers u/s Sections 25 to 28 of the RDB Act. Therefore, the impugned order is not appealable before this Tribunal u/s 30 of the RDB Act. He further submitted that Respondent No.1 has filed Special Civil Suits Nos.153 to 163 of 2014 for cancellation of Sale Deeds in favour of Respondent No.2 in respect of the properties in question wherein Hon'ble Senior Civil Court Anand was pleased to grant order of status quo with respect to the suit properties vide order dated 04/05/2017. In the said suits, the Appellant Bank had filed an application on 01/10/2019 under Order 1, Rule 10 of CPC to join itself as party by contending that the Bank has given loan of Rs.55,81,00,000/- to Respondent No.2 against mortgaged of the suit properties. Therefore, the Appellant Bank was aware about pendency of the aforesaid Special Civil Suits as well as order of status quo granted by Hon'ble Civil Court, Anand. The said applications of the Appellant Bank were not accepted by the Hon'ble Civil Court. However, the Appellant Bank has not disclosed the said facts before this Tribunal in Recovery Proceedings and obtained orders behind the back of Respondent No.1-TPO.

9. Ld. Counsel for Respondent No.1 further submitted that the aforesaid Civil Suits were dismissed by the Hon'ble

Civil Court vide order dated 01/04/2024 on technical ground. Against the aforesaid judgments and orders of the Hon'ble Civil Court, Anand, the Applicant has preferred First Appeal Nos.745 of 2022 in the Hon'ble High Court of Gujarat. The said First Appeals are admitted by the Hon'ble Court and was pleased to extend the order of status quo till the final disposal of the said First Appeals. All the aforesaid First Appeals are pending in the Hon'ble High Court of Gujarat. He further submitted that the Appellant Bank has obtained orders to sell out the properties of Respondent No.1 for which *is* is pending in the Hon'ble High Court of Gujarat wherein Interim order of status quo is granted qua the disputed properties and the said order is in force today also. Therefore, auction of the said properties of Respondent No.1 herein is required to be postponed till final disposal of the aforesaid First Appeals as the proceedings to auction the aforesaid properties of Respondent No.1 would amount to willful disobedience of the orders of Hon'ble High Court of Gujarat by the Appellant Bank. As such, he submitted that *Ld. RO* has rightly directed the Appellant Bank to appear before the Hon'ble High Court of Gujarat for clarification of the issues as the matters are pending before the Hon'ble High Court of Gujarat regarding the properties in question. In support of his submission, he relied on the judgment of the Hon'ble

High Court of Gujarat in the case of **Unique Yarn Industries Pvt. Ltd. v/s GIDC & Ors., decided on 23/09/2014 in SCA No.10536/2011.**

1. 10. Considering rival submissions of parties and documents placed on record, it is not in dispute that the Appellant Bank is not a party to the First Appeals filed by Respondent No.1 herein before the Hon'ble High Court of Gujarat wherein the parties are directed to maintain status quo with respect to the properties in question. Ld. Counsel for Respondent No.1 has not been able to show any provision of law empowering Ld. RO to direct the Appellant Bank for making an application to be joined as a party to the proceedings pending before the Hon'ble High Court of Gujarat for the purpose of clarification whether the order of status quo is binding to it or not. It is also an undisputed fact that Ld. Civil Court has also not permitted the Appellant Bank to join as a party to the suits filed by Respondent No.1 herein against Respondent No.2 herein. It should be noted that the Bank was not a party to the said proceedings and therefore any order passed by Ld. Civil Court shall not bind the Bank. Similarly, the Hon'ble High Court has in its order dated 07/06/2022 stated "*the parties are directed to maintain status quo with respect to the subject suit property.*" Since the Appellant Bank was not a party to the proceedings filed by Respondent No.1 before the High

Court of Gujarat, the order passed by the Hon'ble High Court of Gujarat would not prima facie bind the Bank. If at all Respondent No.1 intended to bind the Appellant Bank by any order that may be passed by the Hon'ble High Court, she would have joined the Bank as a party to the said proceedings. Respondent No.1 has admittedly not done so. However, at the time of hearing of the present Appeal, Ld. Counsel for Respondent No.1 made a statement at the Bar that he is ready to move an appropriate application for joining the Bank in the proceedings before the Hon'ble High Court of Gujarat, which are still pending.

1. 11. In view of the aforesaid facts and circumstances and in view of the statement made by Ld. Counsel for Respondent No.1 herein, this Tribunal is of the opinion that the order to the extent of direction to the Appellant Bank to approach the Hon'ble High Court of Gujarat for clarification of the order of status quo is required to be set aside.

2. 12. In light of the aforesaid factual and legal position, the following order is passed:

**ORDER**

- ➤ The present Appeal is hereby partly allowed.

- ➤ The impugned order dated 11/12/2023 passed by Ld. RO, DRT-II, Ahmedabad in RP No.207 of 2015 directing the Appellant Bank to appear before the

Hon'ble High Court of Gujarat for clarification of the issues is hereby quashed and set aside.

- ➤ In view of the statement made by Ld. Counsel for Respondent No.1 at Bar, Respondent No.1 is at liberty to move an appropriate application before the Hon'ble High Court of Gujarat for joining the Appellant Bank as a party in the proceedings pending before it.

- ➤ The present Appeal accordingly stands disposed of with no order as to cost.

- ➤ All pending interim applications, if any, stand disposed of.

- ➤ Registry is directed to provide copy of this Judgment free of cost to all the parties.

Pronounced in the open Court on 29^th day of May, 2024.

(Laxman Madnani) Presiding Officer DRT-II, Ahmedabad

\*ykb\*