Paul Brothers (Tailoring Division) and Ors. Vs. Ashim Kumar Mondal and Ors.
EmailAppeal: Civil Appeal No.1756 of 1990
Petitioner: Paul Brothers (Tailoring Division) and Ors.
Respondent: Ashim Kumar Mondal and Ors.
Apeal: Civil Appeal No.1756 of 1990
Judges: S. RANGANATHAN & V. RAMASWAMI, JJ.
Date of Judgment: Apr 02, 1990
Head Note:
PRACTICE AND PROCEDURE
Order of the Supreme Court directing Commissioner in Sanchaita Investment Company case to attach properties of the Company or its partners and sell the same if objections are not received within a month – Objections by tenants after the sale not precluded – Auction purchaser not entitled to evict lawful tenants without due process of law.
Held:
(i) While, no doubt, this Court had indicated that claims and objections to attachments should be filed within a period of thirty days, that period cannot be read as if were a rigid rule of limitation prescribed by law. The order also only says that, if objections are not put forward within a month, the property may be sold and does not preclude objections being filed after the sale. … We are also unable to read into the order any conclusion of the Division Bench that even bona fide tenants are liable to be evicted from the property. If that had been so, the Bench need not have gone into a detailed consideration of the merits of the claim of tenancy put forward by the contesting respondents in that case. All that the Bench observed in the passage extracted above was that all claimants to the properties subjected to attachment by the Commissioner, whether as owners or as intermediate interests holders (like tenants) or otherwise, have to put forward their claims for adjudication by the Division Bench. The Bench did not proceed to hold, as suggested by Sri Kapur, that the auction purchasers are entitled to get vacant possession of the property free from all encumbrances and that even bona fide tenements can be directed to be summarily evicted from the property in pursuance of the orders of this Court. We are unable to see in this order any observation that could legitimately have induced the Mandals to believe that they would be entitled to evict even lawful tenants from the property by purchasing it at the auction sale. (Para 13)
(ii) In principle also, this contention is not well founded. The object of the directions given by this Court was to cut short the proliferation of litigation and to ensure that the Commissioner is able to gather in expeditiously the assets of Sanchaita which were dissipated or siphoned off by the persons in charge of the firm. Thus, if the firm’s moneys had been utilised to purchase properties in the name of various individuals benami such property had to be taken back by the Commissioner from such benamidars. Also, where the said benamidars or other persons put up frivolous claims to the property or its possession without the semblance of any legal title to its ownership or possession, such claims could and should be rejected by the Court. But this principle cannot apply to bona fide interests of others in the property. For instance, suppose Sanchaita’s moneys had been advanced on the mortgage of an item of immovable property, all that the Commissioner would be entitled, legally and equitably, would be to call in the mortgage moneys (principal and interest) and not the entire property itself. An auction purchaser of such a property cannot get anything higher than the interest Sanchaita itself could have claimed in respect of the property. Likewise, if Sanchaita’s moneys had been invested in a property which had been bona fide let out to tenants, Sanchaita would have paid only the value of the property so encumbered and its rights in the property can only be subject to those tenancy rights. Sanchaita could not have a right in respect of the property superior to that which its vendor had. Similar would be the position where Sanchaita or its benamidars had, after acquiring a property, created a bona fide tenancy or other encumbrance in respect of that property, in respect of independent outsiders who acquire such interest for consideration. To say that Sanchaita, through the Commissioner, would be entitled to vacant possession even from such tenants, or free from such encumbrances, would result in its being able to realise a larger interest in the property than it acquired. Not only this, the result of any such conclusion would enure the benefit of, not Sanchaita, but of the auction purchaser of the property. Having bid for and acquired the right, title and interest of Sanchaita in the property, he would be enabled to get vacant possession which Sanchaita, even if it had continued to be active and prosperous, could not have got except by due process of law. We have, therefore, no doubt that this Court, by its order dated 4.5.83 and 27.9.83 intended only that the firm, or the auction purchasers at the sales effected by the Commissioners, should be able to clear the property of trespassers and unauthorised persons and not that even bona fide tenants could be got evicted straight away in pursuance thereof. Normally, even trespassers and unauthorised persons cannot be thrown out except by recourse to legal proceedings but, having regard to the large scale dealings, the special circumstances and the desperate situation, this Court made an exception and made it possible for the Commissioner to get false and frivolous claimants out of the way by a quick procedure but nothing more. We are, therefore, of opinion that if the Court, on a consideration of the materials placed by the claimants or objectors, comes to the conclusion that they are not mere stooges or false claimants but have a bona fide right to possession as against Sanchaita, it cannot direct their eviction but should leave it to the auction purchaser to initiate such eviction proceedings in the normal course and in accordance with law, as may be available to him against the claimants/ objectors. …. It is true that there should be a quick and expeditious
realisation of the properties that really belong to Sanchaita. That is why the Court empowered the Commissioner to attach and sell properties that, in his opinion, really belong to Sanchaita though ostensibly held in the names of others and also devised a quick and summary method for adjudication upon claims and removal of obstructions. But this order cannot be availed of to ride rough-shod over the rights and interests of others in the properties which have been created bona fide. Third parties who have acquired real interests in the property, either independent of, or through, Sanchaita cannot be called upon to give up their rights. To do so would be to do more than merely realise what rightfully belongs to Sanchaita a better title than it had, in fact, acquired. The depositors or investors in Sanchaita cannot claim any such rights. It is, therefore, difficult to accept the ground urged by Sri Kapoor as entitling the Mandals to an interest that can ignore or override all manner of rights and interests in the auctioned properties. For the above reasons, we are unable to accept the plea that the Mandals are entitled to get vacant possession of the premises, irrespective of the nature of the interests the claimants had therein and that, on this ground alone, we should uphold the order of the Division Bench. (Paras 14 to 16)
JUDGEMENT:
RANGANATHAN, J. :
1. Leave granted.
2. These appeals arise as a sequel to certain directions of this Court in the famous Sanchaita case. The Sanchaita Investment Company was a firm which was controlled and run, primarily, by three persons Sambhu Prasad Mukherjee, Biharilal Murarka, and Swapan Kumar Guha. It had been able, by dint of a tremendous advertisement campaign, to collect deposits amounting to several crores of rupees from thousands of depositors spread all over India by holding out attractive terms of interest. The firm initially prospered and its deposits steeply mounted to astronomical figures. The firm, however, began to acquire, or deal in, movable and immovable properties in various cities of India in the names, not only of the firm, but of relatives and benamidars of various persons who were in management its affairs. A sizeable portion of the firm’s funds being thus tied up or siphoned away from its coffers for the private benefit of the individuals running it, the firm eventually began making defaults in its obligations to the depositors. The depositors, thereupon, approached the High Court and eventually the matters came up to this Court in W.P. Nos.638 and 755-800 of 1983. With a view to safeguard the interests of the depositors, arrange for a return to them of as much of their deposits as possible and ensure that the properties of the firm were duly identified and the full and due benefit of the funds diverted from its coffers was restored to the firm, this Court, by its order dated 4.5.83, appointed a retired District Judge as a Commissioner to take charge of all the assets, documents and papers of the firm and of its agents, sub-agent transferees and benamidars. Directions were given to the Commissioner to look into the claims of depositors and to devise a scheme whereby persons who had deposited sums not exceeding Rs.25,000/- could be repaid expeditiously. By a subsequent order dated 27.9.83, certain directions were given to enable the Commissioner to gather in all the assets of the firm. It is necessary to quote a portion of this order. It read :
“The Commissioner may attach such assets and properties which, in his prima facie opinion, are of the ownership of the firm Sanchaita Investments, or of the ownership of any of its partners. Such assets and properties may be put to sale by the Commissioner if no objection is received to the attachment thereof within one month of the date of attachment. All objections received to the attachment of such assets or properties will be forwarded by the Commissioner to the Prothonotary of the High Court of Calcutta. We request the learned Chief Justice of the Calcutta High Court to nominate a Division Bench of the High Court for the purpose of jurisdiction upon such objections. The Division Bench will dispose of the objections on merits after hearing all interested parties.”
3. Reference must also be made to another order of this Court dated 23.9.85 in C.M.P. No.38589/85. By this order, this Court directed :
“After hearing counsel for the parties we consider it necessary to empower the Commissioner, Sanchaita Investment, to remove all unauthorised persons and trespassers from possession of the property proposed to be sold by the Commissioner under the orders of this Court and to hand over vacant possession to the rightful purchasers. The Commissioner is authorised to take the assistance of the police for the purpose of obtaining possession and handing it over to the rightful purchasers.”
4. In pursuance of these directions, the Commissioner attached a large number of properties situate all over the country which, he had reason to believe, were properties which belonged to the firm though acquired in the names of others. When the properties were so attached and sought to be sold, objections were lodged by persons claiming title or possession of the property in their own right and these objections were adjudicated upon by the designated Division Bench of the Calcutta High Court.
5. One of the properties that were thus attached by the Commissioner was house No.52/1/1B, Surendra Nath Banerjee Road, Calcutta-14. (There is a slight discrepancy in the door number of this property as appearing in various documents but that is not material for our purposes). This property stood on land of the small extent of about 800 sq. ft. and comprised of five rooms in the ground floor (three in front and two at the back), a first floor and a second floor but, being business premises in a busy commercial locality, is of considerable value today. The Commissioner found that this property had been acquired in the name of Mahamaya Devi, an aunt of Sambhu Prasad Mukherjee, for Rs.85,000/- on 4.10.1977. Apparently the Commissioner was of the opinion that the property was really that of the firm acquired in the name of Mahamaya Devi. He, therefore, attached this property by a public notice taken out, inter alia, in The Statesman dated 27.5.84 to the following effect :
“The Public are hereby informed that in exercise of the authority and power vested in me under the order of the Hon’ble Supreme Court of India passed and made on 4.5.83 and 27.9.83…….., I had attached or I had taken possession of or I am hereby taking possession of (as the case may be) the following properties (specified in the schedule below) including flats, lands, cars, launch, business, shares in companies and partnership firms and house properties. The persons in which names these properties stand are hereby warned that they shall not lease out, assign, sell mortgage, transfer or otherwise encumber or deal with them until further orders from me. Anybody dealing with such properties would do so at his own risk or responsibility.”
6. It appears that there were also other similar notices issued by the Commissioner. In response to one of these notices, Smt. Mahamaya Devi put forward her claim to the ownership of the property but her claim was rejected by the Division Bench of the Calcutta High Court on 29.3.1985 in Case No.23 of 1984. Sri Kapur, learned counsel for the respondents states that a petition for special leave to appeal to this Court preferred by her was also rejected sometime in 1985. This is not contradicted by the petitioners. We may, therefore, proceed, for the purposes of this case, on the footing that, though standing in the name of Mahamaya Devi, the property in question belongs to the firm Sanchaita.
7. Subsequently the property was brought to sale by the Commissioner. Sealed tenders were invited for the purchase of the properties specified in the schedule, by a notice published in “The Statesman” on 7.3.86, on “as is where is basis”. The notice specifically mentions that the possession of only three of the six items mentioned in the notice was with the Commissioner and the property presently in question was not one of them. Asit Kumar Mandal and two others (the respondents before us, hereinafter compendiously referred to as ‘the Mandals’) offered, on 22.5.86, to purchase the property for Rs.1,25,000/- in lump sum subject to negotiations in the matter. They undertook to deposit 25% of the price on the acceptance of the offer and the balance “at the time of giving us the physical possession of the said premises”. After a discussion with the Commissioner, they deposited Rs.31,500 on 11.6.1986 and stated in their letter of the same date to the Commissioner :
“We shall deposit the balance amount as and when called upon to do so. Thereafter, you will hand over to us the possession of the said premises free from illegal trespassers”.
On 12.6.86, the Commissioner accepted the offer of the Mandals subject to the following conditions, namely :
“a) That the proposed sale in your favour under the conditions mentioned herein below is approved by our advisory Board.
b) That 1/4th (i.e. Rs.31,500/0) of the total consideration money is at once paid by you to the Commissioner, Sanchaita Investments, through bank draft or pay order.
c) That the balance of the consideration money is paid within 30th June, 1986.
d) That in default of payment of the consideration money as stated above, the earnest money (Rs.31,500/-) to be paid by you through bank draft or Pay Order as mentioned above shall stand forfeited.
e) That the aforesaid sale is made on “as is where is basis”.
f) That on payment of the full consideration money as above within the date fixed you may take steps for the obtaining possession of the said entire premises and the Commissioner will help you for the said purpose.”
The Mandals, thereafter, paid Rs.31,500/- on 27.6.86 and Rs.63,000/- on 18.7.86 and wrote to the Commissioner as follows :
“Please send us the draft sale certificate in respect of the above property for our approval on behalf of our clients and arrange immediately to give our clients vacant possession of the property as agreed upon.
Please inform us if any objection was received by you in respect of the property pursuant to you advertisement in the Statesman dated March 7, 1986.”
The Commissioner referred the purchasers to his lawyer in regard to the preparation of the sale certificate and a certificate of sale deed was eventually issued in favour of the Mandals on 10.4.1987. The certificate referred to the orders of the Supreme Court, the satisfaction of the Commissioner, the fact of attachment and the absence of any objections from Mahamaya Devi and conveyed the property to the Mandals.
8. Having thus purchased the property, the Mandals requested the Commissioner to give them vacant possession of the property but there was no response. Thereupon, on 17.9.1987, the Mandals moved an application (being Matter No.3737/87) before the High Court praying that they may be given vacant possession of the property. It appears that, in the meantime, they had come to know that the premises were occupied by the following parties:
Name of person Portion occupied
1. Paul Brothers (Textile One room on Ground Floor
Division)
2. Paul Brothers (Watch -do-
Repairing Division)
3. Paul Brothers (Electronics -do-
Division)
4. Dulal Dutta and Panchanan -do-
Dutta
5. G. Dey -do-
6. Phani Bhusan Ghosh First Floor
7. Hari Narayan Gupta Second Floor
These persons were made respondents to the application and, alleging that they were all trespassers in occupation of the property, a prayer was made that they should be directed to hand over vacant possession of the property to the applicants. This prayer has been granted by the Division Bench of the High Court and, hence, these two petitions for leave to appeal, one by the three Paul Bros. and the other by three of the other four “objectors”. We have heard these petitions at great length. We grant leave in both S.L.Ps and proceed to dispose of the appeals.
9. The petitioners claim that they are bona fide tenants in the property. Except for petitioner H.N. Gupta who was inducted as a tenant by Mahamaya Devi, the others claim that they have been tenants even under the predecessors-in-interest of Mahamaya Devi. they claim, therefore, that they can be evicted only in accordance with due procedure prescribed by law after full contest and opportunity to lead evidence and cannot be thrown out in summary proceedings like the present one just as if they were persons in unauthorised possession of the property or as if they were mere trespassers. On the other hand, for the Mandals it is contended that once it is held that Mahamaya Devi was a benamidar for Sanchaita, the Commissioner is entitled to take possession of the property, removing all present occupants including tenants therein and selling the property at the maximum possible price free of all encumbrances so that the proceeds may be made available to the innumerable depositors who had been denuded of their lifetime savings by the undesirable and fraudulent activities of the persons in charge of the firm. A pernicious evil, it is said, warrants a drastic remedy and hence this Court, having regard to the large scale involvements of the firm, considered it necessary to arm the Commissioner with wide powers so that he may be able to gather in all the real assets of the firm without delay or obstruction of the benefit of the defrauded investors. The Mandals have, it is said, having regard to the terms of the orders passed by this Court and by the Calcutta High Court, purchased the property in the belief that they would not only get a perfect title but also speedy possession of the property. If bona fide purchasers are to be obstructed like this by all manner of claims, real or imaginary, it is argued, the properties of the firm can only be sold for a song and the entire object and purpose of the various directions of this Court would be frustrated. It is, therefore, contended that, even if the appellants are really tenants in the property as claimed, their claims will have to yield to the paramount public interest of the Sanchaita investors.
10. We are unable to accept this contention of the Mandals. It is not maintainable either in principle or on the terms of the directions given by this Court. To take up the latter first, there is nothing in the terms of the orders of this Court or of the notices of attachment or sale or of any other orders of the Calcutta High Court that vests an absolute title in the auction purchasers of the property free from all encumbrances. The order of the Court dated 27.9.83 only authorised the Commissioner to attach properties which he believed to belong to Sanchaita and provided for any objections to the attachment being heard by the designated Division Bench of the High Court. The attachment and sale of the property presently in question were effected in pursuance of this order. Any sale, transfer, encumbrance or alienation subsequent to the attachment could, no doubt, be impugned but the attachment did not have the legal effect of invalidating earlier interests of others subsisting in the property. In fact also, the sale was on an “as is, where is basis” i.e. without prejudice to the claims of other persons in whose favour bona fide encumbrances or interests may have been created earlier qua the property. There appears to be some force in the contention of the claimants that the price paid by the appellant is not adequate to reflect the market value of the property situated in an important commercial locality in Calcutta at the present day if sold free from all encumbrances but we shall leave this contention out of account as there is no material before us on this aspect. The order of 23.9.85, no doubt, goes a step further but it only empowers the Commissioner to remove all unauthorised persons and trespassers. The reference to vacant possession in the order has to be restricted only to cases where the property is in the possession of such unauthorised persons or trespassers and cannot be read so as to empower the Commissioner to evict forcibly, or seek the orders of the Court to evict summarily, persons who are in lawful possession of the property. We should also like to point out that, in fact also, the Mandals got no better right on the terms of the auction and the correspondence that followed. Though the Mandals referred in their letters to vacant possession of the property, the sale was only on an “as is, where is” basis and the Commissioner at no time offered or assured the Mandals that they would get such vacant possession. He only offered to help them in the process to the extent permissible in law. He has made this position explicit in the letters written by him.
11. Sri Kapur, for the Mandals, placed considerable reliance on the common order of the Calcutta High Court dated 25.3.86 in Amar Mondal v. Commissioner (Matter No.122 of 1986) and Jagdish Chand Aggarwala v. Commissioner (Matter No.146 of 1985) to contend that the Mandals are entitled to get vacant possession of the property. In that case, Amar Mondal who was the auction purchaser of an item of property (which we shall call ‘Property A’) at a sale by the Commissioner sought to be put into possession by evicting the respondents 2 to 5 “who are unauthorised occupants” and Jagdish Chand Aggarwala, whose highest bid at an auction for an item of property (which we shall call ‘Property B’) by the Commissioner could not be proceeded with because of an injunction obtained by respondents nos. 6 & 7, sought the orders of the Court “for completing the sale and giving delivery of possession by evicting the respondents”. So far as Property A is concerned, the Court found, for reasons which need not be repeated here, that they were “unauthorised occupants” and not “bona fide tenants in occupation” and were, hence liable to be evicted. Likewise, in respect of property B, the Court concluded that the claims of tenancy put forward by respondents 6 & 7 “were frivolous”. These were, therefore, not cases where tenants were held liable to be evicted and the order does not help the Mandals to the extent claimed.
12. Sri Kapur, however, relies strongly on two sets of observations in this order. The first reference by him is to an observation that any person claiming to have any interest in the property should file his claim within 30 days of the attachment and that any claim made beyond this period would be barred by limitation and hence cannot be considered. The second reference is to an observation that the Court is entitled to adjudicate upon all claims, even those of persons who claim to have any bona fide intermediate interests in the properties attached by the Commissioner. The Court observed:
“In our opinion, therefore, once an attachment is effected by the Commissioner on the authority of his powers vested in him by the Supreme Court, not only persons claiming right, title and interest independent of Sanchaita Investments but also claiming any bona fide intermediate interest created by the claimant should put forward to claim of objection. It was not the intention of the Supreme Court that there should be proliferation of litigation, result whereof would be that the insignificant part of the depositors’ money which should be realised by the Commissioner would be wasted in litigation. This position has been made clear by the Supreme Court when the Supreme Court by a recent order upheld the view of the Bombay High Court that a claim of tenancy in respect of a property attached by the Commissioner must be lodged with this Special Bench and not before any ordinary Civil Court. The attachment made by the Commissioner cannot be equated with an attachment made by a Civil Court either prior to judgment or in execution since there what is attached is the right, title and interest of either the defendant or the judgment debtor. In the present case, however, on the Scheme framed by the Supreme Court what is being attached is the property itself so that any body having any lawful claim in whatever interest held by him, must put forward his claim before the Commissioner so that it can be adjudicated once for all in a proceeding before this Special Bench and thus avoid wasting litigation. We do not accept for a moment that this court’s jurisdiction is limited to adjudication of all claims preferred as against the attachment made by the Commissioner. The scope of our power must be determined with reference to the intention of the Supreme Court referred to herein. Such power in our opinion covers adjudication of all sorts of claims or objections for the Commissioner’s attachment and sales of assets belonging to the beneficial ownership of Sanchaita Investment preferred or brought forward at any stage and also to make all incidental and consequential orders as we may find necessary to assist the Commissioner in collecting the assets having regard to the resistance faced by him from persons putting forward any claim of his own. In that view we hold that our power covers a case like the present one where even after the objection has been overruled by this Court, others have come forward to resist the Commissioner from effecting sale by putting forward a claim of tenancy. Such a claim in our opinion, is really an objection to the attachment when we consider it on its substance, that comes well within the scope of our jurisdiction. It matters little whether such jurisdiction is invoked by the Commissioner or the claimant or the proposed purchased.”
He submitted, on the strength of these passages, that the claims in the present case are liable to be dismissed (a) on the ground that they are time barred and (b) even if the claimants are found to be bona fide tenants in the property.
13. We are unable to agree. While, no doubt, this Court had indicated that claims and objections to attachments should be filed within a period of thirty days, that period cannot be read as if were a rigid rule of limitation prescribed by law. The order also only says that, if objections are not put forward within a month, the property may be sold and does not preclude objections being filed after the sale. Indeed, the Division Bench did not rest its conclusion on this ground and proceeded to consider the objections on merits. We are also unable to read into the order any conclusion of the Division Bench that even bona fide tenants are liable to be evicted from the property. If that had been so, the Bench need not have gone into a detailed consideration of the merits of the claim of tenancy put forward by the contesting respondents in that case. All that the Bench observed in the passage extracted above was that all claimants to the properties subjected to attachment by the Commissioner, whether as owners or as intermediate interests holders (like tenants) or otherwise, have to put forward their claims for adjudication by the Division Bench. The Bench did not proceed to hold, as suggested by Sri Kapur, that the auction purchasers are entitled to get vacant possession of the property free from all encumbrances and that even bona fide tenements can be directed to be summarily evicted from the property in pursuance of the orders of this Court. We are unable to see in this order any observation that could legitimately have induced the Mandals to believe that they would be entitled to evict even lawful tenants from the property by purchasing it at the auction sale.
14. In principle also, this contention is not well founded. The object of the directions given by this Court was to cut short the proliferation of litigation and to ensure that the Commissioner is able to gather in expeditiously the assets of Sanchaita which were dissipated or siphoned off by the persons in charge of the firm. Thus, if the firm’s moneys had been utilised to purchase properties in the name of various individuals benami such property had to be taken back by the Commissioner from such benamidars. Also, where the said benamidars or other persons put up frivolous claims to the property or its possession without the semblance of any legal title to its ownership or possession, such claims could and should be rejected by the Court. But this principle cannot apply to bona fide interests of others in the property. For instance, suppose Sanchaita’s moneys had been advanced on the mortgage of an item of immovable property, all that the Commissioner would be entitled, legally and equitably, would be to call in the mortgage moneys (principal and interest) and not the entire property itself. An auction purchaser of such a property cannot get anything higher than the interest Sanchaita itself could have claimed in respect of the property. Likewise, if Sanchaita’s moneys had been invested in a property which had been bona fide let out to tenants, Sanchaita would have paid only the value of the property so encumbered and its rights in the property can only be subject to those tenancy rights. Sanchaita could not have a right in respect of the property superior to that which its vendor had. Similar would be the position where Sanchaita or its benamidars had, after acquiring a property, created a bona fide tenancy or other encumbrance in respect of that property, in respect of independent outsiders who acquire such interest for consideration. To say that Sanchaita, through the Commissioner, would be entitled to vacant possession even from such tenants, or free from such encumbrances, would result in its being able to realise a larger interest in the property than it acquired. Not only this, the result of any such conclusion would enure the benefit of, not Sanchaita, but of the auction purchaser of the property. Having bid for and acquired the right, title and interest of Sanchaita in the property, he would be enabled to get vacant possession which Sanchaita, even if it had continued to be active and prosperous, could not have got except by due process of law. We have, therefore, no doubt that this Court, by its order dated 4.5.83 and 27.9.83 intended only that the firm, or the auction purchasers at the sales effected by the Commissioners, should be able to clear the property of trespassers and unauthorised persons and not that even bona fide tenants could be got evicted straight away in pursuance thereof. Normally, even trespassers and unauthorised persons cannot be thrown out except by recourse to legal proceedings but, having regard to the large scale dealings, the special circumstances and the desperate situation, this Court made an exception and made it possible for the Commissioner to get false and frivolous claimants out of the way by a quick procedure but nothing more. We are, therefore, of opinion that if the Court, on a consideration of the materials placed by the claimants or objectors, comes to the conclusion that they are not mere stooges or false claimants but have a bona fide right to possession as against Sanchaita, it cannot direct their eviction but should leave it to the auction purchaser to initiate such eviction proceedings in the normal course and in accordance with law, as may be available to him against the claimants/ objectors.
15. Sri Kapur laid considerable stress on the aspect that, unless vacant possession can be had, no one will purchase any property at the auction sales conducted by the Commissioner as no one would like to face further litigation to secure possession of the property. He submitted that the object which the Court had in mind was to effectuate sales of Sanchaita properties by assuring vacant possession with a view to secure maximum price therefor and to ensure expeditious return to the Sanchaita investors of as much of their deposits as possible and that this object would be totally frustrated if people were encouraged to put in hurdles in the way which will depreciate the value of the property. This contention proceeds, only partially, on a correct basis. It is true that there should be a quick and expeditious realisation of the properties that really belong to Sanchaita. That is why the Court empowered the Commissioner to attach and sell properties that, in his opinion, really belong to Sanchaita though ostensibly held in the names of others and also devised a quick and summary method for adjudication upon claims and removal of obstructions. But this order cannot be availed of to ride rough-shod over the rights and interests of others in the properties which have been created bona fide. Third parties who have acquired real interests in the property, either independent of, or through, Sanchaita cannot be called upon to give up their rights. To do so would be to do more than merely realise what rightfully belongs to Sanchaita a better title than it had, in fact, acquired. The depositors or investors in Sanchaita cannot claim any such rights. It is, therefore, difficult to accept the ground urged by Sri Kapoor as entitling the Mandals to an interest that can ignore or override all manner of rights and interests in the auctioned properties.
16. For the above reasons, we are unable to accept the plea that the Mandals are entitled to get vacant possession of the premises, irrespective of the nature of the interests the claimants had therein and that, on this ground alone, we should uphold the order of the Division Bench. We shall, therefore, proceed to consider how far the claim of each one of the appellants before us to continue in possession of the property, unless and until evicted in due course by process of law, is maintainable.
1. Leave granted.
2. These appeals arise as a sequel to certain directions of this Court in the famous Sanchaita case. The Sanchaita Investment Company was a firm which was controlled and run, primarily, by three persons Sambhu Prasad Mukherjee, Biharilal Murarka, and Swapan Kumar Guha. It had been able, by dint of a tremendous advertisement campaign, to collect deposits amounting to several crores of rupees from thousands of depositors spread all over India by holding out attractive terms of interest. The firm initially prospered and its deposits steeply mounted to astronomical figures. The firm, however, began to acquire, or deal in, movable and immovable properties in various cities of India in the names, not only of the firm, but of relatives and benamidars of various persons who were in management its affairs. A sizeable portion of the firm’s funds being thus tied up or siphoned away from its coffers for the private benefit of the individuals running it, the firm eventually began making defaults in its obligations to the depositors. The depositors, thereupon, approached the High Court and eventually the matters came up to this Court in W.P. Nos.638 and 755-800 of 1983. With a view to safeguard the interests of the depositors, arrange for a return to them of as much of their deposits as possible and ensure that the properties of the firm were duly identified and the full and due benefit of the funds diverted from its coffers was restored to the firm, this Court, by its order dated 4.5.83, appointed a retired District Judge as a Commissioner to take charge of all the assets, documents and papers of the firm and of its agents, sub-agent transferees and benamidars. Directions were given to the Commissioner to look into the claims of depositors and to devise a scheme whereby persons who had deposited sums not exceeding Rs.25,000/- could be repaid expeditiously. By a subsequent order dated 27.9.83, certain directions were given to enable the Commissioner to gather in all the assets of the firm. It is necessary to quote a portion of this order. It read :
“The Commissioner may attach such assets and properties which, in his prima facie opinion, are of the ownership of the firm Sanchaita Investments, or of the ownership of any of its partners. Such assets and properties may be put to sale by the Commissioner if no objection is received to the attachment thereof within one month of the date of attachment. All objections received to the attachment of such assets or properties will be forwarded by the Commissioner to the Prothonotary of the High Court of Calcutta. We request the learned Chief Justice of the Calcutta High Court to nominate a Division Bench of the High Court for the purpose of jurisdiction upon such objections. The Division Bench will dispose of the objections on merits after hearing all interested parties.”
3. Reference must also be made to another order of this Court dated 23.9.85 in C.M.P. No.38589/85. By this order, this Court directed :
“After hearing counsel for the parties we consider it necessary to empower the Commissioner, Sanchaita Investment, to remove all unauthorised persons and trespassers from possession of the property proposed to be sold by the Commissioner under the orders of this Court and to hand over vacant possession to the rightful purchasers. The Commissioner is authorised to take the assistance of the police for the purpose of obtaining possession and handing it over to the rightful purchasers.”
4. In pursuance of these directions, the Commissioner attached a large number of properties situate all over the country which, he had reason to believe, were properties which belonged to the firm though acquired in the names of others. When the properties were so attached and sought to be sold, objections were lodged by persons claiming title or possession of the property in their own right and these objections were adjudicated upon by the designated Division Bench of the Calcutta High Court.
5. One of the properties that were thus attached by the Commissioner was house No.52/1/1B, Surendra Nath Banerjee Road, Calcutta-14. (There is a slight discrepancy in the door number of this property as appearing in various documents but that is not material for our purposes). This property stood on land of the small extent of about 800 sq. ft. and comprised of five rooms in the ground floor (three in front and two at the back), a first floor and a second floor but, being business premises in a busy commercial locality, is of considerable value today. The Commissioner found that this property had been acquired in the name of Mahamaya Devi, an aunt of Sambhu Prasad Mukherjee, for Rs.85,000/- on 4.10.1977. Apparently the Commissioner was of the opinion that the property was really that of the firm acquired in the name of Mahamaya Devi. He, therefore, attached this property by a public notice taken out, inter alia, in The Statesman dated 27.5.84 to the following effect :
“The Public are hereby informed that in exercise of the authority and power vested in me under the order of the Hon’ble Supreme Court of India passed and made on 4.5.83 and 27.9.83…….., I had attached or I had taken possession of or I am hereby taking possession of (as the case may be) the following properties (specified in the schedule below) including flats, lands, cars, launch, business, shares in companies and partnership firms and house properties. The persons in which names these properties stand are hereby warned that they shall not lease out, assign, sell mortgage, transfer or otherwise encumber or deal with them until further orders from me. Anybody dealing with such properties would do so at his own risk or responsibility.”
6. It appears that there were also other similar notices issued by the Commissioner. In response to one of these notices, Smt. Mahamaya Devi put forward her claim to the ownership of the property but her claim was rejected by the Division Bench of the Calcutta High Court on 29.3.1985 in Case No.23 of 1984. Sri Kapur, learned counsel for the respondents states that a petition for special leave to appeal to this Court preferred by her was also rejected sometime in 1985. This is not contradicted by the petitioners. We may, therefore, proceed, for the purposes of this case, on the footing that, though standing in the name of Mahamaya Devi, the property in question belongs to the firm Sanchaita.
7. Subsequently the property was brought to sale by the Commissioner. Sealed tenders were invited for the purchase of the properties specified in the schedule, by a notice published in “The Statesman” on 7.3.86, on “as is where is basis”. The notice specifically mentions that the possession of only three of the six items mentioned in the notice was with the Commissioner and the property presently in question was not one of them. Asit Kumar Mandal and two others (the respondents before us, hereinafter compendiously referred to as ‘the Mandals’) offered, on 22.5.86, to purchase the property for Rs.1,25,000/- in lump sum subject to negotiations in the matter. They undertook to deposit 25% of the price on the acceptance of the offer and the balance “at the time of giving us the physical possession of the said premises”. After a discussion with the Commissioner, they deposited Rs.31,500 on 11.6.1986 and stated in their letter of the same date to the Commissioner :
“We shall deposit the balance amount as and when called upon to do so. Thereafter, you will hand over to us the possession of the said premises free from illegal trespassers”.
On 12.6.86, the Commissioner accepted the offer of the Mandals subject to the following conditions, namely :
“a) That the proposed sale in your favour under the conditions mentioned herein below is approved by our advisory Board.
b) That 1/4th (i.e. Rs.31,500/0) of the total consideration money is at once paid by you to the Commissioner, Sanchaita Investments, through bank draft or pay order.
c) That the balance of the consideration money is paid within 30th June, 1986.
d) That in default of payment of the consideration money as stated above, the earnest money (Rs.31,500/-) to be paid by you through bank draft or Pay Order as mentioned above shall stand forfeited.
e) That the aforesaid sale is made on “as is where is basis”.
f) That on payment of the full consideration money as above within the date fixed you may take steps for the obtaining possession of the said entire premises and the Commissioner will help you for the said purpose.”
The Mandals, thereafter, paid Rs.31,500/- on 27.6.86 and Rs.63,000/- on 18.7.86 and wrote to the Commissioner as follows :
“Please send us the draft sale certificate in respect of the above property for our approval on behalf of our clients and arrange immediately to give our clients vacant possession of the property as agreed upon.
Please inform us if any objection was received by you in respect of the property pursuant to you advertisement in the Statesman dated March 7, 1986.”
The Commissioner referred the purchasers to his lawyer in regard to the preparation of the sale certificate and a certificate of sale deed was eventually issued in favour of the Mandals on 10.4.1987. The certificate referred to the orders of the Supreme Court, the satisfaction of the Commissioner, the fact of attachment and the absence of any objections from Mahamaya Devi and conveyed the property to the Mandals.
8. Having thus purchased the property, the Mandals requested the Commissioner to give them vacant possession of the property but there was no response. Thereupon, on 17.9.1987, the Mandals moved an application (being Matter No.3737/87) before the High Court praying that they may be given vacant possession of the property. It appears that, in the meantime, they had come to know that the premises were occupied by the following parties:
Name of person Portion occupied
1. Paul Brothers (Textile One room on Ground Floor
Division)
2. Paul Brothers (Watch -do-
Repairing Division)
3. Paul Brothers (Electronics -do-
Division)
4. Dulal Dutta and Panchanan -do-
Dutta
5. G. Dey -do-
6. Phani Bhusan Ghosh First Floor
7. Hari Narayan Gupta Second Floor
These persons were made respondents to the application and, alleging that they were all trespassers in occupation of the property, a prayer was made that they should be directed to hand over vacant possession of the property to the applicants. This prayer has been granted by the Division Bench of the High Court and, hence, these two petitions for leave to appeal, one by the three Paul Bros. and the other by three of the other four “objectors”. We have heard these petitions at great length. We grant leave in both S.L.Ps and proceed to dispose of the appeals.
9. The petitioners claim that they are bona fide tenants in the property. Except for petitioner H.N. Gupta who was inducted as a tenant by Mahamaya Devi, the others claim that they have been tenants even under the predecessors-in-interest of Mahamaya Devi. they claim, therefore, that they can be evicted only in accordance with due procedure prescribed by law after full contest and opportunity to lead evidence and cannot be thrown out in summary proceedings like the present one just as if they were persons in unauthorised possession of the property or as if they were mere trespassers. On the other hand, for the Mandals it is contended that once it is held that Mahamaya Devi was a benamidar for Sanchaita, the Commissioner is entitled to take possession of the property, removing all present occupants including tenants therein and selling the property at the maximum possible price free of all encumbrances so that the proceeds may be made available to the innumerable depositors who had been denuded of their lifetime savings by the undesirable and fraudulent activities of the persons in charge of the firm. A pernicious evil, it is said, warrants a drastic remedy and hence this Court, having regard to the large scale involvements of the firm, considered it necessary to arm the Commissioner with wide powers so that he may be able to gather in all the real assets of the firm without delay or obstruction of the benefit of the defrauded investors. The Mandals have, it is said, having regard to the terms of the orders passed by this Court and by the Calcutta High Court, purchased the property in the belief that they would not only get a perfect title but also speedy possession of the property. If bona fide purchasers are to be obstructed like this by all manner of claims, real or imaginary, it is argued, the properties of the firm can only be sold for a song and the entire object and purpose of the various directions of this Court would be frustrated. It is, therefore, contended that, even if the appellants are really tenants in the property as claimed, their claims will have to yield to the paramount public interest of the Sanchaita investors.
10. We are unable to accept this contention of the Mandals. It is not maintainable either in principle or on the terms of the directions given by this Court. To take up the latter first, there is nothing in the terms of the orders of this Court or of the notices of attachment or sale or of any other orders of the Calcutta High Court that vests an absolute title in the auction purchasers of the property free from all encumbrances. The order of the Court dated 27.9.83 only authorised the Commissioner to attach properties which he believed to belong to Sanchaita and provided for any objections to the attachment being heard by the designated Division Bench of the High Court. The attachment and sale of the property presently in question were effected in pursuance of this order. Any sale, transfer, encumbrance or alienation subsequent to the attachment could, no doubt, be impugned but the attachment did not have the legal effect of invalidating earlier interests of others subsisting in the property. In fact also, the sale was on an “as is, where is basis” i.e. without prejudice to the claims of other persons in whose favour bona fide encumbrances or interests may have been created earlier qua the property. There appears to be some force in the contention of the claimants that the price paid by the appellant is not adequate to reflect the market value of the property situated in an important commercial locality in Calcutta at the present day if sold free from all encumbrances but we shall leave this contention out of account as there is no material before us on this aspect. The order of 23.9.85, no doubt, goes a step further but it only empowers the Commissioner to remove all unauthorised persons and trespassers. The reference to vacant possession in the order has to be restricted only to cases where the property is in the possession of such unauthorised persons or trespassers and cannot be read so as to empower the Commissioner to evict forcibly, or seek the orders of the Court to evict summarily, persons who are in lawful possession of the property. We should also like to point out that, in fact also, the Mandals got no better right on the terms of the auction and the correspondence that followed. Though the Mandals referred in their letters to vacant possession of the property, the sale was only on an “as is, where is” basis and the Commissioner at no time offered or assured the Mandals that they would get such vacant possession. He only offered to help them in the process to the extent permissible in law. He has made this position explicit in the letters written by him.
11. Sri Kapur, for the Mandals, placed considerable reliance on the common order of the Calcutta High Court dated 25.3.86 in Amar Mondal v. Commissioner (Matter No.122 of 1986) and Jagdish Chand Aggarwala v. Commissioner (Matter No.146 of 1985) to contend that the Mandals are entitled to get vacant possession of the property. In that case, Amar Mondal who was the auction purchaser of an item of property (which we shall call ‘Property A’) at a sale by the Commissioner sought to be put into possession by evicting the respondents 2 to 5 “who are unauthorised occupants” and Jagdish Chand Aggarwala, whose highest bid at an auction for an item of property (which we shall call ‘Property B’) by the Commissioner could not be proceeded with because of an injunction obtained by respondents nos. 6 & 7, sought the orders of the Court “for completing the sale and giving delivery of possession by evicting the respondents”. So far as Property A is concerned, the Court found, for reasons which need not be repeated here, that they were “unauthorised occupants” and not “bona fide tenants in occupation” and were, hence liable to be evicted. Likewise, in respect of property B, the Court concluded that the claims of tenancy put forward by respondents 6 & 7 “were frivolous”. These were, therefore, not cases where tenants were held liable to be evicted and the order does not help the Mandals to the extent claimed.
12. Sri Kapur, however, relies strongly on two sets of observations in this order. The first reference by him is to an observation that any person claiming to have any interest in the property should file his claim within 30 days of the attachment and that any claim made beyond this period would be barred by limitation and hence cannot be considered. The second reference is to an observation that the Court is entitled to adjudicate upon all claims, even those of persons who claim to have any bona fide intermediate interests in the properties attached by the Commissioner. The Court observed:
“In our opinion, therefore, once an attachment is effected by the Commissioner on the authority of his powers vested in him by the Supreme Court, not only persons claiming right, title and interest independent of Sanchaita Investments but also claiming any bona fide intermediate interest created by the claimant should put forward to claim of objection. It was not the intention of the Supreme Court that there should be proliferation of litigation, result whereof would be that the insignificant part of the depositors’ money which should be realised by the Commissioner would be wasted in litigation. This position has been made clear by the Supreme Court when the Supreme Court by a recent order upheld the view of the Bombay High Court that a claim of tenancy in respect of a property attached by the Commissioner must be lodged with this Special Bench and not before any ordinary Civil Court. The attachment made by the Commissioner cannot be equated with an attachment made by a Civil Court either prior to judgment or in execution since there what is attached is the right, title and interest of either the defendant or the judgment debtor. In the present case, however, on the Scheme framed by the Supreme Court what is being attached is the property itself so that any body having any lawful claim in whatever interest held by him, must put forward his claim before the Commissioner so that it can be adjudicated once for all in a proceeding before this Special Bench and thus avoid wasting litigation. We do not accept for a moment that this court’s jurisdiction is limited to adjudication of all claims preferred as against the attachment made by the Commissioner. The scope of our power must be determined with reference to the intention of the Supreme Court referred to herein. Such power in our opinion covers adjudication of all sorts of claims or objections for the Commissioner’s attachment and sales of assets belonging to the beneficial ownership of Sanchaita Investment preferred or brought forward at any stage and also to make all incidental and consequential orders as we may find necessary to assist the Commissioner in collecting the assets having regard to the resistance faced by him from persons putting forward any claim of his own. In that view we hold that our power covers a case like the present one where even after the objection has been overruled by this Court, others have come forward to resist the Commissioner from effecting sale by putting forward a claim of tenancy. Such a claim in our opinion, is really an objection to the attachment when we consider it on its substance, that comes well within the scope of our jurisdiction. It matters little whether such jurisdiction is invoked by the Commissioner or the claimant or the proposed purchased.”
He submitted, on the strength of these passages, that the claims in the present case are liable to be dismissed (a) on the ground that they are time barred and (b) even if the claimants are found to be bona fide tenants in the property.
13. We are unable to agree. While, no doubt, this Court had indicated that claims and objections to attachments should be filed within a period of thirty days, that period cannot be read as if were a rigid rule of limitation prescribed by law. The order also only says that, if objections are not put forward within a month, the property may be sold and does not preclude objections being filed after the sale. Indeed, the Division Bench did not rest its conclusion on this ground and proceeded to consider the objections on merits. We are also unable to read into the order any conclusion of the Division Bench that even bona fide tenants are liable to be evicted from the property. If that had been so, the Bench need not have gone into a detailed consideration of the merits of the claim of tenancy put forward by the contesting respondents in that case. All that the Bench observed in the passage extracted above was that all claimants to the properties subjected to attachment by the Commissioner, whether as owners or as intermediate interests holders (like tenants) or otherwise, have to put forward their claims for adjudication by the Division Bench. The Bench did not proceed to hold, as suggested by Sri Kapur, that the auction purchasers are entitled to get vacant possession of the property free from all encumbrances and that even bona fide tenements can be directed to be summarily evicted from the property in pursuance of the orders of this Court. We are unable to see in this order any observation that could legitimately have induced the Mandals to believe that they would be entitled to evict even lawful tenants from the property by purchasing it at the auction sale.
14. In principle also, this contention is not well founded. The object of the directions given by this Court was to cut short the proliferation of litigation and to ensure that the Commissioner is able to gather in expeditiously the assets of Sanchaita which were dissipated or siphoned off by the persons in charge of the firm. Thus, if the firm’s moneys had been utilised to purchase properties in the name of various individuals benami such property had to be taken back by the Commissioner from such benamidars. Also, where the said benamidars or other persons put up frivolous claims to the property or its possession without the semblance of any legal title to its ownership or possession, such claims could and should be rejected by the Court. But this principle cannot apply to bona fide interests of others in the property. For instance, suppose Sanchaita’s moneys had been advanced on the mortgage of an item of immovable property, all that the Commissioner would be entitled, legally and equitably, would be to call in the mortgage moneys (principal and interest) and not the entire property itself. An auction purchaser of such a property cannot get anything higher than the interest Sanchaita itself could have claimed in respect of the property. Likewise, if Sanchaita’s moneys had been invested in a property which had been bona fide let out to tenants, Sanchaita would have paid only the value of the property so encumbered and its rights in the property can only be subject to those tenancy rights. Sanchaita could not have a right in respect of the property superior to that which its vendor had. Similar would be the position where Sanchaita or its benamidars had, after acquiring a property, created a bona fide tenancy or other encumbrance in respect of that property, in respect of independent outsiders who acquire such interest for consideration. To say that Sanchaita, through the Commissioner, would be entitled to vacant possession even from such tenants, or free from such encumbrances, would result in its being able to realise a larger interest in the property than it acquired. Not only this, the result of any such conclusion would enure the benefit of, not Sanchaita, but of the auction purchaser of the property. Having bid for and acquired the right, title and interest of Sanchaita in the property, he would be enabled to get vacant possession which Sanchaita, even if it had continued to be active and prosperous, could not have got except by due process of law. We have, therefore, no doubt that this Court, by its order dated 4.5.83 and 27.9.83 intended only that the firm, or the auction purchasers at the sales effected by the Commissioners, should be able to clear the property of trespassers and unauthorised persons and not that even bona fide tenants could be got evicted straight away in pursuance thereof. Normally, even trespassers and unauthorised persons cannot be thrown out except by recourse to legal proceedings but, having regard to the large scale dealings, the special circumstances and the desperate situation, this Court made an exception and made it possible for the Commissioner to get false and frivolous claimants out of the way by a quick procedure but nothing more. We are, therefore, of opinion that if the Court, on a consideration of the materials placed by the claimants or objectors, comes to the conclusion that they are not mere stooges or false claimants but have a bona fide right to possession as against Sanchaita, it cannot direct their eviction but should leave it to the auction purchaser to initiate such eviction proceedings in the normal course and in accordance with law, as may be available to him against the claimants/ objectors.
15. Sri Kapur laid considerable stress on the aspect that, unless vacant possession can be had, no one will purchase any property at the auction sales conducted by the Commissioner as no one would like to face further litigation to secure possession of the property. He submitted that the object which the Court had in mind was to effectuate sales of Sanchaita properties by assuring vacant possession with a view to secure maximum price therefor and to ensure expeditious return to the Sanchaita investors of as much of their deposits as possible and that this object would be totally frustrated if people were encouraged to put in hurdles in the way which will depreciate the value of the property. This contention proceeds, only partially, on a correct basis. It is true that there should be a quick and expeditious realisation of the properties that really belong to Sanchaita. That is why the Court empowered the Commissioner to attach and sell properties that, in his opinion, really belong to Sanchaita though ostensibly held in the names of others and also devised a quick and summary method for adjudication upon claims and removal of obstructions. But this order cannot be availed of to ride rough-shod over the rights and interests of others in the properties which have been created bona fide. Third parties who have acquired real interests in the property, either independent of, or through, Sanchaita cannot be called upon to give up their rights. To do so would be to do more than merely realise what rightfully belongs to Sanchaita a better title than it had, in fact, acquired. The depositors or investors in Sanchaita cannot claim any such rights. It is, therefore, difficult to accept the ground urged by Sri Kapoor as entitling the Mandals to an interest that can ignore or override all manner of rights and interests in the auctioned properties.
16. For the above reasons, we are unable to accept the plea that the Mandals are entitled to get vacant possession of the premises, irrespective of the nature of the interests the claimants had therein and that, on this ground alone, we should uphold the order of the Division Bench. We shall, therefore, proceed to consider how far the claim of each one of the appellants before us to continue in possession of the property, unless and until evicted in due course by process of law, is maintainable.
