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CASE NO.: Appeal (civil)  2950 of 2007

PETITIONER: Punjab National Bank

RESPONDENT: Sahujain Charitable Society and Ors

DATE OF JUDGMENT: 11/07/2007

BENCH: C.K. THAKKER & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO.  2950      OF 2007 (Arising out of SLP(C) No.18483 of 2005)

P.K. BALASUBRAMANYAN, J.

1.              Leave granted.

2.              This appeal arises out of a suit for partition.   The appellant before us is the plaintiff in the suit.  

3.              The suit property consisted of two buildings and  the land on which it stood. The plaintiff held 66.94% of  the shares therein.  In terms of fraction, this came to 83  out of 124 shares.  Defendant No. 1 held 8 out of 124.  Defendants 2 to 7 each held 4 out of 124.  Defendant No.  8 held 8 out of 124 and defendant No. 9 held 1 out of 124  shares.  The total extent was said to be 64333 sq. feet.   Out of this, the plaintiff - bank was in possession of an  extent of 14930 sq. feet.  On 22.6.1977, a preliminary  decree for partition was passed.  It was declared that the  plaintiff was entitled to 83 out of 124 shares and that the  same be allotted to the plaintiff.  It also directed that other  sharers be allotted their respective shares.  The  preliminary decree became final.  It is necessary only to  notice that respondent No. 1 before us was not a party to  the preliminary decree and no share was allotted to it.   But, it appears that subsequently, respondent No. 1  purchased the shares of defendants 1 to 4 and 9 and  respondent No. 5 acquired 8 out of 124 shares taking an  assignment from defendant No. 8.  Thus, both  respondents 1 and 5 before us who were impleaded in the  final decree proceedings, were assignees from sharers,  subsequent to the preliminary decree.   

4.              A commission was issued for actual effecting of  division pursuant to the preliminary decree.  The  Commissioner assisted by a surveyor for valuation of the  property, found that a partition by metes and bounds  could not conveniently be made.  The buildings were  valued at Rs. 25,00,000/-  At this stage, defendant No. 8  owning 8 out of 124 shares, moved an application for sale  of the property.  It is somewhat surprising that the  plaintiff - bank which held upward of a moiety of shares,  did not seek to enforce its rights to buy the rights of the  other sharers in terms of Section 3 of the Partition Act.   

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The court, on that application by defendant No. 8, took  note of the report of the Commissioner that it was not  convenient to divide the properties by metes and bounds  and directed by order dated 21.7.1987, that the property  be sold in public auction.  The sharers were given liberty  to participate in the sale and to set off the purchase price  to the extent of their shares.  It appears that this order  was not implemented.  It is difficult to understand why the  matter did not surface before the court for about 12 years  and why the court did not ensure that its order was  complied with or if the parties were at default to deal with  that default in an appropriate manner. What is seen is  that respondent No. 5, the assignee from one of the  sharers, moved a fresh application for sale of the property.   On 1.3.2000, the court noticed the earlier order dated  21.7.1987 and directed the implementation of that order  but ordered a fresh valuation, in view of the lapse of time.   The joint receivers were discharged.  It is unfortunate that  the joint receivers were allowed to continue for more than  12 years in such a simple suit for partition which was only  awaiting the passing of a final decree after sale of the  properties as per order dated 21.7.1987 incurring  unnecessary expenditure for the estate.  As we see it, the  court was called upon to play a more active role in  dispensation of justice and should have ensured that this  suit for partition filed as early as on 12.5.1975 stood  disposed of finally within a reasonable time after the  preliminary decree, especially when the issue involved was  such a simple one.  We are constrained to make these  observations because of our unhappiness at the    tardiness of the process of court, which is one of the  aspects that is held out as a discrediting one for the  judiciary.  We do hope that the court concerned would  ensure that such matters periodically surface before it and  they are dealt with in an appropriate manner, but with a  little more expedition.  

5.              The valuer submitted a fresh valuation and  suggested that the value would be Rs. 1,06,62,000/-.   At  this stage, wisdom seems to have dawned on the plaintiff,  who purported to make an application under Section 3 of  the Partition Act seeking to buy the shares of the other  sharers.  This petition was rightly dismissed as the prayer  was barred by the order for sale already made.   An  application for review of that order was also dismissed.  

6.              Now, the plaintiff purported to file an appeal  against the order dated 1.3.2000 by which the court  directed the sale of the property pursuant to the earlier  direction dated 21.7.1987 but on the basis of a fresh  valuation.  In that appeal, a Division Bench noticed that  the parties had agreed to settle the matter if a proper  valuation was made and directed yet another valuation to  be made.  This time, the valuer valued the property at Rs.  1,04,96,000/-, less by about Rs. 2 lakhs from the previous  valuation as per the report dated 12.9.2000.  The Division  Bench thereafter disposed of the appeal by directing that  the valuation submitted be accepted and the other sharers  execute conveyances in favour of the plaintiff \026 Bank on  the plaintiff depositing the amount less its share and  making it liable for meeting all Municipal dues.  The price  payable was later corrected to show the purchase price as  Rs. 1,06,42,000/-, higher of the two subsequent  valuations.  Thus, the property was directed to be taken  by the plaintiff for the price of  Rs.1,06,42,000/-.  The

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amount was deposited. The sale was affirmed on  24.6.2005 and the Commission for partition directed to  handover possession of the vacant portion on the third  floor to the plaintiff, within a week.    

7.              At this stage, an application was made to recall  the earlier orders and to stay the implementation of the  orders dated 4.5.2005 and 24.6.2005.  On 6.7.2005,  respondent No.1 herein, the assignee subsequent to the  preliminary decree, offered to purchase the property for  Rs.1,25,00,000/- as against Rs.1,06,42,000/- for which it  was sold to the plaintiff.  The court directed the  respondent to deposit Rs.1,25,00,000/- without prejudice.   The amount was deposited.  On 26.7.2005, respondent  No.1 herein offered to purchase the property for  Rs.2,00,00,000/-.  Counsel for the plaintiff sought time to  get instructions from his client.  Respondent No.3 who  claimed that it had no notice of the earlier order submitted  that it could not offer anything more than  Rs.1,25,00,000/-.  The plaintiff was not willing to make  any higher offer but raised the objection that the sale in  its favour had been confirmed, it has deposited the price  and nothing more remained to be done.  The Division  Bench of the High Court proceeded to set at naught  everything that had happened earlier including its own  confirmation of the sale in favour of the plaintiff and  asserting that it could not keep its eyes shut to the  enhanced price that may be fetched for the property,  proceeded to go back upon its earlier orders and directed  the property to be sold to respondent No. 1 at Rs. 2 crores  and granted time to respondent No. 1 to make the deposit.   It is this order of the Division Bench that is challenged by  the plaintiff.  

8.              At the time of moving the Petition for Special  Leave to Appeal, in addition to taking the stand that the  earlier order confirming the sale in favour of the plaintiff  had become final, the plaintiff \026 appellant also offered that  it was willing to deposit a sum of Rs. 2,01,00,000/- in  spite of the fact that the sale in its favour had been  confirmed for a price of Rs. 1,06,42,000/-. This Court  while issuing notice on the Petition for Special Leave to  Appeal passed the following order on 5.9.2005: "The learned counsel for the petitioner  submits that there was a concluded sale in  favour of the petitioner and the order of  confirmation was made in the presence of  all the parties, and it could not have been  undone merely because there was a revised  higher offer.  The learned counsel further  submits that the petitioner is prepared to  revise its offer to Rs. 2 crores and 1 lakh,  i.e., Rs. 1 lakh higher than the offer of the  respondent No. 1 and this offer deserves to  be accepted inasmuch as the petitioner is  in occupation of the 66% of the property  and owns 83/124 moity of shares in the  property, has a confirmed sale in its favour  and the remaining 33% share is mainly in  occupation of the tenants and partly in  occupation of the other co-sharers.  The  learned counsel further submits that not  only law but even the equities substantially  lie in favour of the petitioner and the  petitioner is revising the offer only to

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dislodge the offer made by the respondent  No. 1 which in his submission was not  available to be accepted.  We record this  statement and issue notice to the  respondents returnable within two weeks.   Dasti service in addition is permitted.  

Learned counsel for the respondent  No.1 present on caveat takes notice.

                       Liberty to file additional documents.

                       Stay in the meanwhile."

9.              Learned counsel for the plaintiff submitted that  the confirmation of sale in favour of the plaintiff on  24.6.2005 became final no one having challenged it in the  mode known to law either before this Court or before the  same court by way of review.  It was therefore submitted  that the subsequent order nullifying that sale and  directing the sale in favour of respondent No. 1 herein  passed by the High Court was one without jurisdiction  and was even otherwise a perverse one.  Learned counsel  further submitted that sharers or assignees from sharers  could not go on making fresh offers and encouraging of  such fresh offers without reference to prior orders passed  by the court would make it a never ending process and in  that view it was just and proper for this Court to set aside  the order of the High Court now passed and to restore the  order dated 24.6.2005.  Learned counsel also pointed out  that the plaintiff after all, was entitled to 83 out of 124  shares and going by the spirit of Section 3 of the Partition  Act, was entitled to purchase the shares of the others  though the plaintiff had not taken proper steps in that  behalf at the appropriate time.  But learned counsel  submitted that the spirit of Section 3 of the Partition Act  pervades  and that would also justify the confirmation of  the sale in favour of the plaintiff.  Learned counsel also  pointed out that there will be no injustice caused to any of  the sharers in view of the fact that though the plaintiff was  not legally liable to do so, has offered an enhanced price of  Rs. 2,01,00,000/- and in the circumstances this Court  should accept that enhanced offer and confirm the sale in  favour of the plaintiff.  It was also emphasised that the  plaintiff was in actual possession of a significant portion of  the premises and equity was in favour of the sale being  confirmed in favour of such an occupant who held the  majority of shares.  He also submitted that it was time to  put an end to this litigation involving a simple issue, filed  in the year 1975.   

10.             On behalf of the respondents, especially  respondents 1 and 3, it is contended that the earlier  orders would justify the present order for sale in favour of  the respondent No.1 and since what was important was  the best advantage that may be derived by the various  sharers, there was no reason for this Court to interfere  with the order of the Division Bench impugned in this  appeal.  Learned counsel submitted that in the light of the  stand adopted by the plaintiff in the High Court it was too  late in the day for the plaintiff to raise an argument based  on the alleged finality of the confirmation of the earlier  sale in its favour.  The plaintiff had taken time pursuant  to the order of the court dated 26.7.2005 only to tell the  High Court whether it was willing to make a higher offer

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and by virtue of its conduct, the plaintiff had waived the  rights that allegedly accrued in its favour by the  confirmation of the sale on 24.6.2005.  It was also  submitted that in any event, it could be considered that it  was a review of the earlier order and there was no reason  why in the interests of justice, this Court should interfere.   Learned counsel for respondent No. 3 added that it had  not been served with notice prior to the earlier order and it  was relevant to consider that all the sharers would have  an advantage if the properties were sold for Rs.2 crores as  against the price of Rs. 1,06,42,000/-.  We may also  notice that at the conclusion of the hearing, learned  counsel for respondent No. 1 offered to purchase the  property at Rs. 3 crores leaving out the portion held by the  plaintiff \026 Bank in the building to be treated as owned by  the plaintiff \026 Bank itself.  Learned counsel for the plaintiff  \026 Bank after taking instructions has filed an affidavit  submitting that the Bank was not in a position to raise its  offer above Rs.2,01,00,000/- it had made when the above  Petition for Special Leave to Appeal was moved before this  Court.  

11.              Nothing turns on the argument of counsel for  respondent No.3 of no proper notice being given to it  before the passing of the order dated 24.6.2005, since  respondent No.3 was not willing and is not willing to raise  any offer to purchase the property for above  Rs.1,25,00,000/-.  Of course, the claim of lack of notice is  seriously repudiated on behalf of the plaintiff.  But in the  view we are taking on this question, we do not think it  necessary to pursue this aspect of notice.  Suffice it to say,  we see no reason to accept the contentions of respondent  No.3 based on this aspect or to re-open the earlier orders  based on the plea of want of notice.

12.             To recapitulate, there was an order for sale of  the property in auction as early as on 21.7.1987 giving  permission to the sharers to bid and set off.   There was a  subsequent order on 1.3.2000 directing a sale based on a  fresh valuation.  Instead of ensuring that the sale took  place, the matter was allowed to linger until the plaintiff  sought assignment of the rights of the others by belatedly  invoking Section 3 of the Partition Act, which request was  rightly declined.  It was then that the plaintiff brought up  the matter before a Division Bench by way of appeal,  obviously belated, challenging the order for sale on fresh  valuation and in that appeal, it is seen that the Division  Bench ordered yet another valuation on agreement of  parties and recorded by it and then proceeded to pass an  order confirming the sale in favour of the plaintiff at the  value suggested by the new valuer,  of course, after  correcting the valuation to the higher figure shown by the  second valuer.  As we see it, the matter should have  stopped here.  But then the Division Bench purported to  entertain an application from an assignee subsequent to  the preliminary decree,   seeking a fresh sale of the  property.  It is in that proceeding that the Division Bench  has passed the order impugned in the present appeal.  We  have already indicated that what should have been done  was to ensure that the order passed in the year 1987 and  reiterated in the year 1999 was strictly complied with and  the matter brought to a close in accordance with law.  But  by adopting the course it did, the matter was allowed to  drag on.  We are of the view that there is no equity in  favour of either of the two subsequent assignees while

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considering the belated request of one of them for sale of  the property afresh.   It is true that pursuant to the order  for sale by public auction, the property should have been  sold.  But, the Division Bench chose the method of  directing a fresh valuation to be made and then accepting  the offer of the plaintiff to purchase and then to pass an  order confirming the sale in favour of the plaintiff at the  enhanced valuation.  This was obviously done on consent  as is recorded in that order.  It is in that context that  respondent No.3 came up with a plea of no notice, which  we have discountenanced, in view of its failure  to put up  any tenable higher offer.  At that stage, it does not appear  that any of the other sharers including respondent No.1  herein, raised any objection or made any higher offer.       It is also difficult to accept its  contention of want of notice  on the materials available.  After all, the parties were  being represented by counsel before the court and any  responsible counsel taking care of the interests of his  client, would have certainly informed the client about the  posting of the case and the passing of the order by the  court.  The belated offer of respondent No.1 to purchase  the property for a higher price, does not appear to be bona   fide  especially since respondent No.1 is an assignee from  some of the sharers after the preliminary decree and  apparently is not in possession of any significant portion  of the property.  We are satisfied that there is no equity in  favour of the respondent No. 1 and the High Court was in  error in relying on its conscience being troubled for setting  at naught its own earlier order confirming the sale in  favour of the plaintiff, passed with the consent of parties  as recorded by it.  We are of the view that the impugned  order is not justified.  

13.             For that matter, our conscience also need not be  troubled by what we are doing, because the plaintiff has  offered that it will take the property, for an enhanced price  of Rs. 2,01,00,000/-, more than what has now been  accepted by the Division Bench of the High Court.  We are  therefore of the view that considering the larger share held  by the plaintiff and considering the area held in its  possession, it would be just and proper to accept the offer  of the plaintiff and restore the order dt.24.6.2005 to sell  the suit property to the plaintiff earlier made by the  Division Bench of the High Court.  

14.             Learned Senior Counsel for the respondent No. 1  spent considerable time on arguing the question of finality  of earlier orders and their binding nature and so on.   Those arguments, in our view, are double edged, they may  help respondent No. 1 and they may also go against  respondent No. 1.  But, it is not necessary for us to  discuss those decisions in detail on the facts and in the  circumstances of the case.  We are satisfied that taking  note of the original holders of shares, the contents of the  preliminary decree, the conduct of the sharers during the  protracted proceedings in the High Court, it would be just  and proper to confirm the sale in favour of the plaintiff \026  Bank for a price of Rs. 2,01,00,000/- subject to the  plaintiff being in a position to set off the share of purchase  price due to its share and on deposit of the balance  purchase price, or making up the balance purchase price  due to the other sharers.

15.             After all, our jurisdiction under Article 142 of  the Constitution of India to do complete justice to the

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parties, in any event would enable us to make such a  direction on the facts and in the circumstances of the  case.  We think that justice in the present litigation would  be done by permitting the plaintiff, the larger shareholder  in possession of a significant portion of the property, to  purchase the rights of the other sharers rather than  permitting an assignee from some of the sharers  subsequent to the preliminary decree to purchase the  property merely because it is in a position to offer a higher  price and has come forward with a belated higher offer.    

16.             In the result, the appeal is allowed.  The decision  of the High Court is set aside and the plaintiff \026 Bank is  declared as the purchaser of the property for Rs.  2,01,00,000/-.  The plaintiff \026 Bank is permitted to set off  its share of the value and is directed to deposit the value  of the other sharers on the basis of the purchase price  now fixed by us.  Whatever the amounts the plaintiff \026  Bank had deposited already in the High Court, will be  given credit to and the plaintiff \026 Bank will be liable to  deposit only the balance amount, if any, remaining  towards the shares of the purchase price of the other  sharers.  The amount would be made up in four months.   The direction to the other sharers to execute sale deeds in  favour of the plaintiff contained in the order dated  24.6.2005 will stand affirmed.  A final decree on the above  terms will be drawn up by the High Court in accordance  with the relevant rules.  In the circumstances, the parties  are directed to bear their respective costs.