http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: AMIYA PROSAD SANYAL AND ANR.

       Vs.

RESPONDENT: BANK OF COMMERCE LIMITED(IN LIDUIDATION) AND OTHERS

DATE OF JUDGMENT:       03/01/1996

BENCH: RAY, G.N. (J) BENCH: RAY, G.N. (J) MAJMUDAR S.B. (J)

CITATION:  1996 AIR 1762            1996 SCC  (7) 167  JT 1996 (1)   148        1996 SCALE  (1)171

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T G.N. RAY.J.      Leave granted. Heard learned counsel for the Parties.      These appeals  are directed against the order dated May 17, 1991  and June 18,1991 passed by a Division Bench of the Calcutta High  Court in  Appeal No.  436 of 1986 (Samarendra Nath Dass  and Ors.  versus Bank  of  Commerce  Limited  (in liquidation) and  Appeal No.  437 of  1986 (Smt. Anjali Paul and Ors.  versus Bank  of Commerce Limited (in liquidation). By the  first order dated May 17, 1991 both the said appeals were allowed  whereby certain  properties numbering nine out of  nineteen  properties  earlier  sold  to  the  appellants pursuant to  the Court’s  sale in  execution proceedings are excluded from  such sale  on the  tinding that the said nine properties belonged  to the  respondent Nos. 2 to 13. By the subsequent order  dated June 18, 1991 passed in the said two appeals leave  was granted  by the  Division  Bench  to  the Official Liquidator  to take  steps for  setting  aside  the auction sale  by the  Court and  confirmed in  favour of the appellants in  respect of  the remaining  properties and  to reaction the said properties.      In or  about 1949, the Bank of Commerce Limited (now in liquidation) had  filed a  suit against  one  Bagala  Prasad Sanyal Seing  Suit No.  1794 of  1949 to  recover a  sum  of Rs.1,51,939,86 being  the amount  due for  monies  lent  and advanced on  an overdraft account. The said Bank of Commerce Limited having  gone in liquidation. it is being represented by the Official Liquidator.      On May 20, 1954, the said Suit was decreed in favour of the Bank  for a sum of Rs.1,67,378,36 with interest @ 6% per annum from  the date  of decree  until realisation  together with costs. The Official Receiver of the Calcutta High Court was  appointed  Receiver  over  certain  shares  of  certain companies which  were hypothecated  by the  judgment  debtor Bagala Prasad  with the  said Bank  and it was directed that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

the said shares would be sold in the event that the decretal dues were  not paid.  The Receiver was also detected to hand over the  sale proceeds  of such  sale of shares to the Bank with liberty to the Bank to appropriate the sale proceeds in protanto satisfaction  of its  claim under  the said degree. The said  shares were  however of  defunct companies  and as such were  not marketable.  No  amount  therefore  could  be realised by  sale of  the said shares. The degree holder was not  aware   about  the   fact  that  there  were  immovable properties  owned  by  the  judgment  debtor.  The  Official Liquidator caused enquiries Pursuant to the orders passed by the Court and it was revealed that the judgment debtor owned nineteen several properties. After ascertaining the title of the  judgment   debtor  in  respect  of  the  said  nineteen properties, the  Official Liquidator  proceeded against  the immovable properties belonging to the judgment debtor Bagala Prasad in  execution of  the said  degree and an application was taken  out by the Official Liquidator for appointment of a Receiver  over the  said immovable  properties and for the sale of  the same.  It may  be noted  here that the judgment debtor Bagala Prasad had died in the meantime and steps were taken  to   serve  the  notice  of  sale  of  the  immovable properties on  the heirs  and legal  representatives of  the said Bagala  Prasad. A  notice under Order 21 Rule 22 of the Code of  Civil Procedure  was issued  by the  Master of  the Calcutta High Court for the purpose of sale of the immovable properties requiring  the judgment  debtor to show cause why the said  degree should  not be executed by selling the said properties.      In the  said execution proceedings, an order was passed on May 20,1970 whereby the Official Receiver of the Calcutta High Court  was appointed as Receiver over the right, title, and interest  of the said heirs and legal representatives of the  deceased   judgment  debtor   in  respect  of  nineteen properties with power to sale the same. Pursuant to the said order dated  May 20,  1979 a  notice was  also published  in October, 1986  in three  leading newspapers  of Calcutta for the sale  of the  said properties.  The properties were then put up  for sale  in the Court of the Company Judge. A joint offer was  given by  the appellants and such offer was found to be  the highest  and the  same was  accepted by  the High Court, In  compliance with  the direction of the High Court, the appellant  also deposited  a sum  of Rs.1,40,000/- being the 25% of their offer by October 3, 1987.      Prior  to   that  in   or  about  November,  1986,  two applications were  filed, one  by the  respondent Nos.2 to 6 and the  other by the respondent Nos.7 to 13 claiming right, title and  interest in  respect of  nine properties  out  of nineteen properties  advertised in the said notice. A prayer was made  in the said applications for exclusion of the nine properties from  the sale  notice for  being auctioned.  The properties sought  to be excluded by the respondent Nos.2 to 13 are  properties under Item Nos. 1,2,4,5,8,16,17,18 and 19 of the sale notice.      The respondent  Nos.2 to 6 claimed for exclusion of the said properties  on the  ground that  they had purchased the same  from  the  heirs  and  legal  representatives  of  the deceased judgment  debtor between  6th May to 8th May, 1970. The respondent  Nos.7 to  13 claimed  exclusion of the other properties on  the ground that their vendor Manik Sanyal and others had  purchased the said properties from the heirs and legal  representatives   of  the  deceased  judgment  debtor between 6th  May and  8th May, 1970 and the said respondents thereafter purchased the said properties from the said Manik Sanyal and  others between  14th May  and July 23, 1986. The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

said two applications filed by the respondent Nos.2 to 6 and 7 to  13 were disposed of by the learned Single Judge of the Calcutta High  Court.  No  order  was  passed  on  the  said applications but  leave was  granted to  the respondents  to take appropriate  steps in  accordance with  law against the Official Liquidator.      Being aggrieved  by such  order passed  by the  learned Single Judge,  two appeals  were preferred  to the  Division Bench of  the High  Court being  appeal Nos. 436 of 1986 and 437 of  1986. It  has already been indicated that the orders impugned in  these appeals  have been passed by the Division Bench in the said two appeals.      The learned  counsel for  the appellants  has submitted that the  sale transaction  made in favour of the respondent Nos. 2  to 13  were sham  and fraudulent transactions. It is contended that  the legal  heirs and  representatives of the deceased judgment  debtor were  fully aware  that  the  said properties were  notified for  auction sale  in execution of the degree passed against their predecessor-in-interest, the judgment debtor.  But in  order to  avoid the  sale of those valuable   properties,    the   said    legal   heirs    and representatives of  the judgment  debtor entered into a sham transaction with  the respondents  and their vendors between 6th May  to 8th  May, 1970. Accordingly, such purported sale must be held as null and void. It has been contended that on May 20,1970  in the  execution proceedings,  a Receiver  was appointed  in  respect  of  the  said  nineteen  properties. Accordingly,  the   subsequent  sale   transactions  by  the vendors. Manik Sanyal and others in favour of the respondent Nos.7 to  13 between  May 1986  to July  1986 must  be  held illegal and  void.  It  is  contended  that  the  said  sale transactions between  6th May and 8th May, 1970 by the legal heirs of  the judgment  debtors had  been made with ulterior motive for nullifying the execution proceedings initiated by the degree  holder respondent No.1. It is contended that the Division Bench  unfortunately failed to appreciate the facts and circumstances  of the  case which  speak for themselves. Having ignored  the fraud practiced by the Respondents which is patent  from the  purported sale  transactions. the Court accepted the  said sale transactions to be valid and on such footing excluded the same from being auctioned although such properties had  in fact  been already sold in auction to the appellants and  such sale  had been  confirmed. It  has also been contended  that the sale of the said nine properties in auction in  favour of the appellants having been effected by the Company  Judge of  the High  Court, the  Division  Bench should not  have allowed  the  appeals  filed  by  the  said respondents for  assailing  such  sale.  It  has  also  been contended that  the offer  of the  appellants being highest, the sale  in favour  of the  appellants ought  to have  been finalised and  the applications made by the said respondents should have been rejected.      The learned  counsel appearing for the respondent Nos.2 to 13  has, however,  refuted such  contentions. It has been submitted that the registered conveyances of nine properties being item  Nos.1,2,4,5,8,16 to  19 in  favour of  the  said respondents  and  their  vendors  by  the  heirs  and  legal representatives of  the deceased  Judgment debtor  are legal and valid.  Accordingly, such  properties cannot  be sold in auction in execution of the said degree.      The learned  counsel has  submitted that admittedly the said registered conveyances in respect of nine properties in favour of  the respondents had been effected long before any Receiver was appointed in respect of the said properties. By the order  of the  Court, Receiver was appointed only on May

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

20, 1970.  But the  properties were sold between 6th May and 8th May, 1970.      It is  contended  by  the  learned  counsel  for  there respondents that  as the  title of  the respondents had been perfected earlier  namely between 6th May and 8th May, 1970, the Division  Bench  in  the  impugned  orders  had  rightly observed that when the sale deeds were executed by the heirs and the  legal  representatives  of  the  deceased  judgment debtor, no  Receiver had  been appointed  by the  Court. The Division Bench  has also come to a specific finding that the notice of  the application  for issuing sale proclamation on which the  order of  May 20,  1970 was made by the Court had been served  on the  heirs and  legal representatives of the deceased judgment debtor. The fact is that the notice stated to have  been served was not on the legal representatives of the judgment  debtor who  was then  dead. The Division Bench has therefore  rightly held  that no  proper notice had been served on  the legal  representatives of the judgment debtor and the  sale transactions  between the parties could not be held invalid.      The  learned  counsel  for  the  respondents  has  also submitted that  the Division  Bench has  also held  that the Official Liquidator had also not taken any step to set aside the sale in respect of the said nine properties in favour of the said respondents. Accordingly, there was no occasion for the Court  to interfere with such sale made in favour of the respondents Nos.2 to 13.      The learned  counsel has  submitted that after noticing the said  fact, the  Division Bench has held that unless the sale is  set aside  in appropriate  proceedings by any party aggrieved by  such sale,  the Court  cannot  at  that  stage interfere with the said sale.      The learned counsel has also submitted that in the said suit instituted  by the  Bank prayer  for  sale  of  certain shares stated  to have  been hypothecated with the plaintiff Bank was  made. There  was no  allegation that the said nine properties had  been mortgaged  with the  Bank. No  mortgage degree in  respect of the said nine properties had also been sought for  in the  suit. The said suit was decreed in 1954. The sale  of the  said nine  properties  in  favour  of  the respondents Nos.2  to 13 had taken place after about sixteen Years from  the date  of degree between 6th May and 8th May, 1970. Even  after another  sixteen Years  namely in 1986, an attempt  was  made  for  the  first  time  by  the  Official Liquidator to  sale the said properties. Such sale, however, in respect  of the  said  nine  properties  cannot  be  held because the  respondents Nos.2  to 13  had already  obtained valid title  to the  said  properties  on  the  strength  of registered conveyances  executed between  6th and  8th  May, 1970.      The  learned  counsel  for  the  respondents  has  also submitted that  although the  said respondents  had  validly obtained title  in respect  of the said nine properties even then, pursuant  to the  direction of  the  Court,  the  said respondents made additional payment of Rs.84,000/- in favour of the degree holder. The learned counsel has also submitted that the  total price  of the  properties had  been fixed at Rs.5,51,000/- but  as the  nine properties  had already been transferred to  the  said  respondents,  the  value  of  the remaining ten  properties was  fixed at  Rs.3,17,900/-. Such deduction in the value of the properties after excluding the value of  the said nine properties and there was no occasion for them  to suffer  any prejudice  by the  exclusion of the said nine  properties. The  learned counsel  has, therefore, submitted that no interference against the impugned judgment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

is called for and the appeals should be dismissed.      After giving our careful consideration to the facts and circumstances of  the case  and the  submissions made by the learned counsel  for the  parties, it appears to us that the degree holder  Bank did  not claim  any  mortgage  right  in respect of  the said  nine properties. A simple money degree was obtained by the Bank in 1954. Initially, the attempt was made to sale certain shares which had been hypothecated with the Bank  for realisation  of the  decretal amount  but such shares were  issued by  defunct companies and therefore they had no  marketable title.  It was  only after  a long  lapse namely after  thirty two  Years from  the date  of degree an attempt was  made by the Official Liquidator in 1986 to sale the nineteen  properties which  were owned  by the  Judgment debtor after  ascertaining the  title to such properties. On the prayer  of the  Official Liquidator  that  the  decretal amount would be satisfied by the sale of the said properties belonging to  the judgment  debtor, the  Court  appointed  a Receiver on  May  20,  1970,  in  respect  of  the  nineteen properties which  were owned  by the  judgment  debtor.  It, however, appears  that between  6th and  8th May,  1970, the said properties  had  been  sold  by  the  heirs  and  legal representative of the deceased judgment debtor. On the dates of sale  of the said nine properties, there was no legal bar for the  said heirs  of the  judgment debtor to execute sale deeds in respect of the said properties. Such properties had not been  attached on the cates between 6th May and 8th May, 1970. The  Receiver was  appointed only on May 20, 1970. The Division Bench  has also clearly come to the finding that no notice about  the proposed  auction sale  had been served on the legal  representatives of  the deceased  judgment debtor between 6th  May and  8th May,  1970. As  a matter  of  fact initially a  notice was  issued in  the name of the deceased judgment debtor.  There is  also no  material  warranting  a finding that the respondent Nos.2 to 13 were aware about the steps taken  to effect  the sale of the immovable properties of the  judgment debtor  in execution of the money degree on the dates when the nine properties had been sold.      The Division  Bench has  also not  found as a fact that there had  been any  collusion between the purchasers of the said nine properties and the heirs and legal representatives of  the   deceased  judgment   debtor.  In   the   aforesaid circumstances, auction  sale of  the said nine properties in execution of  the said  degree can  not be  held valid.  The Division Bench  of the  High Court  has also  indicated that although the  said nine properties had been sold between May 6 and  8, 1970,  the Official  Liquidator had  not taken any step  to   get  the  sale  transactions  set  aside  in  any appropriate  proceedings.   In  the   aforesaid  facts   and circumstances of  the case.  we do  not find  any reason  to interfere with  the impugned decision of the High Court. The appeals therefore fail and are dismissed with no order as to costs.