TMI Blog2016 (8) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... the property and the vesting of the ownership in the transferee. A sale deed by which ownership in an immovable property are transferred can be ignored only where it is void ab initio. In all other cases where it is pleaded that sale deed is a voidable document because it ought not to have been executed or that there is a fraudulent transfer of title by means of the particular sale deed or for any reason which makes the transfer voidable, it is necessary that a claim has to be filed for cancellation of such a sale deed within a period of three years from the date a person comes to know of execution and existence of the sale deed which goes against the interest of such person. This is the enacted by Article 59 of the Limitation Act, 1963. The Supreme Court in the judgment reported as Prem Singh vs. Birbal [2006 (5) TMI 517 - SUPREME COURT ] has held that Article 59 applies to voidable transactions and not void transactions. If the said ratio were to be applied to this case, it is evident that the applicant should have sought for recall and setting aside of the auction sale, immediately after his dispossession. In not doing so, within the time (3 years from date of knowledge) and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Court on 05.06.1998; thereafter the final winding up order was passed on 29.08.2003 and an Official Liquidator was appointed for the company by that order. Further to a sale proclamation, the suit property, which belonged to the company in liquidation was sold through auction on 17.05.2006. The land was sold to M/s. Metro Nirvana for a sum of ₹ 2,05,00,000/-; the entire amount was paid by the auction purchaser on 31.07.2006. The Applicant/appellant filed CA No.1315/2006 on 24.08.2006 seeking his impleadmentas a necessary party in the company petition. It was contended that the applicant had purchased 21 acres of land out of which 16.9 acres were wrongly sold to the auction purchaser on 17.05.2006. The applicant produced, along with the aforesaid application, the copies of sale deeds dated 22.04.1995, 24.04.1995 and 06.05.1995 executed in his favour. It was contended that he purchased the lands with the assistance of one C. M. Chopra, a broker. After buying the land a registered general power of attorney (GPA) was executed by the applicant in favour of C.M. Chopra. Further pleadings by way of supplementary affidavits were filed by the applicant, who also pointed out that mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the land was purchased out of the funds of the company in liquidation and was so purchased in the name of the applicant only as a nominee of the company. It was thus pointed out that before the auction took place on 17.05.2006 this Court was aware that the land belonged to the company in liquidation, though standing in the name of the applicant. As a consequence the Court rejected the applicant s plea for stay of the auction sale. V.K. Sharma disputed the applicant s claim that he was an agriculturist. He highlighted that there was no proof or evidence in support; nor did the applicant reveal the source of such huge funds for purchasing the land. V.K. Sharma also disputed the claim of the applicant that the latter asked for return of the original documents entrusted to him (V.K. Sharma) by the applicant for verification. 5. The learned Company Judge, on 13.07.2010 recorded the following order, in C.A.1315/2006: - This application has been moved by Mr. Achyut Kumar Sharma, praying that he be allowed to intervene in the matter and be impleaded as a party. The reliefs the applicant seeks are as follows: [i] allow/ permit the intervener herein to be impleaded as party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach the Company Court with a fresh application mentioning all necessary details especially with regard to the property on which he claimed ownership. Further to the liberty granted, the appellant/Applicant moved a fresh application. This application reiterated the same facts, but sought more reliefs from the Court. The applicant relied, in addition to the report of the SFIO (Serious Frauds Investigating Office) and submitted that sufficient evidence was led before that body regarding the sources of his income for the purchase of the land in 1995 and that SFIO accepted it. 7. The auction purchaser pointed out that the auction took place on 17.05.2006 and possession was given to the auction purchaser on 21.08.2006, after the applicant did not file any application claiming ownership over the land. It was contended had the applicant s claim been genuine, he would have moved for restoration of possession and cancellation of sale soon after the provisional liquidator took possession of the land. It was pointed out that for a period of six years the applicant took no steps and it could not be said that he was unaware that his land has been taken possession of by the provisional li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to the summons by either appearing before the SFIO or by sending replies. Out of five persons who appeared before the SFIO, one of them (Munikalappa) refused to sign the statement. Five persons out of 35 sent in their replies. 15. The SFIO thereafter went to Bangalore to record the statements of all the 35 persons since they were all residents of Bangalore rural district. Only 5 persons appeared at the camp office for recording their statements. Their statements are annexed to the report of the SFIO. 16. The SFIO obtained the relevant documents from the Sub-Registrar concerned. It also perused the balance sheets, bank statements and other relevant records of the company in liquidation. 17. In an attempt to verify the income tax return stated to have been filed by the applicant, a letter was written by the SFIO to the income tax authorities but there was no response. The bank accounts of the applicant, one from Allahabad Bank, Baddopur Branch, Pandarak, Patna and the other from HDFC Bank, Exhibition Road, Patna were obtained by the SFIO. It was seen that the account in Allahabad Bank was opened on 12.03.2008 on which the Kisan credit loan of ₹ 3 lakhs was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings before it. Clearly, the story trotted out by the applicant that he took friendly loans from seven persons in Bihar was an afterthought. In addition to this the SFIO has also remarked that all the letters received from the seven persons appeared to have been written by the same person. Thus, there is no evidence to show the nature and source of the monies used for the purchase of the lands by Achyut Kumar Sharma, the applicant. 19. It is also very important to note that Achyut Kumar Sharma himself admitted before the SFIO that he gave the original title deeds relating to the lands to V.K. Sharma within a few months after he purchased the lands. He stated that he knew V.K. Sharma as he had meet him in an investor meet. He claimed to have made a deposit of ₹ 75,000/- in the JVG Group, but could not produce any evidence in support of this claim before the SFIO. As an explanation for giving the address of the guest house of the JVG Group in Bangalore as his local address in the sale deeds, Achyut Kumar Sharma stated before the SFIO that when he met V.K. Sharma in the investor meet, he told him that he needed a local address to purchase the land and V.K. Sharma readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of C.M. Chopra who was an officer in the employment of the JVG Group of companies. This is a registered general power of attorney which was later sought to be revoked by an unregistered document. These facts, taken together with the fact that Achyut Kumar Sharma was wholly unable to prove the nature and source of the monies utilised for purchasing the land, can lead to the only conclusion that the lands in question actually belonged to the company in liquidation. ************* ************* 22. In addition to the above I find merit in the contention of the learned counsel for the auction purchaser that the applicant did not challenge the action of the provisional liquidator, who took possession of the lands and also put it to auction, for a period of six years. Moreover, the present application was filed on 16.08.2011 when the applicant came to know that the sale deed was about to be executed in favour of the auction purchaser pursuant to the orders of this Court passed on 10.05.2011; this actually reinforces the contention that the applicant is merely indulging in delaying tactics. 23. Taking the entire conspectus of the facts and the conduct of the applicant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funded the transaction, is barred. It is also urged that the applicant moved this court earlier, but was permitted by the Division Bench to file a fresh application. Learned counsel relied on the decision reported as Valiammal v Subramaniam AIR 2004 SC 4187 to urge that since the Sale deeds designated the applicant as the purchaser, he is deemed to be the owner. It was also stressed that at no point of time did the Company ever enter the suit property as part of its assets in the returns and balance sheets prepared and compiled at the time. 10. Learned counsel for the Liquidator, Mr. Behl, and counsel for the ex-director, Mr. Deepak Khosla, urge that this court should not interfere with the order of the learned Company Judge, who considered all the circumstances in great detail. It was urged that the earlier application was dismissed on merits. The Division Bench did not interfere with or set aside the earlier dismissal. What the Division Bench, in the appeal preferred by the present appellant, permitted was liberty to file a fresh application. The new application filed merely reiterated all the facts contained in the previous application, but also sought the relief of settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he maintainability of the new application is constructive res judicata. For this purpose, it would be useful to notice that the relief of declaration and cancellation (of the sale deed) was available and could have been sought in CA 1315/2006. The applicant omitted to claim that relief. Yet, all the factual details on the basis of which such relief could be claimed, were pleaded. The Court, after examining the merits of the application rejected it. That the Division Bench permitted withdrawal of the appeal by granting liberty to the applicant to approach for appropriate relief afresh did not mean that what could have been asked, and was deemed to have been abandoned (i.e the constructive res judicata principle) could nevertheless be sought. This is because of Explanation IV to Section 11, CPC, whose principles apply to the present proceedings. The said Explanation reads as follows: Explanation IV.- Any matter which might and ought to have been made ground of defense or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. The Supreme Court has explained this principle as follows in Forward Construction Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its discretion so adjudge it and order it to be delivered or cancelled. 15. Ownership of a property is transmitted by a registered sale deed as per Section 54 of the Transfer of Property Act, 1882. Every sale deed has an effect of divesting the transferor of the ownership of the property and the vesting of the ownership in the transferee. A sale deed by which ownership in an immovable property are transferred can be ignored only where it is void ab initio . In all other cases where it is pleaded that sale deed is a voidable document because it ought not to have been executed or that there is a fraudulent transfer of title by means of the particular sale deed or for any reason which makes the transfer voidable, it is necessary that a claim has to be filed for cancellation of such a sale deed within a period of three years from the date a person comes to know of execution and existence of the sale deed which goes against the interest of such person. This is the enacted by Article 59 of the Limitation Act, 1963.The Supreme Court in the judgment reported as Prem Singh vs. Birbal 2006 (5) SCC 353 has held that Article 59 applies to voidable transactions and not void transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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