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ACHYUT KUMAR SHARMA Versus J.V.G. FINANCE LTD. AND ORS.

2016 (8) TMI 423 - DELHI HIGH COURT

Cancellation of the auction - whether the application seeking for directions to set aside the auction purchase is time-barred? - Held that:- The applicant was aware and presumably advised as to his rights when the previous application was filed. Yet, no relief that the auction sale was invalid, because the title vested in the applicant, was sought. Having abandoned the relief at the relevant time, the said applicant cannot now seek it. - It was held that Section 31 of the Specific Relief Act .....

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r 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 .....

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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 preferring an application in that regard after 5 years, the applicant sought a relief that was time-barred in law. - As regards other grounds, the SFIO report itself clarifies that the applican .....

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.K. Sharma- over 11 years after purchase. If indeed the applicant’s claims were genuine, he would have taken steps to secure back such title deeds. - CO.APP.4/2014, C.M. APPL.2831/2014 - Dated:- 13-7-2016 - MR. S. RAVINDRA BHAT AND MS. DEEPA SHARMA, JJ. For The Appellant : Sh. Barun Kumar Sinha with Sh. Abhay Kumar and Sh. Tenzing Tsering, Advocates For The Respondent : Sh. Deepak Khosla, Advocate, for Sh. V.K. Sharma, Ex-CMD, Sh. Kirti Uppal, Sr. Advocate with Sh. Amit Goel, Sh. Sidharth Chopra .....

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, 691/97, 688/97, 681/97, 683/97, 689/97, 690/97, 693/97, 694/97, 682/97, 692/97 and 695/97 ( the suit property ). The suit property was sold to the auction purchaser M/s. Metro Nirvana; cancellation of the auction and subsequent fresh auction was sought. As a consequence, an order was passed on 31.07.2006 which directed the company to hand over possession of 13.5 acres of land that belonged to it, to the auction purchaser, namely M/s. Metro Nirvana. The appellant/applicant claims that he is the .....

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or 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 .....

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uthenticity of his claim as the owner of the land. The Official Liquidator doubted if indeed the sale deeds were executed in 1995 in favour of the applicant. It was further pointed out that since the land was sold under orders of this court by public auction and the auction purchaser was also put in possession, no purpose would be served in impleading the applicant in the winding up proceedings. It was alleged that the applicant was merely trying to delay the proceedings at the instance of veste .....

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was paid by the applicant in cash, as pointed out by the Official Liquidator and the applicant failed to disclose the source of his funds. The payment to the sellers were unverifiable because they were not by cheques or drafts. The original title deeds relating to the land were in the possession of V.K. Sharma who submitted them before the Court. The applicant had claimed in the application that the General Power of Attorney given to C.M. Chopra was cancelled on 18.12.2005. The said Mr. Chopra .....

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ior to the date of auction. It was stated that the property belonged to the company in liquidation even though the sale deed was in the name of Achyut Kumar Sharma. On 14.09.2005, V.K. Sharma made a statement in Court, in the presence of the applicant, that 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 .....

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f 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 and consequently thereof permit/ allow the inte .....

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..." Counsel for the applicant has tried to support the aforesaid reliefs by alleging that some property belonging to the applicant was sold in a public auction by this Court without notice to his client. This submission is vehemently opposed by counsel for the auction purchaser and also by counsel for the Official Liquidator. I might notice that no substantive relief with regard to any property allegedly belonging to the applicant, which is supposed to have been sold by this Court in a pub .....

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the one which took place on 17th May, 2006. Thereafter, it was open to the applicant to take any remedy that may have been available in law, but he does not seem to have pursued any such remedy. Counsel for the applicant has cited no precedent where, under similar circumstances, any party can be impleaded in these proceedings under the Companies Act 1956, and that too, at this stage. To my mind, this application is entirely devoid of merits and the same is dismissed with costs of ₹ 11,000/ .....

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berty 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 posse .....

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of by the provisional liquidator and was the subject matter of the auction sale. It was pointed out that despite four additional affidavits filed by the applicant in Company Application No.1315/2006 this Court was not satisfied about the genuineness of the applicant's claim. No new fact was brought out in the present application. It was urged that the present application was filed on 16.08.2011 when the applicant came to know that the sale deed was to be executed in favour of the auction pu .....

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y the impugned order, the learned single judge considered the various circumstances and concluded that the reliefs claimed could not be granted. Some of the Company Judge s findings are as follows: As rightly pointed out on behalf of the auction purchaser, no new fact or development which is crucial to the decision has been brought to my notice, persuading me to hold that the applicant is the real owner of the land. The only relevant or crucial document which has come on record after the earlier .....

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yut Kumar Sharma, the applicant herein, and V.K. Sharma, Managing Director of the company in liquidation. V.K. Sharma did not appear before the SFIO, but the applicant appeared and a statement was recorded from him by the SFIO. He also placed certain documents through letter dated 26.02.2013. The SFIO first issued summons to 35 persons from whom the applicant claimed to have purchased the lands. Ten persons responded to the summons by either appearing before the SFIO or by sending replies. Out o .....

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rned. 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 accou .....

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e income tax return for a later year does not establish the source of the funds. 18. Another important finding of the SFIO in its report is that Achyut Kumar Sharma, the applicant stayed in Bangalore for 3 to 4 months and persuaded some agriculturists to sell the land to him. They sold the land to him on the strength of a certificate obtained by him from the Sub-Registrar in Bihar showing that he was an agriculturist. Achyut Kumar Sharma in his statement before the SFIO, explained that since the .....

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O, he sent a letter to the SFIO on 26.02.2013 enclosing affidavits from seven persons from whom he claimed to have taken loans to purchase the lands. The SFIO found that during the proceedings before it, Achyut Kumar Sharma had not stated anything about any monies being borrowed by him from friends and relatives for purchasing the lands. The affidavits were also noticed to be in the same style. The applicant claimed to have taken loans amounting to ₹ 7,15,000/- from these seven persons. Th .....

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s 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 hims .....

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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 readily offered the address of the guest house of the JVG Group. According to Achyut Kumar Sharma's statement on oath before the SFIO, V.K. Sharma had taken the original title deeds of the lands for verification and that he had assured that he would pay a good price for the lands. In other words, Achyut Kumar Sha .....

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ts to V.K. Sharma but simply omitted to get them back. Undisputedly the title deeds were with V.K. Sharma who handed them over to this Court. There is no reason why the title deeds to the lands should be in the possession of V.K. Sharma, if Achyut Kumar Sharma is the real owner of the lands as claimed by him. It should also be noted that in the affidavit submitted by V.K. Sharma before this Court on 29.11.1999 giving details of the assets of JVG Finance Ltd., the lands in question were included .....

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is Court, clearly shows that the lands belonged to the company in liquidation and not to Achyut Kumar Sharma. V.K. Sharma has also stated in the affidavit that the funds came out of the company in liquidation, of which he was the managing director. It is also relevant to note that in the sale deeds the residential address of Achyut Kumar Sharma shown was in fact the address of the guest house of the JVG Group of companies in Bangalore. Coupled with this is the further fact - and a very crucial f .....

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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 f .....

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o.1315/2006 was dismissed against which he filed an appeal before the Division Bench. He simply withdrew the appeal but obtained liberty to approach the company court again with a fresh application mentioning all necessary details with regard to the lands. In the fresh application, which is the present one, there is nothing of vital importance which was not submitted in the affidavits and the additional affidavits filed in support of the earlier Company Application No.1315/2006 which was dismiss .....

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hl, the learned counsel for the OL that the present application should be dismissed with heavy costs. 9. The appellant s counsel urges the grounds in support of the appeal; he claims that the Company Judge misdirected himself and recorded erroneous findings. It is pointed out that facially, the impugned judge itself records that the appellant is a benamidar or nominal owner/name lender. If such a position is accepted, the appellant had to succeed, in view of the express provisions of the Benami .....

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s owner. In such case, the so called benami owner is deemed to be the real owner and any action by one claiming to be the real owner who alleges to have 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 .....

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n 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 setting aside the sale and restoration of possession. These reliefs could have been claimed in the earlier application, which had suffered dismissal. That dism .....

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e ex-Director, in addition, that the Benami Act does not apply, in view of Section 4 (3) (b) which excepts the bar contained in Section 4 (1) (from the recovery of benami property), i.e where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity. It is pointed out that a full reading of the SFIO report would show tha .....

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the owner. The application filed (for impleadment, which contained all the averments made in support of the new application for cancellation of the sale) was rejected on merits, by the order dated 13th July, 2010. The appeal filed by the applicant did not set aside the said order; rather it permitted the filing of a fresh application. The new application- which is the subject matter of the present appeal, reproduced the same facts and circumstances which the applicant had averred in the previous .....

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m 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 Exp .....

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as to the actual matter determined but as to every other matter which the parties might and ought to have litigated and have had decided as incidental to or essentially connected with subject matter of the litigation and every matter coming into the legitimate purview of the original action both in respect of the matters of claim and defence." Later, in Alka Gupta v Narender Kumar Gupta 2010 (10) SCC 141, it was stated that: even though a particular ground of defence or attack was not actu .....

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ly advised as to his rights when the previous application was filed. Yet, no relief that the auction sale was invalid, because the title vested in the applicant, was sought. Having abandoned the relief at the relevant time, the said applicant cannot now seek it. 14. The second, equally substantial rationale for denying relief- urged by counsel for respondents, is that the application seeking for directions to set aside the auction purchase is time-barred. In the decision reported as Md. Noorul H .....

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taining to cancellation of an instrument. It enacts that any person against whom a written instrument is void or voidable and who has a reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, can sue to have it adjudged void or voidable and the court may 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. Eve .....

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