PUNJAB NATIONAL BANK v. SAHUJAIN CHARITABLE SOCIETY AND ORS

Citation: [2007] 8 S.C.R. 255

Court: Supreme Court of India

Bench: C.K. THAKKER, P.K. BALASUBRAMANYAN

Case summary

PUNJAB NATIONAL BANK v. SAHUJAIN CHARITABLE SOCIETY AND ORS.pdf

Judgment text

J PUNJAB NATIONAL BANK v. SAHUJAIN CHARITABLE SOCIETY AND ORS. JULY 11, 2007 (C. K. THAKKER AND P. K. BALASUBRAMANYAN, JJ. ] Partition Act, 1893: ss. 2 and 3-Partition suit-Preliminary decree passed on determination ofshares ofproperty-Division ofproperty not possible by metes and bounds- Direction by Court for public auction of the suit property-Held: Sharer having larger share has preferential right and if his offer is highest, it deserves to be accepted-Courts to decide such simple matters with some haste and not allow them to linger on-Constitution ofIndia. 1950-Art. I42. The plaintiff-appellant held 66% of shares in the suit property consisting of two buildings and the land on which it stood. Defendant No. I to 9 also held small shares in the suit property. On 22. 6. 1977, the preliminary decree for partition was passed. The preliminary decree became final. The respondent No. I was not a party to the preliminary decree and no share was allotted to it. Subsequently respondent No.

I and 5 purchased the shares of defendants. Thus both respondent Nos. I and 5 who were impleaded in the final decree proceedings were assignees from sharers subsequent to the preliminary decree. A local commissioner was appointed for effecting division pursuant to the preliminary decree who found that partition by metes and bounds was not possible. The buildings were valued at Rs. 25 lacs. Defendant No. 8 owning 8 out of 124 shares moved an application for sale of the property. Plaintiff-Bank did not seek to enforce its right to buy the rights of the other sharers in terms ofs. 3 of the Partition Act. The Court directed by order dated 21. 7. 1987 for public auction. The sharers were given liberty to participate in the same and to set off the purchase price to the extent of their shares. This order was not implemented for about 12 years. Respondent No. 5, the assignee from one of the sharers mo,·ed a fresh application for sale ofthe property. On 1. 3.

2000, the Court noticing the earlier order dated 21. 7. 1987 directed the implementation of that order but ordered a fresh valuation. The valuer submitted a fresh valuation of Rs. 1. 06 crores. At this stage plaintiff moved an application under s. 3 of Partition Act seeking to buy the shares of the other sharers. This petition was dismissed. Plaintiff filed an appeal. High Court held that the parties had agreed to settle the matter if proper valuation was made and directed yet another valuation. This time the valuer valued property at Rs. 1. 04 crores less than about Rs. 2 lacs from the previous valuation. High Court thereafter disposed of the appeals by directing that valuation submitted be accepted and another sharers to execute conveyances in favour of plaintiffon their depositing the amount less its share. The price payable was later corrected to show the purchase price as Rs. 1. 06 crores higher of the two subsequent valuations.

The amount was deposited and sale was affirmed on 24. 6. 2005. At this stage, Respondent No. I the assignee offered to purchase the property for Rs. 1. 25 crores as agains. t Rs. 1. 06 crores for which it was sold to the plaintiff. The Court directed respondent to deposit Rs. 1. 25 crores. This amount was deposited . On 26. 7. 2005 respondent No. I offered to purchase the property for Rs. 2 crores. 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. High Court directed the property to be sold to respondent No. I at Rs. 2 crores. In appeal to this Court, plaintiff-appellant offered an enhanced price of Rs. 2. 01 crores. Allowing the appeal, the Court HELD: 1. 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 s'ood d·isposed of finally within a reasonable time after the preliminary decree, especially when the issue involved was such simple one. This Court is constrained to make such observations because of unhappiness at the tardiness of the process of court, which is one of the -. / aspects that is held out as discrediting one for the judiciary. This Court hopes that the court concerned would ensure that such matters are dealt with in an appropriate manner, but with a little more expedition. [Para 4( (259-G-H; 260-Al 2. 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 s. 3 of the Partition Act, which request was rightly declined.

It was - v-- • I 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 '. Pl""lAB >,;ATIO"Al BA""K "· SAlil'J.. \J>,; CHARITABLE SOCIETY [BALASL'BRA\l.. \"Y.. \>,;. J ) 263 _,,. ·r- that it was a review of the earlier order and there was no reason why in the interests ofjustice, 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-Bank in the building ~ to be treated as owned by the plaintiff-Bank itself.

Learned counsel for the -> plaintiff Bank after taking instructions has filed an affidavit submining 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 I 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. IE 12.

To recapitulate, there was an order for sale ofthe 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 fresh valuation. Instead ofensuring that the sale took place. the matter was allowed to linger until the plaintiff sought assignment of the rights of the others by .... iF 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 0 the value suggested by the new valuer, ofcourse, 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 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, f 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. I 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 ... l counsel taking care of the interests of his client, would have certainly infonned i the client about the posting of the case and the passing of the order by the court.

The belated offer of respondent No. I to purchase the property for a I higher price, does not appear to be bona fide especially since respondent No. I is an assignee from some of the sharers after the preliminary decree and ·r 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. I 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, -r- I 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. ~ \ ! ~· I PL"'\JAB "iATIO"iAl BA:"K "· SAHL'JAl"i CHARITABLE SOCIETY [B.. \LASLllRAMA"iYA"i. J) 265 14. Learned Senior Counsel for the respondent No. I spent considerable time on arguing the question of finality of earlier orders and their binding nature ar. d so on. Those arguments, in our view. are double edged. they may help respondent No. I and they may also go against respondent No. I. 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-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 jurisc! iction under Article 142 of the Constitution of India to do complete justice to the 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-Bank is declared as the purchaser of the property for Rs. 2,0L00. 000/-. The plaintiff-Bank is permitted to set off its share ofthe 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 ,F Bank had deposited already in the High Court, will be given credit to and the plaintiff-Bank will be liable to deposit only the balance amount, ifany, 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 'G up by the High Court in accordance with the relevant rules. In the , ---'< circumstances, the parties are directed to bear their respective costs. D. G. Appeal allowed.