MP-35/BOM/2013 (Intervention) & MP-36/BOM/2013 (Intervention)

1. Shri Ashok Sadarangani and his son Shri Nitesh Sadarangani, (hereinafter referred as applicants) have filed an application for intervention in the appeal FPA No. 13/BOM/2008 filed by Smt. Chandra Dilip Lalwani. A similar application has been filed by them in the appeal FPA No. 14/BOM/2008 filed by Shri Sandeep Dilip Lalwani, son of Smt. Chandra Dilip Lalwani. Shri Ashok Sadarangani is the brother of the appellant, Smt. Chandra Dilip Lalwani. The applicants have contended that they are concerned about their residential flat bearing No. 103, Oceanic Building, Plot No. 321, Carter Road, Bandra (W), Mumbai 400050 (hereinafter referred as the property) which has been forfeited. The applicants contended that when the respondent had initiated the proceedings under SAFEMA against the property as a consequence to the detention order issued against the second applicant, it was occupied on temporary basis by Smt. Chandra Lalwani and Sandeep Dilip Lalwani (hereinafter referred as the appellants). It is also stated that the said property was amongst collateral securities given by Shri Ashok Sadarangani to UCO Bank, Nariman Point against advances received. It is further stated that the applicants could not clear their debts, their account became bad and the UCO Bank started recovery proceedings.

2. It is next stated that the appellants had filed Criminal Writ Petitions against the forfeiture order dated 12 August 2003 passed by the respondent. They also filed appeals under the provisions of SAFEMA. According to the applicants, Hon'ble Bombay High Court directed the respondent to take symbolic possession of the said property and directed the appellants to pay monthly rent of Rs. 10,000 per month and also to bear the amounts demanded by the Society. This interim order was passed during the pendency of the statutory appeal filed by the appellants. Subject to said order, the respondent were directed not to dispossess the appellant.

3. The applicants further contended that Writ Petition (Crl.) 35 of 2011 was filed challenging the detention order against the second appellant wherein the judgment has been reserved by the Hon'ble Supreme Court.

4. The applicants' submitted that they have since settled the dues with UCO bank and the bank has also issued no dues certificate to the applicants. According to them the subject property had not been auctioned finally by the bank/DRT nor the appellants had paid the entire auction sale consideration to the bank and therefore, the appellants have no ownership rights in the property.

5. The applicants in the circumstances have prayed that they be impleaded as parties to the above noted appeal as no prejudice will be caused to the respondent or the appellants in case the applicants are impleaded as party to the above noted appeal. According to applicants, the balance of convenience shall be in favour of the applicants in case they are impleaded as parties to these appeals. The applicants have stated that the appellants have a separate ownership flat No. 402 in the same building and it will be more appropriate if the appellants are made to leave the property under appeal and they (the applicants) be allowed to move into the property under appeal, which in any case belongs to them and not the appellants, on payment of a monthly rent till final resolution of the said matter. The applicants have also pleaded that the appeals be disposed off expeditiously and such other and further orders, as may be just and appropriate in the facts and circumstances, be passed in favour of the applicants.

6. The applicant's have not alleged whether they are necessary or proper parties. The learned counsel appearing for the applicants has not been able to explain satisfactorily that the applicants are the necessary parties.

7. While no response has come from the respondent, the appellants have filed their objections against entertaining the intervention application. According to the appellants, the applicants are trying to reap the benefits of litigation pursued by the appellants in respect of the property although the applicants had not challenged its forfeiture when they filed the appeals against the impugned order of the respondent, that the appeals filed by the applicants had been dismissed by this tribunal on 17.01.2012 as no one had appeared and a very belated restoration application has been filed and that they are trying to revive their claim on the property after a one time settlement of Rs. 1.50 Crore to UCO Bank. They have requested for the dismissal of the applications for intervention as the applicants are trying to file belated appeals against the forfeiture order against the property.

8. This tribunal considering the appeals against the order of forfeiture dated 17th March, 2008 does not have to adjudicate about the ownership rights of the appellants vis-a-vis the applicants as there had been litigation between the applicants and the appellants. The findings of civil litigation between the applicants and the appellants cannot be challenged in the present appeal by any of the parties. This tribunal has only to decide whether the impugned order passed by the respondent needs to be interfered or not; and if yes to what extent and effect.

9. Perusal of the impugned order also reveals that the Bank of Maharashtra and UCO Bank had filed separate appeals against the initial order of forfeiture passed by the Competent Authority vide order dated 12.8.2003 which were disposed of by this Tribunal vide order dated 17th May, 2006. Banks had filed petitions against the said order before the Supreme Court which were dismissed.

10. In the remand proceedings before the Competent Authority, the plea of the UCO Bank was that the cash credit limit of Rs. 100 lakhs and letter of credit Rs. 150 lakhs was given to M/s. Pacific Traders, a firm owned by Mr. Ashok Sadarangani and a valid equitable mortgage was created on 4.1.2001 by depositing the title deeds of said property. As the firm had defaulted the bank had moved DRT for recovery of loan and the DRT vide recovery certificate, ordered on 20.02.2002 for auction of the property. Initially the auction was fixed for 12 November 2002 but finally the property was put on sale on 3.2.2003 and the highest bidder was the appellant.

11. It was stated on behalf of the appellants before the Competent Authority that Shri Sandeep Lalwani had preferred an appeal on 26th July, 2002 against the order of DRT which was, however, dismissed on 12.11.2002. A suit was also filed in Court of Small Causes, Mumbai.

12. With reference to the claims of the Bank of Maharashtra, in the impugned order dated 17.3.2008, the Competent Authority has observed as under:

(v). Subsequently, Mr. Ashok T. Sadarangani was arrested and during the course of hearing on his bail application before the Hon'ble Judge of City Civil Court. Mr. Ashok T. Sadarangani accepted that the power of attorney executed in favour of Mr. Kersi V. Mehta was forged and he was also duped by Mr. Kersi V. Mehta. The complaint was filed not only under the provisions of Indian Penal Code but also under the provisions of Prevention of Corruption Act, which means that bank official were also involved in accepting the forged documents as original. In view of clear admission by the bank as early as in 2003 that APs had obtained the loan on forged documents, so at this stage, their contentions that loan was taken on the basis of proper and legal documents so they have claim over the property cannot be accepted. When the person who forged the power of attorney i.e. Mr. K.V. Mehta, is not contesting the genuineness of the document, and the person to whom the property was leased out on the basis of forged power of attorney, makes an admission before the judge of City Civil Court, that the documents were forged then the bank, who was neither party nor witness to the execution of the power of attorney has any right to say that power of attorney as well as the lease documents are proper and legal, similarly on the basis of forged documents, the bank has no right to claim any interest in the property.
13. With reference to the claims of the UCO Bank, the Competent Authority held that the UCO bank was neither 'transferee' as no sale was effected, nor any 'consideration amount' was paid or promised to be paid nor it was 'adequate' even if mortgage money is to be treated as consideration. The Competent Authority had repelled the claim of the UCO Bank through which the appellants are claiming rights in the property which has been forfeited by the respondent.

14. The UCO bank had filed an appeal against the impugned order dated 17 March 2008 of the Competent Authority. Later on the UCO Bank had withdrawn its appeal being FPA-15/BOM/2008 and the same was dismissed as withdrawn by this Tribunal vide order dated 4.2.2013 pursuant to a miscellaneous Application being MP-16/BOM/2013 filed by the Bank.

15. The Competent Authority had also held in its impugned order dated 17 March 2008 that both the applicants despite notice for personal hearing did not appear before the Competent Authority. When no one had appeared on behalf of the applicant, their counsel was contacted who also did not have any instructions from his clients. The Competent Authority therefore dealt with the properties on the basis of the evidence available on the record.

16. The applicants have challenged the impugned order by filing the separate appeals which were earlier dismissed as no one had appeared and applications for restoration are pending before this Tribunal.

17. Whether the applicants are liable to be impleaded has to be decided on the basis of whether they are necessary parties or not. A necessary party is one without whom no order can be made effectively. A proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. The addition of parties is generally not a question of initial jurisdiction of the Tribunal but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case. In order to ascertain whether a person is a necessary party or not what is to be seen is whether in absence of such person, conflicting orders may be passed by the Tribunal. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action and the question to be settled. The question to be settled must be a question in the action which cannot be effectually and completely settled unless he is a party. A line has been drawn on a wider construction between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e., he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights.

18. The right which the applicants are claiming in the property vis-à-vis Bank and the appellant is not to be decided by this Tribunal as those rights have already been adjudicated between the parties in the proceedings before the Civil Courts and the Debt Recovery Tribunal. What is to be determined in the present appeal is whether the rights of the appellants, if any, are liable for forfeiture or not and not 'whether the appellants have any right in the property through the bank'. The plea of the bank and its claim on the property was rejected by the Competent Authority and the appeal filed by the bank has already been withdrawn by it.

19. In the circumstances the learned counsel for the applicants is unable to demonstrate that the applicants are necessary parties to the present appeal and therefore, their applications for intervention cannot be entertained and are liable to be dismissed. Whether the rights of the applicants in the property are liable to be forfeited or not is to be determined in their appeals in which the proceedings are pending before this Tribunal. In the appeals by the appellants and in the appeals filed by the applicants it is not to be determined by this tribunal whether the rights were legally transferred by the applicants or not and whether the appellants in the present appeal have got the ownership rights through the bank with whom the property was allegedly mortgaged. Therefore, the applications for intervention, in the facts and circumstances of the present appeals are without any merit and being not maintainable are, therefore, dismissed. Ordered accordingly.

FPA-13/BOM/2008 & FPA No. 14/BOM/2008

Arguments heard. Order Reserved