# Celir LLP v. Mr. Sumati Prasad Bafna & Ors

- **Citation:** 2024 INSC 978
- **Court:** Supreme Court of India
- **Decided:** 2024-12-13
- **Case number:** Civil Appeal Nos. 5542-5543 of 2023
- **Bench:** J.B. Pardiwala, Manoj Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/celir-llp-v-mr-sumati-prasad-bafna-ors-37229
- **Pages:** 125

## Headnote

The present petitions sought to initiate contempt proceedings against
the respondents/alleged contemnors for wilful disobedience of the
final judgment and order dated 21.09.2023 passed by this Court
in Civil Appeal Nos. 5542-5543 of 2023 which directed issuance
of Sale Certificate of the Secured Asset (belonging to respondent
no.1-Borrower) to the petitioner-auction purchaser; Respondent
no.4 'Greenscape IT Park LLP' and its director, i.e., respondent
no.2 were the subsequent transferee/third party purchaser and
respondent no.3, 'Union Bank of India' was the secured creditor/
bank. Accordingly, the following questions arose for consideration:-
1.
Whether any act of contempt could be said to have been
committed by the respondent nos. 1 to 4 respectively of
the judgment and order dated 21.09.2023; whether the
respondents in light of the aforesaid decision of this Court were
duty bound to cancel the Release Deed dated 28.08.2023
(executed for discharge of mortgage over the Secured Asset)
and hand over physical possession along with original title
deeds of the Secured Asset to the petitioner.
2.
Whether, proceedings arising out of Securitization Application
being S.A. No. 46 of 2022 preferred by the Borrower u/s.17 of
SARFAESI Act before DRT [assailing demand notice issued
by the Bank for repayment of principal amount and further
notice of the Bank classifying the Borrower's account as
NPA and taking symbolic possession of the Secured Asset]
could have continued after this Court's judgment and order
dated 21.09.2023; whether the petitioner by virtue of the
Sale Certificate dated 27.09.2023 (issued by the Bank for
*Author
[2024] 12 S.C.R.
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Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
the Secured Asset) can be said to have acquired a clear title
to the said property; and
3.
Whether the transfer of the Secured Asset in favour of the
Subsequent Transferee by way of Assignment Agreement
dated 28.08.2023 was hit by lis pendens; whether the absence
of any registration in accordance with Section 52 of the
Transfer of Property Act, 1882 as amended by the State of
Maharashtra rendered the lis pendens inapplicable.
Headnotes†
Contempt of Courts Act, 1971 - s.2(b) - Constitution of
India - Art. 129 - Mere conduct of parties aimed at frustrating
the court proceedings or circumventing its decisions, even
without an explicit prohibitory order, constitutes contempt -
However, power of contempt to be exercised sparingly and
with caution - On facts, respondents demonstrated effort
and willingness to purge themselves of their contemptuous
conduct in violation of Court's judgment - One last opportunity
to them to abide by the judgment:
Held: 1. The contempt jurisdiction of this court cannot be construed
by any formulaic or rigid approach - Merely because there is no
prohibitory order or no specific direction issued the same would not
mean that the parties cannot be held guilty of contempt. [Para 199]
2. Mere conduct of parties aimed at frustrating the court proceedings
or circumventing its decisions, even without an explicit prohibitory
order, constitutes contempt - Such actions interfere with the
administration of justice, undermine the respect and authority of
the judiciary, and threaten the rule of law - However, at the same
time, the power of contempt ought to be exercised sparingly and
with caution and care - It operates with a string of caution and
unless otherwise satisfied beyond doubt, it would neither be fair nor
reasonable for the courts to resort to such powers - The standard
of proof required before a person is held guilty of committing
contempt of court must be beyond all reasonable doubt - The
courts while exercising its contempt jurisdiction must remain
circumspect, more particularly, where there exists a possibility
of the order being amenable to more than one interpretation.
[Paras 201, 202 and 203]
3.1. On facts, it is true that this Court in its decision rendered
in the Main Appeals had not issued any specific direction eith

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[2024] 12 S.C.R. 1618 : 2024 INSC 978
Celir LLP
v.
Mr. Sumati Prasad Bafna & Ors.
(Contempt Petition (C) No(s). 158-159 of 2024)
In
(Civil Appeal No(s). 5542-5543 of 2023)
13 December 2024
[J.B. Pardiwala* and Manoj Misra, JJ.]
Issue for Consideration
The present petitions sought to initiate contempt proceedings against
the respondents/alleged contemnors for wilful disobedience of the
final judgment and order dated 21.09.2023 passed by this Court
in Civil Appeal Nos. 5542-5543 of 2023 which directed issuance
of Sale Certificate of the Secured Asset (belonging to respondent
no.1-Borrower) to the petitioner-auction purchaser; Respondent
no.4 'Greenscape IT Park LLP' and its director, i.e., respondent
no.2 were the subsequent transferee/third party purchaser and
respondent no.3, 'Union Bank of India' was the secured creditor/
bank. Accordingly, the following questions arose for consideration:-
1.
Whether any act of contempt could be said to have been
committed by the respondent nos. 1 to 4 respectively of
the judgment and order dated 21.09.2023; whether the
respondents in light of the aforesaid decision of this Court were
duty bound to cancel the Release Deed dated 28.08.2023
(executed for discharge of mortgage over the Secured Asset)
and hand over physical possession along with original title
deeds of the Secured Asset to the petitioner.
2.
Whether, proceedings arising out of Securitization Application
being S.A. No. 46 of 2022 preferred by the Borrower u/s.17 of
SARFAESI Act before DRT [assailing demand notice issued
by the Bank for repayment of principal amount and further
notice of the Bank classifying the Borrower's account as
NPA and taking symbolic possession of the Secured Asset]
could have continued after this Court's judgment and order
dated 21.09.2023; whether the petitioner by virtue of the
Sale Certificate dated 27.09.2023 (issued by the Bank for
*Author
[2024] 12 S.C.R.
1619
Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
the Secured Asset) can be said to have acquired a clear title
to the said property; and
3.
Whether the transfer of the Secured Asset in favour of the
Subsequent Transferee by way of Assignment Agreement
dated 28.08.2023 was hit by lis pendens; whether the absence
of any registration in accordance with Section 52 of the
Transfer of Property Act, 1882 as amended by the State of
Maharashtra rendered the lis pendens inapplicable.
Headnotes†
Contempt of Courts Act, 1971 - s.2(b) - Constitution of
India - Art. 129 - Mere conduct of parties aimed at frustrating
the court proceedings or circumventing its decisions, even
without an explicit prohibitory order, constitutes contempt -
However, power of contempt to be exercised sparingly and
with caution - On facts, respondents demonstrated effort
and willingness to purge themselves of their contemptuous
conduct in violation of Court's judgment - One last opportunity
to them to abide by the judgment:
Held: 1. The contempt jurisdiction of this court cannot be construed
by any formulaic or rigid approach - Merely because there is no
prohibitory order or no specific direction issued the same would not
mean that the parties cannot be held guilty of contempt. [Para 199]
2. Mere conduct of parties aimed at frustrating the court proceedings
or circumventing its decisions, even without an explicit prohibitory
order, constitutes contempt - Such actions interfere with the
administration of justice, undermine the respect and authority of
the judiciary, and threaten the rule of law - However, at the same
time, the power of contempt ought to be exercised sparingly and
with caution and care - It operates with a string of caution and
unless otherwise satisfied beyond doubt, it would neither be fair nor
reasonable for the courts to resort to such powers - The standard
of proof required before a person is held guilty of committing
contempt of court must be beyond all reasonable doubt - The
courts while exercising its contempt jurisdiction must remain
circumspect, more particularly, where there exists a possibility
of the order being amenable to more than one interpretation.
[Paras 201, 202 and 203]
3.1. On facts, it is true that this Court in its decision rendered
in the Main Appeals had not issued any specific direction either
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Supreme Court Reports
to the Borrower or the Subsequent Transferee as regards the
handing over of physical possession and the original title deed to
the Secured Asset, or the proceedings pending before the DRT
in S.A. No. 46 of 2022 - However, the same would not mean
that the decision of this Court in the Main Appeal was bereft of
any direction as to the outcome of its findings - This Court in the
operative portion of the Main Appeals stated in unequivocal terms
that the confirmation of the sale by Bank under Rule 9(2) of the
SARFAESI Rules had vested the petitioner herein with a right to
obtain the certificate of sale of the Secured Asset - It further held
categorically that the Borrower herein could not have redeemed the
mortgage upon publication of the 9th auction notice - Furthermore,
this Court explicitly directed the Bank to not only issue the Sale
Certificate to the petitioner herein in accordance with Rule 9(6) of
the SARFAESI Rules but also directed the refund of the amount
of Rs. 129 crore paid by the Borrower - Moreover, the impugned
order of the High Court had been set-aside by this Court in toto.
[Para 204]
3.2. Where a decision is rendered and the impugned order is setaside, it behoves any logic that an express direction to act must
be given in respect of every aspect of the decision - The parties
are duty bound to act in accordance with common sense - If at all
the parties are in doubts over the judgment and order of a court,
the correct approach is to prefer a miscellaneous application for
seeking clarification rather than proceeding to presume a selfserving interpretation of the decision. [Paras 205, 206]
3.3. On facts, both the Borrower and the Subsequent Transferee
made several attempts to prevent the effective implementation of
the judgement and order dated 21.09.2023 passed by this Court
and thereby thwart the attempts of the Bank to hand over the
physical possession and the original title deeds of the Secured
Asset to the petitioner - Both the Borrower and the Subsequent
Transferee committed contempt of this Court's judgment and order
dated 21.09.2023 in the Main Appeals - The acts of the contemnors
are nothing more than a gamble on their part to circumvent and
undermine the findings and directions passed by this Court in the
Main Appeals - Similarly, the lame excuses offered by them for
explaining their conduct are also nothing more than a calculated
attempt in the hope that they would get away with legitimizing the
illegal Assignment Agreement even after the decision of this Court,
and is equally contemptuous - However, on an overall conspectus
[2024] 12 S.C.R.
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Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
of the facts of the present case, while the initial acts of the Borrower
and the Subsequent Transferee are in violation of this Court's
judgment and order dated 21.09.2023, yet the efforts on their part
to take steps and make amends by withdrawing the Special Civil
Suit No. 5 of 2024 along with their belated unconditional undertaking
to comply with any further order that this Court may deem fit and
proper to pass, demonstrates their effort and willingness to purge
themselves of their contemptuous conducts - Thus, this Court is
inclined to provide one last opportunity to the Borrower herein and
the Subsequent Transferee to abide by the judgment and order
dated 21.09.2023 passed by this Court and further comply with the
directions issued in the present contempt petition, and thus, deem
it fit not to hold them guilty of contempt for the present moment.
[Paras 207, 208, 209]
Contempt of Courts Act, 1971 - s.2(b) - 'Wilful disobedience'
in the context of s.2(b) - Expression "wilful" - Meaning of:
Held: Wilfulness signifies deliberate action done with evil intent
and bad motive and purpose - The expression or word "wilful"
means act or omission which is done voluntarily or intentionally
and with the specific intent to do something which the law forbids
or with the specific intent to fail to do something the law requires
to be done, that is to say with bad purpose either to disobey or to
disregard the law - It signifies a deliberate action done with evil
intent or with a bad motive or purpose. [Paras 184, 185]
Contempt of Court - Principles governing the Rule of law must
be extended to the party against whom contempt proceedings
have been initiated. [Para 187]
Res judicata - Constructive Res Judicata - Abuse of Process
of Court - Collateral challenge to judgments that have attained
finality - Proposition of law laid down by English Court of
Chancery in Henderson v. Henderson, [1843] 3 Hare 999 -
'Henderson' Principle as a corollary of Constructive Res
Judicata - Discussed:
Held: 1. The 'Henderson Principle' is a foundational doctrine in
common law that addresses the issue of multiplicity in litigation -
It embodies the broader concept of procedural fairness, abuse of
process and judicial efficiency by mandating that all claims and
issues that could and ought to have been raised in a previous
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Supreme Court Reports
litigation should not be re-litigated in subsequent proceedings -
The extended form of res-judicata more popularly known as
'Constructive Res Judicata' contained in Section 11, Explanation
VII of the CPC originates from this principle. [Para 135]
2.1. 'Henderson Principle' is a core component of the broader
doctrine of abuse of process, aimed at enthusing in the parties a
sense of sanctity towards judicial adjudications and determinations -
It ensures that litigants are not subjected to repetitive and vexatious
legal challenges - At its core, the principle stipulates that all claims
and issues that could and should have been raised in an earlier
proceeding are barred from being raised in subsequent litigation,
except in exceptional circumstances - This rule not only supports
the finality of judgments but also underscores the ideals of judicial
propriety and fairness. [Para 144]
2.2. There are, four situations where in second proceedings between
the same parties doctrine res judicata as a corollary of the principle
of abuse of process may be invoked: (i) cause of action estoppel,
where the entirety of a decided cause of action is sought to be
re-litigated; (ii) issue estoppel or, "decided issue estoppel," where
an issue is sought to be re-litigated which has been raised and
decided as a fundamental step in arriving at the earlier judicial
decision; (iii) extended or constructive res judicata i.e., "unraised
issue estoppel," where an issue is sought to be litigated which
could, and should, have been raised in a previous action but was
not raised; (iv) a further extension of the aforesaid to points not
raised in relation to an issue in the earlier decision, as opposed
to issues not raised in relation to the decision itself. [Para 145]
2.3. As part of the broader rule against abuse of process, the
Henderson principle is rooted in the idea of preventing the judicial
process from being exploited in any manner that tends to undermine
its integrity - This idea of preventing abuse of judicial process
is not confined to specific procedure rules, but rather aligned
to a broader purport of giving quietus to litigation and finality to
judicial decisions - The essence of this rule is that litigation must
be conducted in good faith, and parties should not engage in
procedural tactics that fragment disputes, prolong litigation, or
undermine the outcomes of such litigation - It is not a rigid rule
but rather a flexible principle to prevent oppressive, unfair, or
detrimental litigation. [Para 146]
[2024] 12 S.C.R.
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Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
3. Although in the present case, the Borrower had raised the
issue of the validity of the measures taken by the Bank under
the SARFAESI Act and the legality of the 9th auction conducted
by it in the earlier stages albeit in a different proceeding, yet its
conduct of having conveniently abandoned the same in a different
proceeding elected by it for the same cause of action and then
later re-agitating it in the pretence that the two proceedings were
distinct, is nothing but a textbook case of abuse of process of
law. [Para 148]
4. Piecemeal litigation where issues are deliberately fragmented
across separate proceedings to gain an unfair advantage is in
itself a facet of abuse of process of law and would also fall foul
of this principle - Merely because one proceeding initiated by a
party differs in some aspects from another proceeding or happens
to be before a different forum, will not make the subsequent
proceeding distinct in nature from the former, if the underlying
subject matter or the seminal issues involved remains substantially
similar to each other or connected to the earlier subject matter
by a certain degree, then such proceeding would tantamount to
're-litigating' and the Henderson Principle would be applicable -
Where a party deliberately withholds certain claims or issues in
one proceeding with the intention to raise them in a subsequent
litigation disguised as a distinct or separate remedy or proceeding
from the initial one, such subsequent litigation will also fall foul of
this principle - Similarly, where a plea or issue was raised in earlier
proceedings but later abandoned it is deemed waived and cannot
be re-litigated in subsequent - Parties must litigate diligently and in
good faith, presenting their entire case at the earliest opportunity.
[Paras 149, 150, 151]
5. The Henderson principle operates on the broader contours of
judicial propriety and fairness, ensuring that the judicial system
remains an instrument of justice rather than a platform for procedural
manipulation - Both logic and principle support the approach that
the judicial determination of an entire cause of action is in fact the
determination of every issue which is fundamental to establishing
the entire cause of action - The effect of a judicial determination on
an entire cause of action is as if the court had made declarations on
each issue fundamental to the ultimate decision. [Paras 152, 153]
Doctrines / Principles - Doctrine of lis pendens - Doctrine of
Pari Delicto - Property situated in Maharashtra - Applicability
of lis pendens in absence of any registration as required under
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Supreme Court Reports
the State Amendment to s.52 of TPA - Even in absence of a
registered notice of pendency in terms of amended s.52 of TPA
the said provision will not be rendered ipso-facto inapplicable -
Even otherwise, in peculiar facts of the present case, nonregistration of notice of pendency not fatal to application
of the doctrine of lis pendens - Transfer of Property Act,
1882 - s.52 (as amended by State of Maharashtra) - Bombay
Amendment Act, 1939:
Held: 1.1. The amended Section 52 sub-section (1) of the TPA
casts upon a party who is claiming any right to a property which
is a subject-matter of any pending suit or proceeding an additional
duty to register a notice of pendency in respect of such property
so as to caution and put to notice any third-party who might
otherwise be unaware of such proceeding or litigation despite
the best of due diligence either due to inadvertence or deliberate
misleading by one of the parties to the lis and as result might
be genuinely considering to purchase or acquire any right in
the subject-matter proceeding - The requirement of registration
of notice of pendency is to prevent any undue or unwarranted
hardship to such third-parties who even after a reasonable due
diligence have bona-fidely purchased the property believing it to
be free from the encumbrances of any pending proceeding only
to later face the adverse consequence of losing their rights by a
mechanical application of lis pendens. [Para 171]
1.2. This additional requirement of registration of notice of pendency
is for the benefit of the party claiming any right in such subjectmatter property and also for the benefit of any third-party interested
in such subject-matter property by enabling the former to claim
the benefit of lis pendens as an absolute right after having duly
taken steps towards ensuring that the public is well-aware of the
impeding litigation in respect of such property by registering a notice
of pendency and to enable the latter to ascertain the veracity of
title of such property by exercise of its due diligence - Although,
the said provision is for the benefit of the third-party, yet such
subsequent purchasers cannot as a matter of absolute right claim
any title to such property solely on the ground of want of any
notice of pendency being registered - To hold otherwise would
undermine the object and purpose of the doctrine of lis pendens
which is based on the principle of equity, good conscience, and
public policy and discourage any thwarting or frustration of rights
of the parties so litigating by unscrupulous and unanticipated
transactions. [Para 172]
[2024] 12 S.C.R.
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1.3. The vital essence of this additional duty imposed upon the party
claiming a right to a property which is a subject matter of a pending
proceeding, is only to aid a third-party to exercise its due diligence
and obviate the possibility of any dishonesty, misrepresentation or
fraud by a party in order to gain an undue advantage or benefit
despite the pendency of proceedings - However, if the absence of
notice registration were to render the doctrine entirely inapplicable,
it would lead to exploitation of procedural gaps by parties who
deliberately delay or avoid registering such notices to defeat
substantive rights of the parties and undermine the very sanctity
of judicial proceedings - Such an interpretation would lead to a
very chilling effect whereby, third parties despite being expected to
verify the title and status of the property would simply abdicate their
duty to conduct thorough due diligence in transactions involving
immovable properties or that despite being fully aware of the
pendency of such proceedings would be able to deviously claim
absolute rights to such property or worse, mischievously execute
back-dated agreements in collusion with a party to a lis prior to
registration of such notice of pendency to circumventing the very
proceedings and render them infructuous. [Para 173]
2. Even in the absence of a registered notice of pendency in terms
of the amended Section 52 of TPA the said provision will not be
rendered ipso-facto inapplicable, at best it would preclude the party
seeking benefit of this doctrine to claim it as a matter of right, but
by no stretch would it mean that the third-party conversely would
be able to as matter of absolute right claim inapplicability of this
doctrine - It would be the discretion of the courts to see keeping
in mind the peculiar facts of the case to ascertain whether such
doctrine ought to be applied or not - Where the courts are satisfied
that the third-party had genuinely purchased the subject-matter
property after an exercise of a reasonable degree of care and
caution and that it was otherwise unaware of the pendency of
proceedings, the courts would be circumspect to displace the rights
of such bona-fide third-party by a mechanical application of the
doctrine of lis pendens - Even otherwise, in view of the peculiar
facts of this case, more particularly the fact that the petitioner could
not have registered the same being only an auction purchaser and
that it was the duty of the Bank to register the notice of pendency
which was not reasonably possible in view of the haste that
was shown by the Borrower and the Subsequent Transferee in
redeeming the mortgage and thereafter immediately transferring
the Secured Asset, the non-registration of notice of pendency is
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not fatal to the application of the doctrine of lis pendens in the
present case. [Para 174]
3. In the present case, it is not as if the Subsequent Transferee was
not aware of what was happening however, when things went wrong,
they now cry foul of not being impleaded as parties and heard by
this Court in the Main Appeals - Even otherwise, assuming that the
petitioner and the Bank herein deliberately chose not to implead
the Subsequent Transferee herein in order to mislead this Court
in the Main Appeals, the same is immaterial as the Subsequent
Transferee too failed to implead itself despite being aware of the
pendency of the proceedings before this Court - If at all they were
so concerned about the transfer of the Secured Asset in their favour,
either they ought to have themselves attempted to implead itself
before this Court or requested the Borrower to do the same - In
view of the Doctrine of Pari Delicto i.e.., 'in equal fault, the law
aids neither party', the Subsequent Transferee cannot seek any
benefit from the fault of the petitioner or the Bank when it is itself
equally at fault - In view of the aforesaid, the execution of the
Assignment Agreement dated 28.08.2023 and the transfer of the
Secured Asset in pursuance thereto in favour of the Subsequent
Transferee is hit by lis pendens despite the fact that no notice of
pendency was registered in terms of the amended Section 52 of
the TPA. [Paras 175, 176]
Auction - Sale of secured asset by auction or any other method
under the SARFAESI Act - Circumstances when such sale
may be challenged or set-aside after its confirmation - Any
sale by auction or other public procurement methods once
already confirmed or concluded ought not to be set-aside or
interfered with lightly except on grounds that go to the core
of such sale process - Securitization and Reconstruction of
Financial Assets and Enforcement of Securities Interest Act,
2002 - Security Interest (Enforcement) Rules, 2002:
Held: 1. Any sale by auction or other public procurement methods
once already confirmed or concluded ought not to be set-aside
or interfered with lightly except on grounds that go to the core of
such sale process, such as either being collusive, fraudulent or
vitiated by inadequate pricing or underbidding - Mere irregularity
or deviation from a rule which does not have any fundamental
procedural error does not take away the foundation of authority
[2024] 12 S.C.R.
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Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
for such proceeding - In such cases, courts in particular should
be mindful to refrain entertaining any ground for challenging an
auction which either could have been taken earlier before the sale
was conducted and confirmed or where no substantial injury has
been caused on account of such irregularity. [Para 218]
2.1. In the present lis, it is not the case of the Borrower herein
that the 9th auction conducted by the Bank was a result of any
collusion or fraud either at the behest of the Bank or the Successful
Auction Purchaser herein - Aside from the lack of any 15-days
gap between the notice of sale and the notice of auction, no other
illegality has been imputed to the aforesaid auction proceedings -
It is also not the case of the Borrower that due to the absence
of the aforesaid statutory period, any prejudice was caused or
that it was prevented from effectively exercising its rights due to
such procedural infirmity - Despite a total of eight auctions being
conducted by the Bank from April, 2022 to June, 2023, not once
did the Borrower express its desire to redeem the mortgage -
Even when the auction notice came to be issued on 12.06.2023,
the Borrower never intimated that it was in process of redeeming
the mortgage with the aid of the Subsequent Transferee and
that the auction be delayed even though, as per the parties own
submissions, they started exploring the possibility of redeeming
the mortgage and thereafter transferring in June, 2023 itself - In
such circumstances, given the fact that although the S.A. No. 46
of 2022 was still pending, yet since there was nothing before this
Court to doubt the validity of the 9th auction, this Court in the Main
Appeals confirmed the sale in favour of the petitioner and brought
the auction proceedings to its logical conclusion by directing the
issuance of the sale certificate - The Borrower never raised the
issue of the validity of the 9th auction notice despite having sufficient
opportunities to do so even after the pronouncement of the decision
in the Main Appeals, and that such pleas are being raised only
after the auction was confirmed in favour of the petitioner, there
is no good reason to interfere with the 9th auction conducted by
the Bank. [Para 217]
2.2. In the present lis, apart from the want of statutory notice period,
no other challenge has been laid to the 9th auction proceedings
on the ground of it being either collusive, fraudulent or vitiated by
inadequate pricing or underbidding, thus, the auction cannot be
said to suffer from any fundamental procedural error, and as such
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does not warrant the interference of this Court, particularly when
the plea sought to be raised to challenge the same could have
been raised earlier - Even if the 9th auction were to be held illegal
and bad in law by virtue of the aforesaid S.A. No. 46 of 2022, it
would not mean that the auction purchaser would by virtue of such
finding lose all its rights to the secured asset, even after having
the sale confirmed in its favour. [Paras 219, 220]
Transfer of Property Act, 1882 - s.52 - s.52 does not render
a transfer pendente lite void - However, the court while
exercising contempt jurisdiction may be justified to pass
directions either for reversal of the transactions in question by
declaring the said transactions to be void or proceed to pass
appropriate directions to the concerned authorities to ensure
that the contumacious conduct on the part of the contemnor
does not continue to enure to the advantage of the contemnor
or anyone claiming under him. [Para 180]
Contempt of Court - Contumacious conduct - Duty of the
court - To issue appropriate directions for remedying or
rectifying the things done in violation of its orders - Power
to take restitutive measures at any stage of the proceedings -
Discussed. [Paras 221, 222]
Doctrines / Principles - Doctrine of election - Once a party has
elected to choose remedy under one forum, again the same
cause of action cannot be challenged before another forum:
Held: On facts, the Borrower decided to move the High Court for
seeking the very same relief that it had sought in the securitization
application u/s.17 of the SARFAESI Act before Debt Recovery
Tribunal - As there was virtually no difference between either
the scope of proceedings or the prayer sought before the DRT
and that before the High Court, once the Borrower had chosen
to espouse the same matter already sub-judice in one forum
before another, in this case the High Court, it was the duty of the
Borrower to bring within the fold of its case all issues and grounds
in respect of the 9th auction proceedings in the proceedings
arising from the writ petition, by virtue of the Doctrine of Election -
Furthermore, by virtue of the Doctrine of Election, the Borrower
cannot be permitted to pursue two inconsistent remedies, once
the Borrower had availed the remedy to redeem its mortgage and
[2024] 12 S.C.R.
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Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
pay the dues sought to be recovered by way of the SARFAESI
proceedings initiated by the Bank and having failed in doing so,
it now cannot be permitted to challenge those very SARFAESI
proceedings - A litigant cannot approbate or reprobate at the same
time - Election is the obligation imposed upon a party by Courts
of equity to choose between two inconsistent or alternative rights
or claims in cases where there is clear intention of the person
from whom he derives one that he should not enjoy both. [Paras
126, 127 and 154(iii)]
Maxims - Expressio Unius Est Exclusio Alterius - Expression
of one thing is the exclusion of another - Where a court
consciously and specifically grants certain reliefs but does
not advert to other reliefs or rights, the relief so expressly
provided necessarily leads to the implied exclusion of the
other reliefs and rights. [Para 154(vii)]
Case Law Cited
State of U.P. v. Nawab Hussain [1977] 3 SCR 428 : (1997) 2 SCC
806; Devilal Modi v. Sales Tax Officer, Ratlam & Ors. [1965] 1
SCR 686 : AIR 1965 SC 1150; Shankara Coop. Housing Society
Ltd. v. M. Prabhakar [2011] 7 SCR 468 : (2011) 5 SCC 607;
Sanjay Verma v. Manik Roy [2006] Supp. 10 SCR 469 : (2006)
13 SCC 608; Thomson Press (India) Limited v. Nanak Builders
and Investors Private Limited & Ors. [2013] 2 SCR 74 : (2013) 5
SCC 397; T. Ravi & Anr. v. B. Chinna Narasimha & Ors. [2017]
3 SCR 1 : (2017) 7 SCC 342; Ashok Paper Kamgar Union v.
Dharam Godha and Ors. (2003) 11 SCC 1; Ram Kishan v. Tarun
Bajaj & Ors. [2014] 1 SCR 538 : (2014) 16 SCC 204; Murray &
Co. v. Ashok Kr. Newatia & Anr. [2000] 1 SCR 367 : (2000) 2
SCC 367; Pushpaben & Anr. v. Narandas Badiani & Anr. [1979]
3 SCR 636 : (1979) 2 SCC 394; Reliance Petrochemicals Ltd. v.
Proprietors of Indian Express Newspapers, Bombay Pvt. Ltd. &
Ors. [1988] Supp. 3 SCR 212 : (1988) 4 SCC 592; Rita Markandey
v. Surjit Singh Arora [1996] Supp. 7 SCR 56 : (1996) 6 SCC 14;
Jhareshwar Prasad Paul v. Tarak Nath Ganguly [2002] 3 SCR
913 : (2002) 5 SCC 352; Valji Khimji and Company v. Official
Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors [2008]
12 SCR 1 : (2008) 9 SCC 299; Ram Kishun & Ors. v. State of
Uttar Pradesh & Ors. [2012] 6 SCR 105 : (2012) 11 SCC 511;
PHR Invent Educational Society v. UCO Bank (2024) 6 SCC 579;
1630
[2024] 12 S.C.R.
Supreme Court Reports
V.S. Palanivel v. P. Sriram 2024 INSC 659 : [2024] 8 SCR 1263;
Janak Raj v. Gurdilal Singh & Ors. [1967] 2 SCR 77 : AIR 1967
SC 608; Baranagore Jute Factory Plc. Mazdoor v. Baranagore
Jute Factory Plc. [2017] 4 SCR 700 : AIR Online 2017 SC 410;
and State Bank of India & Ors. v. Dr. Vijay Mallya [2022] 15 SCR
384 : 2022 SCC Online SC 826 - relied on.
Patel Rajnikant Dhulabhai & Anr. v. Patel Chandrakant Dhulabhai
& Ors. [2008] 10 SCR 1169 : (2008) 14 SCC 561 - clarified and
relied on.
Arce Polymers Private Limited v. Alphine Pharmaceuticals Private
Limited & Ors. [2021] 11 SCR 1059 : (2022) 2 SCC 221; ITC Ltd.
v. Blue Coast Hotels Limited & Ors. [2018] 5 SCR 516 : (2018)
15 SCC 99; Supertech Limited v. Emerald Court Owner Resident
Welfare Association & Ors. [2021] 13 SCR 976 : (2023) 10 SCC
817; Collector of Customs, Bombay v. Kirshna Sales (P) Ltd. (1994)
Supp. 3 SCC 73; General Manager, Sri Siddeshwara Cooperative
Bank Limited & Anr. v. Ikbal & Ors. [2013] 8 SCR 532 : (2013) 10
SCC 83; Vasu P. Shetty v. Hotel Vandana Palace & Ors. [2014] 9
SCR 38 : (2014) 5 SCC 660; Govind Kumar Sharma & Anr. v. Bank
of Baroda & Ors. 2024 INSC 326 : [2024] 4 SCR 633; Phoenix ARC
(P) Ltd. v. Vishwa Bharati Vidya Mandir [2022] 1 SCR 950 : (2022)
5 SCC 345; Vodafone Idea Cellular Ltd. v. Ajay Kumar Agarwal
[2022] 2 SCR 748 : (2022) 6 SCC 496; Joint Action Committee
of Air Line Pilots' Assn. of India (ALPAI) & Ors. v. DGCA [2011] 5
SCR 1019 : (2011) 5 SCC 435; Jayaram Mudaliar v. Ayyaswami
[1973] 1 SCR 139 : AIR 1973 SC 569; Guruswamy Nadar v. P.
Lakshmi Ammal [2008] 7 SCR 435: (2008) 5 SCC 796; Chander
Bhan (D) through Lr. Sher Singh v. Mukhtiar Singh & Ors. 2024
INSC 377 : [2024] 5 SCR 1148; M/s Siddamsetty Infra Projects
Pvt. Ltd. v. Katta Sujatha Reddy & Ors. 2024 INSC 861; B. Arvind
Kumar v. Govt of India & Ors. (2007) 5 SCC 745 and LICA (P) Ltd.
v. Official Liquidator (1996) 85 Comp Cas 788 (SC) - referred to.
Henderson v. Henderson [1843] 3 Hare 999; Johnson v. Gore
Wood & Co [2002] 2 AC 1; Virgin Atlantic Airways Ltd. v. Zodiac
Seats UK Ltd. [2014] AC 160; Newington v. Levy (1870) 6 CP
180 (J) and Bellamy v. Sabine (157) 1 De G&J 566 - referred to.
Books and Periodicals
Black's Law Dictionary, Sixth Edition, at page 1599 - referred to.
[2024] 12 S.C.R.
1631
Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
List of Acts
Transfer of Property Act, 1882; Contempt of Courts Act, 1971;
Constitution of India; Securitization and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002; Security
Interest (Enforcement) Rules, 2002.
List of Keywords
Wilful disobedience of judgment; Wilful; Sale certificate; Secured
asset; Borrower; Auction purchaser; Subsequent transferee; Third
party purchaser; Secured creditor; Bank; Release Deed; Discharge
of mortgage; Securitization application; Demand notice; Assignment
agreement; Lis pendens; Explicit prohibitory order; Contemptuous
conduct; Last opportunity; Contempt jurisdiction; Administration
of justice; Rule of law; Contempt of court; Beyond all reasonable
doubt; Res judicata; Constructive res judicata; Abuse of process;
Henderson Principle; Procedural fairness; Cause of action estoppel;
Issue estoppel; Decided issue estoppel; Unraised issue estoppel;
Piecemeal litigation; Registered notice of pendency; Doctrine of
Pari Delicto; Auction; Sale process; Transfer pendente lite; Duty of
the court; Power to take restitutive measures; Doctrine of election;
Maxim "expressio unius est exclusio alterius"
Case Arising From
INHERENT JURISDICTION: Contempt Petition (C) No(s). 158-159
of 2024
In
Civil Appeal No(s). 5542-5543 of 2023
Petition filed for contempt of this Court's Judgment dated 21.09.2023
in Civil Appeal Nos. 5542-5543 of 2023
With
M.A. Nos. 600-601 of 2024 In C.A. Nos. 5542-5543 of 2023
Appearances for Parties
Mukul Rohatgi, Neeraj Kishan Kaul, Raju Ramachandran,
Dr. A.M. Singhvi, Parag Tripathi, Nikhil Nayar, Devadatt Kamat,
Kapil Sibal, Chander Uday Singh, Sr. Advs., Ms. Shyel Trehan,
Gaurav Y., Pranav Sarthi, Ms. Krushi Barfiwala, Divyanshu Gupta,
Ms. Shivalika Rudrabatla, Ms. Apoorva Singh, Ms. Ira Mahajan,
1632
[2024] 12 S.C.R.
Supreme Court Reports
Keshav Sehgal, O.P. Gaggar, Sachindra Karn, Avishkar Singhvi,
Shreeyash Uday Lalit, Sanam Tripathi, Ms. Sugandha Batra,
Ms. Priyansha Sharma, Ms. Arushi Mishra, Shreyash Choudhary,
Ms. Runjhun Garg, Himanshu Vats, Angad Pahal, Lavam Tyagi,
Ishaan George, Shubhranshu Padhi, Sumeet Lal, Sidhant Kapoor,
Masoom Shah, D. Girish Kumar, Jay Nirupam, Pranav Giri, Ekansh
Sisodia, Ms. A.M. Harsavardhini, Ms. Sumedha Ray Sarkar,
Ms. Rupali Francesca Samuel, Ms. Palak Rawat, Advs. for the
appearing parties.
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*
A.
FACTUAL MATRIX ............................................................
3
i.
Facts leading upto the Decision of this Court in Civil
Appeal Nos. 5542-5543 of 2023 .................................
3
ii.
Developments during the pendency of Civil Appeal
Nos. 5542-5543 of 2023 ..............................................
10
iii. Subsequent Developments and the Acts alleged to
be in contempt thereof ...............................................
13
B.
SUBMISSIONS OF THE PARTIES ..................................
20
i.
Submissions of the Successful Auction Purchaser/
the petitioner .............................................................
20
ii.
Submissions of the Borrower/the respondent
no. 1 .................................................................................
28
iii. Submissions of the Subsequent Transferee/
respondent nos. 2 & 4 ..............................................
38
iv.
Submissions of the Bank/the respondent no. 3 .......
45
* Ed. Note: Pagination as per the original Judgment.
[2024] 12 S.C.R.
1633
Celir LLP v. Mr. Sumati Prasad Bafna & Ors.
C.
ISSUES FOR DETERMINATION ........................................
49
D.
ANALYSIS ..........................................................................
50
i.
Concept of Abuse of Process of Court and Collateral
challenge to judgments that have attained finality
....................................................................................
50
a.
The Decision of this Court in Celir LLP v. Bafna
Motors & Ors. (2023 INSC 838) and the Scope of
challenge before it ..............................................
77
b.
The 'Henderson' Principle as a corollary of
Constructive Res-Judicata .....................................
83
ii.
Applicability of Lis Pendens in the absence of any
registration as required under the State Amendment
to Section 52 of the TPA .......................................... 104
iii. Whether any contempt is said to have been
committed by the respondents herein? .................... 121
iv.
Circumstances when a sale of property by auction
or other means under the SARFAESI Act may be
set-aside after its confirmation ............................... 138
E.
FINAL ORDER ................................................................... 146
1.
Since the issues raised in both the captioned petitions are same
and the parties are also the same, they were taken up for hearing
analogously and are being disposed of by this common judgment
and order.
2.
The present petitions have been filed under Section 2(B) of the
Contempt of Court Act, 1971 (for short, the "Act, 1971") read with
Article(s) 129 and 142(2) of the Constitution respectively seeking
to initiate contempt proceedings against the respondents/alleged
contemnors for wilful disobedience of the final judgment and order
dated 21.09.2023 passed by this Court in Civil Appeal Nos. 55425543 of 2023 respectively captioned as 'Celir LLP v. Bafna Motors
(Mumbai)'.
1634
[2024] 12 S.C.R.
Supreme Court Reports
3.
For the sake of convenience, we clarify that the petitioner herein is
the successful auction purchaser, the respondent no. 1, Mr. Sumati
Prasad Bafna is the original borrower (hereinafter referred to as
the 'Original Borrower'), the respondent no. 4 'Greenscape IT
Park LLP' and its director, Mr. Jayesh A. Vavia i.e., the respondent
no. 2 herein are the subsequent transferee/third-party purchaser
(hereinafter referred to as the 'Subsequent Transferee') and the
respondent no. 3, 'Union Bank of India' is the secured creditor/bank
(hereinafter referred to as the 'Bank').
A.
FACTUAL MATRIX
i.
Facts leading upto the Decision of this Court in Civil Appeal
Nos. 5542-5543 of 2023.
4.
The Original Borrower herein had availed credit facility from the
Bank. Accordingly, the Bank on 03.07.2017 sanctioned Lease Rental
Discounting (for short, 'the LRD') credit facility to the tune of Rs. 100
crore in favour of the Borrowers. The Bank vide its letter dated
02.01.2020 further sanctioned an additional amount of Rs. 6.77
Crore towards the said LRD term loan.
5.
Against the aforesaid term loan, a simple mortgage was created over
a parcel of land admeasuring 16200 sq. metres having buildings
and ancillary structures on it at plot Nos. D-105, D 110 and D-111
respectively situated at the Trans Thane Creek Industrial Area
MIDC Village Shirwane, Thane, Belapur Road, Nerul, Navi Mumbai,
Thane, Maharashtra (hereinafter referred to as the "Secured Asset")
belonging to the Borrower vide a Mortgage Deed dated 28.01.2020
in lieu of the sanctioned credit.
6.
The Borrower defaulted in repayment of the said loan amount and
accordingly on 31.03.2021 the Borrower's LRD Term Loan Account
was declared as a Non-Performing Asset (NPA).
7.
The Bank on 07.06.2021 issued a demand notice under Section 13
sub-section (2) of the Securitization and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002 (for short,
the 'SARFAESI Act') for repayment of the principal amount along
with interest, cost, charges, etc. As of 30.04.23, an aggregate sum of
Rs. 123.83 crore was due and payable by the borrowers to the Bank.
[2024] 12 S.C.R.
1635
Celir LLP v. Mr.