# NITIN GUNWANT SHAH v. INDIAN BANK & ORS

- **Citation:** [2012] 10 S.C.R. 38
- **Court:** Supreme Court of India
- **Decided:** 2012-07-10
- **Case number:** Writ Petition No. 1747 of 2009
- **Bench:** Altamas Kabir, Gyan Sudha Misra, J. Chelameswar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nitin-gunwant-shah-v-indian-bank-ors-27952
- **Pages:** 32

## Headnote

Constitution of India, 1950 - Article 136 - Suit by
petitioner against owners of the disputed property for
declaration as a monthly tenant - Petitioner also claims to
have entered into agreement of Leave and Licence with the
owners of disputed property - Suit dismissed for nonprosecution - Suit by Bank against owners of the property for
recovery of dues from them and on failure to pay the dues,
permission sought to sell the property in dispute and to utilize
the sale proceeds for satisfaction of the dues - Bank also
made the petitioner a party to the suit and sought his eviction
from the property declaring him a trespasser - Suit of Bank
transferred to Debts Recovery Tribunal - Tribunal allowed
claim of the Bank qua the owners of property - However,
refused to decide the claim qua the petitioner as it lacked
jurisdiction to give such relief - Petitioner filing second suit,
13 years after dismissal of his first suit, against the owners of
property and the Bank, seeking the same relief and
declaration as sought in the first suit - Second suit still
pending - Attachment warrant issued in respect of the property
for recovery of dues - Petitioner's objection, that sale should
be subject to his tenancy right, rejected - Writ petition of
G
petitioner disposed of holding that if petitioner would not get
any interim protection in his second suit, he could be
dispossessed - On appeal, held: Per Chelameswar, J: The
petitioner, though in possession, the nature of his right to be
in possession, mode of acquiring the possession and legal
H
character of his possession are yet to be decided - The same
38
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
39
can be decided by appropriate forum in appropriate
A
proceeding - Such determination not permissible in exercise
of jurisdiction under Article 136 - The person in possession
as a tenant, or a licencee or a trespasser can be evicted only
in accordance with the procedure established by Law - The
procedure for eviction of such person is provided under CPC
B
and alternative procedure is provided under ss. 25, 29 of 1993
Act and also Rules 39, 40, 41, 42 and 43 under Income Tax
Rules - In the instant case, the sale of the property of the
judgment-debtors (owners of property) is in pursuance of the
procedure established by law - Petitioner's possession of the c
disputed property cannot be protected in exercise of
jurisdiction under Article 136 - Bank is at liberty to proceed
with the sale of the property - Petitioner, even if loses
possession of the property, can seek restitution of possession,
if he succeeds in the suit for declaring him as tenant - Per 0
Kabir, J: The second suit by the petitioner was barred u/O.
23 r. 1(4) CPC - The petitioner who abandoned his first suit
for declaration as tenant cannot take advantage of the lapse
viz. suit of Bank was transferred to Tribunal who had no
jurisdiction to adjudicate upon declaring the petitioner as
E
trespasser - Code of Civil Procedure, 1908 - Or. 21 r. 98 and
Or. 23 r. 1 (4) - Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 - ss. 25 and 29 - Income Tax Certificate
Proceedings Rules, 1962 - rr. 39, 40, 41, 42 and 43.
Petitioner's claim was that he entered into a 'Leave
F
and Licence' agreement dated 6.5.1989 with respondent
Nos. 4 and 5, whereby the property in dispute was given
on lease to the petitioner. On 23.2.1990, he took the
possession of the property. A few days thereafter, the
petitioner filed Suit No. 1719/190 before Small Causes
G
Court against respondent Nos. 4 and 5 for a declaration
that he was a monthly tenant in respect of the disputed
property. The Court, by an interim order directed both the
parties to maintain status quo. However, the Suit was
dismissed by order dated 19.2.1993 for non-prosecution.
H
40
SUPREME COURT REPORTS
[2012) 10 S.C.R.
A
In the meantime, the respondent-Bank filed suit No.
3038/1992 in the High Court against respondent Nos. 2
to 5 and the petitioner. The case of the Bank was that
respondent N

## Text

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[2012] 10 S.C.R. 38
NITIN GUNWANT SHAH
v.
INDIAN BANK & ORS.
(SLP (Civil) No. 22785 of 2010)
JULY 10, 2012
[ALTAMAS KABIR, GYAN SUDHA MISRA AND
J. CHELAMESWAR, JJ.]
Constitution of India, 1950 - Article 136 - Suit by
petitioner against owners of the disputed property for
declaration as a monthly tenant - Petitioner also claims to
have entered into agreement of Leave and Licence with the
owners of disputed property - Suit dismissed for nonprosecution - Suit by Bank against owners of the property for
recovery of dues from them and on failure to pay the dues,
permission sought to sell the property in dispute and to utilize
the sale proceeds for satisfaction of the dues - Bank also
made the petitioner a party to the suit and sought his eviction
from the property declaring him a trespasser - Suit of Bank
transferred to Debts Recovery Tribunal - Tribunal allowed
claim of the Bank qua the owners of property - However,
refused to decide the claim qua the petitioner as it lacked
jurisdiction to give such relief - Petitioner filing second suit,
13 years after dismissal of his first suit, against the owners of
property and the Bank, seeking the same relief and
declaration as sought in the first suit - Second suit still
pending - Attachment warrant issued in respect of the property
for recovery of dues - Petitioner's objection, that sale should
be subject to his tenancy right, rejected - Writ petition of
G
petitioner disposed of holding that if petitioner would not get
any interim protection in his second suit, he could be
dispossessed - On appeal, held: Per Chelameswar, J: The
petitioner, though in possession, the nature of his right to be
in possession, mode of acquiring the possession and legal
H
character of his possession are yet to be decided - The same
38
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
39
can be decided by appropriate forum in appropriate
A
proceeding - Such determination not permissible in exercise
of jurisdiction under Article 136 - The person in possession
as a tenant, or a licencee or a trespasser can be evicted only
in accordance with the procedure established by Law - The
procedure for eviction of such person is provided under CPC
B
and alternative procedure is provided under ss. 25, 29 of 1993
Act and also Rules 39, 40, 41, 42 and 43 under Income Tax
Rules - In the instant case, the sale of the property of the
judgment-debtors (owners of property) is in pursuance of the
procedure established by law - Petitioner's possession of the c
disputed property cannot be protected in exercise of
jurisdiction under Article 136 - Bank is at liberty to proceed
with the sale of the property - Petitioner, even if loses
possession of the property, can seek restitution of possession,
if he succeeds in the suit for declaring him as tenant - Per 0
Kabir, J: The second suit by the petitioner was barred u/O.
23 r. 1(4) CPC - The petitioner who abandoned his first suit
for declaration as tenant cannot take advantage of the lapse
viz. suit of Bank was transferred to Tribunal who had no
jurisdiction to adjudicate upon declaring the petitioner as
E
trespasser - Code of Civil Procedure, 1908 - Or. 21 r. 98 and
Or. 23 r. 1 (4) - Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 - ss. 25 and 29 - Income Tax Certificate
Proceedings Rules, 1962 - rr. 39, 40, 41, 42 and 43.
Petitioner's claim was that he entered into a 'Leave
F
and Licence' agreement dated 6.5.1989 with respondent
Nos. 4 and 5, whereby the property in dispute was given
on lease to the petitioner. On 23.2.1990, he took the
possession of the property. A few days thereafter, the
petitioner filed Suit No. 1719/190 before Small Causes
G
Court against respondent Nos. 4 and 5 for a declaration
that he was a monthly tenant in respect of the disputed
property. The Court, by an interim order directed both the
parties to maintain status quo. However, the Suit was
dismissed by order dated 19.2.1993 for non-prosecution.
H
40
SUPREME COURT REPORTS
[2012) 10 S.C.R.
A
In the meantime, the respondent-Bank filed suit No.
3038/1992 in the High Court against respondent Nos. 2
to 5 and the petitioner. The case of the Bank was that
respondent No. 4 had taken overdraft facility from the
Bank and had failed to pay the amount. The Bank sought
B for the recovery of the amount. It also sought a
declaration that the amount claimed was secured by a
mortgage of the property (property in dispute) by a deed
dated 27.9.1989 and in failure, property in dispute to be
sold and sale proceeds to be applied towards the
c satisfaction of the claim of the Bank. The Bank further
prayed for a decree of eviction against the petitioner who
was in possession of the property, on the ground that he
was a trespasser without any right, title or interest. The
suit was transferred to Debts Recovery Tribunal, after the
0 Recovery of Debts Due to Banks and Financial
Institutions Act, 1993, came into force. The Tribunal by its
order dated 19.6.2002 allowed the claim of the Bank qua
respondent Nos. 2 to 5. But dismissed the case qua the
petitioner holding that it lacked jurisdiction to adjudicate
E the dispute between the petitioner and the Bank.
After about 13 years from the date of dismissal of suit
No. 1719/1990, the petitioner filed Suit No. 1389/2006
against respondent Nos. 4 and 5 and also the
respondent-Bank, seeking the same declaration and
F relief. This suit is still pending.
An attachment warrant was issued in respect of the
property for recovery of due amount to the respondentBank. The petitioner filed objection to that, and prayed
that the fact that an encumbrance by way of tenancy
G existed on the property, should be notified in the sale
proclamation. Petitioner's objection was rejected. In
appeal against the order, tribunal by interim order
directed not to evict the petitioner and that sale be made
subject to the occupancy rights of the petitioner. By final
H
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
41
order, the appeal was dismissed. Further appeal thereA
against was also dismissed by App~!late Tribunal.
Challenging that order, petitioner filed writ petition, which
was disposed of by High Court.
·
·
Petitioner approached this court by way of present 8
petition. This Court by an interim order directed status
quo for a specified period. As the interim order was not
extended further, the Bank filed application before Debts
Recovery Tribunal seeking direction to petitioner to
deliver possession of the property and the same was
allowed. This court again directed status quo.
C
Dismissing the petition, the Court
HELD: Per Chelameswar, J. (for himself and Gyan
Sudha Misra. J.)
1. This is a typical case of the abuse of the process
of the legal system by unscrupulous litigants. The
petitioner claims to be a tenant in the property in dispute.
No doubt, the petitioner is in possession of the property
D
in dispute. However, the nature of his right to be in
E
possession, the mode of his acquiring the possession,
and the legal character of his possession are yet to be
ascertained. The only certain fact is that the petitioner
has been in possession of the property in dispute as on
the date of the filing of the original suit No.3038 of 1992
F
in the High Court of Bombay by the first respondentBank. Of course, the petitioner asserts that he was
inducted into possession of the property in dispute on
23rd February, 1990 allegedly the brothers-in-law of the
fourth respondent. No forum so far examined the
accuracy of such an assertion, both regarding the date,
G
the alleged delivery of possession and also regarding the
alleged relationship of the persons who are said to have
given possession to the petitioner. (Para 23) [57-F-H; 58A-B]
H
A
B
c
D
E
42
SUPREME COURT REPORTS
[2012] 10 S.C.R.
2. The case of the petitioner, regarding the legal
character of the possession of the property in dispute
itself is not consistent. The agreement dated 6th May,
1989 alleged to have been executed by respondents
Nos.4 and 5, in favour of the petitioner (whose
authenticity is yet to be established) is styled as an
Agreement of "Leave and Licence". On the other hand,
reading the document as a whole, gives an impression
that the parties did not intend the document to be
creating any tenancy or a lease. However, right from the
plaint in Suit No.1719/1990, the petitioner started
describing himself as a tenant of the property. But the
case of the Bank has been consistent from the beginning
that the petitioner is a trespasser. Ultimately, these are all
questions to be determined on an examination of all the
materials, by an appropriate forum in an appropriate
proceeding. Whether a person in possession of
immovable property is a tenant or a licencee or a
trespasser, he cannot be evicted except in accordance
with the procedure established by law. [Para 24] [58-BD; G-H; 59-A-B]
3. The respondent-Bank initially chose to seek a
decree of eviction against the petitioner on the ground
that he is a trespasser in the property in dispute by filing
Suit No.3038/1992 apart from seeking various other reliefs
F
against respondent Nos. 4 and 5 in the said suit. However,
such a suit came to be transferred in its entirety by an
act of the High Court, relying upon Section 31 of the Act
51 of 1993 to the tribunal, constituted under the
abovementioned Act. While allowing the·claim of the
G
respondent-Bank for recovery of the amount due from
respondent Nos. 4 and 5, the tribunal reached the
>
conclusion that the suit, insofar as the petitioner herein
is concerned, is not amenable to the jurisdiction of the
tribunal. In such case, in the normal course, that part of
H
the suit insofar as it pertains to the relief against the
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
43
petitioner shall be deemed to be pending before the High A
Court. This legal position was not examined either by the
counsel appearing for the Bank nor the tribunal or for that
matter even the High Court before transferring the abovementioned suit. The result is that the exact legal status
of the petitioner vis-a-vis the property in dispute is not B
examined by any court so far. All submissions made
before this Court seek an examination of the issue. Such
an examination is not permissible in this Court for the first
time in exercise of the jurisdiction under Article 136 of the
Constitution of India. It requires the establishment of c
basic facts which requires the framing of evidence. [Para
27] [60-A-E]
4. Adjudication of civil disputes and enforcement of
the rights of the parties to the dispute in terms of the 0
adjudication are matters provided for under CPC, the
procedure established by law. The person entitled in law
to the possession of any immovable property, which is
in the occupation of some other persons whether a
tenant, licencee or trespasser can evict such tenant,
licencee or trespasser by obtaining a decree for eviction
E
from a competent civil court. [Para 25] [59-B-C]
5. Attachment and sale of immovable properties of a
person, who is adjudged to be owing some amount to
another person is one of the modes of securing the F
repayment of such judgment debt. When an immovable
property of the judgment-debtor is brought to sale in
order to recover the amounts adjudicated to be due, the
possibility of such a property being in the possession of
a third party, either pursuant to some legal right or G
otherwise is recognised by law. Law also recognises the
possibility of such a third party objecting to or resisting
his dispossession in the process of delivering the
possession of the property to the purchaser in the
execution proceedings. When such resistance is offered,
H
44
SUPREME COURT REPORTS
[2012] 10 S.C.R.
A
law also contemplates an examination whether the
resistance is justified or not. Depending upon the
conclusion arrived at such an examination, the third
party's possession is either protected or he is evicted.
Elaborate provisions have been made in this regard
B under Order 21 CPC. However, the legislature can create
special/alternative procedure for the eviction of either a
judgment-debtor or a third party. [Para 26) [59-D-G]
6. The scheme of the provisions u/ss. 25 and 29 of
1993 Act and Rules provisions 39, 40, 41, 42 and 43 of
C the Income Tax Certificate Proceedings Rules, 1962
clearly establish an alternative procedure for the eviction
of a person (3rd party to the proceedings) in occupation
of a property which is brought to sale pursuant to a
Recovery certificate issued under the 1993 Act. The
D possibility of .a person other than the judgment-debtor,
being in possession of the property of the judgmentdebtor is recognised even under Order 21 and under
Rule 98 CPC. It provides for the eviction of such persons
in an appropriate case where it is found that the person
E in possession is not legally entitled for the same. The
Rules under the Income Tax Act which are adopted for
the purpose of the Recovery of debts due to the financial
institutions and Banks under the 1993 Act also provide
a similar authority of law. The law further provides under
F
Rule 47 that any person so evicted is entitled to file a
separate suit to establish his legal claim. Obviously, such
a right is acknowledged in recognition of the fact that an
enquiry of the claim of the third party under the Rules is
summary in nature by a Quasi Judicial Forum and
G therefore, an examination of the issue by a Judicial Forum
would adequately protect the interests of such third party
or the purchaser, as the case may be. [Para 36] [65-A-E;
66-A]
H
7. It is in pursuance of the above mentioned
NITIN GUNWANT SHAH v. lNDIAN BANK & ORS.
45
procedure established by law, the property of the A
judgment-debtors (respondent Nos. 4 & 5) is sought to
be sold. The petitioner's insistence that such a sale
should be subject to his rights of the alleged tenancy is
ill-conceived. The rules no doubt enable the petitioner to
object to his dispossession on whatever grounds he
B
believes are available to him. The Recovery Officer is
obliged to examine the tenability of such objections and
take an appropriate decision. If such a decision is
adverse to the interests of the petitioner, the petitioner is
entitled to file a suit and seek an adjudication of his right c
to protect his interest. Whether the petitioner is a tenant
or a trespasser is a matter to be decided in such a suit.
The petitioner had already approached the High Court by
filing Suit No. 1389 of 2006, wherein one of the prayers
is for a declaration that the petitioner herein is a monthly D
tenant of respondent Nos. 4 and 5. [Para 37] [66-A-E]
8.The issue whether the petitioner is a tenant or a
trespasser is to be examined in the said suit. As of today,
his assertion that he is a tenant is refuted by the statutory
E
authority. Even if such a conclusion is an erroneous
conclusion, the same can be corrected in the suit No.
1389/2006, subject to the maintainability of the suit on any
one of the grounds available to the respondent-Bank.
[Para 38] [66-F, G-H; 67-A]
F
,_
9. Interference in exercise of the jurisdiction under
Article 136 of the Constitution with the impugned
judgment and protecting the petitioner's possession in
the property in dispute would only delay the sale of the
"'
property in dispute thereby effectively postponing the
G
recovery of the amounts due to the respondent-Bank
-
indefinitely. The respondent-Bank is a Nationalised Bank
dealing with the moneys of the general public. On the
other hand, the petitioner is not absolutely remediless
even if he loses the possession of the property in dispute
H
46
SUPREME COURT REPORTS
(2012] 10 S.C.R.
A pursuant to the recovery proceedings initiated by the
respondent-Bank. The petitioner can always seek
restitution of the possession of the property in dispute
in the event of his success in Suit No. 1389 of 2006.
Therefore, there is no reason to interfere with the
B judgment under appeal. The respondents are at liberty to
proceed with the sale of the property in dispute. and
hand-over the possession of the property to the
purchaser, after evicting the petitioner. [Paras 39, 40 and
41) [67-B-E]
c Per Altamas Kabir, J.(supplementing)
1. The second suit, being Suit No.1389/2006, filed by
the petitioner, against Respondent Nos. 4 and 5 and the
respondent-Bank, for the same declaration that was
D sought in the earlier suit, being R.A.No. 1719of1990, and
which was dismissed for non-prosecution, is barred
under Order XXlll Rule 1 Sub-rule (4) CPC. The said
question has a definite bearing on the grant of an interim
order, as prayed for by the petitioner. [Para 2 & 3) [68-AE D, G]
2. The suit filed by the respondent-Bank against ·
respondent Nos. 4 and 5, for recovery of the dues also
sought a declaration against the petitioner as the fifth
F defendant in the suit, that he was a trespasser in the suit
premises without any right, title or interest and also
prayed for a decree for his eviction therefrom. With the
enactment of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993, the suit filed by the
respondent-Bank came to be transferred to the Debt
G Recovery Tribunal. The Court and the parties overlooked
the fact that in the suit relief had also been prayed for
against the petitioner for declaring him as a trespasser
in the suit property and for his eviction therefrom, which
relief the Debts Recovery Tribunal was not competent to
H give. On account of such a lapse on the part of all
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
47
concerned, the relief sought by the respondent-Bank A
against the petitioner for declaration of his status vis-avis the suit property and his eviction therefrom, remained
undecided. The petitioner, who abandoned his suit for
declaration that he was a tenant of the suit premises,
cannot at this stage of the proceedings, be allowed to B
take advantage of such lapse, in view of' the provisions
of Sub-rule (4) of Order XXlll Rule 1 CPC. [Paras 4, 5 and
6] [68-H; 69-A-F]
CIVIL APPELLATE JURISDICTION : SLP (Civil) No. C
22785 of 2010.
From the Judgment & Order dated 30.6.2010 of the High
Court of Judicature at Bombay in Writ Petition No. 1747 of
2009.
D
Bhaskar P. Gupta, Arunabh Chowdhury, Anupam Lal Das,
Raktim Gogoi, Vaibhav Tomar for the Petitioner.
Sudhir Chandra Agarwal, Himanshu Munshi, Prithvi Pal for
the Respondents.
E
The Judgments of the Court was delivered by
CHELAMESWAR, J. 1. Respondent No. 5 is the wife of
respondent No.4. Both are said to be the residents of Florida,
USA. It is asserted by all the parties to the present proceedings
that the property in dispute, a flat in Amar Jyoti Cooperative F
Society, 28-C, Ridge Road, Malabar Hills, Mumbai, is owned
by respondents 4 and 5 (hereinafter referred to as the property
in dispute).
2. The petitioner claims that he entered into an agreement G
dated 6th May, 1989 styled as "Leave and License" Agreement
by which the respondents 4 and 5 agreed to lease the property
in dispute to the petitioner.
3. Admittedly, the petitioner was not put in possession of H
48
SUPREME COURT REPORTS
[2012] 10 S.C-8.
A the property in dispute immediately on the execution of the
abovementioned agreement. As regards the possession of the
petitioner, it is stated by the petitioner in Writ Petition No. 1747/
2009 from out of which the instant appeal arise~ as follows:
B
c
D
E
,F
G
"At the time of execution of the said Agreement, the
Respondent Nos. 4 & 5 informed the Petitioner that they
intended to go to U.S.A. for an extended visit and they
needed some time to make the necessary arrangements
mainly for their furniture and articles. The Respondent Nos.
4 and 5, therefore, requested the Petitioner to allow them
some time to do so before they would hand over the
physical possession of the said premises. The Petitioner
agreed to this, as he was helpless in the matter.
Apparently, the Respondent Nos. 4 & 5 delayed their
arrangements. Finally on or about 2nd February, 1990, the
Petitioner was informed by one Yogesh M. Kamani and
one Madhubai A. Gandhi, both the brothers-in-law of the
Respondent No.4 that the Respondent Nos. 4 & 5 had
removed their articles and the keys which were with them.
They suggested that the Petitioner take the keys and take
over the possession of the said premises. These two
persons were known to the Petitioner and had been
introduced to him by the Defendant No.4. They also told
Petitioner that they were holding authority from the
Respondent Nos. 4 & 5 and that the Respondent Nos. 4
& 5 had left for U.S.A. the previous day but had done so
hurriedly and therefore had not contacted the Petitioner
before their departure. Accordingly on 23rd February
1990, they gave the keys of the flat to the Petitioner and
the Petitioner shifted into the said premises with his family
and articles and continues to reside there and be in
exclusive possession, enjoyment, use and occupation
thereof till today."
(emphasis supplied)
H
4. It appears from the record that respondent No. 4 owed
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
49
[J. CHELAMESWAR. J.]
certain amounts to the 1st respondent bank on account of an
A
over draft facility extended to him and certain other transactions
(the details of which are not necessary for the present purpose).
It appears that such liabilities were incurred for the benefit of
the second respondent, a sole propriety concern owned by the
HUF of which the fourth respondent is said to be the karta. It
B
appears that respondents 4 and 5 executed several
documents in favour of the 1st respondent in connection with
the above transaction including a deed dated 27 .09.1989
creating a mortgage over the property in dispute in favour of
the 1st respondent Bank.
c
5. As the amounts due to the Bank under the above
mentioned transaction were not repaid, the first respondent filed
a suit No.3083/1992 in the High Court of Bombay against
respondents 2 to 5 and also the petitioner herein for the
recovery of an amount of Rs.33,71,862/- alongwith interest and
various other reliefs. The first respondent, inter alia, sought a
declaration that the amounts claimed and due to the first
respondent are secured by "a valid and subsisting mortgage"
of the property in dispute and further prayed that in the event
of failure of the respondent 4 and 6 herein to repay the amount
due to the first respondent Bank before the date of redemption
to be fixed by the Court, "the property in dispute be sold and
the sale proceeds be applied towards the satisfaction of the
claim of the Bank".
6. The petitioner herein is the fifth defendant in the said
suit. In so far as the petitioner is concerned, the 1st respondent
sought a declaration that the petitioner is a trespasser without
any right, title or interest in the disputed property and further
D
E
F
prayed for a decree for eviction of the petitioner.
G
"(g) that it be declared by the Hon'ble Court that defendant
No.5 has no right, title or interest in the said flat described
in Exhibit 'A' hereto or any party thereof and that the use,
occupation and possession of Defendant No.5 of the said
flat described in Exhibit 'A' hereto is wrongful and illegal
H .
A
B
50
SUPREME COURT REPORTS
(2012] 10 S.C.R.
and amounts to trespass.
(h) that defendant No.5 be ordered and decreed to quit,
vacate and hand over quiet, vacant and peaceful
possession of the said flat described in Exhibit 'A' hereto
to Defendants Nos. 3 and/or the plaintiffs."
7. In the abovementioned suit, the first respondent Bank
obtained an ex parte ad interim order dated 1st October, 1992.
By the said order, the Court took note of the fact that the
petitioner herein is residing in the disputed premises but under
C
doubtful authority and therefore appointed a receiver. The
relevant portion of the order reads as follows:-
D
E
F
G
H
"Malabar Hill, Bombay, which is under mortgage
under indenture dated 27th September 1989. The said
indenture says that the mortgagors viz. Defendants Nos.
3 and 4 are residing in the said flat. Again in a writ petition
filed by defendants Nos. 3 and 4 on 8th February 1990,
there is a mention that defendants Nos. 3 and 4 are
residing therein. Through the correspondence the plaintiffs
have come to know that the 5th Defendant is occupying
the said flat under the leave and licence agreement dated
6th May, 1989. According to plaintiffs this is a sham and
bogus document. At the same time writ petition does not
mention that defendants Nos. 3 and 4 have not been
residing in the suit flat. Prima facie case made out. Adinterim in terms of prayer (a) except the bracketed portion.
Court Receiver is directed to allow the 5th defendant to
occupy the flat only if the 5th defendant is ready and willing
to occupy the same as the Receiver's agent on usual terms
and conditions. Ad-interim relief also in terms of prayer (b)
of the Draft Notice of Motion except the bracketed portion.
Court Receiver to act on the ordinary copy of this
order certified by the Associate as true copy.
Certified copy expedited."
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
51
[J. CHELAMESWAR, J.]
8. Pursuant to the said order, the receiver appointed by
A
the Court visited the disputed property on 23rd October, 1992,
took formal possession of property in dispute and allowed the
petitioner herein to continue in possession of the property after
obtaining an undertaking from him in terms of the order of the
Court (dt. 1.10.1992).
B
9. The petitioner further executed an agreement dated
7.1.1997 containing various terms and conditions subject to
which he would continue in possession of the property in
dispute as an agent of the receiver. The ex parte interim order
dated 1.10.1992 appointing the Receiver came to be
C
confirmed by an order dated 13th June, 1997.
10. The recovery of Debts due to Banks and Financial
Institutions Act, 1993 hereinafter referred to as the 1993 Act
for the sake of convenience, made by the Parliament came into
D
force w.e.f. 24.06.1993. The abovementioned Suit No.3083/
1992 was transferred to the Debts Recovery Tribunal, Mumbai
(constituted under Section 3 of the said Act) in compliance of
the requirement of law under Section 31 and the same was
renumbered as OA No.3585/2000. The petitioner herein filed
his written statement before the Debts Recovery Tribunal and
questioned the Tribunal's jurisdiction to grant any relief against
the petitioner. However, respondents 4 and 5 did not appear
and contest the proceedings before the Debts Recovery
Tribunal. As a result, the claim of the Bank came to be allowed
by an order dated 19.6.2002 declaring that the defendants 1
to 4 (respondents 2 to 5 herein) are jointly and severally liable
E
F
to pay the amount claimed by the Bank with interest and such
payment is secured by a valid mortgage of the property in
dispute and further directed the respondents 2 to 5 to make
G
the payment "within a period of three months for avoiding the
sale of the mortgaged property". The Tribunal, however,
dismissed the abovementioned OA in so far as the petitioner
herein is concerned, holding in substance that it lacked
jurisdiction to adjudicate the dispute between the petitioner and
H
. the respondent-Bank.
52
SUPREME COURT REPORTS
[2012] 10 S.C.R.
A
11. Aggrieved by the dismissal of the said OA in so far
as the petitioner is concerned, the first respondent Bank
preferred an appeal No. 7612002 before ·the Debt Recovery
Appellate Tribunal, Mumbai which was also dismissed by an
order dated 5.4.2004. The matter was further carried by the first
B respondent Bank in Writ Petition No.9337/2004 before the High
Court of Bombay which also came to be dismissed by an order
dated-14.2.2005 of a Division Bench.
12. Pursuant to the order of the Debts Recovery Tribunal
C dated 19.6.2002 against respondents 2 to 5 herein, the first
respondent Bank initiated proceedings for recovery of the
amount specified in the recovery certificate issued under
Section 19(22) dated 16.09.2002.
13, Though the petitioner claims to have taken possession
D of the .oroperty in dispute on 23rd February, 1990, within a
couple of weeks thereafter, he filed a suit bearing RAD Suit
No.1719/1990 on the file of the Small Causes Court, Mumbai
agaioot respondents 4 and 5 herein for a declaration that the
petitioner is a monthly tenant in respect of the property in dispute
E and other reliefs. During the pendency of the said suit, he also
sought an interim injunction restraining respondents 4 and 5 and
their servants, agents etc. from dispossessing him from the
disputed property. The Small Cause Court issued an ad interim
order dated 9.3.1990 directing both the parties to maintain
F status quo till 14.3.1990. However, the said RAD Suit No.1719/
1990 came to be dismissed on 19.2.1993 for non-prosecution.
The petitioner allowed the said dismissal order to become final
and 13 years thereafter filed a fresh RAD Suit No.1389/2006
against respondents 4, 5 and also the 1st respondent Bank
G once again for a declaration that he is a monthly tenant of the
disputed property and respondents 4 and 5 herein and their
servants, agents and persons claiming through them be
restrained from dispossessing the petitioner. In the said suit,
the petitioner no doubt disclosed the filing of the earlier suit,
i.e. RAD Suit No.1719/1990 and dismissal of the same for
H
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
53
[J. CHELAMESWAR, J.]
default. However, the burden of the song in the fresh plaint is
A
that such a default occurred earlier on an erroneous legal
advice by his erstwhile counsel who appeared in the earlier suit.
The petitioner herein also filed an application in the RAD Suit
No.1389/2006 seeking an interim injunction restraining the
defendants from disturbing his possession over the disputed
premises. The said application was dismissed by an order
dated 21st August, 2010. Consequent upon the said dismissal,
B
the first respondent Bank filed an application date_d 26.8.2010
(in OA No.3583/2000) before the Debts Recovery Tribunal-II,
Mumbai seeking a direction to the petitioner herein to deliver c
physical possession of the disputed premises. In the
meanwhile, this Court granted an interim order in favour of the
petitioner on 7.9.2010 directing the parties to maintain status
quo for a period of six weeks or until further orders whichever
is earlier.
14. The property in dispute is brought to sale for the
recovery of amount found due by the Debt Recovery Tribunal's
order dated 19.6.2002 and consequent recovery certificate. An
attachment warrant came to be issued by the Recovery Officer
D
on 4th September, 2005 attaching the property in dispute. The
E
petitioner herein filed objections. The substance of the objection
is that the 1st respondent Bank has no right to secure vacant
possession of the property in dispute from the petitioner herein.
Consequently the respondent Bank cannot sell the property free
from all incumberances. He, therefore, prayed that the fact that
F
an incumberance by way of tenancy exist on the property in
dispute should be notified in the sale proclamation.
15. The first respondent Bank filed its reply. The matter
was listed before the Recovery Officer on more than one
G
occasion and finally the application of the petitioner herein was
dismissed for default on 20th July, 2007. The petitioner
thereafter filed a miscellaneous application before the Recovery
Officer praying that the order dated 20.7.2007 be set aside with
a further prayer that during the pendency of the said application,
H
54
SUPREME COURT REPORTS
(2012] 10 S.C.R.
A the terms of the sale of the property in dispute shall not be
finalised. The said application was dismissed by the order of
the Recovery Officer dated 9th January, 2008.
16.Aggrieved by the same, the petitioner herein carried
B the matter in appeal (Appeal No.11/2008). By an interim order
dated 14th March, 2008, the Tribunal directed as follows:
"O R D E R
(A) The Recovery Officer is directed not to evict Appellant
c
from suit property till further order.
(B) The Recovery Officer is permitted to sale suit property
subject to occupancy rights of the Appellant till further
order."
D
17. By a final order dated 10th June, 2009, the said appeal
came to be dismissed.
18. Aggrieved by the said dismissal, the petitioner herein
carried the matter in a further appeal before the Debts Recovery
E Appellate Tribunal, Mumbai in Appeal No. 186/2009. The said
appeal was also dismissed by an order dated 21st July, 2009
which was in turn challenged by the petitioner in a writ petition
No. 1747/2009 before the Bombay High Court.
19. By the order under appeal before us dated 3oth June,
F 2010, the Bombay High Court disposed of the writ petition. The
operative portion of the order reads as follows:-
"11. Considering the peculiar facts of the case, we direct
that the Court of Small Causes should dispose of
G
applications at Exhibit-19 and 21 in R.A.D. Suit No.1389
of 2006 pending before it as expeditiously as possible and
within a period of eight weeks from today. Till the
application is disposed of, the 1st respondent/bank will not
dispossess the petitioner to unable to secure any interim
H
protection in the pending suit, he can be dispossessed in
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
55
[J. CHELAMESWAR, J.]
execution of the Recovery certificate by the 1st respondent/ A
bank and the Recovery Officer will be entitled to enforce
the certificate and sell the property/flat for recovery of the
dues mentioned therein.
12. The petition stands disposed of in the above terms.
B
All concerned to act on the authenticated copy of this
order."
20. Aggrieved by the order dated 13th June, 2010 of the
Bombay High Court, the petitioner herein approached this Court
by way of the instant special leave petition. On 7.9.2010, this C
Court passed an interim order which has already been taken
note of at para 11. Since the order was limited for a specified
period in operation and as there was no further extension of
the interim order, the respondent Bank filed an application on
13th December, 2011 before the Debts Recovery Tribunal-II,
D
Mumbai once again seeking a direction to the petitioner herein
to deliver the possession of the property in dispute. The said
application was allowed by an order of the Debts Recovery
Tribunal-II, Mumbai dated 4.1.2012 directing the petitioner to
hand over possession of the portion of the dispute property.
E
Thereupon the petitioner moved this Court in I.A. No.3/2011 and
this Court by an order dated 6th January, 2012 directed that
"till 6th February, 2012, the parties are once again directed to
maintain status quo with regard to the flat in question".
F
21. It is argued by Mr. Bhaskar P. Gupta, learned senior
counsel for the petitioner -
(i) that the petitioner is a tenant of the property in dispute
and, therefore, he cannot be evicted except in accordance
with the procedure established by law;
G
(ii) that the petitioner is not either a debtor or a guarantor
of any debt due to the 1st respondent Bank and, therefore,
the Debts Recovery Tribunal would be without any
jurisdiction (as rightly held by the tribunal) to order the
H
A
B
c
D
E
F
G
H
56
SUPREME COURT REPORTS
[2012] 10 S.C.R.
eviction of the petitioner. Consequently, the Recovery
Officer cannot evict the petitioner in the purported exercise
of the recovery certificate;
(iii) that the petitioner acquired the tenancy rights in the
property in dispute at a point of time prior to which the
landlord of the petitioner incurred the liabilities due to the
bank and the mortgage created by the landlord is much
later than the tenancy agreement between the petitioner
and his landlord (respondent No.4). Therefore, it cannot be
said that the petitioner's tenancy is subject to the rights of
the mortgagee (the respondent Bank);
(iv) assuming for the sake of arguments that the petitioner
is not a tenant but only a trespasser, as contended by the
respondent Bank, even then the petitioner is required to
be evicted from the property in dispute by the procedure
established by law. The recovery certificate issued by the
Debts Recovery Tribunal is not a procedure established
by law for evicting 'a trespasser' (petitioner);
(v) that in view of the pendency of his suit RAD No.1389/
2006, the petitioner cannot be evicted until the said suit is
adjudicated upon.
22. On the other hand, it is argued by learned counsel for
the respondent Bank:
(i) that the conduct of the petitioner in allowing his Suit RAD
No.1719/1990 to be dismissed for non-prosecution and
filing a fresh Suit for the same relief 13 years thereafter
while he is comfortably squatting in the property would
disentitle the petitioner from raising an objection that until
the fresh suit RAD No.1389/2006 is decided, his
possession cannot be disturbed;
(ii) the registered mortgage in favour of the respondent
Bank for the property in dispute was created on 27.9.1989
-
NITIN GUNWANT SHAH v. INDIAN BANK & ORS.
57
[J. CHELAMESWAR, J.]
whereas the petitioner entered possession of the property,
A
even according to his own assertion, on 23rd February,
1990, i.e. after a lapse of four months after the mortgage
is created.
(iii) the alleged Leave and License Agreement itself is a B
bogus and sham transaction.
(iv) the petitioner's possession is clearly that of a
trespasser.
(v) The mortgage in question is in the nature of an English C
mortgage. In the mortgage deed the respondent No.4
clearly asserted that he was in the possession of the
property in dispute. Therefore, he could not have legally
inducted any person into possession of the property in
dispute after the execution of the mortgage.
o
(vi) Lastly, the learned counsel submitted that in view of the
language and Scheme of the 2nd Schedule to the Income
Tax Act, which are made applicable to the recovery
proceedings under the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993, more specifically Rule
E
40 therein, the Recovery Officer is entitled to evict the
petitioner, though the petitioner is not either a debtor to the
bank or a guarantor to any debtor to the bank irrespective
of the fact whether he is a trespasser or a tenant to the
property in dispute.
F
23. In our opinion, this is a typical case of the abuse of
the process of the legal system by unscrupulous litigants. The
petitioner claims to be a tenant in the property in dispute. No
doubt, the petitioner is in possession of the property in dispute. G
However, the nature of his right to be in possession, the mode
of his acquiring the possession and the legal character of his
possession are yet to be ascertained .. The only certain fact is
that the petitioner has been in possession of the property in
dispute as on the date of the filing of the original suit No.3038 H
58
SUPREME COURT REPORTS
(2012] 10 S.C.R.
A
of 1992 in the High Court of Bombay by the first respono,ent
Bank. Of course, the petitioner asserts that he was inducted
into possession of the property in dispute on 23rd February,
1990 by one Yogesh M. Kamani and Madhubai A. Gandhi,
allegedly the brothers-in-law of the fourth respondent. No forum
B
so far examined the accuracy of such an assertion, both
regarding the date, the alleged delivery of possession and also
regarding the alleged relationship of the persons who are said
to have given possession to the petitioner.
24. On the other hand, the case of the petitioner regarding
C
the legal character of the possession of the property in dispute
itself is not consistent. The agreement dated 6th May, 1989
alleged to have been executed by respondents 4 and 5 in
favour of the petitioner (whose authenticity is yet to be
established) the document is styled as an Agreement of "Leave
D
and Licence". It purports to grant a "licence" in favour of the
petitioner of the property in dispute to use and occupy the same
on a "monthly compensation" of Rs.2000/- and for a period not
exceeding "11 months commencing from 15th day of August,
1989" with a further specific stipulation which reads (in the copy
E
filed before this Court) as follows:
" ...