# y - )> PAUL BROTHERS (TAILORING DIVISION) AND ORS. ETC v. ASHIM KUMAR MANDAL AND ORS. ETC

- **Citation:** [1990] 2 S.C.R. 283
- **Court:** Supreme Court of India
- **Decided:** 1990-04-02
- **Case number:** Civil Appeal Nos. 175556 of 1990
- **Bench:** S. Ranganathan, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/y-paul-brothers-tailoring-division-and-ors-etc-v-ashim-kumar-mandal-and-ors-etc-10745
- **Pages:** 35

## Headnote

Practice and Procedure: Sanchaita case-Directions of Supreme
Court explained.
These appeals arose as a sequel to certain directions of this Court
in the famous Sanchaita Investment Company case, which by dint
of tremendous advertisement campaign collected deposits amounting
to several crores of rupees from thousands of depositors spread all
over India, The firm prospered and thereafter tied up and siphoned
away a sizeable portion of its funds from its coffers for the benefit of
the management personnel by acquiring movable and immovable
properties in the names of the firm, relatives and benamidars.
Then they started making defaults in its obligations to tbe depositors.
The depositors approached the High Court and eventually the
matter came up to this Court in 1983. With a view to safeguard the
interests of the depositors and ensure that the properties of the firm be
duly identified and full and due benefit of the funds be diverted to its
coffers, this Court by its order appointed a Commissioner to take
charge of all the assets, documents, papers of the firm, agents,
sub-agents, transferees and benamidars. Further to enable the
Commissioner to gather all the assets of the firm, he was given powers
to attach all assets and properties which in his prima facie opinion are of
the ownership of the firm or any of its partners. Such assets were to be
put to sale if no objections are received there to within one month from
the date of attachment. All objections thus received in respect of such
properties were to be forwarded to the Prothonotary of Calcutta High
Court, and a Division Bench of the High Court was to dispose of the
objections on merits. By a further order dated 23rd September, 1985
this Court empowered the Commissioner to remove all unauthorised
283
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SUPREME COURT REPORTS
[1990] 2 S.C.R.
persons or trespassers from possession of the property proposed to be
sold, and lhe Commissioner to hand over vacant possession to the rightful purcbasers.
One of the properties thus attached by the Commissioner by a
public notice was house N. 52/1/IB Surendra Nath Banerjee Road,
Calcutta. It was subsequently brought to sale on "as is and where is
basis". Asit Kumar Mandal and two others purchased this property
and requested the Commissioner to give them vacant possession. Since
the sale was on "as is and where is basis", the Mandals moved
an application before the High Court Division Bench praying for
the vacant possession of the said property and the same was
granted.
Hence the appellants i.e. Paul Bros and Others, moved two
0
Special Leave Petitions in this Court and claimed that they were bona
fide tenants in the property even under the predecessors-in-interest of
Mahamaya Devi in whose name the property was purchased by
Sanchaita firm and therefore could be evicted only in accordance with
due process of law after full contest, and could not be thrown out iu
summary proceedings just as if they were persons in unauthorised
E possession of the property, or as if they were mere trespassers. On the
other hand the Mandals contended that in terms of the orders of this
Court, and of the Calcutta Division Bench they purchased the property
only on the basis that they would get a perfect title and speedy
possession.
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Allowing the Special Leave Petitions, this Court,
HELD: That the contention of the Mandals is not maintainable
either in principle or on the terms of the directions of this Court. The
attachment and sale in pursuance of this Court's order of the present
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property in question did not have the legal effect of invalidating any
interests created or subsisting in the property by sale, transfer
encumbrance or alienation prior to the attachment. Even the sale was
on "as is and where is basis". The Courts order of 27th September,
~
1983 only empowered the Commissioner to remove all unauthorised
H" persons and trespassers but persons who are in lawful possession of the
PAUL BROS. v. A.K. MANDAL
285
,
property co

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PAUL BROTHERS (TAILORING DIVISION)
AND ORS. ETC.
v.
ASHIM KUMAR MANDAL AND ORS. ETC.
APRIL 2, 1990
[S. RANGANATHAN AND V. RAMASWAMI, JJ.]
Practice and Procedure: Sanchaita case-Directions of Supreme
Court explained.
These appeals arose as a sequel to certain directions of this Court
in the famous Sanchaita Investment Company case, which by dint
of tremendous advertisement campaign collected deposits amounting
to several crores of rupees from thousands of depositors spread all
over India, The firm prospered and thereafter tied up and siphoned
away a sizeable portion of its funds from its coffers for the benefit of
the management personnel by acquiring movable and immovable
properties in the names of the firm, relatives and benamidars.
Then they started making defaults in its obligations to tbe depositors.
The depositors approached the High Court and eventually the
matter came up to this Court in 1983. With a view to safeguard the
interests of the depositors and ensure that the properties of the firm be
duly identified and full and due benefit of the funds be diverted to its
coffers, this Court by its order appointed a Commissioner to take
charge of all the assets, documents, papers of the firm, agents,
sub-agents, transferees and benamidars. Further to enable the
Commissioner to gather all the assets of the firm, he was given powers
to attach all assets and properties which in his prima facie opinion are of
the ownership of the firm or any of its partners. Such assets were to be
put to sale if no objections are received there to within one month from
the date of attachment. All objections thus received in respect of such
properties were to be forwarded to the Prothonotary of Calcutta High
Court, and a Division Bench of the High Court was to dispose of the
objections on merits. By a further order dated 23rd September, 1985
this Court empowered the Commissioner to remove all unauthorised
283
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SUPREME COURT REPORTS
[1990] 2 S.C.R.
persons or trespassers from possession of the property proposed to be
sold, and lhe Commissioner to hand over vacant possession to the rightful purcbasers.
One of the properties thus attached by the Commissioner by a
public notice was house N. 52/1/IB Surendra Nath Banerjee Road,
Calcutta. It was subsequently brought to sale on "as is and where is
basis". Asit Kumar Mandal and two others purchased this property
and requested the Commissioner to give them vacant possession. Since
the sale was on "as is and where is basis", the Mandals moved
an application before the High Court Division Bench praying for
the vacant possession of the said property and the same was
granted.
Hence the appellants i.e. Paul Bros and Others, moved two
0
Special Leave Petitions in this Court and claimed that they were bona
fide tenants in the property even under the predecessors-in-interest of
Mahamaya Devi in whose name the property was purchased by
Sanchaita firm and therefore could be evicted only in accordance with
due process of law after full contest, and could not be thrown out iu
summary proceedings just as if they were persons in unauthorised
E possession of the property, or as if they were mere trespassers. On the
other hand the Mandals contended that in terms of the orders of this
Court, and of the Calcutta Division Bench they purchased the property
only on the basis that they would get a perfect title and speedy
possession.
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Allowing the Special Leave Petitions, this Court,
HELD: That the contention of the Mandals is not maintainable
either in principle or on the terms of the directions of this Court. The
attachment and sale in pursuance of this Court's order of the present
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property in question did not have the legal effect of invalidating any
interests created or subsisting in the property by sale, transfer
encumbrance or alienation prior to the attachment. Even the sale was
on "as is and where is basis". The Courts order of 27th September,
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1983 only empowered the Commissioner to remove all unauthorised
H" persons and trespassers but persons who are in lawful possession of the
PAUL BROS. v. A.K. MANDAL
285
,
property could not be evicted forcibly or summarily. The said order
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could not be interpreted to mean that the purchasers would be entitled
to vacant possession through the commissioner even by evicting bona
fide tenants or other encumbrancer or independent out-siders who had
acquired interest for consideration in the property. The object of the
directions was to cut short the proliferation of litigation and to gather in
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expeditiously the assets of Sanchaita. [l'llD-E; 29SH; 296B]
Having regard to the large scale dealings, the special circumstances and the desperate situation, the Court made an exception and
made it possible for the Commissioner to get false and frivolous claimants out of the way by a quick procedure because even normally the
trespassers and unauthorised persons cannot be thrown out except by
recourse to legal proceedings. So this order could not be availed of to
ride rough-shod over the rights and interests of others in the properties
which had been created bona fide. Even third parties who have
acquired real interests in the property either independent of, or even
through Sanchaita could not be called upon to give up their rights which
would mean to do more than merely realise what rightfully belongs to
Sanchaita that is by conferring a better title than it had in fact acquired
while purchasing those properties. [297B, GI
So in the instant case, considering the materials and evid~nce and
the records placed before the Court by the claimants/objectors, to prove
that they are not stooges or false claimants but have·bona fide right to
possession, it was held that the auction purchaser could not evict Paul
Brothers and Phani Bhushan Ghose except eviction proceedings in the
normal course and in accordance with law as may be available to them
against the claimants/objectors. The claim's of the other appellant was
rejected. [297C-D I
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 175556 of 1990.
From the Judgment and Order dated 9.2.1989 of the Calcutta
,;;ii.,
High Court in Matter No. 3737 of 1987.
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Dr. Shankar Ghosh, C.S. Vaidyanathan, S.R. Setia, K.V. VisH
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286
SUPREME COURT REPORTS
( 1990] 2 S.C.R.
wanathan and A.K. Sil for the Appellants.
S.K. Kapoor, P.K. Pillai D.K. Sinha, Mrs. R. Paul and H.K.
Puri for the Respondents.
The Judgment of the CouPt was delivered by
RANGANATHAN, J. Leave granted.
These appeals arise as a sequel to certain directions of this Court
in the famous Sanchaita case. The Sanchaita Investment Company was
a firm which was controlled and run, primarily, by three persons
Samonu Prasad Mukherjee, Biharial Murarka, and Swapan Kumar
Guha. It had been able, by dint of a tremendous advertisement
cam.Paign, to collect deposits amounting to several crores of rupees
from thousands of depositors spread all over India by holding
out attractive terms of interest. The firm initially prospered and its
deposits steeply mounted to astromical figures. The firm, however,
began to acquire, or deal in, movable and immovable properties in
various cities of India in the names, not only of the firm, but of
relatives and benamidars of various persons who were in management
its affairs. A sizeable portion of the firm's funds being thus tied up or
siphoned away from its coffers for the private benefit of the individuals
running it, the firm eventually began making defaults in its obligations
to the depositors. The depositors, thereupon, approached the High
Court and eventually the matters came up to this Court in W.P.
Nos. 638 and 755-800 of 1983. With a view to safeguard the interests
. of the depositors, arrange for a return to them of as much of their
deposits as possible and ensure that the properties of the firm were
duly indentified and the full and due benefit of the funds diverted from
its coffers was restored to the firm, this Court, by its order dated
4.5.83, appointed a retired District Judge as a Commissioner to take
charge of all the assets, documents and papers of the firm and of its
agents, sub-agents, transferees and benamidars. Directions were given
to •.the Commissioner to look into the claims of depositers and to devise
a scheme whereby persons who had deposited sums not exceeding
Rs.25,000 could be repaid expeditiously. By a subsequent order dated
27.9.83, certain directions were given to enable the Commisioner to
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PAUL BROS. v. A.K. MANDAL [RANGANATHAN, J.J
287
gather in all the assets of the firm. It is necessary to quote a portion of
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this order. It read:
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"The Commissioner may attach such assets and properties
which, in his prima facie opinion, are of the ownership of
the firm Sanchaita Investments, or of the ownership of any
of its partners. Such assets and properties may be put to
sale by the Commissioner if no objection is received to the
attachment thereof within one month of the date of attachment. All objections received to the attachment of such
assets or properties will be forwarded by the Commissioner
to the Prothonotary of the High Court of Calcutta. We
request the learned Chief Justice of the Calcutta High Court
to nominate a Division Bench of the High Court for the
purpose of jurisdiction upon such objections. The Division
Bench will dispose of the objections on merits after hearing
all interested parties."
Reference must also be made to another order of this Court
dated 23.9.85 in C.M.P. No. 38589/85. By this order, this Court
directed:
"After hearing counsel for the parties we consider it necessary to empower the Commissioner, Sanchaita Investment,
to remove all unauthorised persons and trespassers from
possession of the property proposed to be sold by the Commissioner under the orders of this Court and to hand over
vacant possession to the rightful purchaser~. The Commissioner is authorised to take the assistance of the police for
the purpose of obtaining possession and handing it ov!'r to
the rightful purchasers."
In pursuance of these directions, the Commissioner attached a
large number of properties situate all over the country which, he had
reason to believe, were properties which belonged to the firm though
acquired in the names of others. When the properties were so attached
and sought to be sold, objections were lodged by persons claiming title
or possession. of the property in their own right and these objections
were adjudi~ated upon by the designated Division Bench of the
Calcutta High Court.
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SUPREME COURT REPORTS
[ 1990] 2 S.C.R.
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One of the properties that were thus attahced by the Commissioner was house No. 52/1/lB, Surendra Nath Banerjee Road,
Calcutta-14. (There is a slight discrepancy in the door number of this
)
property as appearing in various documents but that is not material for
our purposes). This property stood on land of the small extent of about
800 sq. ft. and comprised of five rooms in the ground floor (three in
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front and two at the back), a first floor and a second floor but, being
business premises in a busy commercial locality, is of considerable
value today. The Commissioner found that this property had been
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acquired in the name of Mahamaya Devi, an aunt of Sambhu Prasad
Mukherjee, for Rs.85,000 on 4.10.1977. Apparently the Commis-
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sioner was of the opinion that the property was really that of the firm
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acquired in the name of Mahamaya Devi. He, therefore, attached this
property by a public notice taken out, inter alia, in "The Statesman"
dated 27 .5.84 to.the following effect:
"The Public are hereby informed that in exercise of the
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authority and power vested in me under the order of the
Hon'ble Supreme Court of India passed and made on
4.5.83 and 27.9.83 ..... , I had attached or I had taken
possession of or I am hereby taking possession of (as the
case may be) the following properties (specified in the l
schedule below) including flats, lands, cars, launch, business, shares in companies and partnership firms and house
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properties. The persons in which names these properties
stand are hereby warned that they shall not lease out,
assign, sell, mortgage, transfer or otherwise encumber or
deal with them until further orders from me.· Anybody
dealing with such properties would do so at his own risk or
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'responsibility.''
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It appears that there were also other similar notices issued by the
Commissioner. In response to one of these notices, Smt. Mahamaya
Devi put forward her claim to the ownership of the property but her
claim was rejected by the Division Bench of the Calcutta High Court
on 29.3.1985 in Case No. 23 of 1984. Sri Kapur, learned counsel for the
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responde.nts states that a petition for special leave to appeal to this
Court preferred by her was also rejec;~d sometime in 1985. This is not
contradicted by the petitioners. We may, therefore, proceed, for the
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purposes of this case, on the footing that, though standing in the name
of Mahamaya Devi, _the property in question belongs to the firm
Sanchaita.
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PAUL BROS. v. A.K. MANDAL [RANGANATHAN, J.I
289
Subsequently the property was brought to sale by the Commissioner. Sealed tenders were invited for the purchase of the properties
specified in the schedule, by a notice published in "The Statesman" on
7 .3.86, on an "as is where is basis". The notice specifically mentions
that the possession of only three of the six items mentioned in the
notice was with the Commissioner and the property presently in question was not one of them. Asit Kumar Manda! and two others (the
respondents before us, hereinafter compendiously referred to as 'the
Mandals') offered, on 22.5.86, to purchase the property for
Rs.1,26,000 in lump sum subject to negotiations in the matter. They
undertook to deposit 25% of the price on the acceptance of the offer
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and the balance "at the time of giving us the physical possession of the
said premises". After a discussion with the Commissioner, they
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deposited Rs.31,500 on 11.6.1986 and stated in their letter of the same
date to the Commissioner:
"We shall deposit the balance amount as and when called
upon to do so. Thereafter, you will hand over to us the
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possession of the said premises free from illegal trespassers" -
On 12.6.86, the Commissioner accepted the offer of the Mandals subject to the following conditions, namely:
"(a) That the proposed sale in your favour under the
conditions mentioned herein below is approved by our
advisory Board.
(b) That l/4th (i.e. Rs. 31,500) of the total consideration
money is at once paid by you to the Commissioner,
Sanchaita Investments, through bank draft or pay order.
( c) That the balance of the consideration money is paid
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within 30th June, 1986.
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( d) That in default of payment of the consideration money
as stated above, the earnest money (Rs.31,500) to be paid
by you through bank draft or Pay Order as mentioned
above shall stand forfeited.
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SUPREME COURT REPORTS
[1990] 2 S.C.R.
(e) That the aforesaid sale is made on "as is where is
basis".
(f) That on payment of the full consideration money as
above within the date fixed you may take steps for obtainmg possession of the said entire premises and the Commis·
sioner will help you for the said purpose."
The Mandals, thereafter, paid Rs.31,500 on 27 .6.86 and Rs. 63,000 on
18.7.86 and wrote to the Commissioner as follows:
"Please sent us the draft sale certificate in respect of the
above property for our approval on behalf of our clients
and arrange immediately to give our clients vacant possession of the propeny as agreed upon.
Please inform us if any objection was received by you. in
respect of the property pursuant to your advertisement in
the Statesman dated March 7, 1986."
The Commissioner referred the purchasers to his lawyer in regard to
the preparation of the sale certificate and a certificate of sale deed was
eventually issued in favour of the Mandals on 10.4.1987. The certificate referred to the orders of the Supreme Court, the satisfaction of
the Commissioner, the fact of attachment and the absence of any
ob1ections from Mahamaya Devi and conveyed the property to the
Manaals.
Having thus purchased the property, the Mandals requested the
Commissioner to give them vacant possession of the property but there
was no response. Thereupon, on 17.9.1987, the Mandals moved an
application (being Matter No. 3737 /87) before the High Court praying
that they may be given vacant possession of the property. It appears
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that, in the meantime, they had come to know that the premises were
occupied by the following parties:
Nameofperson
Portion occupied
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1.
Paul Brothers"(Textile Division)
One room on Ground Floor
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PAUL BROS. v. A.K. MANDAL [RANGANATHAN, J.}
291
2.
Paul Brothers (Watch Repairing
One room on Ground Floor
Division)
3.
Paul Brothers (Electronics
-doDivision)
4.
Dula! Dutta and Panchanan Dutta
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G.Dey
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Phani Bhusan Ghosh
First Floor
7.
Hari Narayan Gupta
Second Floor
These persons were made respondents to the application and, alleging
that they were all trespassers in occupation of the property, a prayer
was made that they should be directed to hand over vacant possession
of the property to the applicants. This prayer has been granted by the
Division Bench of the High Court and, hence, these two petitions for
leave to appeal, one by the three Paul Bros. and the other by th.ree of
the other four "objectors". We have he:~rd these petitions at great
length. We grant leave in both S.L.Ps. and proceed to dispose of the
appeals.
The petitioners claim that they are bona fide tenants in the property. Except for petitioner H.N. Gupta who was inducted as a tenant
by Mahamaya Devi, the others claim that they have been tenants even
under the predecessors-in-interest of Mahamaya Devi. They claun,
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therefore, that they can be evicted only in accordance with due proceF
dure prescribed by law after full contest and opportunity to lead evidence and cannot be thrown out in summary proceedings like the
present one just as if they were persons in unauthorised possession of
the property or as if they were mere trespassers. On the other hand,
for the Mandals it is contended that once it is held that Mahamaya
Devi was a benamidar for Sanchaita, the Commissioner is entitled to
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take possession of the property, removing all present occupants
including tenants therein and selling the property at the maximum
possible price free of all encubrances -so that the proceeds may be
made available to the imnumerable depositors who had been denuded
of their lifetime savings by the undesirable and fraudulent activities of
the persons in charge of the firm. A pernicious evil, it is said, warrants
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SUPREME COURT REPORTS
[1990] 2 S.C.R.
a drastic remedy and hence this Court, having regard to the large scale
involvements of the firm, considered it necessary to arm the Commissioner with wide powers so that he may be able to gather in all the real
assets of the firm without delay or obstruction for the benefit of the
defrauded investors. The Mandals have, it is said, having regard to the
terms of the orders passed by this Court and by the Calcutta High
Court, purchased the property in the belief that they would not only
get a perfect title but also speedy possession of the property. If hona
fide purchaseFs are to be obstructed like this by all manner of claims,
real or imaginary, it is argued, the properties of the firm can only be
sold for a song and the entire object and purpose of the various directions of this Court would be frustrated. It is, therefore, contended
that, even if the appellants are really tenants in the property as
claimed, their claims will have to yield to the paramount public
interest of the Sanchaita investors.
We are unable to accept this contention of the Mandals. It is not
maintainable either in principle or on the terms of the directions given
by this Court. To take up the latter first, there is nothing in the terms
of the orders of this Court or of the notices of attachment or sale or of
any other orders of the Calcutta High Court that vests an absolute title
in the auction purchasers of the property free from all encumbrances.
The order of the Court dated 27.9.83 only authorised the Commissioner to attach properties which he believed to belong to Sanchaita
and provided for any objections to the attachment being heard by the
designated Division Bench of the High Court. The attachment and sale
of the property presently in question were effected in pursuance of this
order. Any sale, transfer, encumbrance or alienation subsequent to
the attachment could, no doubt, be impugned but the attachment did
not have the legal effect of invalidating earlier interests of others subsisting in the property. In fact also, the sale was on an "as is, where is
basis" i.e. without prejudice to the claims of other persons in whose
favour bona fide encumbrances or interests may have been created
earlier qua the property. There appears to be some force in the contention of the claimants that the price paid by the appellant is not
adequate to reflect the market value of the property situated in an
important commercial locality in Calcutta at the present day if sold
free from all encumbrances but we shall leave this contention out of
account as there is no material before us on this aspect. The order of
23.9.85, no doubt, goes a step further but it only empowers the
Commisioner to remove all unauthorised persons and trespassers. The
reference to vacant possession in the order has to be restricted only to
PAUL BROS. v. A.K. MANDAL [RANGANATHAN, J.[
293
cases where the property is in the possession of such unauthorised
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persons or trespassers and cannot be read so as to empower the Com-
~ missioner to evict forcibly, or seek the orders of the Court to evict
summarily, persons who are in lawful possession of the property. We
should also like to point out that, in fact also, the Mandals got no
better right on the terms of the auction and the correspondence that
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followed. Though the Mandals referred in their letters to vacant possession of the property, the sale was only on an "as is, where is" basis
and the Commissioner at no time offered or assured the Mandals that
-y they would get such vacant possession. He only offered to help them in
4
the process to the extent permissible in law. He has made this position
explicit in the letters written by him.
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Sri Kapur, for the Mandals, placed considerable reliance on the
common order of the Calcutta High Court dated 25.3.86 in Amar
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Monda/ v. Commissioner, (Matter No. 122 of 1986) andJagdish Chand
Aggarwala v. Commissioner, (Matter No. 146 of 1985) to contend that
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the Man dais are entitled to get vacant possession of the property. In
that case, Amar Monda! who was the auction purchaser of an item of
property (which we shall call 'Property A') at a sale by the Commissioner sought to be put into possession by evicting the respondents 2 to
5 "who are unauthrised occupants" and Jagdish Chand Aggarwala,
whose highest bid at an auction for an item of property (which we shall
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call 'Property B') by the Commissioner could not be proceeded with
because of an injuction obtained by respondents Nos. 6 & 7, sought
the orders of the Court "for completing the sale and giving delivery of
possession by evicting the respondents". So far as Property A is concemed, the Court found, for reasons which need not be repeated here,
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that they were "unauthorised occupants" and not "bona fide tenants in
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occupation" and were, hence liable to be evicted. Likewise, in respect
of Property B, the Court concluded that the cliams of tenancy put
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forwarel by respondents 6 & 7 "were frivolous". These were, therefore, not cases where tenants were held liable to be evicted and the
order does not help the Manda/s to the extent claimed.
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Sri Kapur, however, relies strongly on two sets of observations in
this order. The first reference by him is to an observation that any
person claiming to have any interest in the property should file his
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claim within 30 days of the attachment and that any claim made
beyond this period would be barred by limitation and hence cannot be
considered. The second reference is to an observation that the Court is
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[ 1990] 2 S.C.R.
entitled to adjudicate upon all claims, even those of persons who claim
to have any bona fide intermediate interests in the properties attached
by the Commissioner. The Court observed:
"In our opinion, therefore, once an attachment is
effected by the Commissioner on the authority of his
powers vested in him by the Supreme Court, not only
persons claiming right, title and interest independent of
Sanchaita Investments but also claiming any bona fide
intermediate interest created by Sanchaita Investments in
favour of the claimant should put forward to claim of
objection. It was not the intention of the Supreme Court
that there should be proliferation of litigation, result
whereof would be that the insignificant part of the
depositors' money which should be realised by the Commissioner would be wasted in litigation. This position has
been made clear by the Supreme Court when the Supreme ·
Court by a recent order upheld the view of the Bombay
High Court that a claim of tenancy in respect of a property
attached by the Commissioner must be lodged with this
Special Bench and not before any ordinary Civil Court. The
attachment made by the Commissioner cannot be equated
with an attachment made by a Civil Court either prior to
judgment or in execution since there what is attached is the
right, title and interest of either the defendant on the judgment debtor. In the present case, however, on the Scheme
framed by the Supreme Court what is being attached is the
property itself so that any body having any lawful claim in
whatever interesfheld by him, must put forward his claim
before the Commissioner so that it can be adjudicated once
for all in a proceeding before this Special Bench and thus
avoid wasting litigation. We do not accept for a moment
that this court's jurisdiction is limited to adjudication of all
·claims preferred as against the attachment made by the
Commissioner. The scope of our power must be determined wit~ reference to the intention of the Supreme Court
referred to herein. Such power in our opinion covers
adjudication of all sorts of claims or objections for the
Commissioner's·attachment and sales of assets belonging to
the beneficial ownership of Sanchaita Investment preferred
or brought forward at any stage and also to make all inci·
PAUL BROS. v. A.K. MANDAL [RANGANATHAN. J.]
295
dental and consequential oraers as we may find necessary
to assist the Commissioner in collecting the assets having
regard to the resistance faced by him from persons putting
forward any claim of his own. In that view we hold that our
power covers a case like the present one where even after
the objection has been overruled by this Court, others
have come forward to resist the Commissioner from effecting sale by putting forward a claim of tenancy. Such a claim
in our opinion, is really an objection to the attachment
when we consider it on its substance, that comes well within
tjJ.e scope of our jurisdiction. It matters little whether such
jurisdiction is invoked by the Commissioner or the claimant or the proposed purchaser."
He submitted, on the stren_gth of these passages, that the claims in the
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pn;:sent case are liable to be dismissed (a) on the ground that they are
time barred and (b) even if the claimants are found to be bona fide
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tenants in the property.
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We are unable to agree. While, no doubt, this Court had indicated that claims and objections to attachments should be filed within
a period of thirty days, that period cannot be read as if were a rigid
rule of limitation prescribed by law. The order also only says that, if
objections are not put forward within a month, the property inay be
sold and does . not preclude objections being filed after the sale.
Indeed, the Division Bench did not rest its conclusion on this ground
and proceeded to consider the objections on merits. We are also
unable to read into the order any conclusion of the Division Bench that
even bona fide tenants are liable to be evicted from the property. If
that had been so, the Bench need not have gone into a detailed consideration of the merits of the claim of tenancy put forward by· the
contesting respondents in that case. All that the Bench observed in the
passage extracted above was that all claimants to the properties subjected to attachment by the Commissioner, whether as owners or as
intermediate interest holders (like tenants) or otherwise, have to put
forward their claims for adjudication by the Division Bench. The
Bench did not proceed to hold, as suggested by Sri Kapur, that the
auction purchasers are entitled to get vacant possession of the property
free from all encumbrances and that even bona fide tenants can be
directed to be summarily evicted from the property in pursuance of the
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orders of this Court. We are unable to see in this order any observation
that could legitimately have induced the Mandals to believe that they
would be entitled to evict even lawful tenants from the property by
purchasing it at the auction sale.
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In principle also, thi• contention is not well founded. The object
of the directions given by this Court was to cut short the proliferation
of litigation and to ensure that the Commissioner is abk to gather in .
expeditiously the assets of Sanchaita which were dissipated or
siphoned off by the persons in charge of the firm. Thus, if the firm's
moneys had been utilised to purchase properties in the name of various
individuals benami such property had to be taken back by the Commissioner from such benamidars. Also, where the said benamidars or
other persons put up frivolous claims to the property or its possession
without the semblance of any legal title to its ownership or possession,
such claims could and should be rejected by the Court. But this princiD pie cannot apply to bona fide interests of others in the property. For
instance, suppose Sanchaita's moneys had been advanced on the mortgage of an item of immovable property, all that the Commissioner
would be entitled, legally and equitably, would be to call in the mortgage moneys (principal and interest) and not the entire property itself.
An auction purchaser of such a property cannot get anything higher
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than the interest Sanchaita itself could have claimed in respect of the
property. Likewise, if Sanchiata's moneys had been invested in a property which had been bona fide let out to tenants, Sanchaita would
have paid only the value of the property so encumbered and its rights
in the property can only be subject to those tenancy rights. Sanchaita
could not have a right in respect of the property superior to that which
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its vendor had. Similar would be the position where Sanchaita or its
benamidars had, after acquiring a property, created a bona fide
tenancy or other encumbrance in respect of that property, in respect of
independant outsiders who acquire such interest for consideration. To
say that Sarichaita, through the Commissioner, would be entitled to
vacant possession even from such tenants, or free from such encumG
brances, would result in its being able to realise a larger interest in the
property than it acquired. Not only this, the result of any such conclusion would enure the benefit of, not Sanchaita, but of the auction
purchaser of the property. Having bid for and acquired the right, title
and interest of Sanchaita in the property, he would be enable to get
vacant possession which Sanchiata, even if it had continued to be
H active and properous, could not have got except by due process of law.
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297
We have, therefore, no doubt \hat this Court, by its orders dated
4.5.83 and 27.9.83 intended only that the firm, or the auction purchasers at the sales effected by the Commissioners, should be able to
clear the property of trespassers and unauthorised persons and not
that even bona fide tenants could be got evicted straight away in
pursuance thereof. Normally, even trespassers and uuauthorised
persons cannot be thrown out except by recourse to legal proceedings
but, having regard to the large scale dealings, the special circumstances and the desperate situation, this Court made an exception
and made it possible for the Commissioner to get false and frivolous
claimants out of the way by a quick procedure but nothing more. We
are, therefore, of opinion that if the Court, on a consideration of the
materials placed by the claimants or objectors, comes to the conclusion that they are not mere stooges or false claimants but have a bona
fide right to possession as against Sanchaita, it cannot direct their
eviction but should leave it to the auctioin purchaser to initiate such
eviction proceedings in the normal course and in accordance with law,
as may be available to him against the claimants/objectors.
Sri Kapm laid considerable stress on the aspect that, unless
vacant possess10n can be had, no one will purchase any property at the
auction sales conducted by the Commissioner as no one would like to
face further litigation to secure possession of the property. He submitted that the object which the Court had in mind was to effectuate sales
of Sanchaita properties by assuring vacant possession with a view to
secure maximum price therefor and to ensure expeditious return to the
Sanchaita investors of as much of their deposits as possible and that
this object would be totally frustrated if people were encouraged to
put in hurdles in the way which will depreciate the value of the property. This contention proceeds, only partially, on a correct basis. It is
true that there should be a quick and expeditious realisation of the
properties that really belong to Sanchaita. That is why the Court
empowered the Commissioner to attach and sell properties that, in his
opinion, really belong to Sanchaita though ostensibly held in the
names of others and also devised a quick and summary method for
adjudication upon claims and removal of obstructions. But this order
cannot be availed of to ride rough-shod over the rights and interests of
others in the properties which have been created bona fide. Third
parties who have acquired real interests in the property, either independent of, or even through, Sanchaita cannot be called upon to give
up their rights. To do so would be to do more than merely realise what
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rightfully belongs to Sanchaitas; it would amount to conferring on
Sanchaita a better title than it had, in fact, acquired. The depositors or
investors in Sanchaita cannot claim any such rights. It is, therefore,
difficult to accepf the ground urged by Sri Kapoor as entitling the
Mandals to an interest that can ignore or override all manner of rights
and interests in the auctioned properties.
For the above reasons, we are unable to accept the plea that the
Mandals are entitled to get vacant possession of the premises, irrespective of the nature of the interests the claimants had therein and that,
on this ground alone, we should uphold the order of the Division
Bench. We shall, therefore, proceed to consider how far the claim of
each one of the appellants before us to continue in possession of the
property, unless and until evicted in due course by process of law, is
maintainable.
Though the High Court has set out in extenso the details of the
claims put forward by the various claimants, we consider it necessa.ry
to set out, in some detail, the evidence put forward by the claimants as
the principal complaint of every one of the claimants is that a considerable volume of evidence adduced by him has been summarily brushed
aside by the Division Bench. We shall, therefore, proceed to do this:
I. PAUL BROTHERS
The petitioners in SLP 3258/59 have described themselves as
"Paul Brothers". A complete paper book containing copies of a
number of documents has been placed before us to substantiate their
claim that they have been tenants in the premises since a very long
time. These are:
"(1) A letter addressed by one Ramakrishna Paul to Dilip
Kumar Paul and Mihir Kumar Paul, Landlords, seeking
permission to make some alterations in the Radio and
Electrical shop and a reply thereto dated 8.4. 75 by Dilip
and a similar reply to Amar Nath Paul (Paul Brothers) in
respect of the watch repairing shop;
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(2) A letter intimating "Amar Nath Paul (Paul Bros.),
Repairing Shop" that Satyanarayan Paul had died on
10.8.66 and that the four signatories AshoK Paul, Dilip
Kumar Paul, Mihir Kumar Paul and Mrs. Suchitra Kundu
had succeeded as landlords entitled to the rents thereafter;
(3)(a) A stamped deed of partnership dated 14.6.61 drawn
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up by B.M. Motilal. Advocate, between Amar Nath Paul,
Robindra Nath Paul. Abani Bhushan Paul. Arnn Kumar
Paul, Kiron Chandra Paul and Gopal Chandra Paul (all
sons of Mohni Mohan Paul) sharing profits equally. The c
firm is said to have started business in Watch Repairing and
Tailoring w.e.f. 14.4.61 at the suit premises under the
name and style of Paul Bros. and is said to have been
registered with the Registrar of Firms.
(b) Three stamped deeds of partnership drawn by B.M.
Motilal (Advocate) and dated 25.4.75 have also been produced. The first of these, of Paul Brothers (Watch Division), Amar Nath Paul, Robindra Nath Paul, shows Abani
Bhushan Paul and Rama Kishore Paul (sons of Mohni
Mohan Paul) as having started and been carrying on business as watch d"alers and repairers since 15.4.74 in the
premises sharing profits equally without a formal deed till
then. The second is of Paul Brothers (Radio and Electrical
Division) in which Kiron Chandra Paul, Amiya Kumar
Paul, Samir Kumar Paul, Amar Nath Paul (sons of Mohni
Mohan Paul) and Shyama Ranjan Paul (son of Lalit Mohan
Paul) are partners with Amar Nath having a 10% share and
the others 22.5% share each. fhe deed recites that the
above partnership started a business in radio and electricals
on 15.4. 74 at the suit premises as well as at 195/ l, Mahatma
Gandhi Road, Calcutta without a formal deed having been
drawn up till that date. The third deed is between Arnn
Kumar Paul, Benoy Kumar Paul, Gopal Chandra Paul and
Amar Nath Paul (all sons of Mohni Mohan Paul) in respect
of Paul Brothers-Tailoring Division with Amar Nath Paul
having a 10% share and the others 30% each. This deed
also recites that the business had started earlier with effect
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from 15.4.74 but that no formal deed had been drawn up
till then.
(c) A deed of partnership dated 8.5.1980, also on stamp
paper and witnessed by B.M. Motilal, is between Kirall
Chandra Paul, Amiya Kumar Paul, Samir Kumar Paul
(sons of Mohni Mohan Paul) and Promotho Nath Paul (son
of Lalit Mohan Paul). By this deed Shama Ranjan and
Amar Nath retire from Paul Brothers-Radio and Electri·
cals w.e.f. 13.4.80 leaving the remaining four to share the
profits equally.
(4) More than 225 rent receipts in favour of "Amar Nath
Paul", "Amar Nath Paul and others'', or "Amar Nath Paul
(Paul Brothers)" have been produced. They are spread
over the period from 1962 to November 1987 (except
October 1965 to March 1968). They are signed by S.N. Pal
between May 1962 and September 1965, by Ashok Paul
between April 1968 and October 1971, by Dilip and Mihir
between October 1971 and September 1977 and by
Mahamaya Devi from October 1977 onwards.