Attachment under r54 of o21
S. Fernandes
(Querist) 20 October 2013
This query is : Resolved
Dear Sir/Mam,
In Execution proceedings the Court has attached a property under Order 21 Rule 54.
An objector has filed application stating that he has purchased the property from the judgment debtors, with money he has borrowed from a bank, and the property is now mortgaged to the said bank.
The bank scilent, and has not filed any objections.
Please advise
1) If this mortgagee bank will be bound by the order passed against the objector in these proceedings?
2) Notwithstanding the court attachment, If bank sells the property during subsistance of the attachment, will such a sale be valid?
3) If bank continues to remain scilent, how can the decree holder implead the bank in these execution proceedings??
4) Should DH ignore the bank??
Thanks.
Guest
(Expert) 20 October 2013
Prove your title before the executing court by tendering evidence in support of your case.
S. Fernandes
(Querist) 21 October 2013
sorry Iam the DH this is a EP of decree in money recovery suit
P. Venu
(Expert) 21 October 2013
The objection is already before the court. Let the court decide it. If the transfer by the JH is tainted or incompetent (because of the pending suit) you may prove the same.
Ms.Nirmala P.Rao
(Expert) 21 October 2013
Dear Client,
As per the doctrine of law of waiver, since the Bank has chosen to keep mum during execution proceedings despite it's knowledge there of- about the property being attached in execution proceedings, the Bank is deemed to have forfeited its rights to the mortgaged property and the DH can go ahead with attachment an sell the property despite it being mortgaged in favor of the bank as in th eye of law it/the Bank forfeited /forgone its rights to mortgaged property. Hence decree holder/objector can ignore the Bank in execution proceedings, Bank is bound by law of waiver and it can't sell the property against the interests and legal rights of the objector.
Rajendra K Goyal
(Expert) 21 October 2013
Agree with the experts, nothing more to add.
Raj Kumar Makkad
(Expert) 21 October 2013
You have not mentioned in the query whether the property under mortgage was mortgaged by JD prior to the institution of the suit or thereafter.
If the same was mortgaged prior to the institution of the suit, such property shall remain mortgaged with the banker and there shall not be any effect over this legal position even if banker do not appear in the mentioned execution proceeding but if the situation is otherwise, the objection of objector has no legal meaning and such property can definitely be got attached and thereafter auctioned.
S. Fernandes
(Querist) 22 October 2013
Dear Mr Raj Kumar,
Thank you and all others for the kind assitance.
This is the time line in the matter:
Dec 09:
I filled suit for money recovery,against partnership firm of four parners,along with an application under O39 for temp injunction to restraint the defendants from alianating their partnership property being a factory premise,wich is the only asset available to settle m y dues.
Feb 10:
During the subsistance of the suit and injunction proceedings the defendants through a POA on behalf of Partners sold the said factory premises to third party.
Third Party mordgages the said factory premise to Bank.
April 10:
Court passes order of injunction as prayed, in my favour.
Oct 10:
Suit decreed as prayed, in my favour.
July 12:
I file in capacity now of DH, Execution proceedings.
Aug 13:
I attach the factory property. The said Third Party files objections under R58 of O21 praying that attachment be lifted as the said factory premises have been purchased by him prior to the decree being passed, and further disclosed that the said factory premises are also mortgaged to the bank all in Feb'10.
Bank (mortgagee) has not appeared to date, even though third party(mortgager)has filled objections filled objections.
Partnership Firm still subsists. No Business being carriedout as business premises, being the said Factory premises is sold to said Third Party.
Questions:
1- Can Partnership Property be sold even though the Partnership is not desolved.
The principal business of the Partnership was the manufacture and sale of Ice Creams.
2 - Can Partnership during the subsistance of the partnership be sold through a POA. Reference sec 19, 20 & 22 of Partnership act 192.
3 - Is this a lis pendant sale.
4- Can the bank(mortgagee) who has not reponded to the atachment be ignored.
S. Fernandes
(Querist) 23 October 2013
your advise will be greatly appreciated
venkatesh Rao
(Expert) 23 October 2013
The opinion of Nirmala Rao holds good if and only if the Bank is made a party to the proceedings, in other words, if the fact is within the knowledge of Bank.
It is not clear whether the prohibitory order was served on the defendant before the alleged mortgage.
If the title was clear and there was no injunction or so on the property as on the date of mortgage, the bank gets a better title unless it is made a party to the proceedings and allowed to put in its say.
venkatesh Rao
(Expert) 23 October 2013
The opinion of Nirmala Rao holds good if and only if the Bank is made a party to the proceedings, in other words, if the fact is within the knowledge of Bank.
It is not clear whether the prohibitory order was served on the defendant before the alleged mortgage.
If the title was clear and there was no injunction or so on the property as on the date of mortgage, the bank gets a better title unless it is made a party to the proceedings and allowed to put in its say.
S. Fernandes
(Querist) 27 October 2013
Dear Sir,
How to make Bank party to these execution proceedings. There is no provision under O21 to implead third party in execution proceedings??
Please advise how this can be done?
prabhakar singh
(Expert) 27 October 2013
1)Obviously there was no attachment before judgement in suit proceedings.
2)The property in dispute was Sold just during suit on Feb 10,while interim order
of injunction was passed two moths after
on april 10.
3)Then injunction order was of no use.
4)The suit was decreed on Oct 10 of which execution was sought on July 12 in which attachment order was passed against JD on
Aug 13 when title and possession vested in
in the the THIRD PARTY who is objector U/O
21 R 54.
5)THEN ORDER OF ATTACHMENT IS NOT BINDING UPON THE PURCHASER THE THIRD PARTY OBJECTOR WHO STANDS BONA FIDE PURCHASER FOR VALUE AS HIS CONSIDERATION RESOURCE Is THROUGH LOAN OF A BANK.
WHETHER BANK COMES IN TO THE PICTURE OR NOT
IS IMMATERIAL.
A decree holder can not implead any body party in EP other than JDs.
6)ANSWER TO YOUR QUESTIONS 1 TO 4 are that
TRANSFER in question holds good and binding upon the firm(also there is no dispute between partners and firm with regard to this transfer).AND THAT IT IS NOT A transfer of any LIS BECAUSE PROPERTY SOLD was not a subject matter before the court in recovery suit and even injunction was passed only after the property was sold.
When Third party having TITLE is before court any adjudication by court would be binding on the mortgagee bank also whether it comes before the court or not because it's all claims are sourced to third party ,the purchaser.
THE decree holder in these type of cases can succeed only when he proves the sale a SHAM transaction with intention to defeat the claim of DH.
BUT HERE NOTHING IS FOUND AS SUCH.THE VERY SALE IS PRIOR TO DECREE AT A DATE WHEN PROPERTY WAS FREE FROM ANY ENCUMBERENCE AND PURCHASE HAS A SOURCED CONSIDERATION.
S. Fernandes
(Querist) 27 October 2013
Sir,
Thank you very much for your reply. I am happy to note that adjudication by court against third party objector shall be binding on the mortgagee bank. My greatest concern was that mortgagee bank may proceed to sell under sarfaesi act, notwithstanding the attachment.
Now regarding the the third party title,will it is hit by sec 53 TPA. there may be consederation, but there is no good faith.
Party has purchased the property for 60 lakhs on Feb10, and mortgagee bank has valued the same property through approved eveluator at 3.5Cr. and sanctioned 1 cr. loan to this purchaser against mortgage of the same property, infact the 60 lakhs is out of the same loan, there is no money actually paid out of purchasers pocket.
There is also no publication in the news paper giving public notice of his intention to purchase. For 53 TPA transferee must show both consideration and good faith, and good faith includes right price & enquiry.
Please advise?
