Sangay Lama v. Chandra Kumar Sharma & Ors.

Judgment

#1. Aggrieved by the decision of the Learned First Appellate Court, the Appellant assails the finding in Title Appeal No.05 of 2017, whereby the Learned District Judge, Special Division – II, Sikkim, at Gangtok, while upholding the finding of the Learned Trial Court on two Issues, set aside the finding on Issue No.3. 2(i). The Appellant herein was the Defendant/Respondent No.4 before the Learned Courts below; Respondent No.1 herein was the Plaintiff/Appellant; Respondent No.2 herein was the Defendant No.1 (ex parte)/Respondent No.1; Respondent Nos.3 and 4 herein was the Defendant Nos.2 and 3/Respondent Nos.2 RSA No.02 of 2019 2 Sangay Lama vs. Chandra Kumar Sharma and Others and 3 and, the Respondent No.5 herein was the Defendant No.5/Respondent No.5. (ii) They shall be referred to in terms of their appearance before this Court.

#3. In this Second Appeal, the lone substantial question of law framed for determination is; (i) Whether the Learned First Appellate Court erred interpretation of the documents of title of the present Appellant and that of the Respondent and arrived at the wrong finding? 4(i). The Suit was initially filed by the Respondent No.1 as

Plaintiff, on 08-07-2011, before the Learned District Judge, East and North, at Gangtok, being Title Suit No.12 of 2011, for Declaration and Injunction. (ii) The Appellant herein filed an Application before the said Court under Order I Rule 10(2) read with Section 151 of the Code of Civil Procedure, 1908 (hereinafter, “Cr.P.C.”), seeking to be impleaded as the Defendant No.4. The Court ordered accordingly on 11-10-2012 and vide the same Order, the State Bank of India was also impleaded as the Defendant No.5. (iii) On 09-09-2013, based on the averments in the pleadings and submissions of Learned Counsel and examination of the parties under Order X of the Cr.P.C., the following Issues were settled for determination by the Learned District Judge; (i) Whether the transaction of the Suit land between the Defendant No.1 and the Defendant No.5 took place prior to the transaction of the same land between the Plaintiff and the Defendant No.1? (ii) Whether the transaction of the Suit land between the Plaintiff and the Defendant No.1 is valid in the eyes of Law RSA No.02 of 2019 3 Sangay Lama vs. Chandra Kumar Sharma and Others in view of the alleged prior transaction of the same, between the Defendant No.1 and the Defendant No.5? (iii) Whether the Defendant No.5 could have auctioned the Scheduled Property and Defendant No.4 could have purchased the said Property, in view of the fact that the Defendant No.1 was only a Lessee of the land which belonged to Defendant No.2? (iv) Any other reliefs? (iv) Pursuant to the settlement of Issues, on the Orders of the High Court dated 13-12-2013, the entire Case records were forwarded to the Learned Civil Judge (Junior Division), East and North Sikkim, at Gangtok, for trial and disposal as per Law, considering the pecuniary jurisdiction of the Court. The Court registered it as Title Suit No.04 of 2014 on 28-12-2013. (v) In Issue No.1 (supra), the Learned Trial Court by adopting a novel short cut method, merely perused the documents furnished and sans consideration of any evidence, reached a finding that the transaction between Respondent No.2 and Respondent No.5 was entered into on 10-07-2003, while Exhibit 5 the Sale Agreement between the Respondent No.2 and the Respondent No.1 mentioned the date as “28-09-2005”. Accordingly, the Issue was decided against the Respondent No.1 (Plaintiff). In Issue No.2, the Learned Trial Court reasoned briefly that a right did not accrue to the Respondent No.1 to possess the property on mere agreement and possession of Power of Attorney and decided the Issue against the Respondent No.1 (Plaintiff). In Issue No.3, it was observed that the Appellant is a bona fide purchaser of the property, auctioned by the Respondent No.5 and decided the Issue in favour of the Appellant. RSA No.02 of 2019 4 Sangay Lama vs. Chandra Kumar Sharma and Others While considering the Counter-Claim filed by the Appellant seeking ownership of the purchased property, it was observed that as he was the legal purchaser, hence the suit property be handed over to the Appellant by the Respondent No.5, after fulfilling all legal formalities. (vi) Aggrieved, the Respondent No.1 was before the Learned First Appellate Court who agreed with the findings of the Learned Trial Court on Issue Nos.1 and 2 (supra). In Issue No.3, the Learned First Appellate Court while differing with the stand of the Learned Trial Court, observed that the Sale Certificate, Exhibit D5/15 was unacceptable, as the suit property was leasehold property. Thus, the sale in favour of the Appellant was determined as illegal ab initio. That, it was unfathomable as to why the Respondent No.5, despite receiving Exhibit 16, a Legal Notice dated 29-04-2006, issued by the Respondent No.1, requesting them to cancel the Sale Notice as he had priorly purchased the property from the Respondent No.2, would proceed to auction the suit property. That, the NOC issued by the Respondent No.3 in favour of the Respondent No.2 was to enable him to procure loan from the Respondent No.5 and not for mortgaging it as security for a third person. It was further observed that the Learned Trial Court failed to notice the material discrepancies in the name of the owner and the property details in the Sale Notice. The finding of the Learned Trial Court in Issue No.3 was accordingly set aside. Dissatisfied with the finding of the Learned First Appellate Court, the Appellant is before this Court. 5(i). Before delving into the arguments advanced by the opposing Counsel before this Court, a brief narration of the facts is RSA No.02 of 2019 5 Sangay Lama vs. Chandra Kumar Sharma and Others essential. The Respondent No.1 averred in his Plaint that he had purchased the suit property from the Respondent No.2, at ₹ 4,50,000/- (Rupees four lakhs and fifty thousand) only, on 25- 05-2003. That, the property measuring 20 x 30 ft. was leased to the Respondent No.2 by the Respondent No.3 vide a Lease Deed (Exhibit D5/7). A Sale Agreement was executed between the Respondent No.1 and Respondent No.2, Exhibit 5, dated 28-09- 2005, whereupon the Respondent No.1 started construction of a one storeyed building on the suit property. While such construction was in progress, a Legal Notice from M. S. Limboo was delivered for Respondent No.2, mentioning that the said person had already purchased the property from Respondent No.2. M. S. Limboo later admitted that advance money of a few thousand Rupees only had been paid by him and he chose not to pursue the matter. The Respondent No.1 also learnt that the same plot was mortgaged by the Respondent No.2, to the Respondent No.5, against the loan taken by one Thupden Tashi Lepcha (T. T. Lepcha) of Upper Dzongu, North Sikkim. On the loan being unpaid, an Auction Notice (Exhibit D5/14) was issued by the Respondent No.5 in the local Newspaper on 20-04-2006. The last date of Bid was fixed on 02-05-2006. On 29-04-2006, the Respondent No.1 issued Notice to the Respondent No.5 informing it vide Exhibit 16, that, he had already purchased the land and to cancel the Sale Notice, in vain. Hence, the prayers in the Suit. (ii) In his Written Statement, the Respondent No.2 denied in toto the averments of the Respondent No.1, while the Respondent No.3 in its Written Statement averred that they had allotted and leased the suit land to Respondent No.2 vide Lease RSA No.02 of 2019 6 Sangay Lama vs. Chandra Kumar Sharma and Others Deed (Exhibit D5/7). The Lease Deed bore several clauses to be adhered to by the Respondent No.2 and as lessee he was not the absolute owner of the land, consequently he could not alienate it by way of mortgage. The Respondent No.3 on the request of Respondent No.2 had issued NOC dated 30-04-2003, to enable him to procure loan from the Respondent No.5 for house construction and not for obtaining loan for T. T. Lepcha. That, Respondent No.5 also had no right to Auction and sell the leased suit property to the Appellant. (iii) Respondent No.4 did not file any written statement. (iv) The Appellant in his Written Statement averred that he was unaware of the claim of the Respondent No.1 and participated in the bid process on seeing a Sale Notice in the local Newspaper „NOW‟, dated 20-04-2006. His bid was accepted by Respondent No.5 and a Sale Certificate, dated 23-06-2006 (Exhibit D5/15), was issued to him. In his Counter-Claim, he sought a declaration that the sale transaction between the Respondent No.1 and the Respondent No.2 is void and inoperative and he being the bona fide Auction purchaser has right, title and interest over the scheduled property, as its owner. (v) The Respondent No.5 in its Written Statement admitted that the property in question had been mortgaged to it by the Respondent No.2 as collateral to secure a loan availed by T. T. Lepcha, Proprietor of Lepcha Stone Crusher, for which Title Deeds were deposited on 10-07-2003. On his failure to repay the loan, the property of the Respondent No.2 was sold in Auction in terms of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the RSA No.02 of 2019 7 Sangay Lama vs. Chandra Kumar Sharma and Others property made over to the Appellant, the highest bidder in the Auction. Hence, the Suit be dismissed with exemplary costs. 6(i). The arguments advanced by Learned Senior Counsel for the Appellant was that the Respondent No.1 had no right to file a Declaratory Suit before the Learned Trial Court as an “Agreement for Sale” does not qualify as a “Sale Deed”, nor does it transfer ownership, besides which the Sale Agreement was an unregistered document. The submission was fortified by the observation in Dharma Naika vs. Rama Naika and Another1. Adverting to the facts of the case, it was contended that as T. T. Lepcha the principal loanee was unable to repay the loan availed by him, Respondent No.5 sold the mortgaged property in Auction to the highest bidder is the Appellant. That, the entire auction amount has been deposited with the Respondent No.5 by the Appellant, but admitted no documents of title have been made over to him by the Respondent No.5, till date, but that does not divest the Appellant of its ownership. Garnering strength from the ratio in B. Arvind Kumar vs. Govt. of India2 it was contended that it is well-settled that when an auction purchaser derives title by confirmation of sale in his favour and a Sale Certificate is issued as proof of such sale and title, no further deed of transfer from the Court is contemplated. That, the Appellant cannot now be deprived of his right on technical grounds raised by Respondent No.1 and the Respondent No.3. Hence, the finding of the Learned First Appellate Court in Issue No.3 be set aside. (ii) Learned Senior Counsel for the Respondent No.1 reiterating the averments made in the Plaint also invited the