Dewan Izzat Rai Nanda Thru LR's v. Dewan Iqbal Nath Thru LR's and Ors.

3. For the sake of completeness, it may be noted that vide order dated 19.01.2024 the application of the auction purchaser i.e. I.A. 14786/2019 was held to have been rendered infructuous in view of the fact that Sale Certificate had already been issued. However, prayer with regard to the interest amount accumulated on the principal was left to be considered in the application I.A. 9951/2020 i.e. the present application moved by the parties.

4. The learned counsel appearing for the plaintiff and the defendants i.e. the applicants invite the attention of this Court to the judgment dated 16.08.2016, whereby this Court had drawn up the final decree and directed that the principal amount along with the interest accrued thereon shall be released to the parties in their respective shares. The said judgment has attained finality as the appeals preferred by the auction purchaser before the Hon’ble Division Bench as well as the Hon’ble Supreme Court have been dismissed. While referring to certain communications between the auction purchaser, the parties and the authorities in Jammu & Kashmir filed by defendant no. 1 in reply to I.A. 14786/2019, it has been contended that the delay in execution of the sale deed is not on account of the parties to the suit, rather the reasons for delay are primarily on account of the auction purchaser. Therefore, the parties are entitled to the interest amount in terms of their share mentioned in the final decree and the auction purchaser has no right on the said amount.

5. Per contra, the learned counsel appearing on behalf of the auction purchaser submits that the amount should be released in favour of the auction purchaser as Rs. 18 crores were deposited by the auction purchaser as far back as in 2014 and the sale deed was executed only in 2022 after a delay of 08 years for reasons not attributable to the auction purchaser. He submits that the purchaser was neither able to enjoy the subject property in the aforesaid period nor did he have access to the deposited amount of Rs. 18 crores. He contends that the purchaser has incurred heavy expenditure while he also had to make countless trips between Jammu and Delhi for sorting out the issues arising with regard to execution of the sale deed.

6. I have heard the learned counsel for the parties, as well as, the auction purchaser and have perused the record.

7. The limited question which arises for consideration of this Court is with regard to the entitlement of the interest amount that accrued on the auction money of Rs. 18 crores deposited by auction purchaser in the year 2014.

8. The answer is not too far to seek. This Court while passing the final decree vide judgment dated 16.08.2016 had observed in no uncertain terms that the amount of Rs. 18 crores deposited by the auction purchaser in this Court together with interest accrued thereon be disbursed by the Registry in favour of the parties to the suit in accordance with their share as per the preliminary decree.

9. Notably, vide aforesaid judgment dated 16.08.2016, this Court had also given certain directions to disburse the amount of Rs. 18 crores by drawing cheques in the name of the parties according to their share. Simultaneously, the interest of the auction purchaser was also secured by observing that if any defect is found in the title of the parties to the suit, he shall be at liberty to intervene in the execution of the suit, vis-avis, the other properties of the parties, for recovery of the price paid by him and for such other relief for which he may be entitled to. This Court had also empowered the auction purchaser to do all acts/deeds before the Court/Authority at Jammu & Kashmir to have the auctioned land transferred in his own name.

10. The aforesaid judgment dated 16.08.2016 was challenged by the auction purchaser by preferring RFA (OS) 68/2016 essentially on the ground that the impugned judgment causes severe prejudice to him, in as much as, the sale consideration deposited by him would be disbursed to the suit parties without ensuring that he gets the benefit of the property which he has purchased in the auction.

11. The Hon’ble Division Bench of this Court disposed of the RFA (OS) 68/2016 observing, inter-alia, that the learned Single Judge vide impugned order has balanced the interest of all the parties by authorizing the auction purchaser himself to perfect his title by ensuring execution of the sale deed in his favour or in the name of any other person, while at the same time releasing the sale consideration to the parties entitled to it. Incidentally the direction of the learned Single Judge with regard to the disbursal of Rs. 18 crores together with interest accrued thereon in favour of the parties to the suit, was neither challenged nor upset by the Hon’ble Division Bench.

12. However, with regard to the observations made by the Hon’ble Division Bench in its judgment dated 13.12.2018, challenge was taken by the auction purchaser to the Hon’ble Supreme Court by way of SLP (C) 786/2019. The Hon’ble Supreme Court disposed of the said SLP vide order dated 20.09.2019 and further tried to balance the equities by observing as under: “It appears that there is some dispute with respect to the conferment of clear title upon the auction purchaser. However, in order to safeguard his interest, let the respondents furnish the Bank Guarantee pari pasu to the extent of their interest, to be kept alive till the title is cleared and also to furnish undertaking to pay money along with the amount of the interest, as may be ordered in case the refund of the auction money is required. The undertaking, as aforesaid, be furnished to make the payment along with interest within a period of one month from today and it is also assured on behalf of the respondents that they will cooperate with the auction purchaser for the due execution of the decree.”

13. Clearly, the aspect of disbursal of auction money of Rs. 18 crores with interest accrued thereon to the parties to the suit was not touched upon by the Hon’ble Supreme Court as well. Thus, the order of this Court in this regard has attained finality. This leaves no manner of doubt that it is the parties to the suit who are entitled to the amount of interest that had accrued on the auction money of Rs. 18 crores that was deposited by the auction purchaser. As noted above, the auction money of Rs. 18 crores had already been disbursed to the parties to the suit vide order dated 12.07.2023.

14. As regards the entitlement to the interest amount already released to the auction purchaser vide order dated 29.04.2016 passed on his application (I.A. 3640/2016), notably such release of interest amount to the auction purchaser was made subject to the condition that in the event this Court comes to the conclusion that the said interest should be to the credit of the sellers (parties to the suit), the auction purchaser will pay the same to the sellers. The relevant part of the order dated 29.04.2016 reads thus: “It is directed that for the time being, the interest earned on the amount deposited by the auction purchaser may be released to the auction purchaser. However, after hearing the parties, in case the court comes to the view that the said interest should be to the credit of the sellers, the auction purchaser undertakes to pay the same to the sellers. In that situation, the obligation to execute the sale deed shall arise simultaneously with the payment of the interest amount which has now been released to the auction purchaser.”

15. Since the judgment passing the final decree in the suit was passed subsequently on 16.08.2016, finally taking a view that the amount of auction money of Rs. 18 crores deposited by the auction purchaser together with interest thereon is to be disbursed to the parties to the suit, which direction, as noted above, has already attained finality, therefore, the amount which was earlier released to the auction purchaser will have to be refunded by the auction purchaser to the parties to the suit.

16. Insofar as the claim of the auction purchaser to interest amount on the ground that the delay in execution of the sale deed was attributable to the parties to the suit, it is to be borne in mind that the factors which led to the delay were considered by this Court and in order to facilitate the execution of the sale deed and other documents in favour of the auction purchaser or his nominee, necessary powers were also conferred on the auction purchaser so that he could perfect his title. Therefore, the aspect of delay cannot be allowed to be re-agitated by the auction purchaser. In any case, the Division Bench while disposing of RFA (OS) 68/2016 had made a categorical observation that if the auction purchaser had taken steps to purchase the subject property without inquiry as to the title of the land and the steps required to complete his acquisition thereof, such conduct was at his own peril. The relevant part of the order reads thus: “The appellant has not raised any grievance regarding the title of the respondents to the subject property, and his apprehension in respect of the impugned order appears to be based on the possibility that the property may not be finally registered in his name due to objections that may be taken by the authorities of the State. In our view, such an apprehension cannot defeat or reverse the confirmed sale at this late stage. The appellant had consciously made an offer for purchase of the subject property in the course of the suit proceedings. He had first made an offer of ₹14 crores and subsequently [one month later] raised it to ₹18 crores. He deposited the sale consideration in installments over a period of six months. If he took all these steps without due inquiry as to the title to the land and the steps required to complete his acquisition thereof, such conduct was at his own peril.” (emphasis supplied)

17. In light of the facts narrated above the application is partially allowed and the following directions are passed: i) The Registry is directed to place on record a report indicating – (a) the interest amount that was disbursed to the auction purchaser in terms of order dated 29.04.2016, and (b) the interest amount that had accrued on the deposit of auction money of Rs 18 crores after disbursal of aforesaid interest amount to the auction purchaser, with further interest accrued thereon, lying with Registry, within a period of two weeks. ii) The auction purchaser is directed to deposit the interest amount released to him in terms of the order dated 29.04.2016, in the name of the worthy Registrar General of this Court, within a period of 8 weeks of the filing of report by the Registry, failing which he shall be liable to pay an interest at the rate of 6% per annum on the said amount till the entire amount has been deposited. For any period prior to expiry of the aforesaid 8 weeks, this Court is not inclined to grant any interest on the above mentioned amount to be deposited by the auction purchaser nor it was so directed by this Court in the aforesaid order dated 29.04.2016. iii) The matter may be placed before the learned Joint disbursal of aforesaid amounts to the parties to the suit i.e. plaintiff as well as defendants, in accordance with their proportionate share as declared in the preliminary decree dated 17.07.1998.

18. With the aforesaid directions, the application is disposed of.

VIKAS MAHAJAN, J. OCTOBER 21, 2024 N.S. ASWAL