Bombay High Court: In the present appeal filed under Section 11 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (‘MPID Act’) along with an interim application, an exception was sought to an order passed by the Special Judge and Additional Sessions Judge wherein a Miscellaneous Application was rejected. The Division Bench of A.S. Gadkari and Shyam C. Chandak*, JJ. dismissed both stating that when an individual, firm, company, etc. has assumed a specific character while participating in a public auction, they are not expected to change the same to exploit the situation.
Background:
The present matter consists of a criminal appeal along with an interim application, wherein the applicant, Arya Lusters Associates, was an unregistered partnership firm and the appellant was one of the two partners of the firm. The subject property, Hotel Jal, was to be auctioned in relation to the MPID Special Case in which Arya Lusters participated through the appellant acting as the agent of the firm.
By an interim order, the MPID Court declared that the last bid amount of Arya Lusters was Rs. 46.70 Cr and was confirmed in his favor. A stipulation was added that the entire sale consideration would have to be deposited within 60 days, failing which, the earnest amount of 10 percent deposited with the competent authority would be forfeited.
The respondent was directed to execute the sale deed of the subject property in favor of the appellant, but it did not do so. As a result, the appellant filed a Miscellaneous Application to seek direction against the respondent to which they stated that the deed would be executed but backed out.
The counsel for the appellant submitted that the impugned order directed the respondent to issue a fresh sale deed in the name of Arya Luster Associates through its representative which was the appellant. He further contended that this was not only contrary to the Interim Order passed by the Special Judge of the Trial Court which ordered for the sale deed to be issued in the name of the appellant but also illegal and may be quashed and set aside.
The counsel for the respondent submitted that the bid was submitted in the name of Arya Lusters which was represented by the Appellant but only as an agent as authorized by his co-partner. He further said that the impugned order is based on the same common judgment which is why it cannot be termed as faulty.
Analysis and Decision:
The Court noted that Arya Lusters Associates was an unregistered partnership firm and that the Letter of Authority was signed by the other partner which mentioned that the appellant was authorized to represent the firm in regard to the subject property and all other work thereto. Further, the Court stated that the facts indicated that the Miscellaneous Application was filed by the Appellant as an agent of the firm and not in his individual capacity.
The Court stated that it seemed possible that for brevity purposes, the Special Judge inadvertently directed the respondent to execute the sale deed in favor of the appellant in the interim order. The Court further notedthat since the consideration amount could not be deposited within 60 days, the letters were signed for and on behalf of Arya Lusters to seek an extension of time.
The Court noted that the entire consideration of the bid amounting to Rs. 46.75 Cr was paid from the account of Arya Lusters and not by the appellant’s account, which indicates that the appellant participated in the bid only as an agent and not in his individual capacity.
The Court, while noting that the appellant tried to change his stance from partner of the firm to an individual, stated that when an individual, firm, company, etc. has taken part in a public auction assuming a specific character and continued with that character in litigation that arose out of the public auction, then unless legal permission is taken by the Court, they are not expected to change their character to exploit the situation for their personal gain, especially to harm the beneficiary.
The Court opined that the appellant was fully aware of his participation in the bid solely as an agent but after the interim order was passed, he started asserting for his personal benefit with malicious intent that he had participated as an individual bidder. After this, the appellant deceptively filed the Miscellaneous Application with the intent to misguide the Trial Court which was illegal.
Further, while stating that the appellant cannot replace Arya Lusters with his name, the Court said that the Code of Civil Procedure does not allow for such orthodox substitution since the appellant was never a party as an individual in the earlier rounds of litigation. Thus, the Court held that the interim application required no order and dismissed the appeal.
[Ved Prakash Arya v. State of Maharashtra, 2024 SCC OnLine Bom 1172, Decided on 24-04-2024]
Advocates who appeared in this case :
For Appellant — Advocate Subhash Jha, Advocate Ritesh Kesarwani, Advocate Krunal Jadhav, Advocate Praveena Venkatraman, Advocate Priti Singh
For Applicant — Advocate V.S. Kapse, Advocate J.P. Mishra, Advocate J.S. Shukla
For Respondent — Advocate A.A. Takalkar, APP
