WESTERN PRESS PVT. LTD., MUMBAIversusTHE CUSTODIAN AND ORS.

                 WESTERN PRESS PVT. LTD., MUMBAI                                     A
                                        v.
                       THE CUSTODIAN AND ORS.

                             DECEMBER 6, 2000

  [B.N. KIRPAL, DORAISWAMY RAJU AND BRIJESH KUMAR, JJ.]                              B

      Trial of offences relating to transactions in securities Act, 1992-
Section 10-Appellant not a party in the proceedings before the court-
Properties of the appellant made liable for realisation of debts-Appellant
gave an undertaking that it will not alienate or encumber with the properties-       C
Further. chairman of the appellant company filed an affidavit of undertaking-
Held that the properties can be rightly attached for realisation of the dues
under the decree-Code of Civil Procedure 1908 section 145.

      Registration Act, 1908-Section, 17(/)(b) and 17(2)(vi)-Documents               D
of which registration is compulsory-Consent decree and undertaking-
Does not envisage the execution of any deed or document to create or assign
any right title or interest in immovable property-Held, that consent decree
and undertaking does not require compulsory registration as it (ioes not deal
with immoveable property.
                                                                                     E
       Public money belonging to banks and financial institutions WllS siphoned
out into the llccounts of respo11dent No. 5, which in turn siphoned to respo11dent
No. 6 and from them to respondent Nos. 2, 3 and 4. Custodian filed petition
against the respondents and a decree was passed. Properties of the appellant
alongwith the properties of the respondents was to be attached for realisation       F
of the dues under the decree. Appellant gave an undertaking to the court that
on sale in execution, they shall hand over the possession of the premises.
An affidavit of undertaking was also filed by the Chairman of the appellant
company. Since there was a default, the custodian filed an application by way
of execution proceedings against the respondents. Special Court appointed
a receiver to take possession and to dispose of the properties by sale.              G
Apprehending similar course of action, appellant filed an application pleading
that the properties cannot proceeded against for realisation of debts.
Application was dismissed. Hence, this appeal.

      Dismissing the appeal, the Court
                                      197                                            H
     398                      SUPREME COURT REPORTS (2000] SUPP. 5 S.C.R.

A           HELD: I.I. The properties of the appellant can be attached or proceeded
     against in any manner for realisation of the dues under the decree. The
     consent decretal order and an undertaking by the appellant stated that in the
     event of the decree becoming executable, the respondents including the
     appellant undertook to hand over possession of the properties mentioned in
B    schedules, to the purchaser, on the sale being held and sanctioned by the
     special court for realisation of the debts. In carrying out the directions
     contained in the consent decretal order, Chairman of the appellant company,
     filed an affidavit of undertaking and affirmed the factum of ownership of the
     appellant to the property in question. (401-F; 403-H; 404"A)

C          1.2. The plea of lack of authority in Chairman of the appellant company
    to bind the appellant is to be rejected because the directors of the appellant-
    company, who allowed him a free hand as Chairman of the appellant-company
    to deal with the matter, cannot be permitted to blow hot and cold as it suits
    them. Equally untenable is the pretended mistake of fact which, is a self-
    serving attempt found to be made as a pure after thought to wriggle out of
D   the lawful commitments made and retrace the position in which the dire~tors
    of the company have allowed themselves to be landed in. (405-E, F) ·

          2.1. Declaration or undertaking cannot be construed to fall under
    Section 17(l)(b) of the Registration Act. The consent decree as well as the
    undertaking does not envisage the execution of any deed or documents also
E   to create, declare, assign, limit or extinguish, whether in present or in future
    any right, title or interest whether vested or contigent of the value of Rs. 100
    or upwards in immove:ible property. It would fall within the exempted category
    of any decree or order of the Court envisaged under Section 17(2) (vi) and
    take it outside the excepted category of cases as it does not deal with
F   immoveable property envisaged in Section 17(l)(b) of the Act.1406-D, El

        2.2. In a czse where an item of property is referred to in an undertaking
  given to the Court as one which can be proceeded against in the event of the
  judgment-debtor faili11g to pay the decretal amount within the stipulated time,
  the immoveable property does not get ipso facto affected or suffe1· in anyone
G of the manner envisaged under Section 17(1) of the Act so as to require
  compulsory registration. (406-H; 407-A)

            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2770 of
    2000.

H           From the Judgment and Order dated 16.2.2000 of the Special Court at
      WESTERN PRESS PVT. LTD. v. THE CUSTODIAN AND ORS. [RAJU. J .]         399
Mumbai in Misc. Appeal No. 2/99 in Misc. Petition No. 30 of 1995.                   A
      Dr. Rajeev Dhavan, and Vimal Chandra S. Dave for the Appellant.

     Shiraz Rustomjee, A. Subba Rao, Ms. Kumud Singh and Bhargava V.
Desai for the Respondents.
                                                                                    B
      The Judgement of the Court was delivered by

       RAJU, J. The appellant before us was the unsuccessful applicant in
Miscellaneous Application No.2 of 1999 before the Special Court (Trial of
offences relating to transactions in securities) at Bombay (called for
convenience as "the Special Court"). The appeal has been filed under Section        C
10 of the Special Court (Trial ofoffences relating to transactions in securities)
Act, 1992 (hereinafter referred to as "the Act") against the order of the Special
Court dated 16.2.200'0, whereunder the relief sought to set aside the Minutes
of the Order dated 5. 7.1995 in Miscellaneous Petition No. 30 of 1995 and the
Order dated 24.9.1997 in Miscellaneous Application No. 280of1997 earlier            D
passed by the Special Court insofar as it related to the appellant and the
premises of the appellant situated at Regent Chambers, Nariman Point, Bombay-
400 021, on 2nd floor bearing unit Nos. 3 & 4 admeasuring approximately 2030
sq. ft. came to be rejected.

        The relevant facts insofar as they are necessary for a proper appreciation E
of the issues raised before us, need a brief mention before adverting to the
grievance of the parties. M/s Dhanraj Mills Private Ltd., the 5th respondent
 in this appeal, is a notified party under the Act. On the information furnished
by the Income Tax Department that public money belonging to Banks and
Financial Institutions have been siphoned out into the accounts of the notified
party and which, in tum, came to be successively siphoned to Kenilworth F
Investment Company Private Ltd., the 6th respondent herein, and from them
to CIFCO Properties Private Ltd., CIFCO Finance Ltd. and M/s Champaklal
Investments (Respondents 2, 3, 4 & 6), the Custodian filed Miscellaneous
Petition No. 30 of 1995 against all those respondents. When the petition
reached the stage of hearing by consent of parties, Minutes of the Order G
dated 5.7.1995 came to be filed and recorded as per which, among other things
Kenilwonh Investment Company submitted to a decree in favour of Dhanraj
Mills Private Ltd., in a sum of Rs. 11,82,81,316 with interest @ 20% per annum
from 24.4.92 till date of payment and CIFCO Group of Companies and
Champaklal Investment Company Private Ltd., submitted to a decree in favour
of the 6th respondent and the decretal debts also stood charged in favour H
    400                     SUPREME COURT REPORTS 12000] SUPP. 5 S.C.R.

A of Dhanraj Mills to receive payment from Kenilworth Investment.
           Clause 7 of the Minutes of the Order dated 5.7.95 declared the ownership
    of the 3rd respondent herein, in the premises bearing unit Nos. 2, 5, 6, 7 and
    8 at Regent Chambers, Nariman Point, Bombay, in 2nd floor admeasuring 4931
    sq. ft and unit No. 5 in ground floor admeasuring 451 sq. ft. as well as the
B   residential flat bearing unit No. 36 in 3rd floor of Anita Apartment in Mount
    Pleasant Road at Malabar Hills admeasuring 575 sq. ft. Clauses 8, 12 and 13
    on which both parties fixed their hopes read as follows:

           "8. The Respondent No.2 declares that one Western Press Pvt. Ltd.
           (formerly known as Jayakrishna Pvt. Ltd.) is the owner of the premises
c          admeasuring approximately 2030 sq. ft. and described in Schedule A-
           3 hereunder written. The said premises are used and occupied by the
           Respondent Nos. 2 and 3 along with the said Western Press Pvt. Ltd.
           The Respondent Nos. 2 and 3 declare and undertake to this Hon'ble
           Court that they will not claim any right, title or interest in the said
D          premises mentioned in Schedule "A-3". The respondent Nos. 2, 3 and
           the said Western Press Pvt. Ltd. undertake to this Hon 'ble Court that
           pending satisfaction of the decree the Respondent Nos. 2, 3 and the
           said Western Press Pvt. Ltd. will not alienate, encumber or part with
           possession of or create third party right, title or interest in the said
           property described in Schedule A-3 hereto or any part thereof, till the
E          decree herein is marked satisfied.

            12. In the event of the decree herein becoming executable against the
           Respondent Nos. 1 and 2 or 3, the Respondent No.2 and the Companies
           listed in Schedule "C" as well as the said Western Press Pvt. Ltd. and
           the said employee occupying the flat as per Schedule A-2, undertake
F          to this Hon 'ble Court that on sale in execution being held and
           sanctioned by this Hon'ble Court the Respondent No.2 and the said
           companies mentioned in the Schedule B hereto shall hand over the
           possession of the premises mentioned in Schedule A-1 to A-3 hereto
           to the purchaser.
G
           13. The companies mentioned in the Schedules "B" and "C" and the
           said employee will within one week from today file separate affidavits
           declaring that they have no right, title or interest in the premises
           mentioned in Schedules "A-1 to A-3", hereto as also giving the
           undertaking to this Hon'ble Court to vacate the premises in their
H          occupation in the event happening as stated above."
           WESTERN PRE~S PVT. LTD. v. THE CUSTODIAN AND ORS. [RAJt:. !.]          40[

           Pursuant to the above, the Chairman of the appellant-company Mr.               A
     Milan Dalal filed on 28.7.95 an affidavit of undertaking not to alienate, encumber
     or part with possession of or create third party right, title qr interest in the
     aforesaid property of the appellant-company, till the decree is satisfied and
     in case of events happening as provided in Clauses 12 and/or 13 of the
     Minutes of the Order further undertaking to vacate the premises in the               B
     occupation of the appellant.

             Since there was a default. the Custodian filed Miscellaneous Application
      No. 280 of 1987 by way of execution proceedings against the respondent-
      companies which suffered a decree (of course not including or specifically
      initiating against the appe!lant and their property) and the Special Court          C
      passed an order on 24.9.97 appointing a Receiver to take possession and to
      dispose of the properties by sale. At this stage, apparently apprehending
      similar course of proceedings for execution by the Custodian against the
    · properties in question of the appellant, Miscellaneous Application No.2 of
      1999 came to be filed for the reliefs noticed supra. The sum and substance
      of the claim in this application of the appellant was (a) that the appellant-       D
      company is the absolute owner of the properties in question, (b) that they
      have not created any interest in the properties in favour of the 3rd respondent
      herein, (c) that the undertaking given on behalf of the appellant was wrong
      and unauthorised. (d) that no such undertaking could have been given by
      any one else in respect of the property of the appellant unless duly authorised     E
      by the company (e) that at no point of time the appellant was a party to any
      of the proceedings or it was represented by any counsel or was ever been
      put on notice of the orders to be passed affecting its rights/interest, (f) that
      the appellant is neither a judgment debtor nor it claims through a judgment
      debtor, (g) that it neither agreed to give guarantee nor stand as surety for the
      payment of the debts of the judgment debtor and consequently the properties         F
•     of the appellant cannot be attached or proceeded against in any manner for
      realisation of the dues under the decree in question.

            The Special Court, after a careful consideration of the respective
     contentions of parties, held that the Minutes of the order dated 5.7.95 covered      G
     also units 3 & 4 belonging to the appellant and it would be open to the
     Custodian to prefer an appropriate application for execution, as was done in
     the case of units 2, 5 to 8 as and when required. The Special Court also held
     that the said two units of the appellant also constituted an integral part of
     the compromise. As regards the ground based upon want of registration, the
     Special Court was of the view that the minutes of the order stood excepted           H
    402                       SUPREME COURT REPORTS [20001 SUPP. 5 S.C.R.

A from compulsory registration and that in any event in view of Section 41 of
    the Maharashtra Co-operative Societies Act, 1960 it stood also exempted,
    having regard to the fact that the interests of the appellant in the properties
    being merely that of a tenant in co-partnership housing society and the right
    to occupy the flats flowing only from the ownership of shares, the same
B   cannot be considered to be immovable property. Consequently, the application
    of the appellant came to be dismissed. Hence, this appeal.

            Dr. Rajeev Dhavan, learned senior counsel appearing for the appellant,
    strenuously contended, while reiterating the stand taken before the Special
    Court, that the appellant is an utter third party to the proceedings before the
C   Special Court it being neither a notified party nor claiming through any of the
    parties and, as a fact, also not having been arrayed as one such, its properties
    cannot be made liable for the recovery of the dues in question. It is also
    further contended that neither the appellant gave any undertaking nor it
    stood as surety for the realisation of the amount secured in the minutes of
    the order dated 5. 7 .95 and, therefore, cannot be said to have encumbered its
D   property by any specific thing in writing and the undertaking, if any, given
    on its behalf is not only an unauthorised one not binding upon the appellant
    but that it has been given also under a mistaken view of facts and, therefore,
    the same could not adversely affect the rights of the appellant. Argued the
    learned senior counsel further that in the absence of registration as envisaged
E   under Section 17 (I) (b) of the Registration Act, it cannot in any manner affect
    the rights of the appellant in immovable property and that the appellant's
    property cannot be proceeded against. Shri Shiraz Rustomjee, learned counsel
    for the Custodian, while drawing inspiration from the reasoning of the Special
    Court, endeavoured to sustain the conclusions arrived at by the Special
    Court. It is the contention of the learned counsel that the very object of the
F   consent order passed on 5. 7.95 was to effectively ensure the recovery of the
    dues and it is too late in the day to retrace steps to disown responsibility and
    liability in this regard. The case on hand is said to squarely fall under Section
    I 7 (2) (vi) of the Registration Act and that the attempt of the appellant is to
    somehow delay indefinitely realisation of the dues. The learned counsel on
G   either side also elaborately invited our attention to portions of the order under
    challenge to substantiate their respective stand.

          We have carefully considered the submissions of the learned counsel
    appearing on either side. In our view, apart from the lack of merits in the
    challenge made to the well considered order of the Special Court, the appellant's
H   case does not merit countenance in our hands for another reasor. also. The
      WFSTrnN PRESS PVT. LTD. v. THE CUSTODIAN AND ORS. [RAJll. J.]          403
parties before the Special Court having consented and invited the Court to           A
pass the order dated 5.7.95 and obtained benefits by giving undertaking of
their own and on behalf of the appellant-company, ought not to be allowed
to take shelter under tec!lnicalities to overreach the Court, which believed the
parties and counsel appearing on their behalf and acted in good faith by
accepting the terms suggested by the parties themselves.
                                                                                     B
       The questions. which loom large for consideration in this appeal, are as
to v. hat are the legal consequences flowing from the consent order of the
Special Court dated 5.7.95 and the affidavit filed by Mr. Milan Dalal on 28.7.95
as the Chairman of the appellant-company? and do they suffer any legal
infirmities such as want of registration, want of authority and mistake of fact      C
so as to render them either non-est or unenforceable? If it is held that the
consent order dated 5.7.95 and the affidavit dated 28.7.95 are binding upon
not only the parties but upon the appellant, as one.who has undertook to
abide by certain consequences and such an undertaking was given to secure
any or some benefit for any one or more of the parties from the Court, the
facts such as the appellant not being itself a party in the proceedings before       D
the Court and it was only a third party and that the property in question is
of the appellant and that the appellant is neither a notified party nor one
claiming through such notified party 1..Jr the judgment debtor pale into
insignificance and are rendered wholly irrelevant in determining the actual
issues arising.                                                                      E
        The Minutes of the order dated 5.7.95 came to be passed as a consent
order, decreeing for the rec<lVery of Rs. 11,82,81,316 with interest@ 20% and
the manner in which such decree has to be satisfied as well as proportionate
 liabilities, inter se, of the parties thereto. The permission for payment in
instalments sought for has been countenanced. Clauses 8, 12 and 13 make it           F
abundantly clear that Respondents 2 and 3 before the Special Court declared
that they will not claim any right, title or interest in the premises in question
(Schedule A3 properties) and Respondents 2 and 3 before the Special Court
as well as the appellant undertook to the Special Court, not to alienate,
encumber or part with possession of or create third party right, title or interest   G
in or over the Schedule A3 properties or any part thereof pending satisfaction
of the decree passed therein. The consent decretal order further stipuiated
that in the event of the decree becoming executable the Companies including
the appellant undertook to hand over possession of the properties mentioned
in .Schedules A I to A3 to the purchaser. on the sale being held and sanctioned
by the Special Court. In carrying out the directions contained in the above          H
    404                      SCPREME COURT REPORTS [2000] SUPP. 5 S.C.R.

A   consent decretal order, Mr. Milan B. Dalal, Chairman of the appellant-company,
    filed the required affidavit of undertaking dated 28.7.95. In the said affidavit
    of undertaking, while affirming the factum of ownership of Western Press Pvt.
    Ltd., to the property in question and noticing the factual position that the said
    property is being used and occupied by M/s CIFCO Ltd. and CIFCO Finance
B   Ltd., it has been stated in unmistakable terms in paragraphs 2 and 3 as
    follows:-

            "2. In terms of the Minutes of the order dated 5th July, 1995, passed
            by the Hon'ble Special Court, Western Press Pvt. Ltd., do hereby
            undertake that not to alienate, encumber or part with possession of

c           or create third party right, title or interest in the aforesaid premises till
            the decree is marked satisfied.

            3. On behalfofthe Company, I hereby undertake to this Hon'ble Court
            that in the events happening as provided in Clauses 12 and 13 of the
            said Minutes, the company undertake to vacate the premises in their
D           occupation."

            Though for fixing liability as such the mere fact that the judgment
    debtor companies and the appellant-company being part of the same group
    of companies completely controlled by Dalal family and its group concerns
     may not be sufficient as such, the said factual information indicating that the
E   cluster of companies is a mere cloak for these groups will be a just and
     relevant piece of material in appreciating the foul play anC: attempts on the
    part of the Directors of the appellant and their opportunistic stands adopted,
    as it suits them, from time to time, not only before the Court below but even
     in this Court. Mr. Milan B. Dalal has been found to be and seems to have
    been openly allowed by others without demur to liberally play the multifarious
F   roles he held in different companies of Dalal group families. Though the
    authority of Milan B. Dalal as Chairman of the appellant-company was seriously
    questioned by another Director of the appellant at a later stage, the rejoinder
    filed in this appeal by the very same Milan B. Dalal, in support of the stand
    of the appellant- company patently betrays the sinister motive of all those
G   who are fighting under the shadow of the appellant-company harping upon
    some technicalities of law or otherwise unmindful of the fact realities starring
    at them, who cannot disown their own responsibilities too in the matter. We
    are constrained to observe that both the parties as well as their advisers who
    have been responsible for the respective roles they seem to have played in
    misguiding and misleading the Special Court to pass a particular order, assuring
H   the existence of certain obvious facts, ought not to be allowed to either
     WESTERN PRESS PVT. LTD. v. THE CCSTODIAN AND ORS. [RAJU. J.]             405
retrace their steps or derive, retain or enjoy the fruits of their own machinations   A
and manipulations by now assuming different postures and asserting facts
which they deliberately withheld from the Court and were found to be giving
a different picture altogether when such orders came to be passed. This
condemnable conduct of the parties alone, in our view, is more than sufficient
to reject their claims now made in desperateness under the cover of pretended         B
and invented illegalities.

       On a careful consideration of the events which occurred before the
Special Court which made the said Court to believe the existence of certain
facts on the representations made before it, the orders passed and the affidavits
found and noticed to have been filed from time to time before the Special             C
Court, the Special Court could not be either faulted for its conclusions or that
the specific findings arrived at that the consent order dated 5.7.95 taken
together with the affidavit of undertaking dated 28. 7 .95 covered within its fold
the property of the appellant-company in question for being proceeded against
in execution of the decree passed for recovering the amount due as declared
in the consent order dated 5.7.95, could not be said to be vitiated in any            D
manner warranting our interference. Consequently, it would be permissible for
the Custodian to proceed against the property comprised in Units 3 and 4
belonging to the appellant- company also by means of an appropriate execution
application as and when he choose to do so. The plea of lack of authority
in Milan B. Dalal to bind the appellant needs mention only to be rejected even        E
for the simple reason that the Directors of the appellant-company, who allowed
Milan B. Dalal a free hand as Chairman of the appellant- company to deal with
the matter, cannot be permitted to blow hot and cold as it suits them. Equally
untenable is the pretended mistake of fact which, in our view, is nothing but
a self-serving attempt found to be made as a pure afterthought to wriggle out
of the lawful commitments made and retrace the position in which the Directors        F
of the company have allowed themselves to be landed in.

        So far as the challenge based on the want of registration under Section
I 7(I ) (b) of the Registration Act is toncemed, we are of the view that the
same is neither genuine nor has any merit whatsoever or capable of being              G
countenanced at our hands. The reasons assigned by the Court below to
reject the said plea cannot be considered to be either unjust or untenable.
Even otherwise, a careful analysis and consideration of the consent order
dated 5.7.95 as also the affidavit of undertaking dated 28.7.95 made in this
case disclose no intention, per se, to purport or operate to create, declare,
assign, limit or extinguish in present or in future any rigbt, title or interest,     H
    406                      Sl:PREME COl:RI REPORTS [2000[ SUPP. 5 S.C.R.

A    whether vested or contingent in the immovable property of the value of Rs.
      l 00 and upwards. On the other hand, the terms as well as the tenure of the
     above proceedings make clear the dominant intention and Jrpose of them
     to be merely an undertaking given by a third party to the proceedings to the
     Court to abide by a particular course of action if the judgment-debtor fails to
B    satisfy the decree. Even in cases of such default by the judgment-debtor in
     this case, the undertaking as well as the consent decree only enables the
     Custodian to initiate execution proceedings against the propertie' in question
     of the appellant- company and it is only in the event of such sale, the
     question of coming into existence any document which would require
     compulsory registration under Section 17 of the Act would arise and not at
C    this stage. In substance and effect what has been undertaken to the Court
     is to preserve the properties intact for being proceeded against in a given
     eventuality and deliver peaceful possession of the property in the event of
    such action becoming necessary. Declaration or undertaking conceding such
     liberty of action cannot be construed to fall under clause (b) of Section 17
    (I) of the Registration Act. It is important to note that both the consent
D   decree as well as the undertaking do not, by itself, envisage the execution of
    any deed or document also to create, declare, assign, limit or extinguish,
    whether in present or in future any right, title or interest whether vested or
    contingent of the value of Rs. 100 or upwards in immovable property. The
    consent order as also the undertaking given in this case would squarely. fa)I
E   within the exempted category of 'any decree or order of the Court' envisaged
    under Section 17 (2) (vi) and take it outside the excepted category of cases
    for the simple reason that it does not deal with, as such, any immovable
    property envisaged in the manner of clause (b) of Section 17 ( l) of the
    Registration Act. In the first instance, the decree/order in question does not
    comprise any immovable property as such. In any event, in a matter like the
F   one before us where the consent order which came to be passed on agreement
    as well as the undertaking given in pursuance thereof, was an undertaking
    to the Court, the words "subject-matter of the suit" need not be confined to
    the subject-matter of the plaint or subject- matter of the dispute alone, but
    would include all that which is made to become part of the proceedings in
G   order to finally and effectively settle alt the disputes between the parties.
    Shorn of all these unnecessary controversies now raised, we are also of the
    view that in a case where an item of property is referred to in an undertaking
    given to the Court as one which can be proceeded against in the event of
    the judgment- debtor failing to pay the decretal amount within the stipulated
    time, the immovable property does not get ipso facto affected or suffer in
H   anyone of the manner envisaged under Section 17 (I) so as to require
       WESTl:RN PRESS PVT. LTD v fHE CUSTODIAN AND ORS. [RAJU, J]        407
compulsory registration.                                                        A
      That apart, the provisions contained in Section 145 CPC also would
enure to the benefit of the Court as well as the Custodian to proceed against
the appellant in enforcement of the undertaking given to the Court and there
are no merits in the contentions sought to be urged to the contrary.
                                                                                B
     For all the reasons stated above, we see no merit whatsoever in the
above appeal. The appeal is dismissed with costs quantified at Rs. 25,000 to
be paid to the Custodian.

N.J.                                                      Appeal dismissed.