[O I R 10 CPC ] Party Executing Assignment Deed With Auctioneer After Successful Bidders Raise Dispute Qua Transaction Not Necessary Party: Calcutta HC

The instant proceedings arise out of an intervention application preferred by the applicant Phoenix ARC Private Limited seeking to intervene and be impleaded as a party respondent in the writ proceeding.

The writ petition was filed by the successful auction purchasers of a property which was put on sale by the State Bank of India ("SBI"), the respondent no. 1 herein, under the SARFAESI Act, 2002, praying for a direction on SBI for refund of consideration amount paid by the successful auction purchasers together with interest.

The cause of action for the present writ petition arose when SBI failed to issue Sale Certificate in favour of the successful auction purchasers on account of an earlier order of injunction passed by the Debt Recovery Tribunal ("DRT") whereby the borrower had sought to challenge the auction sale.

As the writ petitioners were deprived of the right of possession and enjoyment of the property despite having put in the entire amount of consideration, the present writ petition was filed seeking refund of the said consideration amount.

Counsels for the applicant Phoenix ARC Private Limited contended on facts that as SBI had assigned the borrower's dues to it by a Deed of Assignment and had thus stepped into the shoes of SBI and was therefore a necessary and proper party to the writ petition. Counsels for the applicant further contended that the applicant had issued a Sale Certificate in respect of the auctioned property but since the applicant was not a party to the writ proceeding, it could not agitate on the ground that the issuance of the said Sale Certificates would disentitle the writ petitioners from claiming refund of the consideration amount.

Counsels for the writ petitioners argued that the consideration amount became due and payable from SBI prior to the execution of the Deed of Assignment and that although the petitioners had paid the consideration amount to SBI, the petitioners were no longer interested in purchasing the property by reason of passage of time and were thus entitled to a refund of the said consideration amount. It was also argued by the petitioners that SBI as the assignor could always claim adjustment of consideration amount from the assignee applicant who sought to intervene in the writ petition and further that the petitioners did not receive or accept the Sale Certificate purported to have been issued by the applicant.

Placing reliance on the decision of the Supreme Court in M/s. Gammon India Ltd. v. Union of India, reported in (1974) 1 SCC 596 on the position of law that an intervenor cannot raise points which are not canvassed by the petitioners in the pleadings, the Single Judge Bench of Justice Moushumi Bhattacharya found the said decision to fit squarely within the factual matrix of the instant case and ruled:

"The application for intervention and addition of Phoenix as a party respondent to the writ petition hence fails for the above reasons. The reliance on Order I Rule 10(2) of The Code of Civil Procedure, 1908 is of no assistance to the applicant or to the SBI since under the said provision, the onus is on the Court to pass an order if the Court finds that a party has been wrongly impleaded. Order I Rule 10(2) also comes in where the Court deems it necessary to pass orders for effective and complete adjudication of the questions involved in the suit. The view of the Court that the applicant is neither a proper nor a necessary party has already been stated in the preceding paragraphs of this judgment."

The Court on merits, observed that the presence of the applicant as the alleged assignee is not necessary for adjudicating on the issue of refund of the bid amount from SBI to the petitioners as the liability to refund is only of SBI and that the Assignment Deed was executed subsequent to both the payment of consideration money as well as petitioners claim for refund of the money from the respondent no. 1. The Court further noted that there was no privity of contract between the petitioners and the applicant and that the claim for refund of consideration amount was borne solely out of correspondences exchanged between the petitioners and SBI, the respondent no. 1.

Accordingly, the Court found that the instant applicant was neither a proper nor a necessary party to the present suit proceedings and dismissed the instant application without costs.

Case: Avlokan Commosales Private Limited & Anr. v. State Bank of India & Anr., WPO 2166 of 2022

Date: 07.11.2022

Citation: 2022 LiveLaw (Cal) 356