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Judgement Reserved on: 05.11.2024

Judgement Delivered on: 01.04.2025

Neutral Citation No. - 2025:AHC-LKO:17786

AFR
Case :- WRIT - C No. - 35050 of 2019
Petitioner :- Sunita Nishad And Anr.
Respondent :- Debt Recovery Appellate Tribunal through
Registrar And Ors.
Counsel for Petitioner :- Sushil Kumar,Abhiuday Pratap
Singh,Amrendra Nath Tripathi,Meenakshi Singh
Parihar,Rakesh Chandra Tewari
Counsel for Respondent :- Rakesh Pal,Pc
Chauhan,Prashant K. Srivastava,Ramesh Chandra,S.C.
Tiwari,Shailendra Singh Rajawat,Vidya Kant Sharma

Hon'ble Mrs. Sangeeta Chandra, J.

1. This writ petition has been filed by the petitioners

Sunita Nishad and her husband Om Prakash, challenging
the order dated 22.10.2019 passed by the Debt Recovery
Appellate Tribunal Allahabad, (DRAT) in Appeal No.18 of
2018, filed by the Bank of Baroda through which the
order dated 20.08.2018 passed by the Debt Recovery
Tribunal, Lucknow (hereinafter referred to as “DRT”) has
been set aside and auction sale dated 11.12.2017 and
possession notice dated 05.10.2016 has been affirmed
and physical possession of House No. 13/88, Sector-13,
Indira Nagar Vistar Yojna, Lucknow, has been directed to
be delivered to Smt. Mamta Yadav, the respondent no.4
in this petition. The petitioners had earlier filed Writ
Petition No. 31115 (MB) of 2017 before this Court
challenging the auction notice dated 11.12.2017, which
petition was disposed off by this Court directing the
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petitioners to approach the DRT as the proceedings were

under the SARFAESI Act.

2. The brief facts necessary for deciding the case, as

mentioned in the Writ Petition No. 35050 of 2019 are that
the State Government launched a scheme called
“Kamdhenu Dairy Scheme” with intention to promote
dairy farming in the State of U.P. to maintain its status as
the highest milk producing state in the country. One Jai
Prakash, the brother of petitioner no.2 and the brother-
in-law of the petitioner no.1, applied for a term loan of
five years and was sanctioned Rs.90 lakhs by the Bank of
Baroda under the State Sponsored Scheme. The
petitioner no.1 and the petitioner no.2 being relatives of
the borrower Jai Prakash and already being customers of
Bank of Baroda, Gomti Nagar Branch, were shown as
guarantors of the loan fraudulently by the bank, which
used the original papers relating to petitioner’s jointly
owned property at Indira Nagar, which was already
mortgaged to the bank in a housing loan, as surety for
the agricultural loan of the borrower. It has been stated in
paragraph 10 to 13 that the petitioner no.1 was never
consulted by the bank, nor did she sign any papers for
extension of mortgage and she never stood as guarantor
or surety for the loan taken by Jai Prakash. Petitioner
no.1 and petitioner no.2 had taken a housing loan from
HDFC Bank on 30.07.2011 of Rs.32 lakhs for buying the
house situated at Indira Nagar and the loan had to be
repaid with interest to HDFC initially, but due to lower
rate of interest being offered by Bank of Baroda, the
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petitioners got their loan transferred on 23.01.2015 to

the respondent no.3, Bank of Baroda, which granted
them a loan of Rs.29,50,000 and the papers relating to
the house situated at Indira Nagar were submitted by the
petitioners to the said bank in January, 2015 itself. In
March 2015, when Jai Prakash applied for loan of
Rs.90,00,000 under Kamdhenu Dairy Scheme, the papers
relating to Indira Nagar House property had already been
deposited in the bank as the house was mortgaged for
repayment of housing loan, which had to be done in 217
monthly installments. The loan account of the borrower
Jai Prakash Yadav was declared NPA by the bank on
30.06.2016 and a Demand Notice was issued under
Section 13(2) of the SARFAESI Act on 21.07.2016.

3. It has been stated that the petitioner no.1 never

received such Demand Notice under Section 13(2) of the
SARFAESI Act. On 05.10.2016, possession notice was
issued by the bank under Section 13(4) of the SARFAESI
Act, 2002 and it took symbolic possession of the
property, but no such notice was ever served upon
petitioner no.1, and the petitioner had no knowledge of
taking over of the property by the bank. On 27.01.2017,
a letter of redemption was sent by the bank to the
petitioners through speed post. Thereafter summons
were issued by the District Magistrate, Lucknow under
Section 14 of the SARFAESI Act, 2002, on 21.03.2017.

4. It has been stated that the petitioners filed their

objections, but they were not considered and the house
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property at Indira Nagar was put up for auction. The bank

failed to comply with Rule 8(6)(a) of the Security Interest
(Enforcement) Rules, 2002 (hereinafter referred to as the
Rules of 2002), which specifically provides that
publication of auction sale notice shall include details of
encumbrances on the property known to the secured
creditor. The bank was well aware that there was a
housing loan of Rs.29 lakhs pending against the said
property, which was the primary charge and details of
such encumbrance was not published.

5. The petitioners filed Writ Petition No. 31115 (MB) of

2017 at Lucknow challenging the Auction Sale Notice
dated 11.12.2017, which was disposed of by this court,
directing the petitioners to approach the DRT. The
petitioners filed an application under Section 17 (1) of the
Act of 2002 before the DRT Lucknow and after pleadings
were exchanged, the Securitisation Application No.19 of
2018 was allowed by the DRT by its order dated
20.08.2018, a copy of which has been filed as annexure-
12 to the petition.

6. It has been submitted on behalf of the petitioners

that the Securitisation Application No. 19 of 2018 was
allowed by the DRT after recording a specific finding that
the Demand Notice issued under Section 13(2) of the Act
of 2002 was not served upon petitioner no.1. The postal
receipt submitted by the bank was issued in the name of
one ‘Savita’ and not Sunita. The DRT observed that the
bank should have gathered more proof of service, instead
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of placing reliance upon postal receipt dated 25.07.2016,

which was in the name of ‘Savita’ and not Smt. Sunita
Nishad. The DRT while placing reliance upon the Rule
3(4) of the Rules of 2002, which required that the
Demand Notice should be served upon each borrower
individually where there were more than one borrowers;
was of the opinion that the Demand Notice was served
only upon the husband of the petitioner no.1 Om
Prakash, and not on Sunita Nishad although the property
was jointly owned by husband and wife. The DRT also
observed that mere producing of postal receipt in support
of having dispatched the notice under Section 13(2) is
not sufficient to have established that the communication
was actually delivered to the addressee. Due to non-
compliance of of Rule 3(4) of the Rules of 2002, the
entire action initiated by the respondent bank was void
ab initio, and therefore, the possession notice dated
05.10.2016 and the E-auction sale notice published by
the bank were also vitiated on the ground that the
possession notice was dispatched to the petitioners
through registered post on 05.10.2016 and symbolic
possession was taken by the bank on 05.10.2016 itself.
Such action was against the law settled by the High Court
of Karnataka in the case of K.R. Krishna Gowda and
Another Vs. Chief Manager/Authorised Officer,
Kotak Mahindra Bank reported in
Manu/KA/0689/2012, where the Karnataka High Court
observed that in order to enable the borrower to know
the date on which possession would be taken by the
secured creditor Rules(1) and (2) of Rule 8 would have to
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be complied with by issuance of notices indicating the

date on which possession would be taken. The DRT
observed further that Special Leave Petition preferred by
Kotak Mahindra Bank was dismissed by the Supreme
Court hence the judgement rendered by Karnataka High
Court stood affirmed about service of possession notice
prior to actual taking of symbolic possession.

7. It was also observed by the DRT that auction sale

notice published by the respondent bank did not mention
the encumbrances already existing on the secured asset
proposed to be sold in terms Rule 8(6) of the Rules of
2002, Sunita Nishad being a joint owner of the secured
asset along with her husband Om Prakash, had taken a
housing loan on the property earlier from the bank, which
was not mentioned in the sale notice. Consequently, since
the bank had failed to prove service of demand notice
dated 21.07.2016, on Sunita Nishad hence, the entire
consequential action taken by the respondent bank under
the SARFAESI Act of 2002 was vitiated and void ab initio.

8. It has further been stated that the bank being

aggrieved filed an appeal before the DRAT, which was
allowed mainly on three grounds. It was observed that
even though notice was sent indicating a wrong name of
‘Savita’ instead of Sunita Nishad it can be considered to
be a typographical error of the postal department and
notice shall be treated to have been duly sent as it was
not returned undelivered. Such notice will be deemed to
have been served upon petitioner no.1 as it was
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addressed, not only to petitioner no.1, but also to her

husband Om Prakash, who was living at the same
address. The Securitisation Application was filed by both
husband and wife. The pleading in the Securitisation
Application was only for non-receipt of notice by the the
applicant no.1, Smt. Sunita Nishad. It is sufficient to infer
that the notices were served to both husband and wife as
they were dispatched to one and the same address and
her husband, Om Prakash did not allege that such notice
was never served upon him, and even the notice sent to
Sunita Nishad did not return unserved.

9. It has also been observed by the DRAT that non-

service of prior notice of taking symbolic possession
under Section 13(4) is also of no consequence once
summons were issued under the provisions of Section 14
of the Act by the District Magistrate. The DRAT also
observed that in view of the judgment rendered by the
Supreme Court in Standard Chartered Bank Vs. V.
Noble Kumar, 2013 (9) SCC 620; there was no
necessity to serve any notice before taking over symbolic
possession of the property. The DRAT placed reliance
upon a judgement rendered by this court at Allahabad in
Writ-C No. 9731 of 2019, ‘M/s Mahesh Industries Private
Limited and Others Vs. Karur Vyasa Bank Limited’, on
08.08.2019, where relying upon Noble Kumar (supra),
this Court had observed that there is no requirement for
issuance of any notice to the borrower for the proposed
date of taking possession. The secured creditor is under
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no obligation to intimate to the borrower/guarantor

before taking symbolic possession of the property.

10. The DRAT has allowed the appeal of the bank also
on the ground that the applicants had created an
extended mortgage of property for securing the loan
granted to their relative Jai Prakash, who was the
Borrower. The extended mortgage letter dated
07.05.2015 was signed by both Sunita Nishad and her
husband Om Prakash, and therefore, Sunita Nishad could
not be permitted to say that she had not given any
guarantee for securing the loan taken by Jai Prakash. As
per Rule 8(6), the secured creditor is required to mention
encumbrances in the sale notice, but in this case the
properties were primarily mortgaged against the housing
loan granted to Sunita Nishad and her husband by Bank
of Baroda itself and since no mention regarding such
housing loan was made in the demand notice, it was
apparent that such housing loan was regular. Also, even if
the encumbrance was in existence, the property was
mortgaged with the self same bank and encumbrance
was not of any third party (institution), hence if at all it
caused any prejudice to the rights of any party it was
that of the bank alone. Non-mentioning of such
encumbrance on the properties in the sale notice was of
no consequence and it could not be said that the bank
had committed such a grave irregularity as to vitiate the
sale proceedings altogether.
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11. Initially, when this petition was filed and taken up as

fresh, the counsel for the petitioner had argued that the
requirement of Rule 13 of the Rules of 2002 had not been
met and the Appellate Tribunal had given a wrong finding
regarding sufficiency of service of notice under Section
13. The Court issue notice to the respondent and directed
that till the next date of listing, the parties shall maintain
status quo. Such time interim order continued to be
extended and counter affidavit was filed by the
respondent bank on 26.03.2021, along with an
application for vacation of interim order.

12. In the counter affidavit, the bank denied the claim

of the petitioners in the writ petition and stated that the
petitioners have resorted to material concealment and
misrepresentation in stating on oath that they have not
taken any guarantee in the term loan facility extended to
Jai Prakash of Rs.90 lakhs under the Kamdhenu Scheme.
It was stated that earlier Writ-C No.16546 of 2021 was
filed by the borrower Jai Prakash before this court,
praying for early disposal of his application for recall
dismissing Securitisation Application No. 15 of 2017 for
want of prosecution. The High Court disposed off Writ-C
No. 16546 of 2021 on 07.04.2022 with direction to the
DRT to decide the recall as well as delay condonation
application filed by Jai Prakash expeditiously, but before
such order was passed, the DRT had already disposed off
both the applications by its order dated 04.04.2022 and
Securitisation Application No. 15 of 2017 filed by Jai
Prakash stood revived.
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13. It was also stated in the counter affidavit of the

bank that the Demand Notice dated 21.07.2016, issued
under Rule 13 (2) of the Act of 2002 was sent to the
borrower and also to the guarantor through registered
speed post on 25.07.2017, which notice has not returned
undelivered, and therefore, service was deemed upon
them. The bank took symbolic possession of the secured
asset on 05.10.2016 and summons were issued by the
District Magistrate under Section 14 of the Act which
were affixed on a conspicuous place on the house
property/secured asset as the borrower/guarantor had
refused to accept personal service of the same.

14. It has also been stated that the petitioners have

admitted in paragraphs 3 and 15 of writ petition that they
had stood as guarantors for the loan facility extended to
Jai Prakash. Kamdhenu Dairy Loan is a commercial loan,
which is granted to the borrower against some security.
The borrower Jai Prakash and the guarantors have
executed the necessary documents in this regard by
securing the said term loan by extending guarantee of
house property no. 13/88, Indira Nagar Vistar Yojna and
a plot situated at Sharda Nagar Raebareli Road Scheme,
therefore, the bank could initiate recovery proceedings
under SARFAESI Act which relates to recovery of NPAs
from secured assets held by the creditor. Moreover, the
Uttar Pradesh Agricultural Credit Act, 1973 prohibits sale
of agricultural property, whereas the house property
situated at Indira Nagar Vistar Yojna and the plot situated
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at Sharda Nagar Raebareli Road Housing Scheme were

not agricultural properties.

15. It has also been stated that after summons were

issued under Section 14 of the Act of 2002 by the District
Magistrate, Lucknow. The petitioners did not file
objections when orders were passed under section 14 of
the Act by the designated officer, the Bank had published
auction notice on 18.11.2017, in two leading newspapers,
namely, Times of India and Amar Ujala as is required
under the Act and the Rules. The DRT had allowed the
Securitisation Application of the petitioners on technical
grounds stating the Demand Notice remained unserved
due to wrong mention of the name of the petitioner no.1,
the name of the petitioner no.1 was Sunita, but it was
typed as ‘Savita’. It has been stated that the postal
receipt issued in the name of ‘Savita’ had been issued for
the notice which showed the correct name and address of
the guarantors. Both petitioner no.1 and petitioner no.2
were joint owners of the property. The Demand Notice
sent through registered post has never been received
back undelivered, and therefore, service is deemed upon
the petitioners. With regards to taking over of symbolic
possession, the bank has relied upon Standard Chartered
Bank Vs. Noble Kumar (supra), where the Supreme Court
has observed that application under Section 14 of the Act
can be moved straight away after Demand Notice under
Section 13(2) of the Act is issued.
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16. The bank has also stated in its counter affidavit that
there is no provision which requires the bank to cancel
the sale proceedings in case only one bid is received.
Since the reserved price set by the bank had been met by
the bidder, the house property could be sold to such
bidder. It was an open bidding process and the petitioners
were free to place a better offer in the auction.

17. In the rejoinder affidavit filed by the petitioners to

the counter affidavit of the bank, it has been stated that
Writ-C No. 16546 of 2021 was filed by the borrower Jai
Prakash without knowledge of the petitioners. When the
petitioners derived knowledge of the contents of the
petition, they objected to the same. Since Jai Prakash,
the borrower was petitioner no.1’s brother-in-law, he
admitted his mistake, but requested the petitioner no.1
not to deny the contents of the Writ Petition No. 16546 of
2021. To protect him, she had stated in her Writ Petition
No. 31115 (MB) of 2017 that she was the guarantor in
the loan extended to Jai Prakash. In fact, Writ Petition
No. 31115 (MB) of 2017 was disposed of by this court by
making no observations on merit, but with a direction to
the petitioners to approach the DRT under the SARFAESI
Act. In such writ petition the petitioners had made no
admission of being guarantors for the term loan facility
extended to Jai Prakash. The petitioners had taken a
housing loan of Rs. 29 lakhs from the Bank of Baroda to
buy a house property situated in Sector-13, Indira Nagar
and mortgaged the said house to secure the loan. They
had not signed any document extending the guarantee in
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favour of Jai Prakash for securing his term loan taken

under Kamdhenu Dairy Scheme. However, the bank in
collusion with the borrower Jai Prakash had extended the
guarantee which was never executed by the petitioners.
As a result of such fraudulent behaviour, the bank
manager, who had processed the loan given to Jai
Prakash had been suspended and later demoted.

18. It was also stated in such rejoinder affidavit that the

alleged letter issued on 27.11.2017 admitting the
mortgage of house property situated at Indira Nagar for
securing the loan given to the principal borrower was not
signed by the petitioners and Jai Prakash may have
forged the same. The house property at Indira Nagar was
never mortgaged, and therefore, there could not have
been an extension of the mortgage deed.

19. It was reiterated that the bank had failed to comply

with Rule 8(1) and 8(2) by not issuing notices, specifying
the possession date. The alleged notice of symbolic
possession dated 05.10.2016 was published only on
07.10.2016 proceedings initiated thereafter ex parte.

20. After affidavits were exchanged and the petition was

ripe for hearing an Impleadment Application no.9 of 2022
was filed by the petitioners on 25.04.2022 for impleading
the principal borrower Jai Prakash as respondent no.5 in
the writ alleging that Securitisation Application No.150 of
2017 was pending before the DRT and its outcome would
impact the petitioners, and therefore, it was necessary to
include Jai Prakash as respondent no.5 in the petition.
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21. Objections were filed by the bank on 18.07.2022,

against such application for impleadment by the bank
saying that such impleadment application was collusive in
nature and filed only to delay the decision in the writ
petition where pleadings had been exchanged and the
matter was ripe for final hearing. It was stated that
initially one Securitisation Application No. 150 of 2017
was filed by Jai Prakash, the petitioners were not
impleaded therein as respondents. When Securitisation
Application No.19 of 2018 was filed by petitioners Sunita
Nishad and Om Prakash, they did not implead Jai Prakash
as a respondent, although the same advocate was
engaged by them and they had made pleadings on behalf
of each other. Also, when Securitisation Application No.19
of 2018, was allowed by the DRT, the bank filed appeal
before the DRAT Allahabad. Jai Prakash, the borrower
was not a party to such proceedings and no objections
regarding the non-joinder of the borrower was ever
raised by the petitioners.

22. This court passed a detailed order on 14.03.2023,

rejecting the impleadment application by noticing the
objections as stated by the bank and finding that the
securitisation application of Jai Prakash the borrower is
pending before the DRT, where the guarantors have not
been impleaded as parties. The securitisation application
of the guarantors Sunita Nishad and Om Prakash having
been allowed, the bank had filed appeal before the DRAT
Allahabad, and during the pendency of the appeal, the
petitioners did not raise any issue regarding non-
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impleadment of the principal borrower. Since Writ-C No.

35050 of 2019 had arisen out of proceedings in the
Securitisation Application No. 19 of 2018 and challenged
the order passed in appeal by the DRAT, Allahabad where
Jai Prakash was not a party, there was no necessity of
impleading the Jai Prakash in the instant petition.

23. An application for amendment in the petition was

moved on 20.09.2023 by the petitioners stating that Writ
Petition No. 31115 (MB) of 2017 had been disposed off
on 20.12.2017 and there were certain incorrect pleadings
made therein and the petitioners had filed an amendment
application which was pending in the finally disposed off
petition.

24. This Court partly allowed such Amendment

Application on 01.03.2024, the relevant extract of which
is being quoted here in below:-

1. ***

2. Learned counsel for the applicant has prayed, on the basis of

the affidavit filed in support of such amendment application for
permission to add paragraph 1A after paragraph 1 in Writ-C
No.35050 of 2019, that initially a Writ Petition No.31115 (M/B)
of 2017 was filed by the petitioners, which was disposed of by
this court by an order dated 20.12.2017. In the said Writ
Petition No.31115 (M/B) of 2017, certain incorrect statements
were made in paragraphs-3 and 15, to substantiate the claim of
the petitioners that loan ought to be recovered from the
principal borrowers first and only if it is not feasible to recover
from the principal borrowers, proceedings of recovery could be
initiated against the guarantors that is the petitioners. Such
pleadings was made in Writ Petition No.31115 (M/B) of 2017 by
the petitioners only to convince this Court that the petitioners
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being guarantors cannot be fixed with liability of repayment of

loan of the principal borrower before the bank proceeds against
principal borrower. But from such pleadings, an inference has
been drawn that the petitioners admitted the Bank's claim that
they are guarantors of the loan taken by the principal borrower.
In fact, the petitioners had wanted to assert that the bank was
arbitrarily proceeding against the petitioners as guarantors.

The petitioners pleading in the said Writ Petition No.31115 (M/

B) of 2017 was made only because they could not understand
the nuances of the english language used by the learned
counsel appearing for them in Writ Petition No.31115 (M/B) of
2017 and even the document that has been relied upon by the
petitioners showed that the petitioner no.1 Sunita Nishad never
signed the terms and conditions of the loan document and the
extension of equitable mortgage, nor did she extended her own
house as security against the loan of Jai Prakash, who is the
principal borrower. The petitioners were under tremendous
pressure as their residential house, which was fraudulently
shown by the Bank officials to have been extended as security
for repayment of loan in time by the principal borrower, was
under auction sale and they were being threatened to be
dispossessed. Therefore, inadvertently mistake was committed
in the said pleading in Writ Petition No.31115 (M/B) of 2017.

3. Learned counsel for the applicant has also stated before this
Court that Writ Petition No.31115 (M/B) of 2017 having
already disposed off by this Court by its order dated
20.12.2017, an application for amendment in the pleadings in
the said Writ Petition No.31115 (M/B) of 2017 has also been
filed, which is pending disposal before the Division Bench.

4. Additionally, learned counsel for the applicant has prayed

for liberty to add paragraph-70 A in Writ-C No.35050 of 2019,
raising the plea with regard to the bank proceeding under the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act (SARFAESI Act) illegally,
as a loan that had been given to the Principal borrower was
under "Kamdhenu Dairy Interest Subsidy Scheme" floated
under the U.P. Agriculture Credit Act, 1973. In the said loan,
subsidy was given by the State Government. As such recovery, if
any, could be done only under the provisions Section 11, 12,
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12A, 12B and 12C of the U.P. Agriculture Credit Act, 1973. The
Bank could not be allowed to pursue the remedy under the
SARFAESI Act before the Debt Recovery Tribunal.

5. Further, the learned counsel for the applicant prays for

permission to be granted to the applicants to add paragraph
70-B to the pleadings in Writ-C No.35050 of 2019, wherein it
has been stated that loan in question being under the
Kamdhenu Dairy Interest Subsidy Scheme, under the U.P.
Agricuture Credit Act, 1973, is an agricultural loan extended
for agricultural purposes and, therefore, no proceedings under
the SARFAESI Act could be initiated to effectuate recovery of
agricultural loan.

6.,7.,8.***

9. A strong objection has been taken to the pleadings proposed

to be added as paragraph-1A saying that the petitioners
knowingly signed all documents and they cannot resile from
signatures made by them on such documents as guarantors and
the annexure that have been filed along with Writ Petition
No.31115 (M/B) of 2017 by the petitioners themselves belie
their claim that they were not guarantors to the loan taken by
the principal borrower and they did not offer their residential
house as surety for the loan taken by the principal borrower.

10. It has been argued by Sri Prashant Kumar Srivastava,

learned counsel for the respondent, that the petitioners
deliberately moved an amendment application with a prayer to
add the pleadings as proposed in paragraph-1A only to detract
from the inference made from the pleadings in the writ petition
subsequently filed i.e. Writ-C No.35050 (M/S) of 2019, where
they had stated that they had not signed as guarantors and have
not offered the house as surety for the loan taken by the
principal borrower. Through the application for amendment,
the petitioners are trying to raise new grounds and are trying to
change nature and character of the petition.

11. It has also been argued that application for amendment

filed by the applicants is collusive for the reason that at the
initial stage when securitization application No.150 of 2017
was filed by the principal borrower Jai Prakash, and
securitization application no.19 of 2018 was filed by Mrs.
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Sunita Nishad and her husband, they had engaged the same
Advocate and they had made pleadings on behalf of each other
in the said Securitization Applications.

12., 13., ***

14. This Court has gone through the counter affidavit that has
been filed to the original writ petition Writ-C No.35050 of 2019
and also the writ petition no.31115 of 2017, a copy of which has
been annexed to the counter affidavit filed in the instant
petition. From the same, it is evident that documents have been
filed by the Bank to show that the petitioners had signed the
documents as guarantors for the principal borrower, annexed
as annexure-5 to the counter affidavit. Therefore, the
amendment as proposed by addition of paragraph 1A cannot be
allowed. It would only permit the petitioners to resile from their
pleadings and set up a new case altogether before this Court.

15. In so far as the proposed amendments and addition of

paragraphs- 70A and 70B are concerned, such addition to the
pleadings raise legal grounds, which can be taken at any stage.

16. Such pleadings are proposed to be made the basis of the

legal grounds which could be raised at any stage even at the
stage of final hearing as they do not require additional evidence
to be led. Such proposed amendments by addition of pragraph-
70A and 70B, the grounds (hh) and (ii) as well as the relief
clause (v) are permissible in law to be added and are therefore
allowed.

17. Consequently, the amendment application C.M. Application

No. I.A.12/ 2023 is partly allowed.”

25. In effect, this Court had allowed amendments

relating to UP Agricultural Credit Act, 1973, by addition of
paragraphs 70A and 70B and grounds relating to the
same. It however, did not allow paragraph 1A to be
added where the petitioners had stated that, although in
Writ Petition No. 31115 (MB) of 2017, they had stated
that recovery should first be sought to be made from the
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principal borrower before proceeding against the

guarantor and had inadvertently suggested their
acceptance as guarantors to the loan taken by Jai
Prakash, the petitioners only meant that even if they are
treated as guarantors, the recovery should first follow the
proper legal procedure. It was also stated that they had
unknowingly signed the pleadings under pressure as their
residential house was under auction.

26. After amendment of the petition by addition of

paragraph 70A and 70B, the respondent bank filed
another application for dismissal of the petition on
03.04.2024, along with a supplementary counter
affidavit, saying that the petitioners have acknowledged
their role as guarantors for the term loan of Rs.90 lakhs
extended to Jai Prakash under Kamdhenu Dairy Scheme
additionally through letter dated 27.11.2017, they
admitted to providing the guarantee and requested the
bank to auction the borrowers property first. They had
further sought a deferment of auction of their house
property situated in Sharda Nagar Yojna and Indira Nagar
Vistar. Also, after rejection of interim relief application in
Securitisation Application, the petitioners had filed Writ
Petition No. 31115 (MB) of 2017 and had made various
averments on behalf of the borrower and they had also
engaged the same counsel and through this petition as
well as repeated applications moved by the petitioners,
they have indirectly benefited the borrower.
 VERDICTUM.IN

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27. Moreover, the petitioners have filed false affidavits

before this Court and the Supreme Court in the case of
State of Orissa and Others Vs. Laxmi Narayan Das
(2023) 15 SCC 273, has observed that if a petitioner
does not disclose all material facts fairly and truly before
the Court but stated them in a distorted manner and tried
to mislead the Court, the Court has inherent power to
protect itself and to prevent an abuse of its process and
dismiss the petition. The respondent bank has also placed
reliance upon Hari Narayan Vs Badari AIR 1963
Supreme Court 1558, G. Narayana Swamy Reddy
Vs. Govt. of Karnataka 1991 (3) SCC 261 and several
other cases where the High Court denied relief to the
litigant on the ground that he had not approached the
court with clean hands and writ jurisdiction was equitable
jurisdiction, which could not be allowed to be abused.
With regard to contents of paragraphs 70A and 70B, it
has been submitted that securitisation proceedings can
be initiated by a secured creditor for realisation of debt
through transfer of security interest created on the
secured asset by way of sale/lease, etc. under the Act of
2002. There is no provision in the Act of 2002, which bars
the bank from initiating securitisation proceedings under
the Kamdhenu Scheme.

28. A short counter affidavit has been filed by the

respondent no.4 Mamta Yadav on 19.04.2024, stating
that she had bought the property in question in auction
sale held by the bank and completed all formalities and
deposited the money by taking a home loan of Rs.75
 VERDICTUM.IN

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lakhs from Indian bank sanctioned on 14.12.2017. The

auction purchaser was paying the monthly installments
for repayment of such loan to Indian bank, but had not
been given actual physical possession of the property,
sale certificate in regard to which had been issued by the
respondent bank.

Sri Shailendra Singh Rajawat, Advocate appearing

for the auction purchaser respondent no.4 has argued
that the encumbrance or charge, if any, in respect of the
property in question can only be challenged by the
auction purchaser, and therefore, the petitioner as such
being the guarantors and mortgagors, in the instant case
have no locus to raise any objection against the alleged
encumbrances or charge. For establishing a charge or
encumbrance, the petitioner has to show three parties,
one who created the encumbrance, two, who has a
superior or first charge under any statute and three, who
has inferior or second charge.

It has been argued by the learned counsel appearing

for the respondent no.4 that since a Sale Certificate has
been issued by the bank, which held the first charge on
the property in question, mentioning there in that such
sale has been conducted in a public auction in
proceedings under the SARFAESI Act, and transferred
title, free from all encumbrances on the auction
purchaser, such Sale Certificate gives absolute title and
interest to the auction purchaser on the property in
question.
 VERDICTUM.IN

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29. It has been argued by Shri Amrendra Nath Tripathi,

learned counsel for the petitioners that the Tribunal has
failed to correctly appreciate the facts and law. The DRT
had allowed the Securitisation Application on three
grounds, namely, that the Demand Notice was not served
on the Sunita Nishad; prior notice before taking symbolic
possession was not issued to the guarantor; the
encumbrance on the secured asset was not mentioned in
the sale notice. The DRAT while allowing the appeal gave
an erroneous finding that the mentioning of the name
‘Savita’ on the postal receipt was a typographical error
and since Securitisation Application had been filed by
both Sunita Nishad and her husband, Om Prakash and
there was no pleading on record that Om Prakash, who
lived in the same property on the same address as Sunita
had not been served a copy of the demand notice, it
could not be said that notice was not served upon Sunita
Nishad. Notice having not returned undelivered, would be
deemed to have been served.

30. It has been argued that the Appellate Tribunal also

erroneously observed that non-service of notice of
possession would be of no consequence as the bank had
resorted to Section 14 of the SARFAESI Act proceedings
and summons was issued by the District Magistrate which
was served on the guarantor. It has been submitted that
the Appellate Tribunal erred in interpreting the judgement
of the Supreme Court in Standard Chartered Bank Vs.
Noble Kumar(supra).
 VERDICTUM.IN

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31. It has further been argued that the Tribunal

committed a gross error of law in holding that the
petitioners have created extended mortgage of the
property when the original mortgage was not made and
signed, extended mortgage could not have been made at
all.

32. It has also been argued on behalf of the petitioners

that the Tribunal has wrongly held that non-mentioning of
encumbrances on the property proposed to be sold is of
no consequence as prior mortgage had been created by
the petitioners in favour of the self same bank.

33. It has been further argued by the learned Counsel

appearing on behalf of the petitioners that Kamdhenu
Dairy Scheme had been launched by the Government of
U.P. as an Agricultural Credit Scheme under the U.P.
Agricultural Credit Act, 1973. If the loan had been
extended under an Agricultural Credit Scheme to Jai
Prakash, which could not be repaid by the borrower, then
proceedings should have been initiated under Sections
11, 12, 12 A, 12B and 12C of the Uttar Pradesh
Agricultural Credit Act of 1973. No proceedings could
have been initiated under the Act of 2002 to effectuate
recovery of agricultural loan. Also, the properties which
were allegedly mortgaged to the bank for securing the
agricultural loan for a project to be set up by Jai Prakash
were agricultural and situated at Barabanki and Principal
Borrower was at Lucknow and the Bank of Baroda Branch
at Gomti Nagar had no jurisdiction to sanction loan in
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District Barabanki. This irregularity when revealed to the

higher management of the bank had prompted them to
take disciplinary action against the staff involved in
sanctioning of loan to Jai Prakash, the principal borrower.

34. On the basis of pleadings on record, the counsel for

the petitioner has argued that firstly the petitioners did
not create any mortgage and also never took any
guarantee in the matter of loan availed by Jai Prakash
under the Kamdhenu Dairy Scheme. Even if such
mortgage is shown by the bank to have been created, the
same is defective. Secondly, the bank did not follow the
procedure prescribed under the SARFAESI Act and Rules
to auction the property of the petitioner in so far as no
demand notice under Section 13(2) was received by the
petitioner no.1, no possession notice under Section 13(4)
was given in time prior to taking over of symbolic
possession, and the Auction Notice did not disclose the
encumbrances on the property. Even the Sale Certificate
which was issued to the respondent no. 4 was defective.

35. To substantiate such arguments, counsel for the

petitioners has stated that service of demand notice on
petitioner no.2, who is the husband of petitioner no.1,
cannot be said to be sufficient service on petitioner no.1.
The Appellate Tribunal findings are contrary to the
mandatory requirement under Rule 3(1) and Rule 3(4) of
the Rules of 2002 which require that demand notice shall
be served either by hand or by registered post
acknowledgment due, or by speed post or by courier, or
 VERDICTUM.IN

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by any other means of transmission of documents like

through fax or electronic mail service upon the borrower
or his agent and the demand notice shall be served on
each borrower. In case of the petitioners, the only mode
of service of demand notice as shown by the bank is
through registered post and a perusal of demand notice
filed at page-413 of the counter affidavit of the bank
shows that it mentions the same having been issued in
pursuance of some ‘General Form of Guarantee’ dated
02.03.2015. No such form or guarantee dated
02.03.2015 has been brought on record by the bank
either before the Tribunal or before this court. It is the
case of the petitioners that Loan Sanction Letter dated
01.03.2015 of Jai Prakash had only one ‘General Form of
Guarantee’ of Om Prakash petitioner no.2, and not
petitioner no.1, as is evident from serial no.4 of the
sureties mentioned at page-292 of the counter affidavit of
the respondent no.3 Bank.

36. I have gone through page no.292, as pointed out by

the learned counsel appearing for the petitioners, which
is part of enclosures to Supplementary Affidavit SA 19
OF 2018 filed by Chief Manager of Bank of Baroda in
Securitisation Application No.19 of 2018. S.A.-1 is the
Loan Sanction Letter and it shows that Jai Prakash had
taken a term loan of rupees 90 lakhs under Kamdhenu
Dairy Scheme and offered as securities several
properties, some of which also belonged to Om Prakash
and Sunita Nishad. Prior to loan sanction to Jai Prakash
on 01.03.2015, the petitioners had taken a housing loan
 VERDICTUM.IN

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of rupees 29.50 lakhs on 28.01.2015. Copies of Loan

Sanction Letter dated 28.01.2015 to Om Prakash and
Sunita Nishad and Loan Sanction Letter dated 01.03.2015
in favour of Jai Prakash have been filed along with the
said supplementary affidavit in Securitization Application
No. 19 of 2018. The security documents mentioned in the
Loan Sanction Letter dated 28.01.2015 in favour of the
petitioners mentions primary mortgage of House
No.13/88 situated at Indira Nagar, Lucknow belonging to
Om Prakash and Sunita Nishad his wife, and plot no.
3/334 situated at Rajni Khand Sharda Nagar, Raebareli
Road, Lucknow as collateral. Attendance Sheet for
Creation of Mortgage, Declaration in the Matter of
Mortgage by deposit of Title Deed of property, Stamped
Undertaking for Creation of Equitable Mortgage soon after
execution of Sale Deed, letter of Confirmation of
Mortgage Creation/Extension; have all been mentioned as
enclosures to the sanction letter. All such documents have
signatures of Sunita Nishad as also of Om Prakash, her
husband.

37. The Loan Sanction Letter dated 01.03.2015 in favour

of Jai Prakash mentions sanction of term loan of rupees
90 lakhs under Kamdhenu Dairy Interest Subsidy Scheme
and mentions as securities at serial no. 4 General Form of
Guarantee signed by Om Prakash and at serial nos. 5, 6,
7 and 8 declaration under Section 6(1) of the Agricultural
Credit Act, 1973 of Khasara plot nos. 71, 73, 72, 81 and
parts thereof, situated at Gram Athri Pargana Bhetauli,
Tehsil Ramnagar, District Barabanki. These four properties
 VERDICTUM.IN

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mention of which finds place as securities at serial

numbers 5 to 8, have not been proceeded against under
the SARFAESI Act and Rules, being agricultural
properties. At serial no.9 of the same document, mention
has been made of Extension of property of Jai Prakash
house no. 645B on plot no. 223, Abhishek Puram
Mandiyaon, Jankipuram Vistar, Lucknow. At serial no. 10
mention has been made of Extension of property of
House No. 13/88, Sector 13, Indira Nagar Vistar Yojna
owned by Om Prakash and his wife, Sunita Nishad. At
serial no.11, Extension of property of plot no. 3/334,
Type-C Rajni Khand Sharda Nagar Yojna, Raebareli Road,
Lucknow by Om Prakash and Sunita Nishad have been
mentioned. Such document has also been signed by
Sunita and her husband, Om Prakash along with
Jaiprakash, the principal borrower.

38. In the same supplementary affidavit, copies of

LDOC 90 (P), relating to letter of Confirmation of
Creation/Extension of Mortgage dated 07.05.2015; LDOC
90 (C) Declaration in the matter of Mortgage by Deposit
of Title Deeds in respect of immovables dated
06.05.2015, and Composite Memorandum for Extension
of Title Deeds by two or more mortgagors, dated
06.05.2015; and Attendance Note of the Mortgagor dated
06.05.2015 has been filed as Exhibit-S.A.2.

39. This Court has carefully gone through S.A.-2 and

finds both petitioner no.1 and petitioner no.2 had signed
such document 90(P) for Creation/Extension of Mortgage
and had undertaken to create charge in favour of the
 VERDICTUM.IN

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bank for due repayment of or redemption of credit

facilities of Rs.90,00,000/- with interest and costs and
charges payable thereon. Similarly, the Declaration
Document 90(C) and the Schedule of Properties mentions
Extension of Equitable Mortgage of plot no.3/33 4C Type
situated in Rajini Khand Sharda Nagar, Yojna and also
extension of equitable mortgage of house no.13/88
situated at Indira Nagar Vistar Yojna, Lucknow. All such
documents filed as exhibits in the Supplementary
Affidavit filed by the Chief Manager of the bank before
the D.R.T. in Securitization Application No.- 19 of 2018
have been signed by Sunita Nishad and her husband, and
specific mention has been made at page-300 of the
counter affidavit of the properties mentioned in Schedule
2A and 2B being mortgaged in housing loan of Rs.29.50
lakhs of Om Prakash and Sunita Nishad; papers for which
had already been deposited in the bank, being extended
as guarantee/security for loan of Rs.90 lakhs to Jai
Prakash.

40. This Court has also gone through the Attendance

Note of the mortgage which mentions the names and
signatures of Om Prakash and Sunita Nishad as also of Jai
Prakash and two officers of the bank.

It is these documents that have been relied upon by

the D.R.T. Lucknow in giving a specific finding that both
Sunita Nishad and her husband Om Prakash had signed
documents relating to extension of equitable mortgage of
house, property situated at Sector 13 Indira Nagar,
Lucknow, as security for repayment of loan of Rs. 90
 VERDICTUM.IN

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lakhs by Jai Prakash. Such specific finding given in the

judgement of D.R.T. dated 20.08.2018 has not been
challenged by the petitioners and being a finding of fact
which has been corroborated by documents filed along
with the counter affidavit of the bank and perused
carefully by this Court, indicates that the petitioners have
resorted to misrepresentation and deliberate falsehood
before this Court which is sitting in equitable and
extraordinary writ jurisdiction.

41. In so far as the argument relating to non-service of

demand notice under Section 13, Sub Clause 2 of the Act
is concerned and reference to Rule 3 (4) having been
made by the counsel for the petitioners, this court has
carefully gone through documents enclosed with the
counter affidavit of the respondent bank referred to the
arguments of the counsel for the bank. The counter
affidavit filed in Writ Petition No.35050/2019 has copy of
entire Petition No.31115/2017 enclosed to it. In
paragraph-3 and in subsequent paragraphs, the
petitioners have clearly admitted to being guarantors to
the loan taken by Jai Prakash and they have challenged
the sale notice dated 18.10.2017 on the ground that the
bank should have proceeded first against the principal
borrower. A copy of letter dated 27.10.2017, written by
Sunita Nishad and her husband, Om Prakash, has been
filed Annexure 5 to the said Writ Petition No.
31115/2017, wherein it has been clearly stated by the
petitioners that they are guarantors of loan taken by Jai
Prakash and had offered House No. 88 situated at Sector
 VERDICTUM.IN

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13, Indira Nagar, Lucknow as security to the loan taken

by Jai Prakash and that notice has been sent by the bank,
not only to the borrower but also to the petitioners who
are guarantors for sale of property in question, whereas
the property of the borrower should have been proceeded
against first and then only auction of properties offered
by the petitioners as securities should be proceeded
against. In this petition, there is no mention of non-
service of notice under Section 13(2) and Section 13(4)
on the petitioners.

42. This Court has noticed that in paragraph 3 of the

affidavit filed in support of Writ Petition No. 35050 of
2019, Sunita Nishad has solemnly affirmed on oath that
Annexure no.4 of the petition, including other Annexures
is a true copy of its original. The demand notice dated
21.07.2016 has been filed as an Annexure no.4 to the
writ petition and it shows that it was properly served
upon petitioner no.1 also. Along with the demand notice
dated 21.07.2016, the bank had also sent a demand
notice to the borrower and the house property situated at
Indira Nagar was mentioned in paragraph-2 of the said
demand notice as belonging to the petitioners. All details
of secured asset were clearly mentioned in the demand
notice dated 21.07.2016 issued under Section 13 (2) of
the Act which was sent through registered post
acknowledgment due, to the petitioner no.1 and also
petitioner no.2 at their correct address that is House
No.88, Sector-13, Indira Nagar, Lucknow. Such letter was
never returned unserved. The demand notice/letter dated
 VERDICTUM.IN

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21.07.2016, clearly mentions the name and address of

the petitioner no.1 correctly. The postal receipt issued in
the name of ‘Savita’ by the Post Office instead of showing
the name, Sunita has no relevance in view of Section 27
of the General Clauses Act 1897, which defines service by
post and service shall be deemed to be effected by
properly, addressing, pre-paying and posting by
registered post, a letter containing the document
(demand notice), and unless the contrary is proved, it
shall be treated to have been effected at the time at
which the letter would be delivered in the ordinary course
of post.

43. In Krishna Kumar Gupta Vs. Manoj K Sahu

reported in (2022) SCC OnLine All. 528, this court
considered Section 27 of the General Clauses Act and
judgment rendered by the Supreme Court in the case of
C.C. Alavi Haji Vs. Palapetty Muhammed & Anr reported
in (2007) 6 SCC 555, where the Supreme Court
considered Section 114 of the Indian Evidence Act 1872,
and observed that if a registered letter addressed to a
person at his residential address does not get served in
normal course, and is returned, it can only be attributed
to addressee’s own conduct. The dispatch of notice by
registered post is sufficient compliance of service of
notice by the landlord on the tenant. The Supreme Court
had also observed that the presumption under Section
114 of the Act of 1872 would be that notice was served
on the defendant unless he rebuts the said presumption
by adducing evidence in rebuttal. Where a registered
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envelope with correct address is posted. The presumption

is regarding its delivery unless the same is returned
unclaimed. This Court also placed reliance upon judgment
rendered by the Supreme Court in M/s Ajeet Seeds
Ltd Vs. K. Gopala Krishnaiah reported in (2014) 12
SCC 685. The Supreme Court had observed that under
Section 114 of the Evidence Act when it appears to the
Court that the common course of business renders it
probable that a thing would happen, the Court may draw
a presumption that the thing would have happened,
unless there are circumstances in a particular case to
show that the common course of business was not
followed. Thus, Section 114 enables the Court to presume
the existence of any fact which it thinks, likely to have
happened, regard being had to the common course of
natural events, human conduct, and public and private
business in their relation to the facts of the particular
case. Consequently, the Court can presume that the
common course of business has been followed in
particular case. When applied to communications sent by
post, Section 114, enables the Court to presume that in
the common course of natural events, the communication
would have been delivered at the address of the
addressee. But the presumption that is raised under
Section 27 of the General Clauses Act is a far stronger
presumption. Further, Section 114 of the Evidence Act
refers to a general presumption, Section 27 of the
General Clauses Act refers to a specific presumption.
Section 27 gives rise to a presumption that service of
notice has been effected when it is sent to the correct
 VERDICTUM.IN

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address by registered post. In view of the said

presumption, when stating that a notice has been sent by
registered post to the address of the drawer, it is
unnecessary to further aver that in spite of return of the
notice unserved, it is deemed to have been served or that
the addressee is deemed to have knowledge of the
notice. Unless and until the contrary is proved by the
addressee, service of notice is deemed to have been
affected at the time at which the letter would have been
delivered in the ordinary course of business.

44. This court is of the considered opinion that the

argument regarding non-disclosure of encumbrances in
the sale notice is unacceptable as the petitioner being the
guarantor and the mortgager cannot raise such objection.
For establishing a charge as an encumbrance, the
petitioners have to show three parties. One, who created
the encumbrance, two, who has a superior or first charge
under any Statute, and three, who has the inferior or
second charge. It was also necessary that due to such
encumbrance, the value of the property should diminish.
In the case at hand however, there are only two parties.
The bank which has the first charge also has the second
charge. The second party in this case being Respondent
No.4, Mamta Yadav. The Sale Certificate has therefore
been correctly issued free from all encumbrances. It is
also registered in the office of the Sub-Registrar, Lucknow
on 21.12.2017, as is evident from page-265 of the
counter affidavit filed on 27.03.2021 by the bank. The
Supreme Court has also held that after issuance of sale
 VERDICTUM.IN

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certificate on completion of SARFAESI proceedings, there

is no provision for registration of sale certificate in the
case of B. Arvind Kumar Vs. Government of India
and Others reported in (2007) 5 SCC 745; Shakeena
and Others Vs. Bank of India and Others reported in
(2021) 12 SCC 761; Indian Overseas Bank Vs. RCM
Infrastructure Limited and Others reported in
(2022) 8 SCC 516.

45. In B. Arvind Kumar (supra), the Supreme Court

observed in paragraph-10 that the Sales Certificate is
merely the evidence of title having been transferred in
favour of the auction purchaser. It is well settled that
when an auction purchaser derived title and confirmation
of sale in his favour, and a Sale Certificate when issued,
is evidence of such sale and title. No further deed of
transfer from the Court is contemplated or required. Sale
Certificate issued by an officer authorized by the Court
does not need to be registered Section 17 (2) (xii) of the
Registration Act, 1908 specifically provides that a
certificate of sale granted to any purchaser of any
property sold by a public auction by a Civil or Revenue
Officer does not fall under the category of non-
testamentary documents which required registration
under Sub-Section (b) and (c) of Section 17 (1) of the
said Act.

46. In Shakina Vs. Bank of India (Supra), the Supreme

Court placed reliance upon observations made by it in
Mardia Chemicals Limited Vs. Union of India
reported in (2004) 4 SCC 311. It was observed that the
 VERDICTUM.IN

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registration of Sale Certificate as per Section 17 (2) (xii)

of the Registration Act is not mandatory for the
completion of the sale, pursuant to the public auction and
issuance of Sale Certificate under the scheme of
SARFAESI Act. The Supreme Court held as follows:-

“Assuming, the right of redemption conferred under the Transfer

of Property Act is protected under Section 37 of the SARFAESI
Act, and independently available without reference to the
registration of the Sale Certificate under Section 17 (2) (xiii) of
the Registration Act, the sale already effected satisfying the
conditions contemplated under Section 13 (8) of the SARFAESI
Act, shall by virtue of Section 37 of the SARFAESI Act, prevail
over such other rights, much less the right of redemption
conferred under the Transfer of Property Act, which is protected
under Section 37 of the SARFAESI Act, in view of the non obstante
clause provided under Section 35 of the SARFAESI Act, because a
non obstante clause provided under Section 35 of the SARFAESI
Act, makes it clear that even though there are inconsistencies to
such other rights conferred under any other law for the time being
in force that are protected under Section 37 of the SARFAESI Act,
the action initiated under the provisions of the SARFAESI Act
shall have the overriding effect as per Section 35 of the SARFAESI
Act, because SARFAESI Act is a special Act, which aims to
accelerate the growth of the economy of our country empowering
the lenders, namely nationalised banks, private sector banks and
other financial institutions to realise the dues from the defaulting
borrowers who are very lethargic in repayment of the loans,
borrowed by them, by exercising the right of expeditious
attachment and foreclosure for the enforcement of security, and
therefore, Section 35 and Section 37 of the SARFAESI Act have to
be read conjointly to achieve the object of the SARFAESI Act, but
not to defeat the same, and therefore, we do not see any conflict
between them.”

47. In Indian Overseas Bank Vs. R.C.M. Infrastructure

Limited (Supra), the Supreme Court has observed that in
Shakina, the Supreme Court had already held that Sale
Certificate issued in favour of the respondent did not
 VERDICTUM.IN

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require registration and that the sale process was

complete on issuance of Sale Certificate. Such
observations were followed by the Supreme Court again
in the case of S. Karthik and Others Vs. N. Subhash
Chand Jain and Others reported in (2022) 10 SCC
641.

48. This Court after careful perusal of all affidavits and

documents filed along with them is of the considered
opinion that the Petitioners have not approached this
Court with clean hands and the litigation has been
protracted unnecessarily by them only to enjoy the
interim order granted to them initially by this Court.

49. In State of Orissa Vs. Laxmi Narayan Das

(2023) 15 SCC 273, the Supreme Court has made
observations that on misrepresentation and concealment
on the part of the litigant should be discouraged and
viewed seriously. It has observed in Paragraphs 40, 41,
43, 44, 45, 47 and 49 as follows :-

40. As to how a litigant who conceals material facts from the

court has to be dealt with, has been gone into by this Court, time and
again in plethora of cases and the consistent opinion is that, he is not
entitled even to be heard on merits.

41. In Abhyudya Sanstha v. Union of India [Abhyudya Sanstha

v. Union of India, (2011) 6 SCC 145 : (2011) 3 SCC (Civ) 241 : 4
SCEC 185] , this Court, while declining relief to the petitioners
therein, who did not approach the court with clean hands, opined as
under :
“18. … In our view, the appellants deserve to be non-
suited because they have not approached the court with
clean hands. The plea of inadvertent mistake put forward
by the learned Senior Counsel for the appellants and
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their submission that the court may take lenient view and
order regularisation of the admissions already made
sounds attractive but does not merit acceptance. Each of
the appellants consciously made a statement that it had
been granted recognition by NCTE, which necessarily
implies that recognition was granted in terms of Section
14 of the Act read with Regulations 7 and 8 of the 2007
Regulations. Those managing the affairs of the
appellants do not belong to the category of innocent,
illiterate/uneducated persons, who are not conversant
with the relevant statutory provisions and the court
process. The very fact that each of the appellants had
submitted application in terms of Regulation 7 and made
itself available for inspection by the team constituted by
WRC, Bhopal shows that they were fully aware of the
fact that they can get recognition only after fulfilling the
conditions specified in the Act and the Regulations and
that WRC, Bhopal had not granted recognition to them.
Notwithstanding this, they made a bold statement that
they had been granted recognition by the competent
authority and thereby succeeded in persuading this Court
to entertain the special leave petitions and pass interim
orders. The minimum which can be said about the
appellants is that they have not approached the court
with clean hands and succeeded in polluting the stream
of justice by making a patently false statement.
Therefore, they are not entitled to relief under Article 136
of the Constitution. This view finds support from a
plethora of precedents.”
(emphasis supplied)

43. In G. Narayanaswamy Reddy v. State of Karnataka case [G.

Narayanaswamy Reddy v. State of Karnataka, (1991) 3 SCC 261] ,
this Court while noticing the fact regarding the stay order passed by
the High Court which prevented passing of the award by the Land
Acquisition Officer within the prescribed time period was concealed
and in the aforesaid context, it observed that:

“2……..It is well settled in law that the relief under

Article 136 of the Constitution is discretionary and a
petitioner who approaches this Court for such relief must
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come with frank and full disclosure of facts. If he fails to

do so and suppresses material facts, his application is
liable to be dismissed. We accordingly dismiss the
special leave petitions.”

44. In Dalip Singh v. State of U.P. [Dalip Singh v. State of U.P.,

(2010) 2 SCC 114 : (2010) 1 SCC (Civ) 324] , this Court noticed
the progressive decline in the values of life and observed :

“1. For many centuries Indian society cherished two

basic values of life i.e. “satya” (truth) and “ahinsa” (non-
violence). Mahavir, Gautam Buddha and Mahatma
Gandhi guided the people to ingrain these values in their
daily life. Truth constituted an integral part of the justice-
delivery system which was in vogue in the pre-
Independence era and the people used to feel proud to
tell truth in the courts irrespective of the consequences.
However, post-Independence period has seen drastic
changes in our value system. The materialism has
overshadowed the old ethos and the quest for personal
gain has become so intense that those involved in
litigation do not hesitate to take shelter of falsehood,
misrepresentation and suppression of facts in the court
proceedings.
2. In the last 40 years, a new creed of litigants has
cropped up. Those who belong to this creed do not have
any respect for truth. They shamelessly resort to
falsehood and unethical means for achieving their goals.
In order to meet the challenge posed by this new creed
of litigants, the courts have, from time to time, evolved
new rules and it is now well established that a litigant,
who attempts to pollute the stream of justice or who
touches the pure fountain of justice with tainted hands,
is not entitled to any relief, interim or final.”
(emphasis supplied)

45. In Moti Lal Songara v. Prem Prakash [Moti Lal Songara v.

Prem Prakash, (2013) 9 SCC 199 : (2013) 3 SCC (Cri) 872] , this
Court, considering the issue regarding concealment of facts before
the Court, observed that “court is not a laboratory where children
come to play”, and opined as under :
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“……..Anyone who takes recourse to method of

suppression in a court of law, is, in actuality, playing fraud
upon the court, and the maxim suppressio veri, expressio
falsi i.e. suppression of the truth is equivalent to the
expression of falsehood, gets attracted. We are
compelled to say so as there has been a calculated
concealment of the fact before the Revisional Court. It
can be stated with certitude that the respondent-accused
tried to gain advantage by such factual suppression. The
fraudulent intention is writ large. In fact, he has shown his
courage of ignorance and tried to play possum.
20. The High Court, as we have seen, applied the
principle ‘when infrastructure collapses, the
superstructure is bound to collapse’. However, as the
order has been obtained by practising fraud and
suppressing material fact before a court of law to gain
advantage, the said order cannot be allowed to stand.”
(emphasis supplied)

47. It has also been laid down by this Court in Chandra

Shashi v. Anil Kumar Verma [Chandra Shashi v. Anil Kumar
Verma, (1995) 1 SCC 421 : 1995 SCC (Cri) 239] that a person who
makes an attempt to deceive the court, interferes with the
administration of justice and can be held guilty of contempt of court.
In this case, a husband who had filed a fabricated document to
oppose the prayer of his wife seeking transfer of matrimonial
proceedings was found guilty of contempt of court and was
sentenced to two weeks' imprisonment. It was observed as under :

***
“1. The stream of administration of justice has to remain
unpolluted so that purity of court's atmosphere may give
vitality to all the organs of the State. Polluters of judicial
firmament are, therefore, required to be well taken care
of to maintain the sublimity of court's environment; so
also to enable it to administer justice fairly and to the
satisfaction of all concerned.

2. Anyone who takes recourse to fraud, deflects the

course of judicial proceedings; or if anything is done with
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oblique motive, the same interferes with the

administration of justice. Such persons are required to be
properly dealt with, not only to punish them for the wrong
done, but also to deter others from indulging in similar
acts which shake the faith of people in the system of
administration of justice.”

(emphasis supplied)

49. In Dhananjay Sharma vs. State of Haryana

[Dhananjay Sharma v. State of Haryana, (1995) 3 SCC 757 :
1995 SCC (Cri) 608], the filing of a false affidavit was the basis for
initiation of action in contempt jurisdiction and the persons
concerned were punished for the same.

50. In K. Jayaram Vs. BDA, (2022) 12 SCC 815, the

Supreme Court observed:-

10. It is well-settled that the jurisdiction exercised by the High

Court under Article 226 of the Constitution of India is
extraordinary, equitable and discretionary and it is imperative that
the petitioner approaching the writ court must come with clean
hands and put forward all facts before the court without concealing
or suppressing anything. A litigant is bound to state all facts which
are relevant to the litigation. If he withholds some vital or relevant
material in order to gain advantage over the other side then he
would be guilty of playing fraud with the court as well as with the
opposite parties which cannot be countenanced.

11. This Court in Prestige Lights Ltd. v. SBI [Prestige Lights Ltd.
v. SBI, (2007) 8 SCC 449] has held that a prerogative remedy is not
available as a matter of course. In exercising extraordinary power, a
writ court would indeed bear in mind the conduct of the party which
is invoking such jurisdiction. If the applicant does not disclose full
facts or suppresses relevant materials or is otherwise guilty of
misleading the court, the court may dismiss the action without
adjudicating the matter. It was held thus:

“33. It is thus clear that though the appellant

Company had approached the High Court under Article
226 of the Constitution, it had not candidly stated all the
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facts to the Court. The High Court is exercising

discretionary and extraordinary jurisdiction under Article
226 of the Constitution. Over and above, a court of law is
also a court of equity. It is, therefore, of utmost necessity
that when a party approaches a High Court, he must
place all the facts before the Court without any
reservation. If there is suppression of material facts on the
part of the applicant or twisted facts have been placed
before the Court, the writ court may refuse to entertain the
petition and dismiss it without entering into merits of the
matter.”

(emphasis supplied)

13. In K.D. Sharma v. SAIL [K.D. Sharma v. SAIL, (2008) 12

SCC 481], it was held in para 36 & 38 :-
36. A prerogative remedy is not a matter of course.
While exercising extraordinary power a writ court would
certainly bear in mind the conduct of the party who
invokes the jurisdiction of the court. If the applicant makes
a false statement or suppresses material fact or attempts
to mislead the court, the court may dismiss the action on
that ground alone and may refuse to enter into the merits
of the case by stating, ‘We will not listen to your
application because of what you have done.’ The rule has
been evolved in the larger public interest to deter
unscrupulous litigants from abusing the process of court
by deceiving it.
38. The very basis of the writ jurisdiction rests in
disclosure of true and complete (correct) facts. If material
facts are suppressed or distorted, the very functioning of
writ courts and exercise would become impossible. The
petitioner must disclose all the facts having a bearing on
the relief sought without any qualification. This is because
“the court knows law but not facts”.

51. In Udyami Evam Khadi Gramodyog Welfare

Sanstha v. State of U.P. [Udyami Evam Khadi
Gramodyog Welfare Sanstha v. State of U.P.,
(2008) 1 SCC 560 : (2008) 1 SCC (Civ) 359] , the
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Supreme Court has reiterated that the writ remedy is an

equitable one and a person approaching a superior court
must come with a pair of clean hands. Such person
should not suppress any material fact but also should not
take recourse to legal proceedings over and over again
which amounts to abuse of the process of law.

52. In A. Shanmugam Vs. Ariya Kshatriya Rajakula

Vamsathu Madalaya Nandhavana Paripalani
Sangam, (2012) 6 SCC 430 : (2012) 3 SCC (Civ)
735 : 2012 SCC OnLine SC 384 the Supreme Court has
observed as under:-

“43.4. Once the court discovers falsehood, concealment,

distortion, obstruction or confusion in pleadings and documents,
the court should in addition to full restitution impose appropriate
costs. The court must ensure that there is no incentive for
wrongdoer in the temple of justice. Truth is the foundation of
justice and it has to be the common endeavour of all to uphold the
truth and no one should be permitted to pollute the stream of
justice.”

(emphasis supplied)

53. The learned counsel for the respondent no.4 has

argued that although the entire payment has been made
by the auction purchaser and Sale Certificate has been
issued in her favour, the actual physical possession of the
property has not been given to her due to pending
litigation filed by the petitioners on the basis of frivolous
grounds.

54. The counsel for the respondent no. 4 in his written

submissions has placed on record the fact that the
respondent no. 4 has been living in rented premises and
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has not been able to enjoy the benefits of the property

purchased by her, which makes her entitled to mesne
profits as well. It has been stated that the auction
purchaser has been paying continuous EMI to Indian
Bank for loan taken to purchase the property for the last
seven years and has incurred enormous monetary loss
and deserves to be compensated for the actual damages
so caused. The monetary loss has been mentioned in the
form of a tabulation chart given in the written
submissions, wherein mesne profits, mental agony and
harassment, legal expenses, rent paid by Respondent
No.4 since January 2018 with 10% annual increments,
interest paid for the Bank loan and House tax, water tax
and electricity charges etc. have all been described in
detail besides other expenses for depreciation of
property. The total loss has been calculated of more than
Rs. One Crore.

55. This Court having gone through the judicial

precedents as aforesaid relating to writ jurisdiction being
an equitable jurisdiction and the responsibility of the
litigant to approach this Court with frank and full
disclosure of facts, avoiding any active misrepresentation
and suppression of material facts, finds that the
petitioners have filed this writ petition in an attempt to
deliberately pollute the stream of justice. Not only this
Court has found misrepresentation from the pleadings on
record and documentary evidence filed by the Bank in its
affidavits, this Court has also found deliberate attempt at
protracting of litigation to enable the petitioners to
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continue to occupy House No.88, Sector-13, Indira Nagar

Vistar Yojana, Lucknow, despite the property having been
auctioned way back on 21.12.2017.

56. Not only has the Court's precious time which may
have been utilized for genuinely suffering litigants has
been wasted; the Respondent no.4 has also suffered
grievously.

57. This Court even on merits has not found the

arguments raised by the counsel for the petitioners to be
sustainable. Hence, the writ petition is liable to be
dismissed and it is hereby dismissed with costs of Rs.25
lacs [Rupees Twenty Five Lacs only] which shall be
payable within three months before this Court by way of
Demand Draft made out in favour of the Senior
Registrar High Court Lucknow Bench.

58. In case of failure to do so, the Senior Registrar of

this Court shall issue a Recovery Certificate to the District
Magistrate, Lucknow, who shall recover such costs as
arrears of land revenue from the petitioners’ movable and
immovable properties and deposit the same in the High
Court sitting at Lucknow.

59. Such costs when deposited shall be released in

favour of the Respondent no.4, namely, Smt. Mamta
Yadav by the Senior Registrar on an appropriate
application being moved in this regard by the Respondent
no.4.
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60. Since this writ petition has been dismissed and order
of the DRAT stands affirmed, the petitioners are bound to
vacate the property in question within one month from
today.

(Sangeeta Chandra, J.)

Order date: 01.04.2025

Darpan/N.Pal

Digitally signed by :-
DARPAN SHARMA
High Court of Judicature at Allahabad,
Lucknow Bench