Rajasthan High Court – Jaipur
Ajay Pal Singh vs Canara Bank Andors (2025:Rj-Jp:3828) on 28 January, 2025
[2025:RJ-JP:3828]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writ Petition No.3479/2015
Dr. Girish Chandra Chaturvedy Son Of Late Shri R.K. Chaturvedy,
Resident of Krishna Marg, C-Scheme, Jaipur
----Petitioner
Versus
1. Canara Bank, Arvind Marg, C-Scheme, Jaipur
2. Punsumi Devices, a Partnership Firm with its Factory at
Harnathpura, Niwaru Road, Jhotwara, Jaipur and Office At
D-16, Meera Marg, Bani Park, Jaipur
3. Shri V.K. Bhargava
4. Smt. Madhu Bhargava
5. Shri Puneet Bhargava
6. Col. Y. Bhargava,
Respondent No. 3 to 6, Resident of D-16, Meera Marg,
Bani Park, Jaipur
7. M/s Tirupati Enterprises Limited, registered office at 140,
New Cloth Market, Pur Road, Bhilwara through its Director
Shri Narendra Ojha
----Respondents
Connected With
S.B. Civil Writ Petition No.2914/2015
Ajay Pal Singh Son of Shri Chandra Pal Singh, resident of Nab
Sarai, New Delhi.
----Petitioner
Versus
1. Canara Bank, Arvind Marg, C-Scheme, Jaipur.
2. Punsumi Devices, a Partnership Firm with its Factory at
Harnathpura, Niwaru Road, Jhotwara, Jaipur and Office
At D-16, Meera Marg, Bani Park, Jaipur
3. Shri V.K. Bhargava
4. Smt. Madhu Bhargava
5. Shri Puneet Bhargava
6. Col. Y. Bhargava,
Respondent No. 3 to 6, Resident of D-16, Meera Marg,
Bani Park, Jaipur
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7. M/s Tirupati Enterprises Limited, registered office at
140, New Cloth Market, Pur Road, Bhilwara through its
Director Shri Narendra Ojha.
----Respondent
For Petitioner(s) : Mr.R.K. Mathur Senior Advocate with
Mr.Lucky Sharma, Adv.
For Respondent(s) :
HON'BLE MR. JUSTICE AVNEESH JHINGAN
Order
RESERVED ON :: :: :: 16/01/2025
PRONOUNCED ON :: :: :: 28/01/2025
1. These two writ petitions are decided by this order as the
facts and issues involved are similar. The facts are being
taken from S.B. Civil Writ Petition No.3479/2015.
2. This petition is filed seeking quashing of orders dated
15.10.2003, 28.11.2003 and 08.08.2014, rejection of the
objections by the Recovery Officer (hereinafter referred to as
'RO'), dismissal of appeals by the Debts Recovery Tribunal,
Jaipur (DRT) and Debts Recovery Appellate Tribunal, New
Delhi (DRAT) respectively. Further prayer is for seeking
directions to hand over the vacant possession of Plot
Nos.502, 503 & 512 situated in Nemi Sagar Colony, Beed
Khatipura, Jaipur (hereinafter referred to as 'plots').
FACTS
3. The relevant facts are that on 25.08.1993 agreement to
sell was executed between the petitioner and Smt. Shanti
Bhargava, Madhu Bhargava & Yogendra Bhargava (collectively
referred hereinafter to as 'borrowers'). For securing the loan
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facility availed the borrowers had mortgaged the plots with
respondent No.1--Canara Bank (hereinafter 'the bank'). On
failure of the borrowers to maintain financial discipline, the
application filed by bank before the DRT for recovery of dues
was allowed on 11.06.2002. The arbitration proceedings
initiated at the instance of petitioner for resolving dispute
between petitioner and borrowers culminated in award dated
14.09.2002. The execution proceedings were initiated by
bank under the Recovery of Debts and Bankruptcy Act, 1993
(hereafter 'the Act of 1993'). On request of the bank for
proclamation of the plots, the RO passed order fixing the
auction for 05th August, 2003. A day before the auction the
petitioner filed objection before the RO, claiming ownership
on the basis of agreement to sell and relying upon the
arbitration award passed in favour of the petitioner. The
objections were rejected vide order dated 05.08.2003 but
liberty was granted to raise the objections after the sale. The
plots were auctioned on 05 th and 06th August, 2003. The
objections filed by the petitioner on 03.09.2003 were
dismissed on 15.10.2003. The borrowers executed a
registered sale deed for plots in favour of the petitioner on
17.01.2004. The appeals of petitioner were dismissed by the
DRT and DRAT on 28.11.2003 and 08.08.2014 respectively.
CONTENTIONS
4. Learned senior counsel for the petitioner made the
following submissions:-
(i) The petitioner was owner of the plots and the auction held
for recovery of the debts of borrowers is bad.
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(ii) The RO had not held enquiry under Rule 11 of the Second
Schedule to the Income Tax Act, 1961 (hereinafter referred to
as 'Second Schedule').
(iii) The RO erred in not exercising the power under Rules 60
and 61 of Second Schedule to set aside the sale.
(iv) The RO had not considered application as per the
provisions of Order 21 Rule 89 and 90 of CPC.
(v) There was discrepancy in the area of plots mortgaged
and auctioned.
(vi) Lastly that after the arbitration award directing the
borrower to get the sale deed executed in favour of the
petitioner having been made rule of court, the bank could not
have auctioned the plots.
PROVISIONS
5. It would be relevant to quote Order 21 Rules 89 and 90
of CPC, Section 29 of the Act of 1993 and Rule 11, 60 & 61
of the Second Schedule to the Income Tax Act, 1961 as
under:-
Order XXI:- Execution of Decrees
and Orders
Rule 89. Application to set
aside sale on deposit.
(1) Where immovable property
has been sold in execution of a
degree, any person claiming an
interest in the property sold at
the time of the sale or at the
time of making the application,
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or acting for or in the interest
of such person, may apply to
have the sale set aside on his
depositing in Court
(a) for payment to the
purchaser, a sum equal to five
per cent of the purchase-
money, and
(b) for payment to the decree-
holder, the amount specified in
the proclamation of sale as that
for the recovery of which the
sale was ordered, less any
amount which may, since the
date of such proclamation of
sale, have been received by the
decree-holder.
(2) Where a person applies
under Rule 90 to set aside the
sale of his immovable property,
he shall not unless he
withdraws his application, be
entitled to make or prosecute
an application under this rule.
(3) Nothing in this rule shall
relieve the judgment-debtor
from any liability he may be
under in respect of costs and
interest not covered by the
proclamation of sale.
Rule 90. Application to set
aside sale on ground of
irregularity or fraud:-
(1) Where any immovable
property has been sold in
execution of a decree, the
decree-holder, or the purchaser,
or any other person entitled to
share in a rateable distribution
of assets, or whose interests
are affected by the sale, may
apply to the Court to set aside
the sale on the ground of a
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material irregularity or fraud in
publishing or conducting it.
(2) No sale shall be set aside on
the ground of irregularity or
fraud in publishing or
conducting it unless, upon the
facts proved, the Court is
satisfied that the applicant has
sustained substantial injury by
reason of such irregularity or
fraud.
(3) No application to set aside a
sale under this rule shall be
entertained upon any ground
which the applicant could have
taken on or before the date on
which the proclamation of sale
was drawn up.
Explanation- The mere absence
of, or defect in, attachment of
the property sold shall not, by
itself, be a ground for setting
aside a sale under this rule.
Section 29 of the Act of 1993:-
29. Application of certain
provisions of Income-tax
Act.--The provisions of the
Second and Third Schedules to
the Income-tax Act, 1961 (43
of 1961) and the Income-tax
(Certificate Proceedings) Rules,
1962, as in force from time to
time shall, as far as possible,
apply with necessary
modifications as if the said
provisions and the rules
referred to the amount of debt
due under this Act instead of to
the Income-tax:
Provided that any reference
under the said provisions and
the rules to the "assessee" shall
be construed as a reference to
the defendant under this Act.
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THE INCOME TAX ACT, 1961
The Second Schedule:-
Procedure for Recovery of
Tax:-
11.Investigation by Tax
Recovery Officer
(1) Where any claim is
preferred to, or any objection is
made to the attachment or sale
of, any property in execution of
a certificate, on the ground that
such property is not liable to
such attachment or sale, the
Tax Recovery Officer shall
proceed to investigate the claim
or objection:
Provided that no such
investigation shall be made
where the Tax Recovery Officer
considers that the claim or
objection was designedly or
unnecessarily delayed.
(2) Where the property to
which the claim or objection
applies has been advertised for
sale, the Tax Recovery Officer
ordering the sale may postpone
it pending the investigation of
the claim or objection, upon
such terms as to security or
otherwise as the Tax Recovery
Officer shall deem fit.
(3) The claimant or objector
must adduce evidence to show
that--
(a) (in the case of immovable
property) at the date of the
service of the notice issued
under this Schedule to pay the
arrears, or
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(b) (in the case of movable
property) at the date of the
attachment,
he had some interest in, or was
possessed of, the property in
question.
(4) Where, upon the said
investigation, the Tax Recovery
Officer is satisfied that, for the
reason stated in the claim or
objection, such property was
not, at the said date, in the
possession of the defaulter or of
some person in trust for him or
in the occupancy of a tenant or
other person paying rent to
him, or that, being in the
possession of the defaulter at
the said date, it was so in his
possession, not on his own
account or as his own property,
but on account of or in trust for
some other person, or partly on
his own account and partly on
account of some other person,
the Tax Recovery Officer shall
make an order releasing the
property, wholly or to such
extent as he thinks fit, from
attachment or sale.
(5) Where the Tax Recovery
Officer is satisfied that the
property was, at the said date,
in the possession of the
defaulter as his own property
and not on account of any other
person, or was in the
possession of some other
person in trust for him, or in
the occupancy of a tenant or
other person paying rent to
him, the Tax Recovery Officer
shall disallow the claim.
(6) Where a claim or an
objection is preferred, the party
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against whom an order is made
may institute a suit in a civil
court to establish the right
which he claims to the property
in dispute; but, subject to the
result of such suit (if any), the
order of the Tax Recovery
Officer shall be conclusive.
Rule 60. Application to set
aside sale of immovable
property on deposit.
(1) Where immovable property
has been sold in execution of a
certificate, the defaulter, or any
person whose interests are
affected by the sale, may, at
any time within thirty days from
the date of the sale, apply to
the Tax Recovery Officer to set
aside the sale, on his depositing
-
(a) the amount specified in the
proclamation of sale as that for
the recovery of which the sale
was ordered, with interest
thereon at the rate of [one and
one-fourth percent for every
month or part of a month],
calculated from the date of the
proclamation of sale to the date
when the deposit is made; and
(b) for payment to the
purchaser, as penalty, a sum
equal to five per cent of the
purchase money, but not less
than one rupee.
(2)Where a person makes an
application under rule 61 for
setting aside the sale of his
immovable property, he shall
not, unless he withdraws that
application, be entitled to make
or prosecute an application
under this rule.
Rule 61. Application to set aside
sale of immovable property on
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ground of non-service of notice or
irregularity. –
Where immovable property has
been sold in execution of a
certificate, [such Income-tax
Officer as may be authorised by
the [Principal Chief
Commissioner or] Chief
Commissioner or [Principal
Commissioner or Commissioner
in this behalf]
the defaulter, or any person
whose interests are affected by
the sale, may, at any time
within thirty days from the date
of the sale, apply to the Tax
Recovery Officer to set aside
the sale of the immovable
property on the ground that
notice was not served on the
defaulter to pay the arrears as
required by this Schedule or on
the ground of a material
irregularity in publishing or
conducting the sale:
Provided that –
(a) no sale shall be set aside on
any such ground unless the Tax
Recovery Officer is satisfied
that the applicant has sustained
substantial injury by reason of
the non-service or irregularity;
and
(b) an application made by a
defaulter under this rule shall
be disallowed unless the
applicant deposits the amount
recoverable from him in the
execution of the certificate.”
ANALYSIS
6. Order 21 CPC deals with execution of decrees and
orders. Under Rule 89 any person claiming an interest in
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property sold at the time of sale or making of the application
or acting in interest of such person, can apply for setting
aside of sale made in the execution of the decree. The
application is subject to depositing in court, 5% of purchase
money to be paid to purchaser and for payment to the decree
holder the amount specified in proclamation of sale, after
deducting the amount paid to the decree holder since the
date of proclamation.
Rule 89 (2) stipulates that in case the person had
applied under Rule 90 for setting aside of the sale, application
under Rule 89 cannot be prosecuted unless the application
under Rule 90 is withdrawn.
As per Rule 89 (3) the judgment debtor is liable to pay
costs and interest not covered by proclamation of the sale.
7. The decree holder or purchaser or a person entitled to
the share in rateable distribution of the assets or whose
interests are affected may apply under Rule 90 for setting
aside of the sale in pursuance to execution, on the ground of
material irregularity or fraud in publication or conducting the
sale.
As per Rule 90 (2) the sale shall not be set aside until
the court is satisfied that irregularity or fraud has caused
substantial injury to the applicant.
According to Rule 90(3) the grounds which the applicant
could have taken on or before the date of proclamation of
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sale, cannot be made basis for setting aside the sale under
Rule 90. The explanation to the rule is that sale shall not be
set aside merely on absence of or defect in attachment of the
property sold.
8. By virtue of Section 29 of the Act of 1993 the relevant
provisions of schedule second and third of the Income Tax Act
1961 and Rules of 1962 with necessary modification and to
the extent possible, are applicable to the 1993 Act.
9. Rule 11 (1) of the Second Schedule obligates upon the
RO to investigate the claims or objection made to attachment
or sale of the property in execution.
As per proviso, RO shall not investigate the objection or
claim, considered to have been filed for purpose of causing
unnecessarily delay.
Rule 11 (2) empowers the RO to postpone sale during
pendency of the investigation subject to condition mentioned
therein.
Rule 11 (3) casts an onus on objector to prove the
interest in the property in question, on specified dates.
The RO under Rule 11 (4) after investigation shall
release whole or part of the property from attachment, on
being satisfied that the property was not in possession of the
defaulter or in occupancy of a tenant or other person paying
rent to him or was being possessed by the defaulter not on
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his own account or as his property but interest of some other
person.
Rule 11 (5) lays down the situation where the objection
shall not be allowed.
Rule 11 (6) makes the order of the RO to be conclusive
subject to result of civil suit instituted to establish right in the
property by a person against whom the order was passed.
10. A defaulter or person whose interests are affected by the
sale can under Rule 60 of the Second Schedule, within thirty
days of the sale apply to RO for setting aside the sale. The
application shall be subject to deposit of the amount to be
recovered as per the sale proclamation along-with interest
and payment of 5% of the purchase money to the purchaser.
Rule 60 (2) provides that a person pursuing application
under Rule 61 cannot prosecute an application under Rule 60
unless the application under Rule 61 is withdrawn.
11. Under Rule 61 the defaulter or person whose interest is
affected by sale of property in execution, can seek setting
aside of the sale within thirty days of the date of sale, on the
ground that notice for payment of arrears was not served on
the defaulter or for material irregularity in publishing or
conducting the sale.
Clause (a) of the proviso to Rule carves out an exception
for not setting aside the sale even in case of non-service or
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irregularity, until the RO is satisfied that the applicant had
sustained substantial injury.
Clause (b) of the proviso mandates that the application
shall be disallowed unless the deposit of the amount due as
per the execution certificate is made by the defaulter.
CONCLUSIONS
12. The first contention of learned senior counsel that the
petitioner was owner of the plots is ill-founded. The admitted
facts are that the agreement to sell was an unregistered
document; possession of the plots was not handed over to
the petitioner and the entire consideration was not paid.
Petitioner cannot claim ownership of the plots on the basis of
unregistered agreement to sell.
13. It would be relevant to quote the following decisions of
the Supreme Court. In the case of Suraj Lamp Industries
(P) Ltd. through Director Versus State of Haryana &
Anr reported in [(2012)1 SCC 656]:-
“16. Section 54 of Transfer of
Property Act makes it clear that a
contract of sale, that is, an
agreement of sale does not, of
itself, create any interest in or
charge on such property. This Court
in Narandas Karsondas v. S.A.
Kamtam observed:
“32. A contract of sale does not of
itself create any interest in, or
charge on, the property. This is
expressly declared in Section 54 of
the Transfer of Property Act. (See
Rambaran Prosad v. Ram Mohit
Hazra.)(Downloaded on 29/01/2025 at 10:11:12 PM)
[2025:RJ-JP:3828] (15 of 21) [CW-3479/2015]The fiduciary character of the
personal obligation created by a
contract for sale is recognized in
Section 3 of the Specific Relief Act,
1963, and in Section 91 of the
Trusts Act. The personal obligation
created by a contract of sale is
described in Section 40 of the
Transfer of Property Act as an
obligation arising out of contract
and annexed to the ownership of
property, but not amounting to an
interest or easement therein.
33. In India, the word ‘transfer’ is
defined with reference to the word
‘convey’. … The word ‘conveys’ in
Section 5 of Transfer of Property Act
is used in the wider sense of
conveying ownership.
37. … that only on execution of
conveyance, ownership passes from
one party to another….”
17. In Rambhau Namdeo Gajre v.
Narayan Bapuji Dhotra this Court held:
(SCC p.619, para10)
“10. Protection provided under
Section 53-A of the Act to the proposed
transferee is a shield only against the
transferor. It disentitles the transferor
from disturbing the possession of the
proposed transferee who is put in
possession in pursuance to such an
agreement. It has nothing to do with
the ownership of the proposed
transferor who remains full owner of
the property till it is legally conveyed
by executing a registered sale deed in
favor of the transferee. Such a right to
protect possession against the
proposed vendor cannot be pressed in
service against a third party.
18. It is thus clear that a transfer of
immoveable property by way of sale
can only be by a deed of conveyance
(sale deed). In the absence of a deed
of conveyance (duly stamped and
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registered as required by law), no
right, title or interest in an immoveable
property can be transferred.
19. Any contract of sale (agreement to
sell) which is not a registered deed of
conveyance (deed of sale) would fall
short of the requirements of Sections
54 and 55 of Transfer of Property Act
and will not confer any title nor transfer
any interest in an immovable property
(except to the limited right granted
under Section 53A of Transfer of
Property Act). According to Transfer of
Property Act, an agreement of sale,
whether with possession or without
possession, is not a conveyance.
Section 54 of Transfer of Property Act
enacts that sale of immoveable
property can be made only by a
registered instrument and an
agreement of sale does not create any
interest or charge on its subject
matter.”
In Indian Overseas Bank Vs. M.A.S. Subramanian
& Ors. in Civil Appeal Nos.282-283/2025 decided on
07.01.2025 held as under:-
“6. It is well settled that an
agreement for sale in respect of an
immovable property does not
transfer title in favour of the
purchaser under the agreement. In
view of Section 54 of the Transfer of
Property Act, 1882, an agreement
for sale does not create any interest
in the property. The only mode by
which an immovable property worth
more than Rs. 100/- (Rupees one
hundred) can be sold is by a sale
deed duly registered in accordance(Downloaded on 29/01/2025 at 10:11:12 PM)
[2025:RJ-JP:3828] (17 of 21) [CW-3479/2015]with the Indian Registration Act,
1908.”
In the case of Sanjay Sharma vs. Kotak
Mahindra Bank Ltd. & Ors. in Civil Appeal
No.14282/2024 decided on 10.12.2024 held as under:-
“27. Section 54 of the Transfer of
Property Act, 1882, defines a “sale”
as the transfer of ownership in
exchange for a price that is either
paid, promised, or part-paid and
part-promised. This provision
further describes the manner in
which a sale is effected. It
stipulates that, in the case of
tangible immovable property valued
at one hundred rupees or more, the
transfer can be made only through
a registered instrument. The use of
the term “only” signifies that, for
tangible immovable property valued
at one hundred rupees or more, a
sale becomes lawful only when it is
executed through a registered
instrument. Where the sale deed
requires registration, ownership
does not pass until the deed is
registered, even if possession is
transferred, and consideration is
paid without such registration. The
registration of the sale deed for an
immovable property is essential to
complete and validate the transfer.
Until registration is effected,
ownership is not transferred.”
(emphasis)
14. The second argument that RO had not conducted
enquiry as per Rule 11 of the Second Schedule is liable to
be rejected. Under Rule 11 investigation was required on
objection that the property in question was not liable to be
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attached or sold. The plots were mortgaged for securing
the credit facility availed by the borrower. The mortgage
was not challenged by the borrower and the petitioner on
the basis of an unregistered agreement to sell could not
have challenged the mortgage. The recovery certificate
was issued on 11.06.2002 by the DRT in favour of the
Bank. There was no occasion for invoking of Rule 11 when
there was no challenge to either the recovery certificate or
to the mortgaging of plots.
15. Reliance on Rules 60 and 61 of of the Second
Schedule does not enhance the case of the petitioner.
Under Rule 60 setting aside of the sale certificate was
subject to the two conditions stipulated in Clause (a) and
(b) of Sub-rule (1) i.e. depositing the amount of sale
proclamation and payment of 5% penalty to the purchaser
and these conditions were not complied with by petitioner.
16. The setting aside of sale under Rule 61 can be on
the grounds (i) notice not served on the defaulters to pay
the arrears or (ii) material irregularity in publishing or
conducting the sale. The issue of service of notice on
defaulter has not been raised. Vis-a-vis the second
argument that three authorities have rightly recorded
concurrent findings that only bald statements were made
alleging that the auction was not conducted properly but
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no material was adduced to even prima facie substantiate
the irregularity in sale.
17. Another angle is that as per clause (b) of the proviso
to the Rule 61 the application shall be disallowed unless
the recoverable amount as per execution certificate is
deposited, whereas no such deposit was made by the
petitioner.
18. The provision of Order 21 Rule 89 and 90 of CPC are
analogous to Rules 60 and 61 of Second Schedule. Reliance
on Order 21 Rules 89 and 90 of CPC deserves rejection in
view of the reasons mentioned hereinabove while dealing
with Rule 60 and 61 of the Second Schedule.
19. The factual issue raised that there was discrepancy
in the area of the plots mortgaged and the area of plots
sold has been dealt in detailed by the appellate authorities.
The finding recorded is that the area of the mortgaged
plots and area sold was same. In absence of any factual
error much less perversity, no interference is called for in
the factual finding recorded.
20. Reliance on the arbitration award to argue that after
award was made rule of court the sale could not have been
conducted lacks merit. The bank was not party to the
arbitration proceedings. The plots were mortgaged with the
Bank. The right of bank over mortgaged plot is neither
derived from agreement to sell nor the position of bank is
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similar to that of petitioner. Reference is made to decision
of Supreme Court in the case of Cheran Properties
Limited Vs. Kasturi and Sons Limited and Ors.
reported in (2018) 16 SCC 413:-
20. xxx xxx xxx
“Section 35 of the Arbitration and
Conciliation Act 1996 postulates
that an arbitral award “shall be final
and binding on the parties and
persons claiming under them
respectively”. The expression
‘claiming under’, in its ordinary
meaning, directs attention to the
source of the right. The expression
includes cases of devolution and
assignment of interest (Advanced
Law Lexicon by P. Ramanatha Aiyar
15). The expression “persons
claiming under them” in Section 35
widens the net of those whom the
arbitral award binds. It does so by
reaching out not only to the parties
but to those who claim under them,
as well. The expression “persons
claiming under them” is a legislative
recognition of the doctrine that
besides the parties, an arbitral
award binds every person whose
capacity or position is derived from
and is the same as a party to the
proceedings. Having derived its
capacity from a party and being in
the same position as a party to the
proceedings binds a person who
claims under it. The issue in every
such a case is whether the person
against whom the arbitral award is
sought to be enforced is one who
claims under a party to the
agreement.”
21. It is appropriate to note that prior to the appointment of
the arbitrator the bank filed an Original Application before the
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[2025:RJ-JP:3828] (21 of 21) [CW-3479/2015]DRT. In the arbitration proceedings it was not disclosed the
plots were already mortgaged with the bank and in pursuance
to proceeding initiated by bank the recovery certificate had
been issued. The relevant facts were withheld in the
arbitration proceedings. The proceedings for the specific
performance of the agreement to sell were initiated after
eight years. After the plots were auctioned in August, 2003
and sale certificate in favour of the auction purchaser was
issued, the borrower executed registered sale deed in favour
of the petitioner on 17.01.2004.
22. In view of the above discussions, the writ petitions are
dismissed.
(AVNEESH JHINGAN), J
Himanshu Soni/Chandan/1-2
reserve
Reportable:- Yes
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