WWW.LIVELAW.

IN
908-CHS993-17.DOC

Arun

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO.993 OF 2017
IN
EXECUTION APPLICATION NO.765 OF 2015
IN
AWARD NO.83 OF 2014

Fullerton India Credit Company Ltd …Applicant

In the matter between
Prithipal S Chadha …Claimant
Versus
Jitenderpal Singh Chadha …Respondent

Mr Mayur Khandeparkar, with Vikas Salvi, Sanjay Dubey, I/b

Vikas Salvi & Associates, for Applicant.
Mr Rajneesh Agrawal, i/b Meghnath N & SH Bohra, for Decree
Holder.
Mr Prithipal S Chadha, Claimant, present.
Mr Jitenderpal Singh Chadha, Respondent, present.
Mr Toraskar, Section Officer of Court Receiver Present.

CORAM: G.S. PATEL, J

DATED: 12th February 2018
PC:-

1. There is an error in the order dated 5th February 2018. In

paragraph 1, line 2 the words “no party” are to be deleted.

Page 1 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

2. There is some something very rotten in the state of our

commercial litigation. It is exemplified by this case. If ever there was
an example of a commercial fraud and a fraud on the Court, this is it.

3. I have before me a Chamber Summons No.993 of 2017 by one

Fullerton India Credit Company Ltd, (“Fullerton”). It seeks to
raise an attachment on Flat No. C-12, Cenced Apartment, 318,
Union Park, Pali Hill Road, Khar (West), Mumbai 400 052.
Fullerton says that it is a secured creditor of the Respondent,
Jitenderpal Singh Chadha (“Jitenderpal”). The flat was mortgaged
to Fullerton as security for the repayment of a loan of
Rs.9,06,85,020/- sanctioned by Fullerton under a sanction letter
dated 30th July 2014 in favour of one Tornado Motors Pvt Ltd
(“Tornado”). Jitenderpal was the co-borrower. He offered this flat
as security. Fullerton found from the society that the flat was already
mortgaged to IndiaBulls Housing Finance Limited on 26th March
2013. Part of the loan amount sanctioned by Fullerton was thus
agreed to be paid to IndiaBulls to release its claim, charge and
mortgage on the flat. Fullerton and Jitenderpal executed a facility
agreement dated 31st July 2014. As part of this, an amount of
Rs.4,06,02,793/- was paid to IndiaBulls in redemption of the
mortgage. A copy of the facility agreement is annexed. IndiaBulls
executed a registered Deed of Reconveyance dated 20th August
2014 with the Respondent. It released its charge, lien and mortgage
on the flat. This document is registered. On 20th August 2014,
Jitenderpal executed a Deed of Simple Mortgage in favour of
Fullerton. This deed was registered on the same date with the Sub-
Registrar of Assurances, Andheri.

Page 2 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

4. Tornado Motors and Jitenderpal defaulted in repayment of

Fullerton’s loan. Fullerton initiated measures under the SARFAESI
Act 2002 and in the course of that applied to the Chief Metropolitan
Magistrate under Section 14(2) of the SARFAESI Act for an order
of forcible possession.

5. It is at this stage that the Respondent, Jitenderpal, appeared

and filed an application before the CMM saying there was an
Arbitral Award of 6th November 2014 against him in favour of the
Claimant, Prithipal Surenderpal Chadha (“Prithipal”). The CMM
was told that Prithipal had put that award into execution by
Execution Application Nos.765 of 2015 in this Court and obtained
an order of 27th April 2016 (KR Shriram J) in Chamber Summons
No.1468 of 2015, by which the Court Receiver was appointed of the
flat. The CMM was told that the flat was thus in custodia legis with
this Court, and therefore no order of possession ought to be passed.

6. But who is this Prithipal Surendersingh Chadha? As it turns

out he is none other than Jitenderpal’s father-in-law. As if that is not
convenient enough, let us have look at the award itself and what it is
that Prithipal says he obtained against his son-in-law. A copy of the
so-called award is annexed at Exhibit “F” to the Affidavit in
Support of the Chamber Summons at page 66. The Arbitrator was,
to my very great dismay, an Advocate of this Court, against whom I
propose to issue notice quite separately for his role in what followed.
The award is so astonishing and so utterly remarkable in what it set
out to do, and actually did, as an entirely pre-planned exercise to
perpetrate a fraud on the Court, that I can do better than quote the
first two paragraphs of it.

Page 3 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

“1. One Mr Prithipal Surindershingh Chadha, adult,

Indian habitant, aged 60 years, residing at Pratap Kutir,
16th Cross Road, Khar, Mumbai 400 052 (hereinafter
referred as ‘Claimant’ for sake of brevity), by his letters
dated 4th November 2014 had forwarded me a copy of the
agreement dated 4th November 2014 entered into between
him on one hand and Mr Jitenderpal Singh Chadha, Indian
habitants, (aged about 35 years), staying at C/12, Cenced
Apartment, 318, Union Park, Pali Hill Road, Mumbai 400
052 (hereinafter referred as ‘Respondent’ for sake of
brevity) on the other hand with specific request that the
said letters forwarded by them to me may be treated as a
reference. A careful perusal of the said agreement shows
that the parties to the said agreement have made specific
arrangement for referring the matter to Arbitration as per
The Arbitration and Conciliation Act, 1996. I am satisfied
that under the said agreement, I am entitled to entertain
the said reference in respect of the dispute between Mr
Prithipal Surendersingh Chadha on one hand and Mr
Jitenderpal Singh Chadha, on other hand as all the parties
have accepted and appointed me as an Arbitrator to
resolve the dispute and accordingly I proceed to entertain
the said References.

2. As could have been seen from the Reference made

by Claimant, it is his contention that he had advanced an
amount of Rs.1,30,00,000/-, Rs.60,00,000/-, Rs.35,00,000/-
and Rs.55,00,000/- aggregating to Rs2,80,00,000/- (Rs.
Two crores eighty lakhs only). The Claimant handed over a
cheque for Rs.1,30,00,000/- and made RTGS for
Rs.60,00,000/- on or about 27th September 2012. Further,
the Claimant handed over cheques along with RTGS form
for Rs.35,00,000/- and Rs.55,00,000/- for making RTGS in
favour of the Respondent on or about 3rd November 2014.
All the above payments were made by the Claimant to the
Respondent as advance/in anticipation of delivery/sale of

Page 4 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

flat no. C/12, Cenced Apartment, 318, Union Park, Pali Hill
Road, Mumbai 400 052 (hereinafter it may be referred as
‘Said Flat’ for sake of brevity) being to the Respondent for
total consideration amount Rs.9.80 crores.”

7. What this tells us is: (i) this so-called claim of specific

performance by Prithipal against his son-in-law Jitenderpal was
supposedly an oral agreement for sale of the flat, and it is of this that
specific performance was sought before the arbitrator; (ii) The
Arbitrator, Advocate Parab, was persuaded to act on the basis of a
letter of 4th November 2014, which apparently references the oral
agreement also conveniently said to be dated 4th November 2014;
(iii) It is alleged that some payment was made on 27th September
2012 but the most recent payment was the day before the so-called
agreement, viz., on on 3rd November 2014; (iv) The total
consideration was, and this cannot be a coincidence, an amount of
Rs9.80 Crores, roughly the amount of Fullerton’s loan to begin with.

8. It does not end at that. The Award was made on 6th

November 2014, i.e. precisely two days later; two days after the so-
called agreement of 4th November 2014. It appears that this award
was rendered on stamp paper of 29th September 2014 obtained by
Advocate Parab. The operative portion of the award says that
Jitenderpal was to pay an amount of Rs.3,94,48,954/- to his father-
in-law with interest at 24% compounded monthly (itself utterly
extraordinary), and, in default, the very flat in question was to be
transferred to the name of the Jitenderpal’s father-in-law —without
payment of the balance consideration. Then clause (c) made a
wholly untenable direction of attachment and sale of the flat and

Page 5 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

clause (d) created a charge over it in favour of the Prithipal, the

Claimant, while clause (e) granted the decree for specific
performance and clause (f ) granted a restraint.

9. This duo of father-in-law and son-in-law then come together

to this Court, when Prithipal filed Execution Application No.765 of
2015 and also filed a Chamber Summons in that Execution
Application, Chamber Summons No.1468 of 2015. Prithipal moved
this Chamber Summons before KR Shriram J on 27th April 2016
inter alia seeking the appointment of the Receiver in Execution.
Father-in-law and son-in -law were careful to arrange separate legal
representation. Jitenderpal, the son-in-law, through his counsel
blithely and promptly told the Court that he was in financial
difficulty, that the flat had already been attached and therefore
persuaded the Court to grant the reliefs in the Chamber Summons.
This was allowed. This is prayer clause (a) of the Chamber
Summons:

“(a) that this Hon’ble Court be pleased to appoint Court

Receiver, High Court, Mumbai as Receiver of the property
viz. Flat No.C/12, Cenced Apartment, 318, Union Park, Pali
Hill Road, Bandra (West), Mumbai 400 052 and all other
attachable there at and more particularly set out in the
above Execution Application with power to take
possession thereof from Respondent, if required and to
hand over the same to the Claimant and/or to such person
as this Hon’ble Court may deem fit and proper as agent of
the Court Receiver, High Court, Bombay;”

10. I have the record of the Chamber Summons with me and

there is no Affidavit in Reply. In short, the son-in-law submitted to

Page 6 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

an order of appointment of the Receiver in a Chamber Summons

filed by his father-in-law in respect of this very flat.

11. It is beyond all doubt that the entire process of invocation of

Arbitration on a non-existent so-called oral agreement and
obtaining, within one day, a reference to Arbitration, a hearing
before the Arbitrator, and, within two days, an Arbitral Award, and
then promptly obtaining an appointment of the Receiver, all had one
and only one objective: to prevent Fullerton from recovering its
dues. There was no other purpose.

12. In pursuing this objective, the process of this Court has been
thoroughly comprised and corrupted. This is in its most flagrant and
blatant form inference with the administration of justice.

13. All manner of submission are attempted today, including

telling me that Fullerton has an understanding with Tornado
Motors. Then Mr Agrawal for the Claimant, Prithipal, with the
same alacrity that his son-in-law displayed in consenting to the flat
going into Receivership, agrees to that very order — one that he
sought on the ground that the flat needed to be protected — being
vacated. This is nothing but playing ducks and drakes with the
Court and its processes.

14. I asked Mr Agrawal if the Claimant client was in Court.

Indeed he was. Then I asked if the Respondent was in Court since it
was the Respondent, Jitenderpal, who had made a statement to
Shriram J. I was told he was not in Court. I asked them if he was just

Page 7 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

outside Court in the corridor. Indeed he was. The Claimant stepped

out and, in a few minutes, returned with his son-in-law in tow.

15. I will first allow this Chamber Summons immediately in terms

of prayer clause (a), (b) and (c) which reads thus:

“(a) That this Hon’ble Court may be pleased to raise the

warrant of attachment levied on mortgaged property
namely Flat No.C/12, Cenced Apartment, 318, Union Park,
Pali Hill Road, Khar (West), Mumbai 400 052;

(b) That this Hon’ble Court be pleased to discharge the

Court Receiver appointed in Chamber Summons No.1468
of 2015 in Execution Application No.765 of 2015, without
passing the accounts, but subject to payment by Claimant
and Respondents of such charges as may be applicable, to
the Court Receiver;

(c) The Court Receiver be directed to hand over

possession of the mortgaged property namely C/12,
Cenced Apartment, 318, Union Park, Pali Hill Road, Khar-
West, Mumbai 400 052, to the Applicants herein;”

16. I will now go further. The Registry will issue Suo Motu
Notice under Rule 9(1) of the Contempt of Courts (Bombay High
Court) Rules, 1994 to the Claimant, Prithipal S Chada, the
Respondent Jitenderpal Singh Chadha and the Advocate Mr
Dattatray R Parab, B/301, Greenwoods CHSL, Chikoo wadi,
Shimpoli Link Road, Boriwali (West), Mumbai 400 092, returnable
on 12th March 2018 on the supplementary board, each to show
cause why they should not be proceeded against and punished for
having committed contempt of Court.

Page 8 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

17. Mr Parab will also required to show cause why a

recommendation should not be made to the Bar Council
Maharashtra and Goa to have his name struck off the rolls for his
involvement in this matter and for having made and published a
thoroughly fraudulent and collusive award.

18. Since prayer clause (c) has been granted there is no reason to
request the Magistrate to take further action.

19. The Court Receiver will proceed to deliver vacant possession

of the flat and will eject Jitenderpalsingh Chadha from it. He will do
so in the next 48 hours by 5.00 p.m. tomorrow 13th February 2018.
The local police authorities at Pali Hill / Khar will render the
necessary police assistance to the Court Receiver and they will act
on production of an authenticated copy of this order.

20. At this stage, Jitenderpal Chadha, who, as I have noted, is

now personally present in Court, undertakes that he will vacate the
flat by 5.00 p.m. on 14th February 2018. This statement is accepted
as an undertaking to the Court. The Court Receiver will stay his
hands until 5.00 p.m. on that day. If possession is not delivered to
the Applicant, Fullerton India Credit Company Ltd, through its
representatives on that date, the Receiver will proceed to physically
evict the Respondent and deliver vacant possession to Fullerton.

21. Finally the Registrar ( Judicial-I) will separately place a report

by 12th March 2018 indicating as to what, in these circumstances,
possible criminal action can be initiated by the Registry against the

Page 9 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

Claimant and the Respondent. Whether any criminal proceeding are

to be taken against the Advocate Mr Parab will be decided on the
next date.

22. I will note that Mr Khandeparkar for the Applicant has drawn
my attention to certain decisions. The first is Ramesh Kumar & Anr
v Furu Ram & Anr,1 in which the Supreme Court says that where an
award is collusive, bogus and not genuine, the Court will not and
cannot make it a rule of the Court. He also draws my attention to
the decisions of BN Srikrishna J (as he then was) in SBI Home
Finance Ltd v Credential Finance Ltd & Ors,2 on the question of
whether a separate suit is required in a situation like this.
Referencing Section 53 of the Transfer of Property Act 1882
regarding fraudulent transfers, Srikrishna J held that where title has
been obtained by fraud, it is ineffectual. It was not necessary to file
an independent suit for this purpose.

23. Finally, there is that long line of judgments that includes AV

Papayya Sastry & Ors vs Government of AP & Ors 3regarding the
conduct of expected by Courts of litigants. This is now too well-
known to merit repetition. This case falls squarely within those
parameters. A party who defrauds a court will be dealt with swiftly
and without remorse or mercy. Mr Khandeparkar says this is
increasingly a trend. That is shameful, and it is unforgivable.
Certainly this is a case that, as I said at the beginning, has the reek of
collusion and the stench of ‘playing the system’ to orchestrate a

1 (2011) 8 SCC 613.

2 AIR 2001 Bom 179.
3 (2007) 4 SCC 221.

Page 10 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::

 WWW.LIVELAW.IN
908-CHS993-17.DOC

fraud to defeat a secured creditor. This Court — and by that I do not

just mean myself, but this High Court — will not for a moment
countenance it.

24. List the matter for compliance on 15th February 2018.

(G. S. PATEL, J)

Page 11 of 11
12th February 2018

::: Uploaded on - 13/02/2018 ::: Downloaded on - 13/02/2018 13:27:53 :::