Shyam Sahni vs Arjun Prakash on 19 March, 2020


Supreme Court of India

Shyam Sahni vs Arjun Prakash on 19 March, 2020

Author: R. Banumathi

Bench: R. Banumathi, Ashok Bhushan, A.S. Bopanna

                                                                     REPORTABLE
                                       IN THE SUPREME COURT OF INDIA
                                        CIVIL APPELLATE JURISDICTION

                                       CIVIL APPEAL NO. 2210 OF 2020
                                     (Arising out of SLP(C) No.9322 of 2019)

                         SHYAM SAHNI                                               ...Appellant
                                                       VERSUS

                         ARJUN PRAKASH AND OTHERS                              ...Respondents


                                                   JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. This appeal has been filed assailing the impugned judgment

and final order dated 01.08.2018 passed by the High Court of Delhi

at New Delhi in FAO (OS) No.210 of 2017 in and by which the

Division Bench of the High Court has set aside the order of the

learned Single Judge and allowed the appeal filed by respondent

No.1 (defendant No.4) herein by holding that the passport of

respondent No.1 (defendant No.4) ought not to have been ordered

to be detained and further directed return of the passport of

Signature Not Verified respondent No.1 (defendant No.4).
Digitally signed by
MAHABIR SINGH
Date: 2020.03.19
18:20:01 IST

3. Brief facts which led to filing of this appeal are as follows:-
Reason:

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The appellant filed a civil suit being CS (OS) No.1134 of 2008

before the High Court seeking declaration, permanent injunction

and possession of the suit property being the first and second floor

of the residential house constructed upon Plot No.68, Friends

Colony (West), New Delhi. Alternatively, appellant has sought the

partition of the suit property. Case of the appellant is that in 1954,

Late Niamat Sahni acquired Plot No.68, Friends Colony (West),

New Delhi, measuring 3000 sq. yards from Friends Colony

Cooperative Housing Building Society Limited wherein, she

constructed a main building having a ground floor and first floor.

Niamat Sahni herself and with her son Shyam Sahni (appellant) and

his family were residing in the ground floor. Soon after the demise of

Niamat Sahni, the appellant came to know that Sarabjit Prakash

and respondent No.1 have executed documents purporting to be

sale deeds and other documents in their favour or in favour of other

persons qua first floor and second floor and terrace in the residential

building constructed upon 68, Friends Colony (West) New Delhi

belonging to mother of the appellant, the appellant has filed a civil

suit seeking declaration, possession and permanent injunction and

also for partition in CS (OS) No.1134 of 2008 which is pending at

the stage of cross-examination of the defendants witnesses.

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4. Respondent No.1 resisted the suit contending that first

respondent’s mother Usha Prakash took physical possession of the

first floor and terrace and the second floor in 1974 and the same

was let out. On 13.08.1984, Niamat Sahni made a registered will in

Hindi dividing equal shares between her son- appellant Shyam

Sahni and her daughter Usha Prakash (mother of respondent No.1).

On 23.12.1992, Niamat Sahni also made another registered will in

English which was identical to her previous will made in 1984. It is

stated that on 06.12.1999, an Irrevocable Memorandum of Family

Settlement was signed between the appellant and Usha Prakash

(mother of respondent No.1) which was confirmed by Niamat Sahni

thus, dividing 50% of the undivided share in the plot of land

between her son and daughter. According to respondent No.1, as

per settlement, ground floor of the suit property was given to the

appellant with the entire parking, garages and servant quarters on

the left side of the property; while the first floor and also subsequent

floors (with entire parking and front entrance on the right side of the

suit property) were given to Usha Prakash-mother of respondent

No.1. According to respondent No.1, the family settlement dated

06.12.1999 is an irrevocable Family Settlement between the

appellant and Usha Prakash and was also acted upon dividing the

suit property by meets and bounds. Respondent No.1 has further

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stated that Niamat Sahni had executed a General Power of Attonery

on 03.01.2002 and pursuant to the said Power of Attorney, Usha

Prakash sold three flats on the second floor to separate parties and

first floor to her husband Sarabjit Prakash by way of separate

registered sale deeds. On 26.06.2005, Usha Prakash passed away

due to cancer.

5. Respondent No.1 further stated that in October, 2007,

M/s. Soul & Attires Creations Private Limited (a company formed by

first respondent, his wife and his father Sarabjit Prakash) took a

term loan for Rs.4.25 crores from Bank of India. Sarabjit Prakash

also stood as the Guarantor for the said project funding loan from

the Bank of India and an equitable mortgage has been created on

the first floor of the property as the secondary collateral security to

Bank of India as per RBI guidelines. In the written submission, first

respondent has further alleged that the appellant had filed a civil

suit being CS (OS) No.1134 of 2008 concealing the factum of

irrevocable Memorandum of Family Settlement on 06.12.1999. In

October, 2008, an additional Working Capital Limit (stated to be

against Stocks and Book Debts) was granted to the aforesaid

company by the Bank of India for Rs.5 crores. By end of 2009, the

account of M/s. Soul & Attires Creations Private Limited was

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declared as Non-performing Assets by Bank of India and Bank of

India took physical possession of the first floor on 31.10.2011. Since

the loan has become Non-performing Assets, Bank of India had

filed O.A. No.297 of 2011 before DRT, New Delhi and the same was

decreed by DRT and RC No.172/2012 was issued by the Bank of

India and the recovery proceedings are still going on before the

Recovery Officer.

6. The grievance of respondent No.1 is that the loan facility was

availed and equitable mortgage was created even in the first week

of October, 2007 much prior to the ex-parte order dated 02.06.2008.

Further grievance of the first respondent is that they were not heard

before granting the ex-parte stay on 02.06.2008.

7. The learned Single Judge vide order dated 02.06.2008

granted interim injunction restraining the defendants from selling,

alienating or creating any third party rights in the suit property.

Taking note of the plaint averments that defendant No.1-Sarabjit

Prakash and respondent No.1 are raising further construction on the

suit property and they have been creating documents executed by

Usha Prakash and other defendants, the learned Single Judge

found that the balance of convenience lies in favour of the

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appellant-plaintiff thereby, granted the ex-parte order of stay on

02.06.2008.

8. Aggrieved by the disobedience of the injunction order by the

defendants, the appellant filed an application being I.A. No.19801 of

2011 under Order XXXIX Rule 2A CPC read with Sections 10 and

12 of the Contempt of Courts Act for breach of injunction order

dated 02.06.2008. It is alleged that in spite of above injunction

order, respondent No.1 (defendant No.4) and defendant No.1

(Sarabjit Prakash) who is father of respondent No.1 availed financial

facilities from Bank of India by mortgaging the first floor of the suit

property to the tune of Rs.4.20 crore to Rs. 5.20 crore which was

enhanced on two different occasions i.e. when the defendants

created charge over suit property to Rs.9.24 crore and later on, to

Rs.11 crore.

9. The contempt petition was heard by the learned Single Judge

on various dates and number of orders came to be passed. Though

number of orders have been passed, we will only refer to those of

the orders which are relevant for consideration of this appeal. On

05.12.2011, when the matter came up for hearing, learned Single

Judge confirmed the injunction order dated 02.06.2008 directing the

parties to maintain status-quo with respect to the suit property. In

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the subsequent hearing, by order dated 21.05.2013, learned Single

Judge held defendant No.1 guilty of contempt and directed

defendant No.1 and defendant No.4-respondent No.1 to appear

before the Court disclosing the list of assets. On 02.07.2013, both

defendant No.1 and defendant No.4-respondent No.1 submitted

that the charge so created on the suit property will be cleared by

them within four months from their own funds and resources.

Accordingly, the Court directed defendant No.1-Sarabjit Prakash

and respondent No.1-defendant No.4 to file an undertaking in this

regard. The said direction was complied with and both of them

submitted their respective undertakings on 15.07.2013. However, on

16.12.2013, Court recorded that despite submitting their

undertaking to that effect, both Sarabjit Prakash and respondent

No.1 (defendant No.4) have failed to comply with the undertakings

given by them.

10. Being aggrieved, appellant filed I.A. No.41 of 2013 under

Order XXXIX Rule 2A read with Section 151 of CPC with Sections

10 and 12 of the Contempt of Courts Act against respondent No.1

(defendant No.4) and his father Sarabjit Prakash (defendant No.1)

for not complying with the respective undertaking/statement.

Respondent No.1 along with his father Sarabjit Prakash-defendant

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No.1 filed a joint reply pleading their insolvency and difficulties in

clearing the charge and furnished another undertaking to clear

charge over suit property from the amount received from selling the

suit property and another property at 33, Sundar Nagar, New Delhi.

In the meanwhile, defendant No.1 died on 28.10.2015.

11. On the next date of hearing, the Court recorded that

respondent No.1 (defendant No.4) had left Delhi and shifted to

Singapore with his family and counsel for respondent No.1 was

directed to file fresh address of respondent No.1 along with the

relevant documents to establish the proof of his residence. The said

direction was again reiterated on 28.07.2016. Respondent No.1

filed an affidavit wherein he claimed that he is still living in Delhi and

did not mention his Singapore resident details. On the next date of

hearing i.e. on 29.09.2016, the Court recorded that respondent No.1

has till date not liquidated the amount as stated by him, therefore,

his personal presence was directed in the court on 04.11.2016.

Despite such direction, respondent No.1-defendant No.4 was not

present before the court and on the next date of hearing i.e. on

13.02.2017, the proceedings were set ex-parte qua respondent

No.1.

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12. On 02.03.2017, the court recorded that the charge on the suit

property has still not been cleared till date and respondent No.1-

defendant No.4 was asked to deposit his passport and furnish

security. Accordingly, respondent No.1-defendant No.4 offered three

properties situated in Amritsar owned by his mother-in-law (Rama

Khanna) as a security and his passport was deposited in the

custody of Court Master. Respondent No.1 thereafter filed an

undertaking to the effect that passports of his family members be

revoked and proceedings for extradition can be initiated on his not

returning to India. The court vide order dated 22.03.2017 accepted

the undertaking given by respondent No.1 and directed the Court

Master to hand over the passport to respondent No.1 and court

directed him to appear on 26.05.2017. Adopting the same attitude,

respondent No.1 did not comply with the undertaking furnished by

him this time. Noting non-compliance of the earlier order and

noticing breach of repeated undertakings given by him, by order

dated 26.05.2017, the Court restrained him from leaving the country

and directed him to deposit his passport with the Assistant

Registrar.

13. Aggrieved by the order dated 26.05.2017, respondent No.1

filed I.A. No.6907 of 2017 seeking recall of the order dated

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26.05.2017. As the matter was listed, respondent No.1 once again

did not mark his presence before the Court. It was informed to the

Court by the counsel appearing on behalf of respondent No.1 that

he had not left the country as directed by the Court vide order dated

26.05.2017 and that the passport of respondent No.1 would be

deposited today itself. Vide order dated 30.05.2017, learned Single

Judge in Para (5) of the order directed the Registry to send

communication relating to his passport details to the concerned

authorities in terms of Para (4) of the order dated 26.05.2017. Under

the same order, respondent No.1 was restrained from leaving the

country and the matter was adjourned. It was later revealed from

the inspection of court file that a report from the Immigration

Department was received reflecting that respondent No.1 was

detained while returning to India on 05.07.2017.

14. The appellant once again filed an application being I.A. No.

7557 of 2017 under Order XXXIX Rule 2A CPC read with Section

151 of CPC with Sections 10 and 12 of the Contempt of Courts Act

seeking initiation of contempt proceedings and for appropriate

directions against respondent No.1.

15. Respondent No.1 thereafter approached the Division Bench of

the High Court by filing FAO (OS) No. 210 of 2017 challenging the

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Para (4) of the order dated 26.05.2017 and Para (5) of the order

dated 30.05.2017 passed by the learned Single Judge. Vide

impugned judgment, the Division Bench allowed FAO (OS) No.210

of 2017 by holding that the bank with which the charge was created

on the property was not a party before the learned Single Judge

and that there was no reason to take any coercive steps against

respondent No.1-defendant No.4 for his failure to honour his

commitment qua the bank. Likewise, there was no reasonable

justification to impose any restriction like retention of passport and

the Division Bench directed return of the passport to respondent

No.1-defendant No.4. Aggrieved by the order of the Division Bench,

the appellant came before us.

16. Learned Senior counsel for the appellant has contended that

upon initiation of contempt proceedings by the appellant,

respondent No.1 gave an unconditional undertaking to clear the

charges created over a portion of the suit property within four

months; however, such undertaking turned out to be mere words

and no such charge was cleared by the first respondent within the

period which he has undertaken. It was submitted that respondent

No.1 was repeatedly giving evasive replies and undertakings; but

failed to comply with the same. Drawing our attention to the affidavit

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dated 27.08.2016, learned Senior counsel for the appellant has

submitted that in the said affidavit, respondent No.1 has stated that

he is still residing in Delhi, when in fact he had already shifted along

with his family to Singapore in May, 2016 itself. Learned Senior

counsel further submitted that the present case is not a case of

impounding of passport; rather the present case is where the

learned Single Judge directed respondent No.1 to deposit the

passport as per his undertaking in terms of his affidavit dated

10.03.2017 so as to ensure the presence of respondent No.1 since

the Court was of the view that respondent No.1 would leave India

for Singapore. It was contended that while dealing with the

contempt petition, in order to ensure compliance of the orders of the

Court and make sure that the parties adhere to the undertakings

filed before the Court, the Court has the power to direct deposit of

the passport and the Division Bench erred in setting aside the order

of the learned Single Judge.

17. Per contra, learned counsel appearing for the respondents

has submitted that respondent No.1 and his father Late Sarabjit

Prakash has made all the efforts to clear the bank dues; but due to

unavoidable circumstances, they could not clear the charge. The

learned counsel submitted that the equitable market value of the

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suit property No.68, Friends Colony (West), New Delhi was made

even in October, 2017 much prior to the alleged ex-parte stay order

dated 02.06.2008. It was submitted that the learned Single Judge

was not right in passing various orders restricting the jurisdiction of

the DRT for recovery of the Bank dues when the Bank of India is not

made a party to the suit. It was further submitted that there is

already an order of status-quo passed in the suit being CS (OS)

No.1134 of 2008 and therefore, there was no need for the learned

Single Judge to direct respondent No.1 to deposit his passport and

issue direction for not leaving the country. It was submitted that in

2012, the bank sought the permission of the Court to sell the first

floor to recover its dues but the bank did not pursue and resultantly,

the said application was dismissed and while so, it was not justified

for the learned Single Judge to take the burden of the bank and

directing respondent No.1 to clear the dues. It was submitted that

coercive directions given by the learned Single Judge compelling

respondent No.1 to clear the dues was not warranted and rightly set

aside by the Division Bench and the impugned order does not

warrant interference.

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18. We have carefully considered the submissions of both the

sides and perused the impugned judgment and other materials on

record.

19. Sarabjit Prakash was directed to be personally present before

the Court on 30.05.2013. On the next date of hearing i.e.

30.05.2013, Sarabjit Prakash was not present in the Court and the

matter was listed for 02.07.2013. By the order dated 02.07.2013,

Sarabjit Prakash (defendant No.1) and respondent No.1-defendant

No.4 who were present in the Court stated that if four months’ time

is given to them, they will ensure that the dues of Bank of India are

discharged and part of the suit property which is charged with the

Bank of India namely, First floor of 68, Friends Colony (West), New

Delhi, shall be freed of all charges/encumbrances. Sarabjit Prakash

and respondent No.1 have also stated that they will file appropriate

affidavit to that effect and on such statement, the contempt petition

was kept in abeyance for four months. Accordingly, Sarabjit Prakash

and respondent No.1 have filed affidavit of undertaking before the

Court on 15.07.2013 undertaking that they will clear the dues of

Bank of India when the property bearing No.68, First Floor, Friends

Colony (West), New Delhi shall be freed of all

charges/encumbrances within a period of four months and that they

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will make arrangement of the loan amount to be paid to the Bank of

India from other moveable and immoveable properties in the name

of Sarabjit Prakash.

20. When the matter was taken up by the Court, the Court noted

that as per undertaking, the amount has not been paid to the Bank

and Sarabjit Prakash and respondent No.1 have failed to clear the

charge over the suit property as per undertaking. The appellant

again filed I.A No.41 of 2013 under Order XXXIX Rule 2A against

Sarabjit Prakash and respondent No.1 for not complying with the

respective undertaking/statement made before the Court. On

24.01.2014, Sarabjit Prakash and respondent No.1 filed a joint reply

stating that due to unavoidable circumstances, they are unable to

clear the charge over the suit property and undertaking to clear the

charge over the suit property from the amount received from 33,

Sundar Nagar, New Delhi.

21. On application filed by the appellant in I.A. No.21764 of 2015,

on 20.10.2015, the High Court directed that amount of Rs.3.50

crores will not be utilized by Sarabjit Prakash and respondent No.1

except to the extent of meeting the medical expenses of Sarabjit

Prakash. One week after the above order, Sarabjit Prakash passed

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away on 28.10.2015 at Apollo Hospital, New Delhi due to multiple

heart arrests.

22. On 28.07.2016, the Court directed respondent No.1 to furnish

his current address and also the extent of bequest in his favour to

the estate of deceased Sarabjit Prakash. It is alleged by the

appellant that respondent No.1 filed a false affidavit claiming to be

residing at B-334, New Friends Colony, Ground floor, Delhi without

disclosing the Singapore address. On 02.03.2017, the Court

recorded that the encumbrances on the suit property were not

cleared till date and directed respondent No.1 to deposit his

passport and furnish the security. On the next date of hearing i.e.

07.03.2017, respondent No.1 offered three properties owned by his

mother-in-law (Rama Khanna from Amritsar) by depositing title

deeds stating that he has no other security to offer. Observing that

respondent No.1 has failed to comply with his

undertakings/statements, on 26.05.2017, the learned Single Judge

directed respondent No.1 to deposit his passport and made an

order restraining respondent No.1 from leaving India.

23. According to respondent No.1, he has shown his bonafide by

producing additional security before the Court by depositing original

title deeds of three properties belonging to his mother-in-law (Rama

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Khanna from Amritsar) to the tune of Rs.4.45 crores. Learned

counsel for respondent No.1 has submitted that equitable mortgage

of the suit property (i.e. 68, Friends Colony (West), First Floor, New

Delhi) was made even in the first week of October, 2007 which was

much prior to the ex-parte stay order dated 02.06.2008. Learned

counsel further submitted that in October, 2008, additional Working

Capital was granted to the company-M/s. Soul & Attires Creations

Private Limited for Rs.5 crores (against Stock and Book Debts) as

per banking regulations. According to respondent No.1, this

enhanced limit is never a loan against the property; but only against

Stocks and Book Debts. Learned counsel appearing for respondent

No.1 has submitted that respondent No.1 is a bonafide legal owner

of the suit property by means of registered will made in his favour by

his father-Sarabjit Prakash dated 29.09.2006 who had the legal title

in his name by way of registered sale deed executed by his wife

Usha Prakash in exercise of the power vested in her through the

registered Power of Attorney dated 03.01.2002 given to her by her

mother Niamat Sahni and thus, respondent No.1 claims title over

the suit property No.68, Friends Colony (West), First Floor, New

Delhi. The question regarding the correctness of the sale deed

executed by Usha Prakash – mother of respondent No.1 in favour

of Sarabjit Prakash and the dispute raised regarding the title of the

17
property could be determined only in the suit after parties adduced

oral and documentary evidence.

24. The short point falling for consideration is whether respondent

No.1 is to be proceeded for contempt and whether the learned

Single Judge was right in directing the deposit of first respondent’s

passport. Of course, on 15.07.2013, Sarabjit Prakash and

respondent No.1 filed an undertaking that they shall clear dues of

Bank of India and the suit property shall be cleared of all

charges/encumbrances within a period of four months and that they

shall make arrangement of the loan amount to be paid to the Bank

of India from other moveable and immoveable properties.

Subsequently also, Sarabjit Prakash and respondent No.1 filed an

undertaking before the Court. Having filed the undertaking, it was

required of the first respondent to keep up to his undertaking filed

before the Court. On behalf of respondent No.1, learned counsel

submitted that respondent No.1 was making genuine efforts to pay

the amount to the Bank and clear the charge on the property; but

due to unavoidable circumstances, they could not clear the charge

over the suit property. As pointed out earlier, Sarabjit Prakash was

suffering from illness and passed away within one week after the

order was passed on 20.10.2015.

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25. Since repeated undertakings were filed and the same were

not complied with, learned Single Judge directed respondent No.1

to surrender his passport. The said order was passed to ensure the

presence of the first respondent and compliance of the order of the

Court. It cannot be said that the learned Single Judge exceeded the

jurisdiction or committed an error in ordering surrender of the

passport. In order to ensure the presence of the parties in the

contempt proceedings, the Court is empowered to pass appropriate

orders including the surrender of passport. While dealing with child

custody matter, in David Jude vs. Hannah Grace Jude and Another

(2003) 10 SCC 767, the Supreme Court directed Union of India to

cancel the passport of contemnor No.1 and to take necessary steps

to secure the presence of contemnor No.1 with the child in India

and to ensure her appearance before the Court on the date of

hearing.

26. It is pointed out that the Division Bench proceeded as if the

learned Single Judge has ordered impounding of the passport of

respondent No.1; whereas, the learned Single Judge has only

directed respondent No.1 to deposit his passport in the Court. As

discussed earlier, the purpose of directing respondent No.1 to

surrender his passport was only to ensure the presence of

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respondent No.1 who was filing repeated undertakings before the

Court but was not complying with the same. In our view, the Division

Bench was not right in setting aside the order of the learned Single

Judge in directing respondent No.1 to deposit his passport before

the Court and the judgment of the Division Bench cannot be

sustained. In order to ensure the presence of respondent No.1 and

to ensure further progress of the trial, the order of the learned Single

Judge directing respondent No.1 to deposit his passport before the

Court stands confirmed.

27. On behalf of the appellant, it is stated that in view of the order

of the Division Bench, the contempt petition has been disposed of

by the learned Single Judge on 04.12.2018 and prayed for

restoration of the contempt petition. Since the suit is of the year

2008 and much of the court’s time has been spent on the interim

orders and on the contempt petition, we are not inclined to issue

direction for restoration of the contempt petition. Since, the suit is of

the year 2008 and the trial has already commenced and the matter

is said to have been pending for cross-examination of the

defendants witnesses, it is suffice to direct early expeditious

disposal of the suit at the same time, ensuring that respondent No.1

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will be available at the stage when the suit is disposed and in case

he suffers an adverse decree.

28. The impugned order of the Division Bench dated 01.08.2018

passed by the High Court of Delhi at New Delhi in FAO (OS) No.210

of 2017 is set aside and this appeal is allowed. In order to ensure

the presence of respondent No.1 and to ensure further progress of

the trial, the order of the learned Single Judge directing respondent

No.1 to deposit his passport before the Court stands confirmed. The

learned Single Judge is requested to take up the civil suit being CS

(OS) No.1134 of 2008 and continue with the trial and dispose the

same expeditiously preferably within a period of nine months. No

costs.

……………………….J.

[R. BANUMATHI]

……………………….J.

[A.S. BOPANNA]

New Delhi;

March 19, 2020.

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