No Reopening of Settled Issues: Delhi HC Bars Plea against RBI in Property Loan Dispute with Revoked ATS and PoA [Read Order]

The Delhi High Court recently dismissed a Letters Patent Appeal pertaining to a loan dispute, noting that issues that had been already conclusively settled through earlier civil proceedings cannot be reopened by the High Court exercising its power under Article 226 of the Constitution of India.

Between 1996 to 1998, Ajay Narain, the appellant herein took loans amounting to approximately ₹50-60 lakh from Respondent No. 2 - Kanwar Raj Singh and his wife. Kanwar Raj Singh had relinquished Indian citizenship and became a citizen of the United States in 1993.

Ajay Narain offered the first and second floors of property at Jor Bagh, New Delhi as security for availing the loans with an understanding between the parties that the property would not be sold to recover the loan amount and could only be used to underwrite the loan.

On 30 March 1998, the petitioner executed a fresh set of documents which included an Agreement to Sell (ATS) and Powers of Attorney (PoA) in respect of the second floor of the Jor Bagh property.

Later on 30 April 1998, Narain repaid ₹45 lakh as part repayment of the loan. Since ₹15 lakh remained outstanding from the original loan amount, the original documents of the property were withheld by the respondent no.2 with the assurance that they would be returned upon full settlement.

However, the petitioner subsequently revoked the Powers of Attorney and informed the Land & Development Office of such revocation and as such, all documents pertaining to the loan agreement stood cancelled..

This petitioner then instituted a civil suit before the Delhi High Court itself seeking a declaration and injunction against the Respondents from alienating or dealing with the property; the petitioner was accordingly granted an interim injunction on 13 July 1998.

However, Respondent No. 2 thereafter approached the Respondent No.1 - Reserve Bank of India, claiming to have purchased the second floor of the subject property, and submitted the earlier executed ATS and PoA from 30 March 1998 along with Form IPI-7 under the Foreign Exchange Regulation Act, 1973 (FERA) with a delay of 51 days.

Following this was a prolonged series of litigation where a Division Bench of the Delhi High Court ruled against the petitioner and ruled on the validity of the subject ATS and PoA among other documents. Though the matter was contested by the petitioner through a writ petition before a single-judge Bench, the court affirmed that the matter could not be reopened.

In the present appeal before a Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, the petitioner has once again challenged the order of the single-judge Bench.

J. Sai Deepak, Ashutosh Nagar, Purnima Vashishtha and Palkriti N. Pande appeared for the appellant while Abhinav Sharma and Snehashish represented the RBI; Bharat Arora and Himangi Arora appeared for the second respondent herein.

Justice Gedela, through an oral judgment, observed that the subject matter raised by the appellant had already been adjudicated in earlier appeals wherein the High Court had rendered findings on the ownership, validity of the PoAs, and the alleged property transfer.

Given the circumstances, the Bench held that the appellant could not invoke writ jurisdiction to re-litigate a question that has already been settled.

The Court further held that the Single Judge had rightly dismissed the writ petition since the matters sought to be reopened had attained finality before the Division Bench.