Anita vs State Bank Of India

S.N.H. Zaidi, J

Both these appeals have been directed against two separate orders dated 14.9.2010 passed by DRT-III, Delhi in S.A. Nos. 291 and 292/2010 (Smt. Anita & Another vs. State Bank of India) as well as in S.A. Nos. 293 and 294/2010 (Smt. Anita & Another vs. State Bank of Bikaner and Jaipur), whereby the S.As have been disposed of with the direction to the S.A. applicants to deposit a sum of Rs. 10 lacs with State Bank of India (SBI), which shall be appropriated equally by both SBI and State Bank of Bikaner and Jaipur (SBBJ) towards the remaining recoverable amount.

The facts giving rise to these appeals, in brief, are that one Praveen Kumar Jain had approached SBBJ for a housing loan of Rs. 10 lacs, which was sanctioned to him by the bank on 27.3.2003 and he had purchased the entire ground floor of property bearing No. 478, measuring 125 sq. yds., Sainik Vihar, Pitampura, Delhi, hereinafter referred to as the property in question, from R.K. Jain s/o B.R. Jain through a registered sale deed and deposited the original sale deed with the bank for creating equitable mortgage of that property in favour of the bank. As the borrower defaulted in repayment of the loan amount, the bank classified the account as Non Performing Asset (NPA) on 27.6.2006 and initiating actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) issued demand notice dated 5.11.2009 under section 13(2) of the Act claiming an amount of Rs. 8,69,342.86. The bank, on failure of compliance of demand notice issued possession notice dated 6.3.2010 under section 13(4) of the Act and took the symbolic possession of the mortgaged property and also filed O.A. No. 56/2010 against the borrower/mortgagor for the recovery of Rs. 23,33,463.67 before DRT Ill, Delhi, which is pending.

The said Praveen Kumar Jain also approached SBI for a personal loan of Rs. 10 lacs which was sanctioned to him by the bank on 25.7.2005 against the deposit of the original registered sale deed dated 29.5.2003 executed by R.K. Jain in his favour for creating the equitable mortgage as collateral security. When the borrower failed to maintain financial discipline and defaulted in making the repayment of the loan amount, the account was classified by SBI as NPA on 26.12.2007 and a demand notice dated 4.2.2009 under section 13(2) of the SARFAESI Act was issued to the borrower/mortgagor, claiming an amount of Rs. 10,09,668.80, but the borrower failed to make any payment within the stipulated period of 60 days. The bank filed an application under section 14 of the SARFAESI Act before the CMM, Delhi for taking the possession of the secured asset and the learned ACMM, Delhi, vide order dated 7.6.2010, had ordered for the delivery of the possession of the property in question to the bank.

The appellants Ms. Anita Jain and Ms. Parul Kapoor filed separate applications under section 17 of the SARFAESI Act against both SBBJ and SBI challenging its actions qua the property in question and claiming their title over the property in question with the averments that the entire property bearing No. 478, Sainik Vihar, Pitampura, Delhi was allotted by the DDA in favour of Ranjit Singh Gill, slo S. Sarmukh Singh, vide perpetual sub-lease dated 12.4.1990; that one R.K. Jain, s/o B.R. Jain, being attorney of said Ranjit Singh Gill, got that property converted into freehold from leasehold by virtue of a registered conveyance deed dated 22.11.2000; that said R.K. Jain had sold the entire ground floor of that property without roof right through a registered sale deed dated 29.5.2003 to Praveen Kumar Jain, who had sold that property to Smt. Sunita Sheryvani and Raju Sherwani by way of a registered sale deed dated 9.6.2005; that the said Smt. Sunita and Raju Sherwani had sold that property to the appellants for a sale consideration of Rs. 13 lacs, vide registered sale deed dated 23.5.2008, and put them in possession over the entire ground floor of the property and handed over all the original documents pertaining to the title of the property to them; that on 6.3.2010 the appellants found a possession notice issued by SBBJ and another notice issued by SBI affixed on the property in question and in those notices the said property was shown as mortgaged with the banks; that the appellants immediately approached the banks and intimating about their title over the property in question showed the original title deeds to the officers of the banks who were of the view that a fraud had been played by the borrower Praveen Kumar Jain with the banks; that the appellants, thereafter, filed a suit for declaration and permanent injunction [CS(OS) No. 569/2010] before the Delhi High Court against both the respondent banks and filed all the original documents of the property in question and the Hon'ble High Court, while making the order dated 7.4.2010, had observed that the plaintiffs were free to approach the PRT under section 17(1) of the SARFAESI Act; that during the pendency of the suit before the High Court, the authorized officer of SBI had sent a notice dated 12.7.2010 for taking the possession of the property in question on 24.7.2010.

Both the respondent banks contested the S.As by filing replies and the learned Tribunal below, after hearing the parties, has disposed of the S.As by the order impugned with the observation that pursuant to its order dated 28.7.2010 the S.A. applicants had deposited a sum of Rs. 10 lacs which had been appropriated by SBI towards the credit account of Praveen Kumar Jain and observing further that SBI has a claim of Rs. 5,09,668.83 whereas SBBJ had a claim of Rs. 3,63,342.86, directed the S.A. applicants to deposit Rs. 10 lacs for appropriation by both the banks equally towards their remaining recoverable amount and interest. Feeling aggrieved with that order the S.A. applicants have filed these appeals qua both the banks separately, which are being disposed of by a common order.

I have heard Mr. S.K. Sharma, the learned counsel appearing for the appellants, Mr. Prashant Gautam the learned counsel representing Ms. Alka Ahir for SBI and Mr. R.K. Mittal, the learned counsel for SBBJ and perused the record.

The only controversy involved in these appeals is whether the borrower Praveen Kumar Jain had created a valid mortgage of the property in question in favour of any of the two banks and which of the creditor banks is entitled to enforce its security interest qua the said property. It is not in dispute to the parties that the property bearing No. 478, Sainik Vihar, Pitam Pura, Delhi was allotted by way of a perpetual sub-lease to one Ranjit Singh Gill, who had appointed R.K. Jain as his Attorney and said R.K. Jain had got the leasehold rights in that property converted into freehold by virtue of a registered Conveyance Deed dated 22.11.2000 and sold that property through a registered sale deed to Praveen Kumar Jain. It is an admitted case of all the parties that Praveen Kumar Jain was the owner of the property in question by virtue of the registered sale deed executed by R.K. Jain in his favour. It is also not disputed that Praveen Kumar Jain had obtained loans from both SBBJ and SBI and had allegedly deposited the original title deed of the property in question with both the banks for creating equitable mortgage of the property in its favour. Both the sale deeds deposited with the banks cannot be genuine. The appellants have also claimed to have in their possession all the original title deeds relating to the property in question, including the original sale deed executed by R.K. Jain in favour of Praveen Kumar Jain. In view of these circumstances, it is to be seen whether the sale deeds deposited with the bank are genuine or forged?

Both the respondent banks were directed by this Tribunal to produce the original title documents deposited by the borrower/mortgagor with them. An original sale deed dated 24.4.2003 executed by RK. Jain in favour of Praveen Kumar Jain and deposited with SBBJ has been produced by it along with its certified copy. The photograph of the vendor affixed/stapled on the original sale deed is, however, different from the photograph of the vendor on the certified copy of the said document as the photograph on the original sale deed is of a middle-aged person whereas the photograph on the certified copy is of a much younger person. This circumstance shows that the person who had appeared before the Sub-Registrar as vendor RK. Jain at the time of registration of the sale deed and whose photograph is available on the certified copy of the sale deed was a different person than the one whose photograph is affixed/stapled on the original sale deed. Moreover, this sale deed was executed on 24.4.2003, but the alleged endorsement of the Sub-Registrar's office on the back of the stamp papers of the original deed are dated 19.4.2003/24.4.2003, whereas the certified copy shows that the sale deed was registered on 19.4.2003 vide Registration No. 8888 in Vol. No. 3270 on pages 111 to 117. It is surprising as to how the deed was registered on 19.4.2003 when it was executed on 24.4.2003. In view of the above circumstances, the original sale deed deposited with SBBJ for creating the mortgage appears to be a forged and fabricated document. No valid mortgage of the property in question can, therefore, be held to have been created in favour of SBBJ on the basis of deposit of the said forged document. Praveen Kumar Jain thus appears to have played fraud with SBBJ for obtaining the loan by depositing a forged title deed.

It is pertinent to note that both the appellant and SBI have filed the sale deeds of the property in question dated 29.5.2003 executed by R.K. Jain in favour of Praveen Kumar Jain. Both the sale deeds are purported to be registered with the Sub-Registrar, Sub District VI, Delhi but the rubber stamps and the seals of the Sub-Registrar's office on both the documents are different. The stamp papers of both the documents are also of different denominations. Though photograph of the vendee Praveen Kumar Jain on both the sale deeds appear to be of the same person, but the photographs of the vendor RK. Jain are of different persons. SSI was also directed to produce the certified copy of the sale deed but, according to the affidavit of the bank's officer, despite repeatedly applying for the certified copy of the sale deed on 2.3.2012 and 30.8.2012 it was not issued as the concerned document was reported to be not traceable in the office of the Sub-Registrar qua which the Sub-Registrar and his office had issued certificates dated 19.4.2012 and 14.9.2012, filed as Annexures to the affidavit. SBI has, however, produced the original perpetual sub-lease dated 12.4.1990 executed by the Delhi Administration in favour of Ranjit Singh Gill, a photocopy whereof has also been produced by SBBJ. Both the banks have also produced the photocopies of the conveyance deed, dated 21.11.2000, executed by the DDA in favour of Ranjit Singh Gill, through his attorney RK. Jain; but the photographs of R.K. Jain on both the copies of conveyance deed are of different persons. The photograph of R.K. Jain affixed on the sale deed dated 29.5.2003 filed by the appellants as well as on the sale deed dated 19.4.2003/24.4.2003 filed by SBBJ are of the same' person and tallies with the photograph of R.K. Jain affixed on the conveyance deed executed by the DDA, whereas the photograph of RK. Jain affixed on the conveyance deed produced by SBI is of a different person. In view of this, the conveyance deed as well as the sale deed filed by SBI does not appear to be genuine and appears to be forged. The photograph on the conveyance deed appears to have been replaced to make it similar with the photograph affixed on the sale deed. I am, therefore, of the considered view that Praveen Kumar Jain had also played fraud with SSI by depositing a forged conveyance deed and sale deed with it, as such no valid mortgage of the property in question can be held to have been created in favour of SSI also.

The case of the appellants, however, is that they had purchased the property in question through registered sale deed dated 23.5.2008 from Smt. Sunita and Raju Sherwani, who had purchased the same from Praveen Kumar Jain, vide registered sale deed dated 9.6.2005. The appellants have filed the copies of the aforesaid registered sale deeds. It thus appears that Praveen Kumar Jain after purchasing the property in question from RK. Jain through the registered sale deed dated 29.5.2003 had deposited a forged copy thereof with SBBJ and had thereafter sold the said property to Smt. Sunita and Raju Sherwani through a registered sale deed dated 9.6.2005. Since no valid mortgage was created in favour of SBBJ on the basis of deposit of a forged title deed with it, therefore, the property was not carrying any charge/encumbrance of any loan over it when it was transferred to Smt. Sunita and Raju Sherwani. The genuineness of the sale deed dated 9.6.2005 by Praveen Kumar Jain in favour of the said vendees is not in dispute. Praveen Kumar Jain had thus ceased to be the owner of the property in question after executing the sale deed on 9.6.2005. The mortgage of the property allegedly created by him on 25.7.2005 in favour of SBI was thus invalid as he was neither the owner of the property nor had any right to mortgage it. In my opinion, SBI does not appear to have exercised due diligence before sanctioning the loan as there is no search report on record, otherwise the forgery of the documents and the fraud of the borrower would have come to its notice.

The contention of the learned counsel for both the banks that the appeals are not maintainable as the order impugned is a consented one does not appear to have any force. The Tribunal below has also not said that the order was passed on the basis of any consent of the parties. Perusal of the order impugned would show that the Tribunal below had observed that, "It would be pragmatic for the four petitioners to cure their defective title through the deposit of another sum of rupees ten lacs with the same bank i.e. State Bank of India. The counsel appearing for the four petitioners had accepted the Tribunal's above observation. Shri Lalit Kumar, the husband of Smt. Anita and Shri Raman Kapoor, the father of Ms Parul Kapoor have prayed for sufficient time for such purpose." In my considered view firstly, this observation does not show that the order impugned was made on the consent of the parties, secondly, the Tribunal below has nowhere held that the title of the petitioner/appellants was defective and, thirdly, acceptance of any observation of the Tribunal by the husband or father of the S,A. applicants does 'not change the nature of order from contested to consented one. The Order impugned, therefore, cannot be held to be a consented order.

On the basis of foregoing discussion, I have come to the conclusions that the learned Tribunal below has seriously erred in disposing of the S.As. filed by the appellants by directing them to make deposits with the bank as admittedly the appellants are neither the borrowers nor guarantors or mortgagors of any property qua a loan with any of the banks. The appellants are the bona file purchasers of the property in question for value without notice. The alleged equitable mortgage of that property with both the banks is invalid being vitiated by fraud and cannot be enforced under the provisions of the SARFAESI Act. The measures taken by both the respondent banks for the enforcement of its security interest qua the property in question on the basis of its alleged mortgage with them were, therefore, not in accordance with the provisions of the SARFAESI Act and were bad in law.

Consequently, these appeals as well as the S.As filed by the appellants are entitled to be allowed and the orders impugned are liable to be set aside. The appellants are also entitled for the refund of Rs. 10 lacs deposited by them pursuant to the Tribunal's order dated 28.7.2010 with interest. Both the appeals and S.As. are accordingly allowed and the orders impugned dated 14.9.2010 are set aside. The respondent banks are directed to refund the amount deposited by the appellants during the pendency of the S.A. with interest @9% per annum from the date of deposit within four weeks, failing which the appellants would be entitled for interest @12% per annum on such amount. Parties to suffer their own cost of these appeals. The original documents produced by the respondent banks be returned to it after obtaining necessary receipts.

Copy of this order be furnished to the parties as per law.