Bank of Baroda vs Allahabad Bank

R. D. Khare, Chairperson

This appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of the Security Interest Act, 2002 (hereinafter referred to as “The SARFAESI Act”) against the order dated 06.02.2019 passed by the Presiding Officer, DRT, Jabalpur, whereby the securitization application filed by the respondent no. 1-Allahabad Bank was allowed.

The brief facts of the matter are that the appellant-Bank had granted a term loan of Rs. 177.00 lacs and cash credit limit of Rs. 95.00 lacs to one M/s Kenstar Polymers through its proprietor on 11.12.2010. In order to secure the said facilities, the proprietor of the firm Shri Pawan Kelotra created an equitable mortgage over the factory land and building situated at plot no. E-41/A-1 by depositing the original lease deed dated 19.01.2007 executed by the General Manager, D.I.C. Indore. Since the borrower did not repay the amount in terms of the loan agreement, therefore, the accounts were classified as NPA on 29.01.2015 by the appellant-Bank and demand notice dated 27.04.2015 was issued under section 13(2) of the SARFAESI Act. The Borrowers did not pay any amount against the said demand, therefore, symbolic possession was taken by the appellant-Bank by issuing possession notice dated 03.07.2015, which was published in newspapers on 08.07.2015.

It appears that the respondent No. 1-Allahabad Bank challenged the action of the appellant-bank by filing the S.A. No. 152/2015 stating inter-alia that the respondent no. 2 had also availed the various credit facilities from the Allahabad Bank vide sanction letter dated 01.11.2010 and in order to secure the said facilities, the borrower created equitable mortgage over the properties belonging to the firm in favour of the respondent no. 1-Bank and also belonging to one of the partners i.e. Shri Pawan Kelotra, who has deposited the original title deed of the said property with the appellant-Bank. Besides it, the borrower also created equitable mortgage with the respondent no. 1 over the factory land and building situated at plot no. E-40/A and E-41/A, Sector-C, Industrial Area, Sanwar Road, Indore and also hypothecated the plant and machinery and other fixed assets both present and future installed at factory land at plot no. E-40/A and E-41/A to secure the aforesaid loan facility. The Tribunal below vide impugned order disposed off the S.A. filed by the respondent no.-1 relying upon the Commissioner’s report dated 20.11.2017 along with map drawn after physical verification on spot and rejected the claim raised by the appellant and directed the appellant-Bank to proceed with the SARFAESI Action only in respect of property displayed as E-41-A1 and return the physical possession of the remaining portion i.e. E-40A and E-41A as displayed in the map to the applicant-Allahabad Bank within a week. Being aggrieved by the said order, the present appeal has been filed by the appellant.

Leaned counsel for the appellant-Bank submitted that one M/s Kenstar Polymers through its proprietor Shri Pawan Kelotra was sanctioned a term loan of Rs. 177.00 lacs and cash credit facility of Rs. 95.00 lacs by the appellant-Bank and in order to secure the said facilities, the said borrower created equitable mortgage over its property i.e. Factory land and building situated at plot no. E-41/A-1 (area admeasuring 4640 sq. ft.), Sector-C, Industrial Area, Sanwar Road, Indore, whereas against the credit facilities granted by the respondent no. 1 to the respondent no. 2, the property mortgaged is plot no. E-40/A and E-41/A, Sector-C, Industrial Area, Sanwar Road, Indore having area of 5000 sq.ft. each.

Learned counsel for the appellant-Bank further submitted that the appellant initiated the proceedings against the property mortgaged by issuing possession notice under the SARFAESI Act, which was challenged by the respondent no. 1 by filing S.A. No. 152/2015 before the Tribunal below and the DRT, Jabalpur vide order dated 07.10.2017 appointed Advocate Commissioner to verify the fact and submit its report. Accordingly the Advocate Commissioner submitted its report dated 20.11.2017 stating therein that area of land and building situated at Plot No. E-40/A and E41/A, Sector-C, Industrial Area, Sanwar Road, Indore is 5000 sq.ft. each and the area of Plot No. E-41/A/1 is 600 Sq.ft. The learned counsel also submitted that the report submitted by the Advocate Commissioner is against the evidence on record and the Tribunal below completely relying upon the said report and without going into the evidence on record has allowed the S.A. of the respondent no. 1-Bank illegally and arbitrary and rejected the claim of the appellant-Bank. It was therefore prayed that the order impugned may be set aside and the appeal may be allowed.

Learned counsel for the respondent-Bank submitted that the respondent-Bank granted a loan of Rs. 235.00 lacs, out of which the term loan of Rs. 155.00 lacs and cash credit limit of Rs. 80.00 lacs to the borrower-respondent no. 2, for which the said respondent mortgaged its property namely Plot No. E-40/A and E-41/A, Sector-C, Industrial Area, Sanwar Road, Indore by depositing the title deed with the appellant-Bank.

The learned counsel for the respondent-Bank further submitted that on 20.12.2010 the appellant-Bank has granted a term loan of Rs. 177.00 lacs and cash credit limit of Rs. 95.00 lacs to the said respondent-Borrower, for which the said respondent created equitable mortgage over the property bearing no. E/M of plot no. E-41-A/1, Sector-C, Sanwar Road, Indore admeasuring area 4640 sq. feet. Further the mortgage dated 02.11.2010 in favour of the respondent-Bank is prior to the mortgage dated 18.01.2011 in favour of the appellant-Bank. As such the mortgage of the appellant-Bank is in respect of the different properties, but the appellant Bank started the proceedings on the property, which is mortgaged with the respondent-bank by taking physical possession on 29.07.2015.

The learned counsel for the respondent-Bank also submitted that pursuant to the order dated 07.11.2017 passed by the Tribunal below, the Advocate Commissioner submitted a report dated 20.11.2017 (at page no. 365-367), which shows that the area of the property mortgaged with the appellant-Bank is only 600 sq. feet, which has been accepted by the Tribunal below vide order dated 06.02.2019 and on the basis of the said report, the order impugned has been passed by the Tribunal below, which does not suffer from any infirmity or illegality. As such the present appeal filed by the appellant is liable to be dismissed with heavy costs.

Having heard the learned counsels for the parties and considering the material available on record, undisputedly, the appellant-bank had granted some credit facilities to one M/s Kenstar Polymers on 11.12.2010, to which the proprietor of the said firm Shri Pawan Kelotra had created equitable mortgage over the plot No. 41/A-1, Sector C, Industrial Area, Sanwar Road, Indore. The respondent- No. 1-Allahabad Bank had also granted some credit facilities to respondent No. 2- M/s Kenstar Plastopack through its partners Shri Pawan Kelotra and Smt. Neha Kelotra on 01.11.2010, to which the respondent No. 2 created equitable mortgage over the properties belonging to the firm and also belonging to one of the partners i.e. Shri Pawan Kelotra by depositing the title deeds of the said property with the respondent No. 1-Allahabad Bank. In addition to it, the factory land and building situated at plot No. E-40/A and E-41/A, Sector C Industrial Area, Sanwar Road, Indore was also mortgaged with the Bank. It is admitted that the properties mortgaged in the loan accounts of both the Banks i.e. Bank of Baroda and Allahabad Bank belong to Pawan Kelotra, who is proprietor of Ms\/s Kenstar Polymers and one of the directors of M/s Kenstar Plastopack. It is also admitted that the properties mortgaged are adjacent to each others. It is clear from the record available on record that the properties mortgaged with both the Banks are different, but the main controversy in the present case is with regard to the area and demarcation of the properties mortgaged with both the Banks.

Before this Tribunal, it was contended by the appellant that the Tribunal below on the basis of report dated 20.11.2017 given by the advocate commissioner and without going through the evidence on record has allowed the S.A. and rejected the claim of the appellant-Bank.

The appellant has not placed any such documents against the report dated 20.11.2017 of the advocate commissioner, which may show that the property bearing No. E 41/A-1 is having area of 4640 Sq. Ft. It is also observed that the Advocate Commissioner appointed by the Tribunal below has inspected the properties in question in presence of the representative of the appellant-Bank and also in presence of the official of the DIC, therefore, the appellant-Bank cannot dispute the report of the Advocate Commissioner. However, in this regard, a letter dated 27.12.2010 issued by Zila Vyapar Avam Udyog Kendra, Indore is relevant, which is at page No. 338 of the memo of the appeal. In Para 2 of the said letter, it is stated that the allotted land bearing No. E-41/A is having area of 4640 Sq. Ft. As such the contention of the appellant that the property bearing No. E-41/A-1 having area of 4640 Sq. Ft. is incorrect. Thus, there is no such document except the commissioner’s report dated 20.11.2017, which may give the correct measurement of the properties mortgaged with both the Banks. Hence, the Tribunal below has rightly relied upon the Advocate Commissioner’s report dated 20.11.2017 and allowed the S.A. filed by the respondent No. 1-Allahabad Bank. Besides it, the mortgage over the properties was created with the respondent-Bank was prior to the mortgage created by the borrowers with the appellant-Bank, hence, the Allahabad Bank is having first charge over the properties mortgaged in question.

In view of the above, the order impugned does not call for any interference by this Tribunal. Accordingly, the appeal is dismissed with no order as to costs.

A copy of this judgment be supplied to the parties as well as to the DRT concerned.