Chackalakkal Mathew Poulose vs Bank of Baroda & Anr

Ashok Menon, Chairperson

This is an appeal challenging the order dated 30/10/2017 of the Debts Recovery Tribunal-III, Mumbai(D.R.T.) in Misc. Application No. 117 of 2013, an application filed by the Appellant herein under sec. 19 (25) of the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (“RDDB&FI Act”, for short) for interference in executing the Recovery Certificate issued in Original Application (O.A.) 182 of 2010 and make such orders to prevent abuse of process and for securing the ends of justice.

O.A. 182 of 2010 was filed by the Respondent Bank of Baroda against the borrower/mortgagor namely Sohanlal L. Solanki, for recovery of a debt due to the bank on account of the purchase of 2 flats bearing Nos. 301 and 302 forming part of an apartment complex named “Garden View”, Kalyan (West), Thane (subject flats). Vide order dated 25/01/2012, the D.R.T. allowed the O.A. and issued a Recovery Certificate in favour of the Respondent bank to recover the amount due with a charge over the mortgaged flats.

The Appellant claims he is the sole proprietor of M/s Labin Engineers Builders and Developers, a proprietorship, and that he had acquired the development rights concerning an apartment complex under construction on the plot owned by the plot owner namely Satyaranjan Vitthal Kulkarni, from the builders M/s Gayathri Developers and M/s Trupti Developers vide a Power of Attorney dated 23/02/2004 and completed construction of 24 flats in the complex named “Garden View”. As per the terms of the agreement, 12 flats were sold and handed over to the earlier developers/ previous owners, and the Appellant retained the remaining 12 flats with him. Being a busy man, he was not able to sell the remaining flats with him and hence, entrusted one Mr Vilas Deoram Katarnaware as Power of Attorney to negotiate and sell the flats and to receive the sale consideration from the prospective purchasers in the name of Labin Engineers, and deposit the same in account No. 864 S.V.C. Bank Ltd. Sakinaka branch. It is understood that the POA holder of the Appellant sold the subject flats to the above-mentioned borrower and got the loan amount sanctioned by the bank deposited in another account maintained in the name of M/s Labin Engineers maintained in the Hindustan Co-Operative Bank Ltd. Mumbai. The Appellant has nothing to do with the said account which was fictitiously opened by the POA holder Katarnaware to defraud the Appellant. The specific instruction in the Power of Attorney was to deposit the amount in account No. 864, S.V.C Bank Ltd. Sakinaka. The title deeds namely

the agreement for sale executed between the borrower and the POA holder were deposited in the bank to create a mortgage by deposit of title deeds in favour of the bank concerning the subject flats. The Appellant contends that he has filed a criminal complaint against Katarnaware and an FIR has been registered by the Mahatma Phule Chowk Police Station as CR No. 1-93/2009. That apart, the Appellant has also filed Special Civil Suit No. 180/2009 before the civil court at Kalyan. The criminal investigation is pending, and the civil suit has yet to be disposed of.

Claiming that the subject flats are in his actual possession and that he has been defrauded, he approached the D.R.T. with the above-mentioned Misc. Application No. 117/2013. Vide the impugned order, the Ld. Presiding Officer dismissed the application and hence the Appellant is in appeal.

Heard Mr Rajesh Nagory appearing for the Appellant and Mr Anant Shinde appearing for the Respondent bank. Records perused.

The only question that arises for consideration in this appeal is whether the Appellant who has been defrauded by his Power of Attorney for not paying him the sale consideration could get the mortgage in favour of the bank created by the borrower concerning the subject flats set aside exercising the remedy available under section 19 (25) of the RDBB&FI Act.

The Respondent had succeeded in establishing the mortgage created by the borrower and had also succeeded in establishing the debt recoverable from the borrower. It is in consequence of such proof that O.A. No. 182 of 2010 was allowed by the D.R.T. The Appellant has admitted the execution of the power of attorney in favour of Katarnawre and the agreement to sell was executed by the said POA in favour of the borrower Sohanlal. The said registered agreement for sale was deposited with the Respondent Bank for availing a loan. The loan was sanctioned and the amount was disbursed in favour of Labin Engineers. The Bank is under no obligation to see whether the cheque issued by them is deposited for realisation in the account belonging to the Appellant. The cheque was drawn in favour of Labin Engineers and credited into the account of Labin Engineers. The fact that Katarnaware, the POA of the Appellant defrauded him by opening another account in the name of Labin Engineers with himself as proprietor with another bank namely the Hindustan Co-operative Bank Ltd. and did not credit the cheque into the account of Labin Engineers of which the Appellant was the proprietor maintained with SVC Bank Ltd., Sakinaka, as stipulated in the POA, will not have any effect on the mortgage of the subject flats.

This is a case of cheating with misappropriation and criminal breach of trust committed by the POA holder Katarnawre. The Appellant has also proceeded against Katarnawre for the realisation of the amount before the Civil Court and has also lodged a criminal complaint against him. Under the circumstances, it cannot be said that the charge created over the property is invalid. The Ld. Counsel for the Respondent has relied upon a decision of the Hon’ble Supreme Court reported in State of Rajasthan & Ors. vs. Basant Nahata (2005) 12 SCC 77 in support of his argument that the power of attorney acts in a fiduciary capacity and that any act of infidelity or breach of trust is a matter between the principal and the agent.

In the instance case, the Appellant had attempted to set up a case that the power of attorney is invalid for reasons of being unregistered. The evidence, however, proves otherwise. It was valid registered power of attorney executed in favour of Katarnawre by the Appellant and would, therefore, empower the POA holder to execute the sale agreement in favour of the borrower. A valid mortgage by deposit of title deed was created and the loan amount was disbursed in favour of Labin Engineers. The fact that the amount did not come to the credit of the Appellant in the account maintained by him in the SVC Bank at Sakinaka is not the fault of the Respondent Bank. Under the circumstances, the Appellant cannot avoid the mortgage created in favour of the Respondent Bank. The impugned judgment has no infirmity calling for any interference in appeal.

In the result, the Appeal is dismissed, though without costs.