Dinesh Jayantilal Choksi vs Bank of Baroda

Ashok Menon, Chairperson

The Appellant, the Late Mr Dinesh Jayantilal Choksi, through his daughter as Power of Attorney, filed a Securitisation Application (S.A.) No. 13 of 2008 before the Debts Recovery Tribunal-II, Mumbai(D.R.T.), claiming to be the true owner of Flat No. 101 B wing, measuring 550 ft², Shimla House Co-Operative Housing Society Ltd., Napeansea Road, Mumbai 400006, challenging the Sarfaesi measures initiated by the Respondent Bank of Baroda (BoB) under the provisions of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) against the said Flat purported to be a secured asset allegedly mortgaged by one Mr P.K.M. Singh for securing the loan taken by a firm M/s International Steel Industries with Mr P.M. Doshi and Ms F. A. Rangoonwala as guarantors. Vide the impugned judgment dated 04.05.2009, the S.A. was dismissed. The Appellant is aggrieved and hence in appeal. Pending this appeal, the Appellant died and his legal representatives were brought on record.

The late Appellant contends that the subject Flat belongs to one Ishwardas Haridas Bhatia, who sold the Flat to a person named Naroth Ramachandran Nair (N.R. Nair) and from him, the late Appellant purchased the Flat vide registered sale deed dated 10.12.1981. These facts are undisputed.

The Respondent bank alleges that the late Appellant had sold the Flat on 06.08.2003 vide Exhibit-35 registered sale deed to Mr. P.K.M. Singh who mortgaged the Flat by deposit of title deeds of the property in favour of the bank on 22.08.2006. The loan was taken by M/s International Steel Industries of which Mr Singh was also a partner. The repayment of the loan was defaulted and a demand notice under Sec. 13 (2) of the SARFAESI Act was issued to the borrower/guarantors/mortgagor on 05.10.2007 the demand notice demanding a sum of ₹5,174,050/-. There was no response to this demand and hence, symbolic possession of the subject Flat was taken on 02.01.2008 under Sec. 13 (4) of the SARFAESI Act.

On coming to know about the Sarfaesi measures initiated by the bank, the late Appellant through his daughter as Power of Attorney Holder filed the S.A. on 15.02.2008 challenging the Sarfaesi measures by stating that the no Security interest could have been created by Mr Singh as the property still belonged to the Applicant and that he was in actual possession and enjoyment of the Flat. It is contended that the purported assignment deed executed in favour of Mr Singh is forged and fabricated and that no title whatsoever has been conveyed to him. No consideration was also paid to the Applicant for completing the sale. Hence, the Sarfaesi measures initiated by the bank based on a forged and fabricated document are not sustainable as there is no valid Security interest created in favour of the bank.

The original title deed produced by the mortgagor as Exhibit 35 was sought to be compared with a certified true copy of the very same document produced as Exhibit 73. It is pointed out that Exhibit 35 is drawn on a stamp for you of ₹50/- while Exhibit 73 is on plain paper. It is also indicated that the photographs of the executor of the document purported to be that of the Appellant in both documents are different. It is further pointed out that the sale considerations mentioned in the documents also differ.

The D.R.T. did not accept the contentions raised by the late Appellant and hence, dismissed the S.A. The late Appellant is aggrieved and hence in appeal.

Heard Mr. Herbert A. Norohna, the Ld. Counsel appearing for the Appellant and Mr. Nilesh Bamne, the Ld. Counsel appearing for the Respondent bank. Records perused.

The Ld. Counsel appearing for the Appellants submits that when there is an allegation of fraud concerning the creation of security interest, the D.R.T. should have considered the allegation in detail and should have come to the conclusion regarding the title of the original Applicant. The Ld. Counsel relies on a division bench decision of the Hon’ble High Court of Gujarat in Pranjivan Purshottam Javeri & Ano. vs. Dena Bank & Ors. IV (2011) BC 558 (DB) where it is held thus:

“15. Under Sub-section (1) of Section 17 of the SARFAESI Act, any person aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor can prefer an appeal (Application) to the D.R.T. within 45 days from the date on which such measures had been taken. In the present case, there cannot be any dispute to the effect that the petitioners are aggrieved persons. They would definitely fall within the ambit of the aggrieved person. Under Sub-Sec. (2) of Sec. 17, the Tribunal is bound to consider whether any of the measures referred to in Sub-Sec. 4 of Sec. 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act. Legality and validity of a mortgage would be definitely one of the relevant considerations, if genuinely raised under Section 17 of the SARFAESI Act.”

The facts in the above-cited decision indicate that the Applicants are bona fide purchasers of a property against which the bank proceeded under the provisions of the SARFAESI Act for recovery of the debt due from the erstwhile owner of the property. The Applicants were in possession of all the documents but the borrower had fraudulently created forged documents for creating multiple mortgages. It was held by the Division Bench that the D.R.T. should adjudicate and decide the alleged fraud and forgery concerning the creation of the mortgage.

In the instance case, the facts are slightly different. The original Applicant had executed a sale deed in favour of the mortgagor. The original title deeds which were executed in favour of the assignor, and also the earlier title deeds were handed over to the mortgagor. All these documents of title were produced by the mortgagor before the bank. The documents pertaining to the society are also produced. The title deed which was registered in favour of the mortgagor contains the photograph of the Applicant as the assignor. It was pointed out by the Applicant that there is some difference in the photographs of the assignee affixed on Exhibit 35 the title deed produced by the mortgagor, and Exhibit 73 the certified copy of that document.

Without expert evidence, it cannot be concluded that the document was forged. When the document was registered by the Applicant with his photograph affixed on the document, he must have admitted the fact regarding the sale before the Registrar who registered the document. The Applicant did not produce his original title deed to prove that he continues to remain in possession of the Flat as the owner of the property. It is also pertinent to note that even though the Applicant had mentioned the address of the subject property as his present residential address, it has come out in evidence that he was staying in Nashik and also died there. The Bank Official had before the creation of the mortgage, visited the premises and had taken photographs of the Flat with the mortgagor who was present. All these would indicate that the Applicant had sold the property to the mortgagor but was clinging on to it raising untenable contentions. He also did not take any steps to get the allegedly fraudulent sale deed set aside under the provisions of the Specific Relief Act, 1963.

The Ld. Presiding Officer has rightly rejected the S.A. and I find no reason to upset that finding. The appeal has no merits and is, therefore, dismissed.