Jannatul Mala vs State Bank Of India And Ors.

Ranjit Singh, J

Appellant claims to be a third party purchaser of the property which was mortgaged with the respondent State Bank of India. The appellant, claiming herself to be the bona fide purchaser of property bearing No. E-59, 70 sq. yds. in Abadi of Jawahar Park, Laxmi Nagar, Shahdara, had filed objections before the Recovery Officer (R.O.) in a pending proceeding pursuant to the R.C. No. 18/2012 issued by the Tribunal below.

The R.O. rejected the objections filed by the appellant, whereby she had claimed exclusive title over the property, and, thereafter, continued with the recovery proceedings as the property was validly mortgaged in favour of the Bank. Aggrieved against this order, the appellant had filed an appeal under Section 30 of the RDDBFI Act. The Tribunal below has upheld the order passed by the R.O. while dismissing the appeal filed by the appellant. The appellant, therefore, has filed the present appeal before this Tribunal.

In the present appeal the plea by the appellant is that she is ready to deposit the amount to redeem the property even though she is a subsequent bona fide purchaser of the same. The notice in the appeal was accordingly issued.

On 24.3.2015, the Counsel for the appellant prayed for one week time to deposit the entire amount to redeem the property. While adjourning the case, the Bank was permitted to continue with the process of auction but was directed not to finalize the auction till further orders.

On the next date of hearing, i.e. 1.4.2015, the Counsel for the appellant stated before this Tribunal that appellant had deposited the entire amount. At that stage, the Counsel for the Bank had pointed out that the amount deposited by the appellant was the one which was due long ago and the liability of the borrower as on date was approximately Rs. 10 crores. The appeal was accordingly adjourned for final disposal.

This is a case where the O.A. filed by State Bank of India was allowed on 26.11.2001 and R.C. was issued. The Tribunal below has held that Smt. Neelam Rani (CD-4) had created a valid mortgage of the property on 6.7.1996 by deposit of sale deed dated 22.4.1994.

A The plea by the appellant was that Smt. Neelam Rani had executed an agreement to sell and GPA in favour one Manjeet Kaur on 15.5.1996, transferring the property for a consideration of Rs. 1 lac. On 29.8.1996, Smt. Neelam Rani executed registered sale deed in favour of Manjeet Kaur who, in turn, sold half undivided share in the property to Mr. Bharat Bhushan Bhatt by registered sale deed dated 25.5.2008. Remaining half share was sold by Mr. Vinay Kumar Anand to M/s. Bhagirathi Palace Residence (P) Ltd. as per registered sale deed dated 19.9.2006. Appellant claims to have purchased this half share as per registered sale deed dated 31.12.2010. The plea by the appellant accordingly was that Smt. Neelam Rani had no right to mortgage the property as she had conveyed the property through a transfer made on 15.5.1996.

The pleas raised by the appellant were contested by the Counsel for the Bank. It was urged that the agreement to sale and GPA carried no value in the eyes of law. This was so pleaded on the basis of law laid down in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Anr., VII (2011) SLT 494 : IV (2011) CLT 8 (SC) : (2011) 183 DLT 1. The Bank had accordingly contested the title of Manjeet Kaur and consequently the so-called sale made in favour of the appellant.

The Tribunal below, after considering the pleas raised before it found that the right acquired by the appellant in the property would be subject to encumbrance created in favour of State Bank of India which will have prior right. It is accordingly observed that the appellant cannot challenge the action of the secured creditor in proceeding against the mortgaged property. As per the Tribunal, if some surplus is left after payment of the dues of the secured creditor, the appellant would have claim over that. The other remedy available to the appellant and as is noticed is to pay the dues of the respondent Bank to discharge the encumbrance and sue the vendor for the recovery of the amount paid by her (appellant).

The Counsel appearing for the borrower would dispute the claim made by the appellant and would submit that there is no sale deed executed in favour of the appellant to entitle him to make any claim.

Once the Tribunal below has considered the validity of the mortgage while deciding the O.A., this issue cannot be reopened in the recovery proceedings before the R.O. If the appellant had purchased the property which is mortgaged with the Bank, then she has to suffer the consequence of her purchase of the property which was with the encumbrance. The plea by the appellant that the validity of the title in favour of the Bank be considered is a plea which is nothing but to seek reopening of the order passed in the O.A. The O.A. was allowed in the year 2001. R.C. was issued in the year 2002. The appellant has entered into this venture in the year 2010. She ought to have acquainted herself with the facts and the background of this property before purchasing the same and at this belated stage she cannot be permitted to challenge the validity of the mortgage while dealing the objection in the recovery proceedings which has already been determined by the Tribunal below. Appellant has not made any challenge to the order passed in the O.A.

The appellant who is a subsequent purchaser thus could retain this property only by participating in the auction or paying the amount which the property may fetch in auction. Being a subsequent purchaser, the appellant cannot seek redemption of the property if objected to by the borrower who has disputed the sale relied upon by the appellant.

The Counsel for the appellant was given option to withdraw the amount deposited by the appellant with the Registrar of this Tribunal. The Counsel, however, would state that the appellant is not interested in withdrawing this money.

There is no merit in the pleas raised by the appellant against the order passed by the R.O. as well as the Tribunal below. On the basis of plea raised by the appellant, the Bank cannot be restrained or stopped from realizing the amount due in the R.C. in accordance with law. There is no merit in the appeal. The same is accordingly dismissed. In view of the dismissal of the appeal, the application (I.A. No. 153/2013) for stay of the auction proceedings would be rendered infructuous and is accordingly disposed of as such.