Mahender Singh Adil vs Indian Bank And Ors

P.K. Bhasin, J

Indian Bank had granted some financial facilities in eighties the years to one Bhawna Exports whose proprietor was one Mahinder Singh Adil. The repayment of Bank's dues was secured by way of equitable mortgage of one leasehold plot of land in Tagore Garden, New Delhi and personal guarantees of two persons both of whom have expired as shown in the title of this appeal. The said borrower defaulted in clearing the loan as per the terms and conditions of the loan and so the Bank filed a civil suit for recovery of its dues under Order 37, CPC in the Hon'ble Delhi High Court in the year 1990. With the enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 that suit came to be transferred to the Debts Recovery Tribunal (DRT) where it was registered as O.A. No. 146/1996 in which a Recovery Certificate was issued on 3.5.2012 for a sum of Rs. 22,21,200/- with interest thereon @, 12% p.a. from 19.11.1990. The borrower Mahinder Singh Adil filed an appeal against the order of DRT and lost. He then took the matter right upto the Hon'ble Supreme Court where his S.L.P.(C) No. 34148/2014 was disposed of on 2.8.2016 by way of One Time Settlement approved by the Supreme Court as per the terms mentioned in the order dated 2.8.2016. He was to pay Rs. 57 lacs within the time granted to him. Since he failed to honour those terms of settlement the mortgaged plot of the Bank, where already residential building stood constructed by one Smt. Sudesh Kumari Trehan (hereinafter referred to as the Objector), as is being claimed by her, was put up for sale by the Recovery Officer attached to the DRT. The Objector during the pendency of the Bank's O.A. had sought her impleadment in those proceedings on the ground that in the year 1981, i.e. prior to the alleged mortgage, Mahinder Singh Adil had entered into an agreement to sell his plot of land with her and after having paid the sale consideration of Rs. 40,000/- to him and taking physical possession of the plot pursuant to various documents like registered irrevocable Power of Attorney in favour of her deceased husband, affidavit, Will, etc. She and her deceased husband had constructed a residential house thereon. However, her impleadment application in the O.A. was not allowed and was rejected on 29.7.2008 on the ground that she could file objections in execution proceedings in case Bank's O.A. was allowed and the mortgaged property was to be sold. The objector did not challenge that order of the DRT and waited for subsequent developments.

After the disposal of the Bank's O.A. recovery proceedings started before the Recovery Officer and the Bank sought sale of its mortgaged property. The objector filed objections at that time against the proposed sale of the property which she claimed to be her property. The objections came to be rejected by the Recovery Officer on 7.4.2014 and her appeal against the order of the Recovery Officer also came to be dismissed by the DRT on 22.8.2014 and the DRT while coming to the conclusion that the appeal was time barred and the DRT could not entertain request for condonation of the appeal under Section 30 of the RDDBFI Act also rejected the case of the objector on merits.

Before proceeding further it may be noticed here that the objector having lost before the Recovery Officer had once again approached him with an application dated 23rd September, 2014 when the Receiver had sealed first and second floor and in that application she had agreed before the Recovery Officer that the entire dues of the Bank could be recovered by selling the 'second floor with roof rights' of the property in question and so the same could be sold and she will fully cooperate with the Bank and Recovery Officer for selling the second floor with roof rights. However, that request of hers does not appear to have been accepted by the Recovery Officer and the objector while continuing in possession of the ground floor is fighting in Courts to save the entire property in question by once again claiming that no portion of her property which she and her husband had constructed can be sold for the recovery of the dues which Mahinder Singh Adil owes to the Bank.

It appears that the objector had also approached the Hon'ble Supreme Court in the disposed of SLP of Mahinder Singh Adil by moving one application for the protection of her property, after her appeal against the order of the Recovery Officer was dismissed by the DRT and the Hon'ble Supreme Court disposed of her application on 27.2.2017 with the direction that she could approach the Debt Recovery Appellate Tribunal and permitted her to approach this tribunal within a week and it was also observed that in case she would approach DRAT her matter shall be considered in accordance with law. Accordingly, the objector moved an I.A. No. 195/2017 before this Tribunal in the disposed of appeal of Mahinder Singh Adil, seeking the relief that her property, first and second floors of which stand sealed already by the Receiver appointed by the Recovery Officer, should not be sold to recover the dues which Mahinder Singh Adil owes to Indian Bank. That is how now this Tribunal is looking into her grievances.

Another fact which needs to be noticed is that the objector had also filed a suit for specific performance against Mahinder Singh Adil but the Civil Court dismissed that suit even though the said vendor had not contested the suit. While dismissing that suit the learned Civil Judge had suspected the genuineness of the agreement to sell which was being relied upon by the plaintiff (objector herein) and not only that the Civil Judge had impounded the agreement produced in the suit.

The objector preferred an appeal against the judgment of the Civil Judge and the appeal, I was told during arguments, is still pending in the Appellate Court.

The grievance of the appellant/objector is that since there is a valid agreement to sell in her favour executed by the borrower/owner Mahinder Singh Adil prior to the alleged mortgage of the plot by him in favour of the Indian Bank she has a vested right to continue to remain in possession of the property in dispute which be sold in recovery proceedings going on before the Recovery Officer attached to the DRT in execution of the Recovery Certificate issued in favour of the Bank and against Mahinder Singh Adil and his Firm.

The stand taken by Mahinder Singh Adil, who had not contested the civil suit nor had submitted any reply to the objections of the objector herein before the Recovery Officer, before this Tribunal at the time of arguments was that in fact there was no agreement of sale of the property in dispute with the objector and actually he had entered into an agreement of construction with her in respect of the leasehold plot before the mortgage of the plot in favour of the Bank and thereafter construction was raised by the objector and, therefore, she cannot resist the auction of the building building constructed by her on the ground that she had become owner of the plot underneath prior to the mortgage since agreement to sell does not confer ownership on her and her suit for specific performance has also been dismissed.

Counsel for the Bank while not disputing the fact that now Hon'ble Delhi High Court has held that DRTs can condone delays in filing of applications before them opposed the claim of the objector that she is the owner of the property in question and cannot be sold in execution of recovery certificate issued in favour of the Bank by the DRT against its borrower. It was contended that the Recovery Officer cannot go beyond the recovery certificate issued by the DRT in which it was accepted that the property in question was duly mortgaged in favour of the Bank at a time when the objector had acquired no right in that property based on the alleged agreement to sell.

A Division Bench of Hon'ble Delhi High Court has in an order passed on 16.2.2016 in WP(C) No. 10161/2015, Punjab National Bank v. West Coast Paper Mills, relying upon a judgment of the Hon'ble Supreme Court dated July 1, 2015 in CA No. 4926/2015 is A.R. Venugopal v. Jotheeswaran & Ors., VII. (2015) SLT 444 : IV (2015) BC 402 (SC) held that DRT can condone the delay in filing of appeals. Therefore, the decision of the DRT that the, delay in filing of the appeal by the objector against the order of the Recovery Officer could not be condoned because DRT cannot entertain applications for condonation of delay in filing of appeal under Section 30 of the RDDBFI Act cannot be sustained. Accordingly the matter needs to be remanded back to the DRT only for the purpose of deciding the objector's application for condonation of delay in filing of the appeal against the order of the Recovery Officer afresh on merits and since the DRT has also given findings on the merits of the objector's case the present appeal is not being decided finally which will be done after the fresh decision on delay condonation application of the objector is received from the DRT.

The DRT shall decide the condonation application within two months from the date of receipt of this order and send its decision to this Tribunal within a week thereafter. This Tribunal is also quite conscious of the fact that the Bank is trying to recover its dues around seventy odd crores since long but has not been able to recover the same nor has it been able to sell the mortgaged asset. However, considering the fact that the objector herself had volunteered before the Recovery Officer that second floor of the property in question with roof rights could be sold with her cooperation it is also ordered that the Recovery Officer shall now-proceed to take immediate steps to sell the second floor with roof rights of the property in question and this excise should be completed within three months and this Tribunal shall be given a report by the Recovery Officer in this regard and the Bank shall fully cooperate with the Recovery Officer by furnishing him valuation report or any other material if not already furnished. In case, second floor cannot be put to sale for any reason the reasons therefore shall also be given by the Recovery Officer in his report as also by the Bank. The Recovery Officer shall further give a show cause notice to the borrower Mahinder Singh Adil as to why he should not be detained in prison for not clearing the Bank's dues for which Recovery Certificate already stands issued by DRT and after receiving his response appropriate order shall be passed in on this aspect also in accordance with law within the period of three months.

This appeal shall now be listed again for further directions on 31.10.2017.