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Judgment
Ashok Menon, Chairperson
This is an appeal filed by the applicant in Securitisation Application (S.A.) No. 21 of 2020 on the files of the Debts Recovery Tribunal-II, Mumbai (D.R.T.) aggrieved by the judgment and order dated 09.02.2021 allowing the S.A. despite having found no violation of Sarfaesi measures taken by the first respondent financial institution for recovery of debt due from the borrowers/mortgagors under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short).
The facts in brief are thus:
The appellant was the owner of the flat No. 706, A-2, Shiv Siddhi Lok Kailas CHS Ltd., Mulund (West), Mumbai which was agreed to be sold to the borrowers respondents Nos. 2 and 3 under a registered agreement for sale on 08.01.2015 for a sale consideration of ₹1.2 crores. The appellant had entered into the said agreement for sale intending to buy another flat No. 701 adjoining his flat No. 702 which was already in his possession. On the date of the agreement, ₹13.8 lakhs was paid to him by the vendees and the appellant had also deposited TDS ₹1.2 lakhs. The balance sale consideration of ₹1.05 crores was agreed to be paid on or before 15.01.2015. Respondent Nos. 2 and 3 were handed over the title deeds of the subject flat to facilitate them to mortgage the property with the first respondent Housing Finance Company and based on the registered mortgage which was created in favour of the first respondent on 02.03.2015, a housing loan of ₹65 lakhs was sanctioned on the security created over the subject flat. The title deeds were deposited as requested by the mortgagors, from out of the loan amount, a sum of ₹58,37,500/- was disbursed to the appellant towards sale consideration and the balance of ₹6,62,500/- was handed over to the mortgagors.
The vendees did not pay the balance amount before 15.01.2015 as agreed in the agreement and an extension of time was granted initially up to 20.02.2015and then a rectification agreement of sale was executed on 10.02.2015 wherein it was agreed that respondent Nos. 2 and 3 would pay the balance amount positively on or before 28. 02.2015 and in case the payment was not made, the principal agreement would stand cancelled. The first respondent had sanctioned the loan and disbursed the amount to the appellant after the aforesaid date.
When the vendees failed to pay the balance sale consideration, the appellant filed Suit No. 127 of 2018 before the High Court of Bombay to cancel the agreement. The matter was taken up before the Hon’ble High Court on 09.10.2019 and the appellant sought an injunction against the Sarfaesi measures initiated by the first respondent in consequence of the default in repayment of the housing loan by respondent Nos. 2 and 3. The High Court did not grant any interim relief.
On 05.10.2019, the appellant filed the aforesaid S.A. challenging the Sarfaesi measures initiated by the first respondent. A Writ Petition No. 27446 of 2019 filed by the appellant before the Hon’ble High Court was dismissed on 16.10.2019. Yet another writ filed by him as No. 28913 of 2019 was also dismissed by the High Court on 20. 11.2019.
The Hon’ble High Court directed the appellant to refund ₹43,77,500/- to the first respondent, and subject to such payment being made, the auction sale intended to be conducted was stalled. The question of possession over the property was left to be decided by the D.R.T. The aforesaid amount was arrived at after deducting ₹15 lakhs from the total amount paid by the vendees to the appellant which he was entitled to forfeit given the rectification agreement dated 10.02.2015.
The first respondent objected to the S.A. by contending that on receipt of ₹58,37,500/- by the first respondent directly to the appellant he had consented to the creation of a mortgage of the property. The physical possession of the subject flat was taken on 09.10.2019 after the rejection of the interim relief sought by the appellant and also the dismissal of the writ petitions referred to above. The first respondent would contend that the sale of the subject flat was stalled subject to the payment of ₹43,77,500/- by the appellant but Suit No. 127 of 2018 concerning the specific relief sought by the appellant. Hence, the appellant is not entitled to any relief challenging the Sarfaesi measures.
It is interesting to note that the D.R.T. did not grant any relief to the appellant concerning the challenges to the Sarfaesi measures raised in the S.A. The possession of the property was directed to be restored to the appellant based on a decision of the Hon’ble Bombay High Court in Subir Chakravarty & Ano. Vs. Kotak Mahindra Bank Ltd & Ano. 2019 SCC OnLine Bom. 9499 wherein it was observed that the CMM acting under Sec. 14 of the SARFAESI Act could not have appointed a lawyer to take over possession of the secured assets as a lawyer is not an officer subordinate to the CMM. However, the said decision of the Bombay High Court has been overruled by the Hon’ble Supreme Court in NKGS Co-operative Bank Ltd. vs. Subir Chakravarty & Ors (2022) 10 SCC 286, the aforesaid cited decision of Hon’ble High Court of Bombay was overruled and it was held that an advocate could be delegated by the CMM to take over possession of the property under Sec. 14 of the SARFAESI Act. Hence, the observation of the D.R.T. to hand over possession of the subject flat to the appellant on his undertaking that he would not raise any objection at the time of the Sarfaesi action being taken by the first respondent appears to be exercising futility. The Ld. D.R.T. has observed that the appellant had consented to the creation of a mortgage concerning the subject flat by respondents No. 2 and 3 and had also received a part of sale consideration from the first respondent. Having done so, the appellant is estopped from challenging the Sarfaesi measures.
Coming to the appellant’s right as an unpaid seller it has to be held that non-payment of part consideration would not vitiate the agreement for sale as was held by the Hon’ble Supreme Court in Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives and ors. (2020) 7 SCC 366.
Under the circumstances, the appellant has no case to challenge the Sarfaesi action initiated by the first respondent. The findings of the Ld. Presiding Office about the challenges raised about the Sarfaesi measures is upheld. However, the order directing the first respondent to restore possession of the subject flat to the appellant is modified and struck off. The S.A. is only to be dismissed.
The appellant is not entitled to any relief and therefore, the appeal too stands dismissed.