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Judgment
Ashok Menon, Chairperson
The order of DRT-II, Mumbai in IA No. 1522 of 2017 (Exhibit No. 7) and Exhibit No. 1 in Securitisation Application (SA) No. 369/2017 dated 11/12/2018 is impugned by the Appellants herein in the above-mentioned appeal filed under section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act' for short). Vide the impugned order, the Ld. Presiding Officer dismissed the SA and the applications. Hence, the Appellants are aggrieved, and this Appeal.
The Appellants are neither borrowers nor guarantors or mortgages with respect to the secured assets which are being proceeded against by the 1st Respondent secured creditor bank under the provisions of the SARFAESI Act for the realisation of the amount due to the bank. The 2nd Respondent is the principal borrower when the rest of the Respondents are the guarantors for the transaction between the 2nd Respondent and the 1st Respondent bank.
The Appellants claim that they are the true owners in possession of the subject Flat No. 704 on the 7th floor of the Gaurav Avenue building in Mira road (East), Thane. The claim to have purchased the property in the year 2011. The Appellants negotiated with the 2nd Respondent for the sale of the Flat and entered into an agreement for sale with him on 12/05/2015 for a sale consideration of ₹85 lakhs. Towards the said consideration ₹25,50,000/-was paid and the agreement was registered. It is contended that the agreement provides for handing over of possession and the documents pertaining to the property only consequent to payment of the balance consideration. Although a cheque for ₹29 lakhs was issued by the 2nd Respondent to the Appellants, the cheque was dishonoured. Subsequently, another cheque for ₹59,50,000/-issued by the 2nd Respondent in favour of the Appellants was also dishonoured. However, a sum of ₹12,25,000/-was transferred to the account of the Appellants by way of RTGS. The 2nd Respondent has thus paid only ₹37,75,000/-out of the total consideration agreed. The contention of the Appellants is that the sale has not come into effect and the property continues to remain in their possession. The 2nd Respondent borrowed money from the 1st Respondent bank on the basis of the agreement for sale. The Appellants are not aware of the liability created by the 2nd Respondent over the subject property. It is contended that though the 2nd Respondent has produced a possession letter which states that full payment towards a consideration has been received by the 2nd Appellant and that the possession has been handed over, the said document does not contain any date and it also does not show the mode of payment. This indicates that the document is not genuine. The Appellants claim that they came to know about the liability created by the 2nd Respondent only when a notice was affixed on the front of the door of the house in which they are residing. There are documents like telephone bills and other bills to indicate that the Appellants continue to be in possession of the subject property. The Appellants, therefore, approached the DRT under section 17 of the SARFAESI Act and filed SA No. 369/2017.
The 1st Respondent alone appeared to contest the appeal. They filed a reply stating that the Appellants had for valid consideration sold the property to the 2nd Respondent borrower, who had availed a loan for commercial purposes and the subject Flat was offered as collateral security. All the order documents pertaining to the Flat were deposited with the 1st Respondent. The 1st Respondent also produced a possession letter purportedly executed by the Appellants acknowledging that full payment of the sale consideration was received by them. A letter is also issued by the Society in which the subject Flat is situated and it confirms that the 2nd Respondent is the owner of the Flat. The 2nd Respondent is also in possession of the agreement for sale executed between the Appellants and their predecessor-in-interest. The wording in that agreement is identical to the one executed in favour of the 2nd Respondent. The agreement for sale executed in favour of the 2nd Respondent indicates that on receipt of full sale consideration, the possession of the property would be handed over to him. This has been supported by the possession certificate as also the certificate issued by the Society indicating that the contract of sale has concluded. The contention of the counsel appearing for the Respondent is that the production of a property tax receipt and telephone receipt would not go to prove the title to the property. It is further submitted that in case the transaction was not complete, the documents and title deeds pertaining to the property would not have been handed over to the 2nd Respondent as specifically mentioned in paragraphs 6 and 7 of the agreement for sale executed on 12/05/2015. It is also stated that the Appellants have approached the Civil Court with suit No. 198 of 2017 in which the 1st Respondent bank is also made a party. The prayers and that plaint indicate that it is a simple suit for injunction to restrain Sarfaesi measures against the property. There is no declaratory prayer in the plaint to hold that the sale has not taken place and that the Appellants continue to remain the owners of the property. On 26/06/2016, the Appellants issued a notice to the 2nd Respondent stating that they are cancelling the agreement for sale with him. According to the learned counsel for the 1st Respondent, such a unilateral act on the part of the Appellants will not undo the sale that has taken place by virtue of a registered deed. The learned counsel relies on the decision reported in Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) Dead through legal representative & Ors. (2020) 7 SCC 366 wherein the Hon’ble Apex Court dealt with facts indicating that the plaintiff therein had made out a case of alleged non-payment of the part of the sale consideration in the plaint, and prayed for the relief of cancellation of the sale deed on this
ground. Referring to another decision of the Hon’ble Apex Court in Vidhyadhar Vs Manikrao (1999) 3 SCC 573 it is held thus:
“29.8 in Vidhyadhar Vs. Manikrao this court held that the words “price paid or promised or part-paid or part-promised” indicates that actual payment of the whole of the price at the time of the execution of the sale deed is not a sine qua non for completion of the sale. Even if the whole of the price is not paid, but the document is executed and thereafter registered, the sale would be complete, and the title would pass on to the transferee under the transaction. The non-payment of a part of the sale price would not affect the validity of the sale. Once the title in the property has already passed, even if the balance sale consideration is not paid, the sale could not be invalidated on this ground. In order to constitute a “sale”, the parties must intend to transfer the ownership of the property, on the agreement to pay the price either in praesenti or in future. The intention is to be gathered from the recital of the sale deed, and the evidence on record.
29.9 in view of the law laid down by this court, even if the averments of the plaintiffs are taken to be true, that the entire sale consideration had not in fact been paid, it could not be a ground for cancellation of the sale deed. The plaintiffs may have other remedies in law for recovery of the balance consideration, but could not be granted the relief of cancellation of the registered sale deed. We find the suit filed by the plaintiffs is vexatious, meritless, and does not disclose a right to sue. The plaint is liable to be rejected under Order 7 Rule 11 (a).”
In Vidhyadhar Vs. Manikrao (supra) referring to the definition of “sale” in Sec. 54 of the Transfer of Property Act, 1882 it is held thus:
“36. the definition indicates that in order to constitute a sale, there must be a transfer of ownership from one person to another, i.e. transfer of all rights and interests in the properties which are possessed by that person are transferred by him to another person. The transferor cannot retain any part of his interest or right in that property or else it would not be a sale. The definition further says that the transfer of the ownership has to be for a “price paid or promised or part-paid or part-promised”. Price thus constitutes an essential ingredient of the translation of sale. The words “price paid or promised or part-paid or part-promised” indicate that the actual payment of the whole of the price at the time of the execution of sale deed sine qua non to the completion of the sale. Even if the whole of the price is not paid but the document is executed and thereafter registered, if the property is of the value of more than Rs.100, the sale would be complete.”
The learned counsel for the 1st Respondent submits that there is a collusion between the Appellants and the borrower to defeat the Sarfaesi measures initiated against the borrower to realise the amount due to the bank.
After having heard the learned counsel appearing on both sides and after due consideration of the documentary evidence that is available and the precedents cited above, I find that the Appellants have no case to sustain the Securitisation Application seeking to quash the Sarfaesi measures initiated by the 1st Respondent bank. Even if the Appellants have not received the balance sale consideration, it is for them to resort to other available legal remedies against the purchaser of the property. Admittedly they have not done so. The Civil Suit that they have filed is only a suit for injunction simpliciter filed with the intention to stall the Sarfaesi measures initiated against the subject property. The possession certificate which they have issued in favour of the 2nd Respondent indicates that full consideration has been received by the Appellants. It is true that it does not bear any date, but then the execution of that document is not denied nor proved to be not signed by the Appellants. The share certificate issued by the Society in which the subject property is situated also indicates that the sale has been completed. The fact that the 2nd Respondent bank is in possession of all the title deeds would also further indicate that the sale has concluded. Issuing a notice to the 2nd Respondent by the Appellants intimating him that the agreement for sale has been cancelled would not be sufficient to cancel the registered document. No declaratory suit has been filed to get the registered document set aside. Insofar as the Appellants are not taken any legal action against the 2nd Respondent with respect to the nonreceipt of the sale consideration, it has to be presumed that the sale has been completed and full consideration paid to the Appellants.
Although it is the application for a stay that was taken up for consideration by this Tribunal, the materials on record indicate that no case has been made out by the Appellants to sustain an application under section 17 of the SARFAESI Act. Hence, the application for stay, as also the appeal stand dismissed.