Nancy Roy vs Union Bank Of India

P.K. Bhasin, J

The order passed by the learned Tribunal below (DRT) on 5.12.2016 is under challenge at the instance of the appellant herein, who was the security applicant before the DRT. The said order of the DRT which gives the facts of the case as well as the submissions made there on behalf of the security applicant and the respondent Bank, is re-produced below:

"Learned Counsel for the applicant submits that the applicant is a widow lady and she is residing in the property in question i.e. HP-11-B, 1st floor, Janta Flat, Pitampura, Delhi. He further submits that son of the applicant has obtained a loan from the Bank and mortgaged the property with the Bank fraudulently without her consent and in connivance with the Bank Officials. He further submits that the son of the applicant has left her alone and not paying the dues of the Bank. He further submits that a suit for permanent injunction is already pending against her son and the respondent Bank before the Civil Court Rohini, Delhi and the matter is sub-judice. He further contends that the respondent Bank has failed to give any reply to the objections filed by her under Section 13(3A) of the SARFAESI Act. He further argued that the Bank itself has removed the Section 13(4) notice is not duly served up on the applicant in view of the above, it has been prayed that the respondent Bank be restrained from taking physical possession of the property in question.

Learned Counsel for the respondent Bank strongly opposes the aforesaid contentions of the applicant and submits that applicant has duly mortgaged the property in question with the respondent Bank and it is a secured asset as envisaged under the SARFAESI Act. He further submits that the applicant has gave her consent for mortgaging the property in question without any force and the civil suit has been filed by the applicant in connivance with her son. He further submits that the Bank has duly complied with the provisions of SARFAESI Act and Rule in its letter and spirit. To prove his contentions, learned, Counsel for the respondent Bank has also produced the speed post receipt qua the service of Section 13(4) notice. Therefore, he prayed that present SA may be dismissed and Bank may be allowed to take the physical possession of the property in question.

I have heard the learned Counsel for the parties and perused the record.

Admittedly, the property in question is mortgaged with the Bank and is a secured asset. However, considering the fact that applicant is an old widow lady, therefore, in the larger interest of justice, to allow the applicant to stay in part of the property in question. However, respondent Bank is hereby. The applicant herein is directed to deposit Rs. 5.00 lacs with the respondent Bank within 10 days from today and she is further directed to deposit Rs. 10 lacs within next one month. The applicant is further directed to deposit the remaining balance amount within next six months in equal monthly instalments. The respondent Bank is here by directed that on receiving the initial payment of Rs. 5.00 lacs, provide the fresh statement of account to the applicant within a week. On receipt of the amount, the respondent Bank is further directed to close the account of the applicant and the title deeds of the property be released.

Needless to say that in case the applicant fails to deposit the aforementioned amounts within the stipulated period or commits a single default, the respondent Bank may take the physical possession of the property in question without any further directions or interference from this Tribunal through the same Court receiver. With the aforesaid direction, now nothing survives in the present SA and the same is hereby disposed off accordingly. File be consigned to records. Orders dasti."

The main grievance of the appellant is that without even obtaining the reply to the S.A. from the Bank, which had initiated steps under SARFAESI Act to take physical possession of her property which her son had fraudulently deposited with the respondent Bank as a security for the re-payment of the loan obtained by him, and without even putting the case to trial disposed of the securitisation application (S.A.) under Section 17(1) of SARFAESI Act on the first date after notice to the Bank and that too after observing that the admittedly the property in dispute was mortgaged in favour of the Bank. It was contended by the learned Counsel for the appellant that the way her S.A. has been disposed of is totally in violation of the procedure laid down for the disposal of S.As. and also against the principles of natural justice and so not sustainable at all and is liable to be set aside.

There was no representation from the side of the Bank at the time of hearing of this appeal. However, written arguments were permitted to be filed on its behalf which was done. In the written submissions Counsel for the appellant Mr. Uma Kataria had submitted that since sufficient time was given by the DRT to the appellant to clear the Bank's dues but still she did not care to clear the outstanding dues the Bank was justified in taking over the physical possession of the mortgaged property in March, 2017 after obtaining necessary order from the Chief Metropolitan Magistrate as provided under Section 14 of SARFAESI Act and then sold it also by way of auction in October, 2017 and possession of the sold property was handed over to the successful auction purchaser Mr. Brejesh Sharma who paid the full auction money to the Bank and consequently this appeal has already become infructuous.

This Tribunal does not agree with the contention raised on behalf of the Bank this appeal has become infructuous. The appellant has the legal right to demonstrate that the Tribunal below has acted with material irregularity while disposing of her S.A. on the first date of hearing itself. In my view, the appellant has been able to demonstrate that and is entitled to succeed. The Bank had not even filed any reply to the S.A. in fact, the DRT's record shows that the appellant had not paid Court fee as was required to be paid by her and she had sought exemption from payment of Court fee by moving I.A. No. 1667/2016. That application only was first taken up by the DRT on 2.12.2016 and notice of that application only was directed to be issued to the Bank for 5.12.2016. On 5.12.2016 instead of passing any order on the said miscellaneous application the learned Presiding Officer disposed of the main S.A. itself notice of which was not even issued so far. Then how could the learned Presiding Officer of the DRT observe in the impugned order that "Admittedly, the property in question is mortgaged with the Bank and is a secured asset.". There certainly has been material illegality in the disposal of the S.A.

Learned Counsel for the appellant was right in his submission that even if it could be said that in a way by disposing of the S.A. without specifically passing any order on the application for exemption from payment of Court fee the exemption prayer is considered to have been impliedly allowed the learned Presiding Officer was still required to require the Bank to respond to the averments made in the S.A. regarding the mortgage being without her consent and as a result of fraud played upon her by her son in collusion with Bank officials. That was however not done. Ignoring these averments made in the S.A. by the appellant that she was a victim of fraud and her son had obtained loan in connivance with Bank officials without her consent and in that regard she had already filed a civil suit also against her son the learned Presiding Officer of DRT could not have observed that the creation of mortgage of the property in dispute was admittedly by the appellant. It was also the case pleaded by the appellant in the S.A. that in her reply to the notice under Section 13(2) of SARFAESI Act she had raised the same points but the Bank had not dealt with her objections.

Section 17(3) of SARFAESI Act says that the DRT is to consider the pleadings and evidence produced by the parties and then to come to a conclusion as to whether the security applicant was able to establish violation of any provision of SARFAESI Act and the rules made thereunder and in case the finding is favourable to the security applicant then even possession of the mortgaged property, if it stands taken over in the meanwhile, like in the present case, can be ordered to be restored back to the borrower/mortgagor by the Bank. The appellant had approached the DRT for the redressal of her legal grievances and so the DRT ought to have dealt with the same before directing her to clear the Bank's dues. The appellant had not approached the DRT for permission to clear the loan amount in instalments. Her prayer was to restrain the Bank from recovering the loan amount from her or from her property. She was certainly entitled to establish that she was not liable to pay any money to the Bank. That opportunity has been denied to her by the learned DRT. Of course that opportunity she was entitled to get provided requisite Court fee had been paid by her or she was granted exemption from payment of Court fee for which relied she had moved an appropriate application also of which cognizance was taken by the DRT and notice was also issued at first instance but no decision was taken on that application.

Thus, this Tribunal having found that the disposal of the appellant's S.A. by the learned DRT vide its impugned order dated 5.12.2016 cannot be said to be in accordance with law, the same is liable to be set aside. This appeal is accordingly allowed and the impugned order stands set aside. The matter is remanded back to the DRT for fresh disposal of the S.A. in accordance with law but only after taking appropriate decision on the application moved by the appellant for seeking exemption from payment of Court fee.

The S.A. shall be taken up by the DRT now on 14.11.2018 at 10.30 a.m. for passing appropriate directions. Record of DRT be sent back.