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Judgment
The appellants have assailed the order dated 15.09.2018 passed by the Tribunal below(DRT) in Securitisation Application (S.A.) filed by them under Section 17(1) of SARFAESI Act whereby the said S.A. was rejected. The S.A. was filed by the appellants to protect the first floor of property no. E-6, Jangpura Extn., New Delhi(hereinafter to be referred to as 'the property in question') from being auctioned by respondent no.1 Punjab & Sind Bank(hereinafter to be referred as 'PSB') in exercise of its powers under Section 13(4) of SARFAESI Act in order to recover over a crores of rupees which it claimed to have lent to respondent no.2 herein in 2014 on the security of equitable mortgage of the property in question allegedly created by her by depositing sale deed allegedly executed in her favour by her brother Amarjeet Singh, respondent no.4 herein in March, 2014. Vide impugned order the learned DRT has dismissed the appellants' S.A. and that is why they had approached this appellate Tribunal with the present statutory appeal.
It is undisputed that two storeyed house no. E-6, Jangpura Extn., New Delhi was exclusively owned by respondent no. 4 Amarjeet Singh Oberoi. The case of the appellants is that Amarjeet Singh had sold the first floor of this property i.e. property in question to one Amrit Kaur Bedi, who according to the respondent Bank is his sister, in the October, 2009 by registered sale deed. Thereafter the old building was demolished and a new building was constructed by one buider Company, which according to Bank was M/s Carehome Builders Pvt. Ltd. Amrit Kaur Bedi sold the newly built first floor i.e. property in question to M/s Carehome Builders Pvt. Ltd. in December 2012 by a registered sale deed and the said Company further sold the same by a registered sale deed to one Naveen Jindal in May, 2017. Naveen Jindal then sold the first floor to the present two appellants vide registered sale deed dated 06.06.2017.
After execution of sale deed in favour of Carehome Builders Pvt. Ltd. by Amrit Kaur Bedi on the basis of sale deed which Amarjeet Singh Oberoi had executed in her favour in 2009 Amarjeet Singh executed another sale deed on 29.03.2014 in respect of the property in question(first floor) in favour of his another sister Devender Kaur Bedi, respondent no.2 herein. Smt. Devender Kaur Bedi then deposited that sale deed with PSB and obtained loan of a crore of rupees in April, 2014. Respondent no.3 had also stood as a guarantor for the repayment of the loan by Devender Kaur Bedi.
Devender Kaur defaulted in repayment of loan and her loan account was declared NPA and when she did not clear the Bank's dues despite service of demand notice under Section 13(2) of SARFAESI Act PSB took physical possession of the property in question on 12.02.2018 after obtaining possession order from the Court of CMM under Section 14 of SARFAESI Act. Then the appellants in whose favour Naveen Jindal had executed a sale deed in June 2017 approached the DRT and claimed that having sold the property in question to Amrit Kaur in 2009 Amarjeet Singh, respondent no.4 herein, was left with no right or title in the property in question and so the sale deed again executed by him in favour of his sister Devender Kaur Bedi was a fraudulent document which conferred no title in favour of Devender Kaur Bedi in respect of the property in question(first floor) and consequently no valid mortgage could be created by her in favour of PSB and resultantly PSB never acquired the status of a secured creditor and PSB could not have taken possession of the property in question claiming itself to be secured creditor and the property in question to be its secured asset.
They sought the delivery of possession of the property in question back to them.
Before the DRT PSB had pleaded in its written statement that:-
"12. That it humbly submitted that Respondent No.4 was the exclusive owner of the E-6, Jangpura Extn., New Delhi by virtue of conveyance deed dated 14.01.2008.
That the Respondent No.4 entered into collaboration agreement with M/s Carehome builders (P) Ltd. for reconstruction of abovementioned property after dismantling the old structure thereon. The plans for construction of fresh building over the plot of land in form of basement, stilt area, Ground floor, first floor, second floor & third floor with terrace thereon was sanctioned by MCD dated 23.12.2011.
That the respondent No.4 in the meanwhile on March, 2014 sold the first floor of the above property in favour of respondent No.2 & hence perpetuated fraud upon the builder M/s Carehome builder (P) Ltd., which executed sale deed dated 28.04.2014 in favour of one Shri Naveen Jindal, who ultimately sold the same to Naveen Kumar Goel & Smt. Reena Goel during the pendency of proceedings i.e. SA 309/16 before this Hon'ble Tribunal."
"REPLY ON MERITS:
5(iv) That Para (5iv) under reply, unless otherwise specifically traversed and admitted herein, are strictly denied and refuted. It is denied that Applicants are the owners of the property. It is specifically submitted that property in question was already mortgaged with Bank in the month of March 2014 and Respondent No.4 had perpetuated fraud on the builder M/s Carehome builders (P) Ltd. by selling the said property unto Respondent No.2. Hence subsequent sale deeds are in contravention of provisions of section 48 Transfer of Property Act. The chain of title deeds from (a) to (h) are admitted. However, it is vehemently denied that Respondent No.4 executed sale deed in favour of Smt. Amrit Kaur with the intention to transfer the property in question. No valid consideration whatsoever was passed in favour of Respondent No.4 Smt. Amrit Kaur had not paid any consideration at the time of execution and registration of sale deed. The said sale deed was executed in lieu of collaboration agreement with M/s Carehome builders (P) Ltd. It is reiterated that before the builder could sell the property in question, Respondent Nno.4 sold the property in favour of Respondent No.2 & same was mortgaged with Respondent Bank.
5(vii) That Para 5(vii) under reply is wrong and denied, as stated. It is vehemently denied that Applicants apprised Receiver and Bank officials of Respondent Bank that there must have been fraud played upon the Bank as they have purchased the property vide registered sale deed dated 06.06.2017 from Naveen Jindal. In this regard it is submitted that property in question was already mortgaged with the bank way back in 2014 and fraud must have been perpetuated by Respondent No.4 on the M/s Carehome Builders (P) Ltd. which subsequently sold the property in question to Naveen Jindal after the mortgage with bank. Rest of the para is wrong and denied, as stated & Applicants may be put to strict proof of the averments made in para under reply."
The learned DRT has dismissed the S.A. The relevant paras from the impugned order of the learned DRT are also being noticed below:-
"1. The present SA has been filed by the applicants under Section 17 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after referred as "the SARFAESI Act, 2002") praying therein to declare that the measures taken as per Section 13(4) of the SARFEASI Act, 2002 by the respondent no. 1 by taking physical possession of "All that part and parcel of the immovable property consisting of Flat bearing No. E-6, First Floor, Jangpura Extension, New Delhi, measuring 167.2 sq. mtrs with proportionate rights in the land underneath"(in short "property in question") on 12.02.2018 as invalid; direct the respondent No. 1 to restore the possession of the property in question..............................
Facts as succinctly set out in the SA are that the applicants are the present owners of the property in question on the basis of sale deed dated 06.06.2017 executed by Sh. Naveen Jindal S/o Sh. Ravi Nandan Jindal in their favour. It is stated that on 12.02.2018 the officials of the respondent no. 1 bank alongwith Ms. Poonam Singhal, Advocate appointed as Receiver for taking forcible possession of the property in question in pursuant to the order dated 05.01.2018 passed by the Ld. CMM, Saket, New Delhi. It is also stated that on 12.02.2018, applicant came to know through the officials of the respondent no. 1 that the property in question was mortgaged by the respondent no. 2 in favour of the respondent bank in the year 2014 against the housing loan thereafter, the applicant no. 1 lodged a complaint narrating the aforesaid entire incident however, neither any FIR has been registered nor any action has been taken by the PS: Hazrat Nizamuddin, New Delhi.
It is also stated that the respondent no. 4 by virtue of conveyance deed dated 14.01.2008 became the absolute owner of the property in question and who sold the property in question to Smt. Amrit Kaur Bedi sold the property in question in favour of the M/s Carehome Builders (P) Ltd. vide sale deed dated 19.12.2012 which was further sold by M/s Carehome Builders Pvt. Ltd. in favour of Shri Naveen Jindal and finally in favour of the applicants by virtue of sale deed dated 06.06.2017 executed by Sh. Naveen Jindal whereas on the other hand the respondent no. 4 also executed a sale deed dated 29.03.2014 in favour of the respondent no. 2. Thus, it is stated that the respondent no. 4 has fraudulently executed the sale deed in favour of the respondent no.2 as the same was already sold by him to Smt. Amrit Kaur Bedi vide sale deed dated 05.10.2009.
............Therefore, it is stated, that the respondent no.1 bank has wrongly created mortgage of the property in question in the year 2014. Hence, it is prayed that the action taken by the respondent bank may be declared as invalid and liable to be set aside.
Notices were issued to the respondents. Respondent no. 1 bank has filed its reply. The respondent no.2 appeared however, no reply has been filed by the respondent no.2. None appeared on behalf of the respondent of the respondent no. 3 & 4.
In the reply filed by the respondent no.1 it is stated that the respondent no.2 and 3 approached the respondent bank for availing Housing Loan for purchasing duly built -up Freehold Property bearing No. E-6, First Floor measuring 167.2 sq. meters. Jangpura Ext. New Delhi-10014. The respondent bank sanctioned the Housing Loan of Rs.1 Crore against equitable mortgage by way of deposit of original sale deed dated 29.03.2014 executed by respondent no.4 in favour of the respondent no.2 and thereafter mortgage was created in favour of the respondent no.2 and thereafter mortgage was created in favour of the respondent bank by the respondent no.2.
It is also stated that an SA No. 309/2016 was filed by Sh. Kushal Kumar, alleged to be the tenant in the mortgaged property, which was dismissed by this Tribunal on 09.11.2017. The respondent no. 4 herein then moved an MA No. 40/17 seeking restrain order against the receiver appointed by Ld. CMM for taking possession on 5. 01.2018. However, no interim relief was granted by this Tribunal allowed the respondent bank to take the possession of the premises. It is also stated that the sale of the first floor of the applicants herein is hit by Section 48 of the Transfer of property Act, 2002. Therefore, the applications have no right title and interest in the mortgaged property.
Record reveals that the applicants are claiming ownership first floor of E-6, Jangpura Extension, New Delhi on the basis of sale deed dated 06.06.2017 executed by Shri Naveen Jindal. The said Mr. Naveen Jindal acquired this property from M/s Carehome Builders (P) Ltd. vide sale deed dated 28.04.2014. It is submitted by the respondent no.1 that M/s Carehome Builders (P) Ltd. were collaborators , who constructed the fresh building in the form of basement, stilt area and Ground to third floor, by dismantling the old structure, in terms of MCD sanctioned plans dated 23.12.2011. It is also submitted by the respondent no.1 that the alleged sale dated 05.10.2009 to Ms. Amrit Kaur was merely an arrangement and a part of the collaboration agreement with M/s Carehome Builders (P) Ltd. for the sake of obtaining necessary clearances for reconstruction of the property. The respondent bank on the other hand claims that they had on 29..03.2014 granted a Housing Loan to Mrs. Devinder Kaur Bedi , to the 0tune of Rs 1 crore to purchase the property in question from Mr. Amarjeet Singh, who admittedly was the freehold conveyance deed holder.
Record also reveals that the occupant of the property in question, one Mr. Kushal Kumar, filed an SA no. 309/16 posing as tenant and sought stay of the possession, which was disposed of, on the promise of respondent no. 4 i.e. Mr. Amarjeet Singh, on behalf of the respondent no.2 (his sister) to regularize the loan account within 30 days. Another MA no. 14/17 was moved on 08.02.2017, by respondent no.4, seeking extension of time, which was ultimately declined on 15.11.2017 by this Tribunal. It is note-worthy to mention that respondent no. 4 i.e. Shri Amarjeet Singh appeared in person during the hearings of both the SA no. 309/16 & MA no. 14/17 and gave assurances on behalf of respondent no. 2 to clear the overdues, but chooses not to file appearance in the present SA.
In the back-drop of the facts narrated in the previous paras, it is perplexing to note that the applicants, very well aware of the security interest of the respondent no.1 and the disputed and litigated nature of the property in question, choose to purchase the same, without exercising due diligence, on 06.06.2017, at a stage when notice u/s 13(2) of the SARFEASI Act 2002 was already issued on 05.07.2016 by the respondent no.1 an SA was already disposed of by this Tribunal and an MA was pending before this Tribunal, wherein the property in question was the subject matter. Thus, the applicant was not only negligent in making proper enquiries locally, but also failed to take due diligence steps. It appears that parties in connivance are out to defeat the process of Recovery of Public Money, by any and.................................................................
Doctrine of lis pendens laid down under Sec 52 of the Transfer of Property Act, clearly points out that the outcome of a suit wherein rights to a property are the subject matter, shall affect the rights of any transferee pendent lite.
It appears that having failed to get the desired relief from this Tribunal, the sale-deed dated 06.062017 has been stage-managed, in cohorts with transferor of the property, for the sake of thwarting the process of recovery of public money, even before a decision was given out in the MA referred to above. The appellant cannot be allowed to take advantage out of his own mistakes and even suspected connivance
In light of the above discussions and the fact that substantial public money is involved, this SA is dismissed."
From the paras extracted from the reply of PSB filed to the S.A. it becomes clear that when respondent no.2 Ms. Devender Kaur Bedi, sister of respondent no.4 Amarjeet Singh Oberoi had approached PSB for loan she had produced before the loan sanctioning officer copy of sale deed which her brother had earlier executed in 2009 in favour of Ms. Amrit Kaur in respect of the property in question. She had also produced before the loan sanctioning officer copy of sale deed executed by the original undisputed owner Amarjeet Singh Oberoi in favour of his another sister Amrit Kaur Bedi.
When before the Bank authorities at the time of sanction of loan on the strength of sale deed allegedly executed in favour of the intending borrower, respondent no.2 herein, there was a sale deed also executed by the undisputed owner of the entire property no. E-6, respondent no. 4 herein, in respect of first floor thereof in favour of his other sister, no way the sanctioning officer could sanction loan to Devender Kaur Bedi as a secured loan on the security of the sale deed in her favour executed by her brother n March, 2014. With eyes wide open the loan sanctioning officer of PSB proceeded to give loan despite the fact that the intending borrower's own brother had already executed a registered sale deed in respect of the same first floor of house no. E-6 which she claimed to have purchased from her brother vide sale deed executed by her brother after execution of sale deed by her brother in favour of his other sister Amrit Kaur Bedi. As was rightly and forcefully argued by Mr. Rajeeve Mehra and Mr. B.B. Gupta, learned senior advocates for the appellants, there was no valid mortgage created in favour of PSB on the strength of sale deed allegedly executed in favour of Devender Kaur Bedi by her brother. PSB could not consequently claim itself to be a secured creditor of Devender Kaur Bedi nor could claim the property in question to be its secured asset and further it could also not take possession of the property in question by invoking the measures under SARFAESI Act which are available only to secured creditors.
The DRT has not considered these aspects in the impugned order and has proceeded on a totally wrong basis when it observed that the transaction between Amarjeet Singh and Amrit Kaur was hit by Section 52 of Transfer of Property Act as well as Section 48.
Case projected by PSB in its reply to the S.A., relevant paras wherefrom have already been extracted, and also before this Tribunal was that the undisputed owner of property no.E-6, Jangpura Extn. respondent no.4 Amarjeet Singh had no doubt executed a sale deed in favour of Amrit Kaur Bedi in respect of only first floor of house no. E-6 but that sale deed was not intended to be actually treated as a sale deed but was signed to facilitate a building contract to be executed by Carhome Builders Pvt. Ltd. which Company was to demolish the old structure and construct a new building so that different floors are constructed and sold floorwise including one floor to the said builder. The loan was sanctioned to respondent o.2 in 2014 but by that time Amrit Kaur had executed a sale deed in favour of Carehome Builders Pvt. Ltd. in respect of first floor in respect which single floor Amarjeet Singh had earlier executed a sale deed in 2009. In these circumstances the loan sanctioning officer ought to have ensured before rushing to disburse cores of rupees to Devender Kaur Bedi that the sale document/transaction, if it was projected merely to be a paper transaction, that the sale deed in favour of Amrit Kaur is formally cancelled. The loan sanctioning officer of PSB however ignoring this aspect and without seeking any legal opinion in this regard proceeded ahead and rushed to disburse crore of rupees to Devender Kaur Bedi thereby putting the public money at risk since in the facts and circumstanced the loan sanctioned became an unsecured loan.
Quite surprisingly in its evidence affidavit filed before DRT PSB had abandoned its aforesaid stand taken in its reply to the S.A. So, the story of the sale transaction between Amarjeet Singh and Amrit Kaur being only brought into existence for the alleged purpose of smooth implementation of the intended building contract between Amarjeet Singh/Amrit Kaur in any case gets belied/falsified. In fact, my attention was drawn to the record of DRT where a copy of one FIR had been placed on record purporting to have been got registered by the PSB's borrower Devender Kaur Bedi against her brother Amarjeet Singh alleging that her brother had duped her by getting bogus loans sanctioned in her name from different banks. Even in her reply to the present appeal respondent no.2 Devender Kaur Bedi, the alleged mortgagor of PSB has taken the plea that she had not taken loan from PSB against the property in question and her brother Amarjeet Singh had defrauded her and other banks also by obtaining loans in her name fraudulently.
Learned counsel for the PSB simply supported the impugned order of dismissal of the appellants' S.A. which for the aforesaid reasons cannot be sustained. On behalf of respondent no.2, as noticed already, the stand taken was that she had not taken loan from PSB against the property in question and her own brother had defrauded her by taking loan in her name fraudulently.
This appeal is accordingly allowed and the impugned order of the DRT is set aside and consequently, the S.A. of the appellants stands allowed. It is declared that PSB did not acquire the status of a secured creditor in respect of first floor of house no. E-6, Jangpura Extn., New Delhi and its action in getting possession of the property in question in the garb of exercise of powers under Section 13(4) of SARFAESI Act was totally illegal and, in fact, abuse of the authority under SARFAESI Act conferred upon secured creditors. The respondent no.1 Bank(PSB) shall deliver back the possession of the property in question to the appellants and in case the possession is not given to the appellants herein they will be at liberty to move appropriate application before this Tribunal for getting this direction implemented.