O.P. Sharma vs Punjab National Bank And Ors.

Ranjit Singh, J

Application filed by the appellant under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) has been dismissed. The appellant has, accordingly, filed this Appeal against the said order. The appellant had purchased the property bearing No. 301, III Floor, 49-A, Khasra No. 548/135, Village Sheikh Sarai, Savitri Nagar, New Delhi from Harpreet Singh Pannu (respondent No. 2) on 12th June, 2002 for sale consideration of Rs. 1.50 lac. The appellant claims to be in possession of the property as owner. The appellant has claimed ownership right on the basis of documents taken an agreements to sell, registered Will, special power of attorney, registered general power of attorney affidavit, cash receipt and possession letter.

The appellant states that he was surprised to receive notice from respondent No. 1 Bank. As per the appellant, he then learned that respondent No. 2 by fraudulently suppressing the sale executed in favour of the appellant had mortgaged the property with the Bank as collateral security in a loan transaction where he defaulted in making repayment. Claiming that the appellant is a bona fide purchaser and that the vendor had no right to create a mortgage, the appellant had challenged the action of the Respondent Bank to invoke proceedings in respect of the said property.

The respondent Bank filed a reply pleading that is a case of collusion between the appellant and respondent No. 2. The Bank has stated in the reply that the appellant and respondent No. 2 are brothers, which is not a fact. Otherwise, it is alleged that respondent No. 2 had mortgaged 3rd floor portion of the property as collateral security to avail loan and the Bank had filed on O.A. for recovery of Rs. 3,45,24,621/-. In this reply filed in this O.A. respondent No. 2 had admitted the mortgage of his property in favour of he Bank. The Bank initiated action under the SARFAESI Act whereupon respondent No. 2 has filed one S.A. In this S.A. also respondent No. 2 had given an undertaking to permit the Bank to sell the property. As per the Bank, respondent No. 2 did make an attempt to resile from this undertaking by moving an application, but his application was dismissed. As per the Bank, appellant is not a bona fide purchaser of the property and the document produced by him did not confer any title on the appellant. On the other hand, respondent No. 2 had created mortgage of the property.

On the basis of the pleadings, the Tribunal below found no merit in the S.A. and, accordingly, dismissed the same.

The Counsel for the appellant has made strenuous efforts to show that the property put to sale is different from the property mortgaged, by making reference to some number of the property, but no such plea was ever raised before the Tribunal below. When asked to show any such plea having been raised before the Tribunal the Counsel could not point out any pleadings or submissions the appellant may have advanced before the Tribunal below. Accordingly the appellant cannot be permitted now to make out an altogether different case which was neither pleaded nor considered by the Tribunal below.

Counsel would then submit that the appellant had valid title as the owner of the property, which was required to be considered and the same could not been ignored on the ground that the documents produced in this regard have no force of law. The plea by the Counsel of that the Tribunal was required to go into the validity of the documents and then consider whether the appellant was bona fide purchaser or not.

I am not at all impressed with the line of submissions made by the Counsel for the appellant. Firstly, the appellant has no title to show in his favour. The documents like agreement to sell, registered Will, special power of attorney, would concededly not convey any title. In support of his plea that these documents could pass a valid title in favour of the appellant, the Counsel has placed reliance on the case of Suraj Lamp and Industries Pvt. Ltd. through Director v. State of Haryana, 183 (2011) DLT 1 (SC) : VII (2011) SLT 494 : IV (2011) CLT 8 (SC) : (2012) 1 SCC 656. The Hon'ble Supreme Court in Para 26 of the said judgment, on which the Counsel for the appellant has placed reliance, shows that the Court had merely referred to and reiterated the well-settled legal position that SA/GPA/Will transactions are not transfers or sales and that such transactions cannot be treated as completed transfers or conveyances. That being the legal position as settled by the Hon'ble Supreme Court, it is not understood as to how the appellant could take support from these observations. The Court has further observed that these can continue to be treated as existing agreement to sell and that nothing prevented the affected parties from getting registered deeds of conveyance to complete their title. The appellant may thus take action to complete his title but cannot claim valid title on the basis of such like documents.

No doubt, the Court has observed that their observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions but the legal position would be what is observed by the Hon'ble Supreme Court. Thus, this judgment, in my view, would not be of any help to the cause of the appellant and, rather, would go against the line of submissions made and pursued by the Counsel. The appellant has not been able to show any valid title in his favour on the basis of which he could claim right over the property to contest the right of the Bank to recover the amount from the said property which was duly mortgaged with the Bank. In this view of the matter, I find no merit in the Appeal and would, therefore, dismiss the same.