Oriental Bank Of Commerce vs Satish Chand Goyal And Ors

P.K. Bhasin, J

This appeal by the appellant Bank is against the order dated 21.1.2016 passed by Debts Recovery Tribunal-I, Delhi (DRT) in Securitisation Application No. 76/2012(S.A.) which was filed by respondent Nos. 1 and 2 herein under Section 17(1) of the SARFAESI Act against the appellant Bank for quashing the measures taken by it under Section 13(4) of the SARFAESI Act to recover its money which it claimed to have lent to them. The DRT has allowed the S.A. of the respondents accepting their case that they had neither taken any loan from the appellant nor had they mortgaged their House No. H-99, Ashok Vihar, Delhi (hereinafter to be referred as 'the property in dispute') to secure the repayment of loan allegedly given to one Firm by the name of M/s. Leather Creation in the year 2008.

The impugned order of the DRT which gives the factual background of the case and the contentions raised there by the parties is re-produced below:

"1. This securitization application has been filed by the applicants under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Security Interest (Enforcement) Rules of 2002 (the SARFAESI Act, 2002) with the prayer to restrain the respondent Bank/Court Receiver appointed by the learned CMM Delhi for taking physical possession of House No. H-99, Ashok Vihar, Phase-I, New Delhi measuring 125 sq. yards under Section 13(4) of the SARFAESI Act and also to quash the proceedings initiated by the respondent Bank under the SARFAESI Act.

Brief facts of the case as stated by the applicants are that the applicants are neither the borrowers nor the guarantors/mortgagors in respect of the alleged loan facilities advanced to M/s. Leather Creation at any point of time and the impugned property was never mortgaged by the applicants with the respondent Bank. It has been submitted that the officers of the respondent Bank including the Chief Manager Mr. Satish Tandon acted in connivance with the partners of alleged M/s. Leather Creations and played fraud against the applicants by advancing credit facilities to M/s. Leather Creations on the basis of forged and fabricated documents including title deeds of the alleged property and have also forged the signatures of the applicants herein.

It has also been submitted that these facts were brought to the knowledge of the Bank vide letter dated 25.10.2008. The applicants have also lodged a complaint with Police authorities on 3.10.2008. It has been submitted that the original title deeds of the mortgaged property is in custody of the applicants and the applicants have never visited the branch of the respondent Bank for creating any mortgage or executing any guarantee documents. It has also been submitted that the partners of the alleged firm M/s. Leather Creation were stranger to the applicants.

It has also been submitted that the property of the applicants as well as one Smt. Radha Rani widow of the late Shri Raghu Nandan was also cheated by playing fraud by Shri Satish Tandon and other fraudsters in respect of property No. 5/43, NIT Faridabad, Haryana by forging Relinquishment Deed and depositing the same with the respondent Bank as security for loan advanced to M/s. Leather Creations. Smt. Radha Rani got registered an FIR No. 658 of 2008 in Police Station Faridabad under Sections 419/420/467/471 and 120-B against the accused persons. The charge sheet in the said case has already been filed in District Court Faridabad.

It has also been submitted that Chief Manager of the Bank Mr. Satish Tandon is under suspension in view of the fraudulent activities of the said branch as disclosed by the Bank under RTI Act. In view of the above, it has been prayed that since the applicants are neither borrowers nor mortgagors/guarantors, the action taken by the Bank against the impugned property be quashed.

Reply to this S.A. has been filed by respondent Bank vehemently opposing the same submitting that this S.A. has been filed by the applicants in connivance with other borrowers/guarantors. It has been sated that the applicant Bank has filed an O.A. No. 55/2010 on 18.5.2010 for recovery of Rs. 1,42,30,255/- on the basis of record available with it at the time of filing of OA. It has been pleaded in O.A. No. 55/2010 that defendant No. 1 M/s. Leather Creations is a partnership firm of defendant Nos. 2 and 3 who are the main borrowers and defendant Nos. 4 to 8 (including the present applicants) were impleaded as guarantor/mortgagors for the credit facilities allowed to the main borrower. It has been submitted that the applicants alongwith some other co-conspirators had planned and conspired to defraud the Bank and in order to divert the attention of concerned authorities and also made in the criminal complainants against Shri S.K. Tandon, the then Chief Manager of the Bank. Based on the said allegations, two Bank officers were arrested by the police authorities and were subsequently released on bail.

During the said police investigation, the copies of final report were handed over to the Bank officers from where they came to know about the conspiracy hatched by the defendants along with their co-conspirators to defraud the Bank. During investigation by the police, one Shri Manish Kumar Goswami has admitted before the police that during October 2007, he was employed with Smt. Shubha Thirumoorthy W/o. Shri Kupuswami Bala Subramaniam who were engaged in arranging Bank loans, in his affidavit filed before the police authorities, Mr. Manish Kumar Goswami admitted to have impersonated himself as Shri Mahender Kumar S/o. late Shri Raghunandan Prasad. He has further admitted that he impersonated himself to be Shri Mahender Kumar as the main (signing) partner of partnership firm M/s. Leather Creations, Sadar Bazar, Delhi.

It has also been submitted that the Cash Credit limit was sanctioned in the name of M/s. Leather Creations vide sanction letter dated 23.2.2008 specifying the terms and conditions of the said CC facility and the securities to be provided. The said sanction letter was duly signed by the applicants herein in the branch in the presence of Loan Manager for acceptance of the terms and conditions of the said CC Limit. Both the applicants also submitted their separate LF-4 forms to the Bank on 23.2.2008 to show their networth to stand guarantee showing joint ownership of the impugned property. The agreements of guarantee were deposited by the applicants in the presence of Loan Manager.

It has further been submitted that the applicants have filed a police complaint on 3.10.2008 and the police authorities found no prima facie merit in the complaint and they have not initiated any further investigation. The applicants have also filed a Writ Petition (Crl.) No. 516/2010 in the Hon'ble High Court of Delhi which was withdrawn by them. The applicants have also filed a Civil Writ Petition which was not pursued by them. It has been submitted that the present S.A. has in the subject loan account. In view of the above, it has been prayed to dismiss the present S.A.

The applicants have filed their rejoinder to the reply filed by the Bank and reiterated the averments made in the S.A. It has been submitted that Mr. K.L. Purthy, the Loan Manager of the respondent Bank has given a false affidavit before this Tribunal that the present applicants have signed the loan documents in his presence and that they have deposited the title deeds with the ban. It has further been stated that the applicants joined investigation with Faridabad Police on 20.12.2008 and 1.9.2009 on receipt of notice under Section 160, Cr.P.C. and produced their original title deeds before the Police. After investigation, the Chief Manager of Bank Mr. Satish Tandon and the Loan Manager Mr. K.L. Purthy were arrested and final report was filed against them for commission of offences under Sections 419, 420, 467, 468, 471 and 120-B, IPC and charges were also framed against them on 28.2.2011. It has further been alleged that the respondent Bank has lodged a police complaint only on 27.4.2010 when the applicants have asked them under the RTI Act that why they have not taken any action against the Bank officials.

The applicant Mr. Satish Chand Goyal has filed his own affidavit in support of the S.A. along with various documents which have been marked as Exbs. A-1 to A-30. The copies of title deeds have been proved as Exbs. A-1 to A-7. Original title deeds have also been placed on record.

The respondent Bank has filed affidavits of Shri K.L. Girotra, Sr. Manager (RW-1), Shri K.L. Purthy, Bank Officer (RW-2) and Shri K.C. Talwar, Chartered Engineer as (RW-3) along with photocopies of loaning and security documents marked as Exbs. RW-2/1 to RW-2/27.

Both the parties hove filed their respective written arguments. I have considered the rival pleas raised by the parties in the present S.A. The sole issue to be decided in the present SA is whether the applicants have created any equitable mortgage with the respondent Bank by depositing the original title deeds and whether there is any security interest of the Bank in the impugned property. As per the version of the applicants, they have neither created any mortgage nor visited the branch of the respondent Bank nor any title deeds were deposited with the Bank. It has been submitted that the original title deeds are in the power and possession of the present applicants. The original title deeds were also placed on record by the applicants.

On the other hand, the respondent Bank has contended that the applicants have duly mortgaged the property in question with the Bank to secure the loans advanced to a firm viz., M/s. Leather Creations. It has been submitted that the applicants have visited the branch of the Bank and deposited the original title deeds of the impugned property and have also executed various other documents to secure the dues of M/s. Leather Creations.

Record reveals that FIRs have been lodged against various persons including the Chief Manager and Loan Manager of respondent Bank and they have been arrested and charge sheeted. Charges have already been framed against them and trial is going on. However, this Tribunal is not concerned with the said proceedings as I have to decide only the issue whether any valid mortgage was created by the applicants or not. In order to appreciate the issue and cut short the controversy, this Tribunal with the consent of both the parties, summoned the original title deeds available with them and send the same to the concerned Sub-Registrars for ascertaining the genuineness of the same. In this regard, this Tribunal received three reports, which are reproduced herein below:

Report received from Sub-Registrar-1, Kashmere Gate, Delhi.

"Sub.--Forwarding of Original General Power of Attorney (GPA) & Special Power of Attorney (SPA) in R/o property No. H-99, Wazirpur Residential Scheme, New Delhi for verification/Genuineness in the matter of Satish Chand Goyal & Anr. v. Oriental Bank of Commerce (SA No. 76/2012).

With reference to your letter dated 29.6.2015 received in this office on 8.7.2015 on the subject cited above, I state that the General Power of Attorney executed on judicial Stamp Paper of Rs. 10/- sold at Sr. No. 15639 dated 26.6.1995 by Vinod Kumar, stamp agent, Kashmere Gate is seems to be genuine according to the record available to this office.

It is further stated that Special Power of Attorney executed on nonjudicial stamp paper of Rs. 2/- sold at Sr. No. 15642 dated 26.6.1995 by Shri Vinod Kumar, stamp agent, Kashmere Gate is also seems to be genuine according to the record available to this office."

Report received from Sub-Registrar-VI-A, Rohini-Delhi.

"Sub.--Verification/genuineness of Conveyance Deed dated 9.9.1996 in respect of property No. H-99, Wazirpur Residential Scheme, New Delhi in the matter of Statist Chand Goyal & Anr. v. Oriental Bank of Commerce.

Sir, With reference to your office letter dated 29.6.2015 on the subject cited above. As per record available in this office, the certified copy of registered Conveyance Deed dated 9.9.1996, bearing Registrar No. 6154, Book-I, Volume No. 151, pages 95-97 dated 9.9.1996 is enclosed herewith for further necessary action."

Report received from Sub-Registrar, Kalkaji, Delhi

"Sub.--Perpetual Lease Deed dated 9.6.1969 in respect of property No. H.99, Wazirpur Residential Scheme, New Delhi for verification/genuineness in the matter of Satish Chand Goyal & Anr. v. Oriental Bank of Commerce.

Sir,

Reference to your letter No. SA. 76/2012 dated 29.6.2015 and 22.9.2015 on the subject mentioned above.

In this regard it is informed that Wazirpur area does not come under the jurisdiction of Sr.-V. However, this office has a record since 1989. Hence, the verification/genuineness of perpetual lease deed dated 9.6.1969 cannot be ascertained."

A copy of the aforesaid reports were also provided to the Counsel for both the parties. I have also gone through the said reports and compared them with the title documents placed on record by the respondent Bank who is claiming that the original title deeds were deposited with it by the applicants with the intention to create equitable mortgage. In its report dated 23.7.2015, the Sub-Registrar-I, Kashmere Gate has categorically submitted that General Power of Attorney executed on judicial Stamp Paper of Rs. 10 sold at Sr. No. 15639 dated 26.6.1995 and Special Power of Attorney executed on non-judicial stamp paper of Rs. 2/- sold at Sr. No. 15642 dated 26.6.1995 by Shri Vinod Kumar, stamp agent, Kashmere Gate are seemed to be genuine according to the record available to their office. I have perused the GPA and SPA dated 26.6.1995 placed by both the parties on record. The GPA as well as SPA filed by the applicants shows the same serial numbers of 15639 and 15642 respectively. However, the GPA and SPA filed by the respondent Bank bears serial Nos. 14747 and 14757 respectively. Therefore, the GPA as well as SPA placed by the applicants on record seems to be genuine.

Similarly, I have also gone through the report submitted by Sub-Registrar-VI-A, Rohini, Delhi. In its report, though the Registrar has not specifically denied or admit the genuineness of both the documents, however, a certified copy of Conveyance-Deed has been sent which is available on their record. I have carefully examined the certified copy of Conveyance Deed dated 9.9.1996 furnished by the concerned Sub-Registrar with the Conveyance Deed placed on record by the respondent Bank. From a bare perusal of both the Conveyance Deeds from naked eyes, it is undoubtedly clear that the Conveyance Deed placed on record by the respondent Bank is not the genuine one. There are material differences in both the Conveyance Deeds one submitted by the Officer of Sub-Registrar and another placed on record by the respondent Bank. In these circumstances, I find no force in the contentions of the respondent Bank that the applicants have deposited the original title deeds with the Bank in the presence of its Loan Manager. Even otherwise also, from the record available it is undoubtedly clear that the Chief Manager as well as Loan Manager of the branch were charge-sheeted by the police for committing the offence of fraud etc., in this account itself.

The Hon'ble High Court of Delhi in WP(C) No. 4709/2012 filed by the applicants have opined as under:

"We are inclined to accede to the request, taking into consideration the chain of title, prima facie, established by the petitioners, the originals of which have been shown to us in the Court. Not only that, in order to confirm the veracity of their original title documents, the petitioners have also obtained certified copies of the registered documents from the office of the Sub-Registrar which verify what the petitioners state."

The Hon'ble DRAT-Mumbai in the matter of Chief Manager, Bank of India v. Gunvantiben Bhawarlal Mehta (Smt.) &Anr., II (2006) BC 16 has held as under:-

"The respondent No. 1 had deposited the forged title deeds with the Bank. Therefore, recourse taken to the provisions of the SARFAESI Act was misplaced. The applicant Bank was not secured creditor and taking recourse to provisions of SARFAESI Act was illegal. The action of the Bank, therefore, has to be branded as unauthorized and illegal."

The ratio laid down in the above said judgment depicts that SARFAESI action taken on the basis of the mortgage created by forged title deeds is liable to be set aside as unauthorized and illegal. This is also settled principles of law that no one can pass better title than what he himself had. Thus, it is held that the mortgage created in favour of the Bank is liable to be set aside.

Considering all the facts and circumstances of the case, I am prima facie satisfied with the case of the applicants. The S.A. is hereby allowed and the proceedings initiated by the respondent Bank qua the property-in-question under the provisions of SARFAESI Act is hereby quashed. File be consigned to records.

A copy of the order be sent to both the parties as per procedure."

Feeling aggrieved by this order of the learned Presiding Officer of the DRT the Bank has come up in appeal.

I have considered the arguments of the learned Counsel for the appellant. From the side of respondents reply to the appeal was filed and respondent No. 1 had appeared in person and stated that his reply to the appeal may be considered as their arguments as well in the appeal.

From a reading of the impugned order of the DRT it becomes clear that the case of the respondents was that they had not given any guarantee for the re-payment of the loan granted to M/s. Leather Creations by the appellant Bank not had they mortgaged the property in dispute in favour of the appellant Bank. They denied having executed any documents of loan which were being relied upon by the appellant Bank. It was claimed by them that all the loan documents produced by the Bank as well as the title documents of the property in dispute were forged documents. The original and genuine title documents had always been in their possession. The case of the appellant Bank on the other hand was that the respondents had given guarantee for the re-payment of loan amount by M/s. Leather Creations to whom loan of Rs. 1.50 crores was granted and disbursed in 2008 and the respondents being the owner of the property in dispute had also created equitable mortgage of the property in dispute by depositing with the Bank original title documents like the conveyance deed executed by DDA in their favour, lease deed in favour of the original allottee which was cancelled after property had been converted into freehold and sold to the respondents by the original allottee, agreement to sell which the original allottee had executed in their favour, letter of possession, General Power of Attorney and Special Power of Attorney. All these documents were claimed by the respondents to be forged documents.

There was thus serious dispute between the parties regarding genuineness of the loan and mortgaged documents which had been relied upon by the Bank in support of its actions taken under the SARFAESI Act like issuance of notice under Section 13(4) of SARFAESI Act to take physical possession of the property in dispute and then to sell the same. So, the learned DRT was expected to examine the controversies between the parties threadbare instead of disposal of the S.A. in a summary way. In this regard reference can be made to the following observations made by Gujarat High Court in Special Civil Appeal No. 4822/2010, Purshottam Zaveri v. Dena Bank through Authorized Officer, decided on 25.4.2011 wherein also there was controversy regarding genuine of loan documents produced by the Bank and it was held that DRT should examine the allegations of forgeries etc. threadbare:

"2.10--On 25.3.2007 respondent No. 1-Bank took over the possession of the property from the petitioners.

2.11--On 7.4.2007 petitioners preferred Appeal No. 25 of 2007 before the Debts Recovery Tribunal, Ahmedabad (for short "DRT") under Section 17 of the SARFAESI Act and sought various reliefs. The Appeal before the DRT was substantially on the following grounds;

(a) respondent No. 2 played fraud not only with the petitioners but with respondent No. 1 - Bank also, because the documents relating to the title of the property produced by respondent No. 2 before respondent No. 1-Bank while creating equitable mortgage are found to be bogus, concocted and they are not original title deeds.

(b) Respondent No. 2 created multiple mortgages in respect of the disputed property. Many lenders were duped by mortgaging the same property.

(c) Petitioners are bona fide purchaser of the property for value without notice of any right, title or interest in the disputed property by respondent No. 1 inasmuch as petitioners approached respondent No. 2 pursuant to the advertisement published by her through a broker and after obtaining title clearance report issued by respondent No. 2. Not only that, but Bank of Maharashtra also obtained title clearance report through their Advocate at the instance of the petitioners at the time of availing of the loan facility.

(d) It was brought to the notice of DRT that Section 13 of SARFAESI Act could get attracted only if security interest is created in favour of the secured creditors. Secured creditor has right to exercise powers under Section 13 of the Act only if security interest is created on the property, meaning thereby security interest must be created legally and validly as per Section 58 of the Transfer of Property Act in case of equitable mortgage by deposit of original title deeds.

(e) it was brought to the notice of DRT that respondent No. 1 - Bank created mortgage on forged documents namely share certificate and forged letters of society. It was brought to the notice of the Tribunal that the original share certificate issued by the society is with the petitioners and the forged and concocted share certificate was produced before respondent No. 1-Bank. This was supported by documentary evidence produced by the petitioners, including the affidavit of the Chairman of the society, who clearly declared on oath that his signatures have been forged and the documents are not issued by the society.

It appears that all these grounds, which were urged before the DRT in Appeal No. 25 of 2007 did not weigh with the Tribunal and ultimately vide order dated 31.7.2007 passed by the Presiding Officer, the Appeal was dismissed holding that the petitioners had purchased the disputed property knowing fully well that respondent No. 2 had defrauded many Banks, including respondent No. 1.

2.12--Petitioners being aggrieved by the order passed by the DRT preferred Appeal No. 291 of 2007 before Debts Recovery Appellate Tribunal, Mumbai (for short "DRAT"), Before the DRAT, all the grounds, which were raised before the DRT were reiterated. However, the Appeal was ordered to be dismissed solely on the ground that the petitioners had no locus to challenge the mortgage in favour of respondent No. 1 - Bank by respondent No. 2. DRAT came to the conclusion that the issue of validity of the mortgage cannot be reopened at the behest of the petitioners, who were not parties to the transaction of mortgage. The DRAT further held that the petitioners cannot adduce evidence to discredit the mortgage in favour of respondent No. 1-Bank.

2.13--Petitioners being aggrieved by the orders passed by DRT and DRAT are here before this Court by way of the present petition.

In the facts and circumstances of the case as narrated above, we are confronted with an issue as to whether the petitioners have locus to challenge the legality and validity of the mortgage in favour of respondent No. 1-Bank created by respondent No. 2 by playing fraud. In this regard, the contentions on behalf of learned Counsel for the petitioners are as under:

7.1 It is submitted that the Appellate Tribunal as well as the DRT ought to have examined the legality and validity of creation of mortgage by respondent No. 2 in favour of respondent No. 1-Bank inasmuch as the fact that there are serious allegations levelled to the effect that the documents relating to the title of the property, produced by respondent No. 2 before respondent No. 1 while creating equitable mortgage are found to be bogus, concocted and are not original title deeds. It is submitted that both the lower authorities have failed in discharging their statutory duties by not adjudicating the dispute on this issue.

7.2 It is submitted that the Appellate Tribunal erred in dismissing the Appeal on the ground that the Tribunal cannot go into legality and validity of the mortgage, because DRT has already allowed Original Application No. 378 of 2001 in favour of respondent No. 1-Bank preferred against respondent No. 2 by judgment and order dated 15.2.2008. It is submitted that the petitioners were not party to the said recovery proceedings filed under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It was also submitted that the issue of legality and validity of mortgage was not under challenge and was not the subject matter of adjudication under these proceedings. It is further submitted that any decision rendered by DRT in Original Application No. 378 of 2001 will not be res judicata while deciding specific issue about validity of the mortgage in favour of respondent No. 1-Bank based upon forged documents since specific dispute has been raised by the petitioners, supported by documentary evidence and affidavit of the chairman of the society.

7.3 It is submitted that the Bank can proceed under Section 13 of the SARFAESI Act only if security interest is created in favour of the secured creditor. It is submitted that the secured creditor has right to exercise powers under Section 13 of the SARFAESI Act only if security interest is created on the property, meaning thereby security interest must be created legally and validly as per Section 58 of the Transfer of Property Act in case of equitable mortgage by deposit of original title deeds. It is further submitted that unless and until the original title deeds are deposited, there is no creation of equitable mortgage over the property by deposit of title deeds.

7.4 It is further submitted that respondent No. 1-Bank created mortgage based on forged documents namely share certificate and forged letters of society. Under such circumstances, it cannot be said that there was valid and legal security interest created upon the property so as to entitle the Bank to invoke the provisions of Section 13 of the SARFAESI Act. It is vehemently submitted that the petitioners have been duped by respondent No. 2. It is submitted that not only petitioners have been duped but even respondent No. 1-Bank has been duped by respondent No. 2. Petitioners are bona fide purchasers of the property for value without notice.

...........We are not able to understand as to why the DRT as well as the Appellate Tribunal has not thought fit to examine this issue more particularly when it is the positive case of the petitioners herein that respondent No. 2 has committed fraud and has duped the Bank by producing defective title deeds and that too, to the extent of producing a forge share certificate said to have been issued by the society. This case of the petitioners cannot be just brushed aside easily and it would also not be in the larger interest of justice to say that the petitioners cannot challenge the validity and legality of the mortgage. If there is no valid security interest created in favour of the Bank, then there is no valid mortgage,........."

It is evident that the SARFAESI Act empowers to take possession of the secured asset for the purpose of recovering secured debt. In the present case the crux of the contention which deserves consideration is that, if there is no valid and legal security interest created by respondent No. 2 in favour of respondent No. 1-Bank, at the time of creating a mortgage because of defective title being handed over to the Bank, then, under such circumstances, it would not be within the powers of the Bank as a secured creditor to enforce such a security interest and proceed under Section 13 of the SARFAESI Act. We are not able to understand as to why the DRT as well as the Appellate Tribunal has not thought fit to examine this issue more particularly when it is the positive case of the petitioners herein that respondent No. 2 has committed fraud and has duped the Bank by producing defective title deeds and that too, to the extent of producing a forge share certificate said to have been issued by the society. This case of the petitioners cannot be just brushed aside easily and it would also not be in the larger interest of justice to say that the petitioners cannot challenge the validity and legality of the mortgage. If there is no valid security interest created in favour of the Bank, then there is no valid mortgage, and if there is no valid mortgage, then the petitioners, who are the purchasers of the property, can definitely say that the Bank could not have enforced such a defective security interest.

For this reason, we passed an order on 18.3.2011 saying that the Bank may produce the documents to suggest that the borrowers have created secured interest in the property in question.

In response to this, learned Counsel for the respondent No. 1-Bank produced the documents to convince us that a valid security interest has been created. We took possession of the documents and asked the registry to place them in the sealed cover. We would not like to comment much on the documents because we want that the whole issue be reconsidered by DRT by carefully perusing each and every document on which the Bank proposes to rely upon to make good their case that a valid equitable mortgage was created in their favour by respondent No. 2. All we would like to say at this stage is that even DRT in its order dated 31.7.2007 has observed:

"It is true that multiple mortgages came to be created in respect of the disputed property. In other words, many lenders were duped by mortgaging the same property. As far as the lenders are concerned, they have to work out the remedy either amicably or by litigation."

We are of the view that having come to this conclusion, it was not just and sufficient for DRT and DRAT to say that -- as documents have been executed and as title deeds have been deposited, they by themselves constitute a valid equitable mortgage creating the security interest in favour of the respondent Bank. We cannot ignore other documentary evidence more particularly the affidavit filed by Chairman of the society, wherein, he has said in so many words that his signatures have been forged, and perhaps this would lead us to believe that the so called share certificate, which has been relied upon by the Bank, is also a false document, because it contains forge signature of the Chairman of the Society, who has issued the share certificate. There is no reason why the Chairman of the Society to file a false affidavit. The matter does not rest here. The case of the petitioners and the Chairman of the Society is further fortified by respondent No. 3, who also claims that they have created a security interest as the same property has been mortgaged with them also by respondent No. 2 and has availed for the loan facility.

We also take notice of the fact that over and above respondent No. 1-Bank, respondent No. 2 obtained loan from Social Cooperative Bank Limited, LIC Housing Finance Limited, Surendranagar District Cooperative Bank Limited and Indus Ind. Bank by creating equitable mortgage on the same property by producing forge title deeds and share certificates. As against this, shockingly, the petitioners have also produced the share certificate in their possession, which the Chairman of the society certifies it to be true and correct. The affidavit and the say of the Chairman of the Society has been completely brushed aside. We can understand that in a given case, some flimsy case may be made out by persons like petitioners to get out of the wriggles of the fact. But that does not appear to be so in the present case considering the material on record. It was therefore necessary for DRT and DRAT to look into this aspect seriously and in detail.

One another contention canvassed on behalf of respondent No. 1-Bank is that DRT and DRAT are justified in saying that they cannot go into the legality and validity of the mortgage because DRT has already allowed Original Application No. 378 of 2001 in favour of respondent No. 1 filed against respondent No. 2, by judgment and order dated 15.2.2008. We are afraid even this contention cannot be accepted because the petitioners were admittedly not party to the said recovery proceedings filed under Section 19 of Recovery of Debts Due to Banks and Financial Institutions, Act, 1993. Secondly, the issue of legality and validity of mortgage was not under challenge and was not the subject matter of adjudication in the said proceedings. Therefore, any decision of DRT in OA No. 378 of 2001 will operate as a bar to res judicata while deciding specific issue about the legality and validity of mortgage in favour of respondent No. 1 - Bank.

Under Sub-section (1) of Section 17 of the SARFAESI Act, any person aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor can prefer an Appeal (Application) to the DRT within 45 days from the date on which such measures had been taken. In the present case there cannot be any dispute to the effect that the petitioners are aggrieved persons. They would definitely fall within the ambit of aggrieved person. Under Sub-section (2) of Section 17, the Tribunal is bound to consider whether any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act. Legality and validity of a mortgage would be definitely one of the relevant considerations, if genuinely raised under Section 17 of the SARFAESI Act.

Under Sub-section (3) of Section 17 of the SARFAESI Act, after examining the facts and circumstances of the case and evidence produced by the parties, if the Tribunal comes to the conclusion that any of the measures referred to in Sub-section (4) of Section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the secured assets to the aggrieved person or restoration of possession of the secured assets to the aggrieved person, it may by order, declare the recourse to any one or more measures referred to in Sub-section (4) of Section 13 taken by the secured assets as invalid and restore the possession of the secured assets to the aggrieved person or restore the management of the secured assets to the aggrieved person, as the case may be. The provisions of Section 17 must therefore receive such consideration at the hands of the Court as to achieve its object, and in any event, not thwarted.

It is true that the Securitisation Act is enacted to provide a speedy and summary remedy for recovery of thousands of crores which were due to the Banks and Financial Institutions, but at the same time, if prima facie there appears to be a case of fraud, then, persons like the present petitioners also deserve some protection at the hands of the Court and it cannot be said that by affording such protection in the given set of evidence, the very object of the Act is defeated. Justice cannot be done by doing injustice with someone.

In light of the foregoing discussion, we summarize our findings as follows:

(i) In a given case, more particularly in light of the facts and circumstances of the present case, it is within the powers of the DRT to adjudicate the issue of legality and validity of a mortgage and the legality and validity of security interest created in favour of the Bank.

(ii) All such grounds, which rendered the action of the Bank/financial institution illegal, can be raised in the proceedings under Section 17 of the Securitisation Act before the Debts Recovery Tribunal. It is for the Debt Recovery Tribunal to decide in each case whether the action of the Bank/financial institution was in accordance with the provisions of the said Act and legally sustainable. Legality and validity of security interest created in the form of a mortgage on the ground and allegations of fraud can definitely be looked into and must be looked into by Debts Recovery Tribunal.

(iii) In this view of the matter, we are of the opinion that the ends of justice would be served if we remit the entire matter to the Debts Recovery Tribunal to once again look into the entire issue threadbare and give an independent finding in this regard.

(iv) We therefore quash and set aside the order passed by Debts Recovery Tribunal, Ahmedabad dated 31.7.2007 passed in Appeal No. 25 of 2007 and also the order passed by Debts Recovery Appellate Tribunal dated 15.4.2010 in Appeal No. 291 of 2007 and remit the matter to the Debts Recovery Tribunal, Ahmedabad for fresh consideration on this issue as regards the fraud which has been played upon by respondent No. 2 and the legality and validity of the security interest created in the form of a mortgage of the disputed property."

These paragraphs from the judgment of the Gujarat High Court have been noticed to emphasise that whenever serious questions of forgeries, fraud etc. are raised even in S.A. proceedings; which normally are of summary nature the DRT is expected to decide the S.A. by examining the allegations of forgeries etc., threadbare and not in a summary way like the DRT has done in the present case. Same view was taken by the Delhi High Court also in its decision rendered on 2.11.2017 in CM(M) 760/2016, Punjab National Bank v. Ms. Bharti Sehgal & Anr., decided on 2.11.2017 that DRT can look into allegations of fraud etc.

As far as the scope of summary proceedings is concerned, the Hon'ble Supreme Court had observed in its judgment dated 27.7.2009 arising out of proceedings for setting aside of Arbitration Award, in Civil Appeal No. 5139 of 2009 (Arising out of SLP(C) No. 16281 of 2009), "Fiza Developers & Inter-Trade (P.) Ltd. v. AMCI(I) Pvt. Ltd. & Anr.", as under:-

"In a summary proceeding, the respondent is given an opportunity to file his objections or written statement. Thereafter, the Court will permit the parties to file affidavits in proof of their respective stands, and if necessary permit cross-examination by the other side, before hearing arguments.

Having regard to the object of the Act, that is providing an expeditious alternative binding dispute resolution process with minimal Court intervention, it is difficult to envisage proceedings under Section 34 of the Act as full-fledged regular civil suits under Code of Civil Procedure. Applications under Section 34 of the Act are summary proceedings with provision for objections by the defendant/respondent, followed by an opportunity to the applicant to 'prove' the existence of any ground under Section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the defendant/respondent to place his evidence by affidavit. Where the case so warrants, the Court permits cross-examination of the persons swearing to the affidavit. Thereafter, Court hears arguments and/or receives written submissions and decides the matter. This is of course the routine procedure. The Court may vary the said procedure, depending upon the facts of any particular case or the local rules."

Learned DRT was expected to return a finding after appreciating the evidence adduced from both sides as to whether the respondents herein had signed loan documents at all or not. In case that had been done the conclusion could either be that they did not sign any of the loan documents relied upon by the Bank or they did sign all or some of them. If the DRT had found upon appreciation of evidence which admittedly had been adduced by the parties that loan documents were signed by the respondents then the next question which would have been required to be examined was whether the title documents in question which were being relied upon by the Bank in support of its plea that it was the secured creditor qua the property in dispute out of which the conveyance deed executed by DDA has been found to be forged were submitted by the respondents themselves or not. Simply be returning a finding that the conveyance deed was forged the S.A. could not have been allowed on that ground alone. The DRT ought to have examined the evidence of the Bank officer had categorically deposed in his affidavit filed for being read as his evidence that all the loan documents had been signed by the respondents in his presence. Evidence of the concerned Bank officer should have been analysed along with the evidence of the two respondents who had also filed their affidavits to be read as their evidence and then a finding should have been given as to whose evidence inspired confidence. It is well settled that there is evidence adduced by both sides then it becomes a matter of appreciation of evidence and burden of proof pales into insignificance. Just because the conveyance deed being relied upon by the appellant Bank did not exactly tally with the certified of the conveyance deed forwarded to DRT by the concerned Sub-Registrar the inquiry ought not to have been wrapped up there. It was still required to be found out by the DRT as to who had deposited the titled documents. When both sides had led evidence and the Bank's official had deposed that those documents were submitted by the respondents themselves by coming to the Branch of the Bank some finding ought to have been returned about the veracity of his evidence and as to why his evidence was being ignored. There could be no presumption that the documents must have been forged and made a part of loan file by Bank officials only and not by the loan applicants. If upon proper analysis of evidence adduced from both sides it had been found out that the respondents did sign loan documents and had availed of the loan facility it might also have been possible to conclude that whatever documents the Bank was producing in evidence had also been produced by the respondents then the question which would have arisen was as to whether the Bank Manager who sanctioned the loan was aware of the fact that the title documents being offered as security were not genuine so as to create a suspicion regarding the claim of the Bank being a secured creditor. Just because some Bank officials had been arrested by the police it could not be said that their guilt as forgeries of title documents had been established and the Bank's claim that the property in dispute was not its secured asset which it could take over by invoking provisions of SARFAESI Act stood negatived from that circumstance alone. In fact, the learned Presiding Officer herself had not attached any significant to the circumstance of arrest of the Bank officers and had observed that she would be arriving at her own independent conclusion. And just because the Bank itself had also lodged a complaint with the police, result of which case is yet to come out, it cannot be said that the documents which the Presiding Officer had found to be not genuine were introduced into the loan transaction between the Bank and its borrower by the Bank officials and under no circumstances the respondents could also be privy to that deal particularly when the Bank's witness had categorically deposed that all the documents were signed by the respondents and title documents, which have now been found to be not genuine, were also deposited by them and everything had happened in his presence. Ignoring this evidence on the Bank officer totally the learned Presiding Officer simply accepted the ipse dixit of the respondents as if their version was bound to be considered as the gospel truth. Of course any decision favourable to the respondents could have been arrived at but only after examining the evidence of the other side also and also pondering over the fact that how everybody on this earth could be said to have conspired against the respondents to deprive them of their property. In fact, the respondents had not only been claiming that the Bank officers had committed fraud upon them, but in their written submissions submitted before the DRT they had even expressed a suspicion that even the Registrar of the DRT was favouring the Bank by not recording proceedings before her correctly and on one date when respondent No. 1 was present before the Registrar, his presence was not even recorded, which fact came to be noticed subsequently. The learned Presiding Officer did not look for any answer to these aspects of the matter. She did arrive at her own conclusions de hors the criminal cases and arrest of Bank officers but not in a correct way and in a casual way trashed all the SARFAESI measures initiated by the Bank. She simply observed that there were dissimilarities in the conveyance deed produced by the Bank and the certified copy of the same made available by the Sub-Registrar concerned in whose office the deed was registered. In my view the learned Presiding Officer after having decided to summon the records from the offices of different Sub-Registrars would have done well if the DDA official had also been summoned with the DDA's file having the office copy of the conveyance deed in respect of the property in dispute.

I am, therefore, of the view that the matter deserves to be remitted back to the DRT for a fresh decision after examining all the aspects highlighted above threadbare but without considering any observation made by this Tribunal in the present order as a final opinion of this Tribunal and will also be not influenced by any observations which might have been made in the earlier rounds of litigations between the parties since those matters arose out of some miscellaneous orders and all the observations were only on a prima facie view of the matter. If those observations which the learned Presiding Officer has relied upon in the impugned order were the final views of superior Courts then the entire case of the Bank would have been thrown out by the superior Courts themselves including DRAT. The Presiding Officer after remand will, however, be at liberty to take any decision in accordance with law after considering and appreciating the entire evidence adduced by both the parties and not by taking into consideration only the evidence of the respondents (security applicants).

This appeal is accordingly allowed and the impugned order dated 21.1.2016 of the DRT-I, Delhi passed in S.A. No. 76/2012 is set aside. The matter is remanded back to the DRT for fresh decision on accordance with the law and keeping in mind the observations made in this order. The respondents had also raised a grievance before the DRT and then before this Tribunal also in their reply to the appeal that when Bank's officer concerned had claimed in his evidence that respondents had signed all loan documents and submitted title documents also in his presence, they had moved an application seeking permission to cross-examine that witnesses, but the DRT had rejected that prayer. The matter was then taken to the Hon'ble High Court by way of writ petition after this Tribunal also did not accede to that request and the Hon'ble High Court had disposed of their writ petition with the observation that in case any such argument is raised at the time of final hearing before the DRT, their request for cross-examination of Bank's witnesses will be considered. The impugned order does not show that any such submission was made before the DRT at the time of final hearing and respondents have felt content with the disposal of their S.A. in their favour. However, since the matter is now being remanded to the DRT for fresh disposal, the DRT will consider the prayer of the respondents, if made, for permission to cross-examine the Bank's witnesses, the same shall be considered in accordance with law since the whole purpose of remanding back the matter to the DRT is to find out as to what is the truth.

Considering the fact that the matter is quite old the DRT should try to pass fresh order as far as possible within three months from the date of communication of this order. Since the possession of the respondents had been protected by orders passed in this legal battle that protection will continue till a fresh decision is taken by the DRT which will also ensure that none of the parties succeeds in delaying the fresh disposal of the S.A. within the time being granted now by this Tribunal.