Poonam Singh & Anr vs Corporation Bank & Ors

All the three appeals arise out of a common order dated 20.06.2018 passed by the Debts Recovery Tribunal (DRT). By that order the DRT disposed of one Securitisation Application (S.A.) No. 70/2017 filed by appellants of Appeal No.358/2018 under Section 17(1) of SARFAESI Act and one miscellaneous application no. 154/2017 for review of an order dated 12.04.2017 which had been passed by the same DRT in S.A. No. 56/2017 which had been filed by the appellants in the other two appeals. Subject matter of both the SAs was property no. 5/839, S-1, Second Floor, Sector 5, Vaishali, Ghaziabad (hereinafter referred to as 'property in dispute') over which respondent Corporation Bank was claiming its right/charge as a mortgagee having advanced home loan of Rs.4,50,460/-, repayable in instalments, to the appellants of Appeal No.358/2018(hereinafter to be referred to as 'the borrowers') in the year 2003 and mortgage of the property in dispute was created to secure the repayment of the said loan amount. According to the case of respondent Bank the borrowers had defaulted in repayment of the loan instalments and that led to the classification of their account as NPA and recall of the entire loan amount in lump sum.

Since despite issuance of demand notice under Section 13(2) of SARFAESI Act the borrowers did not clear the outstanding dues of the Bank physical possession of the property in dispute was taken by the Bank from the possession of appellants of Appeal Nos. 422/2018 and 423/2018 on 06.04.2017(hereinafter to be referred as 'the occupants of the property in dispute'). They then immediately filed one S.A. before DRT-II, Delhi, which was registered S S.A.No. 56/2017, for claiming back the possession of the property in dispute claiming that they were in fact the real owners thereof though loan was granted by the Bank in the name of the borrowers above named. On first date itself in the S.A. on 12.04.217 the learned DRT disposed of that S.A. No.56/2017 by passing the following order:-

"Heard both parties. It is submitted that the overdue amount is Rs.1.6 lacs. The security applicant is directed to deposit Rs. 1.6 lacs to the respondent bank today itself. Counsel for the security applicant further submitted that he would repay the entire amount due within three months along with cost and expenses i.e. Rs. 50,000/- . The respondent bank is directed to de-seal the property immediately on receipt of Rs. 1.6 lacs. The security applicant shall liquidate the entire amount within three months. In default the respondent bank is at liberty to take repossession of the property in question without seeking any further clarification. On payment of the entire due, the respondent bank shall release the title documents qua the property in question to the security applicant. Accordingly, the SA itself is disposed of.

File be consigned to record room.

Dasti.'

Upon coming to know about this order having been passed by the DRT in the S.A.No. 56/2017 for return of the title documents of the property in dispute to the occupants of the property in dispute, the borrowers, appellants in Appeal No. 358/2017, Jai Kant Singh and his wife Veena Singh, also approached the DRT and filed one Securitisation Application(S.A.) before DRT which was registered as S.A.No. 70/2017. By an interim order dated 10.07.2017 passed in that S.A. the order dated 12.04.2017 passed by the DRT in S.A.No. 56/2017 was set aside. Feeling aggrieved with that order the security applicants of S.A.No. 56/2017, Poonam Singh and her husband Ratnesh Kumar Singh filed an appeal before this Tribunal. That appeal no.342/2017 was allowed by this Tribunal vide order dated 17.11.2017 and the order dated 12.04.2017 was set aside.

Thereafter the security applicants of S.A.No. 70/2017 filed a review application(being M.A. No. 154/2017) in disposed of S.A.No. 56/2017 seeking recall of the order dated 12.04.2017 extracted already. In the same application prayer was also made for condoning the delay in filing of the review application. DRT By a common order dated 20.06.2018 disposed of the S.A.No. 70/2017 and review application no. 154/2017 filed in S.A.No. 56/2017. That common order which is now under challenge at the instance security applicants of both the SAs and all of whom were asserting their rights to get back the title deeds of the property in dispute from Corporation Bank, reads under:-

"By this common order, the abovementioned S.A. and M.A. being interconnected are being disposed of.

Brief facts, leading to the filing of S.A. No. 70 of 2017 filed by security applicants Mr. Jai Kant Singh and his wife are as under:

Mr. Jai Kant Singh and his wife Ms. Veena Singh (hereinafter referred to as the security applicants) have filed the present Securitization Application ( for short, the S.A.) under section 17 (1) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (hereinafter called as the SARFAESI Act) against Corporation Bank and two others with a prayer to declare all the actions and measures initiated by the respondent bank under the SARFAESI Act in respect of the property being Flat No. 5/839, S-1, Second Floor, Sector 5, Vaishali, Ghaziabad- 201010, measuring 450 sq. feet ( for short, the flat in question) and quash the same being illegal and to further hold and declare that the respondent bank is not entitled to recover any amount from the security applicants without adjudication of the agreements/rate of interest etc.

The security applicants had taken home loan to the tune of Rs.4,50,460 from the respondent bank in the year 2003 and till date they were paying installments although their account was not regular. During the year 2015-16, security applicant no. 1 suffered acute liver damage and due that he was advised complete rest by the doctors. He had let out the flat in question to respondent no.2 an employee of CPWD at monthly rent of Rs 8,100/-. It is further alleged that for some time the security applicants were regular in payment installments, but later on due to their illness, they became irregular in making the payments. However, they came to know that the tenant has deposited some installments directly and refused to pay monthly rent to them. Subsequently, the security applicants wrote various letters to the respondent bank requesting not to receive any cheque from any third party and to seal and sell the flat in question through auction and to pay the balance amount to them, but the respondent bank did not respond. The security applicants have further pleaded that on 13th April 2017 they came to know that the respondent bank conspired with tenants/respondents no. 2 & 3 and obtained favourable order dated 12th April, 2017 from this Tribunal in the S.A. filed by respondents no. 2 & 3 wherein a direction has been issued to the respondent bank to handover the title documents to the tenant/respondents no. 3 & 4 (respondents no. 2 & 3 herein) on payment of Rs. 1.6 lac by them to the respondent bank. It is further pleaded by the security applicants that their tenants/respondents no. 2 & 3 have made the payment of Rs. 1.6 Lac and the flat in question has been handed over to them by the respondent bank and further that though in the S.A. filed by respondents no. 2 & 3, they (security applicants) have been arrayed as respondents no. 3 & 4 but no notice was served upon them in the said S.A. It is also averred that the said S.A. was filed by respondents no. 2 & 3 on April 10, 2017 and the said order was passed on April 12, 2017 without serving any notice on the security applicants, who are owners of the flat in question and borrowers of the respondent bank and are residing at the same address as stated by the tenants/respondents no. 2 & 3 in their SA. The security applicants further submits that the said order dated April 12, 2017 has been obtained by respondents no. 2 & 3 in connivance with the respondent bank fraudulently without any document in their favour and without showing as to in which capacity they are in possession of the flat in question since 2003. It is further submitted that it is the prime duty of the respondent bank to receive payment from the person, who is borrower, and when the possession has been taken over, the same cannot be given to any party without authority. According to the security applicants respondents no. 2 & 3 were resident of Flat No. 620, Sector 4, Timarpur, Delhi during the year 2005 as is evident from the letter dated 8th February, 2005. The conduct of respondent no. 2 who is posted as LDC in CPWD, Horticulture, Division IV, Fourth Floor, I.P. Bhawan, ITO, New Delhi was not good and was suspended during the year 2006. More so, the valuation of the flat in question is around Rs. 20 to Rs. 25 lacs whereas the dues of the respondent bank are only Rs 4 lacs. According to the security applicants, tenants/respondents no. 2 & 3 want to grab the flat in question in connivance with the respondent bank whose officials are equally responsible for the fraudulent activity carried out by respondents no. 2 & 3 against them. Accordingly, a prayer has been made to declare all the actions and measures initiated by the respondent bank under the SARFAESI Act in respect of the flat in question and quash the same being illegal and to further hold and declare that the respondent bank is not entitled to recover any amount from the security applicants without adjudication of the agreements/rate of interest etc.

In response to the notice issued, respondent bank has filed its reply contesting the SA tooth and nail. Taking preliminary objections, it has been submitted that the present SA has been filed on frivolous ground just to mislead this Tribunal and to defeat the recovery proceedings initiated it. The security applicants were duly served with demand notice under section 13 (2) of the SARFAESI Act through which the answering respondent bank had demanded a sum of Rs 4,55,122/- being the balance amount as on 31st July, 2015. The security applicants had neither raised any objection to the said notice under section 13 (2) nor paid any amount to the answering respondent and consequently the answering respondent bank had issued possession notice of the flat in question. It is submitted that the security applicants had obtained a housing loan facility of Rs 4.5 lacs for purchasing the flat in question and had agreed to repay the same with Interest @ 9 % per annum compounded monthly and in case of default in payment of monthly installments, to pay penal interest @ 2 % per annum. On account of failure of the security applicants in repayment of the loan amount, their account was classified as NPA on February 13, 2016 as per RBI guidelines and account wise dues was Rs. 4.5 lacs as on April 12, 2017. Consequent upon issuing possession notice of the flat in question, a third party viz. respondents no. 2 & 3 herein had filed SA No. 56/2017 which was disposed of with a direction to them to deposit an amount of Rs. 1.60 lacs and in turn the answering respondent bank was directed to restore possession of the flat in question to them i.e. respondents no. 2 & 3 which was done on April 14, 2017. On merits, it is contended that the security applicants and respondents no. 2 & 3 are hand in glove with each other and trying to defeat the legitimate recovery of the answering respondent bank and further that the security applicants have cooked up a false story to defeat recovery of huge public money. Accordingly, a prayer has been made to dismiss the present SA.

Respondents no. 2 & 3 have filed their separate joint Written Statement contending that the present SA is premature and is liable to be rejected as there is no measure which is pending and which requires adjudication. They submit that the security applicants have not taken any valid ground by which the measures initiated by the respondent no. 1 bank have been challenged. Furthermore, the present SA does not disclose any cause of action. The answering respondents no. 2 & 3 further submit that since no relief has been claimed against them, therefore, the present SA qua them is liable to be dismissed. They also contend that aggrieved against the action of respondent no. 1 bank, earlier they had filed SA No. 56 of 2017 before Debts Recovery Tribunal-III at Delhi being in possession of the flat in question since 2003 without any interruption and they were claiming to be the owners of the same by way of adverse possession and also for the reason that they were depositing the installments. It is further submitted that to avail the right of redemption and subrogation as per the provisions of sections 91 & 92 of Transfer of Property Act, 1882 had agreed to deposit the overdue amount as claimed by the respondent no. 1 bank and to clear the remaining outstanding dues within 90 days subject to return of the original deed of the flat in question to them and on deposit of Rs. 1.60 lacs, respondent no. 1 bank in compliance with the order dated 12th April, 2017 handed over physical possession back to them on 14th April 2017. According to the answering respondents no. 2 & 3 as on date no SARFEASI measures are pending qua the flat in question and, as such, the present SA, is liable to be dismissed. The issue raised by the security applicants does not fall within the purview of the Debts Recovery Tribunal at Delhi and can only be decided by the Civil Court. While replying on merits, it has been submitted that loan was standing in the name of the security applicants were making the payment of the installments. It is denied that the flat in question was let out to the answering respondents no.2 & 3 by the security applicants in 2015-2016 @ Rs. 8100/- per month and it is also denied for want of knowledge that security applicant no.1 suffered acute liver damage during the year 2015-16 and the story cooked up by the security applicants has no legs to stand. Ultimately, prayer has been made to dismiss the present SA qua the answering respondents no. 2 & 3.

The security applicants have filed replication controverting the assertions made by respondents no. 2 & 3 in their reply and reiterating the averments made in the SA.

In the miscellaneous application no. 154 of 2017 in SA No. 56 of 2017 the applicants, who are respondents no. 3 & 4 in SA No. 70 of 2017, have submitted that on having come to know about the action of the respondent bank as well as the order dated 12th April, 2017 directing the security applicants in the present SA to receive title documents of the property in question on deposit of the overdue amount the security applicants have filed SA. No. 70 of 2017 narrating the whole story as to how they want to grab their property and as to how they obtained impugned order dated 12th April, 2017 keeping this Tribunal in dark and also the fact that the respondent bank and its officials were hand-in-gloves with the security applicants. It is further submitted that immediately after hearing the MA applicants and the security applicant in SA No. 70 of 2017 restraining the respondent bank from giving possession and title documents of the property in question to the security applicants. Vide order dated 10th July, 2017 this Tribunal, after hearing the parties in SA No. 70 of 2017 as an interim measure set aside the impugned order dated 12th April, 2017 against which the MA applicants had filed Misc. Appeal no. 342 of 2017 before the Hon'ble DRAT at Delhi, which was allowed and the impugned order dated 10th July, 2017 in SA No. 70 of 2017 reversing the order dated 12th April, 2017 was set aside. In order to remove the legal infirmity in the present case, the MA applicants have filed the present MA to recall the order dated 12th April, 2017 on the ground that they were never served but by filing false proof of their service, the security applicants obtained favourable order from this Tribunal. It is further submitted that in the present case the signatures of respondent no. 4 were forged in proof of service. Thus, respondents no. 3 & 4, who are MA applicants, have no option to file the present MA with a prayer to condone of 190 days and to review/ recall the order dated 12th April, 2017. It is further submitted that the security applicants are neither the borrowers nor guarantors in this case and they are merely tenant and the title documents cannot be handed over to the tenant.

Smt. Poonam Singh and Mr. Ratnesh Kumar Singh, who are respondents no. 3 & 4 in SA No. 70 of 2017 have filed their joint reply resisting the said MA on the ground that the same is barred by limitation being filed after a period of around 250 days and that too without any interlocutory application for condonation of delay application. It is submitted that there is no infirmity or mistake in the impugned order and the claim of the MA applicants is baseless and liable to be dismissed. Ultimately, a prayer has been made to dismiss the present MA.

I have heard the learned counsel for both sides and have gone through the record carefully.

It is evident from the record that Smt. Poonam Singh and Mr. Ratnesh Kumar Singh, who are respondents no. 3 & 4 in SA No. 70 of 2017 had filed SA. No. 56 of 2017 titled Ms. Poonam Singh and another Vs Corporation Bank and others, claiming themselves to be the owners of the residential property in question since June 20, 2003 and vide order dated 12th April, 2017 the same was disposed of with a direction to them to deposit Rs. 1.6 lacs to the respondent bank on that very day and on deposit of the same, the respondent bank was directed to de-seal the property in question. It was further directed that the security applicants shall liquidate the entire amount within three months. In default, the respondent bank was given liberty to take repossession of the property in question without seeking any clarification. It was further directed that on payment of the entire due, the respondent bank shall release the title documents qua the property in question to the security applicant. It is further revealed from the record that on having come to know about passing of the said order dated 12th April, 2017. Mr. Jai Kant Singh and his wife Ms. Veena Singh, who claim themselves to the owners of the property in question and Ms. Poonam Singh and Mr. Ratnesh Kumar Singh, respondents no. 3 & 4 in SA No. 70 of 2017 their tenants therein, filed SA No. 70 of 2017 and vide order dated 10th July, 2017 passed therein, this Tribunal recalled and set aside the direction issued in order dated 12th April, 2017 passed in SA No. 56 of 2017 for release of the title documents of the residential property in question pending disposal of the main SA. It is further revealed from the record respondents no. 3 & 4 herein had filed an appeal against the said order dated 10th July, 2017 which was allowed by the Hon'ble DRAT at Delhi vide order dated 17th November, 2017 and the order dated 10th July reversing the order dated 12th April, 2014 passed in SA No. 56 of 2017 was set aside.

From the facts and circumstances enumerated above, both the security applicants in SA No. 70 of 2017 and SA No. 56 of 2017 are claiming their ownership over the residential property in question. Deciding title of the property is not within the domain of the Debts Recovery Tribunal and it is for the Civil Court to decide the title of a party over a property, admittedly, the dispute between the parties in this case is regardless of ownership over the residential property in question, and, as such, it is for them to get decide the question of title over the property in question from the competent Civil Court and on the basis of the decision of Civil Court, the respondent may will handover the title documents to the party in whose favour of the Civil Court gives its decision.

Since the dispute in this matter is with regard to the ownership over the residential property in question therefore, this SA No. 70 of 2017 and MA No. 154 of 2017 in SA No. 56 of 2017 are disposed of in view of the observations made above. Keeping in view the peculiar facts and circumstances of the case, the parties are left to bear their own costs."(highlighting is mine)

Feeling aggrieved, the security applicants of S.A.No.56/2017 have filed two separate appeals challenging the order relating to S.A.No. 60/2017 and the order relating to the review application filed in S.A.No. 56/2017. The security applicants of S.A. No. 70/2017 have filed the appeal since the DRT has not taken any decision in respect of the grievances raised by them in their S.A. and has left the decision to be taken by the CIVIL Court.

From this order of DRT and submissions made at the Bar by counsel for all the parties one thing is clear that as far as respondent Bank is concerned it has already recovered its dues. The private parties are fighting over the right to get back the title documents from the Bank. The learned DRT has, however, refused to decide S.A. No.70/2017 fled by the borrowers/mortgagors of the property in dispute on the ground that they should get a verdict from a civil court as to who out of them is entitled to get back the title documents of the property in dispute. The security applicants of S.A. No.70/2017 had in their S.A. challenged the measures taken by the Bank under SARFAESI Act they had sought review if the order passed by the DRT in S.A. No. 56/2017 directing the bank to return the title documents to the occupants of the property in dispute and not to the mortgagors. All these disputes were supposed be decided by the DRT itself and Civil Court has nothing to with these controversies. Civil Court can entertain such like disputes only if some serious allegations of fraud etc. in respect of creation of mortgage are being made which is not the position in the present case. The mortgagors are accepting creation of equitable mortgage in favour of respondent Corporation Bank. In the S.A No. 70/2017 the DRT was supposed to decide whether there was any illegality in any of the measures taken by the respondent bank-secured creditor which Civil Court cannot decide as per the well settled legal position by now. Similarly in the other matter the DRT was expected to decide whether there were any reasons to review the order dated 12.04.2017 as was being sought for by the borrowers/mortgagors, Jaikant Singh and his wife. That could also not be decided by any Civil Court but only by the same DRT which had passed the order sought to be reviewed.

Learned counsel for all the parties were also not in a position to support the decision of the learned Presiding Officer directing them to approach the Civil Court and to keep the controversy regarding the entitlement of the rival parties to get the title deeds of the property in dispute pending till pronouncement of the decision by the Civil Court.

These appeals are accordingly disposed of by remanding back the matters to DRT with a direction to itself decide the controversies arising for adjudication in S.A. No.70/2017 and M.A. No.154/2017 in S.A. No.56/2017. The DRT shall now take up S.A. No. 70/2017 and S.A.56/2017 on 05.10.2019 at 2 p.m. for further directions and parties shall appear there on the said date and time and DRT will not be required to give any notice of appearance to the parties.