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Judgment
The appellant Bank in all these four appeals is aggrieved by acommon order dated 25.01.2017 passed by the learned Debts Recovery Tribunal(DRT) whereby two Original Applications filed by it under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and twoSecuritisation Applications(S.A.) filed under Section 17(1) of SARFAESI Act one of which was by respondent no.1Shalini Guptain Bank's Appeal No.136/2017 and the other one was by respondents 1 and 2, Sunil Gupta and Vibha Gupta, in Bank's Appeal No.135/2017 were disposed of.
The relevant facts leading to the filing of these four appeals which are being disposed of by this common order, by the appellant Bank with a very serious grievance against the manner in which the two O.As and two S.As were dealt with and disposedof have been noticed by the DRT in the impugned order dated 25.01.2017 and the relevant parastherefrom are extracted below:-
"(S.A. No. 335/2015)
The present securitisation application has been filed by the applicant praying for setting aside and quashing of the impugned possession/sale procedure of the respondent bank under SARFAESI Act, 2002 with respect of the property bearing No. 422-426 situated at Katra, Medgran, KhariBoali, Delhi-110006 with free hold land measuring 200.66 sq. mtrs. Approx. Comprising with ground, first, mezzanine and second floor with terrace/roof rights standing in the name of Shri Sunil Gupta and Smt. Vibha Gupta and for restoration of the possession of the property.
The brief facts of the case are that the applicant came into contact with respondent no. 2 Shri Sanjay Pawa in the year 2007- 2008 as he was informed that Shri Sanjay Patwa has been blessed with some divine power. That Shri Sanjay Patwa persuaded the applicants to sell some of their properties owned by them and advised to purchase the property in question i.e. 422-426 situated at Katra, MedgranKhariBaoli, Delhi- 110006 which is in front of the shop and go down of Shri Sanjay Patwa.
It is further stated that respondent no. 2 asked applicant to give the papers of the property in question and he will arrange the money from the respondent bank and whenever money is needed bank will give the money and also get him empanelled in the list of interest buyers so that he can get information of auction of properties by PNB time to time and on believing Shri Sanjay Patwa the applicant handed over the paper of the property to him. Mr. Sanjay Patwa took the applicant to the bank where the said papers of the property were taken by the bank official and got signed some papers out of which some were written an some were blank. Some papers were also got signed from the wife of the applicant and he was told that he has been empanelled in the bank.
It is further submitted that after one year the applicant requested Shri Sanjay Patwa for return of the property papers but Shri Sanjay Patwa refused to give property papers, however applicant can get the money in lieu of property whenever required. Thereafter the applicant enquired from the bank as to why Shri Sanjay Patwa is not returning the papers of the property in question and the bank officials reluctantly informed that the property in question has been mortgaged with the bank to secure the loans of the firms of Mr. Patwa and papers cannot be returned until bank's dues are paid.
It is further submitted that despite of repeated requests by the applicants for return of property papers Mr. Patwa started avoiding to talk on the issue and then applicant realized that he and his wife have been cheated by Shri Sanjay Patwa.
It is further submitted that Shri Sanjay Patwa with the help and connivance of the bank official and taking the advantage of simplicity and god fearing nature of the applicants and by misrepresentation fraudulently obtained the guarantee and got mortgaged the property of the applicants for which the applicants were never intended to give their guarantee and mortgaged the property in question as security for securing such a high loan of the company and the firm of Patwas.
That the applicant was shocked to see the auction notice dated 20.09.2015 as published in the newspaper. That with much difficulty and repeated visit to Shri Sanjay Patwa, the applicant got some papers from ShriSanjay Patwa that with the help an connivance of bank official ShriPatwa got fraudulently signed various papers/documents for guaranty of the loan and mortgaging the property of the applicants for the company M/s Patwa Synthetic Yarns Pvt. Ltd. and the firm namely M/s PatwaMadanLal Ashok Kumar which are owned and run by the relatives of Shri Sanjay Patwa and the applicant lodged a complaint on 11.05.2015 with the various authorities including police station Lahori Gate, Delhi about the whole incident.
It is further submitted that the respondent bank issued notice dated 07.04.2015 under Section 13(2) of the SARFAESI Act to M/s PatwaMadanLal Ashok Kumar and M/s Patwa Synthetic Yarns Pvt. Ltd. with a copy to the applicant which was not delivered to the applicant and in view of the above facts and circumstances the applicant requested for stay of sale proceedings/auction by the respondent bank in respect of the property in question.
Respondent bank filed reply to the securitization application stating therein that one M/s Patwa Synthetics Yarns and Ors. have obtained credit facilities from the respondent Bank at its branch office Sadar bazaar and the said account subsequently transferred to Mall Road Branch, Delhi and the securitization applicants have not only stood as personal guarantors by executing the guarantee deed in favour of the respondent bank but also offered their property bearing no. 422-426 situated at Katra, Medgran, KhariBaoli, Delhi-110006 as security to the respondent bank by deposit of original title deed with an intention to create mortgage on 14.07.2011 which is confirmed by their letter 15.07.2011.
It is further stated that the applicants have again executed letter of continuity on 12.05.2012 and also Agreement of Guarantees dated 11.05.2012 and applicants could not have remained under the influence of so called divine power for such a long time and their repeated execution of documents goes to so that they have created and confirmed creation of mortgage and their personal guarantees consciously in favour of the respondent bank, Thus the case of the Securitisation applicant is baseless.
It is submitted by the ld counsel for the respondent bank that after declaration of the account as NPA, the respondent bank as secured creditor issued notice under Section 13(2) & Section 13(4) of the SARFAESI Act, 2002, to which there was no objection from the applicants and respondent bank took physical possession of the property in question was sold in public auction and M/s DFS Agri Foods Pvt. Ltd. was declared as the highest bidder who deposited 25% of the bid amount on 09.12.2015. The sale was confirmed on 11.12.2015 after receipt of 25% and a sale agreement executed in favour of the highest bidder on 11.012.2015. The highest bidder deposited the entire balance amount on 23.12.2015 and a sale certificate has been issued in his favour on 23.12.2015 and in view of the above the securitization application may be dismissed.
The applicants filed rejoinder reiterating the facts as mentioned in the securitization application.
M/s DGS Agri Foods Pvt. Ltd., respondent no.8 filed written submission stating therein that auction fixed vide notice dated 20.09.2015themselves offered a sum of Rs. 356 lacs to the respondent bank for release of the property and against the offer of the applicants of Rs. 356 lacs the respondent bank put the property for auction at a reserve price of Rs. 500 lacs and the property is purchased by respondent no. 8 auction purchaser for Rs. 5,00,20,000/- which is much more than the value put up by the applicants themselves for the property.
It is further submitted that the applicants had been permitted by this Tribunal vide order dated 03.12.2015 to participate in the auction and match the bid of the respondent no. 8 auction purchaser. But the applicants chosen not to participate in the auction or make any bid.
It is further submitted that despite having spent a huge amount upon having purchased the auctioned property, the auction purchaser has been deprived from enjoying and utilizing the same according to its needs.
Thus, the applicants are liable to be saddled with exemplary cost of Rs. 50 lacs and the respondent no. 8 auction purchaser is entitled to cost/compensation of Rs. 50 lacs from the applicants.
The applicant filed rejoinder reiterating therein the facts as mentioned in the SA.
The applicant no. 1 filed evidence by way of affidavit and exhibited the documents from AW-1/A to AW1/B, Letter dated 21.03.2014 and 01.07.2014 exhibited as AW1/C and AW1/D and copy of letter dated nil unsigned handed over by Sanjay Patwa is marked and exhibited as AW1/E. A copy of police complaint dt. 15.10.2015 marked and exhibited as AW1/F and copy of FIR is marked and exhibited as AW1/G.
The respondent bank has filed affidavit of evidence of (RW-1) Shri B.L. Vashishat, Chief Manager of the respondent bank who has proved and exhibited the documents such as sale deed dt. 02.11.2010 as RW1/1, Surrender Deed dt. 06.03.2012 as RW1/2, Resolution of the Surrenderor Company dt. 05.03.2012 as ER-1/3, letter of mortgage dt. 15.07.2011 as RW1/4, letter of continuity dt. 12.07.2012 is marked and exhibited as RW1/5, Copy of guarantee Deed dt. 11.05.2012 as RW1/6, copy of recall notice dt. 25.06.2015 alongwith postal receipts as RW1/7 &RW1/8, copy of notice dt. 07.04.2015 alongwith postal receipts exhibited as RW1/9 & RW-1/10 (colly), notice dated 02.11.2015 regarding sale of secured asset alongwith postal receipts as RW1/11 and RW1/12 (Colly), rack report dt. 03.11.2015 as RW1/13, sale notice dt. 03.11.2015 as RW1/14 and sale confirmation letter dt. 11.12.2015 in favour of auction purchaser duly acknowledged by him marked and exhibited as RW1/15 & RW1/16.
The auction purchaser has also filed it evidence by way of affidavit and exhibited the documents such as copy of board resolution dt. 21.03.2016 as RW-9/1, copy of sale certificate as RW9/2, Certificate of Architect as RW9/3, copy sale deed dt. 02.11.2010 as RW9/4, copy of letter of mortgage as RW9/5, letter of continuity dt. 12.05.2012 as RW9/6, Letter of guarantee dt. 11.05.2012 as RW9/7, recall notice dt. 25.06.2015 alongwwith postal receipts as RW9/8 (colly), notice dt. 07.04.2015 under Section 13(2) as RW9/9, Possession Notice dt. 19.06.2015 as RW9/10, copy of sale notice dated 20.09.2015 as RW9/10.
The applicant no.2 SmtVibha Gupta filed evidence by way of affidavit stating therein she visited PNB alongwith her husband and Shri Sanjay Patwa and the officers of the bank took title documents of the property bearing no. 422-426, KatraMedgran, KhariBaoli, Delhi from Sanjay Patwa and asked her and her husband to sign bunch of papers out of which some were unfiled, some were blank and some were written and at the time of signing these papers neither the bank officers present their nor Sanjay patwa intimated that these documents are for creating equitable mortgage and guarantee for financial assistance granted to PatwaSysnthetics Yarns Pvt. Ltd. and the alleged agreement of guarantee dt. 14.07.2011 and alleged ldetter of depositing the document of the title dt. 15.07.2011, agreement of guarantee dt. 11.05.2012, letter of continuity dt. 12.05.2012, agreement of guarantee dt. 03.12.2012 and letter of continuity dt. 14.2.2012 were unwritten and filled by handwriting at her back.
Shri Anil Sharma also filed evidence by way of affidavit stating therein that he is the friend of shri Sunil Gupta and being like a family member to Sunil Gupta he also knew Sanjay patwa since 2011 and in November, 2014 he personally met Sanjay Patwaalongwith Sunil gupta at his office at KatraPedan, KhariBaoli and in discussion Sanjay Patwa admitted that property of Sunil Gupta was got mortgaged with the bank by misrepresentation and Sanjay Patwa also promised to get it released from the bank by replacing it with the property of his family.
ShriVirenderGola also filed evidence by way of affidavit stating therein that he is friend of Sunil Gupta and he came in contact with Sanjay Patwa in the year 1995-96 who has been blessed with some divine power. It is further stated that during May, 2009 condition of his daughter was very critical and he called Shri Sanjay Patwa to cure her and Shir Sanjay Patwa after seeing his daughter told that his Guruji who resides at NandGagri, Delhi can cure his daughter and he alongwith his daughter, Shri Sunil Gupta and Sanjay Patwa went to meet Guruji in the first week of June, 2009 and after which there was lot of improvement in the condition of his daughter.
(S.A.No. 215/2015)
The present Securitisation Application has been filed by the applicant praying for setting aside and quashing of the impugned possession/sale procedure of the respondent bank under SARFAESI Act, 2002 with respect to the property bearing No. F-30A, Gali No. 9, SubhashChowk, Lakshmi Nager, Delhi - 110092 and for restoration of the possession of the property.
The brief facts of the case are that initially the property bearing No. F-30A, Gali No. 9, SubhashChowk, Lakhsmi Nagar, Delhi - 110092 was owned by the applicant's Mother-in-Law since 30 years and got transferred in the name of the applicant through registered sale deed. That during the year 2010-2011 the applicant and her family were in acute financial problem and her mother-in-law become serious and in those days one ShriSunil Gupta, family friend has introduced them to one Shri Sanjay Patwa @Baba GorakhNath and the applicant told Shri Sanjay Patwa that she tried to get some loan from the banks but she cannot get any loan against here residential property as their area comes under some negative list.
It is further submitted that the said Shri Sanjay Patwa asked the applicant to show the papers of the property in question and believing Shri Sanjay Patwa the applicant gave the papers to him and went with him to some banks including the respondent bank where the bank officials asked her to sign few papers out of which some were written/typed and some were blank. It is further submitted that Shri Sanjay Patwa in connivance with the officials of the respondent bank had got mortgaged her property bearing No. F-30a, Gali No. 9, SubhashChowk, Lakshmi Nagar, Delhi - 1100092 and obtained guarantee fraudulently by way of misrepresentation for which applicant never intended to give such security for securing the loan of firm M/s S.R. Traders, proprietor Shri Sanjay Patwa and when applicant asked about the loan money while coming back from the bank Shri Sanjay Patwa told her that money will be given to her very soon.
It is further submitted that even after one year the applicant not received any amount from the bank and when she asked Shri Sunil Gupta either to arrange the loan as assured by Shri Sanjay Patwa or return back the property papers, Shri Sanjay Patwa keep on assuring time and again that he is arranging loan.
It is further submitted that the applicant was shocked to see the possession notice dated 21.04.2015 pasted in from of the building and also upon seeing it in the newspaper dated 23.04.2015 and immediately contacted Mr. Sunil Gupta and enquired the matter from the bank and came to know that the said property has been given as security for the loan of M/s SR Traders, proprietor Shri Sanjay Patwa and she was informed orally that she has given guarantee and mortgaged the said property and asked to contact the M/s SR Traders for clearing the dues else the bank will auction the said property of the applicant.
It is further submitted that with much difficulty and repeated visit to Mr. Sanjay Patwa and also the efforts of Shri Sunil Gupta the applicant got some papers from Shri Sanjay Patwa and after seeing them the applicant came to know that Sanjay Patwa on the pretext of arranging a loan for the applicant got fraudulently signed various papers/documents for guarantee for the loan and mortgaging the said residential property of the applicant for his firm M/s SR Traders, which the applicant never intended or willing to give her personal guarantee and mortgaged her said residential property and applicant lodged a complaint on 11.05.2015 with the various authorities including Police Station Shakarpur. It is further submitted that from the perusal of the letters and the documents got from Sanjay Patwa the applicant came to know that the respondent bank issued notice dated 11.02.2015 under Section 13(2) of the SARFAESI Act to M/s SR Traders with a copy to the applicant which was not delivered to the applicant.
In view of the above facts and circumstances that applicant prayed for setting aside and quashing of the impugned possession/sale procedure of the respondent bank under SARFAESI Act, 2002 with respect to the property bearing No. F-30A, Gali NO. 9, SubhashChowk, LashmiNager, Delhi - 110092 and for restoration of the possession of the property which has been mortgaged by the applicant.
Reply to the SA not filed by the respondent bank.
The applicant has filed evidence by way of affidavit and exhibited the documents i.e. copy of possession notice dt. 21.04.2015 and publication in Newspaper on 23.04.2015 exhibited as A1/1, copy of complaint dt. 11.05.2015 as A1/2, copy of FIR dt. 21.12.2015 exhibited as A1/3.
The affidavit of Shri Sunil Gupta also filed reiterating the facts as mentioned in the SA.
(O.A. No. 612/2015).
The Present Original Application has been filed by the applicant bank, on 08.09.2015 through Shri B.L. Vasishat, Chief Manager of the applicant bank, under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the defendants for recovery of a sum of Rs. 2,43,32,339/- (Rupees Two Crore Forty Three Lacs Thirty Two Thousand Three Hundred Thirty Nine only) together with cost, charges and interest @16.50% p.a. with monthly rests from date of filing of this O.A. till the realization in full.
The brief fact of the case are that the defendant no. 1 through its partners approached the applicant bank for grant of Cash Credit facility of Rs. 200 Lacs vide application dated 30.03.2012 to meet financial requirements for the business of manufacturing and dealing in Nylon yarn, PP yarn, polyster yearn, Dori, Niwar and all type of synthetic yarn and the applicant bank considered the request of the D-1 and granted/sanctioned on 09..05.2012 the Cash Credit (Hypothecation) Limit of Rs. 200 lacs to D-2 against the hypothecation of stocks/book debts and all other assets of the firm both present and further book debts.
In consideration thereto the Defendant no. 1, and D-2, D-3 & D-4 being the partners of the D-1 had signed and executed the documents such as Hypothecation of Goods and Book debts to secure cash facility Agreement, Supplementary Agreement, Demand Promissory Note, Master Undertaking from Cash Credit Borrowers, Request for purchase/discount/collection of cheques etc. all dated 11.05.202. The defendant nos. 2 to 4 and defendant no. 5 to 9 stood as guarantors and executed agreement(s) of continuing guarantee in order to secure the liability undertaking by D-1 in respect of the above facility. The defendant no. 7 & 8 also created mortgage in respect of their immovable Property bearing no. 422 to 426, situated at KatraMaidgran, KhariBaoli, Delhi - 110006 with free hold land measuring 200.66 sq. mtrs. Approx. Comprising of ground floor, first floor, mezzanine floor and second floor with terrace roof rights by deposit of title deeds. The defendant no. 6 also created mortgage in respect of its property being Entire first floor being 1/3 share of House No. 213, (New 416), Ward No. 2, KatraMaidgran, KhariBaoli, Delhi-110006 comprising of 4 rooms, 1 bathroom, 2 kitchens and courtyard by deposit of title deeds with the applicant bank.
It is further submitted that after availing the aforesaid loan facility from the applicant bank the defendants have failed to comply with the terms and conditions and the account has become irregular. The defendant no. 2,3, & 4 as partners signed and executed on 04.04.2014 balance and security confirmation letters wherein they acknowledged their liability. It is further submitted that despite of several requests and reminders, the defendants did not bother and neglected to regularize the loan account and account had been declared as NPA on 31.03.2015 and thereafter applicant bank taken action under the SARFAESI Act, 2002 by issuing notice dt. 07.04.2015 under Section 13(2) of the Act and demand notice on 25.06.2015 but the defendants failed to regularize the account and ultimately the applicant bank has left with no alternative but to approach this Tribunal for recovery of their dues.
The defendant no.7 Shri Sunil Gupta and defendant no. 8 Smt. Vibha Gupta filed written statement reiterating the same facts as mentioned in the SA no. 335/2015 and applicant bank also filed rejoinder reiterating the facts as mentioned in the present Original Application.
The applicant bank filed evidence by way of affidavit of Shri B.L. Vasishat, Chief Manager of the applicant bank who has proved and exhibited the documents as A,B,D, PW-1/1 to PW-1/22. He has proved and exhibited the Power of Attorney as PW-1/1, Letter enclosing firm registration form as PW-1/2, Loan application as PW- 1/3, sanction letter dated 09.05.2012 as PW-1/4, relevant loan documents executed by defendants such as Hypothecation of Goods and Books debts to secure cash credit facility Agreement, Supplementary Agreement, Demand Promissory Note, Master Undertaking from Cash Credit Borrowers, Request for purchase/discount/collection of cheques etc. all dated 11.05.2012 are exhibited as Pw-1/5 to PW-1/9. He further exhibited the Agreement of continuing guarantee by defendants As PW-1/10 to PW-1/13. He further exhibited the copies of the title deeds and the same are Marked as "A" and "B", Letter of continuity dt. 12.05.2012 Marked as "D". He further exhibited the letter of continuity dt. 03.12.2012 as PW-1/14, and PW-1/15, balance and security confirmation letters dt. 04.04.2014 as PW-1/16, Notice dt. 07.042015 as PW-1/17, Demand Notice as PW-1/18, postal receipts as PW-1/19 & 20. He further proved the statement of accounts as per Banker's Book evidence Act and the same is exhibited as PW-1/21 and the statement of account showing the present dues is exhibited as PW-1/22.
The defendant no. 7, Shri. Sunil Gupta also filed evidence by way of affidavit and exhibited the documents as DW-7/A to DW-7/G. He proved the copy of two cheques of Rs. 205 crores each which are marked and exhibited as DW-7/A and DW-7/B, copy letter dt. 21.03.2014 written by defendants to the PNB to release the title deed of property is marked and exhibited as DW-7/C, copy of letter dt. 01.07.2014 exhibited as DW7/D, copy of letter dated nil unsigned handed over by Sanjay Patwa is marked as DW7/E. He further proved the copy of police complaint dt. 15.10.2015 which is exhibited as DW7/F and copy of exhibited as DW7/G.
The defendant no.8 Smt. Vibha Gupta filed evidence by way of Affidavit stating therein she visited PNB alongwith here husband and Shri Sanjay Patwa and the officers of the bank took title documents of the property bearing no. 422-426, KatraMedgran, KhariBaoli, delhi from Sanjay Patwa and asked her and her husband to sign bunch of papers out of which some were unfiled, some were blank and some were written and at the time of signing these papers neither the bank officers present their nor Sanjay Patwa intimated that these documents are for creating equitable mortgage and guarantee for financial assistance granted to Patwa Synthetics Yarns Pvt. Ltd. and the alleged agreement of guarantee dt. 14.07.2011 and alleged letter of depositing the document of the title dt. 15.07.2011, agreement of guarantee dt. 11.05.2012, letter of continuity dt. 12.05.2012, agreement of guarantee dt. 03.12.2012 and letter of continuity dt. 14.12.2012 were unwritten and filed by handwriting at her back.
The Present Original Application has been filed by the applicant bank, on 08.09.2015 through Shri B.L. Vasishat, Cheif Manager of the applicant bank, under Section 19 of the Recovery of Debts Due to Banks and Financial Instituion Act, 1993 against the defendants for recovery of a sum of Rs. 3,94,16,848.59 (rupees Three Crore Ninety Four Lacs Sixteen Thousand Eight Hundred Forty Eight and paisa Fifty Nine only) together with cost, charges and interest @16.00% p.a. with monthly rests from date of filing of this O.A. till the realization in full.
The brief facts of the case are that the defendant no. 1 company had been enjoying credit facilities from the applicant bank since long time and defendant no. 1 signed and executed a balance and security confirmation letter dated 28.12.2011 and confirmed the correctness of balance of Rs. 22,47,846.03 owing from it and acknowledged its liability to reply outstanding amount in the credit facilities being enjoyed by it till that time. That in the year 2002, D-1 approached the applicant bank for grant of Credit Limit of Rs. 40 Lacs and DD (clean) Limit of Rs. 2 lacs and after considerting the request the applicant bank vide sanction letter dt. 18.01.2002 sanctioned Cash Credit (Hypothecation) of stock Limit of Rs. 42 lacs to D-1 against the hypothecation of Stocks/book debts and all other assets of the company both present and future.
In consideration thereto the Defendant No. 2, being the Director of the D-1 Co. had signed and executed the documents such as Hypothecation of Goods and Book debts to secure cash credit facility agreement, Hypothecation of moveable assets forming part of fixed/block assets agreement, undertaking, Request for purchase of cheques etc. and letter dated 14.02.2002 confirming the balance in cash credit account, all documents dated 14.02.2002. The defendant nos. 2 to 5 stood as guarantors and executed agreement(s) of continuing guarantee on 14.02.2002 in order to secure the liability undertaken by D-1 in respect of the above facility. The defendant no. 5 also created mortgage in respect of her Property being entire first floor being 1/3 share of House no. 213, (New 416) Ward no.3, measuring 103.5 sq. yds., KatraMadgran, KhariBaoli, Delhi-110006 comprising of 4 rooms, 1 bathroom, 2 kitchens and courtyard by deposit of title deeds with the applicant bank.
It is further submitted that vide Sanction letter dated 29.09.2004 the applicant bank once again considered the request of D-1 and sanctioned Cash Credit (Hypothecation) of stocks limit of Rs. 55 lacs to D-1 against the hypothecation of stocks/book debts and all other assets of the company both present and future. The Defendant no. being Director of the D-1 had signed and executed relevant loan documents on 13.12.2004 and D-2 to D-6 and Ms. Anita Patwa and Sh. Tapeshwar Narayan patwa executed agreement of continuing guarantee on 13.12.2004 confirmed having already deposited title deeds of immovable property and agreed that applicant bank shall continue to hold with it as additional security in respect of the enhanced limits.
It is further submitted that vide Sanction letter dated 07.06.2006 the applicant bank nonce again considered the request of D-1 and sanctioned Cash Credit (Hypothecation) of stocks limit of Rs. 73 lacs to D-1 against the hypothecation of stocks/book debts and all other assets of the company both present and future. The Defendant No. 2 being Director of the D-1 had signed and executed relevant loan documents on 07.06.2006 and D-2 to D-6 and Ms Anita Patwa and Sh. Tapeshwar Narayan Patwa executed agreement of continuing guarantee on 07.06.2006. The defendant no. 5 vide her letter dated 07.06.2206 confirmed having already deposited title deeds of immovable property and agreed that applicant bank shall continue to hold with it as additional security in respect of the enhanced limits.
It is further submitted that the cash credit limit was enhanced from time to time and relevant loan documents were executed by the defendants from time to time and lastly enhanced uptoRs. 400 lacs and Defendant no. 2 being director of the D-1 had signed and executed relevant loan documents on 14.07.2011 and D-2 to D-8 executed agreement of continuing guarantee on 14.07.2011. The defendant no. 5 vide her letter of continuity dated 14.07.2011 extended the charge on her property already equitable mortgaged with the applicant bank earlier with intention to secure the liabilities of D-1.
In addition to the above, in order to further secure the liability under the said facilities, the Defendant nos. 7 & 8 have created mortgage their property bearing no. 422-426 situated at Katra, Medgran, KhariBaoli, Delhi-110006 comprising with ground, first, mezzanine and second floor with terrace/roof rights on 15.07.2011 and confirmed the same by their letter dated 15.07.2011 and confirmed the same by their letter dated 15.07.2011 addressed to the applicant bank seeking acknowledgement of receipt of title deeds.
It is further submitted that at the request of Defendant no. 1 its account was transferred from Sadar Bazar Branch to Mall Road Branch and D-1 further approached the applicant bank on 08.11.2012 for enhancement of existing credit facilities from Rs. 400 lacs to Rs. 480 lacs and same was sanctioned to D-1 vide sanction letter dated 17.11.2012. The defendant no. 3 being Director of the company had signed and executed the relevant loan documents on 03.12.2012 and D-2 to D-8 executed agreement of continuing guarantee on 03.12.2012. The defendant no. 5, 7 & 8 vide their letter of continuity dated 03.12.2012 and 14.12.2012 respectively extended the charge on their property already equitable mortgaged with the applicant bank earlier with intention to secure the liabilities of D-1.
It is further submitted that after availing the aforesaid loan facility from the applicant bank the defendants have failed to cmply with the terms and conditions and the account has become irregular and declared as NPA on 27.03.2015. Thereafter, applicant bank taken action under the SARFAESI Act, 2002 by issuing notice dt. 07.04.2015 under Section 13(2) of the Act but the defendants failed to regularize the account and ultimately the applicant bank has left with no alternative but to approach this Tribunal for recovery of their dues.
The defendant no. 7 Shri Sunil Gupta and defendant no. 8 Smt. Vibha Gupta filed written statement reiterating the same facts as mentioned in the SA no. 335/2015 and applicant bank also filed rejoinder reiterating the facts as mentioned in the present Original Application.
The applicant bank filed evidence by way of affidavit of Shri B.L. Vasishat, Chief Manager of the applicant bank who has proved and exhibited the documents as A to D, PW-1/1 to PW-1/120. He has proved and exhibited the Power of Attorney as PW-PW1/1, Balance and Security Confirmation Letter dt. 28.12.2001 as PW1/2, sanction letter dated 18.01.220 and acceptance as PW1/3 & PW1/4, Board Resolution dt. 19.01.2002 as PW1/5, relevant loan documents executed by defendants such as Hypothecation of Goods and Book debts to secure cash credit facility Agreement, Hypothecation of moveable assets forming part of fixed/ block assets Agreement, Undertakings, Request for purchase of cheques etc. all dated 14.02.2002 are exhibited as PW1/6 to PW1/10.
He further exhibited the Agreement of continuing guarantee by defendants as PW-1/11 & PW-1/12. He further exhibited the copies of the title deeds and the same are Marked as "A" and "B", letter dated 15.02.2002 Marked as "C". He further exhibited the certificate of charge/modification of charge filed with ROC dt. 13.03.2003 as PW-1/13, application of enhancement of credit limit from Rs. 40 lacs to Rs. 53 lacs and loading documents dt. 13.2.2004 & 14.12.2004 are exhibited as PW-1/14 to PW-1/22. The application of enhancement of credit limit from Rs. 53 lacs to Rs. 73 lacs and loaning documents dt. 07.06.2006 are exhibited as PW-1/23 to PW-1/28. The application of enhancement of credit limit from Rs. 73 lacs to Rs. 87 lacs and relevant loaning documents dt. 23.03.2007 are exhibited as PW-1/29 to PW-1/47. The application of enhancement of credit limit from Rs. 87 lacs to Rs. 152 lacs and loaning documents. Dt. 25.02.2009 are exhibited as PW-1/48 to PW-1/63. He further proved and exhibited the application of enhancement of credit limit from Rs. 152 lacs to Rs. 250 lacs and loaning documents dt. 16.09.2010 are exhibited as PW- 1/64 to PW-1/79. The application of enhancement of credit limit from Rs. 235 lacs to Rs. 400 lacs and loaning documents dt. 14.07.2011 are exhibited as PW-1/80 to PW-1/95 and photocopy of title deeds is marked as "D". Letter dt. 03.09.2012 for transfer of account exhibited as PW-1/96, application dated 08.11.2012 for enhancement of credit facilities from Rs. 400 lacs to Rs. 480 lacs and relevant loan documents executed by the defendants on 03.12.2012 are marked and exhibited as PW-1/97 to PW-1/112, Balance and security letters signed and executed by D-1 are marked and exhibited as PW-1/113 to PW-1/116. He further proved the recall notice dt. 28.03.2015 as PW-1/117 & PW-1/118. He further proved the statement of accounts as per Banker's Book Evidence Act and the same is exhibited As PW-1/119 and PW-1/120.
The defendant nos. 7, Shri Sunil Gupta also filed evidence by way of affidavit and exhibited the documents as DW-7/A to DW-7/G. Hr proved the copy of two cheques of Rs. 205 crores each which are marked and exhibited as DW7/A and DW7/B, copy of letter dt. 21.03.2014 written by defendants to the PNB to release the title deed of property is marked and exhibited as DW7/C, copy of letter dt. 01.07.2014 exhibited as DW7/D, copy of letter dated nil unsigned handed over by Sanjay Patwa is marked as DW7/E. He further proved the copy of police complaint dt. 15.10.2015 which is exhibited as DW7/F and copy of FIR is exhibited as DW7/G.
The defendant no. 8 Smt. Vibha Gupta filed evidence by way of affidavit stating therein she visited PNB alongwith here husband and Shri Sanjay Patwa and the officers of the bank took title documents of the property bearing no. 422-426, KatraMedgran, KhariBaoli, Delhi from Sanjay Patwa and asked her and her husband to sign bunch of papers out of which some were unfilled, some were blank and some were written and at the time of signing these papers neither the bank officers present their nor Sanjay Patwa intimated that these documents are for creating equitable mortgage and guarantee for financial assistance granted to Patwa Synthetics Yarns Pvt. Ltd. and the alleged agreement of guarantee dt. 14.07.2011 and alleged letter of depositing the document of title dt. 15.07.2011, agreement of guarantee dt. 11.05.2012, letter of continuity dt. 12.05.2012, agreement of guarantee dt. 03.12.2012 and letter of continuity dt. 14.12.2012 were unwritten and filled by handwriting at her back.
Heard the ld counsels for the parties in all the above four matter and now the points for determination are:
(i) Whether the applicants in SA no. 335/2015 and SA no. 215/2015 voluntarily stood as guarantor to the loan obtained by M/s PatwaMadanLal Ashok Kumar and M/s Patwa Synthetics Yarns and liable for the claim of the applicant bank?
(ii) Whether Sanjay Patwa, D-2 played fraud on Sunil Gupta and his wife VibhaGupta(who were security applicants in S.A.No. 335/2015 and ae now respondents 1 and 2 in Bank's Appeal No.xxxxxxxxx/2017) and also on ShaliniGupta(who was security applicant before DRT in S.A. no. 215/2015 andis respondent no.1 in Bank's Appeal No. 136/2017) and obtained their documents and took them to bank and obtained their signatures on blank papers?
(iii) Whether the PNB Bank is entitled for guarantee over the properties of Shri Sunil Gupta, MsVibha Gupta and Ms. Shalini Gupta as prayed for?
(iv) Whether the applicant bank in O.A.No. 612/2015 and 613 is entitled for recovery of O.A. amounts against all the defendants therein?
Point nos. (i) to (iii) discussed together. In the present case the claim of the securitization applicants is that Shri Sanjay Patwa during the year 2007-08 persuaded the applicants to give their papers of the property on the pretext of arranging money and to empanel them as buyers for the properties auction by the PNB and kept the documents with the bank and got signed some papers. In the present case no doubt that the title documents of applicants in SA no. 335/2015 and 2015/2015 are with the bank along with the memorandum of deposit of title deeds and the title documents. In the present case the securitization applications are not either partners or Directors of the borrower firms or companies. There is only connection with the borrowers is that they came to know about Sanjay Patwa who has been blessed with some divine power and Shri Sanjay Patwa persuaded the applicants to sell their properties and advised to purchase the property bearing No. 422-426 situated at Katra, Medgran, KhariBaoli, Delhi-110006 which is in from of the shop and godown of Shri Sanjay Patwa and Subsequently Shri Sanjay Patwa asked the applicant to give papers of the property so that he would arrange money from the respondent bank whenever the money is needed and will empanel them as auction purchaser for the properties to be auctioned by the PNB.
In the absence of any business interest for the securitization applicants there is no need for them to be guarantors for the huge amount advanced to the companies of Shri Sanjay Patwa. It seems there is ring of truth in the case of securitization applicants in SA No. 335/2015 and 215/2015. The case of these applicants is that they have not deposited their title deeds with an intention to create equitable mortgage and that Sanjay Patwa took them to the bank and got them signed certain documents which are blank documents and some filled documents without informing the contents of the same. Even the witness examined by the bank does not deposed that the contents of the documents on which the signatures of the applicants were obtained were hand over to them and contents were explained to them. Further the applicants on coming to know about the fraud played by Shri Sanjay Patwa also ledged reports with the police.
The case of the Securitisation Applicants in SA no. 335/2015 and 215/2015 is that Shri Sanjay Patwa played fraud on them and took their documents and took them to the bank and got the documents sign seems to be most probably facts and circumstances of the case as otherwise these applicants have no necessity to stood as surely for the huge amounts advanced in the name of Shri Sanjay Patwa and others. Moreover the fraud played by Shri Sanjay Patwa is further revealed by the release of the securities by the PNB after fraudulently keeping the documents of the securitization applicants with the bank. Admittedly Shri Sanjay Patwa and others are the principle borrowers. This Tribunal do not understand as to why the authorities of PNB returned the title documents of the principle borrowers without notice to the guarantors as the alleged guarantors would be deprived of the valuable right of subrogation in case the properties of these alleged guarantors are sold by the bank. The release of properties at the instance of the borrower without knowledge of the securitization applicants is an additional circumstance to show that there is a fraud between the bank and the principle borrowers in these two OAs i.e. OA no. 612 of 2015 and OA no. 613 of 2015 filed by the PNB. Even the investigation report filed by the IO raised the question on the PNB releasing the securities of the principle borrowers during the pendency of the principle borrowers during the pendency of the clearance of the loan. Thus virtually there is some collusion between the authorities of the PNB and the principle borrowers in releasing the title documents of the principle borrowers and releasing the securities of the principle borrowers during the pendency of the loan.
Thus viewed from an angle this Tribunal is of the considered opinion that the principle borrowers seems to have played fraud on these guarantors.
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The Hon'ble Apex Court held that any fraud is perpetuated it vitiate and entire transaction. Thus the act of the defendants Sanjay Patwa and other seems to have played fraud on these applicants and got the documents signed in the bank and cheated them to act as guarantor without informing the nature of documents to be executed by the applicants in these two Securitization Applications. Moreover the property of the securitization applicant in SA no. 355/2015 seems to have sold by the PNB in pursuance of the alleged guarantee given by Shri Sunil Gupta and Ms. Vibha Gupta. As the auction purchaser without knowledge of the fraud and the material irregularity committed by the defendants participated in the auction and become highest bidder of the property, I am of the considered opinion that the said auction need not be disturbed in the facts and circumstances of the present case and also in view of the law laid down by the Hon'ble Apex Court in the matter of "Janatha Textiles & Others Vs. Tax Recovery Officer & Another" rendered by Hon'ble Apex Court on 16.05.2008 in Civil Appeal No. 6539 of 2003, wherein the Hon'ble Apex Court has categorically held that :
"The distinction between a stranger who purchases at an auction sale and an assignee of a decree holder purchaser at an auction sale is quite clear. Persons who purchase at a court auction who are strangers to the decree are afforded protection by the court because they not in any way connected with the decree. Unless they are assured of title; the court auction would not fetch a good price and would be detrimental to the decree-holder. The policy is therefore, is to protect such purchasers."
Further in the matter of "Ashwin S. Mehta & Another Vs. Custodian & Others (2006) 2 SCC 385, the Hon'ble Apex Court has held that :
"In any event, ordinarily, a bona fide purchaser for value in an auction sale is treated differently than a decree holder purchaser o such properties. In the former event, even if such a decree is set aside, the interest of the bonafide purchaser in an auction sale is saved."
Thus in view of the law of the above said judgments of Hon'ble Apex Court, I am of the considered opinion that it is not a fit case to disturb the right conferred in favour of the auction purchaser during the auction.
In the present case, I am of the considered opinion that the circumstances proved by the Securitisation Applicants revealed that bank without probably appreciating the facts and circumstances seems to have simply taken the signatures of the securitization applicants at the instance of the borrowers without informing the consequences of standing as guarantor and thereby releasing the securities offered by the principle borrowers clearly constitute that the bank is hand in gloves with the principle borrowers in releasing the securities of the principle borrowers and keeping the documents of the securitization applicants as guarantee for the loan obtained by the principle borrowers.
In the facts and circumstances of the case the act of principle borrowers clearly constitute a fraud on the securitization applicants and I am of the considered view that the securitization applicants have no consensus-ad-idem with the bank that they are standing as sureties borrowers made by the principle debtors and as such the said guarantee is vitiated by fraud and not valid and binding on the guarantors.
In view of my discussion stated supra though the sale in favour of the auction purchaser is not disturbed, I am of the considered opinion that the securitization applicants in SA no. 335/2015 is entitled for return of the sale proceedings in the auction conducted by the bank in respect of their property bearing No. 422- 426 situated at Katra, Medgran, KhariBaoli, Delhi - 110006 with free hold land measuring 200.66 mtrs. Approx. Comprising with ground, first, mezzanine and second floor with terrace/roof rights along with interest @9% simple p.a. from the date of deposit with the bank till refund to the securitization applicants.
The ld counsel for the bank vehemently contended that the mortgage having been created by the defendants and accepted by the bank the mortgagor stopped from contending that there was no mortgage and the same can not be adjudicated by this Tribunal. But by virtue of the judgment rendered by the Hon'ble High Court of Delhi in the matter of "SushmaSuri Vs. Mahaedha Urban Cooperative Bank Ltd"2011(2) BC 595 (Del) it is held that:
"If the case of the plaintiffs is that no mortgage was created by defendant no. 3 in favour of defendant no. 1 bank by the time they purchased the second floor of property, it is very much ipen to them to approach Debts Recovery Tribunal under Section 17 of the Act and satisfy the Tribunal that in fact there was no bona fide mortgage and defendant no. 3 was not the owner of the second floor on the date the mortgage was actually created in favour of defendant no. 1."
Further the Hon'ble High Court of Orissa in the matter of "BinatiSamalVs Bank of Baroda" AIR 2014 Ori 67:2014(3) BC 340:2014(2)DRTC 541 (Ori) has held that :
"Creation of an equitable mortgage and its validity is a question of fact to be essentially decided by the Tribunal".
In view of the clear and categorical legal position laid down by the Hon'ble High Court of Delhi as well as Hon'ble High Court of Orrisa, I am of the considered opinion that the objection of the ld counsel for the applicant bank in OA that the guarantors are stopped from questioning the validity of mortgage is unsustainable and liable to be rejected.
In so far as the recovery of amount covered by OA no. 612 of 2015 and OA No. 613 of 2015 are concerned the principle borrower did not contest and oppose the claim of the applicant bank even otherwise the documents filed by the applicant bank clearly established that the principle borrowers borrowed amount. The evidence filed by the applicant bank clearly established the case for recovery of amount from the principle borrower and from the properties of the principle borrowers and this issue is answered accordantly.
SA no. 335/2015 and 215/2015 are allowed and the securitization applicants are discharged from the alleged guarantee obtained by the bank from the applicants. So far as sale in respect of the auction purchaser is concerned the same is confirmed but the applicant in SA no. 335/2015 shall be entitled for the sale proceeds with interest @9% simple from the date of deposit of sale proceeds with the bank till the refund to the saucerisation applicants.
OA no. 612 of 2015 is allowed against the principle borrowers. The defendant nos. 1 to 6 & 9 are directed to pay jointly and severally to the applicant bank within 30 days a sum of Rs. 2,43,32,339/- (Rupees Two Crore Forty Three Lacs Thirty Two Thousand Three Hundred Thirty Nine only) together with cost, charges and future interest at the rate of 13% simple from the date of filing of this OA till the date of realisation; failing with the same shall be recovered from the sale of the movable and immovable properties of the defendant nos. 1 to 6 & 9.
OA no. 613 of 2015 is allowed against principle borrowers. The Defendant nos. 1 to 6 are directed to pay jointly and severally to the applicant bank within 30 days a sum of Rs. 3,94,16,848.59 (Rupees Three Crore Ninety Four Lacs Sixteen Thousand Eight Hundred Forty Eight and Paisa Fifty Nine only ) Together with cost, charges and future interest at the rate of 13% simple from the date of filing of this OA till the date of realization; failing which the same shall be recovered from the sale of the movable and immovable properties of the defendant nos. 1 to 6."
From this common order of DRT the position which emerges is that the learned DRT has decided four cases by one ordereven though parties are not common and properties involved are also different since one Sanjay Patwa@ Baba GorakhNathis the central character in all the four cases out of which these appeals have arisen andwhich are being now disposed of by his common order. He isthe person to whose business concerns, M/s Patwa Synthetic Yarns Pvt. Ltd. and M/s PatwaMadanLal Ashok Kumar, the appellant Bank had sanctioned loans to the tune of crores of rupees during the period from 2004 to 2012. Repayment of the loans was secured by his family members by execution of guarantee deeds as well as by mortgage of some of their properties. The main character SanjayPatwa was impleaded as respondent no.2 in the S.A. No. 215/2015 filed by Shalini Gupta, who is now respondent no.1 in Bank's appeal no. 136/2017. He was also impleaded as respondent no.2 in S.A.No. 335/2015 filed by one Sunil Gupta and his wife Vibha Gupta and now respondent no. 3 in Bank's appeal No. 135/2017. Sanjay Patwa was impleaded by Bank also in its O.A. No. 612/2015 as defendant no.9 and is now respondent no. 9in its appeal no.134/2017 arising out of the final common order passed by DRT in O.A.No. 612/2015. His family members who had stood guarantors for him were impleaded in O.A.No. 612/015 as respondents 2 to 6 and have now been impleaded as respondents 2 to 6 in bank's appeal no. 134/2017.In S.A. No. 335/2015 they were respondents 5 to 7 and now in Bank's appeal no. 135/2017 are respondents 5 to 7.
The security applicant Shalini Gupta, who has been found by the DRT to have been defrauded by principal borrower Sanjay Patwa is now respondent no.1 in Bank's Appeal No.136/2017 and husband wife duo of Sunil Gupta and Vibha Gupta who have also been found by the DRT to have been defrauded by Sanjay Patwa are now respondents 1 an2 in Bank's appeal no. 135/2017 arising out of their S.A. No. 335/2015 and are respondents 7 and 8 in Bank's appeal no. 133/2017 arising out of O.A.No. 613/2017 which was filed in respect outstanding dues in the account of M/s Patwa Synthetic Yarns Pvt. Ltd. and respondents 7 and 8 in Bank's appeal no. 134/2017 arising out of O.A.No. 612/2015 in respect of loan account of M/s PatwaMadanLal Ashok Kumar . The Bank does not appear to have filed any recovery case against borrowerFirm S.R.Traders of Sanjay Patwa in which loan transaction Security Applicant Shalini Gupta had allegedly stood guarantor and had also allegedly mortgaged her residential property which mortgage has also been found by the DRT to have been got created from her fraudulently by Sanjay Patwa @ Baba GoakhNath in collusion with bank officials.
So, as far as the money recovery certificate ordered to be issued in the two OAs of the appellant Bank is concerned no one has challenged the same. Only the appellant Bank has approached this appellate Tribunal and that too only against that part of the final order dated 25.01.2017 whereby the security applicants who had filed S.ANo.215/2015(Shalini Gupta) and S.A.No.335/2015(Sunil Gupta and his wife Vibha Gupta) have been discharged as mortgagors of their respective properties. Since the property mortgaged by Sunil Gupta and his wife Vibha Gupta was auctioned by the appellant Bank in exercise of its powers under Section 13(4) of SARFAESI Act during the pendency of their S.A. to one Company by the name of M/s DFS Agri Food Pvt. Ltd. which Company was impleaded as respondent no.8 in their S.A.No. 335/2015 and is now respondent no.8 in Bank's appeal no. 135/2017 arising out of that S.A. no order was passed in the Bank's O.A. in which an order was sought to be obtained for the recovery of Bank's dues from the sale of their mortgaged property but at the same time mortgagor couple was directed to be paid the amount of sale consideration which the said auction purchaser had paid to bank, with interest. The appellant Bank is aggrieved with that direction also.
Now the entre controversy to be resolved centres around the property allegedly mortgaged by Shalini Gupta in favour of the appellant Bank to secure the repayment of the loan advanced to M/s S.R.Traders against whom no recovery case appears to have been filed by the appellant Bank under Section 19 of RDDBFI Act,1993 but only proceedings under SARFAESI Act had been initiated in the year 2015 by declaration of his borrower Firm's account as NPA, issuance of demand notice and then possession notice under Sections 13(2) and 13(4) of SARFAESI Act. Symbolical possession only was taken in 2015 and physical possession does not appear to have been taken so far and now there is no chance of taking over of physical possession since the DRT has found the mortgage to have been created as a result of fraud having been played upon Shalini Gupta by Sanjay Patwa @ Baba GorakhNath who was initially believed by her to be having some divine powers under the influence of which he had managed to get loan in the name of his own Firm S.R.Traders and also got delivered to the Bank her property documents to secure the repayment of loan taken for his own Firm instead of for her, but later on he was found to be a cheat. Property of Sunil Gupta and his wife Vibha Gupta also found by the DRT to have been mortgaged in favour of the appellant Bank by Sanjay Patwa @ Baba GorakhNath by playing fraud upon this husband wife duo is the other property which they were seeking to get back but have failed to get it back since DRT has while accepting their case of they being victims of fraud still ordered that it was not inclined to set aside the auction in favour of M/s DFS Agri Foods Pvt. Ltd. which was conducted during the pendency of their S.A. though money paid by this auction purchaser was ordered to be paid to them with interest. The property of Sunil Gupta and his wife is the other property in dispute fate of which is to be decided by this Tribunal.
Mr. S.N Relan, advocate argued for appellant Bank and he forcefully submitted that the order of DRT is on the face of it is perverse and a very strong and genuine case has been doubted as far as bank's claim that there was a legal equitable mortgages were created by Shalini Gupta in the account of S.R.Traders of Sanjay Patwa. Mr. Relanargued that the learned DRT has accepted the cock and bull story projected by Shalini Gupta, Sunil Gupta and Vibha Gupta that they did everything under the influence of tantrik Sanjay Patwa @ Baba GorakhNath. It was submitted that this story is highly unbelievable since immediately after execution of guarantee/mortgage documents these people had become conscious that something fishy had happended with them but still they kept mum for a very longperiod before lodging police complaint which inaction on their part clearly shows that this story was cooked up simply to help Sanjay Patwaborrower to delay the recovery of public money. Regarding the observations of the DRT in the impugned order that bank officials also seemed to be in hand in gloves with Sanjay Patwa and his family since they had released other mortgaged properties while kept control over properties of Shalini Gupta, Sunil Gupta and Vibha Gupta Mr. Relan's submission was that those properties were released after accepting adequate money from the borrowers and so no mortgage decree was sought in respect of those properties in the OAs and in any case from that fact no inference by any stretch of imagination could be drawn by the DRT that bank officials ware also a part to the fraud played by principal borrower upon Shalini Gupta, Sunil Gupta and Vibha Gupta.
Mr. BasantAggarwal, advocate argued for Shalini Gupta, Sunil Gupta and Vibha Gupta. His supported the finding of the DRT that mortgages were got created from these people by fraud by Sanjay Patwa @ Baba GorakhNath in collusion with bank officials and also that release of other mortgaged properties after accepting meagre amounts also showed that right from the beginning the intentions of the bank officials were to catch hold properties of these three innocent persons and to release properties of the principal borrower Sanjay Patwa and his family concerns.
Mr. HemantChaudhary, advocate made brief submissions on behalf of auction purchaser of the property of Sunil Gupta and VibhaGupta and submitted that his client had purchased the property in lawfully conducted auction and so rightly the DT has accepted its interest as a bona fide purchaser.
Mr. S.K.Garg and Mr. S.K.Tyagi, advocates for Sanjay Patwa and his family members simply submitted that the DRT has wrongly concluded that ShaliniGupta, Sunil Gupta and Vibha Gupta had been defrauded by Sanjay Patwa.
After giving my due consideration to the rival cases of the Bank and three mortgagors and submissions made by their counsel I have unhesitatingly and without losing much breath come to the conclusion that the findings of the learned DRT that the mortgages of the properties of Shalini Gupta, Sunil Gupta and Vibha Gupta were vitiated because of having been created as a result of fraud played by Sanjay Patwa @ Baba GorakhNath upon Shalini Gupta, Sunil Gupta and Vibha Gupta and so Bank was not entitled to have benefit of those mortgages are totally unsustainable findings. The appellant Bank could not be made responsible for the fraud, if at all it was committed by Sanjay Patwa @ Baba GorakhNath upon Shalini Gupta, Sunil Gupta and Vibha Gupta. If SANJAY Patwa had defrauded these people the Bank cannot lose its status as a 'secured creditor'. As far as involvement of bank officials is concerned these mortgagors had neither named those officials nor were they made parties by them in their SAs and were also not got impleaded in the bank's OAs. Criminal cases were lodged against Sanjay Patwa @ Baba GorakhNath and he has not been so far been found guilty of any offence by any competent Court. Thus, merely on the basis of vague and unsubstantiated allegations of involvement of bank officials no finding could be given that bank officials were also involved in creation of mortgages fraudulently.
The learned DRT has observed that bank officials could be said to be a part of the fraud played by Sanjay Patwa @ Baba GorakhNath since the Bank had released other mortgaged properties while retaining the two properties of Shalini Gupta. Sunil Gupta and Vibha Gupta. In my view it being the prerogative of a creditor to run after a particular guarantor and after getting some of its dues from a particular guarantor, which the appellant Bank recovered before the filing of the OAs, learned DRT was not justified in concluding that that was a circumstance from which involvement of bank officials and their connivance with Sanjay Patwa could be inferred.
These appeals are, therefore, allowed. It is held that the bank was a genuine mortgagee of the two properties in question and the same were not vitiated due to any kind of fraud having been played by bank officials. The appellant bank rightly exercised its rights as a secured creditor by selling the property of Sunil Gupta and Vibha Gupta being property no.422-426, KatraMedgran, KhariBauli, Delhi-110006 in favour of M/s DFS Agri Foods Pvt. L td. Similarly the Bank hasa right as a secured creditor in respect of the property of Shalini Gupta being property no. F-30A, Gali no. 9, SubhashChowk, Lakshmi Nagar, Delhi- 110092. The findings of the learned DRT that mortgages in respect of these two properties were vitiated because of fraud having been played upon owners of these properties by Sanjay Patwa @ Baba GorakhNath and unnamed bank officials are aside. It is, however, clarified that this decision will not come in the way of Shalini Gupta Sunil Gupta and Vibha Gupta in in prosecuting their allegations of fraud etc. against Sanjay Patwa and his family members as found by the DRT before any other competent forum since this Tribunal has come to the conclusion that even if any such fraud was played by Sanjay Patwa upon them that does not affect the rights of the appellant Bank for recovery of crores of public money.