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Judgment
The issues involved in the present matters are similar in nature. The facts circumstances and documents relied upon by the parties are substantially of the same nature in both cases.
The Learned Counsel for respective parties fairly admits that the controversy involved in these matters is common and identical therefore both matters can conveniently be disposed of by a common order.
Accordingly, both matters are heard together and decided by this common order.
This order shall dispose of I.A. Dy. Nos. 449/2026 and 429/2026 respectively in Misc. Appeal Dy. Nos. 344/2026 & 341/2026 respectively. These Appeals are filed against the order dated 30.01.2026 whereby the Learned DRT-II Mumbai (hereafter referred as “DRT”) dismissed the Interim Application of the Appellants.
The Interlocutory Application Nos. 265/2026 and 246/2026 respectively in Securitisation Application Nos. 336/2024 and 355/2024 respectively were filed with prayer inter-alia to stay the operation, implementation and execution of the possession notice dated 12.01.2026, for Flat No. 1201, 12th Floor, D Wing, Atharva Landmark, Poddar Rd. Primal Nagar, Malad (East) Mumbai-400097 and Flat No. 301, 3rd Floor, D Wing, Atharva Landmark, Poddar Rd. Primal Nagar, Malad (East) Mumbai-4000973 respectively (hereinafter referred to “Apartments”).
The Learned Counsel for the Appellants would submit that the Appellants are the bonafide purchasers who purchased the Apartments from the Respondent No. 2 on dated 05.10.2019 & 30.12.2020 respectively by of the Registered Conveyance Deeds. On other hand, the case of the Respondent No. 1 is that the Respondent No. 2 had taken a loan from the Respondent No. 1 and mortgaged the several apartments and spaces in this building including the apartments stated above.
The Learned Counsel for the Appellants would submit that the Application and Affidavit under Section 14 of the SARFAESI Act filed by the Authorized signatory of the Respondent No. 1 before the Magistrate was incorrect and was not as per the law. Therefore, no legal notice could have been taken by the Learned Magistrate on this application to pass the order of possession of the Apartments. Learned Counsel for the Appellants would further submit that Section 26 (D) of the SARFAESI Act says that notwithstanding anything contained in any other law for the time being in force, from the date of commencement of the provisions, no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry; that, 1st proviso to Section 14 of the SARFAESI Act says that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorized officer of the secured creditor, declaring that, inter alia the provisions of the SARFAESI Act and the Rules made thereunder have been complied with; that, but Affidavit in support of the Application filed under Section 14 before the Learned Magistrate by Respondent No. 1, did not make any declaration that the provisions of the “Act” and Rules made thereunder have been complied with, therefore, the order dated 11.10.2023 passed by the Magistrate under Section 14 of the SARFAESI Act is incorrect.
Per contra, the Learned Counsel for the Respondent would submit that the mortgage was registered with the Central Registry on 30.04.2018 that is to say well before the date of purchase of the Apartments by the Appellants from Respondent No.2 Developer. Therefore, this cannot be ground for assailing the order of the Learned Magistrate dated 11.10.2023. The Learned Counsel for Respondent No. 1 would fairly admit that the affidavit in support of the application under Section 14 filed by the Appellant/Respondent No. 1 for securing the physical possession of the Apartments did not mention specifically that the provisions of SARFAESI Act and Rules made thereunder had been complied with. However, he would further submit that the mortgage was duly registered with the “Sub Registrar of Assurance” and that by itself was a public notice to one and all that this property was already mortgaged but the Appellants had not exercised due diligence at the time of purchase of Apartments to verify that Apartments were already mortgaged and did not make any effort as a prudent man to verify from the office of the “Sub-Registrar of Assurance” whether property which he wants to purchase, that is the Apartments, had already been sold or mortgaged.
In rebuttal to the submissions/arguments made by the Learned Counsel for the Respondent No. 1, Mr. Shadab Jaan would refer to the affidavit in support of the application by Respondent No. 1 under Section 14 of the SARFAESI Act and submit that it did not contain the declaration as mandated in Clause (ix) of 1st proviso to Sub-section 1 Section 14 of the Act.
He would further submit that in the Index II to the Mortgage Deed, the properly description place is blank.
Now this Appellate Tribunal has to examined if the Appellants are entitled to ad-interim stay order as prayed for in the Interim Application Dy. Nos 449/2026 and 429/2026 respectively.
For this, the Appellate Tribunal has to see if the Appellants have good prima facie case, balance of convenience lies in their favour and, if the interim stay is not granted then the Appellants would suffer irreparable loss that could not be compensated.
It is admitted fact that the Appellants have purchased the Apartments from the Respondent No. 2 Developer, albeit after the date of registration of Mortgage Deed of Apartments as secured assets for the loan in favour of Respondent No. 1. However, as fairly admitted by the Learned Counsel for the Respondent No. 1, the affidavit in support the application for taking possession under Section 14 of the SARFAESI Act, it has not been specifically stated that the provisions of the SARFAESI Act and Rules made thereunder had been complied with.
It is pertinent to note that as per Clause (ix) to 1st Proviso to Sub-section 1 of Section 14 of the SARFAESI Act , application under Section 14 of the SARFAESI Act, by secured creditor for taking the possession of the secured assets, shall be accompanied by an Affidavit duly affirmed by the authorised officer of the secured creditor stating that the provisions of this Act and Rules made thereunder had been complied with. As taking the possession of the secured assets is a stringent step and at this stage it is only the financial institution or secured creditor who is heard, therefore, there is tremendous burden upon the secured creditor under the provisions of Section 14 of the SARFAESI Act to ensure that all the mandatory requirements have been complied with. This is more evident from the words of 2nd proviso to Section 14 of the SARFAESI Act which mandates that District Magistrate/ Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the Affidavit pass suitable orders for the purpose of taking possession of the secured assets. Then the declaration as per Section 14(1) Proviso 1st Clause (ix) is an important declaration. When such declaration is not made, then there was no occasion for Magistrate to satisfy himself. Therefore, Appellants have good prima facie case which has to be decided.
In respect of the balance of convenience, it is an admitted fact that the possession of the Apartments is with the Appellants and it is the residential Apartments. Therefore, the balance of convenience also lies in favour of the Appellants.
As the Secured assets are residential Apartments, therefore, irreparable loss would be caused if ad-interim stay is not granted.
I.A. Dy. Nos. 449/2026 and 429/2026 respectively are allowed thereby restraining the Respondent No. 1, their officers, assignees from the proceedings further to take the possession of Flat No. 1201, 12th Floor, D wing, and Flat No. 301, 3rd Floor, D wing, more specifically stated in prayer clause (a) of the I.As and for further proceedings under the provisions of SARFAESI Act in respect of the same properties.
List the case on 17.09.2026 for further proceedings.