Sabita Nayak, Wife of Dhanaswar Nayak vs Chief Manager cum Authorized Officer, Oriental Bank of Commerce

Anil Kumar Srivastava, Chairperson

The instant appeal has arisen against the judgment and order dated 27th May, 2010 passed by Learned DRT, Cuttack in S.A. 64 of 2019 Sabita Nayak -vs- Chief Manager-cum-Authorized Officer, Oriental Bank of Commerce whereby the SARFAESI Application was dismissed by the Learned DRT.

In brief the facts of the case are that the Appellant entered into an agreement for sale with Respondent No. 4 on 20th April, 2014 which was subsequently renewed till 17th April, 2020 to purchase the scheduled property. Scheduled property is recorded in the name of Respondent No. 4, Pawan Kumar Jajodia, who has right, title and interest over the same. Respondent No. 4 handed over the photocopy of the documents of title, applied and enquired from various sources and was satisfied that he property was free from all encumbrances. Sale was to take place for Rs.60.00 lac out of which an amount of Rs.45.00 lac was paid on 20th April, 2014 in cash. Balance amount was paid before the execution of the sale deed. Possession was delivered by the Respondent No. 4 to the Appellant.

On 17th January, 2017 Appellant approached Respondent No. 4 for execution of the sale deed after payment of remaining consideration but he avoided the execution. On enquiry it was found that Respondent No. 4 has mortgaged the property in question to the Respondent No. 1/Bank for a loan availed for the business firm. Respondent No. 4 did not return the advance money. Notice was issued which was duly served upon Respondent No. 4.

It appears that the property in question, the secured asset, was mortgaged on 26th February, 2015 by the Respondent No. 4 with the Bank, Respondent No. 1 for a loan availed by him. Default was made in payment of the loan; hence the account was classified as N.P.A. on 31st January, 2018. Notice under Section 13 (2) of the SARFAESI Act, 2002 was sent. Proceedings under SARFAESI Act, 2002 was initiated by the Respondent Bank. Thereafter, auction notice was issued on 9th January, 2019. Property was sold on 13th February, 2019 for a sum of Rs.46.30 lac in favour of the Respondent No. 5, Pradipta Kumar Panda. Sale was confirmed; sale certificate was issued; sale deed was executed on 21st June, 2019. Thereafter, Appellant filed a SARFAESI Application on 24th July, 2019 which was dismissed by the Learned DRT on 27th May, 2020.

I have heard the Learned Counsel for Appellant as well as Respondents No. 1, 2 and 3 and perused the record.

Learned Counsel for Appellant submits that Respondent No. 4 has entered into an agreement for sale of the secured asset of the Bank on 20th April, 2014 for a consideration of Rs.60.00 lac, out of which, Rs.45.00 lac was paid in cash on 20th April, 2014. It is further submitted that after the agreement, possession was also delivered in favour of the Appellant. Subsequently, Respondent No. 4 deceitfully mortgaged the secured asset in favour of the Bank which was subsequently auctioned by the Bank in favour of the Respondent No.5. Learned Counsel submits that the Appellant has a first charge over the secured asset. She has locus standi to file the SARFAESI Application under Section 17 of the SARFAESI Act, 2002 being the aggrieved party and is in possession of the property in question. It is further submitted that the Learned DRT has wrongly dismissed the petition holding that the agreement for sale is not a valid document.

Learned Counsel for the appearing Respondents submits that an unregistered document for sale does not transfer any right or interest over the secured asset in favour of the Appellant. It is further submitted that it is a forged document prepared in collusion with the Appellant and Respondent No. 4 in order to defeat the loan of the Bank. It is further submitted that in the agreement for sale no date of payment of advance was mentioned and how the payment is made has also not been mentioned. It is further submitted that the property was mortgaged in favour of the Bank wherein SARFAESI Proceedings were drawn and the property was sold by the Bank.

Two short questions involved in this appeal are:

(i) As to whether Appellant can claim any right, title or interest over the secured asset on the basis of an unregistered agreement for sale dated 28th April, 2014?

(ii) Whether Appellant has got any right to file an application under Section 17 of the SARFAESI Act, 2002?

As far as point no. 1 is concerned, admittedly, the agreement for sale is an unregistered document on a Rs.10.00 stamp paper. It is not even a notarised document. Consideration for sale is RS.60.00 lac wherein Rs.45.00 lac was shown to have been paid in advance. On an order passed by this Appellate Tribunal on 18th February, 2021, a supplementary affidavit is filled by the today wherein it is mentioned that amount of Rs.45.00 lac was paid in cash on 20th April, 2014. This affidavit, coupled with the agreement for sale, itself cannot be relied upon. It is settled law that under Section 54 of the Transfer of Property Act sale of an immoveable property, above Rs.100.00, can only be made through a registered document. An unregistered agreement for sale does not constitute or create any right, title or interest in favour of the purchaser. In Rambhau Namdeo Gajre -vs-Narayan Bapuji Dhotra, reported in (2004) 8 SCC 614 it was held :

“13. The agreement to sell does not create an interest of the proposed vendee in the suit property. As per Section 54 of the Act, the title in immovable property valued at more than Rs 100 can be conveyed only by executing a registered sale deed. Section 54 specifically provides that a contract for sale of immovable property is a contract evidencing the fact that the sale of such property shall take place on the terms settled between the parties, but does not, of itself, create any interest in or charge on such property. It is not disputed before us that the suit land sought to be conveyed is of the value of more than Rs 100. Therefore, unless there was a registered document of sale in favour of Pishorrilal (the proposed transferee) the title of the suit land continued to vest in Narayan Bapuji Dhotra (original plaintiff) and remain in his ownership.”

Further the Hon’ble Apex Court has placed reliance upon the Case Law SCC pp. 499-500, para 7 in State of U.P. -vs- District Judge, reported in (1977) 1 SCC 496 which runs as follows:

“7. Having given our anxious consideration to the rival contentions we find that the High Court with respect had patently erred in taking the view that because of Section 53-A of the Transfer of Property Act the proposed transferees of the land had acquired an interest in the lands which would result in exclusion of these lands from the computation of the holding of the tenure-holder transferor on the appointed day. It is obvious that an agreement to sell creates no interest in land. As per Section 54 of the Transfer of Property Act, the property in the land gets conveyed only by registered sale deed. It is not in dispute that the lands sought to be covered were having value of more than Rs 100. Therefore, unless there was a registered document of sale in favour of the proposed transferee agreement-holders, the title of the lands would not get divested from the vendor and would remain in his ownership. There is no dispute on this aspect. However, strong reliance was placed by learned counsel for Respondent 3 on Section 53-A of the Transfer of Property Act. We fail to appreciate how that section can at all be relevant against the third party like the appellant State. That section provides for a shield of protection to the proposed transferee to remain in possession against the original owner who has agreed to sell these lands to the transferee if the proposed transferee satisfies other conditions of Section 53-A. That protection is available as a shield only against the transferor, the proposed vendor, and would disentitle him from disturbing the possession of the proposed transferees who are put in possession pursuant to such an agreement. But that has nothing to do with the ownership of the proposed transferor who remains full owner of the said lands till they are legally conveyed by sale deed to the proposed transferees. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party like the appellant State when it seeks to enforce the provisions of the Act against the tenure-holder, proposed transferor of these lands."

Agreement for sale in question is not even a registered document which can create any interest or title in favour of the Appellant. It is also settled legal proposition that unregistered agreement for sale does not bind to person who are not party to the agreement. Unregistered agreement for sale in no manner can foreclose right of the Bank. It is on record that a loan was taken by the Respondent No. 4 from the Bank to the tune of Rs.8.5 crore wherein the secured asset has been mortgaged as equitable mortgage by deposit of the title deeds. The loan account was classified as N.P.A.; proceedings under SARFAESI Act, 2002 was initiated by the Bank and the property in question was auctioned. Sale deed was also executed in favour of the Respondent No. 5 for an amount of Rs.46.30 lac on 21st June, 2019. Hence, no right was created in favour of the Appellant on the basis of an unregistered agreement for sale. Appellant cannot have first charge over the secured asset.

As far as locus standi of Appellant is concerned, Section 17 of the SARFAESI Act, 2002 is quoted as under:

“17. [Application against measures to recover secured  debts]

(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorized  officer under this Chapter, [may make an application  alongwith  such  fee,  as may be  prescribed] to the Debts Recovery Tribunal having jurisdiction in the  matter within forty five days from the date on   which such measure had been taken; x x x x ”

The word “any person” used in Section 17 co-relates with the provisions of Section 13(4) of the SARFAESI Act, 2002 wherein “any person” will be the person who is aggrieved by any of the measures taken by the secured creditor. Such action can be taken by such person within forty five days from the date on which such measure has been taken. Appellant is not an aggrieved person. She filed the SARFAESI Application under Section 17 of the SARFAESI Act, 2002 on 24th July, 2019; while the SARFAESI Proceedings was initiated by the Bank on 31st January, 2018. Even notice under Section 13(2) and 13(4) of the SARFAESI Act, 2002 were issued; Possession Notice was also issued and pasted over the property in dispute on 9th January, 2019; auction took place on 13th February, 2019. But the Appellant had not taken any action within the stipulated time. The property was sold on 21st June, 2019, thereafter, on 24th July, 2019 SARFAESI Application under Section 17 of the SARFAESI Act, 2002 was filed which is definitely beyond the period of forty five days, as provided under Section 17 of the SARFAESI Act, 2002.

From the discussion made above, it is clear on record that the Appellant has no right, title or interest over the property/secured asset. Learned Tribunal below rightly dismissed the SARFAESI Application. The appeal is liable to be dismissed.

ORDER

The appeal, being Appeal No. 49 of 2020,  preferred  by  the Appellant against   the judgment and order dated 27th May, 2010 passed by Learned DRT, Cuttack in  S.A. 64  of  2019 Sabita Nayak -vs-  Chief  Manager-cum-Authorized  Officer,  Oriental  Bank  of Commerce, is hereby dismissed.

The  judgment  and  order  dated  27th  May,  2010  passed  by Learned DRT, Cuttack in S.A. 64 of 2019 Sabita Nayak -vs- Chief Manager-cum-Authorized Officer, Oriental Bank of Commerce, is hereby affirmed.

No order as to costs.

Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

File be consigned to Record room.

Order dictated, signed, dated and pronounced in open Court.