Sachin Kumar vs Karnataka Bank Ltd. And Ors.

P.K. Bhasin, J

I have heard learned Counsel for the parties and perused the record of the DRT.

The appellant sought his impleadment in the original application filed the respondent No. 1 Bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 which had been filed against one Mr. Vicky Singh for recovery of loan advanced to him. The repayment of the Bank's money was secured by one Ms. Paramjeet Kaur who mortgaged her property by way of deposit of title deeds (equitable mortgage) in favour of respondent No. 1 Bank on 26.9.2012.

The OA of the Bank is still pending which neither the borrower nor the mortgagor Paramjeet Kaur is contesting.

The appellant seeks his impleadment in the O.A. on the ground that on the basis of an agreement to sell executed in his favour by Paramjeet Kaur executed on 6.1.2012 and which was having an arbitration clause he had invoked the arbitration clause since the vendor had refused to execute the sale deed in his favour. The arbitration proceedings culminated in passing of an Award by Arbitrator on 21.3.2013 and consequent there upon the appellant claims to have been put in possession of the property in question in execution proceedings before the competent Civil Court after the rejection of objections to the Award filed by Paramjeet Kaur.

The learned DRT has rejected the prayer of the appellant for his impleadment in the Bank's OA mainly on the ground that the appellant was claiming impleadment on the basis of an agreement to sell which did not confer any right of the ownership in view of judgment in the case Suraj Lamp Industry v. Punjab & Haryana & Anr. of the Hon'ble Supreme Court. However, the learned DRT did not even consider the claim of the appellant that he was not claiming impleadment on the basis of the agreement to sell but on the basis of arbitration award which had declared him to be the owner of the property in question.

The learned Counsel for the Bank has submitted that the Bank has a mortgagee prior to the passing of alleged arbitration award culminating into a Court decree and it has a superior right to proceed against the mortgaged property in the event of its succeeding in its OA which is in the nature of a mortgage suit. Therefore, Counsel submitted, the impleadment of the appeal in the Bank's OA is totally unnecessary and is being sought only to delay the disposal of the OA and consequently recovery of the Bank's dues.

However, in my view, the opposition of the Bank against the impleadment of the appellant in its OA is not justified considering the facts that appellant is not coming forward to seek impleadment on the basis of an agreement to sell but he is claiming impleadment on the basis that he is lawful owner of the property in respect of which the Bank is claiming mortgage decree from the DRT. Therefore, in case the appellant is impleaded in the Bank's OA it would be for the DRT to decide as to which of the two parties have preferential claim in respect of the property which the Bank claims to have been mortgaged in its favour. The impleadment of the appellant becomes necessary also for the reason that if in the absence of the appellant the DRT gives a finding that there was a valid mortgage of the property in question in favour of the Bank and the same is to be put to sale and recovery certificate forwarded to the Recovery Officer the Recovery Officer will not be in a position to entertain the appellant's objection on the ground that there was no valid mortgage in favour of the Bank's as he would be bound by the finding of the DRT that there was a valid mortgage in favour of the Bank. Appellant would then be rendered remediless and learned Counsel for the Bank did not suggest that the appellant has any other remedy available to him to protect the property which he claims to be owned by him and the Bank claims to have been mortgaged in its favour. For the above reasons this appeal succeeds. The impugned order rejecting the prayer of the appellant for his impleadment in the Bank's OA is set aside. The appellant would stand impleaded as a defendant and will be entitled to resist the claim of the Bank but only confined to the Bank's claim of mortgage of the property in question and on no other aspect and which position is admitted by the Counsel for the appellant also. It is needless to say that if after his impleadment the appellant would plead in his written statement that on the basis of the arbitration award he had become absolute owner of the mortgaged property and the Bank claims to the contrary and pleads that the arbitration award does not confer the title upon the appellant retrospectively from the date of agreement to sell the DRT would examine these rival pleas in accordance with law uninfluenced by orders already passed whereby appellant's impleadment was rejected and any observation made by this Tribunal in the present order since whatever has been observed in this order is only for the purpose of examining appellant's prayer for impleadment in the OA.

The DRT record be sent back along with a copy of this order.