Shashi Bhushan And Ors. vs Housing And Urban Development And Ors.

All the abovementioned appeals have been preferred against the order dated 6.1.2017 passed by the DRT, Ranchi, whereby the misc. applications filed by the appellants were dismissed by the common order. Since the issue involved in all the appeals is similar in nature, therefore, these are being decided by this common order.

The factual matrix of the matter reveals that the respondent No. 1-Housing and Urban Development Corporation Limited (hereinafter referred to as the "HUDCO") sanctioned a term loan of Rs. 160.00 lacs to the respondent no. 2 through its directors under the Scheme No. 19416. Another term loan of Rs. 100.00 lacs was sanctioned under the Scheme No. 19538. The respondents No. 3 & 4 stood as guarantors to the loan and mortgaged the properties belonging to the respondents no. 2, 3 & 4, which are described under Schedule-A, B & C of the documents. Since the borrowers failed to repay the loan in terms of the loan agreements, therefore, the HUDCO filed an original application (O.A.) for total recovery of Rs. 2,55,08,395/- with future interest from 31.07.2011.

The defendants of O.A. i.e. respondents no. 2, 3 & 4 were served the notice, but they did not participate in the proceedings, therefore, they were proceeded ex-parte. The arguments in the matter were heard and the judgment was reserved.

It transpires that the HUDCO had proceeded under the SARFAESI Act, 2002 and issued possession notice under section 13(4) of the SARFAESI Act. The case of the 13 appellants is that they have purchased the flats from the builder company (respondent no. 2) constructed over Schedule 'B' property and some of them have also taken loan from the other Banks and are in possession of the flats. The contention of 14th appellant-Rashmi Singh is that the property mentioned in Schedule-B belongs to her and construction was to be made by the respondent no. 2 under an agreement, whereby 30% of the total built-up area was to be handed over to her in lieu of the said piece of land. The appellants came to know about the publication of possession notice in the newspapers, hence they filed the S.A. under section 17 of the SARFAESI Act. Thereafter, they came to know about the O.A. filed by the HUDCO, therefore, filed interim application before the DRT to implead the appellants as defendants, being necessary party.

The Tribunal below vide order dated 31.10.2013 rejected the interim applications holding that the O.A. has already been heard and reserved for pronouncement of final order, so the applications cannot be entertained. Thereafter, the O.A. was decreed in favour of the HUDCO vide order dated 12.11.2013 and the claim as raised by the O.A.-applicant along with interest was allowed. The appellants did not challenge the order dated 31.10.2013. However, they filed misc. applications before the DRT to set aside the order dated 12.11.2013. The Tribunal below vide impugned order dated 6.1.2017 rejected the misc. applications filed by all the appellants. Being aggrieved by the said order, the appellants have preferred these appeals.

Learned counsel for the appellants submitted that the appellants are purchasers of the flats and Smt. Rashmi Singh is owner of the land. The flat owners are in possession of the flats and they have also paid the sale consideration to the builder and some of them have availed the loan facility from the other Banks. Thus, their valuable right is vested in the property. The mortgage to the extent of properties belonging to the appellants is not valid in favour of the HUDCO. The appellants cannot redress their grievance before any other forum except the DRT, therefore, the Tribunal below ought to have allowed the appellants to represent their case and should have adjudicated the validity of the mortgage, otherwise, a substantial injury and irreparable loss would cause to the appellants. It was further contended that as soon as the appellants came to know about the filing of O.A., they filed an interim application, but since the matter was already reserved for judgment after hearing the arguments, therefore, their applications were rejected on 31.10.2013. There was no need to challenge the said order. However, just after passing the order in O.A., the misc. applications were filed at the earliest. Thus, it cannot be treated that the order dated 31.10.2013 comes in the way for deciding the misc. applications.

On the other hand, learned counsel for the respondent no. 1-HUDCO submitted that the appellants have not challenged the order dated 31.10.2013 rejecting their interim applications, therefore, the same had attained finality. Thus, the misc. applications were not maintainable and the same were rightly rejected.

The learned counsel has further contended that the proceedings under the O.A. before the DRT are akin to the powers exercised by the Civil Curt while trying a money suit. Thus, the provisions of CPC in view of section 22 of the RDB Act are applicable. A person, who was not initially party to the proceedings, cannot file the application under Order 9 Rule 13 of the CPC. Since the appellants were not party/defendants before the DRT, therefore, the decree passed in favour of the HUDCO cannot be set aside at the behest of the appellants, as laid down by the Hon'ble Supreme Court in Civil Appeal No. 2798 of 2013-Ram Prakash Agarwal and another Vs. Gopi Krishan Agrawal(Dead through L.Rs.) and others, decided on 11.04.2013 and in Civil No. 3167 of 1999-Industrial Credit and Investment Corporation of India Ltd. Vs. Grapco Industrial Ltd., decided on 14.05.1999.

The learned counsel has further referred a judgment passed by the Hon'ble Supreme Court in Civil Appeal No. 8486 of 2013-Standard Chartered Bank Vs. Dharminder Bhohi and others, decided on 13.09.2013 to contend that the Tribunal does not have any inherent powers and section 19(25) of the RDB Act confers a limited power. Therefore, no such inherent powers are vested with the DRT or DRAT to set aside the decree already passed by the DRT. The R.P. Case No. 129/2013 is pending before the Recovery Officer, hence no interference is warranted in the impugned order.

I have given my thoughtful consideration to the rival contentions of the learned counsels for the parties and perused the record.

The facts of the matter as narrated above are undisputed. The borrowers had neither filed any written statement before the DRT nor any counter objection before this Appellate Tribunal so as to deny the fact that the appellants are having no interest in the property mentioned in Schedule-B. The appellants are categorically claiming their right over the respective flats and Smt. Rashmi Singh is claiming 30% share in the constructed area in lieu of the piece of land. Thus, it is clear that the appellants are having interest in schedule 'B' property to the extent of their respective claims.

Section 17 of the RDB Act confers the jurisdiction to the DRT to entertain and decide the application filed by the Financial Institution for recovery of debts due. Section 18 of the said Act bars the jurisdiction of other courts or authority to exercise jurisdiction in such matters. A substantial question of fact is to be determined in the present matter, as to whether there was a valid mortgage in faovur of the HUDCO qua the properties being claimed by the appellants. The appellants cannot raise this issue before any other judicial forum except the DRT. If the appellants are denied to adjudicate their rights, it would cause miscarriage of justice and will affect the substantial legal right of the appellants. Section 19(25) of the RDB Act confers the powers to the Tribunal, though to a limited extent, to make such orders "to secure the ends of justice". Further, the Tribunal is required to follow the principle of natural justice.

Although it is true that the order dated 31.10.2013 was not challenged by the appellants, but it does not make any difference, as there was no stage for allowing the application, once the matter was reserved for judgment. Thus, the said order was not required to be challenged. Otherwise also, non challenge of order dated 31.10.2013 does not preclude the appellants to exercise their right to file the misc. application before the DRT or the appeal before this Tribunal for setting aside or modifying the order passed by the DRT.

I respectfully agree with the proposition laid down by the Hon'ble Supreme Court in Standard Chartered Bank Vs. Dharminder Bhohi (Supra) that the Tribunal does not have any inherent power, but the limited powers are vested with the DRT under section 19(25) of the RDB Act to pass such order to secure the ends of justice and this provision is squarely applicable in the facts and circumstances of the present matter. It is also settled proposition of law that while deciding the original application under section 19 of the RDB Act, the Tribunal below exercises the powers of Civil Court like a trial in a money suit, as held by the Hon'ble Supreme Court in the judgment of Industrial Credit and Investment Corporation of India Ltd. Vs. Grapco Industrial Ltd. (Supra).

Further, the application filed by a stranger, who was not party in the original application, cannot be entertained under Order 9 Rule 13 of the CPC, as laid down in the judgment passed by the Hon'ble Supreme Court in Ram Prakash Agarwal and another Vs. Gopi Krishan Agrawal (Supra). In the instant case, this Tribunal is not going to set aside the ex-parte order invoking the provisions of Order 9 Rule 13 of the CPC, which is not applicable in the present matter.

The misc. applications were filed by the appellants under section 22(2)(g) read with section 19(25) of the RDB Act before the DRT. The provision of section 22(2)(g) with regard to setting aside the ex-parte decree is not applicable in this case, but the powers conferred under section 19(25) to the limited extent for securing the ends of justice ought to have been exercised by the Tribunal below considering the peculiar facts of the matter, in order to adjudicate the rights of the appellants without setting aside the decree. The Tribunal below has not considered these aspects in right perspective.

It is also worthwhile to mention that apart from the properties being claimed by the appellants, the borrowers have also mortgaged the other so many properties to secure the loan and have also given personal guarantee, therefore, the HUDCO may realize the dues from auction of other properties mortgaged with the HUDCO and personal properties of the borrowers/guarantors. The decree passed by the Tribunal is not required to be set aside nor the recovery proceedings conducted in the R.P. Case No. 129/2013 are required to be stayed. Those may be proceeded further qua the other properties belonging to the borrowers/guarantors except the properties being claimed by the appellants. This way no prejudice would cause to the HUDCO in realizing its dues in the recovery proceedings.

In view of the above, the impugned order dated 6.1.2017 passed by the Tribunal below is set aside and the misc. applications filed by the appellants are allowed in the manner and to the extent that;

(i) the Tribunal below shall decide, as to whether there is valid mortgage in favour of the HUDCO with regard to the properties being claimed by the appellants in schedule 'B' properties after affording opportunity to all the parties and shall pass consequential order in accordance with law.

(ii) It is clarified that no other issue except the validity of mortgage of the properties in question shall be re-opened in these proceedings.

(iii) The recovery proceedings in R.P. Case No. 129/2013 will continue and the Recovery Officer is free to proceed further for recovery of the dues from other properties of the borrowers except the properties being claimed by the appellants in Schedule-B properties.

Accordingly, the appeals filed by the appellants stand disposed-off with no order as to costs.

A copy of this judgment be placed in all the appeals and sent to the parties as well as the DRT concerned, as also be uploaded on the e-DRT portal.