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Judgment
R. D. Khare, Chairperson
The present appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of the Security Interest Act, 2002 (hereinafter referred to as “The SARFAESI Act”) against the order dated 28.10.2019 passed by the Presiding Officer, DRT, Lucknow, whereby the Securitization Application No. 391/2018 filed by the appellant was dismissed.
The brief facts of the case are that the appellant is husband of late Raj Laxmi Saxena and father of the respondent No. 2, who had availed various credit facilities for a total sum of Rs. 29.00 lacs from the respondent No. 1-FI, to which the respondent no. 2 and his mother late Raj Lalxmi Saxena, who are the real owners of the property in question, had mortgaged the house in question with the respondent No. 1-FI by depositing the title deed with the respondent-FI.
It appears that one of the borrowers namely Raj Laxmi Saxena expired on 04.11.2013 and after her death, the co-borrower/mortgager did not maintain the financial discipline, therefore, all the loan accounts were classified as NPA and demand notice under section 13(2) of the SARFAESI Act was issued and published in the newspapers dated 20.10.2015. Since the borrowers did not pay any heed to the said demand, therefore, the respondent No. 1-FI took the symbolic possession of the property in question by issuing a notice 12.07.2018 under section 13(4) of the SARFAESI Act. Thereafter, the sale notice was issued and published on 21.08.2018 scheduling the auction of the property in question for 24.09.2018 fixing the reserve price for a sum of Rs. 17.00 lacs.
The appellant filed the S.A. No. 391/2018 challenging the entire proceedings of the respondent-FI including the sale notice dated 21.08.2018 stating inter-alia that the demand notice, possession notice and the sale notice have not been served and also prayed that the respondent-FI may also be directed to accept the outstanding dues from the appellant in view of rule 8(8) read with Indian Succession Act. The Tribunal below vide order impugned has disposed off the said S.A. holding that there is no cause of action now to proceed with the matter and the other issue relating to share of the applicant and respondent No. 2 and other family members is pending before the Civil Court. Being aggrieved by the said order, the present appeal has been filed by the appellant.
The appellant-in-person submitted that he is neither borrower nor guarantor or mortgager, but he is husband of one of the borrowers namely late Raj Laxmi Saxena. He further submitted that respondent No. 2 is willful defaulter and has refused to clear the dues as per letter dated 18.01.2016 issued by the respondent-FI, copy of which has been filed as annexure No. 1 to the written argument.
The appellant further submitted that against the action of the respondent-FI, the appellant being a legal heir (husband) of one co-owner/co-borrower late Raj Laxmi Saxena filed a case No. 735/2016 on 25.03.2016 before the Civil Judge (Senior Division), Malihabad. The Civil Court vide order dated 13.07.2017 passed an interim order directing the appellant to file the S.A. before the DRT. Accordingly, the same was filed challenging the entire proceedings of the Bank including a prayer that the respondent-FI be directed to receive all the dues from the appellant in the light of the provision made under Rule 8(8) read with Indian Succession Act. It was further contended that as per order dated 18.12.2018 passed by the Tribunal below, the appellant had submitted a proposal dated 21.12.2018 to the respondent No. 1-FI (annexure A-13 at page No. 99 of the memo of appeal), which was accepted by the Bank vide letter dated 24.12.2018 and initially the Bank demanded a sum of Rs. 36.00 lacs and thereafter, on a detailed discussions, demanded a sum of Rs. 45,95,281/-, which was paid by the appellant and received by the respondent-FI upto 29.01.2019 in compliance of the said order. In this regard, the learned counsel had referred to a letter dated 29.01.2019 issued by the FI, in which the details of payment have been mentioned. The appellant contended that the aforesaid amount was paid to the Bank under impression that after payment, the respondent-FI shall execute the document pertaining to transfer of the property, but nothing has been done.
The appellant lastly canvassed that after payment of entire dues, the respondent-FI vide letter dated 29.01.2019 directed the appellant to file an application before the Tribunal below for further orders to enable the Bank to execute necessary documents for transfer of the property in favour of the appellant and handover the possession and return the documents of the property. Copy of the letter dated 29.01.2019 issued by the F.I. has been filed as annexure 15 at page No. 101 to the memo of the appeal. Accordingly, the appellant filed an application before the Tribunal below on 08.02.2019 praying that the respondent-FI may be directed to transfer the property in question in favour of the appellant by adopting the mode of private treaty sale as per Rule 8(8) of the Security Interest (Enforcement) Rules, 2002 and handover the possession of the property in question in the interest of justice, but the Tribunal below has not considered and decided the same while passing the order impugned. Copy of the application dated 08.02.2019 has been filed as annexure A-16 at page No. 102 of the memo of the appeal.
The appellant contended that vide letter dated 21.12.2018 the applicant had offered to liquidate the dues of all four loan accounts subject to execution of registered sale deed by the FI in his favour and the same was accepted by the FI vide its letter dated 24.12.2018 and the entire dues had accordingly been paid, which was accepted by the FI and as such all the loan accounts have been closed, but, the Tribunal below has not considered and decided the said issues while passing the order. Hence, it was prayed that the order impugned may be set aside and the respondent-Bank may be directed either to transfer the property in question or to return the amount, which was deposited, to the appellant along with market rate of interest.
Learned counsel for the respondent-Bank submitted that the property in question was purchased by the son and wife of the appellant, who had availed the loan and created the mortgage over the property in question along with his mother. The learned counsel further submitted that after 4-5 days of death of his wife, the appellant moved an application for mutation his name as husband of his deceased wife. A Civil Suit was also filed by the appellant for the same but the appellant was directed to approach before this Tribunal for the said relief.
Learned counsel for the respondent-Bank further submitted that the measures taken by the Bank under section 13(4) of the SARFAESI Act were challenged by the appellant by filing the aforesaid S.A., but on deposit of entire dues, the proceedings under the SARFAESI Act of the FI had come to end, therefore, the Tribunal below has rightly disposed of the S.A. of the appellant observing that there is no cause of action under the said action.
Learned counsel for the respondent-Bank also submitted that the appellant being legal heir of late Raj Laxmi Saxena, who was one of the mortgagers of the property in question, has deposited the total dues, therefore, the contention of the appellant that he has deposited the amount subject to return of document and execution of sale deed is not tenable. It was thus prayed that the order impugned has rightly been passed by the Tribunal below, the appeal filed by the appellant may be dismissed with heavy costs.
Learned counsel for the respondent No. 2-borrower submitted that the appellant has no locus to challenge the proceedings of the Bank and he is the real owner of the property in question as the same was purchased by him and his mother late Raj Laxmi Saxena. It was, therefore, prayed that the appeal may be dismissed with heavy costs.
Having heard the learned counsels for the parties and considering the material available on record, there is no dispute that the property in question was purchased by the respondent No. 2-borrower and his mother late Raj laxmi Saxena, who was wife of the appellant and the respondent No. 2 had taken the loan from the respondent-Bank, for which the respondent No. 2 and late Raj Laxmi Saxena had created equitable mortgage over the said property by depositing the title deed with the respondent-Bank.
It is admitted facts that after declaration of the accounts as NPA, the respondent-Bank proceeded under the SARFAESI Act for recovery of its dues, which were challenged by the appellant before the Tribunal below with prayer to set- aside the same, but it was also prayed that the Tribunal below may also direct the respondent- FI to accept the outstanding dues from the applicant in the light of the provisions made under Rule 8(8) read with Indian Succession Act.
The Tribunal below vide order dated 20.09.2018, which is filed as Annexure A-11 at page No. 97 of the paper book, recorded that “ the applicant is willing to liquidate the dues of the respondent-FI. He wants to pay a sum of Rs. 5.00 lacs on 24.09.2018. He will also deposit Rs. 5.00 lacs on 01.10.2018. Learned counsel for the respondent-FI submits that in case the applicant deposits Rs. 5.00 lacs on 24.09.2018, the EMD received by the respondent-FI will not be opened.”
From the order dated 18.12.2018 passed by the Tribunal below, which is at page No. 98 of the paper book, it is observed that the appellant has complied with the order dated 20.09.2018 passed by the Tribunal below. In the said order, it is recorded that “the learned counsel for the respondent-FI submits that dues against the loan account are around Rs. 36.00 lacs. In case the applicant is willing to deposit the amount, he may deposit the same”. It is further recorded that “the learned counsel for the applicant submits that he will deposit the amount provided the title deed of secure asset is returned to him. Further, the applicant was directed to approach the respondent-FI with the proposal and the amount quoted by the learned counsel for the respondent-FI. The proposal to be submitted by the applicant will be considered by the respondent-FI under Rule 5(d) of the Security Interest (Enforcement) Rule, 2002”. Accordingly a proposal dated 21.12.2018 was given by the appellant to respondent-FI stating therein that Kindly on liquidating the above four loans please do registered Sale Deed of the above House No. 5/71, Janakipuram Extension, Lucknow in my favour under private treaty for amount of liquidating of all the four loan accounts plus Rs. 10.00 lacs (Rs. Ten lacs) already deposited by the undersigned on 24.09.2018, 28.09.2018 and 01.10.2018 as per DRT’s order, which was accepted by the respondent-Bank vide letter dated 24.12.2018, copy of which has been filed as Annexure No. 14 at page No. 100 of the paper book.
From the above, it is clear that the respondent-FI has accepted the deposit of amount by the appellant subject to return of title deed of the property in question to the appellant which is mentioned in the last paragraph of the letter dated 24.12.2018 of the respondent-FI (at page No. 100 of the paper book).
In this regard, it is relevant to mention that a letter dated 29.01.2019 was issued by the respondent-FI to the appellant, wherein the respondent-FI has stated that “your proposal has been considered and the loan accounts are closed in full. In furtherance, kindly file required application with Hon’ble DRT, Lucknow for further orders to enable us to execute necessary documents of transfer in your favour, handover the possession and return title documents of the property as requested by you”.
Accordingly, an application for direction was filed by the appellant before the Tribunal below praying that the respondent-FI may be directed to transfer the property in question in favour of the appellant by adopting the mode of private treaty sale as per Rule 8(8) of the Security Interest (Enforcement) Rules, 2002 and further to handover the possession of the property in question in the interest of justice, but from the order impugned and the documents available on record, it does not appear that the said application has ever been considered and decided by the Tribunal below. If the said application had been considered and decided by the Tribunal below considering all the documents as referred to above, the fate of the S.A filed by the appellant may have been otherwise, but the Tribunal below without considering the documents which are on record has disposed of the S.A only on the ground that there was no proceedings going-on under the SARFARSI Act.
In view of the discussions as held above, it is a fit case to be remanded back before the Tribunal below for deciding the application dated 08.02.2019, which is from page No. 102 to 105 of the paper book filed by the appellant, considering the orders and documents with regard to the payment made by the appellant.
Accordingly, the appeal is allowed to the extent of not deciding the aforesaid application and the case is remanded back to the Tribunal below for deciding the application dated 08.02.2019 filed by the appellant considering all the orders and documents as discussed above after affording proper opportunities to the parties concerned.
A copy of this judgment be forwarded to the parties as well as the DRT concerned and be also uploaded on the e-drt portal.