Sunil Agarwal vs Union Bank Of India And Ors.

R.S. Kulhari, J

This 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 10.04.2019 passed by the Presiding Officer, DRT, Allahabad, whereby the securitization application (S.A. hereinafter) filed by the appellant was disposed off with certain directions.

The brief facts of the matter are, that the borrower-respondent No. 2- was granted a term loan of Rs. 28.00 lacs by the respondent-Bank for construction of house. In order to secure the said loan, the respondent No. 2 created an equitable mortgage over the property in question by depositing the title deed with Bank. As the loan was not repaid in time, the account was classified as NPA and the the borrower could not deposit the (sic) the Bank, hence the borrower approached the appellant and offered to purchase her house to pay the loan amount of the Back. The appellant paid Rs. 2.00 lacs and Rs. 7.00 lacs vide cheques No. 079804 and 079803 to purchase the property in question on 28.01.2016.

It is averred that a registered agreement to sale was executed by the respondent No. 2 in favour of the appellant on 02.02.2016, in which the borrower agreed to sell the property in question for an amount of Rs. 30.00 lacs. "After agreement to sale, the appellant got the possession of the property and shifted his family in the said house, in which he is still residing. Further, the appellant vide letter dated 05.02.2016 informed the Bank regarding agreement to sale and the payment of Rs. 9.00 lacs. Further, the appellant paid the remaining amount of Rs. 21.00 lacs in the first week of April 2016 and requested the borrower to execute the registry in favour of him after taking no dues from the Bank, but the borrower did not deposit the amount in the loan account nor executed the registry in favour of the appellant.

It is also stated that a legal notice dated 26.06.2018 was given by the appellant to the borrower as well as the Bank with regard to the conduct of the borrower. In response to it, the Bank replied that they are not concerned with the agreement to sale between the appellant and the borrower and also said that they are going to take necessary steps under the SARFAESI Act.

Thereafter, the appellant made an offer to the Bank on 07.03.2019 that he is ready to liquidate the outstanding dues in the home loan account, but the Bank did not do (sic) relief under the Specific Relief Act, which is still pending.

It transpires that the Bank has published an auction notice on 20.03.2019 scheduling the auction of the property for 25.04.2019, which was challenged by the appellant by filling the securitization application No. 215/2019, stating inter-alia that he is having title over the property in question on the basis of the agreement to sale of the mortgaged property from its original mortgagor/owner. Further, he had also shown the willingness to liquidate the entire dues of the original borrower/mortgagor to save the property in question. He also offered to deposit the entire dues in two months i.e. Rs. 10.00 lacs before the date of auction and the remaining by 11.06.2016.

The Tribunal below vide Impugned order disposed off the securitization application filed by the appellant by passing the following orders:-

"In order to secure the end of justice, I feel Judicious to dispose of this S.A. In case the applicant liquidates the entire dues along with charges within two months i.e. Rs. 10.00 lacs before the date of auction by 24.04.2019 and remaining amount with interest and charges by

11.06.2019; Respondent-Bank shall drop all proceedings, release the mortgage property in question from the mortgaged charge and will hand over the mortgage documents/title deed to the mortgagor or to its authorized person in accordance with law. If not required in any other loan account.

Further, in case the applicant deposits Rs. 10.00 lacs before the date of auction by 24.04.2019; Respondent Bank may receive the bid and continue with sale but not finalize the sale till deposit of remaining amount with interest and charges and respondent Bank shall provide detail of remaining amount alongwith accrued interest and charges to the applicant within 10 days.

In case of default either in deposit of Rs. 10.00 lacs by 24.04.2019 or remaining amount alongwith accrued Interest and charges by 11.06.2019; Respondent Bank is (sic) further in accordance with law and any part amount deposited by the applicant shall be appropriated in the loan amount.

It is also stated that the appellant challenged the aforesaid order by preferring a Writ-C No. 13309 of 2019 before the Hon'ble High Court, Allahabad, which was disposed off vide order dated 18.04.2019 on the ground of alternative remedy of appeal before this Tribunal within a period of one week from the date of order and in case he files an application for interim relief, the same shall be considered by the DRAT within a period of two weeks thereafter. For a period of three weeks or till the interim application of the petitioner is decided by the DRAT, the petitioner shall not be compelled to comply the order dated 10.04.2019 passed by the DRT. Accordingly, the present appeal has been filed by the appellant seeking the following reliefs:-

"A- to set aside the impugned order dated 10.04.2019 passed by the DRT, Allahabad in S.A. No. 215 of 2019.

B- to quash the entire proceedings initiated by the Bank under the SARFAESI Act against the appellant.

C- to direct the appellant Bank to receive the balance housing loan amount after adjusting the amount deposited by the appellant."

The respondent No. 1-Bank has not filed any reply and the respondent No. 2-borrower has not appeared despite service of notice.

Learned counsel for the appellant submitted that the Tribunal below has directed the Bank to handover the title deed of the property to the mortgagor/borrower, whereas it ought to have directed the Bank to handover the title deed to the appellant. It was further contended that though the appellant had paid the entire sale consideration to the borrower, yet in order to save the property, he had shown his willingness to liquidate the dues, but a very short time was granted to the appellant and in the meantime, father of the appellant also died resulting into financial hardship, so the amount could not be deposited. The next contention was that the Bank has not followed the procedure as laid down under the SARFAESI Act and has issued a fresh safe notice on 02.08.2020 scheduling the date of auction for 19.08.2020. The appellant is still ready to liquidate the whole outstanding including interest and charges, but a reasonable time be granted by fixing the installments and the Bank be restrained from taking any coercive measure till the payment of the dues.

Per contra, the learned counsel for the Bank contended that the Tribunal below has passed the order on the basis of the prayer made by the appellant. Yet the appellant has not complied with the order and even has not deposited any amount till date. The appellant has not locus standi to challenge the proceedings of the bank, as he is having no title in his favour. Mere execution of an agreement to sale does not give rise any right or title in the property. The appellant has not made any effort to liquidate the dues, hence the Bank has every right to proceed further for sale of the property. However, the learned counsel submitted that he is not aware about the fact that the property is scheduled to be sold in auction on 19.08.2020.

With regard to the installments of repayment, the learned counsel submitted that since the appellant has not deposited any amount during the last more than one year, hence the statement made on behalf of the appellant to liquidate the amount within a short period, cannot be relied upon.

Having heard the learned counsels for the parties and considering the material available on record, it is apparent that the appellant has entered into an agreement with the borrower for purchase of the property after knowing well that the same has been mortgaged with the Bank. Thus, he cannot claim any better right or title over the property which was already mortgaged with the Bank and that too only on the basis of an agreement to sale. But the fact remains that the appellant himself has shown the willingness to liquidate the whole outstanding including interest and charges to save the property and considering this aspect, the Tribunal below has granted some time to the appellant to liquidate the dues. Since the order was passed on the request of the appellant and with the consent of the Bank, hence it is a consented order, against which no interference can be called for. It is not the case of the appellant that he has not offered to liquidate the dues. Thus, I find no reasonable ground to interfere with the order passed by the Tribunal below.

However, the learned counsel for the appellant has again shown the willingness to liquidate the dues before this Tribunal contending that the Bank is going to auction the property on 19.08.2020, therefore, in the interest of justice and considering the facts of the matter in its entirety, I deem it appropriate to grant one more opportunity to the appellant. Though no proof has been placed on record with regard to the alleged auction to be held on 19.08.2020, but taking the statement of the learned counsel for the appellant to be true, it would be just and proper to direct the appellant to deposit Rs. 10.00 lacs on or before 18.08.2020 and Rs. 5.00 lacs within one month thereafter. The remaining amount of the loan alongwith-interest and charges shall be paid by the appellant on or before 31.10.2020. If the appellant makes the payment of Rs. 10.00 lacs before the auction on 19.08.2020, the Bank shall not confirm the sale, if conducted on 19.08.2020. Further, if the appellant fails to deposit Rs. 10.00 lacs, then the Bank shall be free to proceed further in accordance with law with regard to the sale scheduled on 19.08.2020.

It is also made clear that if the appellant falls to deposit further amount of Rs. 5.00 lacs and the remaining amount within the stipulated period as indicated above, the Bank shall be free to proceed further as and when the appellant falls to comply with the order or this Tribunal. In case of deposit of entire dues, the Bank shall release the property from the mortgage and deliver the documents to the mortgagor/borrower or to his authorized agent, if not required in any other case.

The contention that the Bank be directed to handover the title deed to the appellant, is not tenable, inasmuch as there is no privity of contract between the appellant and the Bank, hence whosoever may liquidate the dues on behalf of the borrower, but the Bank has to deliver the documents to the mortgagor/borrower itself.

Admittedly, one civil suit is pending before the civil court for specific performance of agreement to sale executed between the appellant and the borrower, therefore, the appellant is free to pursue his cause before the civil court narrating the factum of deposit of this amount in the loan account, as also for getting the relief qua execution of sale deed in his favour. All such issues can only be decided by the Civil Court.

Thus, the appeal is disposed off in the above terms. No order to costs.

A copy of this judgment be uploaded on the e-DRT portal.