Surinder Mohan Chaudhary vs Corporation Bank And Ors

This appeal has been filed by the appellant against the order dated 26.4.2018 passed by the DRT in his Securitization Application (S.A.) filed under Section 17(1) of the SARFAESI Act. Relevant parts only from that order are re-produced below:-

"2. By way of the present IA, the applicant prayed to restrain the respondent bank, its servants, agents and employees in any manner proceeding any further with the purported notice dated 06.04.2018 and any other further notices issued allegedly for sale of property in question being MIG Flat No. 243-G, Top Floor, Rajouri Garden, New Delhi-110027 (herein after referred as "property in question"); permit the applicant to redeem the property in question from the respondent No. 1 bank after paying the amount due as on the date of declaration of the account as NPA; direct the respondent bank to hand over the original title deeds of the property in question to the applicant before this Tribunal or before the Court of Ld. ADJ, Tis Hazari Courts; restrain the respondent in any manner proceeding any further with the purported notice dated 14.07.2016 and 03.11.2016 and direct the respondent bank to hand over the physical possession of the property in question to a receiver duly appointed by this Tribunal subject to further order passed by the Ld. ADJ, Tis Hazari Courts, New Delhi.

Ld. Senior Counsel for the applicant contends that applicant has already deposited the entire amount of Rs. 53,36,303/- as mentioned in demand notice dated 14.07.2016 under Section 13(2) of the SARFAESI Act, 2002 to the respondent bank. He submits that the applicant and borrower of the bank has entered into a agreement to sell for the property in question on 01.01.2013 for Rs. 1.10 cr., out of which applicant has already paid Rs. 86.50 lakhs to the respondent No. 2 however, the respondent No. 2 has deposited only R. 19,10,000/- with the respondent bank therefore, applicant has already filed a suit for specific performance which is still pending. He contends that despite of the pendency of the suit No. 613590/2016 between the applicant and the respondent No. 1&2, the applicant is ready to pay the entire notice amount and which shall already been paid by way of the entire notice amount and which shall already been paid by way of two cheques dated 20.04.2018 as well ad 24.04.2018 and also applicant is ready to deposit the interest within 7 days after the adjudication of rate of interest after the demand notice by this Tribunal therefore, he submits bank may be restrain from proceeding for auction of the property in question. He also contends that the applicant is ready to deposit reasonable cost and charges also thus, he submits on deposit the same respondent bank may be directed to deposit the title deeds with this Tribunal which shall remain subject to outcome of the civil suit.

Per contra, Ld. Counsel for the respondent bank submits that the applicant has no locus to file the present SA in terms of the judgment of Hon'ble Apex Court in Suraj Lamps Industries Vs State of Haryana in SLP No. 13917/2009 decided on 11.10.2011. He contends that the applicant is claiming its right on the basis of agreement to sell. He also submits that the borrower of the bank has no objection for the sale of the property and total dues of the bank as on date is Rs. 55,72,328.64. He also contends in terms of provision of Section 13(7) of the SARFAESI Act, 2002 the respondent is entitled to claim all the cost expenses and interest as applicable.

Ld. Counsel for the borrower submits that the borrower has no objection for sale of the property in question and also submits that there is no privity of contract between the applicant as well as the respondent bank therefore, the applicant has no locus in the present matter. She also submits that since the civil court has denied the relief to the applicant now the applicant by way of the present application claiming the same relief before this Tribunal which is not permitted thus, she submits that the present interim relief application may be dismissed.

Admittedly, the present applicant is claiming its right on the basis of an agreement to sell dated 21.11.2013 which is subsequent to the mortgage and that too admittedly is not registered.

Therefore, in terms of judgment of Hon'ble Apex Court in Suraj Lamps (supra), since the agreement to sell of the applicant is not registered thus, prima facie I find merit in the contention of Ld. Counsel for the respondent bank that the applicant has not locus in the present matter and the present IA is liable to be dismissed.

So far as judgment relied upon by the applicant is concerned, same are not applicable since this Tribunal finds that the applicant has no locus to file the present SA, therefore, the question of reducing the rate of interest and other charges is immaterial.

For the foregoing reasons, the present IA is hereby decline.

The respondent is hereby directed to file reply within 4 weeks thereafter, list this matter on 14.06.2018 before Ld. Registrar for filling rejoinder, evidence and exhibition of documents.

This Tribunal vide order dated 20.04.2018 has allowed the applicant to deposit the amount of Rs. 25 lakhs as well as Rs. 9,26,303/- with the respondent bank however, as this Tribunal today declined the interim relief to the applicant therefore, respondent bank is hereby directed to returned to cheques/DDs of the said amount in case same is still not been encashed. In case same is kept in no lien account then same may be refunded immediately to applicant."(underling in by me)

From the aforesaid impugned order passed by the learned DRT , submissions made at the Bar and the material available on record in respect of which no controversy was raised by any party the undisputed position which emerged was that the respondent no. 1 bank had given loan to respondent no 3 herein in the name of his proprietorship Firm. Respondent no.2, his wife, had created equitable mortgage of her MIG Flat no. 243-G, Rajouri Garden, New Delhi to secure the loan advanced to her husband's Firm Sachin Enterprises. Since the borrower Firm defaulted in repayment of the loan the respondent no.1 Bank initiated measures under SARFAESI Act to recover its dues and sought to auction the said mortgaged of respondent no.3. At that stage the appellant surfaced and approached the DRT with an S.A. claiming that respondent no.2 had agreed to sell the mortgaged house to him vide agreement to sell dated 21.11.2013 for Rs. 1 crore ten lacs in that agreement respondent no.3 had made it known to the appellant herein that her house was mortgaged in favour of Corporation Bank. Dues of the Bank as per the demand notice under section 13(2) of SARFAESI Act allegedly stand cleared part of which were cleared by the appellant and part by the borrower. Some payment was made by the appellant pursuant to the order of DRT while granting interim relief to the appellant, as noticed in the impugned order and which payment has now been directed to be returned back to the appellant by the bank.

Initially the DRT had granted an interim relief to the appellant but within a couple of days the interim relief was withdrawn by the impugned order. During the pendency of the S.A. the mortgaged house was auctioned in favour of respondent no.3 Anshul Monga, and this Tribunal had passed an ex parte interim order that the sale will not be confirmed and the direction for return of the payment made to the Bank by the appellant was also stayed.

Learned senior counsel for the appellant had submitted that the buyer had not paid the EMD of 25% within the due date and had also not deposited balance 75% amount. That however is not the controversy in this appeal.

Learned counsel for the respondents have opposed this appeal primarily on the ground that merely on the bass of agreement to sell in respect of which a suit for specific performance had been filed by the appellant herein and which was still pending the appellant cannot resist the action of the bank as a secured creditor and his remedy lies only against the vendor who had allegedly agreed to sell the mortgaged house. The learned DRT has also taking the same view that based on an agreement to sell alone cannot resist the measures taken by the bank under SARFAESI Act withdrew interim relief to the appellant despite noticing that the dues of the bank had been cleared.

In my view, the view taken by the DRT and the objections raised by the respondents i.e. the respondent bank its borrower and the buyer Anshul Monga have no legal substance. The answer to their aforesaid submissions and accepted by the DRT is to be found in a judgment Court dated 08.10.2012 of Karnataka High Court in in W.P. No. 14711/2003, "Super Sales Corporation & anr. Vs Debt Recovery Tribunal & Ors." In the said judgment the High Court had recognised the rights of an agreement to sell holder in respect of a mortgaged property, like in the present case there is an agreement to sell executed by respondent no.2 in favour of the appellant in respect of the mortgaged house in question, and had rejected the contention that giving relief to an agreement to sell holder in an S.A. amounts to passing a decree for specific performance of the agreement to sell.

This appeal is accordingly allowed. The impugned order of DRT is set aside. It is ordered, which direction of course is only on a prima facie view of the matter, that during the pendency of the appellant's S.A. auction sale in favour of respondent no. 4 herein Anshul Monga shall not be confirmed and the same shall await the final decision in the S.A. It is also clarified that this order will not be construed as a final view regarding the rights of the parties including the auction purchaser.