Syndicate Bank vs H.R. Kanwal

S.N.H. Zaidi, J

This appeal has been directed against the order dated 1.2.2011 passed by DRT-III, Delhi, whereby the Presiding Officer had disposed of two O.As. and an S.A. with the direction to the authorized officer of the bank to restore the possession of the property in question to the applicant of the S.A./respondent. Briefly stated, the facts are that the appellant bank had filed two different applications under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) titled as O.A. No. 73/2010 - Syndicate Bank v. Forgewell Engineering Corporation Ltd. and Others for the recovery of Rs. 58,36,204.34 and O.A. No. 156/2010 -Syndicate Bank v. J.P. Papers and Another for the recovery of Rs. 20,60,881.32, against some defendants. Besides these two claim cases; a Civil Suit No. 70/2010 was also filed by the Syndicate Bank against B.A. Associates for the recovery of Rs. 3,01,653.26 before the Civil Judge, Tis Hazari Courts, Delhi. The total claim in all the three cases was for a sum of Rs. 81,98,538.92, which was settled by the bank with the defendant/borrowers for a sum of Rs. 67.55 lacs in full and final satisfaction of its claim. In all these cases, southern half portion of property bearing No. 17/27, East Punjabi Bagh, New Delhi, measuring 140 Sq.yds. was given as security.

As per record, a plot measuring 280 Sq. yds. Situated in East Punjabi Bagh, New Delhi was allotted by the Refugee Co-operative Society, Punjabi Bagh, New Delhi on 24.4.1962 to one S.S. Bakshi, who sold it to Smt. Ganeshi Devi on 17.2.1964. Smt. Ganeshi Devi, in turn, sold that plot on 13.4.1973 to Smt. Dharshan Kumari, who sold 95% of the plot to Smt. Sumitra Devi and 5% to Sri Krishna Garg on 27.12.1995. Smt. Sumitra Devi and Sri Krishna Garg further sold the entire plot on 31.3.1997 to Smt. Anita Aggarwal, who sold the southern half portion measuring 140 sq. yds. to Suresh Chand Sharma on 13.7.2001 and the northern half portion thereof to Smt. Santosh Kumari on 28.9.2001. Suresh Chand Sharma sold and the southern half portion on 21.3.2006 to Smt. Bela Chawla, who created an equitable mortgage in respect thereof in favour of the appellant bank on 30.3.2007 by depositing four sale deeds executed by different sellers from time to time as security for obtaining certain loan. Smt. Bela Chawla thereafter sold that property on 25.6.2007 to Tajinder Pal Sahni who also created a mortgage of that property in favour of the appellant bank on 22.12.2007 as a security for several loans. When the borrowers defaulted in making repayment of the loan, the bank took physical possession of the said property on 23.11.2010 through the Advocate Commissioner appointed by the ACMM under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) after issuing a demand notice dated 1.8.2009 under section 13(2) thereof.

Dr. H.R. Kanwal, the respondent herein, filed an application (S.A. No. 07/2011) under section 17 of the SARFAESI Act challenging the mortgage as well as the measure taken by the bank, claiming his ownership over the property in question on the basis of a will dated 25.5.1995 allegedly executed in his favour by one Hira Lal Sharma. The Bank filed an interim reply intimating that as the bank's claim has already been settled, therefore, the SA is not maintainable and also filed an affidavit before the DRT on 11.1.2011 for recording the satisfaction of the bank's claim. Title S.A. was listed for hearing before the DRT on 11.1.2011 when the Presiding Officer, appointing the authorized officer of the bank as Court's Receiver, directed him to take physical possession of the property in question within 48 hours. The authorized officer was also provided with the police assistance and was ordered that if the property, over which Dr. H.R. Kanwal was alleging his claim, was found locked then he would break upon the lock and put his own lock. The Presiding Officer also directed all the concerned parties to be present on 1.2.2011 and on that date both the OAs and the SA were disposed of by the order impugned with the direction as mentioned above. Feeling aggrieved with the said direction, the bank has challenged the same in this appeal.

I have heard the parties' counsel and gone through the record.

Mr. Karan Khanna, the learned counsel appearing for the appellant bank, pointed out that the respondent Dr. H.R. Kanwal, alleging his ownership on property No. 17/27 East Punjabi Bagh New Delhi and commission of theft in that property, had filed an FIR under sections 448 and 380 IPC at Police Station Punjabi Bagh, New Delhi, which was investigated by the Crime Branch of the Delhi Police, which came to the conclusion that Hira Lal Sharma was not the owner of the property in question and as such the question of execution of any will in favour of Dr. Kanwal did not arise. He further pointed out that It was also found in that investigation that Dr. Kanwal is a person of dubious character and all the allegations made by him in his report were false and the record of the Refugee Co-operative Society, Punjabi Bagh showed that he was not the owner of the property in question, but in fact, an encroacher and unauthorized occupant against whom several criminal cases were registered at various police stations.

Mr. Khanna further contended that after the settlement of its claim with the borrowers, the bank had ceased to be a secured creditor qua the secured assets and the possession of the mortgaged property could only be restored to the mortgagor and as such the order impugned directing the restoration of the possession of the property in question to Dr. Kanwal is bad in law. He pointed out that when the bank had taken the physical possession over the property in question, it was lying vacant and was not in possession of the respondent and the DRT could not order for the delivery of its possession to the respondent. Mr. Khanna further submitted that the bank still holds with itself the keys of the property in question and it had also filed an application on 10.2.2011 for the recall/modification of the impugned order because it wanted to either return the keys to the mortgagor or to deposit the same with the Registrar of the Tribunal, but the application has yet not been disposed of. He also submitted that as the respondent's claim of title over the property in question has yet not been adjudicated upon in his favour by any competent Court, the compliance of the direction made in the order impugned would result in unnecessary litigation for the bank and would also make impossible for the bank to restore its possession back to the mortgagor.

Mr. Ravi Data, the learned counsel for the respondent, on the other hand, submitted that the respondent was in authorized occupation of the property in question when the bank unlawfully took its possession, which has rightly been ordered to be restored to him by the order impugned. He further submitted that the respondent was in lawful possession over the entire property No. 17/27, East Punjabi Bagh, New Delhi measuring 280 sq. yds. since 1964, vide lease deed dated 15.11.1964 executed by its landlord Hira Lal Sharma, who was the son of 8 mt. Ganeshi Devi and a duly recorded member of the Refugee Co-operative Housing Society and the respondent ran a hospital from that property since then. He also submitted that Hira Lal Sharma had subsequently connived with certain criminal elements to dispossess the respondent from the leased property in respect of which he had to face various difficulties but he succeeded in retaining the possession. Mr. Data also submitted that Hira Lal Sharma later on became pleased with the respondent and executed a will dated 25.6.1995 in his favour bequeathing all his rights and interest in the entire property and had also sent a no objection letter to the Refugee Cooperative Society Punjabi Bagh, New Delhi for the transfer of his share and membership to the respondent and after the death of Hira Lal Sharma the respondent had acquired the title over the property in question. He also submitted that the respondent got installed electricity, water and telephone connections in his name in that property and paid the house tax of the entire property. He also submitted that several mala fide litigations were filed against the respondent by certain persons before the Additional Rent Controller, Delhi for his eviction, but the same were dismissed. He pointed out that as a theft was committed in that property, therefore, the respondent had lodged an FIR at Police Station Punjabi 8agh but the police, being inimical with him, as he had taken actions against it to the higher authorities/High Court, did nothing qua his report.

It has also been submitted by Mr. Data that the bank had taken the possession of southern portion of the property illegally through one Advocate, being Court's Receiver, with the assistance of the police on 23.11.2010 and despite objections of the respondent and his neighbors, put locks and sealed the front and back doors of the southern portion of the property, but the respondent has full access to the entire property from inside after having entrance through the gate and doors on the other side of the property. He also submitted that the bank's claim of security interest qua the southern portion of the property on the basis of alleged mortgage created by one Tajinder Pal Sahni is not lawful as he was having no legal title or right over that property to create any mortgage.

Mr. Data further pointed out that Hira Lal Sharma, who was the owner of the entire property, had mentioned in his will, executed in favour of the respondent, that his mother Smt. Ganeshi Devi had not executed any document in favour of Darshan Kumari and as such the alleged mortgage of the southern portion of the property by Tajinder Pal Sahni on the basis of some forged and fabricated documents for obtaining the loans from the bank as well as the bank's action against that property were bad in law. Mr. Data also submitted that had the appellant bank been cautious before sanctioning the loan and visited the property in question or obtained a valuation report thereof, it would have known that the respondent was in possession over the properly in question. Mr. Data further contended that even if it is found by this Tribunal that the said mortgagor was having a title to the southern portion of property bearing No. 17/27, East Punjabi Bagh, New Delhi and the mortgage in favour of the bank is good, the respondent, being in established and continued possession since 1964, i.e., much prior to the creation of the mortgage, cannot be thrown away and he is entitled to its possession.

I have given my thoughtful consideration to the submissions of the parties counsel. A perusal of the order impugned would show that the learned DRT, after observing that a settlement for an amount of Rs. 67.55 lacs had been arrived at between the bank and the eight defendants of the two claim cases and the bank had recovered the said amount and was no more interested in proceeding further against the defendants, who became free from any liability towards the bank as well as against the property in question, which ceased to be a secured asset for the purposes of enforcement of security interest w.e.f. 7.1.2011, has disposed of both the O.As. as well as the SA with the direction, as state above. The appellant bank is neither aggrieved with the above observations nor with the disposal of the OAs as Mr. Khanna has pointed out that the bank had also filed an affidavit on 11.1.2011 before the DRT for recording the satisfaction of the bank's claim. In view of the above circumstances, I am satisfied that the OAs have rightly been disposed of and the order impugned qua the disposal of the OAs does not suffer with any legal infirmity.

The appellant bank is aggrieved with the order qua the disposal of the S.A. with the direction to the authorized officer of the bank to restore the possession of the property in question to the respondent. The order impugned shows that the DRT, referring to a case (Criminal Original No. 59/1971) held before a Division Bench of the Delhi High Court, had issued the said direction in order to honor the order of the Hon'ble Court. A perusal of the judgement dated 8.8.1975 of the Delhi High Court rendered in the said case (Annexure A/2) shows that proceedings were initiated by the respondent against the Sub Judge and District authorities of Delhi as well as against the SHO of PS Punjabi Bagh under the Contempt of Courts Act qua the possession over premises No. 17/27, East Avenue, Punjabi Bagh Delhi, which was said to be taken on lease by Dr. Kanwal from its owner Smt. Ganeshi Devi, but during those proceedings the possession was delivered to Dr. Kanwal on 27.5.1973. This circumstance though supports Mr. Data's contention about the respondent's Possession over that property in 1973, but it does neither prove the alleged tenancy nor the ownership of the respondent over the property in question. No title document, including the will dated 25.6.1995 allegedly executed by Hira Lal Sharma, has been filed by the respondent. A dispute of title in respect of an immovable property cannot be decided either by the DRT or by this Tribunal and can only be adjudicated upon by a competent Civil Court. There is nothing on record to show that the question of respondent's title qua the property in question has ever been settled in his favour by any competent Court. The fact that the appellant bank had taken the possession over the property in question on 23.11.2010 through an Advocate (Court's Receiver) under the SARFAESI Act is not in dispute as the respondent has admitted that the bank had put its locks and sealed the doors. The order impugned also shows that, vide order dated 11.1.2011, the PO had appointed the authorized officer of the bank as the Court's Receiver and he was directed to take physical possession over the property with the help of the police even by breaking open the lock, but the record does not disclose that in compliance of the said order any further possession was taken by the Court's Receiver. The said order dated 11.1.2011 of the DRT was totally uncalled for as the bank, being already in possession of the property in question since 23.11.2010, had not made any such request to it.

The Presiding Officer has not returned any finding in the order impugned qua the legality/illegality of the measure taken by the appellant bank under section 13(4) of the SARFAESI Act, Unless the DRT, in exercise of its jurisdiction under section 17 of the said Act, comes to the conclusion that the measures taken by the bank under section 13(4) are not in accordance with the provisions of the said Act or the rules made thereunder, it cannot order for the restoration of the possession. The impugned order of restoration of the possession of the property in question to the respondent is, therefore, bad in law and cannot be sustained. The direction for restoration of possession could also not be made in view of the judgment of the Delhi High Court rendered on 8.8.1975 in Criminal Original No. 59/1971, as according to it, the petitioner was already put in possession on 27.5.1973.

In view of the aforesaid facts and circumstances, the contentions of Mr. Data, as mentioned above, are not tenable and unless the question of the alleged title of the respondent over the property in question is determined by any competent court, he does not appear to be entitled to claim the possession over the property in question.

On the basis of the foregoing discussion, I am of the considered view that the learned Tribunal below has committed error in disposing of the SA by directing the restoration of the possession over the property in question to the respondent and the same is liable to be set aside and the appeal is entitled to be allowed to that extent.

The appeal is accordingly allowed and the order dated 1.2.2011 of the DRT III Delhi disposing of the SA No. 07/2011 with the direction to the authorized officer of the bank to restore the possession of the property in question to the respondent is set aside. Parties shall bear their own cost of the appeal. Copy of this order be furnished to the parties as per law and be also sent to the concerned DRT forthwith.