The Authorized Officer, M/s. LIC Housing Finance Ltd. vs B. Kavitha & Ors.

This Appeal is filed against the final order passed in SA 150/2020 by the Learned Presiding Officer, DRT-III, Chennai, on 23.02.2021.

SA 150/2020 has been filed by the Respondents 1 to 3 to set aside the Possession Notice dated 19.02.2020. The said SA was disposed by the Learned Presiding Officer primarily on the ground that the Appellant, who is 5^th Respondent before the Tribunal, did not file any Counter. That apart, it was recorded that there are pending matters before civil court and criminal courts touching upon the very issue of right, title, interest and possession of the property, which is now under mortgage with Respondent No.5. The Tribunal cannot go into this aspect in a summary procedure like the SARFAESI application. Therefore, the SA was dismissed giving liberty to all the parties to settle their disputes inter se before the civil and criminal courts. There is also a direction issued to the 5^th Respondent to proceed further after the conclusion of the civil disputes, with regard to the mortgaged property. As against the said order, this Appeal is filed.

Learned Counsel for Appellant submitted that Respondents 1 to 3-vendors appointed R4 through a Power of Attorney deed for dealing the property. The borrower/R5 purchased the property in question from Respondents 1 to 3 through the Power of Attorney holder R4. Later he mortgaged the property with Appellant Bank and availed loan. Respondents 6 and 7 have no connection with this SARFAESI proceeding.

It is the case of the Respondents 1 to 3 that Respondents 6 and 7 are financiers and Respondents 1 to 3 availed credit facilities from them. In order to pay them back, the property in question was sought to be given to the Respondents 6 and 7. Respondent No.4 illegally sold the property to the Respondent No.5.

Counter could not be filed before the Tribunal for the reason that the material document was not delivered to the Counsel on record before the Tribunal for preparation of the counter. However, Learned Counsel for Appellant filed a Memo seeking time. Learned Presiding Officer has not granted time for filing counter and proceeded to pass order. Therefore, the Appellant must be given opportunity to file counter before the Tribunal and SA be adjudicated.

In reply, learned counsel for the respondents 1 to 3 submitted that respondents 1 to 3 are the owners of the properties referred in General Power of Attorney-D8, dated 22.0762016 executed by them in favour of the 4^th respondent -Vinayak Acharya. The said Vinayak Acharya had executed the sale deed in favour of the 5^th respondent by fraudulently creating a life certificate. Respondents 1 to 3 had not executed the Power of Attorney deed with an intention to sell the property. Violating the trust placed on the 4^th respondent, he sold the property in favour of the 5^th respondent. Criminal complaint has been given against the 4^th respondent-Vinayaga Achari, Jahubar Ali, Babu, Suganya and Impersonator and that criminal complaint is pending for trial. The final report was filed through e-filing on12.05.2024 before the Judicial Magistrate No.-I, Tambaram. Therefore, the order passed by the learned Presiding Officer, DRT-III, Chennai is in accordance with law and prays for dismissal of this appeal.

Considered the rival submissions and perused the records.

SA 150/2020 has been filed by respondents 1 to 3 to set aside the possession notice dated 19.02.2020. Their claim is that the owners - respondents 1 to 3 had executed the power of attorney in favour of the 4^th respondent for a different purpose, but, that was utilized by the 4^th respondent for selling the property to the 5^th respondent. It is the submission of the learned counsel for R1 to R3 that respondents 1 to 3 had not received a single penny towards sale consideration. A bogus account was opened in the name of the second respondent to swindle the sale amount.

A reading of the impugned order shows that SA 150/2020 was dismissed rather disposed on the ground of not filing counter by the 5^th respondent, the appellant herein. Other ground is that the parties submitted that there are matters pending before Civil Court as well as Criminal Court touching upon the very issue of right, title, interest and possession of the property, which is now under mortgage with the 5^th respondent. In a summary procedure like SARFAESI application, the issue of title cannot be adjudicated.

On a query, to the learned counsel appearing for the parties, as to whether any civil litigation is pending, both the learned counsel appearing for the appellant and the learned counsel for the respondents 1 to 3 answered in negative. It is seen from the submission of the learned counsel for R1 to R3 that FIR has been registered against the respondents 4 to 7, final report has been filed and the same is pending for trial.

A perusal of the Power of Attorney Deed dated 22.06.2016, the execution of which, is admitted by the respondents 1 to 3 in favour of 4^th respondent, shows that it is a General Power of Attorney empowering the power agent to deal with the property including the sale of the property. Using this Power of Attorney Deed, 4^th respondent sold the property to the 5^th respondent. When there is a claim made with regard to fraudulent execution of sale deed, non-payment of sale consideration etc., it is expected that the respondent 1 to 3 would have filed a civil suit challenging the sale executed by the 4^th respondent in favour of the 5^th respondent. No material is produced with regard to filing of such suit.

In the said circumstances, the finding recorded by the learned Presiding Officer, DRT-III, Chennai that the issue involved with regard to mortgaged property in this SA 150/2020, especially, the right, title, interest and possession of the secured asset to be settled before the civil and criminal courts is not proper and justifiable reason for disposing the SA 150/2020. The SA 150/2020 has to be adjudicated on the basis of the grounds raised in the securitization application and that has not been done by the learned Presiding Officer. Therefore, the order dated 23.02.2021 passed by the learned Presiding Officer, DRT-III, Chennai in SA 150/2020 is set aside and the SA 150/2020 is remitted to the DRT-III, Chennai for giving an opportunity to the appellant/ 5^th respondent for filing objections to the securitization application and for disposal afresh, on merits and in accordance with law, as expeditiously as possible. Accordingly, this appeal is disposed. Parties shall bear their own costs. Pending IAs, if any, shall stand closed.