Uma Devi And Anr vs Bank Of India And Ors

This order is being prepared while working from home for being signed and communicated to the parties because of the suspension of functioning of DRAT due to spread of Corona Virus (Covid-19) in the entire country. This procedure for the preparation of orders by quasi judicial tribunals and their communication to the concerned litigants in place of formal pronouncement in open Court has been recognised by the Hon'ble Supreme Court in one of its judgments reported as AIR 2008 SC 2594, "State Bank of India and Ors. Vs. S.N.Goyal"(para 19) wherein it was observed that:-

".............While some quasi judicial tribunals fix a day for pronouncement and pronounce their orders on the day fixed, many quasi judicial authorities do not pronounce their orders. Some publish or notify their orders. Some prepare and sign the orders and communicate the same to the party concerned... "

The appellants in these two appeals, which involve common questions of facts and law and are being disposed of by this common order, are the auction purchasers of two separate floors of property no. 82-B, situated at Bindapur Extn.,W. Uttam Nagar, New Delhi- 110059.(hereinafter to be referred as the properties in question) having purchased the same in an auction conducted by Punjab and Sind Bank(respondent no.3 in both appeals) in exercise of the powers conferred upon secured creditors under Section 13(4) of SARFAESI Act. They feel that they were defrauded by the said bank by selling the properties in question which could not have been sold under SARFAESI Act as the original owner one Smt. Sudesh Kumari had first sold the said entire property no. 82-B and then again sold first and second floors and which buyer in turn mortgaged the same in favour of Punjab and Sind Bank to secure the loan taken by him from this Bank. Upon default in repayment of loan Punjab and Sind Bank auctioned the two floors and the two appellants herein separately purchased the same and then title documents were executed in their favour by Punjab and Sind Bank.

The appellants-auction purchasers upon coming to know that Smt. Sudesh Kumari had already sold the entire property no. 82-B and then again executed separate sale deeds in respect of first and second floors based on which sale deeds the buyer had obtained loan from Punjab and Sind Bank approached the Tribunal below(DRT) with separate applications under Section 17(1) of SARFAESI Act primarily showing their willingness to get back their money paid to Punjab and Sind Bank and for a direction to this bank to refund the sale consideration with interest. The further grievance of the appellants if that despite the fact that the DRT has accepted their case that Punjab and Sind Bank could not have auctioned the two floors in question under SARFAESI Act gave the appellants no relief and told them to look for appropriate reliefs from some other forum. Feeling that even the judicial form(DRT) had added to their woes by telling them to approach some other forum for getting back their monies ignoring the legal position that even disputes between a bank and auction purchaser have to be resolved by DRTs only the two auction purchasers have now approached this appellate tribunal by filing separate appeals.

The impugned order of the DRT, which is common order by which the two SAs were dismissed, gives the facts in detail and so the relevant paras therefrom are re-produced below:-

"TSA No. 157/2016

Brief facts of this case, as per amended SA, are that this TSA has been filed on behalf of applicant herein under section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 praying therein to pass a judgment and decree against the respondent no. 2 and his attorney officer, employee, agent, servant be restrained from transferring / selling or disposing off 1st Floor of the property of the part and parcel of the built up entire first floor without roof night, part of free hold property no. 82-B, area measuring 50 sq. yard situated at BindapurExtn, Uttam Nagar, New Delhi-110059 (hereinafter referred to as property in question) as mentioned in the Sale Certificate dated 13.06.2012 issued by respondent no. 3 bank along with other relief(s).

It is stated in the TSA that authorized officer of PSB / respondent no. 3 herein under the SARFAESI Act. 2002 on behalf of PSB sold the property in question (Entire First Floor without roof rights) to the applicant herein for a total consideration of Rs 15,01,000/- on 13.6.2012. and accordingly a sale certificate under rule 9(6) of Security Interest (Enforcement) rules 2002 was issued by respondent no.3 in favoour of applicant .Thereafter applicant took the physical possession of the property in question on 13.6.2012. and put the lock & key on the said property on very same day .Subsequently respondent no 3/PSB through its officer / Sr. Manager sh. Vijay Kumar Gupta executed a sale deed on 3.7.2012. in favour of applicant which is duty registered before the sub registrar -11 ,New Delhi and thereafter sale deed along with earlier original title deeds executed in favour of Manjusha i.e. Sale deed dated 24.6.2009 executed by Smt. Sudesh Kumari (details given in Para 5(D) of SA). It is also stated that after initial visit of 13.6.2012. the appellant did not visit the subject property till 5.5.2014 due to some unavoidable family circumstances and on 5.5.2014 applicant came to know that subject property is not under lock and key but the same is under lock and key of Sh. Dharamvir who illegally taken over the possession of the subject property and hence husband of applicant herein immediately filed an FIR with PS Dabri on 11.5.2014. on further enquiry from sh. Dharamvir (respondent no.2 herein) it came to the knowledge of applicant that respondent no.2 herein has alleged to have purchased the entire land & building ( including the subject property ) i.e. 82-B area measuring 50sq.yard situated at bindapur extn. Uttam nagar , New Delhi - 110059 from respondent no. 1/BOI in January 2014 who has sold the said property to Sh. Dharamvir under the SARFAESI ACT .

Notice on this TSA were issued to the respondents and respondents no. 1 to 3 entered appearance through their respective counsels and filed their reply (s).

Vide order dated 8.8.2014 interim relief was granted in favour of the applicant and parties were directed to maintain status quo qua the property in question till next date fixed.

Reply to this TSA has been filed on behalf of respondent no.1 bank stating therein that one Sh. Pankaj Malhotra and Smt. Rama Malhotra approach the BOI for grant of loan to purchaser entire property situated at 82-B ,Bindapur extension,Village Bindapur ,New Delhi including the property in question and the bank sanctioned a loan of Rs.17.60 lacs for purchase of the said property and after taking loan from BOI , a sale deed was executed by one Smt. Sudesh Kumari in favour of Sh. Pankaj Malhotra on 17.82006 which is duly registered in the officer of sub registrar -11 New Delhi . it is further stated that borrower of the bank since defaulted in making payment of the bank , the BOI served a notice dated 5.12.2012 under SARFESI ACT demanding repayment of loan amount and subsequently possession notice was issued on 12.3.2013 and same was published on 16.3.2013 .Thereafter BOI received a notice dated 25.3.2013 from the counsel for applicant herein wherein it was stated that the property is purchased by them from PSB and reply to the said notice was also sent to the applicant by BOI on 19.4.2013 through its legal counsel but after receipt of the said reply the applicant remained silent for about more than a year and thereafter BOI took the possession of the property in question on 3.6.2013 and in auction one Sh. Dharamvir/respondent no.2 herein submitted bid of Rs 32.0 lacs which was accepted by BOI on 16.11.2013 and accordingly sale certificate was issued in favour of respondent no.2 on 30.11.2013 and physical possession of the property was also handed over to Sh. Dharamvir on 30.11.2013 along with chain of previous title deeds . In the light of above, it has been prayed to dismiss the SA with cost.

Reply to thisa SA has also been filed on behalf of respondent no 2 vehemently opposing the same . it is stated that in the reply that PSB failed in acting diligently while ascertaining the facts with regard to suit property and also failed to find out that the suit property was already registered in the name of Sh. Pankaj Malhotra on 17.8.2006 itself and said property was transferred vide registered sale deed executed by Smt. Sudesh Kumari which is duly registered with the Sub Registrar . it is also stated that the present SA is not maintainable against the answering respondent and same may be dismissed with costs.

Reply to this SA has also been filed on behalf of PSB/ respondent no.3 herein stating therein that one Manjusha availed the credit facilities from the PSB and had mortgaged the built up entire first floor , without roof rights ,part of freehold property no. 82-B in the area measuring 50sq.yds out of khasra no.257 situated at Bindapur Extn.. Uttam Nagar New Delhi in favour of PSB as security in order to avail the credit facilities . since the borrower of the bank failed to pay the dues of the bank the respondent bank/PSB initiated SARFAESI measures against the property in question and sold the same in favour of applicant herein on13.6.2012 and thereafter sale deed was also executed in favour of the applicant herein on 3.7.2012

Applicant herein has filed the evidence by way of her affidavit and has provide various documents as AW-1/1 to AW-1/4 Which includes sale certificate dated 13.6.2012 .Sale Deed dated 24.6.2009 in the name of Manjusha and FIR dated 11.5.2014

Respondent no 1 bank / BCI has filed its evidence by way of affidavit of Sh. Krishan Murari , Sr. Manager of respondent bank and has proved various documents as Ex R1/1 to R -1/16 viz. authority letter dated 29.10.2015 power of attorney .Sanction Letter dated .12.8.2006 .Sale Deed dated 17.8.2006 executed by Smt. Sudesh Kumari in favour of Sh. Pankaj Malhotra attendance sheet for providing mortgage Notice dated 5.12.2012 . Possession Notice dated 12.3.2013. Publication of Possession Notice. Notice dated 25.3.2013 received from counsel for Smt. Uma Devi 9( applicant) Reply dated 19.4.2013 of BOI spot proceedings dated 3.6.2013 Publication dated 12.10.2013 copy of Auction Tender through e-bidding, sale certificate dated 30.11.2013 minutes of handing physical possession and notice dated 13.11 .2013 for delivery of documents copy of search detail;

Respondent no. 2 has also filed its evidence by way of affidavit and has proved various documents as RW2/1 TO RW2/3 viz. Sale deed dated 17.8.2006 sale certificate dated 30.11.2013 and sale deed dated 15.1.2014

Respondent no.3 has not filed its evidence in the present SA.

TSA NO. 159/2015

Brief facts of this case , as per amended SA are that this TSA has been filed on behalf of applicant herein under section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act 2002 praying therein to pass a judgment and decree against the respondent no 2 and his attorney officer employee agent servant be restrained from transferring / selling or disposing off 2nd floor of the property of the part and parcel of the built up entire first floor without roof right part of free hold property no. 82-B area measuring 50sq yard situated at Bindapur Extn .Uttam Nagar New Delhi - 110059 (herein after referred to as property in question ) as mentioned in the sale certificate dated 13.6.2012 issued by respondent no. 3 bank along with other relief(s)

It is stated in the TSA that authorized officer of PSB / respondent no. 3 herein under the SARFAESI Act 2002 on behalf of PSB sold the property in question (Entire Second floor without roof rights) to the applicant herein for a total consideration of Rs 15,11,000/ on 13.6.2012 and accordingly a sale certificate under rule 9(6) of Security interest (Enforcement) Rules 2002 was issued by respondent no 3 in favour of applicant . Thereafter applicant took the physical possession of the property in question on 13.6.2012 and put the lock & key on the said property on very same day. Subsequently respondent no 3/PSB through its officer / Sr. manager Sh. Vijay Kumar Gupta executed a sale deed on 3.7.2012 in favour of applicant which is duly registered before the Sub Registrar -11 New Delhi and thereafter sale deed along with earlier original title deeds executed in favour of Smt. Sonia i.e. Sale Deed dated 13.4.2009 executed by Smt. Sudesh Kumar Gupta (details given in Para 5(D) of SA ). It is also stated that after initial visit of 13.6.2012 the applicant did not visit the subject property till 5.5.2014 due to some unavoidable family circumstances and on 5.5.2014 applicant came to know that subject property is not under lock and key but the same is under lock and key of Sh. Dharamvir who illegally taken over the possession of the subject property and hence husband of applicant herein immediately filed an FIR with PS Dabri on 11.5.2014. on further enquiry from Sh. Dharamvir ( respondent no 2 herein ) it came to the knowledge of appli8cant that respondent no 2 has alleged to have purchased the entire land & building (including the subject property ) I.e. 82-B area measuring 50sq . yard situated at Bindapur Extn. Uttam Nagar New Delhi - 110059 from respondent no.1/BOI in January 2014 who has sold the said property to Sh. Dharamvir under the SARFAESI Act.

Notice on this TSA were issued to the respondents and respondents no .1 to 3 entered appearance through their respective counsels and respondents no. 1 & 2 filed their reply(s).

Vide order dated 8.8.2014 interim relief was granted in favour of the applicant and parties were directed to maintain status quo the property in question till next date of hearing .

Reply to this TSA has been filed on behalf of respondent no 1 bank stating the facts as mentioned in TSA no 157/2015 (Uma devi Vs. BOI & Ors.)

Reply to this SA has also been filed on behalf of respondent no.2 vehemently opposing the same and raising the objections as raised connected TSA NO. 157/2015

So far as respondent no.3 is concerned no formal reply was filed on behalf of defendant no 3 herein.

Applicant herein has the evidence by way of her affidavit and has provided various documents as AW -1/4 which includes sale certificate dated 13.6.2012. Sale deed dated 3.7. 2012. Sale deed dated 24.6.2009 in the name of Smt. Sonia and FIR dated 11.5.2014

Respondent no. 1 bank / BOI has filed its evidence by way of affidavit of Sh. Krishan Murari Sr. Manger of respondent bank and has proved various documents as Ex. R-1/1 to R -1/16 which are already detailed in TSA NO. 157/2015.

Respondent no. 2 has also filed its evidence by way of affidavit and has proved various documents as RW2/1 to RW2/3 viz. Sale deed dated 17.8.2006. Sale certificate dated 30.11.2013 and sale deed dated 15.1.2014.

Heard the Ld. Counsel for the parties in both the matters and perused the record of both the TSAs.

This is an admitted case of the applicants in both the SAs that they purchased their respective floors of the property in question from the respondent no. 3 bank i.e. PSB on 13.6.2012 as the borrower of the PSB failed to pay their dues .It is also a matter of record that borrowers of PSB purchased the said floors from Smt. Sudesh Kumari vide registered Sale Deed dated 15.4.2009 and mortgaged their title documents in favor of PSB. On the other hand case of respondent no. 1 bank i.e. BOI is that Sh. Pankaj Malhotra borrower of BOI purchased the entire property including first and second floor from Smt. Sudesh Kumari vide Registered Sale Deed dated 17.8.2006 and BOI has sold the entire property including first and second floor to Sh. Dharamvir /respondent no.2 herein 30.11.2013 when their borrower namely Sh. Pankaj Malhotra failed to pay their dues . It is evident from the documents that Smt. Sudesh Kumar firstly sold the entire property in favour of Sh. Pankaj Malhotra (borrower of BOI) on 17.8.2006 and thereafter sold the first and second floor of the property in question in favour of Manjusha and Smt. Sonia (borrowers of PSB) ON 15.4.2009. It is a settled principle in law that one who himself has no right / title over the property cannot give any better title to anyone else either meaning thereby the right over the suit property was never transferred in the name of Manjusha and Smt. Sonia who later on mortgaged the same property with PSB and PSB could not become the secured creditor because of defect in the title of Manjusha and Smt. Sonia over the their respective floors.

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in the light of above this tribunal is of the view that since execution of Sale Deeds of the applicants herein took place subsequent to the sale deed of borrower of BOI i.e, respondent no.1 and also creation of mortgage in favour of BOI is much prior to the sale deed executed in favour of the applicants herein. Therefore no case is made cut in favour of applicants herein and hence both the SAs are hereby dismissed accordingly . However applicants herein are at liberty to approach appropriate . Forum for seeking remedy against Smt. Sudesh Kumari who executed different sale deeds in fabour of different persons for the same property as per law."

From a reading of this order passed by the learned DRT it is abundantly clear that the Tribunal had accepted the case of the two security applicants before it, appellants herein, that Punjab and Sind Bank did not acquire any rights as a secured creditor and a mortgagee in respect of the two floors in question since the undisputed owner Smt. Sudesh Kumari had sold the whole of property no. 82-B firstly to one person and subsequently had executed separate sale deeds in respect of first floor and second floor in favour of two ladies who in turn allegedly created equitable mortgages in favour of Punjab and Sind Bank to secure the repayment of loans taken by them from this Bank, Those two borrowers of Punjab and Sind Bank did not repay the loan amounts and which defaults on their part led to initiation of proceedings under SARFAESI Act and eventually Punjab and Sind Bank had sold the two floors in question tp the present two appellants.

The learned DRT has come to the conclusion that Punjab and Sind Bank could not become mortgagee of the two floors in question. This bank has not challenged this conclusion of the DRT. Even when the SAs were pending adjudication before the DRT Punjab and Sind Bank did not take any stand that the mortgage in favour of Bank of India was not legal since the owner of the entire property Smt. Sudesh Kumari was left with no right or title after executing the sale deed in respect of entire property no 82-B in favour of the borrower/mortgagor of Bank of India not any evidence was adduced to refute the claim of the security applicants/appellants herein. Even before this Tribunal Punjab and Sind Bank has not claimed that the findings of the DRT that sale deed in favour of the borrower of Bank of India was executed in the year 2006 which was before the execution of subsequent sale deeds in the year 2009 in favour of the borrowers of Punjab and Sind Bank, the appellants herein. It can thus be safely accepted that Punjab and Sind Bank was always aware of the defect in the 'mortgage' being relied upon by it for selling the two floors in question as also about its incompetence to sell the same in exercise of the powers conferred upon secured creditors under Section 13(4) of SARFAESI Act. However, in the written arguments filed by the learned counsel for this Bank a plea has been taken that the DRT should have left for the civil court to enter into a detailed enquiry into the execution of sale deeds executed by Smt. Sudesh Kumari firstly in the year 2006 and then in the year 2009 before accepting the sale deed in favour of the borrower of Bank of India and rejecting the sale deeds executed by her in favour of the borrowers of Punjab and Sind Bank. On the other hand, the appellants while accepting the decision of the DRT that Punjab and Sind Bank was not a secured creditor and so could not sell the two floors in question to the two appellants herein have pressed for the relief of return of the sale consideration received from them by Punjab and Sind Bank with interest.

In my view, the learned DRT was not justified and the argument of Punjab and Sind Bank also that the security applicants should now approach for return of their monies some other forum. Hon'ble Supreme Court has in a recent judgment in the case of "Aggarwal Tracom Pvt. Ltd. vs Punjab National Bank" rendered on 27 November, 2017 and reported as (2018) 1 SCC 626 has held that disputes even between an auction purchaser and the bank which has sold some property under SARFAESI Act are to be resolved by the DRTs.

These appeals, therefore, deserve to be allowed and the appellants are entitled to get an order for refund of the sale considerations paid by each one of them to Punjab and Sind Bank alongwith interest thereon @ 12% p.a. from the date of receipt of the monies by the bank from them till the date of payment to them. These appeals are accordingly allowed and the impugned common order dated 27.01.2017 of the DRT-I, Delhi dismissing the SAs of the appellants consequently stands set aside.

The payments now being directed to be made to the appellants herein shall be made to the appellants by Punjab and Sind Bank within a period of one month from the date of communication of this order failing which the appellants will be at liberty to approach this Tribunal for appropriate directions for the implementation/execution of this direction of this Tribunal, in accordance with law.