Dismissed

Corporation Bank v. K S Gopalakrishnan

DRAT29 Nov 2022REGULAR APPEAL/73/2015

Case brief

AI extract

What is this about?

The Tribunal dismissed the Bank's appeal against its own order setting aside a possession notice. Upholding the lower order, the Bench held that the DRT has jurisdiction to determine genuineness of documents and validity of security interest under Section 17 of SARFAESI Act, rather than a civil court.

What did the court decide?

Interference with the order of the Tribunal dismissing the Securitisation Application was denied.

Corporation Bank versus K S Gopalakrishnan — Company and Corporate | DRAT (2022)

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RA (SA) 73/2015

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 29^th of November, 2022

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PRESENT: HON'BLE MR. JUSTICE S.RAVI KUMAR CHAIRPERSON

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RA (SA) 73/2015

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(SA 102/2014 (old SA 10/2010 on the file of DRT-I, Chennai)on the file of DRT-II, Chennai)

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Between

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The Authorised Officer, Union Bank of India, Personnel Banking Branch, No.27, Whites Road, Chennai – 600 014.

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…Appellant

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And

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Mr. K. S. Gopalakrishnan, S/o Mr. K. N. Seshadri Iyengar, No.64, West Uttara Street, Srirangam, Tiruchirappalli – 620 006.

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…Respondent

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Counsel for Appellant : Mr. S. Sethuraman, Counsel for Respondent : Mr. R.Srnivasan for M/s. R & P. Partners.

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RA (SA) 73/2015

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ORDER

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This Appeal is against Order dated 17.07.2015 in SA 102/2014 (old SA No. 10/2010 on the file of DRT-I, Chennai) on the file of DRT-II, Chennai.

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Brief facts leading to this Appeal are as follows:-

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Respondent herein filed above referred Securitisation Application contending that he is a bonafide purchaser of Scheduled property for a valid consideration and Appellant Bank initiated measures under SARFAESI Act, 2002, against his property, and prayed to set aside Possession Notice dated 03.12.2009 issued by Authorised Officer of Appellant Bank and pass appropriate Orders that are deemed fit in the circumstances of case.

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RA (SA) 73/2015

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Appellant Bank herein resisted said Application and contended that it sanctioned Housing Loan on 10.11.2004 on the same property. According to Appellant Bank, one G. Raghuraman and R. Prasanya availed loan by creating mortgage by deposit of title deeds, and as they failed to discharge loan amount, account was classified as NonPerforming Asset (NPA), and thereafter, Authorised Officer of Appellant Bank issued Notice under Section 13(2) of SARFAESI Act, 2002 on 31.08.2009 and latter issued Possession Notice under Section 13(4) of SARFAESI Act, 2002, on 03.12.2009. According to Appellant Bank, Respondent contended that he purchased said property from G. Raghuraman and R. Prasanya through a Sale Deed dated 21.04.2008, and original title deeds relating to said property are with him, and documents deposited with Appellant Bank are not genuine, and they are forged documents, therefore, there is no valid mortgage in favour of Appellant Bank. According to Appellant Bank, such contentions cannot be entertained by DRT, and Respondent’s remedy is only to file

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a Civil Suit, and therefore, SA has to be dismissed.

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RA (SA) 73/2015

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Considering these contentions, Tribunal below

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overruled objections of Appellant Bank herein and set aside Possession Notice dated 03.12.2009 by allowing SA No. 102/2014, and aggrieved by said Order, present Appeal is preferred.

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Heard Advocates of both parties.

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Advocate for Appellant Bank submitted that Tribunal below erred in observing that Bank had a doubt over title deed deposited with them, and there is no basis for such observation, particularly, when Bank contended that documents deposited with it are genuine. He further submitted Tribunal below ought to have observed that issue involved in this case requires both oral and documentary evidence, and that issue can be decided by Civil Court only, but not by DRT. He submitted that the findings of Tribunal below are based on presumptions and surmises, therefore, Order of Tribunal below is liable to be set aside.

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RA (SA) 73/2015

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On the other hand, Advocate for Respondent submitted

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that Respondent is a bonafide purchaser for a valid consideration, and prior to purchase, said property was under mortgage with Bank of India, and same was discharged with purchase money, and Respondent took every care to verify the encumbrances of property. It is submitted that mortgage with Bank of India was discharged with sale consideration, and original title deeds are handed over to Respondent herein, and on that basis only, Sale Deed is executed on 21.04.2008 in favour of Respondent herein, and after that date of purchase, Respondent is in exclusive possession. He further submitted that all revenue records are in the name of Respondent herein in respect of said property, and documents relied on by Appellant Bank for mortgage, are not genuine. He further submitted Hon’ble Supreme Court clearly held that right of Respondent is only before DRT and not before Civil Court, therefore, objection of Appellant Bank is rightly overruled by Learned Presiding Officer, and that there are no grounds to interfere with Order dated 17.07.2015.

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RA (SA) 73/2015

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From the material, it is clear that one Lakshmi and A.

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Backiyam sold this property to G. Raghuraman and R. Prasanya through a Sale Deed dated 23.07.2004 and said G. Raghuraman and R. Prasanya sold same property to Respondent herein through a Sale Deed dated 21.04.2008. According to Appellant Bank, on the basis of Sale Deed dated 23.07.2004, they advanced loan to G. Raghuraman and R. Prasanya and as they failed to discharge loan amount, Authorised Officer of Appellant Bank initiated measures under SARFAESI Act, 2002. According to Respondent, very same persons G. Raghuraman and R. Prasanya obtained loan from Bank of India by depositing original Sale Deed dated 23.07.2004, and Respondent herein discharged that loan from out of sale consideration and took delivery of original Sale Deed from Bank of India, and documents relied on by Appellant Bank is not genuine.

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When mortgage is by deposit of title deeds relating to immovable property, title deeds play an important role for

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RA (SA) 73/2015

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creating interest over secured property. From records, it is clear that Respondent herein produced original title deeds before Tribunal below, and only on perusal of them, Tribunal below accepted the case of Respondent herein. As seen from Counter, the main ground on which Appellant Bank resisted SARFAESI Application is that DRT has no jurisdiction and remedy of Respondent herein is to file a Civil Suit. But, that objection was not accepted by Tribunal below. According to Advocate for Respondent, as per decision of Hon’ble Supreme Court, remedy of Respondent is only before DRT and not before Civil Court, and he relied on the judgement of Hon’ble Supreme Court in Jagdish Singh Vs. Heeralal & Ors., in Civil Appeal No. 9771 2013, wherein Hon’ble Supreme Court while setting aside the judgement of Hon’ble High Court Madhya Pradesh at Indore , held that High Court was in error in holding that only Civil Court has jurisdiction to examine as to whether the measures taken by Secured Creditor under Section 13 (4) of SARFAESI Act, 2002 were legal or not.

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RA (SA) 73/2015

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As rightly pointed out by Learned Advocate for Respondent, for initiating measures under SARFAESI Act, 2002, Bank shall prima facie show it has got security interest

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over secured asset and that a valid mortgage is created over

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secured asset.

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Here in this case, when Respondent herein produced original Sale Deed in respect of secured asset, it is for Appellant Bank to show as to how there is a valid mortgage in favour of it over said asset, for which, they failed to produce any material and Tribunal below accepted claim of Respondent over Schedule property.

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On a scrutiny of material, I do not find wrong in the Order of Tribunal below and when Hon’ble Supreme Court clarified that this issue has to be determined by DRT under Section 17 of SARFAESI Act, 2002, objection of Appellant Bank with regard to jurisdiction and maintainability is not at all tenable.

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RA (SA) 73/2015

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For these reasons, I am of the considered view that there are absolutely no grounds to interfere with Order of

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Tribunal below, which is a reasoned Order, and Appeal is liable to be set aside.

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In the result, Appeal RA (SA) 73/2015 is dismissed with

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no order as to costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 29^th of November, 2022]

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Sd/- [ Justice S. Ravi Kumar ] CHAIRPERSON

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Corporation Bank v. K S Gopalakrishnan

Case brief

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Corporation Bank v. K S Gopalakrishnan

Case brief

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