Dismissed

Naseem Ahmad and Ors. v. Au Small Finance Bank Limited and Ors.

DRAT8 Aug 2022REGULAR APPEAL/84/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal dismissed an appeal by purchasers of mortgaged floors seeking to set aside an impugned order denying interim relief. The Tribunal held the appeal was not maintainable as the property had already been auctioned, and the appellants lacked valid title due to purchasing via unregistered documents subsequent to the mortgage.

What did the court decide?

The appeal was dismissed. Pre-deposit amount was ordered to be released to the appellant by the Registry within 07 days.

Naseem Ahmad and Ors. versus Au Small Finance Bank Limited… — Banking and Recovery | DRAT (2022)

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DEBTS RECOVERY APPELLATE TRIBUNAL, DELHI

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Appeal No. 84/2022

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Arising out of S.A. No. 237/2022 (DRT-III, Delhi)

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Shri Naseem Ahmad & Ors.

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The Manager for AU Small Finance Bank Ltd. & Ors.

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08.08.2022 Hon’ble Mr. Justice BrijeshSethi

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Present: Mr. Triloki Nath, Ld. Counsel for the appellants.

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Mr. Samrendra Kumar, Ld. Counsel for respondent no.1.

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Mr. Naveen Thakur, Ld. Counsel for Auction Purchaser.

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This matter has been taken up by me through Video Conferencing.

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Ld. Counsel for the appellants prayed for setting aside of the order dated 13.06.2022, which runs as under:-

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“13.06.2022 Item no. 18

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Present: Mr. Lajwinder Singh, Ld. counsel for S. applicants.

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Mr. Samrender Kumar, Ld. counsel for respondent bank.

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Due to COVID 19, this matter is taken up by this Tribunal through Video Conferencing.

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Today the case is fixed for hearing on the issue of interim relief.

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Ld. counsel for respondent bank submitted that he could not file reply to this SA, however, he is ready to argue the matter without filing any formal reply.

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Ld. counsel for S. applicants submitted that S. applicants no. 1 to 3 are owner-in-possession of three floors of property-inquestion who purchased the Ground, Floor, 2ndFloor and 3rdFloor of property-in-question on 12.03.2020, 13.10.2018 and 03.04.2021 respectively from Smt. Shireen Parveen for valuation consideration by virtue of GPA, Agreement to Sell, Receipt, Possession Letter, WILL and affidavit etc. He also submitted that admittedly S. applicants purchased their respective floors subsequent to creation of mortgage and they want to pay off the dues of the bank but bank has charged exorbitant rate of interest, legal charges etc. He also submitted that since S. applicants are ready to redeem the property, therefore, respondent bank / court receiver may be restrained from taking possession of property-in-question, which is scheduled for today itself i.e. on 13.06.2022..

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Page no. 1

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On the other hand, Ld. counsel for respondent bank submitted that S. applicants are claiming their ownership on their respective portions by virtue of unregistered GPA, agreement to Sell etc. and they have no locus to file this SA. He also informed this Tribunal that borrowers of the bank have filed SA No. 75/2022 but no interim relief was granted in their favour by this Tribunal. He further submitted that admittedly, S. applicants purchased their floors subsequent to creation of mortgage, hence, they are not entitled for any interim relief.

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Ld. counsel for respondent bank also informed this Tribunal that borrower of the bank availed the loan facility of Rs. 20.0 lakh on 10.03.2018 and the subject property was mortgaged, however, due to default, their account was declared as NPA on 10.02.2021 and demand notice under Section 13(2) of SARFAESI Act was issued on 23.04.2021 demanding a sum of Rs. 23.05 lakh (approx.). He further submitted that possession of the property-in question has already been taken by the bank on 27.10.2021 and in the auction scheduled for today, bank has received several bids. Therefore, request is made to decline the interim relief prayer as well as to dismiss the present SA, being not maintainable.

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Heard Ld. counsels for both the parties and perused the record. Admittedly, S. applicants no. 1 to 3 purchased their respective floors from borrower of the bank after creation of mortgage and that too on the basis of unregistered GPA, agreement to sell etc. Hence, this Tribunal is of the view that S. applicants have no valid title in their favour.

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So far as, question of redemption of property in-question by S. applicants is concerned, in this regard, Section 13(8) of SARFAESI Act 2002 is relevant which is as under :-

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13(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,

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(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; And

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(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this subsection. no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.]

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In the light of above, it is clear that the recourse of Section 13(8) of SARFAESI Act 2002 can be taken before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets, however, in the present case, time for said recourse has already been lapsed.

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Page no. 2

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In these circumstances, this SA along with interim relief, stands dismissed.

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File be closed and consigned to record room.

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Ld. Counsel for the appellants states that appellant no.1 is the lawful purchaser of the property in question and he had purchased the ground floor, 2^nd floor, 3^rd floor of the property-in-question on 12.03.2020, 13.10.2018 and 03.04.2021 respectively from Smt. Shireen Parveen for consideration by virtue of GPA, Agreement to Sell, Receipt, Possession Letter, will and affidavit etc. He further states that he is ready to pay whole of the outstanding amount to the Auction Purchaser.

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Ld. Counsel for the respondent, on the other hand, states that present appeal is not maintainable for the reason that the date of mortgage is 10.03.2018 and the appellant has purchased the property thereafter i.e. the ground floor, 2^nd floor, 3^rd floor of the property-in-question on 12.03.2020, 13.10.2018 and 03.04.2021 respectively, which are subsequent to the mortgage of the property with the Bank. He further states that the documents vide which the property has been purchased are unregistered and the same are not of any help to the appellants in view of the Judgment of Hon’ble Supreme Court in Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana & Anr. (2009) 7 SCC 363, as well as Section 17 of the Registration Act.

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Ld. Counsel for the Auction Purchaser has submitted that the Auction Purchaser has paid a sum of Rs. 27,50,000/- during the auction which was held on 15.06.2022. He further states that he has paid stamp duty of Rs. 2,52,000/and registration charges of Rs. 1,00,000/- approximately. He further states that he has taken the property in auction by selling his own property and has paid an amount of Rs. 13,00,000/- as earnest money and in case he doesn’t honour the commitment, he will have to pay back double of the amount of earnest money i.e. Rs. 26,00,000/-. He, therefore, prays that he is prepared to enter into a compromise with the appellant if appellant is ready to pay total amount of Rs. 44,00,200/-.

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Ld. Counsel for the appellant states that appellant is not in position to pay the amount as quoted by the Ld. Counsel for the Auction Purchaser.

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I have considered the rival submissions and perused the record. It is not in dispute that property was mortgaged on 10.03.2018 and ground, second and third floor of the property in question were purchased by the appellant on

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Page no. 3

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12.03.2020, 13.10.2018 and 03.04.2021 respectively from respondent no. 3 Smt. Shireen Parveen by virtue of GPA, Agreement to Sell, Receipt, Possession Letter, will and affidavit etc. Admittedly, these documents were subsequent to the mortgage deed which was created with the bank on 10.03.2018. In view of the fact that the property was purchased on the basis of GPA, Agreement to Sell, Receipt, Possession Letter, will and affidavit etc. it does not vest a valid title in favour of the appellant in view of the judgment of Hon’ble Supreme Court in Suraj Lamp case (Supra), and further keeping in view the fact that the property has already been auctioned and Sale Certificate has also been issued, no grounds for setting aside the impugned order are made out.

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In view of the above, I do not find any infirmity and illegality in the impugned order dated 13.06.2022 passed by the learned DRT-III, Delhi. Appeal is, therefore, dismissed. Pre-deposit amount be released to the appellant by the Registry within 07 days from today.

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It is ordered accordingly. File be consigned to Record Room.

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(CHAIRPERSON)

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-ap

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Page no. 4

Naseem Ahmad and Ors. v. Au Small Finance Bank Limited and Ors.

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Naseem Ahmad and Ors. v. Au Small Finance Bank Limited and Ors.

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