Dismissed

Shri Umesh Shankarlal Singhal v. Bank of Maharashtra

DRAT24 May 2023MISC APPEAL/153/2022

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal disposed of a Misc. Appeal against a stay application. The Tribunal dismissed the stay request, holding that the appellants' claim based on unregistered lease documents was not genuine and prima facie found no infirmities in the impugned order allowing recovery proceedings against the attached properties.

What did the court decide?

Stay of the impugned order passing against the attached properties was dismissed.

Shri Umesh Shankarlal Singhal versus Bank of Maharashtra — Banking and Recovery | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No. 151/2023(Stay)

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In Misc. Appeal No. 153/2022

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Between

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Umesh Shankarlal Singhal & Ors. … Appellant/s V/s. Bank of Maharashtra & Ors. …Respondent/s

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Mr Rajesh Nagory along with Ms Aditi Saxena, Advocate for Appellant.

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Mr Sandip Solanki., Advocate for Respondents Nos. 2 to 4.

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-: Order dated: 24/05/2023:-

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The Misc. Appeal is preferred against the order dated 08/07/2022 of the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.) passed in Appeal No. 11 of 2018 in R.P No. 31/2016 filed in Original Application (O.A.) No. 270/2014 filed under the provisions of the Recovery of Debts & Bankruptcy Act, 1993 (‘RDB Act’, for short). 2. The 2^nd Respondent had borrowed money from the 1^st Respondent bank and defaulted payment. The bank took action under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2000 (‘SARFAESI Act’, for short) and recovered some amount from out of the secured assets. The entire debt due was not however realised and hence, the bank filed the above-mentioned O.A. for recovery of the balance amount under the RDB Act. The O.A. was allowed and a Recovery

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Certificate was issued for recovery of a sum of ₹49,079,927/-

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For execution of the Recovery Certificate, Recovery Proceeding No. 31/2016 was filed by the bank before the Recovery Officer D.R.T. It is contended that the 2^nd Respondent company was not served with the notice and Respondents Nos. 3 and 4 appeared before the Ld. Recovery Officer and filed an affidavit. The recovery was initiated against identified properties namely Harni land and Tarsali land which were not part of the mortgaged properties or secured assets. The appellants contend that those properties were transferred to them during the years 2001 and 2006 and that they have been in exclusive possession of the said property for the last 21 years by virtue of agreements, lease deeds and irrevocable power of attorney executed in their favour.

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The show cause notice was issued under Section 25 (a) of the RDB Act to the borrowers but the Appellants were not served with any notice although they were in exclusive possession of the property. The borrowers did not bother to contest and it resulted in an order of attachment being passed against the property. On affixture of the notice, the Appellants came to know about the attachment. Thereafter the Certificate Debtors issued a letter to the Ld. Recovery Officer on 17/08/2017, and disclosed the fact that the property has been transferred to the Appellants and that a lease deed of 99 years has been executed in their favour. Registered possession receipt was also executed by the 2^nd Respondent company on 10/02/2001 with respect to the Harni land in favour of Appellants Nos. 1 to 3 on receipt of payment of ₹ 326,472/-the company also executed an irrevocable power of attorney on

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12/02/2001 regarding the said property. The transfer of right title and interest in the property could be registered only after the nature of the property was altered from “agricultural land” to “nonagricultural land”.

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On coming to know about the attachment the Appellants filed an objection before the Ld. Recovery Officer against the attachment. The Appellants also filed on Regular Civil Suit No. 144/2018 and Civil Suit No. 143/2018 before the Additional Senior Civil Judge against dispossession except by due process of law under the provisions of the Bombay Tenancy & Agricultural Land Act 1948. An order of status quo has been made in the suits. Documents have been reduced to indicate that the Appellants were in exclusive possession of the properties.

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The Ld. Recovery Officer dismissed the claim raised by the Appellants vide order dated 07/08/2018. An appeal was filed before the Presiding Officer, D.R.T. challenging the order of the Ld. R.O. the appeal was dismissed vide order dated 08/07/2022. The Appellants are aggrieved and hence in appeal before this Tribunal.

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It is understood by the Appellants that the attached property is being put up for e-auction. Hence, the Appellants filed an application for a stay of the impugned order passed by the D.R.T. 8. There are no registered documents of the lease in favour of the Appellants. According to the first Respondent Bank, the Appellants have colluded with the Certified Debtors to see that the amount due to the Bank is not recovered. On being convinced that the alleged tenancy is a frivolous one, the Ld. Presiding Officer

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dismissed the appeal.

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It is the contention of the Ld. Counsel appearing for the Appellants that the Recovery Officer is not expected to conduct an enquiry into the title set by the claimant in case the claimant is found to be in possession, proceedings cannot be completed against the property. The Ld. Counsel has also relied upon the decision of the Hon’ble Supreme Court in Tax Recovery Officer II, Sadar, Nagpur vs. Gangadhar Vishwanath Ranade (1998) 6 SCC 658 . While the Ld. Counsel appearing for the first Respondent Bank has relied upon a catena of the decision to substantiate the argument that the claimant's title cannot be based on an oral agreement of tenancy or an agreement which cannot be accepted. It is pointed out that a tenant-at-sufferance cannot hold on to the property when a creditor proceeds against the owner of the property for the realisation of debt. The decision in Mota Singh & Ors vs. State of Haryana & Ors. 1980 (Supp) SCC 600, Bajarang Shamsunder Aggarwal vs. Central Bank of India & Anr. (2019) 9 SCC 94, Hemraj Ratnakar Salian vs. HDFC Bank Ltd & Ors 2021 SCC OnLine SC 611 and K.B. Saha & Sons Pvt. Ltd. vs. Development Constant Ltd. (2008) 8 SCC 564 in support of his argument.

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A 99 year old lease purportedly set up by the Appellants can definitely not be by means of unregistered document which is not even stamped. When the Appellants have set a claim over the property which, on the face of it, does not appear to be genuine, it cannot be sustained. Prima facie, I find no infirmities in the impugned judgment to grant a stay in favour of the Appellants. The Appeal shall be taken up for hearing at the earliest in case the parties

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are ready for hearing. I find no reason to grant a stay of the proceedings initiated by the first Respondent Bank against the attached properties.

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The application for stay is, therefore, dismissed. Post the appeal for reply/hearing on 13.07.2023.

Sd/-

Chairperson

mks- 1