The Debt Recovery Appellate Tribunal dismissed appeals filed by Punjab National Bank against the DRAT order confirming that a mortgage created in 2009 over shops was invalid because those shops were sold, along with the land, to third parties in 2008.
The appeals filed by the appellant-Bank are dismissed with no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD
Appeal Dy. No. 185/2021
……….....……………………...…………………………………………….Appellants
Versus
Appeal Dy. No. 186/2021
JUDGMENT
Date of Decision: 19.07.2023
JUSTICE R. D. KHARE, CHAIRPERSON
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“the SARFAESI Act”) against the judgment/order dated 16.10.2020 passed by the Tribunal below in S.A (T) No. 185 of 2018 and S.A. (T) No. 473 of 2018, by which both the S.As. were allowed, therefore, these are being decided by this common order.
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before the Hon’ble High Court by filing Writ Petition No. 4563/2013, which was dismissed vide order dated 31/07/2013 on the ground of alternative remedy. Inspite of the order dated 01/07/2013 passed u/s 14 of the SARFAESI Act, the physical possession of the property in question was not handed over by the borrower to the appellant-bank, therefore, the Bank again preferred a Writ-C No. 32405/15, in which vide order dated 27/05/2015 the District Magistrate, Agra was directed to file his personal affidavit as to why the order passed by his own authority u/s 14 has not been complied with. Pursuant to it , the physical possession of the mortgaged property was handed over by the District Administration to the Bank on 25/06/2015. Thereafter, the appellantBank published a possession notice dated 30/06/2015 in the newspapers on 01.07.2015 with regard to taking of physical possession of the property in question, which was challenged by the respondents no. 1 and 2 of both the case by filing S.A. No. 490/2015 and 491/2015 before the DRT, Lucknow, which were subsequently transferred to DRT, Allahabad and were renumbered as S.A (T) 185/2018 and S.A (T) 473/2018 stating inter alia that the S.A applicants have purchased the shop No. G-8 and G-9 in the City Mall, Agra vide sale deed dated 07/07/2008 from the respondent no. 3-borrower, whereas the respondent no. 3-borrower was granted the loan on 25/05/2009 and mortgage was created over the property in question on 22/06/2009, which was done much after selling the shops in question by the borrower to the respondents no. 1 and 2.
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22/06/2009 in favour of the appellant-bank in respect of the shops in question is invalid. Being aggrieved by the said order, both the appeals have been filed by the appellant-Bank.
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Tribunal below vide judgment and order dated 09/10/2015, which was against the settled principal of law as laid down by the Hon’ble Apex Court. The said judgment was challenged by the appellant bank before this Tribunal by filing appeal no. 315/2015, in which the interim status-quo order was passed on 08/12/2015. It was further stated that inspite of status-quo order granted by this Tribunal on 08/12/2015 with regard to the property in question, the respondent no. 3-borrower has deliberately violated the said order in collusion with the respondents no. 1 & 2 and despite the lock and key/seal of the bank, the respondents unlawfully occupied the various shops including the shops in question, for which a FIR was lodged on 24/08/2016 against the respondent/borrower under section 461, 188, 424 of IPC, which was registered as crime case no. 0744 at PS New Agra.
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over when the same was completed. As such the respondents no. 1 & 2 cannot say that the said shops were completed and the same were handed over to the respondents no. 1 and 2. It was also contended that in para 5.33 of the memo of appeal it has been specifically stated that the land on which shops were constructed was never subject matter of the alleged sale deed. It was further contended on behalf of the appellant that the respondents no 1 & 2 has alleged that they are the owners of the shops in question pursuant to the sale deed dated 07/07/2008, but that sale deed does not relate to the proportionate land of the said shops, therefore it cannot be said that the land on which the shops in question are constructed is a part of the sale deed and the finding of the Tribunal below pertaining to shop No. G-8 & G-9 is perverse and not sustainable.
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therefore, the finding of the Tribunal below that the mortgage of shops in question is invalid, is not sustainable. It was further contended that the alleged transfer as claimed by the respondents is in violation of section 8(1) of the Transfer of Property Act. It was lastly contended that the future property cannot be transferred in view o the judgment passed by the Hon’ble High Court, Allahabad in Moti Ram Vs. Khvali Ram and another, AIR 1967 Alld. 484.
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record of the appellant-bank itself. The said record shows that the shops in question were in existence at the time of taking possession by the appellant bank. It was further submitted that there is no future transfer in the present case, as the sale deed was executed on 070/07/2008, in which it is mentioned that the possession of the shops in question will be handed over within 2 months, whereas the mortgage was created in favour of the Bank on 22.06.2009 which is after 14 months. It was further submitted that in the interregnum, the shops were handed over to the respondents no 1 and 2, therefore there is no question of any future transfer. Hence the arguments raised by the appellant with regard to it cannot be considered to be tenable.
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against the shops in question, which have been purchased by the respondents no 1 and 2 prior to the execution of mortgage deed by the respondent no 3 with appellant-bank. The appellant bank is neither secured creditor nor the shops in question is secured asset, therefore, no securitization proceedings can be initiated against the said respondents.
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the sale deed dated 07.07.2008, possession of the same were never handed over to the respondents No. 1 and 2 and future transfer could not be made in view of section 8(1) of the Transfer of the Property Act as also the land on which the said shops are constructed was never subject matter of the said sale deed. In this regard, para 3 of the sale deed dated 07.07.2008, which is annexure No. 2 at page No. 64 of the paper book, is relevant wherein it is stated that the seller shall handover the possession of the said shops to the respondents No.1 and 2 within two months by completing the same. From the said averment, it is clear that at the time of execution of sale deed, the shops in question were in existence but it might be that the same would not have been completed in all respects, hence it cannot be said that the said shops were not in existence. The contention of the appellant Bank that the land on which the shops are constructed is not subject matter of the said sale deed is not tenable because the said shops are situated at the ground floor and the shop No. G-8 having area of 33.82 sq. mtr. was sold for Rs. 9.10 lacs and the shop No. G-9 having area of 26.42 sq. mtr. was sold for Rs. 7.11 lacs, meaning thereby the said shops were sold by the borrower to the respondents No. 1 and 2 along with the land. As such the contention of the appellant Bank that there was future transfer in the present case is also not sustainable.
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is annexure No. 9 at page No. 101 of the paper book, stating therein “as per your letter dated 08.07.2015, our authorized officer has accepted your request and ready to de-seal your shop No. G-8 and G-9 for evacuation”. As such it is clear that the respondents No. 1 and 2 were in possession of the said shops and were doing their business from there. If the respondents No. 1 and 2 were not in possession of the said shops and were not doing their business from there, then on receipt of the letter dated 08.07.2015 from the respondents No. 1 and 2, the Bank would have denied straightway from de-sealing the said shops stating that there is nothing stored in the shops in question, which shops were not in possession of the respondents no. 1 & 2. Hence, the Tribunal below has rightly held that the mortgage created by the respondent No. 3-borrower with the Bank with regard to shops No. G-8 and G-9 is invalid.
CHAIRPERSON
VN Giri
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2 issues framed by the court
Whether the sale deeds executed in 2008 were valid and effective to transfer title and possession of the shops and land to the buyers before the mortgage was created in 2009.
Whether the banks were justified in challenging the validity of the mortgage created over properties which were already transferred and sold to third parties.
Colour shows how this judgement treated each authority
Moti Ram Vs. Khvali RamDistinguished¶42
Moti Ram Vs. Khvali Ram and another, AIR 1967 Alld. 484 · Who else cites this
2 provisions across 2 enactments
Punjab National Bank
Smt. Snehlata Agarwal
Smt Laxmi Devi
M/S City Mall
R. D. KHARE
VN Giri
As recorded by the court registry
10 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
R. D. KHARE and VN Giri
Parties & counsel
