Dismissed

Dinesh Agarwal v. Fullerton India Home Finance Limited

DRAT29 Sept 2023REGULAR APPEAL/104/2023

Case brief

AI extract

What is this about?

Appeal dismissed. Debts Recovery Tribunal held the sale of a secured asset was invalid under Section 13(13) of the SARFAESI Act due to undisclosed prior charge, rendering the appellant not a 'person aggrieved' to challenge the creditor's recovery action.

What did the court decide?

Appeal dismissed; impugned order of DRT confirmed; subsequent applications dismissed.

Dinesh Agarwal versus Fullerton India Home… — Contract and Commercial Disputes | DRAT (2023)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 104 of 2023

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(Arising out of SA 875 of 2022 in DRT-III Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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29.09.2023

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Dinesh Agarwal, residing at 7, Ganesh Chandra Avenue, Kolkata – 700013.

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-Vs-

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Fullerton India Home Finance Ltd. having branch office at 53A, Rafi Ahmed Kidwai Road, 2^nd floor, PS Park Street, Kolkata – 700016.

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Authorized Officer, Fullerton India Home Finance Ltd. having branch office at 53A, Rafi Ahmed Kidwai Road, 2^nd floor, PS Park Street, Kolkata – 700016.

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Java Sinha, residing at 5C, 6/2/A/3, Banamali Ghosal Lane, James Long Sarani, Kolkata – 700034.

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Amitabha Sinha Roy, residing at 108B, M. G. Road, Haridevpur, Kolkata – 700082.

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… Respondents

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For Appellant : In person.

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For Respondent : Mr. S. Bhattacharya, Ld. Advocate for resp.1. Md. Mir Hasan, ld. Advocate for resp.1 Mr. Syed E. Huda, ld. Advocate for resp.no.1

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THE APPELLATE TRIBUNAL :

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Feeling aggrieved by the order dated 15.06.2023 passed by learned DRT-III Kolkata in S.A. 875 of 2022 SARFAESI, appellant, Dinesh Agarwal, preferred the appeal.

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As per pleadings of the parties, appellant filed an application u/s 17 of the SARFAESI Act, 2002 (hereinafter referred to as ‘the Act’) against the respondents on the ground that he has purchased a Flat No. 1B at first floor of P-240, Hindustan Park, PS: Gariahat, Dover Lane, Sarat Bose Road, Kolkata – 700029 and has right, title and interest over the flat along with parking space. Respondent no.1, Fullerton India Home Finance Ltd., disbursed loan to respondent no.3, Java Sinha, and respondent no.4, Amitabha Sinha Roy, against secured asset of the Flat No.1B. Respondent no.3 sold the property to the appellant by registered deed of conveyance on 28.11.2020. Appellant claimed to be a bona fide purchaser for consideration amount of Rs.1.70 crore and physical possession was also handed over to him. Appellant has all the right title interest over the property. He did not know any transaction between the respondent no.1 financial institution and respondent no.3 and 4. He came to know about the action initiated by the respondent no.1 when symbolic possession was arbitrarily taken. There is no privity of contract between the respondent no.1 financial institution and respondent no.3 and 4. Physical possession was arbitrarily taken by respondent no.1 on the basis of the order passed by District Magistrate, South 24 Parganas. Appellant came to know about taking over physical possession on 18.10.2022 when he returned to Kolkata from Delhi. All the actions initiated by respondent no.1 financial institution are bad in law.

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Relief is sought for injunction against the respondent no.1 financial institution for initiating any action against the appellant regarding secured asset and physical possession. Possession notice dated 13.10.2022 is also sought to be quashed along with order passed by District Magistrate on 08.06.2022.

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Opposition was filed by the respondent no.1 financial institution challenging the assertion made by the appellant. It is stated that secured asset was mortgaged in favour of respondent no.1 by respondent no.3 and 4 on 21.02.2019 whereby loan of Rs.61,05,684/- was availed by them. This loan amount was not repaid and it was classified as NPA on 31.05.2021. Accordingly, SARFAESI action was initiated. Notice u/s 13(2) was served upon the respondent no.3 and 4 and was also published in two leading newspapers. Possession notice was issued on 13.10.2022 and was published in two newspapers. Application u/s 14 of the Act was filed before the District Magistrate, South 24 Parganas, who passed order on 08.06.2022 and physical possession was taken 13.10.2022. Appellant has no locus standi as the security interest was created much before the alleged sale in favour of the appellant.

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Learned DRT dismissed the S.A. by the impugned order on the ground that mortgage of the property in question by respondent no.2 and 3 in favour of respondent no.1 financial institution was prior to the sale of the property in favour of the appellant. Accordingly, the transaction in favour of the appellant

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cannot supersede the first charge created in favour of respondent no.1 under the Act.

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Appellant appears in person and argued that he is ready and willing to make the payment of loan amount to the respondent no.1 financial institution. It is submitted that secured asset was taken by the respondent no.1 illegally. He is a bona fide purchaser for the value with notice. He made all the required searching prior to purchase of the secured asset and paid consideration amount to respondent no.3.

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A bare perusal of the record will show that secured asset was mortgaged with the respondent no.1 financial institution by creating equitable mortgage by depositing the original title deed on 23.02.2019. Appellant purchased the secured asset on 28.11.2020.

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Section 13(13) of the Act reads as under :

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– 13(13) “No borrower shall, after receipt of notice referred to in subsection (2), transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice, without prior written consent of the secured creditor.”

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Respondent no.1 has prior charge over the property. Hence any sale by respondent no.3 in favour of the appellant is held to be barred by the provision of sub-section (13) of Section 13 of the Act. Accordingly, SARFAESI action initiated by the respondent no.1 financial institution cannot be challenged by the appellant by preferring an application u/s 17 of the Act. As has been rightly observed by the learned DRT that appellant would

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have right to proceed against his vendor, i.e. respondent no.3 in accordance with law, if so wishes. But since the SARFAESI action has been initiated by respondent no.1 financial institution in accordance with the provisions of the Act and appellant cannot be held as ‘person aggrieved’, SARFAESI application is not legally maintainable.

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10. I do not find any illegality in the impugned order. Appeal lacks merit and is liable to be dismissed.

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O R D E R

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Appeal is dismissed. Consequently, all the I.A.s are also dismissed. Impugned order dated 15.06.2023 is confirmed. No costs.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT.

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Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open Court on this the 29^th day of September, 2023.

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(Anil Kumar Srivastava, J) Chairperson

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Dated : 29.09.2023 /pkb

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Dinesh Agarwal v. Fullerton India Home Finance Limited

Case brief

What is this about?

What did the court decide?

Dinesh Agarwal v. Fullerton India Home Finance Limited

Case brief

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