Dismissed

Mr Mahadev Hari Sarmalkar v. Icici Bank Limited

DRAT6 Dec 2023REGULAR APPEAL/9/2023

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal dismissed the appeal filed by a property seller who claimed to have been defrauded by a buyer, rejecting claims to stall SARFAESI measures and refuse appointment of a receiver.

What did the court decide?

Impugned order upholding SARFAESI measures dismissed. Appeal dismissed. Interlocutory Application dismissed.

Mr Mahadev Hari Sarmalkar versus Icici Bank Limited — Company and Corporate | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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I.A. No.478/2023 In

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Appeal No. 09/2023

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Between

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Mahadev Hari Sarmalkar

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… Appellant/s

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V/s.

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ICICI Bank Ltd. & Ors.

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…Respondent/s

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Mr M.V. Holamagi, Advocate for Appellant. Ms. Ketkin Minha, i/b M/s H & M Legal, Advocate for Respondent Bank.

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The Appellant is the applicant in the Securitisation Application (S.A.) No. 3 of 2022 on the files of the Debts Recovery Tribunal-III, Mumbai (D.R.T.) and is in appeal aggrieved by the dismissal of the S.A. by the impugned order dated 12/10/2022.

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Aggrieved by the Sarfaesi measures initiated by the 1^st Respondent ICICI Bank Limited against the allegedly secured asset, Flat No. 310, 3^rd floor Ostwal Ornate Building No. 2, Cooperative Housing Society Limited, situated at Jesal Park, Bhayandar (E), Thane(subject flat), the Applicant approached the D.R.T. with an application under section 17 (1) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) for a declaration that the measures initiated by the Respondent bank under section 14 of the SARFAESI Act is illegal, arbitrary, unreasonable and unjustified and hence requires to be quashed and set aside and also to stay the order dated

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05/04/2021 of the Additional District Magistrate, Thane.

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The Appellant is a third party who claims to be the absolute owner of the subject flat which he had allegedly purchased on 28/09/2001 from the builders M/s Shree Ostwal Builders Private Limited. It is contended that the Appellant required some money and therefore, agreed to sell the flat to the 2^nd Respondent for a sale consideration of ₹21,23,000/- in the year 2007, and executed an agreement for sale and received earnest money of ₹3 lakhs towards sale consideration. The agreement for sale was registered. The 2^nd Respondent had agreed to pay the balance sale consideration after availing of a loan from some financial institution. It was agreed that on receipt of the balance sale consideration, the possession of the property would be handed over to be 2^nd Respondent and the sale deed would be executed. The original title deed belonging to the Appellant was also handed over to the 2^nd Respondent to pledge it. The subject flat was mortgaged by the 2^nd Respondent to the 1^st Respondent bank and a loan was. The 2^nd Respondent defaulted repayment as a result of which the account was classified as a Non-Performing Asset (NPA). The 1^st Respondent issued a demand notice under section 13 (2) to the 2^nd Respondent seeking repayment of the debt. There was no response and hence, Sarfaesi measures were initiated to recover the debt from the secured asset. Consequent to getting an order under Sec. 14 of the SARFAESI Act, the 1^st Respondent proceeded to take physical possession of the subject flat.

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Aggrieved by the Sarfaesi measures, the Appellant filed the S.A. and sought an injunction to restrain the 1^st Respondent from dispossessing him.

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The 1^st Respondent bank contended that Respondents Nos. 2 and 3 had approached the bank for a housing loan, and a sum of ₹18,78,000 was sanctioned as per letter dated 23/05/2007. The amount was disbursed to the specified account of the Appellant, and a mortgage was created by depositing the title deeds of the subject flat. On defaulting, recovery steps were initiated. Respondents Nos. 2 and 3 failed to respond to the demand notice issued under section 13 (2) of the SARFAESI Act, and further steps were taken under section 13 (4), and symbolic possession was taken. Order to take physical possession of the subject flat was obtained on 05/04/2021 from the Additional District Magistrate under section 14 of the SARFAESI Act.

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The Ld. Presiding Officer after considering the rival contentions found that the claim put forth by the Appellant to be unsustainable and hence dismissed the S.A. vide the impugned order. The Appellant is aggrieved and hence, in appeal.

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The Appellant contends that he has not been paid the balance sale consideration and despite waiting for six months, no steps were taken to execute the sale deed. The 2^nd Respondent asked for a refund of ₹3 lakhs paid by him as advance, making the Appellant believe that the 1^st Respondent bank has not approved the loan. The Appellant then requested a few months more to return the amount received by him. It was mutually agreed that once the amount received by the Appellant was refunded, the agreement for sale would stand terminated. The 2^nd Respondent also agreed to return the title deeds handed over to him by the Appellant. However, to the surprise of the Appellant, the bank proceeded with the Sarfaesi measures to secure physical possession of the secured asset.

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The important question that arises for consideration in this appeal is whether the Appellant is entitled to get the Sarfaesi measures initiated by the Respondent bank stalled for the reason that he has not received the sale consideration from the 2^nd Respondent. The Respondent bank would contend that the 2^nd Respondent had mortgaged the property which he obtained under a registered agreement for sale and a sum of ₹ 18,78,000 was disbursed by the 1^st Respondent bank to the specified account of the Appellant on 07/08/2007 vide cheques which were encashed through the bank account in the name of the Appellant.

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It is an admitted case that the Appellant had agreed to sell the subject flat to the 2^nd Respondent and an agreement for sale was registered on 26/07/2007. ₹3 lakhs was received by the Appellant as part payment and the balance sale consideration was agreed to be paid by the 2^nd Respondent after availing a loan. The Appellant was therefore aware of the fact that the 2^nd Respondent intended to avail loan after mortgaging the property, and for that purpose, the original title deeds of the property were also handed over to the 2^nd Respondent to create a mortgage. However, the Appellant states that he did not receive the balance sale consideration. Neither has he taken any steps against the 2^nd Respondent to claim the balance sale consideration nor did he rescind from the contract. No civil suit was for specific performance of the contract seeking payment of balance sale consideration, or for repudiation of agreement. The remedy available to the Appellant is that of an unpaid seller. He has not taken any steps to exercise his right as an unpaid seller.

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It is contended by the Appellant that the 2^nd Respondent had

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cheated him and has played fraud upon him. The document produced by the bank would indicate that the amount was disbursed to the Appellant in his bank account maintained with CKP Cooperative Bank, branch Dadar. In this appeal, the Appellant took steps to get the details of the said account summoned from the Cooperative Bank. The documents prodded by the witness indicate that some other person has opened an account assuming the name of the Appellant with forged KYC documents and had withdrawn the amount. It appears that the Appellant had not received the amount of balance sale consideration and has been defrauded by the 2^nd Respondent in collusion with someone else.

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Tribunals constituted under the provisions of the SARFAESI Act have a very limited scope and power. Under section 17 of the Act, all that is required by the Tribunal is to examine whether there is any infringement of the provisions of the SARFAESI Act by the creditor while recovering the amount. In the instant case, there is no doubt that the Appellant had agreed to sell the property to the 2^nd Respondent and he had also permitted him to avail a loan for payment of the balance sale consideration. The title deeds of the property were handed over to the 2^nd Respondent to create a mortgage. The Appellant slept over his right to seek remedy as an unpaid seller to claim the balance sale consideration. He has not taken any steps to enforce the contract he had entered into with the 2^nd Respondent.

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Tribunals are required to decide only those issues that come within their domain. The Hon’ble Supreme Court has in Standard Chartered Bank vs. Dharminder Bhohi & Ors (2013) 15 SCC 341 held that the jurisdiction of Tribunals is confined only to powers conferred on

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it by statute and they do not have any inherent powers. In case the Appellant has not received the balance sale consideration from the 1^st Respondent bank, it was incumbent upon him to take action against the 2^nd Respondent seeking payment of the balance sale consideration based on the agreement he had entered into with him. The D.R.T. cannot in an application filed under the provisions of the SARFAESI Act provide any remedy to him for the reason that the 2^nd Respondent has defaulted in complying with his part of the contract. 13. The Appellant is at liberty to proceed with any criminal action against the 2^nd Respondent or his accomplices for having siphoned the money received from the 1^st Respondent bank. This Tribunal is however helpless in providing any succour to the Appellant within the confines of the SARFAESI Act.

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I.A. No. 478/2023 is filed by the Appellant seeking relief to entrust the subject property to a receiver till the fraud deployed by the 2nd Respondent in collusion with others is established. Such powers of appointing a receiver are not provided in proceedings under the SARFAESI Act. The only relief that the applicant aggrieved under Sec.17 of the SARFAESI Act is entitled to, is to get the Sarfaesi measures quashed, and on succeeding to do so, get the restoration of possession of the possession of the secured assets to him under Sub Sec. (3) of Sec. 17 of the SARFAESI Act.

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True, there is a provision under Sec 19(18) of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) to appoint a receiver in cases under adjudication. But, the SARFAESI Act does not contemplate an adjudication. The provisions of the RDB Act may in appropriate cases apply to the proceedings under the SARFAESI Act.

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But it is too far stretched to apply the provisions of appointment of a receiver in the instant case on the indication of possible fraud against the Appellant. The Appellant will have to get that established in an appropriate forum if so advised. I.A. No. 478/2023 is therefore dismissed.

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I do not find any irregularity or illegality in the impugned order of the D.R.T. Resultantly, the appeal is devoid of any merits and is, therefore, dismissed.

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Interlocutory Applications, if any, stand dismissed.

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Sd/Chairperson

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mks-01

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Mr Mahadev Hari Sarmalkar v. Icici Bank Limited

Case brief

What is this about?

What did the court decide?

Mr Mahadev Hari Sarmalkar v. Icici Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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