Allowed

A.O.,Indian Overseas Bank v. R.Veeraraghavan

DRAT9 May 2023REGULAR APPEAL/69/2019

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed the application challenging the sale notice on the ground of forged documents, though the Bank never claimed the deeds were forged. The Full Bench held that the DRT misread pleadings, acted beyond the limited scope of Section 17(1) of the SARFAESI Act, and failed to consider proper service and publication. The appeal is allowed and the DRT order set asi

What did the court decide?

The appeal is allowed; the impugned Order dated 05.03.2019 is set aside; SA 239/2018 is dismissed.

A.O.,Indian Overseas Bank versus R.Veeraraghavan — Contract and Commercial Disputes | DRAT (2023)

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RA (SA) 69/2019

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 9^th of May, 2023

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar CHAIRPERSON

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RA (SA) 69/2019 [SA 239/2018 on the file of DRT- II , Chennai]

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Between

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The Authorised Officer, Indian Overseas Bank, IFSC Code: IOBA000, Ashok Nagar Branch, No.9, Dr. Natesan Road, Ashok Nagar, Chennai – 600 083.

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……Appellant

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And

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Mr. R. Veeraraghavan, S/o Ramamurthy, No.105, Lakshmanaswami Salai, K. K. Nagar, Chennai – 600 078.

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….. Respondent

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Counsel for Appellant : M/s. K. Nethrasikamani Counsel for Respondent : M/s. M. Theivakumar & A. Durgathamarai

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RA (SA) 69/2019

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ORDER

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1. This Appeal is against Order dated 05.03.2019 of DRT-II,

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Chennai, in SA 239/2018.

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2. Brief facts leading to this Appeal are as follows:-

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Respondent herein filed SA 239/2018 challenging Sale Notice dated 23.08.2018 contending that said Notice is against provisions of SARFAESI Act, 2002. It is further contended that said Notice is not personally served, thereby he is deprived of making payment within 30 days, which is an violation of Rule 8(6) of Security Interest (Enforcement) Rules, 2002 (hereinafter called the Rules, 2002). It is further contended that Bank violated provisions of Rule 8(5) 8(6) and 8(7) of Rules, 2002. Another contention raised in Application is that he has not executed any Guarantee Deed and not deposited original Sale Deeds with Bank.

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RA (SA) 69/2019

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Appellant herein resisted said Application disputing contentions of Respondent herein. According to Appellant, Respondent herein introduced 38 bogus persons as purchasers of Flats, and siphoned off nearly Rs.9 Crores at various branches of Appellant. It is further contended that after knowing about fraud, Appellant’s Regional Office preferred a criminal complaint with CBI, which, after proper investigation, filed charge sheet against all persons including Respondent herein. It is further contended that Respondent herein executed Guarantee Deed on 06.02.2013 and deposited title deeds, and Sale Notice is only to bring properties for sale covered by those Sale Deeds. It is further contended that Bank followed all the provisions of SARFAESI Act, 2002, and Application is devoid of merits.

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Tribunal below, on a consideration of contentions and

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rival contentions, allowed SA on the ground that Sale Deeds deposited with Bank are forged and bogus documents, which

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RA (SA) 69/2019

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fact is admitted by Bank, and aggrieved by said Order, present

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Appeal is preferred.

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3. Heard both sides.

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4. Advocate for Appellant submitted that Order of Tribunal

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below suffers both from errors on law and on factual matrix. It is submitted that finding of Tribunal below is completely contrary to pleadings before it. It is further submitted that Bank initiated Sale, only on those properties on which equitable mortgage is created and documents deposited before it are original title deeds. It is submitted that Tribunal below misconstrued pleadings, and held that Bank admitted that title deeds deposited are forged and bogus one. It is further submitted, nowhere Bank contended in those lines, and it is the specific case of Bank that Respondent herein deposited original title deeds pertaining to property mortgaged, on 06.02.2013 by executing Guarantee Deed. It is submitted that Order of Tribunal below is liable to be set aside.

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RA (SA) 69/2019

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5. On the other hand, Advocate for Respondent submitted

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that Letter of Guarantee relied on by Bank is not a valid document, as it is not a registered one. It is submitted, as per State law, registration is compulsory with effect from 0102.2012, and Tribunal below rightly allowed Securitisation Application and that there are no grounds to interfere with Order of Tribunal below. It is further submitted it is the specific case of Respondent that he has not executed any document in favour of Bank, and for all these reasons, Appeal is liable to be dismissed.

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6. I have perused material papers and impugned Order dated 05.03.2019.

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7. As seen from impugned Order, Tribunal below granted relief to Respondent herein on the ground that Appellant herein admitted that deposited title deeds and other documents, are forged and bogus documents. But, as seen

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RA (SA) 69/2019

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from pleadings, nowhere such admission is made by Appellant

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herein. What all pleaded by Appellant herein is that Respondent herein availed loans by introducing 38 bogus persons entering into an agreement for selling Flats, which is a bogus transaction. But, Bank has specifically pleaded that on 06.02.2013 Respondent herein executed Guarantee Deed

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and deposited original title deeds of property given as security. In the Application, Respondent disputed execution of any such Guarantee Deed, but such contention do not fall under the scope of enquiry under Section 17(1) of SARFAESI Act, 2002. As per said provisions, DRT has limited scope of enquiry as to examine whether Secured Creditor has followed the Act and

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Rules made thereunder, in issuing Sale Notice. In the Counter, Bank specifically stated that Sale Notice was sent to Respondent by registered post, but the same is returned with an endorsement ’refused’. It is also stated that Sale Notice is published in two newspapers including vernacular language in Trichy and Chennai Editions. When such specific plea is taken, no rejoinder is filed on behalf of Respondent herein disputing said facts. Under Rules, Bank has to send Sale

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RA (SA) 69/2019

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Notice, and thereafter publish it in two newspapers, which is

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duly complied with, and Tribunal below lost sight of this aspect. As rightly pointed out by Advocate for Appellant, DRT simply allowed Securitisation Application by

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misunderstanding Counter averments of Bank, which resulted

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in passing impugned Order. I completely agree with submissions of Learned Advocate for Appellant herein that Bank followed provisions of Act and Rules in issuing Sale Notice and publishing it. When Appellant herein has not admitted anywhere that Sale Deeds deposited with it, are forged and bogus documents, recording such a finding, in my view, is due to misreading of material papers. When it is not

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the scope of enquiry, to decide whether any mortgage is created or not, and any document is executed or not, taking such a plea and harping on it, in my view, is not permissible.

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8. On a scrutiny of material on record, I have no hesitation

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in holding that Tribunal below committed error in allowing

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RA (SA) 69/2019

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Securitisation Application, therefore, its Order is liable to be

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set aside.

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9. In view of my foregoing observations and findings, Appeal

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has to be allowed and impugned Order dated 05.03.2019 is liable to be set aside, consequently, SA 239/2018 is liable to be dismissed.

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10. In the result, Appeal RA (SA) 69/2019 is allowed with

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costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 9^th of May, 2023]

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CHAIRPERSON

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A.O.,Indian Overseas Bank v. R.Veeraraghavan

Case brief

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A.O.,Indian Overseas Bank v. R.Veeraraghavan

Case brief

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