Partly allowed

M/S. Vnr Enterprises and Ors. v. Union Bank of India

DRAT13 Jun 2024IA/266/2024

Case brief

AI extract

What is this about?

Appeal against DRT order denying interim relief on three properties. High Court refers submission on violation of order regarding sale. Tribunal modifies order to limit protection only to specific properties while stalling possession till disposal.

What did the court decide?

Order dated 12.04.2023 limiting protection to all SARFAESI measures vacated and modified to apply only to properties at serial Nos. 10, 11, 12. Possession of these specific items stayed till disposal.

M/S. Vnr Enterprises and Ors. versus Union Bank of India — Banking and Recovery | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson I.A. No. 266/2024(Intervention) In

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Misc. Appeal No. 59/2024

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Between

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M/s. VNR Enterprises & Ors. … Appellant/s V/s.

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The Authorised Officer, …Respondent/s

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Union Bank of India & Anr.

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Mr Gaurang Kinkhabwala, i/b Ms Kanjani Trivedi, Advocate for Appellants.

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Mr Nainesh Amin, Advocate for the Respondent No. 1 Bank. Mr Rajesh Nagory along with Mr V. Deshpande & Ms S.V Chavan, i/b M/s V. Deshpande & Co., Advocate for Respondent No. 2.

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-: Order dated: 13/06/2024: -

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This is an application filed by the second respondent intervener,

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firstly, seeking himself impleaded as a party to appeal being an auction purchaser of one item of property described as plot No. A/59 in the list of properties proceeded against by the first respondent bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) for recovery of the debt allegedly due from the appellants. The prayer regarding impleadment was allowed and the applicant was impleaded as an additional second respondent. The remaining prayers about modification of the order of this Tribunal dated 12.04.2023 in Interlocutory Application (I.A.) No. 196 of 2023 insofar as the

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property purchased by the applicant is concerned, is what is under consideration now.

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The facts in brief are thus: The appellants had filed Securitisation Application (S.A.) No. 126 of 2023 before the Debts Recovery Tribunal-II, Ahmedabad (D.R.T.-II) seeking to challenge the Sarfaesi measures taken by the first respondent bank. While the S.A. was pending, the bank initiated proceedings to take physical possession of three items of mortgaged properties described in serial Nos. 10, 11 & 12 in the list of secured assets mentioned in the demand notice issued under Sec. 13(2) of the SARFAESI Act. The appellants apprehended dispossession on 25.03.2024 and therefore, pressed for an urgent hearing before the D.R.T. about the interlocutory reliefs to protect the possession of the aforesaid three items of the properties.

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The Ld. Presiding Officer (P.O.) vide order dated 24.03.2023 declined to grant any relief of protection pending the S.A. mainly for the reason that the appellants had already filed another S.A. Diary No. 1781 of 2022 challenging the Sarfaesi measures taken by the respondent bank. Without disclosing the pendency of the former S.A. filed by them, they preferred S.A. No. 126 of 2023. The Ld. P.O. found a glaring example of misconduct by the appellants as well as their counsel and on that ground, declined to grant any interim relief. Aggrieved by this, the appellants came in appeal before this Tribunal.

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To entertain the appeal, the appellants had to comply with

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the mandatory provision of pre-deposit contemplated under Sec. 18(1) of the SARFAESI Act. By order dated 12.04.2023, the appellants were directed to deposit a sum of ₹4 crores for entertaining this appeal. Subject to deposit of the pre-deposit amount an interim order stalling further Sarfaesi measures initiated by the bank in respect of the properties regarding which the S.A. was filed, was ordered. The pre-deposit was made, and the appeal was entertained.

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The interlocutory relief which was sought before the D.R.T. and declined to be granted was concerning properties described as serial Nos. 10,11 and 12 alone. Since the appellants apprehended dispossession of those items of properties by the respondent bank, the appellants had insisted on a hearing about the interim reliefs about those items alone. Without going into the merits, the D.R.T. declined to grant any interim relief for the reason that the appellants did not disclose the filing of an earlier S.A. and had, therefore, not approached the D.R.T. with clean hands.

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The property which was purchased by the second respondent intervener was not the subject property concerning the interim relief sought by the appellants before the D.R.T. This fact was, however, not revealed by the appellants at the time of hearing the application for waiver of deposit before this Tribunal. The main concern of the appellants was about the dispossession of three items of properties alone. The appellants were aware that the sale of one item of the secured property to the intervener had

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already taken place and confirmed. But nothing was mentioned about it before this Tribunal apart from a sweeping submission that some items of properties were already sold. It is also pertinent to note that the appellants had preferred an application for amendment of the S.A. No. 126 of 2023 before the D.R.T. to incorporate a prayer challenging the sale, and the same is pending consideration.

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Paragraph 7 of the memorandum of appeal specifically states that the appellants had during the pendency of the S.A. submitted that the court commissioner had under Sec.14 of the SARFAESI Act fixed the date of taking physical possession of the residential immovable property in question on 25.03.2023 and therefore, the S.A. was preponed for hearing. The appellants would further contend that they are completely unaware of the pendency of S.A. Diary No. 1781 of 2022 which was filed by another advocate. This submission appears to be made-believe story.

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The relief sought in the appeal is to direct the respondent bank, its officer, agents, and servants as well as the court commissioner, Surat not to take physical possession of the subject immovable properties in question in pursuance to Sec. 14 order passed by Ld. Additional Senior Civil Judge, Surat (ACJM) dated 16.12.2022 and passed by Ld. ACJM Surat dated 28.12.2022 pending hearing and final disposal of this appeal. There is no dispute that the properties intended to be taken possession of were serial Nos. 10,11 and 12 mentioned in the demand notice.

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The appellants had also pleaded for relief to direct the respondent bank to maintain the status quo in respect of the subject immovable property in question pending hearing and final disposal of this appeal. In the interim relief sought in this appeal, the appellants have made a similar prayer with regard to the subject properties alone. The pleading in its entirety would amply suggest that the ‘subject properties’ were serial Nos. 10,11 and 12 alone. Nevertheless, a blanket order stalling the entire Sarfaesi measures concerning the properties mentioned in the demand notice was passed by this Tribunal, inadvertently.

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The Ld. Counsel appearing for the appellants submits that the respondent bank has in violation of the order of this Tribunal dated 12.04.2023 executed the sale certificate in favour of the intervener. The Ld. Counsel submits that this is in violation of the order and therefore, needs to be undone. He relies on the decision of the Hon’ble Bombay High Court in Keshrimal Jivji Shah and Ano. Vs. Bank of Maharashtra & Ors. 2004 (4) Bom. C. R. 842 wherein it was held that when in a suit for recovery of money, an ad-interim injunction was passed in favour of the bank and in violation of the injunction order, the property was sold in contravention of the prohibitory order, such transfer is illegal if not void and that transfer of immovable property in violation of injunction order or prohibition issued by the court confers no right title or interest in the transferee and that it is no transfer at all. This decision may not apply to the fact of the present case because there are no

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prohibitory orders passed by this Tribunal preventing the sale of the property to the intervener. Rather there is already an admission that certain items of properties were already sold. What the respondent bank has done was to issue a sale certificate. The respondent bank has apologized for this conduct of theirs.

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The Ld. Counsel for the appellants has also relied upon yet another decision of the Hon’ble Supreme Court in Balvantbhai Sombhai Bhandari vs. Hiralal Somabhai Contractor (deceased) rep. by Lrs & Ors. 2023 LiveLaw (SC) 750 wherein it is held that assurance in the form of an undertaking given by the counsel/advocate on behalf of his client to the court and thereafter committing a willful breach or disobedience of the same would amount to civil contempt. The Ld. Counsel also relies on the decision of the Hon’ble Supreme Court in Vidur Impex and Traders Pvt. Ltd. & Ors. vs. Tosh Apartments Pvt. Ltd. & Ors. (2012) 8 SCC 384 which holds that agreement for sale or sale deed executed clandestinely and in violation of injunction granted by the court would not pass any valid title or interest on the purchaser.

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On an anxious consideration of the entire facts and circumstances, I find that the appeal is directed against the order of the D.R.T. declining to grant reliefs pertaining to the protection properties at of serial Nos. 10,11 and 12 alone. The appellants cannot get a better relief in this miscellaneous appeal. The order of this Tribunal dated 12.04.2023 granting protection to the appellants from the entire Sarfaesi measures is therefore vacated and modified. The

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protection is limited to the protection of properties at serial Nos. 10,11 and 12 alone. The possession of those items of properties shall not be taken under the provisions of Sec.14 of the SARFAESI Act till disposal of this appeal.

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List the appeal for hearing on 28.06.2024.

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Sd/Chairperson

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mks-01.

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M/S. Vnr Enterprises and Ors. v. Union Bank of India

Case brief

What is this about?

What did the court decide?

M/S. Vnr Enterprises and Ors. v. Union Bank of India

Case brief

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