Dismissed

Dr. Pratibha Pawan Chumbale v. Religare Finvest Ltd.

DRAT12 Mar 2024MISC APPEAL/41/2024

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal dismissed the appeal against the DR Tribunal's order denying protection to bona fide purchasers facing adverse possession claims by a financial institution under SARFAESI, relying on the doctrine that mortgage by deposit of title deeds takes precedence over subsequent sales.

What did the court decide?

The miscellaneous appeal failed as meritless. The DR Tribunal directed to dispose of the Security Application expeditiously.

Dr. Pratibha Pawan Chumbale versus Religare Finvest Ltd. — Banking and Recovery | DRAT (2024)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present : Mr. Justice Ashok Menon, Chairperson Misc. Appeal No. 41/2024

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Between

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Pratibha Pawan Chumbhale @Pratibha Patil & Anr. … Appellant/s

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V/s.

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Religare Finvest Ltd. & Ors. …Respondent/s

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Mr. Rishabh Shah, along with Mr. Anshul Anjarlekar, & Mr. P. P Parab, i/b Mr P.P. Parab, Advocate for Appellants. Mr Charles D’Souza along with Mr. Archit Virmani & Ms. Radhika K., i/b M/s. Optimus Legal, Advocate for Respondent No.1.

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-: Order dated: 12/03/2024: -

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The Appellants are aggrieved by the dismissal of I.A. No. 403 of 2024 in Securitisation Application (S.A.) No. 430 of 2024 on the files of the Debts Recovery Tribunal, Pune (D.R.T.) declining to grant any protection concerning the measures taken by the 1^st Respondent Financial Institution (FI) against the secured assets consisting of the 3^rd floor admeasuring 4305 ft² and the top terrace admeasuring 2153 ft² saleable area and four car parking of the building named “Galaxy Pathare Plaza” Kharadi village, Pune (subject property) for recovery of debt allegedly due from the 2^nd Respondent under the provisions of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short).

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The Appellants are doctors who claim to be bona fide purchasers of the subject property from the 2^nd Respondent builder

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on 19/06/2016 by way of a registered agreement for sale, for the sale consideration of ₹2.20 crores and furnished the property by expending more than ₹58 lakhs more to make it suitable for conducting a hospital. They have been in exclusive possession and enjoyment of the property since the aforesaid date of purchase. On being threatened to dispossess the Appellants from the premises by the FI armed with an order obtained from the District Magistrate under section 14 of the SARFAESI Act, they approached the D.R.T. by filing the S.A. and sought an interlocutory relief to protect their possession.

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the Appellants contend that their property can be clearly distinguished from the property which was allegedly mortgaged by the 3^rd Respondent to the FI for obtaining a loan. It is contended that the Appellants' property is situated on the 3^rd floor admeasuring 275.48 m² (2065.26 ft²) in the building named “Ramesh Pathare Patil Galaxy Plaza”. The Appellants had purchased a building which was nearing completion whereas, the 3^rd Respondent had allegedly purchased a building proposed to be constructed by the 2^nd Respondent named “Galaxy Pathare Plaza” on 15/02/2016. The said building was mortgaged by the 3^rd Respondent in favour of the FI by creating an equitable mortgage on 25/04/2016. The agreement for sale allegedly executed between Respondents Nos. 2 and 3 was deposited with the FI for the creation of the mortgage.

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The Appellants would contend that due diligence was conducted by them and a search report was obtained from an advocate before the purchase of the property. The entire sale consideration except ₹ 22 lakhs was paid to the 2^nd Respondent. The entire stamp duty based on the sale consideration was also paid on the agreement to sell. The

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balance sale consideration was to be paid on issuance of a completion certificate. The 2^nd Respondent obtained a Commencement Certificate on 12/09/2017 for the 3^rd floor. The Appellants had also obtained the requisite permission from the municipal authorities for operating a hospital on 23/08/2018. The officers of the FI had visited the premises and apprised the Appellants about an existing mortgage over the property created by the 3^rd Respondent. The Appellants had approached the consumer forum with the complaint against the Respondents which was ultimately settled and Respondents Nos. 2 and 3 agreed to clear the property of all the liabilities in December 2022. Surprisingly an order was obtained from the District Magistrate on 03/02/2023 by the FI under section 14 of the SARFAESI Act.

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The Ld. Counsel appearing for the Appellants argues that the subject building is constructed on a larger extent of property and going by the description of the building described in the agreement to sell executed between Respondents Nos. 2 and 3 and the description in the agreement executed between Respondent No. 2 and the Appellants would indicate that the buildings are different though situated in the same survey numbers. There was no possibility of the Appellants coming to know about the agreement for sale executed in favour of the 3^rd Respondent and the consequent mortgage created by him in favour of the FI. Being bona fide purchasers of the property, the possession of the Appellants needs to be protected. The Appellants have also filed a suit before the civil court which is pending adjudication. The Appellants are facing the threat of dispossession and therefore seek protection by way of an injunction against the Respondents from this processing the Appellants from the premises.

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The 1^st Respondent FI has opposed this application and the appeal by stating that the agreement for sale was executed in favour of the 3^rd Respondent by the 2^nd Respondent on 15/02/2016 and the 3^rd Respondent deposited the title deed with the FI for creating a mortgage on 25/04/2016. The agreement to sell as well as the memorandum of deposit of title deeds were registered. There was also a CERSAI registration concerning the Security interest created over the subject property. The Ld. Counsel appearing for the FI would argue that the entire 3^rd floor proposed to be constructed by the 2^nd Respondent was agreed to be sold to the 3^rd Respondent. The name of the proposed building may have subsequently undergone some alteration. That would not however indicate that there are two different buildings in the property.

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The Ld. Counsel for the Respondent FI has relied upon some precedents in support of the argument that a subsequent sale will not affect the prior mortgage of the property given section 48 of the Transfer of Property Act. Reliance is placed upon the decision of the High Court of Delhi in Ishar Dass Malhotra vs. Dhanwant Singh & Ors AIR 1985 Del 83 wherein it is held thus:

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“It will thus be seen that a mortgage by deposit of title deeds is like any other mortgage and there is a transfer of interest in the property mortgaged to the mortgagee. The question, therefore, of the subsequent purchaser having bought the property subject to a mortgage by deposit of title deeds bona fide, with or without notice, is of no relevance. The subsequent purchaser cannot avoid the mortgage by leading evidence to show that he made all reasonable inquiries to find out if the property was subject to a mortgage by deposit of title deeds or not. S. 48 of the T.P. Act does not admit of any such exception. According to the section, when a person purports to create, by transfer at different times, rights in or over the same immovable property, as such rights cannot all exist or be exercised to their full extent together, each later created right shall in the absence of a special contract or reservation binding the earlier transferees, be subject to the right previously created. Further, proviso to S. 48 of the Registration

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Act enacts that a mortgage by deposit of title deeds shall take effect as against any mortgage deed subsequently executed and registered to the same property. Thus, a subsequent sale cannot have priority over a mortgage by deposit of title deeds created before the sale….”

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After having heard the rival arguments and having perused the documents, I find that the Appellants cannot pretend to be ignorant about the registered agreement for sale as well as the registered memorandum of deposit of title deeds created before they purchased the property. There is no indication of the existence of any other building situated in the property having the same survey number to indicate that the property that was mortgaged by the 3^rd Respondent is different from the property which the Appellants claim to be theirs. The documents produced by the Appellants concerning the proceedings before the consumer forum indicate that the property claimed by the Appellants and the property that is allegedly mortgaged by the 3^rd Respondent are the same. There may be discrepancies regarding the description of the building. There also may be discrepancy regarding the extent of the floor measurement but essentially, the building appears to be the same. Prima facie I am of the opinion that the Appellants were not diligent enough to enquire regarding the encumbrances on the property before the purchase. They are therefore not entitled to any protection. I find no reason to interfere with the findings of the D.R.T. The Misc. Appeal would therefore fail as meritless. The D.R.T. is directed to dispose of the S.A. expeditiously untrammelled by what was stated in the impugned order of this order. The parties are at liberty to adduce evidence in detail establishing their claim over the property.

Sd/-

Chairperson

mks-01

Dr. Pratibha Pawan Chumbale v. Religare Finvest Ltd.

Case brief

What is this about?

What did the court decide?

Dr. Pratibha Pawan Chumbale v. Religare Finvest Ltd.

Case brief

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What did the court decide?

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