Dismissed

Arun Kumar Das v. Aditya Birla Housing Finance Limited

DRAT3 Oct 2024MISC APPEAL/64/2024

Case brief

AI extract

What is this about?

The Debts Recovery Appeal Tribunal dismissed an appeal challenging a DRT order upholding SARFAESI proceedings. The Apex held that an unregistered agreement of sale executed after a prior mortgage did not confer title to the buyer, distinguishing cases where title was granted during suit pendency. Consequently, the financial institution's right to recover the loan via the mortgaged asset remained v

What did the court decide?

The appeal was dismissed, and the order dated 23.7.2024 in I.A. 2432 of 2024 was affirmed; no order as to costs.

Arun Kumar Das versus Aditya Birla Housing… — Contract and Commercial Disputes | DRAT (2024)

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Reportable/Non-Reportable

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appeal No. 64 of 2024

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(Arising out of S.A. 524 of 2024 in DRT-III, Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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Arun Kumar Das, son of Bangshi Badan Das, residing at 102/B, P.N. Mitra Brick Field Road, 2^nd Floor, Flat No. S5, Police Station - Behala, Kolkata – 700 053, District – South 24 Parganas, West Bengal.

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… Appellant

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-Versus-

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Aditya Birla Housing Finance Limited, 2^nd Floor, Bangur, BLF Estate, 3, Chowringhee Road, Kolkata – 700 016, District: South 24 Parganas, West Bengal;

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Authorised Officer, Aditya Birla Housing Finance Limited, 2^nd Floor, Bangur, BLF Estate, 3, Chowringhee Road, Kolkata – 700 016, District: South 24 Parganas, West Bengal;

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Brijesh Prasad Singh, son of Barish Prasad Singh, 3, Achambit Shah Road, Post Office & Police Station – Hastings, Kolkata – 700 022, District: South 24 Parganas, West Bengal;

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Daisy Singh, wife of Brijesh Prasad Singh, 3, Achambit Shah Road, Post Office & Police Station – Hastings, Kolkata – 700 022, District: South 24 Parganas, West Bengal;

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Subhas Prasad, son of Munshi Mahato, Proprietor of Jai Matadi Enterprise, of 5/H/2, Shah Rajib Road, Post Office & Police Station – Hastings, Kolkata – 700 022, District – South 24 Parganas.

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… Respondents

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Counsel for the Appellant … Mr. Souritro Ganguly Ms. Mousumi Pal Counsel for Respondents No. 1 & 2 … Mr. Avishek Guha Ms. Shreyasi Sen

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JUDGMENT : 3^rd October, 2024

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata

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THE APPELLATE TRIBUNAL :

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Instant appeal has arisen against a judgment and order passed by Learned DRT-III, Kolkata dated 23.7.2024 in I.A. 2432 of 2024 arising out of S.A. 524 of 2024 (Arun Kumar Das -vs- Aditya Birla Housing Finance Limited & Others). 2. As per the pleadings of the parties, a SARFAESI Application is filed by the Appellant stating that Appellant is bona fide purchaser and owner of the property situated at 120B, P.N. Mitra Brickfield Road, 2^nd Floor, Flat No. S6, P.S. Behala, Kolkata. Appellant executed an unregistered agreement with Jai Matadi Enterprise for purchase of the flat on 29.12.2015. Appellant also approached the Diwan Housing Finance Corporation Limited (in short DHFL) for financial assistance. Developer, Jai Matadi Enterprise, wrote a letter to DHFL on 19.10.2016 confirming to sell the secured assets to the Appellant. ‘No Objection’ was also given for obtaining the loan. Developer confirmed that in default or otherwise, DHFL will have the right to sell the flat to any other person. Subsequently, a registered Deed of Conveyance was executed on 24.10.2016 and a loan of Rs.8,62,097.00 was sanctioned by the DHFL. Appellant paid an amount of Rs.7.00 lac to the Developer. Registered Deed of Conveyance was registered on 27.02.2019 by the Developer. Finally possession was also handed over to the Appellant. Mutation was also done. During pendency of the credit facility with the DHFL, Piramal Capital and Housing

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata Finance Limited took over the loan from DHFL and repayments were made by them.

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3. On 11.01.2023, Appellant received a notice under Section 13 (2) of the SARFAESI Act, 2002 (hereinafter referred to as the Act) from the Respondent, Aditya Birla Capital in connection with a flat measuring 1000 sq.ft. A complaint to the said fact was lodged before the Behala Police Station by the Appellant. Matter is under investigation. It appears that on 24.4.2023 an order under Section 14 of the Act was passed by the Chief Judicial Magistrate, Alipore which transpires that there is a loan to purchase a flat measuring an area of 1050 sq.ft. on the entire second floor of the building situated at premises No.102/76, P.N. Mitra Brick Field Road, under Municipal Ward No. 116 within the limits of Kolkata Municipal Corporation. However, the Appellant herein has not taken any loan nor his property is connected with the said loan. It is a case of fraud between Brijesh Prasad Singh, Subhas Prasad Mahato and the Bank. Relief was sought to declare the steps under the SARFAESI Act bad in law. Further relief is sought to withdraw the impugned notice under Section 13 (2) of the Act and measures taken under 14 (4) of the Act and to pass appropriate order prohibiting the secured creditor to act upon on the basis of the order dated 24^th April, 2023 passed by the Chief Judicial Magistrate, Alipore. 4. An application, I.A. 2432 of 2024, was filed for the relief to set aside the order dated 24^th April, 2023 passed by

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata Learned Chief Judicial Magistrate, Alipore by the Learned DRT.

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5. Respondent, Financial Institution, opposed the petition stating that the property has been mortgaged with the Bank by Brijesh Prasad Singh and Daisy Singh on 30^th June, 2018 which is prior to the Deed of Purchase of the Applicants.

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6. Learned DRT held that there are no allegations of the Applicants against the Financial Institution. There may be some dispute between the Respondent Applicant and Promoters and Developers. Accordingly, I.A. 2432 of 2024 was dismissed. Feeling aggrieved by the order, Appellant preferred the appeal.

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7. I have heard the Learned Counsel for the parties and perused the record. 8. Learned Counsel for Appellant would submit that the Agreement for Sale was executed on 24^th October, 2016. Prior to it, an unregistered Argument of Sale was executed in the year 2015. Learned Counsel for Appellant places reliance upon Section 47 of the Registration Act and submitted that the unregistered Agreement of Sale would relate back to the date of registered Agreement of Sale, i.e. when the agreement of sale got registered. It means that it will have the effect from the date of execution of the unregistered Agreement of Sale. Learned Counsel also placed reliance upon Section 21 of the West Bengal Registration Rules and Section 54 of the Transfer of Property Act. It is submitted that where the agreement of sale was executed, vendor was precluded from dealing with the

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata property. Possession was also delivered to the Appellant. The Agreement for Sale was executed on 30^th June, 2018 between Sukumar Majhi, Dilip Majhi, Aparna Saha, Subhas Mahato and Arun Kumar Das and M/s. Jai Matadi Enterprise. In the second schedule, details of the property are mentioned as Premises No. 102/76, presently, 102, P.N. Mitra Brick Field Road, within the limits of Kolkata Municipal Corporation, Ward No. 116. It is submitted that the Appellants are enjoying possession of the secured assets on the basis of a registered Agreement for Sale.

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9. Per contra, Learned Counsel for Respondent would submit that the debt amount of Rs.29,36,382.00 was sanctioned in favour of Brijesh Prasad Singh and Daisy Singh on 14.6.2018 whereby the flat measuring 1040 sq.ft on the second Floor of a three storied building situated at premises No. 102/76, P.N. Mitra Brick Field Road, Kolkata was mortgaged. When Loan Accounts became irregular, proceedings under SARFAESI Act was initiated by the Financial Institution. Orders under Section 14 of the Act was also obtained. The registered Deed of Conveyance of Appellant is subsequent to the deed of mortgage in favour of the Financial Institution. Further the secured assets which were mortgaged with the Bank were detailed in the Agreement of Loan. It is further submitted that the Appellant cannot take any advantage of an unregistered sale as no right confer upon the Appellant regarding such sale. Section 47 of the Act will not be applicable in this case.

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata 10. Loan was sanctioned by the Financial Institution in favour of Brijesh Prasad Singh and Daisy Singh on 14.6.2018 on the basis of creation of equitable mortgage on 14.6.2018. Admittedly, the Deed of Conveyance was executed in favour of the Appellant on 27.02.2019 while unregistered Agreement of Sale was executed in the year 2015 while the registered Agreement of Sale was executed in the year 2016.

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11. As far as applicability of Section 47 of the Registration Act is concerned, provisions of Section 47 of the Registration Act would not be of any aid to the Appellant. Reliance is placed upon Arun Bhusan Guha & Others -vs- Amal Roy

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& Another (AIR 2009 Cal 182) by the Appellant. Facts of the case is not applicable to the present case. In the said case sale deed was execute on 14^th November, 2002 but the registration of the said sale deed was kept in abeyance till 29.3.2006 for non-payment of deficit Court Stamp Duty. On the Deed of Conveyance, ultimately on payment of the deficit stamp duty, registration was completed in the year 2006; wherein the Hon’ble High Court held that since registration of the said Deed of Conveyance was completed during the pendency of the said suit, the opposite party No. 2 became the owner of the suit property and his title related back to the date of execution of the said deed. But in the present case, facts are entirely different. Here the Appellant is claiming his rights on the basis of an unregistered Argument for Sale which was subsequently registered and Deed of Conveyance was executed on 27.02.2019 while the

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata mortgage was created in favour of the Financial Institution on 30^th June, 2018. Section 54 of the Transfer of Property Act specifically provides that a contract for sale of immoveable property does not confer any right, title or interest on such property. It was held in Sunil Kumar Jain -vs- Kishan [(1995) 4 SCC 147] that agreement of sale does not confer any title. In Namdeo -vs- Collector, East Neemar, Khandwa [(1995) 5 SCC 598] it was held that an agreement of sale does not confer any right, title or interest. It would be create only an enforceable right before a Court of Law and parties could act thereon. Hence, no right, title or interest could be created in favour of the Appellant on the basis of an agreement for sale.

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12. Learned Counsel has also placed reliance upon Sanjeev Lal & Others -vs- Commissioner of Income Tax, Chandigarh & Another [(2015) 5 SCC 775]. But the facts of the case are not applicable with the facts of the present case.

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13. Equitable mortgage was created in favour of the Financial Institution by the secured creditor by creating an equitable mortgage on 30^th June, 2018 but no right could be transferred in favour of the Appellant in secured assets which are mortgaged in favour of the Financial Institution. If any dispute exists between the Appellant and his Promoter or the Defaulter, that is a separate dispute which could not be relevant in this matter. Prior mortgage is created in favour of the Financial Institution by the Borrower. Financial Institution was well within its rights to proceed under the

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Misc. Appeal No. 64 of 2024-DRAT-Kolkata Securitisation Act under the law. I do not find any infirmity in the order. Appeal lacks merit and is liable to be dismissed.

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O R D E R

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The appeal is dismissed. The judgment and order passed by Learned DRT-III, Kolkata dated 23.7.2024 in I.A. 2432 of 2024 arising out of S.A. 524 of 2024 (Arun Kumar Das -vs- Aditya Birla Housing Finance Limited & Others), is affirmed.

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No order as to costs.

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File be consigned to Record room.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of the Judgment/Final Order be uploaded in the Tribunal’s Website.

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Order dictated, signed, and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson