Allowed

A.O. Canara Bank v. Madapalli Pradeep Verma and Ors.

DRAT18 Apr 2024REGULAR APPEAL/165/2018

Case brief

AI extract

What is this about?

The Dele Recovery Appellate Tribunal allowed the bank's appeal, setting aside the DRT's interim order restraining the bank from auctioning mortgaged property, holding the order unsustainable against the bank's first charge established by a registered mortgage.

What did the court decide?

Impugned order dated 31.05.2018 set aside. DRT directed to decide Sale Petition on merits.

A.O. Canara Bank versus Madapalli Pradeep Verma and Ors. — Banking and Recovery | DRAT (2024)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Appeal No. 165 of 2018

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(Arising out of SA No. 200 of 2018 DRT- Visakhapatnam)

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18.04.2024

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The Authorised Officer, Canara Bank, having Head Office at 112, J.C.Road, Bangalore-2 and Siripuram Branch, Padmavathi Towers, Balaji Nagar, Siripuram, Visakhapatnam – 530003.

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… Appellant

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-Vs-

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Madapalli Pradeep Verma, residing at D No.4-56-1/4, ground floor, Sri Raja Rajeswari Nilayam, Plot No. LIG-75, Lawson’s Bay Colony, Visakhapatnam.

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Smt. Kesani Raja Rajeswari, residing at D No.4-56-1/4, ground floor, Sri Raja Rajeswari Nilayam, Plot No. LIG-75, Lawson’s Bay Colony, Visakhapatnam.

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Kesani Yedukonadalu, residing at D No.4-56-1/4, ground floor, Sri Raja Rajeswari Nilayam, Plot No. LIG-75, Lawson’s Bay Colony, Visakhapatnam.

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Kesani Bala Nagendra, D No.4-561/4, ground floor, Sri Raja Rajeswari Nilayam, Plot No. LIG-75, Lawson’s Bay Colony, Visakhapatnam.

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Karpurapu Anil Kumar, D No.456-1/4, ground floor, Sri Raja Rajeswari Nilayam, Plot No. LIG-75, Lawson’s Bay Colony, Visakhapatnam.

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For the appellants : Mr. Debasish Chakraborty, ld. Advocate For the respondents: None.

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THE APPELLATE TRIBUNAL

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Heard learned counsel for the appellant bank and perused the records. Despite service none is present for the respondents, although on earlier occasions also none appeared for the respondents.

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Instant appeal is preferred against the order dated 31.05.2018 passed by the learned DRT, Visakhapatnam in I.A. No. 887 of 2018 arising out of S.A. No. 200 of 2018 [Madapalli Pradeep Varma Vs. Canara Bank & Ors.] whereby learned DRT has passed an interim order restraining the appellant bank not to take any action upon the ground floor of the Schedule-B property as mentioned in the S.A.

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As would appear from the application filed by the respondent no.1 herein u/s 17 of the SARFAESI Act, 2002 a relief was sought to declare that the SARFAESI applicant, who is a third party, has charge over the Schedule-B property as mentioned in the S.A. with further relief to grant stay of all further proceedings in the matter.

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It appears that respondent no.2 in the S.A., Smt. Kesani Raja Rajeswari, had purchased the property of 302.5 Sq.yards together with entire ground floor, which is described in ScheduleB of the property in the S.A. Agreement for sale was entered between the applicant and respondent no.2 in the S.A. for sale of

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the entire ground floor for an amount of Rs.1.10 crore. Agreement for sale was executed on 17.10.2012. Possession of

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the ground floor was hand over to the applicant. Thereafter, he requested respondent no.2 to execute registered sale deed, but applicant was always ready and willing to pay the balance sale consideration of Rs.13,42,250/-, but respondent no.2 has postponed the same on one ground or the other.

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On 16.03.2018 respondent no.1, Canara Bank, informed the applicant that housing loan of Rs.1.00 crore has been extended to respondent no.2 on 01.12.2011 and they have also mortgaged the same property.

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It appears that the appellant bank has initiated SARFAESI proceedings by issuing Notice u/s 13(2) of the Act. E-auction sale notice was issued on 24.04.2018 and publication of the same was made on 19.04.2018. Auction date was fixed on 01.06.2018. On receiving notice, SARFAESI applicant preferred an application u/s 17 of the Act with an interlocutory application wherein impugned order was passed.

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Learned counsel for the appellant would submit that impugned order is bad in law. Appellant bank is holding first charge over the property in question on which SARFAESI applicant is claiming right by virtue of an agreement for sale, which is unregistered document. Admittedly, there is charge over the property in favour of the bank and interim order could not be sustained.

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Agreement for sale is an unregistered instrument executed on17.10.2012 on a non-judicial stamp of Rs.100/- only wherein it is admitted in Para 8 that the property is free from all encumbrances except loan in Canara Bank. It specifically proves that there was loan over the property taken from the bank, who is holding first charge. If any right over the property at all created on the third party, that would subject to the first charge already created in favour of the bank. Bank was justified in initiating actions available under the SARFAESI Act as the loan amount was classified as NPA. In such circumstances, impugned order restraining the bank, who is holding the first charge over the property, cannot be sustained and is liable to be set aside. Accordingly, appeal deserves to be allowed.

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O R D E R

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Appeal is allowed. Impugned order dated 31.05.2018 is set aside. Learned DRT, Visakhapatnam, is directed to decide the S.A. on its own merit in accordance with law. No costs.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT. Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open Court on this the 18^th day of April , 2024.

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(Anil Kumar Srivastava, J) Chairperson

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Dated : 18.04.2024 10/pkb

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A.O. Canara Bank v. Madapalli Pradeep Verma and Ors.

Case brief

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A.O. Canara Bank v. Madapalli Pradeep Verma and Ors.

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