Dismissed

Puneet Rastogi v. D. M. Lucknow and 2 Ors.

DRAT9 Sept 2024REGULAR APPEAL/216/2018

Case brief

AI extract

What is this about?

Debts Recovery Appellate Tribunal dismissed an appeal against orders setting aside the bank's recovery of a mortgaged property. The court held the bank possessed first charge over the asset created prior to the appellant's purchase.

What did the court decide?

Present appeal dismissed with no order as to costs.

What the court decided

Puneet Rastogi versus D. M. Lucknow and 2 Ors. — Specific Performance | DRAT (2024)

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IN DEBTS RECOVERY APPELLATE TRIBUNAL, ALLAHABAD

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Regular Appeal No. 216/2018

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Puneet Rastogi, S/o Late Sudama Prasad, Resident of House No. 18, Dugawaan, Lucknow- 226004. (presently residing at C-73, Nirala Nagar, Thana Hasanganj, Lucknow)- 226104.

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……………………………………………………….…………………………. Appellant

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Versus

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District Magistrate, Lucknow- 209801.

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Bank of Baroda, Alambagh Branch, Lucknow, through Authorized Officer- 226005.

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Mr. Pankaj Arora, S/o late Nand Prakash, Resident of 28B, Kanhaiya Kunj Vihar, Gopal Nagar, Kanpur Road, Lucknow- 226005.

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………………………………………………….……………………………Respondents

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Advocates who appeared in this case

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For the appellant Shri, Swayambhoo Chandranshul, Advocate, For the respondent No. 2- Shri Maneesh Mehrotra, Advocate, Bank

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For the respondent no. 3 None

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JUDGMENT

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Date of Decision: 09.09.2024

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JUSTICE R. D. KHARE, CHAIRPERSON

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The present appeal has been preferred by the appellant under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act, 2002”) against the orders dated 25.09.2017 and 06.08.2018, whereby the S.A. No. 182/2016 and the review application no. 10 of 2017 have been dismissed by the Tribunal below.

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The brief facts giving rise to this appeal are that Sanjay Kumar Gohari and Shakuntala Kumari were granted some financial assistance by the

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respondent-Bank and the borrower had created a mortgage over the property bearing House No. 551 Jha/19, Ram Nagar, Kanpur Road, Alambagh, Lucknow on 29.07.2005 as security to the said loan. Necessary documents were executed to that effect. Later-on, the property so mortgaged was sold by Shakuntala Kumari to the appellant on 22.02.2010 and the sale deed was executed.

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It transpires that the borrowers did not repay the loan amount, therefore, the respondent-Bank initiated the recovery proceedings under the SARFAESI Act, 2002 and the auction sale notice dated 18.02.2013 was published in the newspapers and the property was sold and sale certificate was issued on 09.05.2013 in favour of the respondent no. 3. Thereafter, the respondent-Bank moved an application under section 14 of the SARFAESI Act before the District Magistrate, Lucknow on 15.02.2014, which was allowed on 07.07.2014. Pursuant to it, the ACM, Lucknow passed an order dated 24.02.2016 for taking physical possession of the property in question on 26.02.2016, which was accordingly affixed. Subsequently the appellant visited the office of the respondent-Bank, where he was informed that the property in question had been mortgaged by Sanjay Gohari and Smt. Shakuntala Kumari as security for a loan of Rs. 5.00 lacs on 29.07.2005 and the account had become NPA for want of non-repayment of the loan and all the documents pertaining to the said loan were handed over by the Bank to the appellants.

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It also transpires that the appellant moved an application before the District Magistrate on 25.02.2016 requesting therein that the ex-parte order dated 07.07.2014 may be recalled and a criminal case may also be got registered, in which the District Magistrate passed an order directing the ACM-III to make a proper inquiry into the matter and take action in accordance with law. Thereafter, the appellant moved an application dated 07.03.2016 before the Senior Superintendant of Police Lucknow for necessary action by lodging FIR against the borrower, but he could not be successful. When it came to the knowledge of the appellant, he approached the DRT for setting aside the entire proceedings of the Bank on the ground that he had purchased the property in question from Shakuntala Kumari, which is alleged to have been mortgaged with the Bank. The Tribunal below vide impugned order dismissed the securitization application of the appellant on the ground that the respondent-Bank has got first charge over the secured asset. Against the said order, the appellant has filed a review application no. 10/2017, which has also been rejected vide order dated 06.08.2018. Being aggrieved by both the orders impugned, the present appeal has been filed by the appellant.

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Learned counsel for the appellant submitted that the appellant had not taken any loan from the respondentBank nor had executed any loan documents pursuant thereto or stood as guarantor and further that no relief was claimed by the respondent-Bank against the

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appellant, therefore, the order impugned against the appellant is not sustainable, as on the basis of the oral prayer of the borrower, the appellant was made party in the proceedings.

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The learned counsel for the respondent-Bank has relied upon page no. 11 of its reply, which is order dated 12.02.2016 passed in O.A. No. 438/2015. The said order records that the defendant no. 2, who was the borrower, obtained loan from the respondent-Bank for purchase of flat. The learned counsel appearing for the borrower had filed a preliminary objection before the Tribunal below requesting therein that the appellant was to be made party on the ground that he has purchased the property, which was mortgaged with the respondent-Bank. Therefore, it cannot be said that the appellant is not liable to pay the dues of the Bank. The learned counsel further submitted that the total amount, which was sanctioned by the Bank, was credited to the account of the appellant.

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Learned counsel for the appellant submitted that there is no document on the record to show that any loan agreement was signed by the appellant or any loan was taken by him or he was guarantor and the aforesaid order dated 12.02.2016 clearly says that the appellant had been made party on the basis of preliminary objection of the borrower. The learned counsel further contended that there is nothing on record either in the reply of the Bank or in any document filed by the respondent-Bank to show that the amount which was sanctioned was credited in the account of the appellant. Thus, the appellant cannot be held liable for the amount, which is due to the Bank.

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Learned counsel for the appellant submitted that the property mortgaged was different and the property purchased by appellant was 551-Jha/19. The learned counsel further submitted that the copy of sale certificate has been appended at page No. 245 of the paper book, which contains the description of the immovable property as “all part and parcels of the residential shop No. 551Jha/119” and the same does not pertain to the appellant, but the possession of the property of the appellant was taken and given to the auction purchaser, which cannot be done, whereas the Tribunal below did not consider the said aspect of the matter and passed the order impugned, which cannot be sustained.

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Learned counsel for the respondent-Bank submitted that the appellant has no locus to contest the matter, because the appellant is the purchaser of the mortgaged property, which was auctioned. So far as the appellant is concerned, he is subsequent purchaser of the property in question, therefore, he has no locus to contest the matter.

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Learned counsel for the appellant submitted that the Tribunal below has incorrectly held that the appellant is the purchaser of the mortgaged property, therefore the order impugned cannot be sustained. It was therefore prayed that the order impugned may be set aside and the appeal may be allowed.

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Having heard the learned counsels for the parties and considering the material available on record, undisputedly, the appellant is neither borrower nor guarantor or mortgagor to the loan advanced by the respondent-Bank to Smt. Shakuntala Kumari, W/o

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Jogendra Sain and Sanjay Kumar Gohari, R/o 559Kha/179, Shri Nagar, Alambagh, Lucknow.

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The only one question involved in the present case is, as to whether the property purchased by the appellant was a charge property or not?

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It appears that Shakuntala Kumari and Sanjay Kumar Gohari were sanctioned a credit facility by the respondent-bank on 29.07.2005. In order to secure the said facility, Shakuntala Kumari mortgaged her property bearing no. 551Jha/19 Ram Nagar, Kanpur Road, Alambagh, Lucknow, which was purchased by her from Shyam Lal vide sale deed dated 23.07.2001 and deposited a copy of the said sale deed with the respondent-Bank stating on affidavit that the original sale deed had been lost somewhere in the area of Manak Nagar station. Copy of the said affidavit has been placed at page no. 206 of the paper book.

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The contention of the appellant that the property mortgaged with the Bank and the property purchased by the appellant are different, is not tenable, because the property mentioned in sale certificate was never purchased or mortgaged with the Bank by Shakuntala Kumari. In this regard, the document executed between the Bank and the borrower with regard to deposit of title deed in respect of immovable property is at page no. 199 to 203. As per page no. 203 of the said document, the shop no. 551Jha/19, Basement, Ram Nagar, Kanpur Road, Lucknow was mortgaged by Shakuntala

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Kumari with the respondent-Bank. Memorandum of deposit of title deeds to be recorded in respect of advanced secured by equitable mortgage of immovable property executed between the Bank and the Borrower is at page no. 204 of the paper book, wherein schedule-1, which is list of documents, shows that the certified copy of the sale deed dated 23.07.2001 was deposited with the Bank, which only pertains to the shop no. 551Jha/19 only. If the shop no. 551 Jha/19 was mortgaged with the Bank, then there was no occasion for the Bank to sell another property. Thus, if another number of the said shop as mentioned in the sale certificate and the other document can only be said to be an inadvertent mistake, but it cannot be termed as illegal.

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It is also not disputed that the appellant had purchased the shop no. 551Jha/19 from Shakuntala Kumari vide sale deed dated 02.02.2010 for a sum of Rs. 2.30 lacs, whereas the said property was mortgaged on 29.07.2005 with the respondentBank. Thus, it is proved that the charge on the property in question was created with the respondent-Bank much earlier to the sale made with the appellant, therefore, the respondent-Bank is having first charge over the said property and the appellant is having second charge over the same.

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It is settled proposition of law that when more than one charge have been created on the same property, the first charge holder would always have better right than the subsequent charge holder. The

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first charge was created in favour of the respondentBank, therefore, it has every right to proceed to recover its dues by selling the property in question.

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In view of the aforesaid, I find no illegality and perversity in the impugned orders dated 25.09.2017 and 06.08.2018 passed by the Tribunal below, therefore, the present appeal deserves dismissal.

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Accordingly, the appeal filed by the appellant is dismissed with no order as to costs.

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A copy of this judgment be forwarded to the parties as well as to the DRT concerned and be also uploaded on the e-DRT portal.

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CHAIRPERSON

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VN Giri

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Puneet Rastogi v. D. M. Lucknow and 2 Ors.

Case brief

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What the court decided

Puneet Rastogi v. D. M. Lucknow and 2 Ors.

Case brief

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