Allowed

Smt Ponnoru Bharathi And others v. Canara Bank

DRAT9 May 2024REGULAR APPEAL/42/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal, Kolkata allowed the appeal and set aside the lower court's order which dismissed a SARFAESI application. The Tribunal held that the Bank failed to exercise due diligence regarding the borrower's title and lacked evidence to prove the sale deed in its favor extinguished the Appellants' prior registered title.

What did the court decide?

Impugned order dated 22.06.2022 set aside; possession notice dated 08.03.2017 set aside; liberty granted to Bank to proceed for recovery.

Smt Ponnoru Bharathi And others versus Canara Bank — Execution and Attachment | DRAT (2024)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No. 42 of 2022)

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(Arising out of S.A. No. 184 of 2017 in DRT-Visakhapatnam)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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Smt. Poonuru Bharati wife Prabhakar Rao, Balaji Nagar, Podalakur, SPSR Nellore District.

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Smt. Konduru Padam, Wife Srinivasulu, Balaji Nagar, Podalakur, SPSR Nellore District.

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Vakati Vasudeva Kumar, Son of Jayaramaya residing at Main Road, Podalakur, SPSR Nellore District.

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Vakti Rajendra Kumar, son of Jayarama residing at Main Road, Podalakur, SPSR Nellore District.

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P Chandrasekhar, son of Guravayya Door No. 969, Rupa Nagar, Sri Kalahasti Town Chitoor.

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Palkuru Penchela Naryana Reddy, son of Penchala Reddy residing at Moguluru Village, Post Podalakuru Manda, SPSR Nellore District.

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Konidhala Sudhakar, son of Srinivasulu Nayudu residing at Door No. 03.05.185, Rajagopalapurm, Naidupeta, SPSR Nellore District.

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Kolagani Sudheer Kumar, son of Narsimha Rao residing opposite Priyadarshini College, Podalakoor, SPSR Nellore District.

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Golagani Mashtan Babu, son of Narsimha Rao residing opposite Priyadarshini College, Podalakoor, SPSR Nellore District.

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10.Kanchi Krishna, son of Mohan Rao residing at Door No. 11/128A, Maganivari Veedhi, Santhapeta, Nellore City, SPSR Nellore.

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Ponnapoola Swarnalatha, son of Venkata Ramana residing at Kattubadipalli Village, Devarayamooru (PO), Sairampuram Mandal, SPSR Nellore District.

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12.Podalakur Narayana, son of Venkatayya residing at Chittepalli Village, Podalakur Village, SPSR Nellore District.

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13.Ponnapola Ramesh, son of Lakshmayya residing at Yadhavaveedhi, Podalakur Mandal SPSR Nellore District.

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Paruchuru Ranga Rao, son of Ramayya, residing at Pillayir Coil Veedhi, Pullar Chennai.

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Srivada Seshadri, son of Chandrasekhar Reddy residing at Chittepalli Village, Podalakur, SPSR Nellore District.

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Mandla Ankireddy, son of Balaramireddi, residing at Moguluru Village, Podalakur Mandal SPSR Nellore District.

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Poluru Pedapanchalayya, son of Chinna Chikkolayaa residing at Srinivasapuram Veedhi, Podalukur, SPSR Nellore District.

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Sivada Venkateswaralu Reddy, son of Chandrasekhar Reddy residing at Chittepalli Village, Podalakur, SPSR Nellore District.

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Sivada Srinivasulu Reddy, son of Chandrasekhar Reddy residing at Chittepalli Village, Podalakur, SPSR Nellore District.

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…Appellants

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-Versus-

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Canara Bank represented through Authorised Officer, Nellore Branch, Brundavanam Nellore -524001.

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M/s Sarvam Sai Agencies, represented by its Partners Sri Ranjan Kalliyappan, son of Late Kaliyappan, Door No. 24-2-840, 1^st Floor, Ram Nagar, Opposite M.G. Bros, Durgamitta, Nellore -524003.

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Sri Ranjan Kaliyappan, son of Late Kaliyappan, Door No. 24-2-840, 1^st Floor, Ram Nagar, Opposite M.G. Bros, Durgamitta, Nellore -524003.

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Smt. Pulugu Parvathi, wife of Dwaram Venugopalreddy, Door No. 242-840, 1^st Floor, Ram Nagar, Opposite M.G. Bros, Durgamitta, Nellore - 524003.

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D. Pavan Kumar Reddy, son of Sudhakar Reddy residing at Vidyanagar, Kota Mandal, SPSR Nellore District.

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Ravula Dasaiah, son of Late Ankaiah Goud residing at Biradavolu Village, Podalukur Mandal, SPSR Nellore District.

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Gadikota Venkata Mohan Naidu, son of Narasayya, Kammapalem Village, Dachuru Post, Kalavai Mandal, Nellore District.

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Venati Balasubhramanyam Reddy, son of Muniram Reddy Door No. 26/441, 4^th Cross Road, SBI Colony, A.K. Nagar, Nellore -524004.

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… Respondents

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Counsel for the parties Mr. Nemani Srinivas, Learned Counsel, for the Appellant

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Ms. Aparajita Rao, Learned Counsel for the Respondent.

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JUDGMENT : On 9^th May, 2024

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THE APPELLATE TRIBUNAL :

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Heard the Learned Counsel for the parties and perused the record.

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2. Instant Appeal has arisen against a judgment and order dated 22.06.2022 passed by Learned DRT Visakhapatnam in S.A. No. 184 of 2017. As per the pleadings of the parties, facts of the case are that the Appellants, who are SARFAESI Applicants, purchased the properties as under:-

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24.01.2011 Registered Sale Deed no. 124/2011 with Translation- Plot no. 152

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24.01.2011 Registered Sale Deed no. 126/2011 with Translation -Plot no. 153P

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24.01.2011 Registered Sale Deed no. 125/2011 with Translation- Plot no. 153P

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31.05.2007 Registered Sale Deed no.961/2007 with Translation -Plot no.154

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31.05.2007 Registered Sale Deed no. 963/2007 with Translation -Plot no. 155

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08.09.2005 Registered Sale Deed no. 917/2005 with Translation -Plot no. 156

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16.02.2006 Registered Sale Deed no. 207/2006 with Translation -Plot no. 157 and 158

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26.02.2007 Registered Sale Deed no. 323/2007 with Translation -Plot no. 159 10. 26.02.2007 Registered Sale Deed no. 324/2007 with Translation- Plot no. 160 11. 04.02.2011 Registered Sale Deed no.189/2011 with Translation -Plot no.161

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04.02.2011 Registered Sale Deed no.190/2011 with Translation -Plot no.162

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16.02.2010 Registered Sale Deed No.2603/2010 with Translation- Plot no.163

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04.11.2010 Registered Sale Deed No.2460/2010 with Translation- Plot no.164 15. 19.10.2010 Registered Sale Deed No.2309/2010 with Translation- Plot no.165 16. 28.10.2010 Registered Sale Deed No.2405/2010 with Translation- Plot no.166 17. 25.10.2010 Registered Sale Deed No.2369/2010 with Translation- Plot no.167 18. 08.08.2007 Registered Sale Deed No.1452/2007 with Translation- Plot no.168 19. 16.11.2010 Registered Sale Deed No.2604/2010 with Translation- Plot no.169 20. 16.11.2010 Registered Sale Deed No.2605/2010 with Translation- Plot no.170 21. 30.01.2006 Registered Sale Deed No.136/2006 with Translation- Plot no.171 22. 19.10.2010 Registered Sale Deed No.2311/2010 with Translation- Plots no.172 & 173 23. 25.10.2010 Registered Sale Deed No.2368/2010 with Translation- Plots no.174 24. 28.10.2010 Registered Sale Deed No.2404/2010 with Translation- Plots no.175.

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3. It is stated that they are owner and in possession of the properties. Registered Sale Deed were executed by Ravula Dasaiah himself and through his General Power of Attorney Holder. After execution of the Sale Deeds possession was delivered.

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4. On 18.03.2017, a possession notice was published by the Respondent No. 1 Syndicate Bank (now Canara Bank) in the newspaper. From the possession notice Appellants came to know that Bank claims that the Respondent No. 2 is a partnership firm wherein Respondent Nos. 3 and 4 are the partners and Respondent No. 5 is the guarantor for a credit limit availed by the 2^nd Respondent from the 1^st Respondent. Plots No. 152 to 175 covered by its survey nos. 200/2, Patta No. 492 of Podalakur Panchayat was given as security while the Appellants are the owner of the same. They have not executed any documents in favour of Respondent Nos. 1 to 5. No loan was taken by them from the Bank.

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5. A challenge was made to the possession notice and the relief was sought for setting aside all the measures taken by the Bank under the SARFAESI Act.

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6. Opposition was filed by the Bank stating that the 2^nd Respondent availed the loan in the year 2014. All the documents were verified. Non Incumbrance Certificate was also verified. Physical verification of the plot was also made. At no point of time any objection was raised by the Applicants. Respondent No. 5 had obtained sale Deed in respect of an extent of Acre 1.28 Cts of land in Survey No. 200/2, patta No. 492 dated 20.01.2014 executed by Ravula Narayana Rao through a special officer. These documents were executed by the Court of Additional District Judge Nellore being document No. 80 of 2014 in execution of a decree passed in O.S. No. 227 of 2012 for specific

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performance of the contract dated 07.06.2011 in favour of Respondent No. 5 by Ravula Narayan. Suit was decreed on 15.11.2012. When the deed was not executed by the vendor, E.P. No. 13 of 2013 was filed and in execution of the same, sale deed was executed through Court. Mortgage was created by Respondent No. 5. Bank has first charge over the property. When the loan became irregular, Bank proceeded under SARFAESI Act. Accordingly, Appellants have no right over the property in dispute.

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7. Learned DRT recorded a finding that Bank has not filed any documents. It is also recorded that the sale deed was executed in favour of the Respondent No. 5 by the Court. Hence, all the right, title interest over plot No. 152 to 175 of the Applicants got extinguished. Accordingly, SARFAESI Application was dismissed.

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8. Feeling aggrieved by the impugned judgment, Appellant preferred the Appeal. 9. Learned Counsel for the Appellant would submit that Learned DRT had erred in recording a finding on the basis of sale deed executed by the Court in favour of Respondent No. 5 while the sale deed was executed for a decree which was passed for specific performance of an agreement dated 07.06.2011. Learned Counsel further submits that the plots were purchased by the Appellant from a vendor namely Ravula Dasaiah from 08.09.2005 to 24.01.2011.

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10. Learned Counsel further submits that chain of title deeds in favour of Ravula Dasaiah are filed by the Appellants

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which shows that Ravula Dasaiah was lawful owner of the plots which was sold to the Appellants. All the plots are from three numbers 198 /2, 200 /IC and 200/2. It is further submitted that alleged agreement of sale by the Respondent No. 5 have no concern with the disputed plots. Even the sale deed in favour of the Appellants is prior to the Agreement for sale dated 07.06.2011.

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11. Per contra, Learned Counsel for the Respondents would submit that the SARFAESI Application itself is not maintainable. Appellant should have got his rights declared from the Civil Court as the loan was sanctioned by the Bank in favour of Respondent Nos. 2 to 5 on the basis of the sale deed executed by the Court in favour of Respondent No. 5. It is further submitted that the loan was sanctioned after verifying the documents and Non Incumbrance Certificate. Reliance is placed upon a judgment of the Hon’ble Bombay High Court in Bank of Baroda through its Branch Manager versus Gopal Shriram Panda and another 2021 SCC OnLine Bom.466: (2021) 4 AIR Bom R 64.

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12. At the very outset, I would like to observe that the Learned DRT had acted in a very careless manner in recording its findings. Learned DRT did not bother to go to the pleadings of the parties. Rather, without looking to the facts and record, it is recorded that after execution of the sale by the order of the Court, right, title interest at plot numbers 152 to 175 of the Applicants have extinguished. It appears that Learned DRT was convinced with the case of

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the Applicants that they have a right, title and interest over the plot No. 152 to 175 but impliedly Learned DRT passed an order cancelling the registered sale deed in favour of the Applicants which is neither within the jurisdiction of the DRT nor a proper exercise of jurisdiction by the DRT.

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13. However, coming to the facts of the matter as far as maintainability of the SARFAESI Application is concerned, a possession notice was issued in respect of the properties which was affixed on the property in dispute. On the basis of that possession notice, SARFAESI Applicants filed a SARFAESI application under Section 17 of the SARFAESI Act. Section 17(1) provides that:

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17.(1) “Any person (including borrower) aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorized officer under this Chapter, [may make an application alongwith such fee, as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty five days from the date on which such measure had been taken:”

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14. Accordingly, Applicants were entitled to challenge the measures undertaken by the Bank under the SARFAESI Act. and file this SARFAESI Application under Section 17 of the SARFAESI Act. Judgment relied upon by the Learned Counsel for the Respondent would not be applicable on the facts of the present case.

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15. As far as merits of the matter are concerned, at the very outset it would be observed that the Bank has not filed any documents either before the DRT or in the Appeal.

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Applicants have filed the chain of title deeds showing that they purchased the plots from Ravula Dasaiah or his Power of Attorney Holder on different dates by different persons from 2005 to 2011. Respondents have nowhere challenged the title of Ravula Dasaiah that he was not having any title to execute the deeds in favour of the SARFAESI Applicants. The only ground for proceeding under SARFAESI Act was a sale deed executed by the Additional District Judge Nellore in favour of Respondent No. 5. The sale deed was executed in execution of a decree in a suit which was filed for a specific performance of an Agreement to Sale. As far as Agreement to Sale is concerned, it was executed on 07.06.2011 between Ravula Narayana Rao and Respondent No. 5. Loan was sanctioned in favour of the Respondent No. 2 to 5 by the Bank. As far as the Title of Appellants are concerned, they have registered sale Deeds in their favour by their vendor who was the lawful owner. Now the question arises as to when the loan was sanctioned in favour of the Respondent No. 2 to 5? Whether due diligence was exercised by the Bank to ascertain the title of the Borrower and guarantors? No document is filed to prove that the Bank officers have exercised due diligence at the time of sanctioning the loan. Applicants have registered documents in their favour. In such case, the properties are of the same patta number. Whether any Non Incumbrance Certificate was obtained or not or if obtained, whether it was duly examined or not could not be established. It is the duty of

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the Bank to ensure at the time of sanctioning of the loan that the borrower or the mortgagor or guarantor have valid title over the property which is being mortgaged as secured assets. But due diligence was not exercised by the Bank. 16. As far as question of the decree of the Court is concerned, no benefit could be extended in favour of the Bank on the basis of that sale Deed which was executed on the basis of an agreement for sale dated 07.06.2011. That document itself is subsequent to the date of purchase by the Appellants.

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17. On the basis of the discussion made above, I am of the considered view that Learned DRT has erred in passing the impugned order which cannot sustain and is liable to be set aside. Appeal deserves to be allowed.

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ORDER

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Appeal is allowed. Impugned order dated 22.06.2022 is set aside. Possession notice issued by Respondent No. 1 dated 08.03.2017 is set aside. However, Bank would be at liberty to proceed further for recovery of its loan in accordance with law.

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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 and pronounced by me in the open Court on this the 9^th day of May, 2024.

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