The Appellate Tribunal dismissed the appeal against a DRT judgment allowing recovery proceedings. The court held that the appellant, a third-party purchaser via a later deed, lacked locus standi to challenge the bank's mortgage or the auction notice's boundary discrepancies.
Appeal dismissed; impugned DRT order of 08.01.2019 confirmed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Reportable/ Non Reportable
IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA
(Appeal No. 66 of 2023)
(Arising out of Recovery Appeal No. 06 of 2016 in C.P. 12 of 2014 in R.P. No. 320 of 2003 in O.A. No. 1687 of 1999 in DRT-1 Hyderabad)
THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON
… Respondents
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Counsel for the parties
Mr. R. Rama S. Sharma, Learned Counsel, Mr. Nemani Srinivas, Learned Counsel for the Appellant
Ms. Mekhala Kanji, Learned Counsel for Respondent No. 1
Mr. Soham Dutta, Learned Counsel Mr. Ayan Poddar, Learned Counsel for Respondent No. 10
JUDGMENT
: On 15th May, 2024
THE APPELLATE TRIBUNAL :
Instant Appeal has arisen against a judgment passed by Learned DRT -1 Hyderabad on 08.01.2019 in Recovery Appeal No. 6 of 2016 in C.P. No. 12 of 2014 in R.P. No. 320 of 2003 in O.A. No. 1687 of 1999 whereby Learned DRT dismissed the Recovery Appeal. 2. Feeling aggrieved, Appellant, who is a third party, preferred the Appeal.
3. As per the pleadings of the parties facts of the case are that the Appellant herein namely Maddinneni Venkateswarlu alleges himself to be a bonafide purchaser of the scheduled property (Ac. 1.03 situated in Survey. No. 294A and 295A situated at Kothagudem Revenue Mandal Khammam District) from his vendor Sri Inturi Sri Babu through a registered Sale Deed No. 148 of 2006 dated 08.02.2006. Sri Inturi Sri Babu purchased the property from Edupuganti
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Venkata Satya Vara Prasad on 25.08.2005 who had availed a loan of Rs.75,000/- from Sri Inturi Sri Babu by mortgaging the scheduled property and he failed to repay the loan.
4. As per the Respondent’s case, secured assets (being land in Sy. No. 294A and 295A to an extent of Acre 1.03 Guntas at Old Kothagudem Village Khammam District) was initially mortgaged by Respondent No. 3 namely Sri I.V.S.V. Prasad in favour of State Bank of India (Respondent No. 1) for securing a loan by deposit of Title Deeds being Deed No. 670 of 1986. Upon failure in paying the loan amount, O.A. No. 1687 of 1999 was decreed in favour of the Bank and a Recovery Certificate for an amount of Rs.57,02,901.76 with interest was issued. Respondent No. 10 participated in the e-auction conducted by the DRT Hyderabad on 15.05.2014 and was declared as the highest bidder for an amount of Rs. 4,40,000/-. Sale Certificate was also registered in favour of Respondent No. 10 on 06.12.2016. Possession was also handed over through Advocate Commissioner on 30th May, 2018. Mutation was also done in favour of Respondent No. 10. He is in possession over the property. The Recovery Certificate was issued by the DRT on 27.06.2003 while the claim petition No. 12 of 2014 was filed by the Appellant before the Recovery Officer after a lapse of 11 years at the behest of Respondent No. 2 to 4. 5. Claim petition was filed by the Appellant before the Recovery Officer DRT Hyderabad on the ground that the
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secured assets were purchased by the Appellant from Dr. Inturi Sri Babu on 08.02.2006 wherein the boundaries were wrongly described and a rectification Deed describing the correct boundaries was executed vide document No. 901 of 2014 dated 23.04.2014. All the original documents Sale Deed were handed over to the Appellant by his vender Dr. Inturi Sri Babu along with Incumbrance Certificate No. 3907 dated 25.08.2005 wherein Registered mortgage was disclosed. Mutation was also done in favour of the Appellant. Appellant is doing agricultural activity over the said property. Electric connection is in his name. He is in possession over the property. Link documents were destroyed in the flood in 1986.
6. Appellant came to know about the publication of sale notice on 20th April, 2014. Boundaries of the property in Sale Notice are different from the boundaries of the property belonging to the Appellant. Accordingly, property allegedly mortgaged by Sri I. Narayan Rao and the property put for auction sale are not one and the same. No mortgage of the assets was ever made either by the Appellant or his vendor. Further, it is stated that the alleged mortgage created in favour of the Bank are not true and correct and illegal. 7. The Recovery Officer dismissed the claim petition No. 12 of 2014 holding that since no appeal is filed against the order of DRT allowing the O.A. No. 1687 of 1999 for Recovery of Rs.57,02,901.76, hence, it attained finality. In the sale notice three side boundaries were wrongly
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mentioned due to typographical error. However, the description of the property extents and other particulars were correctly given to enable correct identification. 8. Feeling aggrieved by the order of the Recovery Officer, Appellant filed an appeal before the Learned DRT Hyderabad under Section 30 (1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 wherein Learned DRT held that originally Edupuganti Narayana Rao was the owner of the schedule property (Ac. 1.03 situated in Survey. No. 294A and 295A situated at Kothagudem Revenue Mandal Khammam District) . He mortgaged the said property in favour of the Respondent No. 1 Bank to secure the credit facilities availed by Respondent No. 2 and 5 by deposit of original registered document No. 670 of 1986 dated 22.08.1996. Edupuganti Narayana Rao subsequently expired and Respondent No. 3 Edupuganti Satya Vara Prasad is his son. Learned DRT in Appeal held that Edupuganti Narayana Rao has created mortgage over the scheduled property in favour of the Respondent No. 1 Bank on 09.02.1995 by depositing the original Title Deeds to secure the credit facilities sanctioned by Respondent No. 1 Bank to Respondent No. 2 and 5. It is also held that the mortgage of the scheduled property in favour of the Bank is not denied by the Appellant. Original linked documents are also not filed by the Appellant and the reason given for not filing the same is vague. Further, the rectification deed was executed after 9 years of the execution of the Deed. Boundaries of
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the scheduled property mentioned in the Sale Deed dated 08.02.2006 in favour of the Appellant tallies with the boundaries of the property in the original Sale Deed which is deposited with the Respondent No.1 Bank. Rectification Deed was executed after publication of the Auction Sale Notice dated 09.04.2014. Further, it was held that if there was any discrepancy in the boundaries of the scheduled property in the auction sale notice published by the Bank, Appellant being a third party has no locus standi to challenge the same while the borrower has not challenged the auction notice.
9. Another finding is recorded by the Learned DRT to the effect that there is no bar to the Recovery officer to proceed with the Recovery proceedings under the RDDB&FI Act, 1993 against the agricultural properties, rather bar against agricultural property relates to the proceedings initiated under SARFAESI Act. Accordingly, Appeal was dismissed. 10. I have heard the Learned Counsel for the parties and perused the record.
11. Learned Counsel for the Appellant vehemently argued that boundaries of the scheduled property does not tally with the auction sale notice issued by the Bank and the Sale Certificate. Learned Counsel further emphatically tried to compare the boundaries of the documents and submits that the three sides of the boundaries are not tallying. It is further argued that a rectification Deed was also executed in the year 2014 when the mistake came to the notice of the
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Appellant. Apart from this argument, Learned Counsel for the Appellant also tries to challenge the mortgage created in favour of the Bank and further issue of limitation was also raised.
12. Learned Counsel for the Respondent submits that document No. 670 of 1986 was executed by one Sri Durgaiah in favour of Narayana Rao, son of Late Sri Edupuganti Venkata Subbaiah, aged 65 years, Contractor, resident of H.No. 5-45, Nalgondanagar, Kothagudem Town, Kothagudem Taluqa, Khammam District.
13. A confirmation letter of the mortgage was also executed by I. Narayana Rao on 09.02.1995 depositing the Deed No. 670 of 1986 registered on 22.08.1986. E.C. No. 625 of 1991 dated 26.12.1991 was also deposited. It is further submitted that the Appellant is trying to claim his rights on the basis of a Deed of 2006 which was rectified by 23.04.2014 after publication of sale notice. It is submitted that the rectification was done in collusion. It is further submitted that mortgage in favour of the Bank is not disputed. Appellant has no right to challenge either the mortgage or the other pleas taken by him. Learned Recovery Officer as well as the DRT have recorded the concurrent findings of facts which did not warrant any interference.
14. It is settled principle of law that once a mortgage is always a mortgage. Appellant has nowhere challenged the mortgage created in favour of the Bank by depositing the
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Title Deeds No. 670 of 1986 which was in favour of Narayana Rao, son of Late Edupuganti Venkata Subbaiah. Creation of mortgage was confirmed by I. Narayana Rao on 09.02.1995 by writing a letter to the Bank and also confirming the deposit of Title Deeds No. 670 of 1986 and E.C. No. 625 of 1991 dated 26.12.1991. This mortgage was created much before the Sale Deed of the Appellant. Death of I.Narayana Rao was duly communicated by the Respondent No. 4 name Smt. I. Vaidarbhi, wife of IVSV Prasad on 10.12.1997 wherein the fact of mortgage was reaffirmed. The alleged mortgage Deed by documents No. 374 of 2003 dated 14.07.2003 registered Sale Deed vide documents No. 148 of 2006 and rectification Deed No. 901 of 2014 dated 23.04.2014 are all documents which were executed much after the creation of mortgage in favour of the Bank. No doubt there are same discrepancies in the boundaries in the Sale Notice as well as there are some typographical error in the Sale Notice published on 24.04.2014, but the Appellant being a third party cannot take advantage of those mistakes. However, the boundaries in the Sale Certificate are identical with the boundaries mentoned in the Mortgage Deed. In such circumstances, Appellant being a third party has no right either to challenge the mortgage on the plea of limitation or the misdescription of boundaries.
15. Conduct of the Appellant in execution of the rectification Deed after the lapse of 11 years itself raises
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doubts about his bonafides. Rectification Deed was executed after publication of the Sale Notice which clearly shows that rectification Deed was executed in order to create a legal obligation with an object to challenge the Sale Notice malifidely.
16. Having considered the submissions, I am of the considered view that the boundaries of the scheduled property mentioned in the Sale Deed dated 08.02.2006 in favour of the Appellant tallies with the boundaries of the property in the original Sale Deed which is deposited with the Bank. Appellant could also not successfully prove his title by depositing the Title Deeds of his predecessor in interest Title Deed. It is stated that earlier legal documents got destroyed in the floods in 1986. But it could not be proved by any material on record.
17. On the basis of the discussion made above, I am of the considered opinion that Appellant has no locus standi to challenge the proceedings pending before the Recovery Officer. Learned DRT has passed an order which did not warrant any interference. Appeal lacks merit and is liable to be dismissed.
ORDER
Appeal is dismissed. Impugned order passed by Learned DRT-1 Hyderabad on 08.01.2019 in Recovery Appeal No. 6 of 2016 in C.P. No. 12 of 2014 in R.P. No. 320 of 2003 in O.A. No. 1687 of 1999 is confirmed.
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No Order as to costs.
File be consigned to Record Room.
Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.
Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.
Order dictated and pronounced by me in the open Court on this the 15th day of May, 2024.
(Anil Kumar Srivastava,J) Chairperson
Dated: 15th May, 2024 /tp
3 issues framed by the court
Whether an appellant-purchaser of mortgaged agricultural land has locus standi to challenge the mortgage and auction proceedings filed by a third party.
Whether a rectification deed executed after publication of the auction notice establishes bona fides or demonstrates malafide intent to contest the sale.
Whether typographical or boundary discrepancies in the auction notice protect a third party purchaser from selling previously mortgaged property.
1 provisions across 1 enactments
Maddineni Venkateswarlu
State Bank of India
Anil Kumar Srivastava
As recorded by the court registry
9 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
