Dismissed

Mr Dhandeep Gautam Salot & Ors. v. Bank of Baroda

DRAT1 Nov 2024REGULAR APPEAL/92/2017

Case brief

AI extract

What is this about?

The tribunal dismissed an appeal challenging the Baroda Bank's SARFAESI action to realize a loan. The court held that while a prior mortgage creates a prior claim for realization, it does not invalidate a subsequent mortgage. Pending civil challenges to the initial sale assignment do not halt the bank's enforcement rights. The dismissal of the Securitisation Application by the DRT was upheld.

What did the court decide?

The appeal against the dismissal of Securitisation Application No. 156 of 2009 is dismissed.

Mr Dhandeep Gautam Salot & Ors. versus Bank of Baroda — Banking and Recovery | DRAT (2024)

¶1

BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

¶2

Appeal No. 92/2017

¶3

Between

¶4

Dhandeep Gautam Salot & Ors.

… Appellant/s

V/s.

Bank of Baroda & Anr

…Respondent/s

Mr Manmohan Rao, Advocate for Appellant. Mr A.R. Bamne and Mr Nilesh Bamne, i/b M/s A.R. Bamne & Co., Advocate for Respondent No. 1.

¶10

-: Order dated: 01/11/2024:-

¶11

The appellants assail the dismissal of the Securitisation Application (S.A.) No. 156 of 2009 by the Debts Recovery Tribunal-III, Mumbai (DRT) in Judgment dated 09.09.2016.

¶12

The appellants had sought quashing of the Sarfaesi measures initiated by the respondent Bank of Baroda (formerly Dena Bank) under the provisions of Sec. 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) concerning Flat No. 304 on the third floor of Soni Towers, Kora Kendra, Off S. V. Road, Ram Nagar, Borivali (West), Mumbai 400093(subject flat). The appellants claim to be the real owners of the aforesaid flat which was allegedly purchased by them on 13.12.2005 from the builder/developer Soni & Associates after availing a loan from the second respondent Deccan Merchant Co-operative Bank Limited and creating a simple mortgage by a registered document on 13.04.2006.

¶13

¶14

The erstwhile Dena Bank had purportedly lent money to a person named Melroy Jerome Kinny mortgaging the subject flat which he had got an assignment from the appellants vide a registered agreement for sale purportedly executed on 03.11.2007 and had created a security interest over the subject flat by deposit of title deeds.

¶15

The aforesaid mortgagor Melroy Jerome Kinny defaulted in repayment of the debt to the Dena Bank in consequence of which, Sarfaesi measures were initiated by the bank under the provisions of the SARFAESI Act. Melroy Jerome Kinny is absconding and is not contesting the claim of the bank against him. 5. It is also contended that the very same flat was mortgaged by the aforesaid Melroy Jerome Kinny in favour of ICICI Bank Limited as well.

¶16

The appellants claim to be in actual possession of the subject property and allege that Melroy Jerome Kinny had made them execute the agreement for sale under coercion, duress and threat and based on those vitiated documents, he availed a loan from the Dena Bank as well as the ICICI Bank Limited.

¶17

Complaining about the coercion and threat the appellants had allegedly filed a police complaint against Melroy Jerome Kinny on 28.07.2010 and an FIR was also registered against him. But subsequently, a police investigation resulted in the complaint being referred unsustainable. The appellants thereafter approached the Civil Court with a declaratory suit in vain. The appellants thereafter filed a Writ Petition No. 10013 of 2024 which was allowed after condoning

¶18

¶19

the delay of 2960 days subject to the payment of the cost of ₹50,000/and the suit is now proceeding before the High Court. No prohibitory orders have yet been obtained from the Civil Suit.

¶20

The appellants would contend that given the mortgage which was created in favour of the second respondent Deccan Merchant Cooperative Bank Ltd., the subsequent mortgage in favour of the Dena Bank as well as the ICICI Bank Ltd. by Melroy Jerome Kinny are void ab initio . The original title deeds of the appellants are with the Deccan Merchant Co-operative Bank and the amount due to the Deccan Merchant Co-operative Bank from the appellants is yet to be discharged and the mortgage redeemed.

¶21

Dena Bank had taken symbolic possession of the subject flat on 16.09.2009 contemplating further action against the subject flat. The appellants filed the S.A. on 28.10.2009. The Deccan Merchant Cooperative Bank Ltd. had appeared in the S.A. affirming the fact regarding the creation of a registered mortgage concerning the subject flat in their favour.

¶22

The impugned judgment holds that the appellants have admittedly created the sale deed in favour of Melroy Jerome Kinny. The said document is now alleged to be vitiated by coercion and threat. The civil suit filed by the appellants is yet to be decided. The criminal case has been dropped. Until there is a finding by a competent Civil Court setting aside the sale agreement in favour of Melroy Jerome Kinny, no fault can be found with mortgaging the property by Melroy Jerome Kinny in favour of the Dena Bank. It is also found that there is no embargo in mortgaging the property in favour of another bank

¶23

¶24

during the subsistence of an earlier mortgage in favour of the Deccan Merchant Co-operative Bank Ltd. The realisation of the debt would, however, be subject to the mortgage in favour of Deccan Merchant Co-operative Bank Ltd. and therefore, the S.A. was found to be not sustainable and consequently dismissed. The appellants are aggrieved and hence, in appeal.

¶25

The question that arises for consideration in this appeal is whether the Sarfaesi action taken by the first respondent bank concerning the subject flat is sustainable or not.

¶26

Legally there is no embargo in creating a mortgage over an allegedly mortgaged property. However, it would be subject to the earlier mortgage and the mortgagee to whom the property was mortgaged prior in point of time would have precedence in realising the amount after enforcing the mortgage. It would not, however, render the subsequent mortgage invalid ab initio .

¶27

The appellants have admitted the sale deed in favour of Melroy Jerome Kinny on 03.11.2007. According to them, the said sale agreement was executed under threat, duress and coercion and therefore, it is an invalid contract. The suit filed by the appellants is yet to be decided and the allegations of the appellants are to be proved and established. Without getting a decree from a Court of competent jurisdiction, the registered agreement for sale admittedly executed by the appellants cannot be overlooked. It is also pertinent to note that despite having made to execute a registered agreement for sale on 03.11.2007 under purported threat and coercion, the police complaint was lodged only on 28.07.2010 and the criminal case has not been

¶28

¶29

charged. The civil suit was filed much later and is yet to be determined. Any normal person who is made to part with a property under threat and coercion would not have been complacent about such an act on the part of an aggressor for such a long time. Inaction on the part of the appellants for almost three years to challenge the alleged act of threat and coercion allegedly exerted by a person named Melroy Jerome Kinny is very surprising. The appellants cannot, therefore, challenge the Sarfaesi measures initiated by Dena Bank or its successor the Bank of Baroda under any circumstances.

¶30

It is true that the right of the Bank of Baroda to enforce the Sarfaesi measures against the subject property would be subject to the rights of Deccan Mercantile Co-operative Bank Limited for they could not have overlooked the existence of a registered mortgage deed in favour of the Deccan Mercantile Co-operative Bank Ltd. mortgaged in the subject property. There was a lack of diligence on the part of the first respondent bank. Be that as it may, it would not preclude them from proceeding with the Sarfaesi action subject to the rights of Deccan Mercantile Co-operative Bank Ltd. over the property as a mortgagee prior in point of time. The right of Melroy Jerome Kinny is also subject to the decision to be taken in the civil litigation challenging the assignment in his favour.

¶31

I find no infirmity in the impugned judgment. The appeal has no merits and hence, stands dismissed.

¶32

Sd/Chairperson

¶33

mks-01

¶34

Mr Dhandeep Gautam Salot & Ors. v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

Mr Dhandeep Gautam Salot & Ors. v. Bank of Baroda

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Shri Dattatraya M Gaurav versus Union Bank of India & Anr.

Bhavna Sugar Private Limited versus State Bank of India and Anr.

Bhavna Pundalikrao Gawali versus State Bank of India and Anr.

M/s. Dharmandan Textiles versus Sanmmaan Capital Limited and Ors.

Bansari Alloys Private Limited versus Indian Bank

PNB Housing Finance Limited versus Rashid Ahmed Sirajulhaq Siddiqui

What is this about?

What did the court decide?

What is this about?

What did the court decide?

What the court decided

A compact analysis

Shri Dattatraya M Gaurav versus Union Bank of India &amp; Anr.

Bhavna Sugar Private Limited versus State Bank of India and Anr.

Bhavna Pundalikrao Gawali versus State Bank of India and Anr.

M/s. Dharmandan Textiles versus Sanmmaan Capital Limited and Ors.

Bansari Alloys Private Limited versus Indian Bank

PNB Housing Finance Limited versus Rashid Ahmed Sirajulhaq Siddiqui

Shri Dattatraya M Gaurav versus Union Bank of India & Anr.