Dismissed

Mr Vijayabhaskar R v. State Bank of India

DRAT8 Apr 2025REGULAR APPEAL/14/2021

Case brief

AI extract

What is this about?

This bench allowed the appeal and dismissed the appeal, confirming the DRT's order. The court held that appellants were liable to repay the housing loan amount because it was disbursed to the builder at their instance, rejecting claims of fraud or lack of bank verification as grounds for non-repayment.

What did the court decide?

Appeal RA 14/2021 dismissed; order of the Presiding Officer, DRT - III, Chennai, in OA 59/2009 confirmed. Parties to bear their own costs.

Mr Vijayabhaskar R versus State Bank of India — Contract and Commercial Disputes | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 08^th day of April, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA 14/2021

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(arising out of OA 59/2009 on the file of DRT - III, Chennai)

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Between

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1. R.Vijayabhaskar, S/o.K.Ramamorthy

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2. Mrs. Ammulu, W/o.R.Vijayabhaskar, Both are residing at: No.57, Rangasayee Street, Perambur, Chennai - 600 011. ...Appellants

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And

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State Bank of India, Anna Nagar West Extension Branch W/7, North Main Road, Chennai - 600 101 Rep. by its Chief Manager, Mr. Suresh M.Nair. …..Respondent Counsel for Appellant : Mr. G.Jeremiah Counsel for respondent : Mr. O.Padmaprakash

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ORDER

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This appeal is filed under Section 20 of RDDB & FI Act challenging the final order passed by the Ld. Presiding Officer, DRT - III, Chennai in OA 59/2009 dated 30.09.2019.

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The respondent bank filed the aforesaid OA for recovering a sum of Rs.11,03,325/together with interest at the rate of 9.75% per annum with monthly rests from the date of application till the date of realization with costs of the application and for sale of property mentioned in the Schedule to the OA. The case of the respondent is that appellants approached the bank during the year 2005 for grant of housing loan for the purchase of property described in the Schedule. 1^st appellant entered into an agreement for sale dated 06.11.2005 and construction agreement on the same date in respect of the property. Respondent bank sanctioned housing loan of Rs.7,50,000/- to the appellants on 07.02.2005. Appellants executed Memorandum of Term Loan agreement dated 07.12.2005 for Rs.7,50,000/-, undertaking to repay the amount in 240 equated monthly instalments at Rs.6,509/- per month. 1^st appellant executed an agreement of mortgage dated 07.12.2005 and agreed to mortgage the schedule mentioned property in favour of the respondent bank. After availing the loan, appellants failed to deposit the sale deed in favour of the respondent bank and they also failed to repay the loan amount. In the said circumstances, the said OA was filed.

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The case of the appellants was that they were approached by one Mr.B.Subramanyam, Proprietor of M/s. R.S. Constructions. He told them that he is a builder of repute and he formulated a scheme to put up a residential flats in Rangasayee Street, Perambur. He represented to the appellants that he would arrange for Home loan with the respondent. He obtained certain documents from the appellants for availing loan facilities. Appellants never stepped into the premises of the respondent bank. Later, on verification, the appellants found that the said Mr.B.Subramanyam, already sold the property described in the schedule to one Mr.Manoj Mathew and Mrs. Nisha Mathew. When enquired about this, Mr.B.Subramanyam confessed to the sale. Mr.Manoj Mathew and Mrs. Nisha Mathew availed housing loan from IDBI bank, Greams Roads, Chennai, for purchase of property. Appellants settled the loan availed by them and then Sale Deed was executed in favour of the appellants on 14.07.2006 by Mr.Manoj Mathew and Mrs.

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Nisha Mathew. It is the case of appellants that on the date on which the respondent bank claims to have disbursed the loan to the said Mr.B.Subramanyam, he had no saleable interest. The sum of Rs.7,50,000/- was transferred to the Account No.57001984. So pleading, the appellants prayed for dismissal of the OA.

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On consideration of the documentary evidence produced in the form of Exhibits A1 to A6 and the proof affidavits filed, the Ld. Presiding Officer, DRT, found in favour of the claim made by the respondent bank and allowed the OA. Therefore, this appeal is filed.

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Ld. counsel for the appellants submitted that at the instance of Mr.B.Subramanyam alone, believing his representation, that he is a builder of repute, appellants entered into a sale agreement and construction agreement with him. He alone had taken the 1^st appellant to the bank for submission of loan application. The officials of the respondent bank obtained signatures of appellants in all the loan documents. Only at a later point of time, appellants came to know about the sale of the property described in the schedule, for which sale agreement was executed, already sold to Mr.Manoj Mathew and Mrs. Nisha Mathew. Left with no option, appellants settled the loan availed by the said two persons with IDBI bank and purchased the property from them. Appellants informed the bank about the fraud played by Mr.B.Subramanyam. Mr.B.Subramanyam along with bank officials, in collusion with each other, had made the 1^st appellant to execute loan documents. A criminal complaint was given against the bank officials and the said Mr.B.Subramanyam. No notice was given to the appellants prior to filing of the OA. No EMI was required from appellants. The loan amount of Rs.7,50,000/- was transferred to Account No.57001984 of M/s.RS Constructions owned by Mr.B.Subramanyam. In the said circumstances, it is submitted by the Ld. counsel for appellants that appellants are not liable to pay any amount to the respondent and thus, appellants pray for setting aside the order of Ld. Presiding Officer and for allowing this appeal.

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In reply to this submission, Ld. counsel for respondent submitted that appellants had approached the bank for sanction of loan for the purchase of house. The claim that appellants had never stepped into the bank premises is not correct, for the reason that in a letter dated 29.09.2006, appellants admitted visiting the bank and signing the loan documents. On the basis of the sale agreement and construction agreement, housing loan will be sanctioned and the sanctioned amount would be credited to the account of the promoter. The conditions of loan agreement permits for this mode of transfer of loan amount. The appellants along with Mr.B.Subramanyam had alone colluded and tried to cheat the bank. The fact that the very property concerned in the sale agreement was purchased by the appellants, establishes the collusion between them. The sale deed in favour of the appellants is a sham and nominal document, for the reason that the market value is shown less than that of the loan amount due from Mr.Manoj Mathew and Mrs. Nisha Mathew, to the IDBI bank. The loan was sanctioned for the purchase of flat to be constructed. When Mr.Manoj Mathew and Mrs. Nisha Mathew owed a sum of Rs.8,15,571/- to IDBI bank. The sale consideration shown in favour of the appellant was Rs.5,00,000/-. In the construction agreement, the value is shown as Rs.8,71,200/-. The fact that the flat worth Rs.8,71,200/- was said to have been sold for Rs.5,00,000/- is a proof of creation of sham and nominal sale deed. There was no entry in the encumbrance with regard to the sale of the property in dispute, in favour of Mr.Manoj Mathew and Mrs. Nisha Mathew. That was the reason why the bank had advanced the loan. The Ld.Presiding Officer, rightly analysed the evidence produced and allowed the OA and thus Ld. counsel prayed for confirming the order of the Ld. Presiding Officer and dismissal of this appeal.

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Considered the rival submissions and perused the records.

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It is not in dispute that there was an Agreement of Sale executed between Mr.B.Subramanyam and Jayalakshmi on one part and R. Vijayabhaskar (1^st appellant) on the other part. By the said agreement, Mr.B.Subramanyam and

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Jayalakshmi agreed to sell the Schedule B property described in the Sale Agreement, to 1^st appellant for a sum of Rs.2,68,800/-. This was followed by a Construction Agreement between M/s. R.S Constructions, through its Proprietor, Mr.B.Subramanyam and 1^st appellant. The construction cost was arrived at Rs.8,71,200/-. As per this agreement, the Schedule B property i.e., Flat E1 with 950 Sq.Ft, super built up area in the First Floor in the proposed construction was agreed to be constructed and transferred to 1^st appellant. Both these agreements had come into existence on 06.11.2005. On the basis of these agreements, appellants approached the respondent bank, for purchase of house/flat and they were sanctioned a sum of Rs.7,50,000/- on 07.12.2005 on the basis of their application dated 10.11.2005. This sanction proceedings specifically refers about payment to be made direct to the seller/promoter as per the terms of instalments agreed. Both the appellants had executed Term Loan Agreement in favour of the respondent bank on 07.12.2005. On 07.12.2005 itself, the loan amount was transferred to the account of Mr.B.Subramanyam in Account No.57001984.

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The important aspect in this case is that, when the Sale Agreement and Construction Agreement had been entered into between the appellants and Mr.B.Subramanyam, Mr.B.Subramanyam had no title to the property at all, for the reason that he along with Jayalakshmi, had already sold the property concerned in the Sale Agreement to Mr.Manoj Mathew and Mrs. Nisha Mathew. It is the submission of the Ld. counsel for appellants that there was no entry found in the Encumbrance Certificate about this Sale Deed dated 18.02.2004. It is established that without any title to the property, Mr.B.Subramanyam had executed Sale Agreement and Construction Agreement on 06.11.2005, in respect of the property sold under Sale Deed dated 18.02.2004, to the 1^st appellant. On the basis of these documents and application submitted by the appellants, bank had sanctioned a sum of Rs.7,50,000/- as a housing loan and transferred this amount to the builder Mr.B.Subramanyam. In the said circumstances, whether it is open to the appellants to claim that they are not liable to pay the amount is a moot question.

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One of the main contentions raised by the appellants in their written submissions filed in the OA was that they never stepped into the premises of the respondent bank. This submission proved to be false for the reason that in a letter dated 29.09.2006 addressed by 1^st appellant to the Branch Manager of the respondent bank, it was plainly admitted that “he and his wife had planned to purchase a flat at Rangasayee Street, Perambur. They were guided by M/s.R.S. Constructions and they stepped into the bank, signed application forms for processing the loan. Only thereafter they came to know that the flat had already been sold to Mr.Manoj Mathew and Mrs. Nisha Mathew.” This plain and clear admission makes it clear that appellants had gone to the bank, applied for loan, loan was sanctioned and disbursed to the builder, Mr.B.Subramanyam.

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It is seen from the letter dated 14.07.2006, addressed by the IDBI Bank to Mr.Manoj Mathew and Mrs. Nisha Mathew that there was a total outstanding of Rs.8,15,571/in their loan account. The Sale Deed dated 14.07.2006 executed by Mr.Manoj Mathew and Mrs. Nisha Mathew shows that the property in dispute was sold to 2^nd appellant for sale consideration of Rs.5,00,000/-. It is not known how the property was sold for Rs.5,00,000/- when the loan due was Rs.8,15,571/-. Subsequent to this payment, the loan account of Mr.Manoj Mathew and Mrs. Nisha Mathew had been closed as evidenced from the letter of IDBI bank dated 22.07.2006. Thereafter, name change was effected in the Revenue records and 2^nd appellant was entered as owner of this property as per the order of the Revenue Officer, Chennai Corporation dated 03.11.2006.

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From the consideration of the materials produced, it is clearly proved that appellants visited the respondent bank, applied for loan for the purchase of flat. On the basis of their application, the loan amount was disbursed to the builder, M/s.R.S Constructions at the instance of the appellants. Subsequently, it was made known that Mr.B.Subramanyam had no title to the property and that he already sold the property to Mr.Manoj Mathew and Mrs. Nisha Mathew. 2^nd appellant purchased

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this property from Mr.Manoj Mathew and Mrs. Nisha Mathew for a lesser price than the loan amount due from Mr.Manoj Mathew and Mrs. Nisha Mathew to the IDBI bank. These factual circumstances created genuine doubt as to the conduct of appellants. When appellants say that without verifying the encumbrance, bank had advanced the loan, the same contention applies to the appellants as well. How did they enter into Sale Agreement in respect of this property, which was already sold, without verifying the encumbrance? Probably, as submitted by the Ld. counsel for respondent, the Encumbrance Certificate did not reflect the sale in favour of Mr.Manoj Mathew and Mrs. Nisha Mathew. During the pendency of OA 59/2009, respondent filed IA 94/2009 for attaching the schedule property before judgement and that was allowed on 02.02.2010.

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In view of the discussions held above, this Tribunal finds that the loan amount of Rs.7,50,000/- was disbursed to M/s.R.S Constructions at the instance of the appellants and therefore, appellants are liable to pay this amount with interest to the respondent.

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In this view of the matter, this Tribunal confirms the order of the Ld. Presiding Officer, DRT – III, Chennai, in OA 59/2009 dated 30.09.2019 and dismisses this Appeal RA 14/2021.

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Parties shall bear their own costs. Pending IAs, if any, stand closed.

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[Dictated to Steno (DD), transcribed by her, corrected, signed and pronounced by me in open court, this 08^th April, 2025]

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Sd/- (JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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Mr Vijayabhaskar R v. State Bank of India

Case brief

What is this about?

What did the court decide?

Mr Vijayabhaskar R v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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Parties & counsel

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Case details

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