Dismissed

Mr G Murugesan v. Punjab National Bank

DRT6 Sept 2022SA/85/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's application challenging an auction sale notice. The court held that the applicant's title via settlement deeds was invalid as his mother lacked marketable title after mortgaging the property. The mortgage was valid despite lack of registration due to state exemption. The property was confirmed as non-agricultural.

What did the court decide?

Application filed under Section 17 of SARFAESI Act dismissing application and directed parties to bear their own costs.

Mr G Murugesan versus Punjab National Bank — Landlord and Tenant | DRT (2022)

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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI

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Dated this 6^th Day of September, 2022

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PRESENT: SHRI A.S. JAYACHANDRA

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Presiding Officer

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S.A. No.85 of 2022

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Mr.G.Murugesan, S/o Mr.C.Gunasekaran, No.23, Min Nagar, Vallam, Thanjavur – 613403.

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. . . Applicant

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Versus

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M/s.Punjab National Bank,

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Sastra Centre,

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Circle Office, Trichy,

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PNB House, Trichy,

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Trichy – Thanjavur Road,

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Kailasapuram, Trichy – 620014.

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M/s.Sri Pushti Industrial Oil, A Sole Proprietorship Firm, Rep. by its Sole Proprietor, Mr.G.Ramachandran, S/o Mr.C.Gunasekaran, No.23, Min Nagar, Vallam, Thanjavur – 613403.

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Mr.G.Ramachandran, S/o Mr.C.Gunasekaran, No.23, Min Nagar, Vallam, Thanjavur – 613403.

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Mrs.G.Sulochana, W/o Mr.C.Gunasekaran, No.23, Min Nagar, Vallam, Thanjavur – 613403..

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. . . Defendants

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Counsel for Applicant :- M/s.Priyanka R & Venkatesh.U Counsel for Respondent No.1 :- M/s.K.N.Chinnakrishnan

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: - O R D E R - :

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In this application filed under Section 17 of SARFAESI Act, the applicant who is neither a borrower nor a guarantor, challenges the auction sale notice dated 15.02.2022 proclaimed by the 1^st Respondent Bank.

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The 2^nd Respondent is a proprietary concern under the proprietorship of his brother who is Respondent No.3. The 4^th Respondent is the mother of the applicant.

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Facts of the case :- It is submitted that the immovable property situate in survey No.13/2, Thirukannurpetti, Thanjavur District, originally belonged to one Abdul Ahmed, which was purchased by the applicants mother under a Registered Sale Deed dated 18.09.2006. His mother had Registered a settlement deed dated 02.11.2011 by allotting half undivided share each to the applicant and the 3^rd Respondent. It is also stated that the 3^rd Respondent by a settlement deed dated 22.12.2017 had conferred his undivided share in favour of the applicant and thus the applicant is entitled to the entire land.

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It is also submitted that the said property is proclaimed to be sold in public auction on 15.02.2022 by e-auction under a sale notice issued dated 24.01.2022. The same is consequent upon the failure of the proprietary concern held by the 2^nd Respondent which failed to clear the loan amount due, which was guaranteed by his mother. The loan was taken by the Respondents 2 to 4 from Oriental Bank of Commerce, Thanjavur, which merged with the applicant bank. Since, the applicant is the absolute owner, he is aggrieved by the sale notice on the following grounds.

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(a) Applicant is in no way connected with the loan transaction concerning his property.

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(b) The demand notice and the possession notice are barred by limitation.

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is not registered as the same is compulsorily be registerable under Section 17 of the Registration Act.

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(d) The property is agricultural in nature and the same cannot be subjected to any or action under SARFAESI Act.

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The Respondents 3 & 4 have lost their rights over the property upon the execution of settlement deeds. The bank had not followed 30 days statutory notice in conducting the auction.

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The Respondent No.1 Bank appeared through the counsel on 25.02.2022 at the very initial stage and it is the bank, which is the contesting Respondent. The Ld. Predecessor by an order dated 09.03.2022 intended to dispose the application by noting the following order:-

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“Ld. Counsel Mr.Chinnakrishnan takes notice for respondent and seeks some more time for filing counter.

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Basing on the documents produced by the applicant, it is seen that the applicant got the property settled in his name in the year 2011, whereas from the e-auction sale notice it is seen that the demand notice is issued as early as on 15.12.2011, which probabilise the argument of the Respondent Bank that the transfer is effected after the mortgage to escape from the liability.

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Respondent to file counter by next date of hearing. List on 21.03.2022 for counter and further hearing.”

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Thus the Ld. Predecessor had dispensed notices to the other respondents, since no prayer is sought against the respondents 2 to 4 and they are the proforma respondents.

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The version of the contesting respondent bank :- In the counter affidavit filed, the bank pleads that the 2^nd Respondent availed term loan facility of Rs.20 Lakhs from the 1^st Respondent bank vide sanction letter dated 20.03.2010, which is signed by the 3^rd Respondent who is the proprietor of 2^nd Respondent. The 4^th Respondent stood as a personal guarantor who mortgaged the property by memorandum of equitable mortgage dated 23.03.2010 as per Section 58(f) of TP Act. At the time of the execution of the mortgage, the stamp duty was not payable which came into force only after 12.07.2011 and the registration was also not mandatory till 30.11.2011, as per the GO of the State Government, bearing GO No.MS/149 Dt.29.11.2012. Since the Respondents 2 to 4 failed to service the loan account, the same was classified as NPA on 30.06.2011. The 4^th Respondent after having executed the security, through equitable mortgage dated 23.03.2010, had executed the settlement deed dated 02.11.2011 in favour of her two sons (Including the applicant) only to circumvent the law. The transactions pleaded by the applicant are questionable and have no force in law.

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It is also pleaded that the first sale notice is dated 09.11.2011 fixing the date of sale as 17.12.2021 and there were no bidders. Hence the second sale notice dated 24.01.2011, which is now questioned. It is submitted that all the procedures are duly followed. However, in the auction held on 15.02.2022 the successful bidder participated and the sale confirmation was also issued dated 16.02.2022. The entire sale consideration was paid and the sale certificate is issued on 04.03.2022. The property in

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question is not an agricultural land, and is not used for agricultural purposes for the past ten years. The second sale notice is in accordance with law. The total liability is Rs.75,59,920/-.

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The Respondent No.1 Bank had filed the paper book and several documents in support of their contentions.

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Heard the Ld. Counsel for the applicant and the contesting first Respondent Bank. Perused the documents urged on both the sides. With the rival submissions made, the point that arises for consideration is:-

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“Whether the applicant has made out a case to sustain the prayers for setting aside the sale as per the notice dated 24.01.2022.”

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It is the case of the applicant that his mother (Respondent No.4) had executed a settlement deed dated 02.11.2011 in favour of her two sons and his brother executed another settlement deed in favour of the applicant dated 22.12.2017. Under these deeds, the applicant claims the absolute rights, interest and title to the property in question. The Respondent Bank questions the validity of such settlement deeds. It is urged that these settlement deeds do not convey any right, title or interest since the absolute owner of the property namely Ms.Sulochana (Respondent No.4) having already created a mortgage much prior to the settlement deeds. The mortgage deed is dated 23.03.2010. The copy of the mortgage deed executed by Ms.Sulochana (Respondent No.4) is filed at Page 3 & 4. The same are prior to the settlement deeds on which the case of the applicant is pleaded.

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The contention of the applicant that the said equitable mortgage is non-est in law for the reason that the same is not registered cannot be accepted for the reason that, at the time of the execution of this mortgage by the 4^th Respondent, the stamp

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duty was exempted. It is payable only after 12.07.2011 and the registration was also not mandatory till 30.11.2011, as per the GO of the State Government, bearing GO No.MS/149 Dt.29.11.2012. The notification of the State Government concerning the exemption of stamp duty and dispensing the registration is not controverted by the applicant counsel. Furthermore, it is clear that the respondent No.4 who executed the mortgage and created the security interest on 23.03.2010, is precluded to convey any title after the date till the security interest is redeemed by the borrower. Therefore, the title on which the applicant is heralding his case cannot be accepted.

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As regards the other contention, that the property in question cannot be sold being agricultural property, the applicant contends that the same is an agricultural land and therefore, the sale is invalid in law. The applicant has not filed any documents namely the revenue records i.e. Adangal, Patta, Chitta or other records of rights showing the cultivation from to time from the date when it was purchased and also to show particularly at the time of the sale notice. On the other hand, the Respondent No.1 Bank had produced one document at Page 9 of typed set of papers, which is an extract from the Government records concerning the Inspector General of Registration that the particular Survey No. concerning the land in question is treated as Residential class – II type – I. The same is also supported by a Certificate issued by the Village Administrative Officer that the particular property bearing Survey No.13/2, measuring 1 Hecr. & 31 Ares is not used for agricultural purposes as per the village records. Therefore, it becomes difficult to hold that the property in question is an agricultural land. There is also one letter addressed to one Mr.Chitrarasu dated 16.02.2022, which confirmed the sale by the bank and that the sale certificate is also issued dated 24.02.2022. Thus the grounds urged by the applicant to sustain the prayer do not sound to reason as the Respondent No.4 Mrs.Sulochana had no marketable title or interest to have entered into settlement deed on 02.11.2011 after having executed the equitable mortgage by way of security to

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the loan transaction on 23.03.2010. The subsequent deeds and acts if any cannot have any force under law to have conveyed the title in favour of her sons by way of settlement deeds. After careful perusal of the records, this Tribunal is not persuaded to accept the contentions of the applicant that the bank had no legal sustainable interest in the secured asset and that the same would have not been sold as it is agricultural land. Thus the following

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The application filed under Section 17 of the SARFAESI Act in SA No.85/2022 stands dismissed. Parties to bear their own costs.

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(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me on this 6^th day of September, 2022)

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Mr G Murugesan v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Mr G Murugesan v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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