Dismissed

Govinda Industries Private Limited v. State Bank of India

DRT13 Dec 2023SA/29/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's special application challenging the bank's recovery measures. The court held that the deposit of title deeds constituted a valid non-registered equitable mortgage and rejected objections regarding the Chief Metropolitan Magistrate's orders or alleged defects in the demand and auction notices, finding no established prejudice.

What did the court decide?

The special application and all pending interim applications were dismissed; the special application was held to have no merit.

Govinda Industries Private Limited versus State… — Contract and Commercial Disputes | DRT (2023)

¶1

SA No.29/2023

¶2

13/12/2023	Ex. No.	Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. *Order in SA 29 of 2023* *M/s Govinda Industries Private* *Limited And Ors V/s State Bank of* *India and Anr.*	Next date
D	R	T1 MUMBA Advocate Rushabh Shah appeared for the Applicant. Advocate Rishi Thakur a/w Advocate Dhwani Gala i/b ZBA appeared for the Respondent. INTRODUCTION 1. By way of the present SA, the Applicants prayed that all the measures / action taken by the Assistant Registrar, Bandra centre of taking physical possession of the property i.e. Flat No. 401, Devpooja CHS Ltd., North Avenue Road, Santacruz (West), Mumbai-400054. (hereinafter referred to as “property in question”) being illegal bad-in-law and be set aside and possession of the property in question be restored to the Applicants. It is also prayed that the order dated 09/10/2021 passed by the Ld. Chief Metropolitan Magistrate (CMM), Esplanade, Mumbai in SA No. 1065/2019 may be declared as illegal and bad in law. Further, the order dated 07/04/2022 passed by Ld. CMM may	I

¶3

¶4

SA No.29/2023

¶5

UMBAI also be declared null and void. The Demand Notice dated 02/05/2019 may be quashed and set aside and other reliefs. FACTS OF THE CASE 2. Facts as succinctly set out in the SA are that the Respondent had sanctioned a credit facilities namely dropline overdraft facility for an amount of Rs.13.50 crores to the Applicant No.1 vide letter of arrangement dated 09/11/2016 in which the Applicant No.2 is one of the guaratnors. In order to secure the said loan, the Applicants created a mortgage of the property in question by way of deposit of title deeds on 05/12/2016. The said credit facility
was further reviewed vide letter of
RT1 arrangement dated 16/05/2018 and the limit was reduced to Rs.13.10 crores. Subsequently, the account of Applicant No.1 was classified as NPA on 30/04/2019. Thereafter, the Respondent issued demand notice dated
D 02/05/2019 under Section 13(2) of the SARFAESI Act, 2002 to the Applicants for an amount of Rs.12,72,12,404.72. 3. It is further stated that thereafter, the Applicants did not receive any communication
from the Respondents. It was only on 27/01/2023 the Applicants received a notice

¶6

¶7

SA No.29/2023

¶8

DRT1 MUMBAI
dated 13/01/2023 from the Assistant Registrar
Bandra Centre of Courts intimating that the
possession of the property in question shall be
taken on 09/02/2023 pursuant to an order
dated 09/10/2021 passed by the Ld. CMM
under Section 14 of the SARFAESI Act, 2002
for
taking
possession
of
the
property in
question.
4.
It is stated that the Applicants came to
know that the Respondents had preferred an
Application being SA No.1065/2019 under
Section 14 of the SARFAESI Act, 2002 before
the Ld. CMM for taking possession of the
property in question and an order dated
09/10/2021 was passed appointing a Court
Commissioner for taking possession.
It is
stated that the said order is not passed after
satisfying the contents of the affidavit filed by
the Respondent thus, the aforesaid order
cannot be enforced against the property in
question thus, the same is liable to be quashed
and set aside. Further the application filed by
the
Respondent
under
Section 14 of the
SARFAESI Act, 2002 is defective for want of
proper authorisation.
5.
It is further stated that the order dated
07/04/2022 passed by the Ld. CMM, Mumbai
is illegal and bad in law. The Ld. CMM does

¶9

¶10

SA No.29/2023

¶11

RT1 MUMBAI not have any power to modify/rectify the order, as the Ld. CMM had become functus officio on passing of the order dated 09/10/2021 hence, order dated 07/04/2022 is liable to be quashed. 6. It is further stated that pursuant to the notice dated 13/01/2023, the Respondents took the possession of the property in question on 09/02/2023 without complying with the provisions of the SARFAESI Act, 2002 thus, the same is bad in law and illegal. It is stated that after period of almost 1.5 years, Assistant Registrar Bandra Centre of Courts Mumbai has executed the said notice and physical possession is taken on 09/02/2023 of the property in question, which is beyond period of six months from the date of passing the order therefore, the notice and action of taking physical possession is very much defective and liable to be quashed and set aside.
D 7. It is further stated that the alleged mortgage is not registered nor properly stamped as per Section 17 of the Registration Act, thus, the same is not lawful and enforceable. 8. It is further stated that the impugned demand notice dated 02/05/2019 falls down

RT1 MUMBAI
not have any power to modify/rectify the
order, as the Ld. CMM had become functus
officio
on
passing
of
the
order
dated
09/10/2021 hence, order dated 07/04/2022 is
liable to be quashed.
6.
It is further stated that pursuant to the
notice dated 13/01/2023, the Respondents
took the possession of the property in question
on 09/02/2023 without complying with the
provisions of the SARFAESI Act, 2002 thus,
the same is bad in law and illegal. It is stated
that after period of almost 1.5 years, Assistant
Registrar Bandra Centre of Courts Mumbai
has executed the said notice and physical
possession is taken on 09/02/2023 of the
property in question, which is beyond period
of six months from the date of passing the
order therefore, the notice and action of taking
physical possession is very much defective and
liable to be quashed and set aside.

D
7.
It is further stated that the alleged
mortgage
is
not
registered
nor
properly
stamped as per Section 17 of the Registration
Act,
thus,
the
same
is
not
lawful
and
enforceable.
8.
It is further stated that the impugned
demand notice dated 02/05/2019 falls down

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¶13

SA No.29/2023

¶14

UMB at the threshold for gross violation of statutory compliance of the manda provisions of Section 13(3) of the SARFA Act. The Respondent failed to disclose details as compulsorily required under Sec 13(3) of the SARFAESI Act. Further, demand notice has to be signed by author officers duly appointed by board of directo the secured creditor and not by any o officer who may be of that rank therefore, demand notice as well as further meas deserves to be quashed. Hence, the present 9. Notices were issued to the Responde	AI the tory ESI the tion the ised rs of ther the ures SA. nt.
10. During the pendency of the SA,	the
Applicants have moved the IA No.506/2	023,
IA No.286/2023, IA No.500/2023,	IA
No.501/2023, IA No.505/2023,	IA
No.506/2023, IA No.758/2023,	IA
No.2058/2023, IA No.2059/2023,	IA
No.2244/2023, IA No.2245/2023,	IA
No.2246/2023, IA No.2362/2023, IA	No.
2363/2023, IA No.2876/2023 &	IA
No.2887/2023.
11. Record reveals that the IA No.506/2	023
was disposed of on 24.04.2023.	IA
No.500/2023, 501/2023, 505/2023	&
758/2023 were dismissed on 27/04/2	023

¶15

¶16

SA No.29/2023

¶17

being infructuous. IA No.2059/2023 for stay of auction was dismissed vide order dated
DRT1 MUMBAI 05/06/2023 being infructuous. IA Nos.2244/2023, 2245/2023, 2246/2023, IA No.2362/2023 & 2363/2023 were dismissed vide order dated 26/07/2023 being infructuous. 12. Therefore, only IA No.286/2023, IA No.2258/2023, IA No.2876/2023, and IA No.2887/2023, are pending to decide. 13. Since the grounds taken in the IAs are also part of the present SA therefore, the same are decided together. 14. The Respondent filed its Reply’s in IA No.2245/2023, 2058/2023, 2059/2023, IA No.2876/2023 & IA No.2887/2023. 15. The Respondent bank vehemently objected to the contentions made by the Applicants in the IAs as well as SA and stated that the the Applicants has not approached this Tribunal with clean hands and has deliberately not set out the true and correct facts before this Tribunal thus. It is stated that the Applicants have created a mortgage of the property in question by deposit of title deeds dated 05.12.2016. The Respondent has also provided the relevant documents such as

being infructuous. IA No.2059/2023 for stay
of auction was dismissed vide order dated

DRT1 MUMBAI
05/06/2023
being
infructuous.
IA
Nos.2244/2023, 2245/2023, 2246/2023, IA
No.2362/2023 & 2363/2023 were dismissed
vide
order
dated
26/07/2023
being
infructuous.
12.
Therefore,
only
IA No.286/2023, IA
No.2258/2023,
IA
No.2876/2023,
and IA
No.2887/2023, are pending to decide.
13.
Since the grounds taken in the IAs are
also part of the present SA therefore, the same
are decided together.
14.
The Respondent filed its Reply’s in IA
No.2245/2023, 2058/2023, 2059/2023, IA
No.2876/2023 & IA No.2887/2023.
15.
The
Respondent
bank
vehemently
objected to the contentions made by the
Applicants in the IAs as well as SA and stated
that the the Applicants has not approached
this
Tribunal
with
clean
hands
and
has
deliberately not set out the true and correct
facts before this Tribunal thus. It is stated that
the Applicants have created a mortgage of the
property in question by deposit of title deeds
dated 05.12.2016. The Respondent has also
provided the relevant documents such as

¶18

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SA No.29/2023

¶20

DR	T1 MUMBAI Memorandum for Recording of creation of mortgage by deposit of title deeds dated 05/12/2016, Central Registry of Securitization Assets Reconstruction and Security Interest of India (CERSAI) Report dated 09/12/2016 and Notice of Intimation of Mortgage by way of deposit of title deeds dated 23/12/2016 respectively. 16. It is also stated that the Respondent has provided all the necessary information in the affidavit filed before the Ld. CMM under Section 14 of the SARFAESI Act, 2002 therefore, it is stated that the present SA is liable to be dismissed. 17. I have heard the Ld. Counsel for the parties and after considering the contentions of the parties, following questions emerges to decide: (A) Whether the order dated 09/10/2021 as well as dated 07/04/2022 of Ld. CMM, Mumbai is bad in law? (B) Whether the mortgage is not lawful and enforceable?
	(C) Whether the demand notice dated 02/05/2019 would vitiate?

T1 MUMBAI
Memorandum for Recording of creation of
mortgage by deposit of title deeds dated
05/12/2016, Central Registry of Securitization
Assets Reconstruction and Security Interest of
India (CERSAI) Report dated 09/12/2016 and
Notice of Intimation of Mortgage by way of
deposit
of
title
deeds
dated
23/12/2016
respectively.
16.
It is also stated that the Respondent has
provided all the necessary information in the
affidavit filed before the Ld. CMM under
Section
14
of
the
SARFAESI
Act,
2002
therefore, it is stated that the present SA is
liable to be dismissed.
17.
I have heard the Ld. Counsel for the
parties and after considering the contentions
of the parties, following questions emerges to
decide:
(A)
Whether the order dated 09/10/2021 as
well
as
dated
07/04/2022
of
Ld. CMM,
Mumbai is bad in law?
(B)
Whether the mortgage is not lawful and
enforceable?

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SA No.29/2023

¶23

R	T1 MUMBAI (D) Whether the auction dated 16/09/2023 is liable to be quashed? CONSIDERATION 18. Now hereinafter, I will decide objections raised by the Applicants. (A) Whether the order dated 09/10/2021 as well as dated 07/04/2021 of Ld. CMM, Mumbai is bad in law? (i) According to the Applicants while passing the order dated 09/10/2021, Ld. CMM, Mumbai did not satisfy himself from the contents of the affidavit filed by the Respondent, further the application filed by the Respondent under Section 14 of the SARFAESI Act, 2002 is defective for want of proper authorisation. Thus, the order dated 09/10/2021 is without application of mind. Ld. Counsel for the Applicants also stated that the order of Ld. CMM dated 07/04/2022 is
D	without any jurisdiction as at the time of passing the order dated 07/04/2022, Ld. CMM, Mumbai had become functus officio
	therefore, he submits that order dated
	07/04/2022 of Ld. CMM is liable to be quashed.

¶24

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SA No.29/2023

¶26

DRT1 MUMBAI
(ii)
Pre
Contra,
Ld.
Counsel
for
the
Respondent objected to the contention of the
Ld. Counsel for the Applicants and contended
that all the necessary information has already
been provided in the affidavit filed before the
Ld. CMM under Section 14 of the SARFAESI
Act, 2002. He also stated that the Applicants
have made such objections just to delay and
harass the recovery of the Respondent.
(iii)
Further, he contended that since the six
months period was about to complete from the
order
of
Ld.
CMM
dated
09/10/2021
therefore, the Bank has obtained an order for
compliance of order dated 09/10/2021 of Ld.
CMM. Therefore, there is no illegality in the
order dated 07/04/2022.
(iv)
Having heard the rival submissions of the
parties and gone through the record.
(v)
Admittedly the actual physical possession
of the Property in question was taken on
09/02/2023
whereas
the
present
Securitisation Application (SA) is filed on
02/03/2023. Further in the SA the Applicants
objected to orders dated 09/10/2021 and
07/04/2022 passed by Ld. CMM at Esplanade,
Mumbai. It is the case of the Applicants that
they
came
to
know
the
order
dated

¶27

¶28

SA No.29/2023

¶29

DRT1 MUMBAI
09/10/2021 of Ld. CMM on 27/01/2023 only
when they received a notice dated 13/01/2023
from the Assistant Registrar, Bandra Centre of
Courts. Be that as it may. The Applicants
mainly raised objections that Ld. CMM passed
the
order
dated
09/10/2021
without
application
of
mind
and
order
dated
07/04/2022 is without jurisdiction.
(vi)
In sofaras objection pertaining with the
application of mind is concerned, on perusal of
Exhibit-F of the present SA, it reveals that the
Bank has filed an application under Section 14
of the SARFAESI Act, 2002 before the Ld.
CMM and the said application consists of 11
pages and has 15 paras. On perusal of the said
application reveals that the Respondent Bank
has already provided the complete details of
the account impugned. Further in the order
dated
09/10/2021
Ld.
CMM
has
clearly
mentioned the relevant details. Thus, the
objection of the Applicants that there is no
application of mind by Ld. CMM is baseless
hence declined.
(vii)
The next objection of the Applicants that
the order dated 07/04/2022 of Ld. CMM is
liable to be quashed as at the time of passing
the said order, Ld. CMM was_functus officio,_is
also
has
no
merit,
as
the
order
dated

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SA No.29/2023

¶32

DRT1 MUMBAI
07/04/2022 was in furtherance of the earlier
order dated 09/10/2021 only and thus the
same is not an independent and separate order
therefore, this objection of the Applicants is
also not sustainable hence rejected.
(B) Whether the mortgage is not lawful and
enforceable?
(i)
According to the Applicants, the alleged
mortgage is being attempted to prove before
the Ld. CMM vide document i.e. MOE dated
05/12/2016
which
is
not
registered
nor
properly stamped. It is stated that the alleged
equitable mortgage claimed by the Respondent
in respect of the said properties cannot be
enforced in law for the reason that said
equitable mortgage by deposit of title deed is
not duly registered as per notification dated
01/04/2013 introduced to Registration Act
under 17(f) of the Registration Act. Thus, the
Respondent is not a secured creditor under the
Act and therefore, cannot enforce the alleged
security,
unless
and
until
the
same
is
registered. Hence, the action/measures of the
Respondent are null and void ab-initio.
(ii)
On the other hand, Ld. Counsel for the
Respondent
Bank
has
stated
that
vide
Memorandum of Recording for creation of

¶33

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SA No.29/2023

¶35

I mortgage by deposit of title deeds dated 05/12/2016, the Applicants secured the loan facility, availed from the Respondent. (iii) Further, the Respondent Bank has produced the copies of Memorandum for Recording of creation of mortgage by deposit of title deeds dated 05/12/2016, Central
DRT1 MUMBA Registry of Securitization Assets Reconstruction and Security Interest of India (CERSAI) Report dated 09/12/2016 and Notice of Intimation of Mortgage by way of deposit of title deeds dated 23/12/2016 respectively. (iv) Admittedly, the Applicants have availed the credit facilities from the Respondent. The execution of the loan documents and creation of security documents was duly admitted by the Applicants. The loan was secured by way of equitable mortgage of the property in question by deposit the title deeds of the property in question. Therefore, since the Applicants mortgaged their properties with the Respondent with an intent to provide security for the credit facilities therefore, the deposit of title deeds itself, based on its language, may be an evidence of the contract between the parties as provided under Section 58(f) of the Transfer of Property Act, 1882. Further, as per Section

I
mortgage by deposit of title deeds dated
05/12/2016, the Applicants secured the loan
facility, availed from the Respondent.
(iii)
Further,
the
Respondent Bank has
produced the copies of Memorandum for
Recording of creation of mortgage by deposit
of
title
deeds
dated
05/12/2016,
Central

DRT1 MUMBA
Registry
of
Securitization
Assets
Reconstruction and Security Interest of India
(CERSAI)
Report
dated
09/12/2016
and
Notice of Intimation of Mortgage by way of
deposit
of
title
deeds
dated
23/12/2016
respectively.
(iv)
Admittedly, the Applicants have availed
the credit facilities from the Respondent. The
execution of the loan documents and creation
of security documents was duly admitted by
the Applicants. The loan was secured by way of
equitable mortgage of the property in question
by deposit the title deeds of the property in
question.
Therefore,
since
the
Applicants
mortgaged
their
properties
with
the
Respondent with an intent to provide security
for the credit facilities therefore, the deposit of
title deeds itself, based on its language, may be
an evidence of the contract between the parties
as provided under Section 58(f) of the Transfer
of Property Act, 1882. Further, as per Section

¶36

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SA No.29/2023

¶38

DRT1 MUMBAI
59 of the Transfer of Property, such mortgage
do not required to be effected by a registered
instrument.
(v)
The Hon’ble Apex Court in the matter of
Rachpal Mahraj Vs. Bhagwandas Daruka and
others, 1950 AIR 272 has held that:
“...when the debtor deposits with
the creditor the title deeds of his
property with intent to create a
security,
the
law
implies
a
contract between the parties to
create
a
mortgage,
and
no
registered instrument is required
under section 59 as in other forms
of mortgage.”
(emphasis provided)
(vi)
Similarly, the Hon’ble Supreme Court
in the case of State of Haryana & Ors vs
Navir
Singh
&
Anr,
Civil
Appeal
No.9030/2013 has held that:
“.....In the face of it, we are of
opinion
that
the
charge
of
mortgage
can
be
entered
into
revenue
record
in
respect
of
mortgage by deposit of title-deeds
and
for
that,
instrument
of
mortgage
is
not
necessary.
Mortgage by deposit of title-deeds
further
does
not
require
registration. Hence, the question
of payment of registration fee and
stamp duty does not arise.

¶39

¶40

SA No.29/2023

¶41

(emphasis provided)
MBAI (vii) Therefore, an equitable mortgage does not need to be affected by a registered instrument and also the issue of stamp duty is not relevant in the matter of deposit of title deeds. (viii) Further, the Applicants never objected that the Respondent has kept the title deeds without their permission. In fact the Applicants themselves confirmed that they
DRT1 MU handed over the title deeds to the Respondent thus, now the objection on the mortgage or memorandum of entries is only an afterthought story of the Applicants with a purpose to frustrate the recovery of the Respondent. Therefore, the objection raised by the Applicants is hereby rejected. (C) Whether the demand notice dated 02/05/2019 would vitiate? (i) The Applicants have raised another objection on the Demand Notice under Section 13(2) of the SARFAESI Act, 2002 in the following manner: “*VII* *GROUNDS* *FOR* *FINAL* *RELIEFS:* XXXXXX

(emphasis provided)

MBAI
(vii)
Therefore, an equitable mortgage does
not need to be affected by a registered
instrument and also the issue of stamp duty
is not relevant in the matter of deposit of title
deeds.
(viii)
Further, the Applicants never objected
that the Respondent has kept the title deeds
without
their
permission.
In
fact
the
Applicants themselves confirmed that they

DRT1 MU
handed
over
the
title
deeds
to
the
Respondent thus, now the objection on the
mortgage or memorandum of entries is only
an afterthought story of the Applicants with
a purpose to frustrate the recovery of the
Respondent. Therefore, the objection raised
by the Applicants is hereby rejected.
(C)
Whether
the
demand
notice
dated
02/05/2019 would vitiate?
(i)
The Applicants have raised another
objection on the Demand Notice under Section
13(2) of the SARFAESI Act, 2002 in the
following manner:
“VII
GROUNDS
FOR
FINAL
RELIEFS:
XXXXXX

¶42

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SA No.29/2023

¶44

T1 MUMBAI
n.
That,
the impugned demand
notice dated 2^{_nd _}May 2019 falls
down at the threshold for gross
violation
of
the
statutory
compliance
of
the
mandatory
provisions
of
Section
13(3)
of
SARFAESI Act. Respondent failed
to
disclose
the
details
as
compulsorily
required
under
section 13(3) of the SARFAESI, Act.
Requirement
to
follow
strict
compliance of Section 13(3) of the
SARFAESI Act was much needed as
this notice is not merely a notice for
demand but it acts as an order of
injunction under Section 13(13).
o. In view of the settled position of
law and glaring irregularity and
illegality, demand notice as well
further
measures
deserve to be
quashed.
p. xxxx
q. That, under the provisions of
SARFAESI Act demand notice has
to be signed by authorised officer
duly appointed by board of director
of the secured creditor and not by
any other officer who may be of
that rank. It is always possible that
the officer of equivalent rank may
not
be appointed as authorised
officer by board of director, thus
any officer of the required bank
cannot be treated as authorised
officer under SARFAESI Act unless
specifically empowered by Board of
Directors.”
(emphasis provided)
(ii)
Thus, the Applicants have challenged the
demand notice under Section 13 (2) of the

¶45

¶46

SA No.29/2023

¶47

RT1 MUMBAI SARFAESI Act, 2002, on two counts firstly, demand notice dated 2^ndMay 2019 falls down at the threshold for gross violation of the statutory compliance of the mandatory provisions of Section 13(3) of SARFAESI Act and secondly demand notice has to be signed by authorised officer duly appointed by board of director of the secured creditor and not by any other officer who may be of that rank. (iii) In sofaras objection pertaining to the compliance of the provisions of Section 13 (3) of the SARFAESI Act, 2002, is concerned, on perusal of Demand Notice i.e. Exhibit-D dated 02/05/2019 of the SA it reveals that Respondent has provided complete details of the amount due as well as details of the interest and further details in the Schedule A of the demand notice under Section 13(2) of the SARFAESI Act, 2002. Importantly, the facility in the present matter was a dropline overdraft facility under the Asset backed loan
D thus in the Demand Notice dated 02/05/2019 the Respondent Bank duly mentioned the
outstanding as Rs. 12,30,95887.56 and
unapplied interest upto 01/05/2019 Rs.
4116517.16. Therefore, the said objection of the
Applicants is not sustainable hence declined.

¶48

¶49

SA No.29/2023

¶50

RT1 MUMBAI (iv) The second objection which was vehemently objected by Ld. Counsel for the Applicants that the demand notice has to be signed by authorised officer duly appointed by board of directors of the secured creditor and not by any other officer who may be of that rank. He drawn my attention to the affidavit in reply filed by the Respondent bank where they provided details of the authorised officer who signed the Demand Notice under Section 13(2) of the SARFAESI Act, 2002, and submitted that as per said reply Mr. P.C. Barikh Chief Manager has signed demand notice whereas actually Mr. Ashish Kumar Singh who signed the demand notice under Section 13(2) dated 02/05/2019 thus, the Respondent has made wrong submission which amounts to perjury. (v) Admittedly in the reply dated 24/04/2023 in para 6 (v) the details of the authorised officer who signed the demand notice is
mentioned as Mr Paresh Barikh, Chief
D Manager however in their Reply dated 21/09/2023 the respondent clarify the
position and stated that originally the
impugned account was handled by the
commercial branch, Girgaon and after the account was declared as NPA the said account was migrated to the Respondent Bank for

¶51

¶52

SA No.29/2023

¶53

recovery of dues. It is also stated that at the time of issuing the demand notice, Mr Ashish
DRT1 MUMBAI Kumar Singh, was Chief manager and relationship manager who issued the demand notice. Further it is stated that subsequently Mr Barikh was handling the account and was taken all further action being authorised officer in the present matter (vi) Thus, though in their reply dated 24/04/2023 the Respondent stated that Mr Barikh was the authorised officer who signed the demand notice but after the objection of the Applicants the Respondents realised their mistake and then in their reply dated 21/09/2023 the Respondent corrected themselves and stated that demand notice dated 02/05/2019 was issued by Mr. Ashish Kumar Singh but further stated that after the migration of the account the same was handled by Mr. Barikh. Thus, the Respondent admitted and corrected their mistake. The Respondent Bank is expected and also bound to give the correct statement in their reply but in the present matter the concerned officer did not put his due diligence while presenting the reply before this Tribunal thus, the Bank is hereby directed to be careful in future.

recovery of dues. It is also stated that at the
time of issuing the demand notice, Mr Ashish

DRT1 MUMBAI
Kumar
Singh,
was
Chief
manager
and
relationship manager who issued the demand
notice. Further it is stated that subsequently
Mr Barikh was handling the account and was
taken
all
further
action
being
authorised
officer in the present matter
(vi)
Thus,
though
in
their
reply
dated
24/04/2023 the Respondent stated that Mr
Barikh was the authorised officer who signed
the demand notice but after the objection of
the Applicants the Respondents realised their
mistake
and
then
in
their
reply
dated
21/09/2023
the
Respondent
corrected
themselves and stated that demand notice
dated 02/05/2019 was issued by Mr. Ashish
Kumar Singh but further stated that after the
migration
of
the
account
the
same
was
handled by Mr. Barikh. Thus, the Respondent
admitted and corrected their mistake. The
Respondent Bank is expected and also bound
to give the correct statement in their reply but
in the present matter the concerned officer did
not put his due diligence while presenting the
reply before this Tribunal thus, the Bank is
hereby directed to be careful in future.

¶54

¶55

SA No.29/2023

¶56

UMBAI (vii) On bare perusal of the Demand Notice dated 02/05/2019 also established that the demand notice was issued by Mr. Ashish Kumar Singh, Chief Manager. (viii) In view of the fact that the demand notice dated 02/05/2019 was signed by Mr. Ashish Kumar Singh who was Chief Manager and according to the bank he was authorised to do so thus, in view of the facts and circumstances, I do not find any illegality in the demand notice dated 02/05/2019. (D) Whether the auction dated 16/09/2023 is liable to be quashed?
DRT1 M (i) The Applicants have raised another objection that the auction notice dated 25/08/2023, whereby the auction is fixed on 16/09/2023 is liable to be quashed as in the said notice the Respondent Bank has included Garage No.1, 2, 3 & 8 which were not part of the demand notice under Section 13(2) of the SARFAESI Act, 2002. (ii) Ld. Counsel for the Applicants stated that since the Respondent bank has not taken any steps with regards to the garages and therefore, now the Respondent bank cannot sell the garages in the auction and thus, the

UMBAI
(vii)
On bare perusal of the Demand Notice
dated 02/05/2019 also established that the
demand notice was issued by Mr. Ashish
Kumar Singh, Chief Manager.
(viii)
In view of the fact that the demand
notice dated 02/05/2019 was signed by Mr.
Ashish Kumar Singh who was Chief Manager
and according to the bank he was authorised
to do so thus, in view of the facts and
circumstances, I do not find any illegality in
the demand notice dated 02/05/2019.
(D)
Whether the auction dated 16/09/2023
is liable to be quashed?

DRT1 M
(i)
The
Applicants
have
raised
another
objection
that
the
auction
notice
dated
25/08/2023, whereby the auction is fixed on
16/09/2023 is liable to be quashed as in the
said notice the Respondent Bank has included
Garage No.1, 2, 3 & 8 which were not part of
the demand notice under Section 13(2) of the
SARFAESI Act, 2002.
(ii)
Ld. Counsel for the Applicants stated that
since the Respondent bank has not taken any
steps
with
regards
to
the
garages
and
therefore, now the Respondent bank cannot
sell the garages in the auction and thus, the

¶57

¶58

SA No.29/2023

¶59

DRT1 MUMBAI auction notice is defective and ought to be quashed and set aside. (iii) Ld. Counsel for the Respondent Bank has objected to the contentions of the Applicants and stated that in the documents pertaining to creation of mortgage as well as copy of the CERSAI report and the notice of intimation of mortgage by deposit of title deeds clearly demonstrate that mortgage was inclusive of the flat alongwith the garage No.1, 2, 3 & 8 thus, he submits that there is no merit in the objection taken by the Applicants. (iv) To buttress his arguments, Ld. Counsel for the Respondent relied upon the judgement of Hon’ble Supreme Court in Varimadugu Obi Reddy vs B. Sreenivasulu, Civil Appeal No(s).8470 of 2022. (v) This is an admitted fact that the mortgage in the demand notice details of the garage No.1, 2, 3 & 8 are not mentioned. The relevant para of the demand notice is quoted herein below: “Part-II
(Equitable Mortgage of Immovable properties)
1. Equitable mortgage of all that piece and parcel of Flat No.401, adm 1600 sq. ft. of carpet

DRT1 MUMBAI
auction notice is defective and ought to be
quashed and set aside.
(iii)
Ld. Counsel for the Respondent Bank has
objected to the contentions of the Applicants
and stated that in the documents pertaining to
creation of mortgage as well as copy of the
CERSAI report and the notice of intimation of
mortgage by deposit of title deeds clearly
demonstrate that mortgage was inclusive of
the flat alongwith the garage No.1, 2, 3 & 8
thus, he submits that there is no merit in the
objection taken by the Applicants.
(iv)
To buttress his arguments, Ld. Counsel
for the Respondent relied upon the judgement
of Hon’ble Supreme Court in Varimadugu Obi
Reddy
vs
B.
Sreenivasulu,
Civil
Appeal
No(s).8470 of 2022.
(v)
This is an admitted fact that the mortgage
in the demand notice details of the garage
No.1, 2, 3 & 8 are not mentioned. The relevant
para of the demand notice is quoted herein
below:
“Part-II

(Equitable
Mortgage
of
Immovable properties)

1.
Equitable mortgage of all
that
piece
and
parcel
of Flat
No.401, adm 1600 sq. ft. of carpet

¶60

¶61

SA No.29/2023

¶62

RT1 MUMBAI area alongwith the right of exclusive use and possess the terrace adm about 1154 sq. ft. on the 4th Floor of the building known as “Dev Pooja” belonging to the Devpooja Co-operative Housing Society Limited, at North Avenue Road, Santacruz (West), Mumbai, situated on the land bearing Plot No.D-1, of private Scheme of Gazdar, and being partly part of Plot No.65, of Town Planning Scheme No IV of Santacruz and being a portion of Survey No.408 and 409 adm 1184.75 Sqm or thereabouts of village-Bandra, Taluka Andheri, Dist. Mumbai Suburban within the registration District and sub District of Mumbai suburban owned by Smt. Abhilasha Yogesh Kela.” (emphasis provided) (vi) However, the last auction notice in which the respondent has received a bid demonstrate the details of the property in question in following manner:
D “Flat No.401, adm 1600 sq. ft. of carpet area on the 4th floor together with four covered garages bearing 1, 2, 3 and 8 on the ground floor in the building known as “Dev Pooja Dev Pooja Co-operative Housing Society Limited, at North Avenue Road, Santacruz (West), Mumbai owned by Smt. Abhilasha Yogesh Kala.” (emphasis supplied)

RT1 MUMBAI
area
alongwith
the
right
of
exclusive
use
and
possess
the
terrace adm about 1154 sq. ft. on
the
4th
Floor
of
the
building
known as “Dev Pooja” belonging
to
the
Devpooja
Co-operative
Housing Society Limited, at North
Avenue Road, Santacruz (West),
Mumbai,
situated on the land
bearing Plot No.D-1, of private
Scheme
of
Gazdar,
and
being
partly part of Plot No.65, of Town
Planning
Scheme
No
IV
of
Santacruz and being a portion of
Survey
No.408
and
409
adm
1184.75 Sqm or thereabouts of
village-Bandra, Taluka Andheri,
Dist. Mumbai Suburban within
the registration District and sub
District
of
Mumbai
suburban
owned by Smt. Abhilasha Yogesh
Kela.”
(emphasis provided)
(vi)
However, the last auction notice in which
the respondent has received a bid demonstrate
the details of the property in question in
following manner:

D
“Flat No.401, adm 1600 sq. ft. of
carpet
area
on
the
4th
floor
together
with
four
covered
garages bearing 1, 2, 3 and 8 on
the ground floor in the building
known as “Dev Pooja Dev Pooja
Co-operative
Housing
Society
Limited, at North Avenue Road,
Santacruz (West), Mumbai owned
by Smt. Abhilasha Yogesh Kala.”
(emphasis supplied)

¶63

¶64

SA No.29/2023

¶65

T1 MUMBAI (vii) No doubt in the demand notice details of the four garage are not mentioned however, in the auction notice dated 25/08/2023 the details of the mortgaged property is properly mentioned which includes the four garages also and therefore, there is no prejudice caused to the Applicants herein by non mentioning the 4 garages in the demand notice when the Applicants did not demonstrated that how they will prejudice by non mentioning of the four garages in the demand notice except some inadvertent mistake. (viii) The Judgment relied upon by the Ld. Counsel for the Respondent is also support the case of the Respondent as in the judgement Varimadugu Obi Reddy (supra) in para 36 & 37, Hon’ble Apex Court has categorically observed that:
DR “36. We find substance in the submissions made by the learned counsel for the appellant for the reason that so far as the error in the description of door number of the property is concerned, which admittedly indicated throughout as “12 3 393” instead of “12 3 39”, but the fact is that the description of the mortgaged property from the commencement of the proceedings under Section 13(2) of the SARFAESI Act, 2002, due to human error instead of “12 3 39”,

T1 MUMBAI
(vii)
No doubt in the demand notice details of
the four garage are not mentioned however, in
the auction notice dated 25/08/2023 the
details of the mortgaged property is properly
mentioned which includes the four garages
also and therefore, there is no prejudice
caused
to
the
Applicants
herein
by
non
mentioning the 4 garages in the demand notice
when the Applicants did not demonstrated
that
how
they
will
prejudice
by
non
mentioning of the four garages in the demand
notice except some inadvertent mistake.
(viii)
The Judgment relied upon by the Ld.
Counsel for the Respondent is also support the
case of the Respondent as in the judgement
Varimadugu Obi Reddy (supra) in para 36 &
37,
Hon’ble
Apex
Court has categorically
observed that:

DR
“36. We find substance in the
submissions made by the learned
counsel for the appellant for the
reason that so far as the error in
the description of door number of
the property is concerned, which
admittedly indicated throughout
as “12 3 393” instead of “12 3 39”,
but the fact is that the description
of the mortgaged property from
the
commencement
of
the
proceedings under Section 13(2)
of the SARFAESI Act, 2002, due to
human error instead of “12 3 39”,

¶66

¶67

SA No.29/2023

¶68

DRT1 MUMBAI
door number was indicated as
“12 3 393”, but admittedly the fact
is that there is no such property
available in the locality/vicinity
with Door no.”12 3 393” and as full
description
of
the
mortgaged
property
was
mentioned/
indicated, although there was a
typographical
error,
but
the
respondent borrowers failed to
demonstrate any prejudice being
caused
on
account
of
the
inadvertent error being caused in
description
of
the
mortgaged
property. At the same time, the
borrower failed to demonstrate
that because of a typographical
inadvertent error in door number,
as indicated above, the property
could not have fetched the value
as it ought to have fetched and
that
apart,
there
was
no
documentary evidence placed on
record to substantiate the kind of
prejudice, if any, being caused.
37. It is true that the secured
creditor is under an obligation to
undertake
the
exercise
and
cross check the description of the
mortgaged property at the stage
when
the
initial
proceedings
under Section 13(2) are initiated
or
in
the
later
consequential
proceedings, but at the same time,
mere typographical error due to
inadvertence
which
has
not
caused
any
prejudice
to
the
borrowers, that in itself could not
be considered to be the ground to
annul the process held by the
secured creditor which, in our
view, is in due compliance with
the requirement as contemplated

¶69

¶70

SA No.29/2023

¶71

RT1 MUMBAI under the provisions of Rules, 2002 and this was extensively considered by the Tribunal and that apart, it is not the case of the respondents that participants in e auction sale are misguided because of the error in description of the property put to auction and when there is no ambiguity with regard to the detailed description of the mortgaged property put to auction, mere mentioning of the door number “12 3 393” instead of “12 3 39” is inconsequential and does not vitiate the auction proceedings held on 28th March, 2015.” (emphasis provided) (ix) In view of the above, the said objection of the Applicants is also not sustainable. CONCLUSION 19. For the foregoing reasons, I do not find any merit in the present SA, therefore, the present SA as well as all the pending IAs are hereby dismissed.
D File be closed and consigned to record room. P.O. DRT-I

RT1 MUMBAI
under the provisions of Rules,
2002 and this was extensively
considered by the Tribunal and
that apart, it is not the case of the
respondents that participants in
e auction
sale
are
misguided
because of the error in description
of the property put to auction and
when there is no ambiguity with
regard to the detailed description
of the mortgaged property put to
auction, mere mentioning of the
door number “12 3 393” instead of
“12 3 39”
is
inconsequential and
does
not
vitiate
the
auction
proceedings held on 28th March,
2015.”
(emphasis provided)
(ix)
In view of the above, the said objection of
the Applicants is also not sustainable.
CONCLUSION
19.
For the foregoing reasons, I do not find
any merit in the present SA, therefore, the
present SA as well as all the pending IAs are
hereby dismissed.

D
File be closed and consigned to record
room.
P.O.
DRT-I

¶72

¶73

Govinda Industries Private Limited v. State Bank of India

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Govinda Industries Private Limited v. State Bank of India

Case brief

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