Dismissed

Sudha v. Hdb Financial Services Ltd.

DRT9 Jun 2023SA/384/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application filed by a third-party wife challenging SARFAESI proceedings initiated against a borrower who had acquired the disputed property. The court held the applicant lacked locus standi as the borrower was the only aggrieved person.

What did the court decide?

Application dismissed; costs of Rs.10,000 awarded to defendants.

Sudha versus Hdb Financial Services Ltd. — Company and Corporate | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 9^th day of June, 2023

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SECURITIZATION APPLICATION No.384/2022

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Between

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Sudha, W/o.late Rajan, Perumbillissery House, Chevoor Village, Thrissur – 680 027. …Applicant

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And

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The Authorised Officer, HDB Financial Services Ltd., 2^nd Floor, Door No.37/1912-J, Chaithanya Buildings,

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Opp. Swapnil Apartments,

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Kaloor – Kadavanthra Road, Kadavanthra, Kochi – 682 017.

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HDB Financial Services, Branch Office, 14/488/26, 2^nd Floor, Suncity,

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Koorkencherry, Thrissur – 680 007, Represented by its Branch Manager.

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Chandran (Deleted) S/o.Mundath Parambil Kunjikuttan, Perumbillissery Desom,

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Chevoor Village, Thrissur – 682 027.

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Jagathali Sivaji Anil Sait, S/o.Jagadale Sivaji, V 481, Jagathala House, Ground Road, Cherpu Post, Thrissur - 680 561. …Defendants [The 3^rd defendant was deleted from the party array as per order dated 11.04.2023]

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This Securitization Application having been heard on 16.05.2023

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in the presence of Advocate Sri.Zakir Hussain for the applicant and Advocates M/s.Paulochan Antony.P, G.Ajithkumar, Lekshmi.S.Sekher

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SA 384/2022

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and Sunil Kumar.S for the 1^st and 2^nd defendants, and the 4^th defendant being absent, and stood over to this day for consideration, the Tribunal delivered the following:

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F I N A L O R D E R

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The applicant, a third party to the loan transaction, has filed this application under S.17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) challenging the entire SARFAESI proceedings initiated by the 1^st and 2^nd defendants and seeking to declare that item No.1 property described in Annexure-A6 possession notice is not liable to be proceeded under the provisions of the SARFAESI Act and also to grant some ancillary reliefs.

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Brief facts of the case :

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The applicant claimed in the SA that she is having right over the secured asset having an extent of 3.90 Ares (10.58 cents) lying in block No.29, Re-Sy.No.299/8 of Chevvoor Village, Thrissur Taluk along with a residential building standing thereon which was acquired by her late husband Sri.Rajan by virtue of a registered sale deed No.1640/1992 of Cherpu SRO. The applicant’s husband Sri.Rajan, during his life time, had mortgaged the said property with Cherpu Co-operative Service Bank, Thrissur and obtained a loan. When the said bank initiated recovery proceedings against the husband of the applicant, he approached the 3^rd defendant to arrange loan for him. Accordingly, the 3^rd defendant arranged Rs.7 lakhs from the 4^th defendant and out of the said amount, Rs.2 lakhs was paid in cash and Rs.5 lakhs was remitted towards the loan availed from Cherpu Co-operative Service Bank.

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SA 384/2022

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The 3^rd defendant approached the husband of the applicant to execute a nominal sale deed for the said loan transaction. Accordingly, he executed sale deed No.69/2011 in favour of the 3^rd defendant as security for the said loan. It was not a real sale deed which was not acted upon. Thereafter the husband of the applicant came to know that the 3^rd defendant has alienated the said property to the 4^th defendant by virtue of sale deed No.4007/2011. Since the 3^rd defendant demanded exorbitant amount from the husband of the applicant, he filed a suit as P.O.P.No.28/2012 before the Sub-Court, Thrissur against the 3^rd defendant which was later converted as OS No.298/2014. The 4^th defendant was impleaded as a party to the said proceeding wherein an interim order of injunction was passed by the civil court. Subsequently, the 4^th defendant also filed one Rent Control Petition (RCP)bearing No.31/2013 seeking eviction of the husband of the applicant from the schedule property on ground of arrears of rent, which was dismissed on 19.03.2019 by holding that the 4^th defendant has no title over the said property.

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After the death of the applicant’s husband, his interest over the subject matter property including other properties devolved upon the applicant and her children who were impleaded in the civil suit. Subsequently, the said suit was dismissed on 13.01.2022, which is under challenge before the District Court, Thrissur in Appeal as A.S.No.45/2022. The applicant and her two children are residing in the schedule property which is in their exclusive possession. Now a possession notice dated 07.07.2022 was affixed on the subject matter property stating that the 1^st defendant had taken possession of the same. It is learnt that the 4^th defendant had mortgaged the subject matter property with the 2^nd defendant for availing a loan and due to

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SA 384/2022

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default in repayment, the 1^st defendant initiated SARFAESI proceedings in respect of the property of the applicant described in schedule 1 of the possession notice. It is further claimed by the applicant that the 4^th defendant has no right to create security over the subject matter property in favour of the 2^nd defendant and the SARFAESI proceeding initiated by the 1^st and 2^nd defendants is not binding on her. Hence the SA is filed by the applicant praying to set aside the SARFAESI measures initiated by the defendant bank.

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During pendency of the SA, order was passed by the CJM, Thrissur in MC No.774/2022 for taking physical possession of the secured asset under S.14 of the SARFAESI Act which is challenged by way of amendment by the applicant seeking relief to declare that the proceedings initiated by the 1^st and 2^nd defendants under S.14 of the SARFAESI Act is unsustainable and liable to be set aside.

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The 1^st and 2^nd defendants contested the case by filing written statement as well as additional written statement denying the claim of the applicant and contended inter alia that the 4^th defendant i.e., owner in possession of the secured asset, had availed a loan by creating equitable mortgage over his property purchased by him vide sale deed No.4007/2011. The applicant or her husband has no ownership or possession over the mortgaged property. The claim made by the applicant is fictitious, baseless and unwarranted. In the additional written statement, the 1^st and 2^nd defendants claimed that there is no defect or illegality in the securitization measures initiated by them, so also the steps taken by them under S.14 of the SARFAESI Act. Hence the SA, being devoid of any merit, may be dismissed.

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SA 384/2022

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From the respective case of the applicant and the 1^st and

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2^nd defendants, the following points are emerged for adjudication in this case:

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(i) Whether the applicant has any locus standi to file the present application under S.17(1) of the SARFAESI Act?

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(ii) Whether there is any defect or illegality in the securitization measures initiated by the 1^st and 2^nd defendants against the 4^th defendant?

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(iii) Whether the applicant is entitled to get any relief from this forum?

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FINDINGS :

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Point Nos.(i) to (iii):

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For the sake of convenience, all the points framed in this case are taken up together for adjudication. There is no dispute that item No.1 property described in the schedule of the possession notice as well as in the application filed under S.14 of the SARFAESI Act marked Annexure-A9 in this case is a secured asset created by the 4^th defendant in favour of the defendant bank. It is also the admitted case that husband of the applicant executed a registered sale deed in favour of the 3^rd defendant vide sale deed No.69/2011. The applicant claimed that the said document was created as security for a loan availed by her husband from the 4^th defendant with the help of the 3^rd defendant and the right, title, interest and possession over the said property was not transferred to the 3^rd defendant. There is also no dispute that the 3^rd defendant executed registered sale deed in favour of the 4^th defendant vide sale deed No.4007/2011. A civil suit was filed by the husband of the applicant bearing OS No.298/2014 for cancellation of the sale deed executed by him in favour of the 3^rd

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SA 384/2022

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defendant and after his death, the applicant and her two children were impleaded as parties in the said suit.

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It was held in the civil suit that the impugned registered document executed by the husband of the applicant in favour of the 3^rd defendant is an outright sale deed and accordingly suit was dismissed by the civil court. Against the judgment in OS No.298/2014, the applicant filed an appeal as A.S.No.45/2022 before the District Court, Thrissur which is sub judice . Unless and until the judgment passed by the competent civil court is set aside, the findings are binding on the parties therein. In such premises, the applicant has no locus standi to file this SA claiming right, title and interest over the subject matter property already alienated by her husband for proper consideration in favour of the 3^rd defendant. So also the judgment passed in RCP No.31/2013 cannot supersede the judgment of a competent civil court which is binding on the applicant and she is not entitled to seek any protection on the basis of such Judgment.

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The admitted fact is that the 4^th defendant purchased the said property from the 3^rd defendant and availed a loan from the 2^nd defendant by creating equitable mortgage over the subject matter property. Due to default in repayment, the 1^st and 2^nd defendants initiated securitization measures against the 4^th defendant. Admittedly, the applicant is a third party to the said loan transaction. The applicant is no way aggrieved by any of the measures taken by the 1^st and 2^nd defendants under S.13(4) of the SARFAESI Act against the borrower/ 4^th defendant. Merely because the applicant claims that the document executed by her husband in favour of the 3^rd defendant is not an outright sale, she cannot resist the securitization measures initiated by 1^st and 2^nd defendants against the 4^th defendant. The applicant cannot

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SA 384/2022

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be treated as an ‘aggrieved person’ to intervene with such measures initiated by the secured creditor. In the above circumstance, she is not entitled to seek any relief in this case. Hence all the points framed in this case are answered against the applicant.

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons, the SA being devoid of any merit, is dismissed on contest with costs of Rs.10,000/- (Rupees ten thousand only), which shall be paid by the applicant to the 1^st and 2^nd defendants. Consequently, all the pending IAs are closed.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 9^th day of June, 2023)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 384/2022

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	20.12.2012	Copy of the order in IA No.11532/2012 of the Sub-Court, Thrissur.
Annexure-A2	…	English translation of Annexure-A1.
Annexure-A3	19.03.2019	Copy of order in RCP No.31/2013 of the Rent Controller, Thrissur.
Annexure-A4	13.01.2022	Copy of the judgment in OS No.298/2014 of the Additional Sub Judge Court, Thrissur.
Annexure-A5	…	Copy of A.S.No.45/2022 filed before the District Court, Thrissur.
Annexure-A6	07.07.2022	Copy of possession notice affixed on the property by the 1^stdefendant.
Annexure-A7	04.01.2023	Copy of notice issued by the Advocate Commissioner.
Annexure-A8	…	English translation of Annexure-A7.
Annexure-A9	29.09.2022	Copy of MC No.744/2022 filed by the 2^nd defendant before the CJM Court, Thrissur.
Annexure-A10	29.09.2022	Copy of affidavit filed by the 2^nd defendant in MC No.744/2022 before the CJM Court, Thrissur.
Annexure-A11	26.11.2022	Copy of order passed by the CJM Court, Thrissur in MC No.744/2022.

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Documents on the part of the defendants

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Nil

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 9^th June, 2023

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SA No.384/2022

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Between

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Sudha, W/o.late Rajan, Perumbillissery House, Chevoor Village, Thrissur – 680 027. …Applicant And

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The Authorised Officer, HDB Financial Services Ltd., 2^nd Floor, Door No.37/1912-J, Chaithanya Buildings, Opp. Swapnil Apartments, Kaloor – Kadavanthra Road, Kadavanthra, Kochi – 682 017 & 3 others. …Defendants

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F I N A L O R D E R

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SA 384/2022 31.05.2023

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Order not ready. Adjourned to 09.06.2023.

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Presiding Officer

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SA 384/2022 09.06.2023

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…………… In view of the foregoing reasons, the SA being devoid of any merit, is dismissed on contest (vide separate final order) with costs of Rs.10,000/- (Rupees ten thousand only), which shall be paid by the applicant to the 1^st and 2^nd defendants. Consequently, all the pending IAs are closed.

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Presiding Officer

Sudha v. Hdb Financial Services Ltd.

Case brief

What is this about?

What did the court decide?

Sudha v. Hdb Financial Services Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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