Dismissed

Oswal Shirish Dalichand HUF Through Its Karta Shirish Oswal v. Indian Bank

DRT22 Jan 2024SA/191/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a securitisation application filed by a licensee challenging a bank's enforcement measures. The Tribunal held the applicant was not an 'aggrieved party' under Section 17 of the SARFAESI Act and the application lacked maintainability as the cause of action did not survive.

What did the court decide?

The Securitisation Application No.191/2022 was dismissed and all interlocutory applications were disposed of.

Oswal Shirish Dalichand HUF Through Its Karta… — Contract and Commercial Disputes | DRT (2024)

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Presented on: 17.04.2022 Registered on: 27.04.2022 Decided on: 22.01.2024 Duration: Y M D 1 9 5

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IN THE DEBTS RECOVERY TRIBUNAL AT PUNE (Before Shri Dilip G Murumkar, Presiding Officer) SECURITISATION APPLICATION No.191/2022

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Shirish Dalichand Oswal H.U.F Represented by its Karta Shirish Oswal

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5, Housing Society, Shahu Nagar, Jalgaon – 425 001.

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… Applicant

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Versus

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Indian Bank Through its Authorised Officer S A M Small Pune Branch, Jupiter Housing Society, Kalyani Nagar, Pune – 411 006.

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Laxmi Irrigation System Pvt. Ltd., Hall C-1, 2^nd Floor, Old B.J. Market, Jalgaon – 425 001.

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M/s. Riddhi Shelters Pvt. Ltd., 315, 316, Survey No.692/A/2 Pune 411 037

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Shri Rajendra Khandewal Hall C-1, 2^nd Floor, Old B.J. Market, Jalgaon – 425 001.

... Defendants

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[KAUR]

APPEARANCES

For the Applicant	Applicant in person
For defendant bank	Mr. V.N. Aji Kumar i/b VNA Legal
	- Advocate
For Defendant Nos.2 to 4	None

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JUDGMENT

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(Delivered on 22^nd January, 2024)

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By the present Securitisation Application, the applicant, third party who is neither the owner/borrower/guarantor nor the mortgagor has challenged the action taken by defendant Bank under Section 13(4) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act” for short) in respect of the mortgaged properties i.e. Office Nos.315, 316 and 317 on 3^rd Floor, Decision Tower, CTS No.2203, Plot No.1, S.No.692/A/2 + 692A/2A/3 + 693/2, Bibwewadi, Satara Road, Pune (hereinafter referred to as “suit properties”).

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The factual matrix of the case is as under:

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It is the case of the applicant that applicant is holding the mortgaged suit properties on the basis of Leave and License Agreements since 1^st January, 2007. On 5^th December, 2009 all the three properties were locked and

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sealed by Pune Municipal Corporation. In spite of all the three properties under lock and seal, the applicant continued with Leave and License/tenancy Agreement with the owners. Further, on 18^th November, 2017 the defendant bank took symbolic possession of the suit properties. On 21^st March, 2022 the applicant through owners of the suit properties received the Notice dated 15^th March, 2022. Thereafter, the applicant issued letters to the defendant bank seeking certain information. However, the defendant bank did not give any reply.

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It is the case of the applicant that the entire action initiated by defendant bank under the SARFAESI Act is liable to be quashed and set aside. The defendant bank has not followed any of the obligatory and mandatory provisions of Security Interest (Enforcement) Rules, 2002 and SARFAESI Act. Without taking physical possession of the suit properties, the defendant bank has issued Notice of intended Sale dated 15^th March, 2022. The defendant has violated the provisions of SARFAESI Act.

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Based on the aforesaid facts, the applicant seek following relief:

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(A) To quash and/or set aside the aforesaid impugned Notice of Intended sale dated 15^th March, 2022 issued by the Authorised Officer of defendant and also hold the measures under the Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 and rules framed thereunder, initiated and adopted by defendant against said three suit properties, being wholly illegal, Unlawful, Criminal, Vexatious, Blatantly and prima facie violative of Said Act of 2002.

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(B) To order exemplary action and penalty u/s 29 of the said Act 2002 against the Authorised office of defendant and his accomplices’ for flagrant violation of SARFAESI Act since 2017 and thereafter till date.

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(C) To order action and penalty u/s 33 of the SARFAESI Act and proceeded against and punished accordingly against Body Corporate Indian Bank for abetting and supporting the unlawful illegal, intentional criminal and fraudulent Acts of their officers and also to book the Top Brass in their vicarious capacity with criminal culpability for

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violating the provisions of SARFAESI Act so blatantly so that it deters the offending officers in future to commit any crime so abashedly by abusing the provisions of SARFAESI Act.

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(D) To, charge the concerned officers/s of defendant for having committed various serious offences and commit the matter to the concerned J.M.F.C to prosecute the offenders for committing of various offences punishable u/Secs.166, 166(a), 167, 182, 193, 219, 339, 384, 403, 417, 420, 447, 465, 467, and 120(b) r/w 34 of Indian Penal Code.

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(E) To permanently injunct and bar invocation of SARFAESI proceedings against the three suit properties because of the misadventure committed by Authorized Officer of the defendant bank by unlawfully and illegally issuing a legally untenable Notices of intended Sale dated 15.03.2022.

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(F) To such further order/orders as to this learned Tribunal may deem fit and proper for the ends of justice and to uphold the Majesty of Law so that white collared Criminals get away from committing

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Crime against statute by infringing on the rights of the applicant and prospective Auction Purchaser.

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Defendant bank has filed Affidavit in Reply (Exhibit-18) thereby resisted the said application. The defendant bank stated that applicant has no locus to file the present application as the secured properties were mortgaged by borrower defendant No.2, Laxmi Irrigation System Pvt. Ltd. The applicant is a Licensee under three separate agreements executed in December, 2021 which is executed after creation and execution of mortgage as well as after issuance of Demand Notice dated 19^th May, 2017. Further, the Securitisation Application has become infructuous as the applicant has challenged auction sale Notice dated 15^th March, 2022 which could not be materialized for want of bids. Therefore, SA is not maintainable. The applicant is paying license fees of Rs.1/- for using commercial premises. Thus, the Leave and License Agreements executed in December, 2021 are sham, bogus and fraudulent. The present application is filed by applicant in collusion with landlord/mortgagor with an ulterior motive to obstruct the measures adopted by the Bank under the SARFAESI Act.

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The application is liable to be dismissed for non-joinder of necessary parties.

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It is further contended that the borrower/mortgagor committed default, therefore, the defendant bank invoked the provisions under the SARFAESI Act, 2002 by issuing Demand Notice dated 19^th May, 2017. Thereafter, took symbolic possession on 17^th November, 2017. Since the borrowers/mortgagors failed to comply the Demand Notice, the defendant bank filed Application u/s 14 of the SARFAESI Act before District Magistrate and took physical possession of the suit property on 3^rd August, 2022 and after completion of sale, the suit properties have been handed over to respective purchaser. The documents produced by the applicant are suspicious. The reliefs sought by the applicant in the Securitisation Application are totally misconceived as the same are beyond the scope of SARFAESI Act, 2002. Hence, the application be dismissed with costs.

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The following points arise for my determination and I record my findings thereon as under:

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(1) Whether the applicant is “Aggrieved Party” for

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claiming reliefs as mentioned in the prayer clause of this Application?

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(2) Whether present Securitisation Application is maintainable? (3) What order?

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Findings:

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Point No.1 – In the negative

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Point No.2 – Does not survive

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Point No.3 – As per final order

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REASONS

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The applicant has filed Written Notes of Arguments (Exhibit-19) in which the applicant has reiterated facts described in the Application. The defendant bank has filed Written Notes of Arguments (Exhibit-20) which are in consonance with contents of Written Statement.

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I have also heard oral arguments made on behalf of both the parties.

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As to Point Nos.1 and 2

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Since both these points are interconnected with each other, I record my findings thereon simultaneously.

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The applicant who claims to be Licensee of three suit

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properties has challenged Sale Notice dated 15^th March, 2022. The defendant bank resisted the Application and challenged the maintainability of present Securitisation Application filed by the applicant.

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I have perused the record and documents produced by both the parties. As per Section 17(4)(i) of the SARFAESI Act any person who claims any tenancy or leasehold rights upon the secured asset then this Tribunal has to examine facts of the case and evidence produced by parties in respect of such claim. On plain reading of this provision, it appears that only tenants or a person having leasehold rights upon the secured asset is entitled to challenge the measures taken by bank under SARFAESI Act. In the present case, the applicant himself is claiming to be Licensee of defendant No.3 M/s Riddhi Shelters Pvt. Ltd., mortgagor of the suit properties to the loan taken by defendant No.2 Laxmi Irrigation System Pvt. Ltd., borrower. Thus, the applicant is neither tenant nor having leasehold rights in respect of suit properties and therefore has no right to challenge the action of the defendant bank. Hence, he cannot be termed as “Aggrieved Party” as provided u/s 17(4)(i) of the

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SARFAESI Act.

According to the applicant, he is in possession of the suit properties since the year 2007 as Licensee. However, he has not produced iota of evidence in that regard. Per contra, on perusal of three Leave and License Agreements it reveals that they are made in the month of December, 2021 but the suit properties have been mortgaged by defendant No.3 M/s Riddhi Shelters Pvt. Ltd., in the month of April, 2014. From these facts it is manifest that the applicant was not in possession of suit properties on the date of mortgage made in the year 2014 or since earlier thereof .

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The record shows that defendant bank had issued Demand Notice in the month of May, 2017 and Leave and License Agreements have been executed in favour of the applicant by mortgagor, defendant No.3 M/s. Riddhi Shelters Pvt. Ltd., in the month of December, 2021 but there is no iota of evidence that either borrower or mortgagor had obtained written permission of defendant bank for giving suit properties on Leave and License. Thus, the mortgagor defendant No.3 has contravened provision of Section 13(13) of the SARFAESI Act. Therefore, it appears that Leave and

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License Agreements executed between mortgagor, M/s. Riddhi Shelters Pvt. Ltd., and applicant are not legal and valid but prepared afterwards for creating obstruction to defendant bank for taking measures under the provisions of SARFAESI Act.

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Admittedly, the defendant bank, in the month of November, 2017 issued Possession Notice to the borrowers and mortgagor i.e. defendant Nos.2, 3 and 4 under Rule 8(1) of Security Interest (Enforcement) Rules and thereby prohibited them to create encumbrance over the suit properties. However, defendant No.3 M/s. Riddhi Shelters Pvt. Ltd., by committing breach of Rule 8(1) of Security Interest (Enforcement) Rules executed Leave and License Agreement in the year 2021 without written permission of the defendant bank.

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Most pertinent is that the applicant has challenged Sale Notice dated 15^th March, 2022 issued and published by defendant bank. However, the sale could not be conducted on scheduled date for want of bidders. Thereafter, defendant bank issued Sale Notice on 17^th May, 2022 afresh and sale process was completed and took possession on 3^rd

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August, 2022 in pursuance of Possession Notice. However, the applicant failed to amend the main application in respect of subsequent actions taken by defendant bank. Thus, the cause of action does not survive . In view of these facts and circumstances, I opine that present Securitisation Application is not maintainable. Hence, I answer these points accordingly.

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As to Point No.3

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At the finale, from the evidence on record I hold that the applicant cannot be termed as “Aggrieved Party” provided u/s 17 of the SARFAESI Act and therefore, has no locus to file this Application. Further, present Securitisation Application is not maintainable due to non-survival of cause of action because Sale Notice dated 15^th March, 2022 which is challenged herein had become infructuous for want of bidders. Other reliefs claimed in prayer clause of present Securitisation Application are devoid of merits as I have held that present application is not maintainable. Consequently, the applicant is not entitled for any of reliefs as claimed. Hence, the application is liable for dismissal.

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Before parting with Judgment, I mention that the arguments

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made on behalf of the applicant are not acceptable whereas the arguments made on behalf of the defendant bank are acceptable for reasons recorded above.

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Hence, by answering this point accordingly , I pass the following order:

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ORDER

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