The Debts Recovery Tribunal dismissed the applicant's security application. It held that the bank validly executed a sale certificate and a rectification deed to correct errors in the release deeds, as the applicant only requested release of two plots, not all mortgaged properties.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERYTRIBUNAL- IAT HYDERABAD
DATED THIS THE 24TH DAY OF APRIL, 2024
PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER
sA.No.220/2022
Smt.K. Shashikala, W/o K.Shekhar Reddy, Occ: farmer, R/o H.NO. 1 1/ 1, Urkondapet village, MidjilMandla, Mahaboobnagar District.
Applicant.
Versus
- Canra Bank, Hitex AF branch, Abids, Hyderabad-SOo 00 1 Rep. by its Authorized Officer
Occ: business, R/o H.No.6-5-43O11)., SF Colony, Vanastalipuram, R.R. District-500070.
Respondents.
the Applicant
Sn V. Santosh Sn A.Y.S.S. A.Y.S.S. Prasad Si NelssunMatheuNelssunMatheu Si D. Saty anaraAanaD. Saty anaraAanaSaty anaraAanaanaraAana
No.1 Sn A.Y.S.S. A.Y.S.S. Prasad No.2 Si NelssunMatheuNelssunMatheu I[o.3 Si D. Saty anaraAanaD. Saty anaraAanaSaty anaraAanaanaraAana ':'!. * ?+ APfl 2$2[ .:ORDER:frled by the Applicant u/s. 17 of the SARFAESI Act, 2OO2 of the 1"r Respondent Bank in issuing Sale certificate t No.l44 /2O2O in favour of Respondents No.2&3 ald a.1so registration of the Rectification Deed vide document No. 10121/2018 dt. 18.12.2018 by modifying/cancelling the Regd. Release Deed No.7308/2018
SA.No.220/2022
partly and to declare the same as illegal and arbitrary and also to set-aside the same.
The Applicant availed credit facilities from the l"tRespondent Bank by creating equitable mortgage against the schedule properties vide Regd. Memorandum of Deposit of Title deed No.5831/2014 dt.3L.O7.2OI4. Due to loss in the business, the Applicant could not repay the loan amount as scheduled and requested the l"t Respondent Bank for oTS and as per the OTS, the Applicant paid the entire OTS amount to the 1"t Respondent Bank as per the terms and the same was accepted by the Bank. The l"tRespondentBank executed Regd. Memorandum of Deposit of Title Release Deed vide Doc.No.73O8l2018 dt.25.09.2018. After the execution of the above Release Deed, the Applicant requested the l"tRespondent Bank to return all the original documents which are deposited by her but the Bank returned only two property documents and promised to return the remainingdocumentswithin a period but thereafter intentionally dragged in retuning the original title deeds of the Applicant. Subsequently, the Applicant carne to know that the l"tRespondent Bank brought up the Rectifrcation Deed vide Registered document No. 10 l2I I 2018 dt. 18.12.2018 whereby unilaterally cancelled/modified the Regd. Release Deed No.7308/2018 without any notice and alsoproceeded further for sale of the properties of tl e Applicant illegally by playing a fraud on the Applicant and also registered the unilateral Rectification Deed and so the said Rectifrcation Deed is not binding on the Applicant. The Applicant filed SA 247 l2ol8 challenging the Auction Notice dt.08.11.2018 issued by the l"t Respondent Bank and the said SA was allowed by this Honble Tribunal vide orders dt.O4. LO.2O19 however this Tribunal made an observation that the Rectification Deed is valid and the same is without jurisdiction. The Applicant challenged the same before the Honble DRAT, Kolkata and the same is pending. In the meanwhile, the l"t ,r. .,.,,".,;'; ,-:T.=-jS:ffindent .:j:ir';,,pqgr$rqigs. i,,,The Bank l"tRespondent again initiated BankSARFAESI fraudulentlyproceedings namedagainst thethe Cancellationschedule ';.- -' ;,':i:.i rr aF.--..'. ,t', '" .'": :-o T:'t gj+Deed *n5r\ #'' \hRectificationDeed vide Regd. Document No. 1OL27l2Ol8 ':; 1r.; dt.18.12.q&8 whereby cancelling the Regd. Release Deed No.73O8/2018 ?.l,ii?.q fiff$r, uf.".rraing L,:ir rsomeproperties fromtJ'e Release Deed and restricting the Release.*D$d to two properties in place of all properties and the l"t ..,,, .--' , ],,| .j'
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SA.No.220/2022
Respondent Bank without following the Rules, unilaterally rectified the said document and hence the same is not binding on the Applicant.In view of the payment of total scheduled oTS amounts and in view of the execution of Release Deed in favour of the Applicant by the l"t Respondent Bank, the Applicant is not liable to pay any amounts to the Bank and the Bank highhandedly taken the coercive steps for sale of the properties and the Sale Certificate issued in favour of the Respondents No.2&3 by the 1"t Respondent Bank in respect of the SA schedule properties is liable to be set aside. Hence, the SA.
3'
3' The l"t Respondent Bank frled their Reply statement denying all the adverse allegations made in the application. It is contended that the Applicant along with her husband Sri K. SekharReddy availed credit facilities from the 1"t Respondent Bank to a tune of Rs.97 lakhs against the security of six immovable properties and the title deeds were deposited by the Applicant along with her husband. The Applicant also hypothecated the plant and machinery etc. by creating Hypothecation Agreement. In view of the default made by the Applicant, the loan account became NPA and the l"tRespondent Bank proceeded under the provisions of SARFAESI Act, 2oo2 and issued demand notice and also possession notice dt.21.o2.2o18 for taking possession of the schedule properties. The Applicant approached the Bank and requested for OTS and the OTS was approved for Rs.SO lakhs by the Bank on certain terms. Sri Sekhar Reddy, who is co-borrower and. husband of the Applicant vide letters dt.09.09.2018 and 10.08.2018 requested the Bank for permission to sell two plots i.e. Schedule 81 and 82 covered by title deeds Schedule A1 and A2 belonging to the Applicant and pay the oTS amount and also requested for release of those tile deeds and pay the amount for each property periodically and accordingly, the propertieswere released and thereafter, Memorandum of Deposit of Title Release Deed document No.73o8/2o18 dt.25.O9.2018 was executed by the l"t Respondent Bank -3rll :'-re-leasing-- .'- "- - the properties in favour of the Applicant and Sri K. Sekhar Reddy. :j ..'n'"',,,'.,'Eiatiyi:-rtently, propertirs.i'..9.. Schedule - - " t. .-.in theRelease A3, A4Deed, and A5in werestead released coveredofplot Nos.Io by & title 30, deedsfive :, 'the-'$tQument writer on the advise of the Bank official and the defendants and the acly4, $"rtir1 amount received was Rs.13,51,1561 - Thereafter Regd. Rectification Deed of Memorandum of Deposit of Title Release Deed vide
SA.No.220/2022
doc.No.l0l2l/2018 dt.18.12.2018 was executed by the Bank by rectifying the mistakes in respect of release of properties. It is further submitted that as the Applicant and Sri K. Sekhar Reddy, failed to honour OTS proposal, the Respondent Bank issued Sale Notice dt.O6.lI.2O18 fixing auction on 13.12.2018 for sale of 84& 86 schedule properties and challenging the sarne, the Applicant herein filed SA 247 12018 and this Honble Tribunal vide orders dt.04. LO-2O19 allowed the SA due to the technical problem of not affixing the photograph on the secured asset and liberty is given to enforce the security as per the provisions of SARFAESI Act by issuing fresh sale notice and the Release Deed vide document NO.7308/2O18 is not enforceable against the Respondent Bank. The Bank issued fresh Sale Notice dt.2l.ll.2ol9 fixing e auction on 27.12.2019 in respect of Schedule A3 and A4 properties belongrng to the Applicant herein and A6 property belonging to K. Sekhar Reddy and despite notice, the Applicant and K.Sekhar Reddy, failed to redeem the properties and the bank upon payment of entire sale consideration, executed Sale certificate No.l44l2O2O in favour of the auction purchasers i.e. Respondents No.2&3. The Applicant has disputed their liability by creating a fiction that the OTS amount is inclusive of subsidy amount, but asa fact that Rs.SOlakhs to be paid as per OTS settlement and non-payment of entire Rs.50 lakhs as per the observation of the Honble Tribunal vide orders dt.04.10.2019 in SA 247 l2Ol8, cannot be challenged by the Applicant herein. Accordingly, Ld. Counsel prayed to dismiss the SA.
..--.! :i ii t\ i, i';l '' ';'i : ' "1 5. ' Respondent No.3' also filed his Reply reiterating the version of the l"tRespondent|.ank and it is a-lso contended that Sale certificate was already .,.. ,/J
5
SA.No,220/2022
executed in favour of RespondentsNO.2&3and subsequentlymutatedand reflected in the records of State Governmentoffrcial revenue department. Accordingly, prayed to dismiss the SA.
SA.No.220/2022
Now the points that arise for consideration are
Points No.(il&(iil :-
, ';' '^.:l' l:i t :.t''-,,'l 10. The Applichnt has rioi challenged theprocedurefollowed by the l.tRespondentBank in isftmgrsale Noticedt.2l.ll.2019or in conducting
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SA.No.220/2022
auction in respect of the schedule property on 27.12.2019 and also the payment of the bid amount by the auction purchasers, Respondents No.2&3. Only after theissuance of SaIe certificate in favour of Respondents No.2&3, the present SA is filed challenging the issuance of Sale Certificate in favour of auction purchasers in respect of the schedule property.
- The l"t Respondent Bank has enclosed certain documents along with their
Reply statement to establish that the Bank has duly followed the procedure as laid down under the provisions of SARFAESI Act, 2OO2 and Rules, made thereunder in conducting auction of the schedule property. As per the said documents it is clear that the l"t Respondent Bank has duly followed the procedure in conducting auction in respect of the schedule property and in the said auction conducted on 27.72.2OL9, Respondents No.2&3 became successful bidders. The specific contention of the 1"t Respondent Bank is that the Applicant and her husband Sri Sekhar Reddy approached the Bank for OTS for an amount of Rs.50 lakhs and they requested the Bank to release two plots No.10&30 admeasuring 300 sq.yds., so that, they can sell the said properties and pay the OTS amount. In order to establish the said version, the I"t Respondent Bank has filed letters addressed by the Applicant and her husband to the 1"t Respondent Bank seeking release of two properties admeasuring 300 sq.yds. In letter d1.09.09.2018, the husband of the Applicant mentioned that he already sold the said two plots and received advance amount of Rs.5 lakhs and so, requested the Bank for release of the tifle documents relating to the said plots. So in pursuance of the said letter, tlre l"tRespondent Bank has executed Memorandum of Deposit of Release Deed vide Doc.N.73OBl2018 dt.25.09.2018. Copy of the said document is frled by the Applicant and in the said document, it is recited that the Applicant and her husband paid the entire outstanding dues of Rs.1,07,00,000/- and so the 1"t Respondent.Bank has released the mortgage created by them in respect of all the properties including the two plots admeasuring 300 sq.yds. li :i-Mprpoiairilunt Slrb-sgguently, ! - '' -.. of Deposit the l"tRespondent of Title Deed Bank dt.18. has 12.2O18 executed wherein it Rectification is recited Deed thatof :-.^ iritailvertent\y;in ,tt . Release Deed dt.25 .Og .20 1 8, it is mentioned that the total dues q{Rs.t,O7,OO,OO0/- is received but in fact the Bank has received only a . i-l :,')[
? ':partial suin of xs*.,l3,51,1561- and release of the properties is only in resect of two plots beaiing Plot Nos.10&30to an extent of 150 sq.yds.So whether the
, {I,
SA,No.220/2022
contents of the said Rectification Deed dt.18. l2.2ol8 are true or not, can be decided basing on the material available on the record.
12' There is no dispute regarding the fact that on earlier occasion when the 1"t Respondent Bank initiated sale of the mortgaged properties, the Applicant herein Iiled SA 24712018 on the file of this Tribunal challenging the auction to be conducted on 13.12.2018. After anelaborate enquiry, the said SA was allowed by my Ld. Predecessor vide order dt.04.10.2019. It is pertinent to note that in the said SA, the Petitioner herein contended that she paid the entire outstanding dues of Rs.1,07,00,000/- but not Rs.So lakhs. This Tribunal vide order dt.04.10.2019 in SA 24212018, categorically held that the Rectification Deed dt. 18.12.2018 executed by the l"t Respondent Bank is valid inlaw. This Tribunal also held that the 1"t Respondent Bank established that the entire OTS amount of Rs.50 lakhs as agreed is not paid and so, the Applicant is not entitled for release of total security documents as deposited by the Applicant herein. The very fact that in the Memorandum of Deposit of Release Deed dt.25.O9.2018, it is mentioned that the entire outstanding dues of Rs.1,07,00,000/- was paid by the Applicant herein and her husband clearly indicates that the person who executed the said document has not gone through the details of loan transaction, outstanding dues as on the date of execution of said document and the properties which are liable to be released as per the request of the Applicant and her husband. So all these mistakes are rectified by the 1"t Respondent Bank by executing Regd. Rectihcation Deed dt.19. l2.2olg.
,.,,.:.r.::-1Yh9+fe.1thesaid appealpreferred by her is registeredon deposit of the .-- ':-'". .
SA.No.220/2022
document. So the contention of the Applicant that the 1"t Respondent Bank is not entitled to execute the Release Deed unilaterally is not tenable particularly in view of the fact that there are glaring mistakes in the said Release Deed dt.28.O9.2018. Moreover, it is not the case of the Applicant that either the Applicant or her husband addressed any letters to the l"t Respondent Bank for release of all the properties in respect of which, the mortgage was created by them to secure the loan facilities availed by them. on the other hand, the material documents filed by the l"t Respondent Bank indicate that the Applicant and her husband canvassed for the release of only two properties admeasuring a total extent of 300 sq. yds.
Polnt No.lill):-
(Dictated to the P.A., transcribed bg her, corrected, signed and pronounced bg me in the open court on th's the 24th day of April, 2024).
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o'{ww As{.Ragts*ar DRf-'{, ii''i ";i': il';ti FAO'
sd/(G. GOPTCHAND) PRESIDING OFFICER
'l
3 issues framed by the court
Whether the Sale Certificate issued by the Bank to auction purchasers is liable to be set aside?
Whether the Applicant is entitled to challenge the validity of the Registered Rectification Deed?
What relief is the Applicant entitled to?
Smt.K. Shashikala
Canra Bank, Hitex AF branch
GantaSurender Reddy
Kranti Kumar Orugunati
Gumadi Gopichand
As recorded by the court registry
2 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
