Dismissed

Dimple Arcade Premises Chsl v. Union Bank of India

DRT5 Feb 2024SA/98/2022

Case brief

AI extract

What is this about?

In this securitisation application, the Dimple Arcade Co-operative Society challenged Union Bank of India's action under SARFAESI. The Tribunal stayed proceedings and dismissed the application because the applicant failed to serve the individual borrowers after a High Court order mandating substituted service.

What did the court decide?

The Securitisation Application No.98 of 2022 stands dismissed with no order as to costs.

Dimple Arcade Premises Chsl versus Union Bank of India — Company and Corporate | DRT (2024)

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Presented on : 05.04.2022 Registered on : 11.04.2022 Decided on : 05.02.2024 Duration : Y M D 01 10 00

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IN THE DEBTS RECOVERY TRIBUNAL No.2, MUMBAI

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SECURITISATION APPLICATION NO.98 OF 2022

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Dimple Arcade Premises Co-op Soc. Ltd., A society registered under Maharashtra Co-op, Societies Act, 1960, Through its Secretary & Authorized Person Mr. Dinesh Nar, having it’s office at Dimplet Arcade, Asha Nagar, Thakur Complex, Kandivali-E Mumbai – 400 101

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… Applicant

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Versus

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Union Bank of India, Union of Indian Building, 5^th Floor, 66/80, Mumbai, Samachar Marg, Fort, Mumbai – 23

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M/s. Ambrosia Restaurants Pvt. Ltd., Office No.1101, A- Wing, Rustomjee Paramount 18^th Road, Khar, West, Mumbai – 400 052.

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Mr Harmeshsingh Narendrasingh Chadha, Director of M/s. Ambrosia Restaurants Pvt. Ltd., Office No.1101, A- Wing, Rustomjee Paramount 18^th Road, Khar, West, Mumbai – 400 052.

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…Defendants

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APPEARANCES

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For the Applicant : Mr Hardeep Singh i/b M/s.

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Clarus Legals – Advocates For Defendant 1 : Mr Chandresh Rao i/b M/s. Vidhii Partners – Advocates. For Defendants 2 and 3 : None

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Shri Deepak M Thakkar Presiding Officer

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HEARING : 19^th January 2024. PRONOUNCEMENT : 5^th February 2024

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J U D G M E N T

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(1) The applicant is a society registered under the Maharashtra Societies Act, 1960 (MCS) who approached the Tribunal challenging the action and measures under Section 17(1) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “the SARFAESI Act”).’

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(2) The 1^st defendant is the secured creditor, defendants 2 and 3 are the borrowers and mortgagors.

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Factual matrix:

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(3) On 28^th July 1993, the appropriate authority under the Income Tax Act, 1961, conducted the auction of the immovable property lying, being

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and situated lying and being at village Poisar, Kandivali (East), Off: Western Express Highway, Taluka Borivali in the registration District and Sub District of Bombay City and Bombay Suburban bearing City Survey No.711(Part) and admeasuring 3051 sq. mts. or thereabouts (for short, the said property’).

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(4) The appropriate authority declared M/s. Arcon Builders as the highest bidder and auction purchaser. On 27^th August 1993, the appropriate authority under the Income Tax Act, 1961, handed over the possession of the said property to M/s. Arcon Builders. The Municipal Corporation of Greater Mumbai (MCGM) issued (i) I.O.D. on 29^th March 1995 (ii) commencement certificate on 26^th April 1995 and (iii) occupation certificate on 23^rd March 1998 issued to M/s. Arcon Builders.

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(5) On 30^th March 2005, M/s. Arcon Builders sold office no.321 and open terrace admeasuring 1600 sq. ft. in the building “Dimple Arcade” to Sundar Automobiles Pvt. Ltd. (for short, ‘ Sundar Automobiles’ ). On 30^th March 2005, M/s. Arcon Builders sold office no.322 to Sundar Automobiles.

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(6) On 12^th November 2008, Sundar Automobiles in its turn sold, transferred and assigned all its rights, title and interest concerning office no.321

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and open terrace on the 32^nd level floor to the 3^rd defendant. The agreement is duly registered with the officer of the sub-Registrar, Borivali bearing registration no.BDR-11 under Sr. No.10071/08.

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(7) On 12^th November 2023, the said Sundar Automobiles sold, transferred and assigned all its right, title and interesting concerning office no.322 and open terrace on the 48^th level floor of the building known and “Dimple Arcade” to the 3^rd defendant.

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(8) On 12^th November 2023, the said Sundar Automobiles sold, transferred and assigned all its right, title and interesting concerning office no.322 with open terrace on the 48^th level floor of the building known and “Dimple Arcade” to the 3^rd defendant.

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(9) On 10^th February, 2010, Sundar Automobiles made and registered the declaration confirming the sale relating to office no.322 and stated that the promoters M/s. Arcon Builders failed to appear before the Registrar and admit the execution of the agreement dated 30^th March 2005.

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(10) On 11^th January 2022, the applicant, through its advocate, sent a notice to (i) M/s. Arcon Builders, (ii) Mr Subhash Shah, partner of M/s. Arcon Builders (iii) M/s. Sundar Automobiles Pvt. Ltd.

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and (iv) the 3^rd defendant. The applicant recorded that M/s. Arcon Builders handed over the building and three terraces. The applicant formed and registered in 2005 to occupy and possess all the three terraces. M/s. Arcon Builders sold offices/premises except office no.321 and 322 and few other shops. M/s. Arcon Builders handed over the recorded charge to the applicant. In 2009, Sundar Automobiles approached the applicant informing about office nos.321 and 322 along-with open terraces from M/s. Arcon Builders. Sundar Automobiles applied for the applicant’s membership and annexed first 2 pages and last 2 pages of sale agreement dated 12^th November 2008 executed between M/s. Arcon Builders and the 3^rd defendant. The applicant declined to accept Sundar Automobiles as the member. Therefore, Sundar Automobiles challenged before the Deputy Registrar, Co-operative Society. The Deputy Registrar, Co-operative Society passed an order directing the applicant to admit Sundar Automobiles as the member. The applicant challenged the Deputy Registrar’s order before the Divisional Joint Registrar, Co-operative who passed an order to maintain status-quo. According to the applicant, M/s. Arcon Builders and Sundar Automobiles admitted their fault and

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agreed that the terrace is a common premises of the applicant which cannot the sold. However, Sundar Automobiles requested the applicant to allow it to use terrace subject to payment of monthly compensation of Rs.25,000/-. Sundar Automobiles agreed to deposit Rs.10 lakhs with the applicant with interest free alteration. The notice dated 11^th January 2022 further records that M/s. Arcon Builders, Sundar Automobiles or the 3^rd defendant did not ask for any permission of NOC from the applicant to enter into any transaction relating to offices 321 and 322. After execution of MoU dated 20^th August 2010, Sundar Automobiles deposited Rs.10 lakhs as security. Under the guise of MoU, Sundar Automobiles misguided and misrepresented the applicant and procured no objection letter to install gas pipeline to support the water connection, etc, M/s. Arcon Builders and Sundar Automobiles failed to provide registered chain of sale agreement executed between M/s. Arcon Builders and Sundar Automobiles. Sundar Automobiles illegally encroached the open terrace and the pocket terrace without the applicant’s permission. Sundar Automobiles converted the office premises into restaurant without the applicant’s NOC or permission. Sundar Automobiles failed to clarify

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the non-compliance of the MoU and its part. Therefore, the applicant cancelled the MoU dated 20^th August 2010 through the managing committee on 19^th January 2012 which got the approval in the 7^th Annual General Meeting held on 10^th August 2012. The applicant cancelled the MoU after issuing Show Cause Notice to Sundar Automobiles. Therefore, MoU dated 20^th August 2010 has no legal validity or binding effect upon the applicant. Sundar Automobiles illegally encroached upon the applicant’s terrace in the year 2009 and since then, it illegally occupied and enjoyed the society’s common property without paying the compensation. The applicant therefore, imposed penalty. Sundar Automobiles did not pay a single rupee to the applicant. According to the applicant, Sundar Automobiles is liable to pay the maintenance arrears relating to (i) Gala No.321, a sum of Rs.4,05,41,644/-, (ii) Gala No.322, a sum of Rs.42,18,972/- and (iii) Gala No.302, a sum of Rs.2,19,41,681/- for the period from 2014 to March 2022. Sundar Automobiles converted the three offices 321, 322 and 303 into restaurant and bar without furnishing any sanctioned approved plan. (11) The applicant filed a compliant with MCGM as regards the addition, alteration and illegal

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construction of pocket terrace and one room of open big terraces. Therefore, MCGM issued a notice under Section 351 of the Mumbai Municipal Corporation Act. Sundar Automobiles succeeded in procuring ad-interim relief from Citi Civil Court at Dindoshi in 2013. The applicant alleged that Citi Civil Court passed order without going into the case’s merits where Sundar Automobiles and MCGM colluded. Sundar Automobiles is not arguing the notice of motion since long.

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(12) In 2021, the applicant sensed fraud, cheating and forgery committed by M/s. Arcon Builders and Sundar Automobiles. The applicant obtained certified true copies of the sale agreements between M/s. Arcon Builders and Sundar Automobiles from the office of the Joint Registrar, Borivali-5. According the applicant, M/s. Arcon Builders did not comply with the procedure relating offices 321 and 322. The two agreements dated 30^th May 2005 relating to offices 321 and 322, self-declaration of Sundar Automobiles on 11^th February 2010 open terraces of 1600 sq. ft. on the 32^nd level floor for office no.321 was inserted. These two agreements got registered on 11^th February 2008. According to the applicant, M/s. Arcon Builders and Sundar Automobiles

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manipulated, fabricated and forged the documents to grab the applicant’s properties, that is, open terrace of 1600 sq. ft. and pocket terrace of 200 sq. ft. Thus, agreements dated 30^th May 2005 registered on 11^th February 2010 is false, fabricated and not binding upon the applicant.

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(13) On 20^th July 2017, L & T Housing Finance Ltd. addressed a letter to the applicant seeking NOC for creating mortgage of property/units 303, 321 and 322. On 27^th July 2017, the applicant replied to the L & T’s letter dated 20^th July 2017 stating that a sum of Rs.2,70,76,796/- is due and payable by the 3^rd defendant for units no.303, 321 and 322.

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(14) On 11^th July 2019, the 1^st defendant took symbolic possession of (i) office no.321 with open terrace on the 32^nd level (ii) commercial office no.322 along-with the open terrace on the 40^th level situated on the 3^rd floor and (iii) commercial officer no.303 on the 3^rd floor of the applicant’s society (for short, the secured asset)

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(15) On 20^th February 2020, MCGM issued notice under Section 53(1) of the Maharashtra Regional and Town Planning Act, 1966 to the 3^rd defendant. On 6^th February 2021, the learned Chief Metropolitan Magistrate passed under Section 14 granting assistance to the 1^st defendant to take

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physical control of (i) office no.321 with open terrace on the 32^nd level (ii) commercial office no.322 along-with the open terrace on the 40^th level situated on the 3^rd floor and (iii) commercial officer no.303 on the 3^rd floor of the applicant’s society. On 25^th January 2022, MCGM issued notice to the 3^rd defendant directing him to discontinue the use of structure and remove or restore the unauthorized work. On 24^th March 2022, the Assistant Registrar addressed a letter to the police authorities seeking police assistance to take the physical possession of the secured asset. Feeling aggrieved by the 1^st defendant’s action and measures under the SARFAESI Act, the applicant presented the Securitisation on 5^th April 2022 requesting the Tribunal to grant the following reliefs:

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(a) That the Hon’ble Tribunal be pleased to declare that impugned action initiated by Respondent under Section 13(2) of the said Act by issuing demand notice dated 02.05.2019 and 11.07.2019 and recourse to the purported measures initiated by the said Respondent No.1, 2, 3 & 4 under Section 13(4) of the said Act vide order dated 6^th February, 2021 passed in CC No.811/SA of 2019 including notice dated 24.03.2022 of taking physical

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possession on 19.04.2022 and all further and consequential action in respect of the said terraces properties of the Applicant society i.e open Terrace on 32 level and open terrace on 40^th level situated at 3^rd floor of Dimple Arcade premises Co-operative Society Ltd. Asha Nagar Kandivali-East, Mumbai-400101 assets as invalid, illegal and contrary to the statutory provisions of the said Act and Rules made thereunder.

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(b) That the Hon’ble Tribunal be pleased to declare that the sanction of loan on the subject properties is illegal, bad in law and not binding upon the Applicant as the Respondent No.3 is not the lawful owner of the subject properties.

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(c) That the Hon’ble Tribunal be pleased to declare that the Respondent No.1 is not entitled to take physical possession of the said terraces properties of the Applicant society i.e. Open terrace on 32 level and open terrace on 40^th level situated at 3^rd floor of Dimple Arcade premises Co-operative Society Ltd. Asha Nagar Kandivali-East, Mumbai – 400101 and Possession Notice dated 24.08.022 is illegal, bad and not binding upon the Applicants.

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(d) That the Hon’ble Tribunal be pleased to declare that the Applicant society is primarily entitled to claim its dues of Rs.6,67,02,297/alongwith interest at rate of 21% from the Respondent No.2 & 3 against that maintenance, property tax, Penalty & usage charges due on the subject property and further order and direct the Respondent No.1 firstly to clear dues of the Applicant Society, before fulfilling their claims of loan against the subject properties.

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(e) That the Hon’ble Tribunal be pleased to quash and set aside entire action under the provisions of SARFAESI Act, 2002 pursuant to impugned Demand Notice dated 02.05.2019 and alleged Possession Notice 11.07.2019 and Order dated 6^th February 2021 for including taking physical possession on 24.03.2022 and all consequential action pursuant thereto in respect of the said property of the Applicant society i.e. Open terrace on 32 level and open terrace on 40^th level situated at 3^rd floor of Dimple Arcade premises Co-operative Society Ltd. Asha Nagar Kandivali-East, Mumbai – 400101.

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(f) That the Respondent bank/financial institution be restrained by order of injunction from

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taking physical possession on 19.04.2022 and all consequential action pursuant thereto in respect of the said terrace property of the Applicant society i.e. i.e. Open terrace on 32 level and open terrace on 40^th level situated at 3^rd floor of Dimple Arcade premises Cooperative Society Ltd. Asha Nagar KandivaliEast, Mumbai – 400101.

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(g) That the Hon’ble Tribunal be pleased to order and restrain the Respondent Bank from taking any further steps in respect of the said terrace property of the Applicant society i.e. Open terrace on 32 level and open terrace on 40^th level situated at 3^rd floor of Dimple Arcade premises Co-operative Society Ltd. Asha Nagar Kandivali-East, Mumbai – 400101.

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(h) That this Hon’ble Tribunal be pleased to stay any further action of the Respondents bank including the invitation of bids for auction and auction of the said property of the Applicant society i.e. Open terrace on 32 level and open terrace on 40^th level situated at 3^rd floor of Dimple Arcade premises Co-operative Society Ltd. Asha Nagar Kandivali-East, Mumbai – 400101.

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(i) For cost; and

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(j) For such other and further orders as this

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Hon’ble Tribunal may deem fit and proper as the circumstances of the case may require.

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(16) The 1^st defendant opposed the applicant’s application stating that the applicant attempted to mislead the Tribunal and sought dismissal of the Securitisation Application. It is the secured creditor’s case that the applicant (i) suppressed the facts and withheld the vital documents (ii) took no decisive steps against defendants 2 and 3 for its claim to enforce the mortgaged property (iii) knew all about the alleged encroachment since 2009 (iv) forfeited its right and claim against the secured asset (v) seeks to procrastinate and delay the secured creditor’s legitimate right to recover and enforce the secured asset (vi) did not dispute prior to the Section 14 order dated 6^th February 2021 (vii) failed to serve defendants 2 and 3 which shows collusion between applicant and defendants 2 and 3 (viii) made false erroneous and misleading statements.

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(17) On 27^th November 2017, defendants 2 and 3 approached the 1^st defendant to grant credit facilities of Rs.4 crores which was sanctioned. Between 4^th December 2017 to 8^th December 2017 defendants 2 and 3 signed and executed the loan and security documents. After availing the credit facilities, defendants 2 and 3 did not adhere to

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the financial discipline and therefore, on 30^th April 2019, the 1^st defendant classified the borrower’s account and NPA. On 2^nd May 2019, the 1^st defendant issued 13(2) notice to defendants 2 and 3. On 11^th July 2019, the 1^st defendant took symbolic possession of the secured asset and published in two newspapers as also pasted on the conspicuous part of the secured asset. On 18^th September 2019, the 1^st defendant filed Original Application No.373 of 2021 before this Tribunal against defendants 2 and 3 to recover Rs.4,05,38,120.70 to enforce the hypothecated and mortgaged security.

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(18) The applicant failed to produce any evidence to support the statement made in paragraph 5.5 of the Securitisation Application. The applicant failed to produce (i) the order passed by the Deputy Registrar, Co-operative Society (R-Ward) favouring the 3^rd defendant directing the applicant to admit the 3^rd defendant as its member. The consent terms filed before the Divisional Joint Registrar Co-operative Society was pursuant to the MoU 20^th August 2010. Without noting the order of Deputy Registrar and the consent terms, the applicant has failed to establish its claim over the secured asset. By the order of Deputy Joint Registrar passed favouring the 3^rd defendant,

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withholding the transfer of the secured assets including the terraces is valid. The applicant relinquished its right over the terraces. It has no locus to file the present Securitisation Application. According to the 1^st defendant, if the applicant’s allegations were true, it ought to have been filed a criminal complaint against the 3^rd defendant. The applicant failed to do so and relinquished the right in claim relating to the secured asset by MoU dated 20^th August 2010. The applicant’s allegations of calling the agreements as forged and fabricated is nothing but an afterthought. The applicant issued NOC dated 28^th October 2010 favouring Oriental Bank of Commerce to mortgage the secured asset. If the 3^rd defendant was in breach, the applicant would not have issued the NOC dated 28^th October 2010. The applicant knew about the sale of the terraces since 2009 without any objection from the applicant. The sale agreement dated 30^th March 2005 was registered on 12^th November 2008 as per the Registration Act which is the public documents. If according to the applicant, the sale of offices and terraces were illegal, then nothing prevented the applicant to take the legal steps against the developer, Sundar Automobiles or against the 3^rd defendant. MoU dated 20^th August

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2010 is still subsisting and binding. The applicant failed to communicate the cancellation of the MoU dated 20^th August 2010 to the 3^rd defendant. The applicant’s claim issuing the Show Cause Notice to the 3^rd defendant without any proof of service and acknowledgement by the 3^rd defendant the managing committee’s resolution dated 19^th January 2012. The purpose to issue Show Cause Notice was to expel the 3^rd defendant which relates to the damaging the Society’s building or illegal construction and not for the borrower’s encroachment. The AGM did not ratify the managing committee’s resolution. The Show Cause Notice was hastily issued as an afterthought to fabricate its claim or the terraces. The notice issued to MCGM is for the alleged illegal construction and not for the alleged encroachment of the applicant’s property. The maintenance charges claimed by the applicant or the 3^rd defendant is the result of unilateral action taken by it by charging exorbitant maintenance without any decisive legal steps or any adjudication from the Court of competent jurisdiction. The applicant’s claim is illegal, unethical and wrong in law. As of date, the applicant took no legal action to evict the 3^rd defendant and take back the open terrace. The Bye-laws of the applicant society

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reveals that NOC from the society for transfer of any title and interest is not necessary. Therefore, the mortgage created by the 3^rd defendant favouring the 1^st defendant is valid. The applicant’s claim over the open terrace extinguished due to passage of time by relinquishing and abandoning its legal right. So also, by MoU dated 20^th August 2010.

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(19) Defendants 2 and 3 committed default in payment of the credit facilities which resulted in issuance of the demand notice which they failed to reply. Therefore, the 1^st defendant took symbolic possession. The applicant challenged the Tribunal’s order dated 18^th April 2022 before the Hon’ble DRAT. On 18^th October 2023, the Hon’ble DRAT disposed of the Appeal and directed this Tribunal to dispose of the Securitisation Application expeditiously. The service was not complete upon defendants 2 and 3. The applicant filed Miscellaneous Application No.113 of 2013 in Miscellaneous Appeal No.44 of 2022. On 7^th December 2023, the Hon’ble DRAT passed an order to serve defendants 2 and 3 by way of substituted service and extended the time to dispose of the Securitisation within two months from 7^th December 2023. The applicant has not made out any case with respect to the right and

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claim over the scheduled property. The applicant has not made out any case for the Tribunal to interfere under Section 13(4) read under the SARFAESI Act.

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Applicant’s submissions:

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(20) Mr Hardeep Singh, presented that the applicant does not press for the final relief in terms of the prayer clause 7(b) to 7(d). There is no dispute relating to shop nos.303, 321 and 322 on the 3^rd floor but the dispute is relating to the terrace only. It is stated that the applicant never knew about the sale of shop nos.321 and 322 by M/s. Arcon Builders. He drew the Tribunal’s attention to the MoU, the agenda of the AGM and the resolution. Mr Singh conceded to the fact that no notice was given to the Sundar Automobiles, a party to the MoU as the agenda and resolution relates to the MoU’s cancellation. Mr Singh read out the letter dated 11^th January 2022 and conceded to the fact that the applicant has not filed any dispute under Section 91 of the MCS Act or any Civil Suit against defendants 2 and 3. The applicant came to know about the action and measures taken by the 1^st defendant upon pasting of the possession notice of shop no.302 on 9^th July 2019, the applicant responded to the possession notice stating that as of the formation

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date, the applicant possessed the terrace. The 3^rd defendant fraudulently claims that the terrace belongs to him which the applicant or MCGM does not accept. The applicant objected the taking of possession beyond the area of 1371 sq. ft. The 3^rd defendant is liable to pay the maintenance as set out in the letter for three units, that is, 303, 321 and 322 respectively. Mr Singh conceded to the facts that the applicant did not challenge the measure of 13(4) of taking the symbolic possession. Mr Singh presented that the applicant challenges the mortgaged creation but conceded to that fact that the applicant did not pray in this regard. Mr Singh submits that the declaration made by Sundar Automobiles after five years is a unilateral declaration. The 3^rd defendant filed the Section 91 dispute before the Co-operative Court in 2015 challenging the MoU cancellation, the resolution and the penalty levied by the applicant. The learned counsel stated that the Hon’ble DRAT did not set aside the Tribunal’s order dated 18^th April 2022. In support of his arguments, he relied upon (i) Pranjivan Purushottam Zaveri and Ors. vs Dena Bank & Ors. MANU/GJ/0434/2011 (ii) Ramagauri Keshvlal Virani vs Walkeshwar Triveni Co-operative Housing Society Ltd. and Others 1999 (3) Mh.L.J.]. No other point was argued by

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Mr Singh.

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1^st defendant’s submissions:

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(21) Mr Rao, in his opening statement, submitted that the Securitisation Application in its present form is time-barred. The applicant has not challenged the mortgaged creation, advanced no arguments on the issuance of the NOC, failed to produce the documents and failed to file the rejoinder to the secured creditor’s reply. Mr Rao presented that the parties entered into MoU after filing the consent terms. After that, the applicant purposely failed to adduce the evidence of the Deputy Registrar’s order and the consent terms. The claim made by the applicant is exorbitant. The applicant did not take any legal steps to get the claim adjudicated by the Court of competent jurisdiction. The 1^st defendant is bound to consider the applicant’s legally and recoverably claim adjudicated by the Court of competent jurisdiction. As of date, the applicant has filed to initiate any legal action under Section 91 of the MCS Act or any relevant laws for the time being in force. On the one hand, the applicant claims cancellation of the MoU and on the other hand, it is charging maintenance. According to the secured creditor, the MoU is subsisting and binding. The mortgaged is a valid mortgage. The applicant

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advanced no arguments in Section 14 order. So far as the order dated 18^th April 2022 passed by this Tribunal is concerned, it attained finality. On 18^th October 2023, the Hon’ble DRAT disposed of the Miscellaneous Appeal No.44 of 2022. The applicant had preferred Appeal against the order dated 18^th April 2022 rejecting to protect the applicant’s interest by passing the order in I.A. No.1024 of 2022. On 7^th December 2023, the parties requested the Hon’ble DRAT to extend the time to dispose of the Appeal. Accordingly, the Hon’ble DRAT directed the applicant take steps to serve defendants 2 and 3 and extended the time to dispose of the Securitisation Application within two months from the dated of the order. Mr Rao submits that the applicant failed to serve defendants 2 and 3. The Hon’ble DRAT did not set aside or alter or modify or reverse the Tribunal’s order dated 18^th April 2022. The learned counsel requested the Tribunal to dismiss the Securitisation Application. In support of his arguments, he relied upon Dilip B. Raja and Ors. vs Shree Arihant Apartment Co-op. Housing Society and Ors. MANU/MH/1746/2020.

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Findings:

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(22) The applicant is neither a borrower nor a guarantor or mortgagor. The commercial unit

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holders of Dimple Arcade formed and registered the premises of Co-operative Society Ltd., bearing registration no. MUM/WR/GNL/O/1271/200506/05, under the MCS Act, 1960.

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(23) The Tribunal perused (i) the S.A. and the applicant's documents and (ii) the 1^st defendant's reply and its documents. Despite the Hon'ble DRAT's order dated 7^th December 2023, in Misc. Appeal No.44 of 2022, the applicant failed to comply with the directions to serve defendants 2 and 3 by substituted service expeditiously. The applicant breached the Tribunal's order dated 7^th December 2023. After that, the applicant consciously argued the case without serving defendants 2 and 3. The presence of defendants 2 and 3 was indispensable to proceed with the hearing of the S.A. and for the final decision. The non-service upon the necessary parties, i.e. defendants 2 and 3, is fatal to the present proceedings. Therefore, the S.A. against defendants 2 and 3 is liable to be dismissed by this Tribunal.

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(24) The 3^rd defendant claims through Sunder Automobiles, who claims through M/s. Arcon Builders. The applicant made severe allegations against M/s. Arcon Builders and Sunder Automobiles behind their back. The applicant

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failed to join them as proper parties to the present S.A. The Tribunal can pass an order without appropriate parties, but their presence was necessary to adjudicate the dispute relating to the two terraces. The Tribunal is bound to apply the correct law even if not objected to by the other party. The Tribunal noted that the applicant failed to join (i) M/s. Arcon Builders and (ii) Sunder Automobiles as parties to the present proceedings.

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(25) The applicant does not press the final relief regarding prayer clauses (b) and (d) of the S.A.; therefore, the question of passing any order does not arise.

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(26) The challenge to mortgage creation : The applicant does not dispute the mortgage creation of office premises nos.303, 321 and 322. The applicant challenges the mortgage creation relating to (i) the open terrace admeasuring 1600 sq. ft. carpet area on level 32 and (ii) the open or pocket terrace on level 40, on the 3^rd floor of the applicant's society.

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(27) Notice dated 11^th January 2022 : To consider the applicant's case challenging the mortgage of the two terraces, the notice under reference is very relevant evidence. The applicant issued a notice to (i) M/s Arcon Builders (ii) Subhash Shah, partner of M/s. Arcon Builders (iii) Sunder Automobiles Pvt. Ltd and (iv) the 3^rd defendant, after several

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years of the transactions.

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(28) The applicant notified the handing over of the charge and documents by M/s Arcon Builders in 2005. The applicant claims right over the two disputed terraces because it issued the maintenance bills until 2010 in the name of Arcon Builders for the unsold units 321 and 322.

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(29) The applicant approbates and reprobates at the same time. The applicant admits that (i) in 2009, Sunder Automobiles submitted a membership application for units 321 and 322 and forwarded the agreement dated 12^th November 2008, (ii) because Sunder Automobiles forwarded the first two and last two pages of the agreement, it rejected the membership application. So, what did the applicant do? On 20^th August 2010, the applicant, (ii) the 3^rd defendant, and (iii) Sunder Automobiles entered an MoU.

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(30) MoU : Recital clauses (1) and (2) of the MoU reveal the applicant's knowledge of the two agreements dated 30^th March 2005 relating to Units 321 and 322 along with the terrace. By the 3^rd recital clause of the MoU dated 20^th August 2010, the applicant admits Sunder Automobiles purchased Unit 321 along with the terrace and Unit 322 but submitted a copy of the agreements on 16^th March 2009.

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(31) By the 4^th recital clause, the applicant admits that Sunder Automobiles sold Unit 321 along with the terrace and Unit 322 to the 3^rd defendant, who applied for membership in June 2009.

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(32) Unnumbered clause (1) of the MoU reveals that Sunder Automobiles and the 3rd defendant shall produce and submit duly corrected, stamped, and registered sale agreements with necessary membership applications and Rs.25,000/-transfer charges. The applicant overlooked that on 6^th March 2009, Sunder Automobiles took steps to perfect the title relating to (i) Unit no.321 and terrace and (ii) Unit no.322 and terrace by paying the requisite stamp duty. On 6^th March 2009, the Collector of Stamps issued a certificate under Section 41 of the Bombay Stamp Act, 1958, acknowledging the receipt of the insufficient stamp duty paid on 22^nd January 2009. After that, Sunder Automobiles got two agreements dated 30^th March 2005 registered with the office of the sub-registrar, BDR-2, (i) under serial no.1474/2010 relating to unit 322 and (ii) under serial no.1475/2010 relating to unit 321 and open terrace admeasuring 1600 sq. ft. The applicant's evidence reveals that Sunder Automobile had perfected the title before signing the MoU on 20^th August 2010. The other conditions of the MoU

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relate to (i) the two terraces' maintenance, (ii) the security deposit, and (iii) the applicant's and the 3^rd defendant's future FSI rights.

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(33) The Tribunal agrees with Mr Rao that the MoU sufficiently proves that (i) Sunder Automobile purchased Unit no.321 with open terrace and (ii) Unit no.322. Sunder Automobiles, in turn, sold, transferred, and assigned the right, title, and interest in Units 321 and 322 with terraces to defendant 3, which the applicant admits in the MoU. On 20^th August 2010, the applicant accepts the 3^rd defendant's right in Units 321 and 322 along with the terraces. On 28^th October 2010, the applicant addressed a letter to the Oriental Bank of Commerce granting NoC to grant a loan to the 3^rd defendant. In the letter dated 28^th October 2010, the applicant states that " the society has transferred the above commercial unit nos.321 and 322. We confirm that Mr Harmesh Singh Chadha is a bonafide member of the society ."

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(34) After considering the matter before it, the Tribunal believes the existence of the fact from (i) the two registered agreements dated 30^th March 2005, (ii) that on 22^nd January 2009, Sunder Automobile paid the insufficient stamp duty on the two agreements, (iii) on 6^th March 2009, the Collector of Stamps issued two certificates

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accepting receipt of the insufficient stamp duty, (iv) Sunder Automobile got the agreement dated 30^th March 2005, relating to unit 321 with terrace and unit 322 with terrace registered, (v) the MoU dated 20^th August 2010, acknowledging the 3^rd defendants right in units 321 and 322 with terraces, (vi) letter dated 28^th October 2010 acknowledging that (i) it validly transferred units 321 and 322 with terraces favouring the 3^rd defendant and (ii) the 3^rd defendant is its bonafide member. It is important to note that the applicant granted NoC after signing the MoU on 20^th August 2010. The ruling in Pranjivan Purshottam Zaveri (supra) will not apply to the applicant's case. The Tribunal is of the considered view that there is no illegality or irregularity in the mortgage creation. (35) Selling of the terraces : The applicant took the stand that M/s Arcon Builder had no right to sell the terraces to Sunder Automobiles and, by it, to the 3^rd defendant. Mr Singh relied upon the judicial precedent in Ramagauri Keshvlal Virani versus Walkeshwar Triveni CHS Ltd., 1999 (3) Mh.L.J.145, by leaning on the proposition that the provisions of MOFA do not authorise the promoter to sell the terrace of a building. The Tribunal respectfully agree with the law laid down by the Hon'ble Bombay High Court. However, the

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judgment will not apply to the facts and circumstances of the applicant's case. It is not the applicant's case that it did not take legal advice (i) before signing the MoU dated 20^th August 2010 and (ii) granting NoC on 28^th October 2010 accepting the transfer of units 321 and 322 with terraces and membership favouring the 3^rd defendant. In 2010, it was not the applicant's case of unlawful sale of the terraces to Sunder Automobiles or the 3^rd defendant, but after more than twelve years, the applicant changed its stand. Mr Rao rightly submitted that the legal rights, if any, stood waived, relinquished or abandoned by the applicant. The applicant failed to take any steps and allowed the 1^st defendant to create a mortgage; therefore, the estoppel principles shall apply. Be that as it may, the applicant did not ask for relief to quash or set aside the mortgage. In Standard Chartered Bank versus Dharminder Bhohi, reported in (2013) 15 SCC 341, the Hon'ble Supreme Court that the Tribunal cannot exercise the jurisdiction beyond the scope of the relief asked for.

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(36) The Tribunal found force in Mr Rao's argument that the applicant failed to answer the 1^st defendant's case. The applicant failed to produce (i) the order passed by the Dy. Registrar Co-op

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Societies, (ii) the Consent Terms filed before the Div. Joint Registrar of the Co-op. Societies, (iii) the documents referred to in paragraph 6.5 of the S.A. Mr Singh neither argued nor pressed for the relief in terms of prayer clause 7(a), (c), (e) to (j) of the S.A. Even otherwise, the relief challenging the measure of taking symbolic possession is timebarred. On 9^th July 2019, the applicant responded to the 1^st defendant taking symbolic possession of units 303, 321, 322 and two terraces. Despite legal advice, the applicant did not challenge the 1^st defendant's action and measure within fortyfive days. The Applicant waived its legal rights and, therefore, cannot question the measure of symbolic possession after inordinate and unexplained delay. The applicant did not apply to condone the delay.

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(37) The relief challenging section 14 order dated 6^th February 2021 is also time barred. The applicant has failed to set up the case to condone the delay.

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(38) After examining the facts and circumstances of the case and evidence produced by the parties, the Tribunal concludes that the action and measures taken by the 1^st defendant are as per the SARFAESI Act read with the Rules.

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