Dismissed

S Nithyananda Murthy v. The Bangalore City Co. Operative Bank Limited

DRT24 Apr 2025SA/145/2024

Case brief

AI extract

What is this about?

Deputy Recovery Tribunal dismissed an application challenging the bank's enforcement measures under the SARFAESI Act. The court held that applicants who purchased properties after the security interest was created could not challenge the bank's entitlement and their remedy lies against the seller.

What did the court decide?

SA No.145 of 2024 dismissed; pending IAs closed; costs to parties.

S Nithyananda Murthy versus The Bangalore City Co. Operative Bank… — Money Laundering | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE Dated 24th day of April 2025

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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SA No. 145 of 2024

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Shri S. Nithyananda Murthy, Aged about 51 years, S/o. H.S.Murthy, R/at B-11, KECHSL Layout, Koramangala, 2^nd Block, Bengaluru 560 034.

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Smt Harini N Murthy, Aged about 49 years, W/o. S. Nithyananda Murthy, R/at B-11, KECHSL Layout, Koramangala, 2^nd Block, Bengaluru 560 034.

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Sri Naveen Kumar M I, Aged about 33 years, S/o. Ishwara Naika, R/at No.3-74,/1, Moodaibettu House, Alike, Sathya Sai Vihaar, Dakshina Kannada 574 235.

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Smt M.R. Nishitha, Aged about 39 years, W/o. Naveena Kumara M I, R/at No.3-74,/1, Moodaibettu House, Alike, Sathya Sai Vihaar, Dakshina Kannada 574 235.

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Sri K.A. Raghavendra Reddy, Aged about 35 years, S/o. K N Adinarayana Reddy, R/at 11, 4^th Cross, 4^th Main, Byrasandra Jayanagar, 1^st Block East, Bengaluru 560 011.

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Smt Meghana M.S. Aged about 35 years, W/o. K.A. Raghavendra Reddy, R/at 11, 4^th Cross, 4^th Main, Byrasandra Jayanagar, 1^st Block East, Bengaluru 560 011.

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Smt Jayashree K Shetty, Aged about 58 years, W/o. Late D V Prakash, R/at.44, Type 4, Block 10, Nimhans Quarters, Byrasandra, Jayanagar, Bengaluru 560 011.

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Smt Dilkush Kothari, Aged about 52 years, W/o. Arvind, R/at No.599, Inspire South Apt, JP Nagar 1^st Phase, 23^rd Main Road, Bengaluru 560 078.

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Smt Nithya M, Aged about 38 years, W/o. Sri Mahesh Kumar S, R/at No.15, B/6, 8^th Cross, 2^nd Main, Near Niravanamma Temple, Byrasandra, Jayanagar 1^st Block East, Bengaluru 560 011.

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Smt Rudramma,

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Aged about 87 years, W/o. Late S K Veerabhadrachari, R/at No.147, 3^rd Cross, 1^st Block East, Jayanagar, 3^rd Block, Bengaluru 560 011. … Applicants

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Versus

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The Bangalore City Cooperative Bank Ltd, No.3, Pampa Mahakavi Road, Chamarajpet, Bengaluru 560 018.

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Sri Murali K.S. Proprietor, Nandi Builders & Developers, S/o. K.M. Sathyanarayana Shetty, Aged about 52 years, R/at No.96, 2^nd Cross Road, BCC Layout, Chandralayout, Bengaluru 560 040.

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Ld. Counsels on record / appeared:

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For Applicants : Shri M.A. Rajendra For Respondent No.1 : Shri K.V. Lokesh For Respondent No.2 : Shri Puttaraju

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ORDER

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The Applicants claiming to be bonafide purchasers of the schedule

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properties are approaching this Tribunal, impugning the measures taken by the 1^st respondent under the provisions of Securitisation and

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Reconstruction of Financial Assets & Enforcement of Security Interest

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Act 2002 ( hereinafter referred to as the “Act”).

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The applicants admit that they have purchased the properties from the 2^nd respondent, who sold the same suppressing the fact about the mortgage. The applicants themselves admits that the transfer in their favour is subsequent to the mortgage, however contends that some of the applicants had got the Khata transferred in their name. Another contention taken by the applicants is that the respondent should have got permission from the Registrar of Co-operative Societies and to get the bye-laws amended for proceeding under the Act.. The next contention taken is that the 1^st respondent should have approached the registrar of co-operative societies and that the bank at the time of renewal was aware that the schedule properties are sold to respective buyers.

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Along with the SA, the applicant had produced the following documents.

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i) Order passed by the Ld.Magistrate in Crl.Misc.4980 of 2024.

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ii) Copy of the Petition under section 14 by Respondent bank. iii) Copy of deposit of title deeds dated 5.4.2019 and 2.3.2020.

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iv) Copy of the Anticipatory bail application filed by the 2^nd Respondent.

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v) Order passed by the Ld Sessions Judge in the Anticipatory bail application.

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The applicant had subsequently produced the title documents along with memo dated 25.7.2024.

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The 1^st respondent had filed their statement of objection refuting the contentions. It is stated that the applicant had filed this SA without any bonafides. Apart from the above, the 1^st respondent had also narrated the particulars of the credit facility as availed by the 2^nd respondent in lieu of the security created over the schedule properties. The 1^st respondent had also put forth the fact that the 2^nd respondent had committed defaults and had also explained the details of the measures they have followed up to the procurement of Section 14 order. Along with the objection, the 1^st respondent had produced the copy of memorandum of deposit of title deeds and the demand notice proof as to the service and publication of the same. The 1^st respondent had also produced the possession notice, its affixture, publication and also the CERSAI registration.

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Even though the 2^nd respondent had entered appearance, no objection was filed by the 2^nd respondent.

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Heard the Ld counsel for the respective sides and considered the rival contentions in the light of pleadings and documents. The only

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issue that arises for consideration in this matter is as to whether the applicants are entitled to challenge the measures and get orders in their favour.

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The applicants themselves admit that the documents in their favour are executed after the creation of security interest and as such the applicant cannot challenge the entitlement of the 1^st respondent to initiate and continue the measures. The contention that the 1^st respondent ought to have resorted to the provisions of Co-Operative Societies Act did not have any legal basis as the provisions of the Act is in addition to and not in derogation of other law. The applicants who admit that they are purchasers subsequent to the mortgage,

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their claim as against the right of 1^st respondent is liable to be rejected.

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If at all, the applicants have any right that can only be against the 2^nd respondent or claim redemption under subrogation of the mortgage, for which this Tribunal is not the appropriate forum. Even otherwise no plea in that regard is made by the Applicant in the SA.

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