Dismissed

Smt Syeda Kulsum Fatima v. Indian Overseas Bank

DRT8 Sept 2025SA/209/2024

Case brief

AI extract

What is this about?

Applicants sold property to a borrower who mortgaged it to a bank. The bank invoked SARFAESI measures. Applicants claimed the sale was nominal and they retained title. The Tribunal rejected the claim, finding full consideration was paid and applicants are third parties with no locus standi.

What did the court decide?

Dismissed the Securitization Application.

Smt Syeda Kulsum Fatima versus Indian Overseas Bank — Company and Corporate | DRT (2025)

¶1

IN THE DEBTS RECOVERY^TRIBUNAL -^{II AT HYDEMBAD}

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DATED THIS THE OSTH DAY OF^{SEPTEMBER, 2025}

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PRESENT: SH. RAMESHWAR^{KOTHE,B.com, L.LB,(Hons.), M.A.}

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PRESIDING OFFICER

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Securitization Application^{No.209 OF 2024}

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Smt. Syeda Kulsum Fatima Wife of Sri Mir Ustafa Ali Mujahid Aged about 57^years, Occ:^Business Resident of "E B Farms" Yenkepally^Village And Gram Panchayat, Moinabad^Mandal Ranga Reddy District.

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Sri Mir Mustafa Ali Mujahid

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Son of Sri Mir Lutfa^{Ali, aged about57 years} Occ:Business,^{Resident of "E B Farms" Yenkepally Village} and Gram Panchayat,^{Moinabad Mandal} Ranga Reddy District.

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.......Applicants.

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Versus

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Indian Overseas Bank Rep by its Authorized Officer Governorpet Branch,^{29-4-54K,CSI Tab} A.S.S. Complex, Rama^{ChandraRao Road} Vijayawada, Krishna District Andhra Pradesh 520 002

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Indian Overseas Bank Rep by its Chief l4anager Governorpet Branch,^{29-4-54K,CSI Tab} A.S.S. Complex,^{RamaChandraRao Road} Vijayawada, Krishna^District Andhra Pradesh 520⁰⁰² Ramanthapur, HYderabad^{500 013}

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Sri Manikonda^{Kishore Kumar} Son of Sri Venkateswarlu,^{aged about 41 years} Occ:Business,^{Resident of House No.9-478/17} Plot No.401, Anantha^{Lakshmi Nilayam} C R Colony,^{Chilakaluripeta, Guntur}

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Andhra Pradesh 522⁶¹⁶

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Page 2 ol7

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SA No.2@/2024

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Smt. Saritha Ravilla Wife of Sri M. Kishore Kumar, aged about 38 years Occ:Business. Resident of House No.9-478111 Plot No.401, Anantha Lakshmi Nitayam C R Colony, Chilakaluripeta, cuntur District Andhra Pradesh 522 616

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Smt. Narayanamma Ravilla Wife of Sri R. Malakondaiah Aged about 66 years Occ:Household, Resident of House No.9-479/11 Plot No.401, Anantha Lakshmi Nilayam C R Colony, Chilakaluripeta. cuntur District Andhra Pradesh 522 616

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...Respondents

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Counsel for the Applicants : Mr. Chunchu Kishore Counsel for Respondent 7 & 2 Bank: Mr. Gampa Rangaiah Respondents 3 to 5 : Ex parte

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-:ORDER:-

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The Applicant filed the present Securitisation Application u/s 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Act") to declare the proceedings initiated by the 1st respondent bank against application schedule property under Sec.13(4) of the Act, 2002 including taking physical possession consequent to possession notice dated 05.72.2023 as illegal, void and arbitrary.

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The case of the applicants, in brief, is that they are absolute owners and possessors of the application schedule property having acquired through registered sale deed Doc.No.64g7 of 2016 dated 07.70,2076 from one Smt. Fouzia Osman, wife of Mohammed Osman Yaseen. After acquiring the property the applicants raised constructions therein. On assurance given by the ]4 respondent to /,/iv..".>e / // /a1;" ' L^,'

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Pate 3 of7

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SA No.209/2024

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arrange flnances by raising^{loan from the 2nd respondent,the} applicants executed^{namesake/nominalsale deed in his favour.} Thereafter 3d respondent^{wasabscondinga d on 23,04.2024' rhe} bank offlcials along with^{advocatecommissioner cameto the property} and supplied^{possessionnotice. The 3'd respondentcannot create} security interest over the^{property whichbelongs to the applicants'} Hence the SA.

¶27

The respondents 1 and 2^{("respondent" hereinafter)bank filed} reply statement along with documents.^{The submissions,in brief, are} that the applicants sold the^{SA schedule propertyin favour of 3'd} respondent who availed loan^{by mortgagingthe same propertyas} security vide registered^{MoDT dated28.07.2022.Encumbrance} Certlficate also^reflects the^{transfer of property. Due to default, the} loan account of 3'd respondent became^{NPA and Securitization} proceedings came to be initiated. The sale deed^{reveals receipt of} entire sale consideration by the^{applicants and hence theycannot} deny the sale transaction^{by using new terms suchas} namesake/nominal sate deed.^{The 3d respondentalso sent legal} notice to the applicants on^{15.06.2023 to pay rents due and to vacate} the^premises within^{15 days therefrom.In view of this, the appllcants} can at best be tenantsⁱⁿ the^{premisesand not owners any more'The} SA is filed collusively and^{hence liable to be dismissed.}

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Respondents 3 to 5^{were set ex parte vide docketorderdated} 30.70.2024 as called absent^{and no representation despite notice'}

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Heard learned counsel for^{the applicantsand learnedcounsel} for the respondent bank.^{Perusedthe written argumentsfiled for the} applicants and the material^brought "^{on reco.i,.fi>c} (-,/ B.v-

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Paee 4 ot 7

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SA No.209/2024

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During the course of arguments, learned counsel for the applicants reiterated the version as in the application that; the applicants are not borrowers, guarantors or mortgagors of the housing loan sanctioned to 3'd respondent. They purchased the application schedule property on 07.lO.2OL6 and subsequenfly executed namesake/nominal sale deed in favour of 3rd respondent who assured the applicants of arranging finances by raising loan from respondent bank however, he paid only advance and not paid full consideration. The applicants are holding right, tiue and charge over the property and 3rd respondent cannot create any security interest. Thus, it is not a secured asset of the bank within the definition of Sec.2(zc) of the Act and it cannot enforce the mortgage. The transaction is vitiated by fraud played on applicants by respondents 3 to 5. Hence all the Securitization notices are liable to be set aside and respondent bank cannot proceed against the subject property. With these contentions, learned counsel would pray to allow the SA.

¶33

Per contra, learned counsel for the respondent bank contended that the 3'd respondent is an NRI, he availed housing loan of Rs.3.75 crores from the respondent bank for purchase of the application schedule property and created mortgage under a registered MoDT dated 2A.07.2022 under Doc. No.723 6/2122and deposited the originat title deed Doc.No.7147 /2022 dated 26.07.2022 as security for the said loan. He informed the bank about letting out the property to 2nd applicant and due to non-payment of rents, a legal notice had been issued. A perusal of legal notice shows that the applicants failed to pay rents and hence they were asked to vacate the property. Under such circumstances, the applicants can at best be treated as tenants and not owners. The sale deed executed by the applicants in favour of the 3d respondent also reveals that they receivFd entire sale LW..".t-q / l/ -ab.,^</sup>

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Pate 5 of7

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SA No'209/2024

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consideration and^{hence applicantscannot claim that they executed} only namesake^{sale deed. Havingsold the property to the 3d} respondent the^{petitioners cannot claim to be absolute ownersand} possessors of the^{property.Due to the default committed by the 3rd} respondent, the^{bank has initiated SARFAESImeasuresagainstthe} secured asset^{and suchmeasurescannot be questioned by the} applicants.^{Howeverthe respondent bank has followeddue procedure} of law as^{prescrlbed underthe Act and Rules of 2OO2' With these} submissions,^{learned counselsought for dismissal of the SA'}

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The^{points for consideration are as follows : -}

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i) Whether the^{applicant madeou.t any valld} quash any of the measures^{of the respondent} -?ao-u-?.1,,:o-^inctuotnq iiiig^{pivsicatpossessionof the applicationschedule} ProPertY^{as PraYed for?}

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ii) To what^relief?

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Point No.(i):

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It is a^{matterof recordthat this Tribunal rejectedthe prayerof} the applicants to^{grant stay vide order dated 27} '05'2024^{in lA} No.1407 of 2024 in^{this SA. The orderis extractedas hereunder:-}

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"I have considered the submissions.^{Admittedly,the} petitioners executed registered^{sale deed in favourof 3'"} respondent and did^{not receive entire sale consideration'} tt is not reoorted that the^{petitioners have taken legal} action against 3'd^{respondent for non-payment of sale} considerJtion.^{The documentsflled by the bank along with} counter show that^{3'd respondentexecutedregistered} lvloDT deoositino subject^{saledeed. As per the legal notice} issued by 3-d^{iespondent-mortgagor,he purchased the} subject^property from^{the petitionersherein, paid entire} sale consideration^{and leased out to petitioners' Once} petitioners executed sale deed^{and parted with the} property under a registered^{instrument, they cannot term} tne satil transaction^{as namesake/nominal registration'} Pertinently, though^{the grievance of petitigrmjs centred}

/'<;'r"''-

PaBe 6 of7

SA No.2O9l2024

against 3rd respondent, he has not been made necessary party in the petition. Under such circumstances, I find that the petitioners failed to make out valid q.orna to grant stay as sought for. Accordingly, the petitio; is liable to be dismissed.

¶47

The aforesaid order has not been challenged and hence attained finality. The applicants filed the sale deed dated 07.10.2016 executed by one Syed Kulsum Fatima in favour of them and the respondent bank filed deed of sale dated 26,07.2022 executed by the applicants in favour of 3d respondent. The covenants of the sale deed Doc.No.7747/2022 dated 26.07.2022 would clearly show that the applicants were paid the entire sale consideration of Rs.5 crores between 04.07.2022 and tO.O7,ZO22 by way of RTGS/Cheques/DDs issued by the respondent bank on behalf of 3d respondent. The applicants would have taken appropriate legal action before the competent court had the 3d respondent for non_payment of sale consideration but they did not choose to do so. Thus, the contention of the applicants that the 3.d respondent failed to pay entire sale consideration falls to ground and consequenuy the claim that they still retain the title, right and charge over the schedule property, no security interest has been created etc., also proved to be baseless. Admittedly, the applicants are third parties to the loan transaction between the bank and the 3rd respondent, and the respondent bank is proceeding under the Act, 2OO2 against the secured asset on the strength of original registered tiue deed deposited by the 3d respondent and registered IvloDT executed by the 3d respondent_ borrower in respect of application schedule property and having parted with the tiue over the property by executing a registered sale deed for a valuable consideration, the applicants absolutely have no tocus standi to question such measures. fu6,*

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Page 7 of 7

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sA No.209/2024

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The applicants have utterly failed to make out any valid^ground to set aside any of the measure of the respondent bank under the Act, 2002 against the application schedule^property. Accordingly SA is liable to be dismissed.

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Point No.(ii):

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In the result, the Securitization Application fails and is hereby dismissed.

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Consequently, Interlocutory Applications^pending, if any, shall stand closed.

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No order as to costs.

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Communicate a copy of this order to the^parties concerned^and upload in the official website.

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(Typed to my dictotion by the PS, corrected, signed ond pronounced by me in the open court on this the O|'h doy of september, 2025).

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(RAMESHWAR KOTHE) PRESIDING OFFICER

Smt Syeda Kulsum Fatima v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

Smt Syeda Kulsum Fatima v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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