Dismissed

Kishore Singh Nayal v. LIC Housing Finance Limited

DRT5 Dec 2025SA/38/2023

Case brief

AI extract

What is this about?

In this Securitisation Application, the applicant, a purchaser claiming specific performance of an agreement of sale, sought to stop the secured creditor from taking possession of a mortgaged property. The Debts Recovery Tribunal held that the applicant failed to interdict the proceedings because the prior creation of an equitable mortgage by the borrowers rendered the subsequent sale void under S

What did the court decide?

Securitisation Application dismissed; 1st respondent Company is free to proceed with taking physical possession of the secured asset.

Kishore Singh Nayal versus LIC Housing Finance Limited — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE sTH DAY OF DECEMBER, 2025

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PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB. (Hons.). M.A. PRESIDING OFFICER

¶4

Securitization Apptication No. 38 OF 2023

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Kishore Singh Nayat S/o S. Bahadur Singh Nayal Aged a bout 49 years Occ: Business, R/o H.No B-29 Hemangar Colony, Boduppal Ghatkesar (M), Ranga Reddy.

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.......Applicant.

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Versus

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LIC Housing Finance Ltd 304-305, III floor, Mythrivanam, HUDA Complex, Ameerpet Branch, Ameerpet, Hyderabad, Rep by its Authorized Officer.

¶9

Neelam Devi Agarwal, W/o Suresh Kumar, Aged about 50 Years, Occ: Business, H. No 8-41l18/1 Flat No.110, Boduppat (V), Ghatkesar (tvt), Ranga Reddy Dist.

¶10

Vikas Kumar, S/o Suresh Kumar, Aged a bout 30 Years, Occ: Business, H. No 8-41l18/1 Flat No.110, Boduppal (V), Ghatkesar (M), Ranga Reddy Dist.

¶11

...... Respondents

¶12

Counsel for the Applicant : Mr. T. Sridhar Reddy Counsel for Respondent Bank : Mr.^p. Hari^prasad Respondents: : Dismissed (Notice not taken) z/,l{rcn ". .--,-,U^--..rL-'

SA No.38/2023

Page 2 ofB

-: q8-Dl-B:-

The^{present Securitization Applicationis filed by the Applicant} uls.17 of the^{Securitisation and Reconstructionof FinancialAssets} and Enforcement^{of SecurityInterest Act, 2OO2 ("Act" hereinafterfor} short) to set^{aside the proposedaction of 1't respondentCompany} from taking^{physical possessionof the SA scheduleproperty through} advocate^{commissioner noticedated 18'01'2023in pursuance of the} warrant in Crl.M.P.No.2O7^{of 2022dated 16 722022on the file ofthe} Hon'ble Chief^{Metropolitan Magistrate, Medchal-Malkajgiri District'}

¶17

The averments^{of the application,briefly,are that the applicant} is the third^{partyto the securitisation proceedingsinitiated against} the SA schedule^{property. The respondents2 and 3' who are the} owners of the^{SA schedule property, executed an Agreementof Sale} for a total consideration^{of Rs 25,OO,0O0/-on 22'07 '2073 The sale} conslderation^{was paidin two instalmentsof Rs 15,00,000/- and Rs'} 1O,OO,OOO/-.^{Afterreceiving the total sale consideration,respondents} 2 and 3 delivered^{the vacant possessionof the propertyRespondents} 2 and 3^{played a fraud by suppressingthe loan transactionand} receiving the sale^{consideration.As the respondentsfailed to execute} the sale deed, applicant^{filed a civil suit vide O.S No 265 of 2014on} the file of Hon'ble^{District ludge, RangareddyDistrictat L B' Nagar} aqainst respondents^{2 and 3 for specificperformance On receipt of} possession notice dated 03.77.20f4,^{applicant filed SA No 1164 of} 2017 (SAIR No. 947 of^{2014) and also deposited Rs 5 lakhsin} compliance of the conditional^{order therein. The SA endedin} dismlssal due to^{communication} 9ap^{wlth the counselengaged} therein. Respondent^{No.1,takingadvantageof the position of there} being no stay against the^{SA scheduleproperty,proceededfor taking} the^{physicalpossessionnotice} of the^{schedule property throughthe} impugned Advocate commissioner^N"tir" d"my:.:i2023.^{As the}

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Page 3 of8

sA No. 38/2023

applicant is the bonafide purchaser of the subject property and paid the entire sale consideration to the respondents 2 and 3, applicant filed the present SA to safeguard his interests.

¶22

Applicant failed to serve notice to the respondents 2 and 3 and hence the SA is dismissed against them.

¶23

The 1't respondent Company flled Memo adopting the counter in 14.257/2023 as reply statement in the SA. The averments therein, briefly, are; respondents 2 and 3 along with Mr. Suresh Agarwal (husband of respondent no.2 and father of respondent no.3) availed a housinq loan of Rs-20,00,000/- vide sanction letter dated 37.07.20t2 for purchase of house bearing No.8-41l18/1, Plot No.10 in Sy. Nos. 206 to 210 and 212, Boduppal Village, Ghatkesar lvlandal, Ranga Reddy admeasuring 150 sq.yds. Respondents 2 and 3 created equitable mortgage by depositing the title deeds of the property. After availing the loan, respondents 2 and 3 neglected in making repayment. The respondent Company informed the respondents 2 and 3 that their loan was classified as defaulted account. Despite several reminders and demands, they failed to regularise the loan account. After classifying the account as NPA, the respondent bank issued demand notice on 22.O4.2074 under section 13(2) of the Act, 2002 but it was returned un-served. Therefore, the notice was published on 26.07.2Ot4. Subsequently, sale notice dated 03.11.2014 was issued and affixed on the property as per rule 8(6) of the Rules,2002. Thereafter, possession notice u/s 13(4) was issued on 22.02.2020, followed by publication on 27.02.2020. Advocate commissioner notice dated 18.01.2023 was issued to vacate the schedule property. Furthermore, the agreement of sale was without the knowledge or consent of the respondent Company. Respondents created equitable mortgage in favour of the respondent Company prior to the agreement of sale and without d%hargrng the right over

// /'{^.ve (t/^t "-

Page 4 of8

sA No. 38/2023

the subject property. As such the same is not bindlng upon the respondent Company. The^present litigation is nothing but a false litigation by the borrower with a malafide intention to avoid repayment of loan amount and also to^prevent sale of mortgaged p roperty.

¶28

Learned counsel for applicant reported no oral arguments. Heard the learned counsel for the respondent Company. Perused the written a rguments filed by the applicant and the material brought on record.

¶29

In his written submissions, learned counsel for the applicant would submit that the OS 94 of 2002 was decreed in favour of the applicant vide order dated 08.11.2023 directing the respondents 2 and 3 to register the sale deed in favour of the applicant, copy oF which was filed before this Tribunal on 30.07.2025.

¶30

Learned counsel for the respondent Company would submit that the appllcant cannot claim any right over the secured asset as the respondents 2 and 3 created equitable mortgage over the property prior to the agreement of sale dated 22-07.2013. As the respondents 2 and 3 have not obtained any consent for entering into the alleged agreement of sale, the same is not valid under the law. The respondent Company issued demand notice u/s 13(2) of the SARFAESI Act, 2002 dated 22.04.2014 and took out^publication of the same in newspapers on 29.07.2074. Though the applicant had the knowledge of securitisation proceedings at the time of challenging the possession notice dated 03.11.2014 by filing sA No.1164 of 2017, applicant did not choose to array the respondent Company as a^party to the proceedings in OS.265/2014. Further, learned counsel would contend that the executants to the agreement of sale dated (/ /fo5a,-r./6't-

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PaEe 5 of8

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sA No. 38/2023

¶33

22.07.2013, Yiz., respondents 2 and 3 herein, were remained exparte in the said OS.

¶34

The points for consideration are as follows:

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Whether the applicant made a valid ground for interdicting the action of l't respondent Company from taking the physical possession of the secured asset through the Advocate Commissioner appointed under the provisions of the Section 14 of the SARFAESI Act?

¶36

ii) To what relieP

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Point No.^(i):

¶38

The contention of the applicant in the SA is that he is in the physical possession of the subject property and is equipped with an agreement of sale dated 22.07.2013 and a decree from a competent court of law for specific performance in OS.265 of 2014 (New No.94/2022). Per contra, it is the contention of the 1't respondent Company that while the agreement of sale pressed into service by the applicant being dated 22.07.2073, the equitable modgage created by respondents 2 and 3 borrowers for the loan availed vide loan agreement was dated 04.08.2012. Indisputably, the loan was availed on 04.08.2012, demand notice was issued on 22.04.20!4 and possession notice was issued on 03.11.2014. Applicant challenged the possession notice dated 03.11.2014 by filing sA.1164/2017 (SAIR No. 947/2014). It is an admitted fact that 1"t respondent Company was not made as a party defendant to the 05.265 of 2014 (New No.94/2022).

¶39

As per the SA, the address of the schedule property is:-

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SA No. 38/2023

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Page 6 of 8

¶42

" House bearing No.8-1-18/1, Plot No.ll0, Sy. No. 206 to 210 and 212, admeasuring 150 SQ.YDs or 125.4 Sq.Mtrs. situated at Boduppdl (V) and (G.P), Ghatkesar (M), Rangareddy District.^"

¶43

As per the order in specific performance OS.94 of 2022 (Old OS No,265 of 2Ol4) dated 08.11.2023 filed by learned counsel for the applicant on 30.07.2025 the address of the schedule of property therein is shown as:

¶44

"All that the house bearing No.B-{1/18/1, Plot No.l l0 in Sy. No.206 to 210 & 212 an extent of 150 sq. yards, constructed wilh R.C.C. situated at Boduppal Village ad Grampanchayat, Ghqtkesar Mandal, Ranga Reddy D istict, 7. 5....^"

¶45

The Agreement of Sale dated 22.07.2013 shows the address of the property offered for sale as that of the one mentioned in the order in OS.94 of 2022 dated 08.11.2023.

¶46

The address of respondents 2 and 3 the present SA is shown as:-

¶47

"H. No. 8-41/18/1, Flat No.l l0 Boduppal (V) Ghatkesar (M) Ranga Reddy Dist."

¶48

The averments in para 6(4) of the SA read as under:-

¶49

"It is submitted that the applicant has paid balance sale consideration of Rs. 10,00,000/- to the respondents no.2 and 3 on 22.08.2013 as per the agreement of sale dated 22.07.2013, After receiving the total consideration lhe respondent no.2 and 3 have delivered the vdcant possession of the application schedule property to lhe applicant. "

¶50

From the above particulars, the following position emerges:-

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a) The address of the SA schedule^property covered in the Advocate Commissioner notice and the property in the Agreement of Sale relied on by the applic"r, "r";$$l:t //,/4'"'-' (_)/

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Page 7 of8

¶53

SA No. 38/2023

¶54

b) The respondents 2 and 3 are still staying in the same premises mentioned in the Agreement of Sale, the vacant posltion of the same was alleged to have been delivered to the applicant after payment of sale consideration of the property;

¶55

c) If the property shown in the Advocate Commissioner notice and that of the one covered in the Agreement of Sale is same, the subject SA property has no relevance to the present proceedings.

¶56

Therefore, the contention of the applicant in para 6(4) about delivery of property covered ln the Agreement of Sale dated 22.07.2073 is patently wrong and contrary to the factual positlon. Further, the borrowers i.e., respondents 2 and 3, who happen to be the defendants in the OS.94 of 2022 remained exparte. Whereas, the applicant in this SA did not choose to take notice on the respondents 2 and 3 hereln. Thus, the absence of respondents 2 and 3 borrowers in the legal proceedings initiated against the property belonging to them speaks volumes.

¶57

Notwithstandlng the above ambiguity, the 1st respondent Company cannot be found fault with the securitisation proceedings initiated against the property belonging to the respondents 2 and 3 against which equitable mortgage was created towards the housing loan availed by them, either the one covered in the agreement of sale or in OS.94 of 2022 ot in the impugned Advocate Commissioner Notice, for recovery of dues from the borrowers i.e., respondents 2 and 3. As per section 58(9) of the Transfer of Property Act, 1882, any subsequent transfers overriding prior mortgages is void. Therefore, the applicant failed to make out any valid ground to lnterdlct in the proceedings of I't respondent Company from taking the physical possession of the secured asset- u/s 14 of the

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SA No.38/2023 ,

Page 8 of 8

Securitisation Act for recovery of dues from respondents 2 and 3 borrowers. Accordingly, the SA is liable to be dismissed.

¶63

Point No.(ii):

¶64

In the result, the SA fails and is hereby dismissed.

¶65

Consequently, Interlocutory Applications pending, if any, shall stand closed. No order as to costs,

¶66

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 dnd pronounced by me in the open court on this the 5'h doy of December, 2025).

¶68

p-"rrrl (RAMESHWAR KOTHE) PRESIDING OFFICER

Kishore Singh Nayal v. LIC Housing Finance Limited

Case brief

What is this about?

What did the court decide?

Kishore Singh Nayal v. LIC Housing Finance Limited

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

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Case details

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