Partly allowed

Santosh Jain v. Punjab National Bank

DRT10 Oct 2025SA/439/2022

Case brief

AI extract

What is this about?

The DRT-I, Delhi quashed an auction sale notice conducted by the respondent bank for violating mandatory provisions of the Security Interest (Enforcement) Rules, 2002. It held that the applicant, relying on an unregistered agreement to sell, had no legal title to the property and directed her to surrender possession to the bank, while allowing refunds of funds deposited by both the bank and the au

What did the court decide?

Quashed the Auction Sale Notice and sale proceedings. Directed the applicant to surrender physical possession of the property to the Respondent Bank immediately. Directed the Bank and Auction Purchase

Santosh Jain versus Punjab National Bank — Banking and Recovery | DRT (2025)

¶1

¶2

SA No.439 of 2022 & TSA No.203 of 2023

¶3

DRT-I, DELHI

¶4

Debts Recovery Tribunal-I, Delhi 4th Floor, Jeevan Tara Building, Parliament Street, New Delhi

¶5

PRESIDING OFFICER: GOVIND BALLABH SHARMA
SA No.439 of 2022
Smt. Santosh Jain
R/o Property bearing No.R-29,
Inder Puri, New Delhi-110012 Applicant
Versus
1. Punjab National Bank
Circle Shastra Centre, South Delhi
UGF, 7, Bhikaji Cama Place, New Delhi-66
2. Sh.Rahul Shah
A-337, Defence Colony
New Delhi-110024
3. Gagandeep Mahindru
B-2, Block D, Kirti Nagar,
New Delhi-15 -- Respondents
TSA No.203 of 2023
Smt. Santosh Jain w/o Narender Jain
R/o R-29, Inder Puri
New Delhi Applicant
Versus
1. Punjab National Bank
Tropical Building,
H-22, Connaught Place,
New Delhi-110001
2. Sh.Rahul Shah s/o Girish Shah
R/o A-337, Defence Colony
New Delhi-110024
3. Gagandeep Mahindru
s/o late Sh.Baldev Singh Mahendru
R/o B-2, Kirti Nagar, New Delhi-15 -- Respondents

¶6

DRT-I, DELHI	2 SA No.439 of 2022 & TSA No.203 of 2023
Present:
For the Applicant� For the Respondent Bank : For Auction Purchaser	�Sh.Sanjeev Bhandari alongwith Ms.Pratiti Rungta, Ld. Advocates Mr. M.K.Chaudhary, Advocate : Sh.Sunil Dalal, Ld. Senior Advocate alongwith Shri Ronnie S. Brara, Advocate
	Date of reserved: 18.09.2025.
Date	of Pronouncement: 10.10.2025.

¶7

FINAL ORDER

¶8

These two connected securitizations applications being SA no.439/2022 and TSA no.203/2022 are disposed of with the following observations:

¶9

SA No.439 of 2022

¶10

The present application has been filed by the S. Applicant on 04.07.2022 under Section 17 of SARFAESI Act 2002 read with Rule (8) of Security Interest (Enforcement) Rules 2002 to quash and set aside impugned notice putting the property being R-29, Inder Puri, New Delhi (hereinafter be called as property in question) to auction on 08.04.2022 and Sale Certificate dated 06.05.2022 and hold the auction of property in question conducted in violation of Rules (8) & (9) of Security Interest (Enforcement) Rules 2002 and place on record all proceedings and / or relevant documents in relation to auction & order for adjudication of demand notice amount dated 05.04.2019 of Sc/

¶11

3 DRT-I, DELHI SA No.439 of 2022 & TSA No.203 of 2023 Rs.3,42,86,616.20 with future interest @ 6% p.a. w.e.f. 06.04.2019 after giving effects of payments made.

¶12

It has been submitted on behalf of the applicant that the applicant is neither the borrower nor the guarantor and she is in actual possession of property in question since 2015 consisting ground, first and second floor filed this securitization application feeling aggrieved by impugned auction conducted on 08.04.2022 by respondent no.1 and impugned sale certificate dated 06.05.2022 whereby auctioning the property in question without following mandatory provision of Rule (8) of Security Interest (Enforcement) Rules 2002 and without disclosing that SA no.181/2021 is pending and stay of possession of the property is in operation. It has further been submitted that respondent no.2 executed Agreement to Sell for sale consideration of Rs.590.00 lacs, out of Rs.265.00 lacs paid as advance through RTGS and respondent no.2 handed over vacant physical possession of property in question. It has further been submitted that the respondent no.2 obtained loan of Rs.417.00 lacs and had mortgaged the property in question by playing fraud with the applicant and the respondent bank. It has further been submitted that applicant has been paying EMIs to respondent bank electronically to save the property but started paying cash to respondent no.2 which was not

¶13

¶14

DRT-I, DELHI

¶15

SA No.439 of 2022 & TSA No.203 of 2023

¶16

deposited by respondent no.2, since absconding for past 3 years. It has further been submitted that due to default, the respondent bank declared the account as NPA on 31.03.2019 and issued notice u/s 13(2) on 05.04.2019 for Rs.3,42,86,616.20. It has further been submitted that Court Receiver was appointed vide Ld.CMM order dated 05.08.2019 for taking physical possession of the property in question which was challenged through filing of SA No.181/2021 by the applicant. It has further been submitted that possession on 04.10.2019 was not taken due to clearing the dues on that date duly recorded in order dated 03.10.2019 and since then applicant is paying EMIs regularly until December 2020 owing to Covid-19, Nationwide lockdown and ill-health of applicant. It has further been submitted that applicant represented for OTS settlement towards settlement of loan account of respondent no.2 and made representations on 09.07.2021 and 07.08.2021 and also visited the respondent bank on 30.08.2021 to explore the possibilities of settlement and offered cheque of Rs.35.00 lacs against towards outstanding but not considered despite repeated requests. It has further been submitted that during pendency of SA no.181/21, respondent bank put property for auction notice dated 05.09.2021 for Rs.4.00 crores and applicant filed Interim Application for set aside the auction notice as applicant was

¶17

¶18

DRT-I, DELHI

¶19

SA No.439 of 2022 & TSA No.203 of 2023

¶20

ready and willing to pay outstanding amount but never adjudicated; but no bid received. It has further been submitted that respondent bank again moved before Ld. CMM for taking physical possession thru Court Receiver but never disclosed that said SA was pending and petitioner was ready to settle the loan account. It has further been submitted that applicant filed application before Ld.CMM against bank officials for perjury for not disclosing the facts which issued notice vide order dated 18.10.2021. It has further been submitted that Court receiver issued notice dated 28.10.2021 for taking physical possession of property in question on 18.11.2021 against which applicant challenged the notice but not listed due to non-availability of P.O. and Hon'ble Chairman in DRAT. It has further been submitted that applicant moved Writ Petition being WP No.12882/21 and vide order dated 16.11.2021, the Hon'ble High Court restrained the Court Receiver from taking physical possession subject to deposit of Rs.85.00 lacs by 17.01.2022 by the applicant which was compiled by depositing the amount with respondent no.1. It has further been submitted that applicant filed IA No.882/2022 against possession notice dated 30.03.2022 of Court Receiver inspite of complying the Hon'ble High Court order which was decided on 12.04.2022 directing to deposit Rs.50.00 lacs by 18.04.2022 restrained Court Receiver from taking physical possession of property in question. It has

¶21

¶22

DRT-I, DELHI

¶23

SA No.439 of 2022 & TSA No.203 of 2023

¶24

further been submitted that the applicant in compliance deposited Rs.50.00 lacs with respondent bank on 18.04.2022 but Counsel for respondent bank made statement that property has been auctioned on 18.04.2022 in complete violation of order dated 16.11.2011 of Hon'ble High Court and Rule (8). It has further been submitted that no auction notice was served nor affixed on the property in question mandatory as per Rule 8 (6)(7) of Security Interest Enforcement Rules 2002, which is in possession of applicant and on this ground, auction needs to be set aside. It has fuhher been submitted that applicant requested the respondent bank to provide auction related documents in order to challenge but not provided intentionally and deliberately by respondent bank. It has further been submitted that on the directions of Hon'ble P0, DRT dated 03.06.2022, respondent bank served copy of sale certificate on 10.06.2022. It has further been submitted that it is a settled proposition of law while affecting sale procedure envisaged in Rule (8) has to be followed as held in the matter of Mathew Varghese Vs M.Amritha Kumar & Others reported as (2014) 5 Supreme Court Cases. It has further been submitted that it is settled proposition that respondent bank has to disclose about pending litigation in auction notice and also restrained from taking over possession of property in question as held by Hon'ble High Court of Judicature at Allahabad titled Rakesh Sd-

¶25

¶26

DRT-I, DELHI

¶27

SA No.439 of 2022 & TSA No.203 of 2023

¶28

Kumar Kaushal Vs State of Uttar Pradesh & Ors. It has further been submitted that a person cannot be deprived of his property except in accordance with provision of a statute. It has further been submitted that there is a fundamental procedural error as auction notice not affixed on property in question and sale certificate has been obtained by not disclosing pending litigation and bank has been restrained from taking over possession of property in question. It has further been submitted that on the date of auction, the account was out of NPA category as applicant had deposited Rs.85.00 lacs in compliance of Hon'ble High Court order and not have auctioned. It has further been submitted that loan account once declared as an NPA if borrower paid overdue principal and interest thereon as per Master Circular No.DBOD No.BP.BC.9/21.04.048/2014-15 dated 01.07.2014 and borrower can get his account out of NPA after paying arrears of interest and principal. It has further been submitted that property in question could not have been auctioned on 08.04.2019, as Rs.85.00 lacs was deposited in compliance of Hon'ble High Court order and account was out of NPA category and it is settled proposition that if borrower pays arrears of interest and principal, account will be classified as Standard as held by Hon'ble High Court, Allahabad in the matter titled as Sravan DaII Mill P.Ltd. Vs Central Bank of India and Hon'ble

¶29

¶30

DRT-I, DELHI

¶31

SA No.439 of 2022 & TSA No.203 of 2023

¶32

Punjab & Haryana High Court titled Oswal Spinning & Weaving Mills Ltd. Vs RBI and Ors. It has further been submitted that applicant has already deposited Rs.177.50 lacs after account became NPA on 31.03.2019 against amount of Rs.3,42,86,616.20 with the respondent bank cannot claim as no future interest has been demanded as per notice u/s 13(2) and This tribunal has authority to adjudicate upon the claim of the bank and interest under the provision of Section 17(7) read with Section 19 (20) and 19(25) of Recovery of Debts and Bankruptcy Act. It has further been submitted that applicant has deposited Rs.344.06 lacs from 26.04.2016 till date and respondent bank be asked to file complete ledger of loan account. In the light of aforesaid facts, actions taken by respondent no.1 bank under SARFAESI Act deserved to be set aside and be quashed.

¶33

On the other hand, Ld. Counsel for the respondent bank has vehemently opposed the submission of the applicant and submit that applicant had filed SA no.181/2021 (now changed to TSA 157/2022) as mentioned in order dated 09.09.2021 prayed for restraining respondent no.1 and Court Receiver from taking physical possession of property in question and selling the same or taking any enforcement measure and declare that the action is void, illegal and unlawful and quash and pass any other orders / directions as deem fit and property in favour of

¶34

¶35

DRT-I, DELHI

¶36

SA No.439 of 2022 & TSA No.203 of 2023

¶37

applicant. It has further been submitted that vide order dated 12.04.2022, this Tribunal observed while deciding IA no.882/2022 that the applicant shown willingness to deposit Rs.50.00 lacs on or before 18.04.2022 without going into merit of the case and it was disclosed that the respondent bank had already auctioned the property on 08.04.2022 as per para 5 of the said order. It has further been submitted that as per para 7, applicant had earlier deposited a sum of Rs.85.00 lacs on the directions of Hon'ble Delhi High Court and accordingly this Tribunal permitted for deposit of Rs.50.00 lacs and consequently restrained Court Receiver from taking over the physical possession. It has further been submitted that Rs.50.00 lacs was ordered to be deposited without going into merit of the case and similarly Rs.85.00 lacs was accepted by respondent bank without prejudice to the rights and contentions and subject orders to be passed by the DRT. It has further been submitted that the respondent in reply to IA No.1023/22 dated 12.05.2022 categorically stated that the property has already been auctioned for Rs.400.50 lacs to respondent no.3 and Sale Certificate has already been issued and physical possession of property is to be delivered after handover the vacant and peaceful possession by the applicant. It has further been submitted that the respondent bank furnished the auction purchaser details and copy of Sale d

¶38

¶39

DRT-I, DELHI

¶40

SA No.439 of 2022 & TSA No.203 of 2023

¶41

Certificate dated 06.05.2022 through e-mail to counsel. It has further been submitted that applicant moved fresh SA registered as SA No.179/2022 before DRT-II Delhi without disclosing the pendency of SA 181/2021 since dismissed by Ld. DRT-II Delhi vide order on 25.07.2022. It has further been submitted that applicant filed review petition which was allowed on 16.08.2022 and the applicant filed this application. It has further been submitted that this SA is prima facie time barred having filed beyond the period of limitation. It has further been submitted that respondent bank issued Sale Notice on 21.03.2022, published in newspaper on 21.03.2022. It has further been submitted that cause of action for filing SA arise on 08.04.2022, whereas SA was filed on 06.07.2022 which much beyond the period of limitation and also changing jurisdiction mischievously and no explanation has come forth for filing fresh SA instead of moving an IA for impleadment of auction purchaser in previous SA 181/2021. It has further been submitted that no summons/notice was served upon respondent bank in SA no.439/2022 which was filed on 03.09.2022 and listed on 08.09.2022, 13.08.2022, 07.12.2022 and on 31.01.2023 and the case was taken up along with TSA No.203/2023 and were fixed for completion of pleading before the Ld. Registrar. It has further been submitted that applicant has not filed rejoinder/evidence even after lapse of approx. one

54-

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶46

year and is in unauthorized occupation/ possession of property in question and enjoying which was sold on 08.04.2022. It has further been submitted that applicant has raised objection to sale of property, objecting Non-Compliance of Rule 8 (6) and (7) of Security Interest (Enforcement) Rules 2002 and respondent bank filed relevant documents with list of documents in response. It has further been submitted that Sale Proclamation of property in question was issued giving 30 days period on 05.09.2021 which failed and again proclamation notice of 15 days dated 21.03.2022 was issued fixing date of auction as 08.04.2022 and there is no other ground challenging sale/auction. It has further been submitted that prayer clause is false, frivolous, hence, merits no consideration and sufficient ground for getting any relief and also not entitled for any relief therefore, securitization application which is an extension of previously instituted SA no.181/2021(now TSA No.203/23) is without any merits and liable to be dismissed and applicant is not entitled for any relief.

¶47

The Respondent No.3 (being auction purchaser) submitted that applicant in collusion with her husband i.e. Narender Kumar Jain and respondent no.2 pre-planned conspiracy to dupe public money, played fraud with the court. It has further been submitted that loan agreement dated

¶48

¶49

DRT-I, DELHI

¶50

SA No.439 of 2022 & TSA No.203 of 2023

¶51

30.06.2018 had been executed between respondent bank, respondent no.2 representing that property has been purchased from Sh.Narender Kumar Jain i.e. husband of applicant vide Agreement to Sell dated 24.01.2015 and complete the purchase, loan facility of Rs.417.00 lacs was sanctioned. It has further been submitted that Agreement to Sell between Narender Kumar Jain & respondent no.2 is dated 24.01.2015 and family members including applicant are completely aware and expected to know that 30.06.2015 secured loan to pay Sh.Narender Kumar Jain and thus applicant could not have executed agreement. It has further been submitted that Narender Kumar Jain sold the property to respondent no.2 on 30.06.2015, if that so, how on 30.06.2015 itself sold to applicant. It has further been submitted that deductions from ATS corroborate the sale transaction between applicant and respondent no.2 as a sham and bogus transaction as stamp paper attached with ATS is of 06.10.2015. It has further been submitted that sale consideration of Rs.5.90 crore and advance amount of Rs.265.00 lacs with no proof and physical possession prior to ATS given which was with applicant prior to ATS. It has further been submitted that Narender Kumar Jain only executed unregistered ATS dated 24.01.2015 with respondent no.2 for availing loan and it has been averred that respondent no.2 purchased the property vide registered

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶56

sale deed dated 30.06.2015 and applicant is not aware that ATS dated 24.01.2015 has been executed which is quite untenable shows malafides and pre-planned conspiracy of applicant, her husband and respondent no.2 to dupe the bank. It has further been submitted that applicant does not deserve for any relief as has no locus stand' in the case and cannot be construed as an aggrieved person to raise an action under SARFAESI Act. It has further been submitted that the respondent bank vide auction of property in question was conducted on 08.04.2022 and the defendant no.2 was declared successful bidder for Rs.400.50 lacs which was confirmed by respondent bank through email dated 11.04.2022 seeking 25% of bid amount & remaining amount on or before 26.04.2022, which has been duly paid. It has further been submitted that respondent bank issued Sale Certificate under rule 9 (6) in favour respondent no.3 and handed over symbolic possession of property, thus, sale qua property stood confirmed. It has further been submitted that respondent bank assured that application u/s 14 for appointment of Court Receiver has been moved and bank will soon take over the physical possession of the property and will hand over the same. It has further been submitted that respondent no.3 repeatedly requested the bank for physical possession but ignored and conveyed that SA filed by applicant is pending adjudication and stalled owing to order

¶57

¶58

DRT-I, DELHI

¶59

SA No.439 of 2022 & TSA No.203 of 2023

¶60

dated 12.04.2022 in SA no.181/2021, titled Santosh Jain Vs PNB. It has further been submitted that respondent bank be directed to furnished requisite proof in respect of auction notice affixed on conspicuous part of the property. It has further been submitted that without prejudice, any action qua non disclosure of pending litigation causing encumbrance over the property is the sole prerogative of the Auction Purchaser and applicant is no capacity is entitled to agitate this ground in its favour, thus, after issuance of Sale Certificate and Sale Consideration received, the sale stood confirmed in favour of auction purchaser. Hence, the securitisation application be dismissed with costs and direct the bank to immediately take over the physical possession of the property and handover the same to defendant no.3.

¶61

TSA No.203 of 2023

¶62

The present appeal has been filed by the S. Applicants on 19.09.2019 under Section 17 of SARFAESI Act 2002 read with Rule (8) of Security Interest (Enforcement) Rules 2002 r/w 19(25) of Recovery of Debts and Bankruptcy Act 1993 and Section 65(A) Transfer of Property Act to restrain the Respondent no.1 and Court Receiver notice dated 28.10.2021 from taking physical possession of property no.R-29, Inder Puri, New Delhi admeasuring 200 sqa.yds. consisting Ground Floor,

¶63

¶64

DRT-I, DELHI SA No.439 of 2022 & TSA No.203 of 2023

¶65

First Floor and Second Floor (hereinafter be called as property in question) and selling or taking any enforcement measures and declare the action taken as void, illegal and unlawful and quash the same.

¶66

It has been submitted on behalf of the applicant that the applicant is in actual possession of property & residing in the property in question since 2015 and neither the borrower nor the guarantor in the matter. It has further been submitted that it has come to the knowledge of applicant that respondent no.1 sanctioned home loan facility for Rs.4.17 crores in favour of respondent no.2 on 30.06.2015 and exclusive equitable mortgage was to be created over property in question. It has further been submitted that respondent no.2 executed Agreement to Sell for total sale consideration of Rs.5.90 crores, out of Rs.2.65 crore as advance money received by first party through RTGS and shall execute Sale Deed on receipt of Rs.3.25 crores. It has further been submitted that respondent no.2 assured that property is free from all kinds of encumbrances and obtained actual physical vacant possession of entire property payment of Rs.2.65 crores. It has further been submitted that applicant has been paying balance amount of Rs.3.25 crores on monthly basis in loan account of respondent no.2 with respondent no.1 bank and has paid more sd

¶67

¶68

DRT-I, DELHI

¶69

SA No.439 of 2022 & TSA No.203 of 2023

¶70

than Rs.2.00 crores to the respondent bank but due to covid19 outbreak and lockdown, failed to make payment since December 2020. It has further been submitted that as per Agreement to Sell, respondent no.2 was to transfer all rights, title and interest after receiving total consideration of Rs.5.90 crore and also agreed that no party shall enter into any agreement of sale of property or part thereof and not create any charge, lien without consent of applicant. It has further been submitted that earlier applicant was depositing EMI electronically but making cash payments to respondent no.2 which was not deposited in loan account resulting account was declared NPA by respondent bank and bank officials pasted possession notice on 05.09.2019. It has further been submitted that due to SARFAESI proceedings, the applicant would jeopardise and would uproot from her residence. It has further been submitted that applicant intends to regularise or settle the account on behalf respondent no.2 and sought reasonable time to make balance payment. It has further been submitted that respondent bank sanctioned the loan and allegedly created securities without verifying factual position of securities and its owners. It has further been submitted that applicant shall suffer irreparable harm and injury if no relief is granted as applicant has not availed the loan facilities nor guaranteed and seeks interim measures of protection against the notice issued

¶71

¶72

DRT-I, DELHI

¶73

SA No.439 of 2022 & TSA No.203 of 2023

¶74

by the Receiver. It has further been submitted that applicant represented for OTS settlement towards legitimate demand to respondent bank of loan account of respOndent no.2 as applicant is in physical possession of property. The applicant made representations on 09.07.2021 and 07.08.2021 and also visited the respondent bank on 30.08.2021 to explore the possibilities of settlement and offered cheque of Rs.35.00 lacs against legitimate dues but was not considered despite repeated requests. It has further been submitted that respondent bank in malafides intention to sale the property, sent notice u/s 13 (4) read with Rule 8 (6) in contravention of law decided by Hon'ble Supreme Court in various cases. It has further been submitted that applicant moved application for taking action against bank officials for making perjury with the court as bank concealed the pendency of this pending securitisation application by filing application before Ld.CMM, who in turn issued notices for taking action against concerned officer for perjury and concealing material facts. It has further been submitted that loan account once declared as NPA is not always an NPA if borrower paid overdue principal and interest thereon as per Master Circular No. DBOD No.BP.BC.9/21.04.048/2014-15 dated 01.07.2014 and borrower can get his account out of NPA after paying arrears of interest and principal. It has further been submitted that

¶75

¶76

DRT-I, DELHI

¶77

SA No.439 of 2022 & TSA No.203 of 2023

¶78

respondent bank put up the property for auction at reserve price at Rs.4.00 crores only and application filed Interim Application praying to set aside the auction which was never adjudicated. It has further been submitted that applicant filed Writ Petition before Hon'ble High Court challenging the possession notice dated 28.10.2021 which was disposed of on 16.11.2021 directing the applicant to pay Rs.85.00 lacs by 18.01.2022 which was deposited by the applicant and also directed Court Receiver for deferment of possession. It has further been submitted that applicant has deposited Rs.177.50 lacs against NPA amount of Rs.3,42,86,616.20 after 31.03.2019 and as per demand notice dated 05.04.2019, no future interest has been demanded. It has further been submitted that Court Receiver again issued physical possession notice dated 30.03.2022 against which IA no.883/2022 has been filed against valuation of property which is more than Rs.5 crores and alleged book debt is Rs.3.56 crores and applicant already paid more than Rs.2.00 crore and bonafide willing to settle the loan account. It has further been submitted that applicant aggrieved by illegal actions of respondent bank knowing full well that applicant has honoured all orders of the Courts and Hon'ble High Court, has been paying EMIs since the first day while respondent No.2 is absconding and auctioned the property in question without affixing auction notice. It has

¶79

¶80

DRT-I, DELHI

¶81

SA No.439 of 2022 & TSA No.203 of 2023

¶82

further been submitted that applicant sought five months' time for payment of adjudicated amount claimed in demand notice dated 05.04.2019 with future interest @6% interest w.e.f. 06.04.2019 in loan account of respondent no.2 and maintain status quo qua the auction conducted by respondent bank. It has further been submitted that the in terms of Section 53A of Transfer of Property Act 1882, respondent no.1 is debarred from taking any action against the applicant. It has further been submitted that in 2015, bank official visited the property and then applicant learn that respondent no.2 availed from against the property in question and being bonafide purchaser, the applicant started paying EMIs to safe the property. It has further been submitted that the applicant paid Rs.2.65 crore to respondent no.2 on 30.06.2015 but remaining amount of Rs.3.25 crores could not be paid as respondent no.2 is absconding by playing fraud with both the applicant and respondent bank and is well within the knowledge of respondent bank. Accordingly, entire actions taken by respondent no.1 bank under SARFAESI Act, 2002 deserved to be set aside and be quashed.

¶83

On the other hand, Ld. Counsel for the respondent no.1 bank has vehemently opposed the submission of the applicant and submit that applicant in collusion with respondent no.2 had

sce-

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶88

played fraud upon respondent bank and respondent no.2 availed Housing Loan of Rs.417.00 lacs @10.00% interest per annum for purchase of property in question on 27.06.2015. It has further been submitted that the respondent no.2 declared himself to be owner of property in question and entered into Agreement to Sell with applicant on 30.06.2015 on Stamp Paper of Rs.100/- dated 06.10.2015 which is sham document and sham transaction in the Agreement. It has further been submitted that the respondent no.2 had purchased property in question from Sh. Narender Kumar Jain for Rs.590.00 lacs vide Sale Deed dated 01.07.2015 registered with Sub Registrar IX, New Delhi on 09.07.2015. It has further been submitted that the applicant paid Rs.265 lacs through RTGS to respondent no.2 and remaining amount was to be paid at the time of registration of sale deed but date of final payment is conspicuously missing in Agreement to Sell. It has further been submitted that respondent no.2 created mortgage as security of title deed dated 01.07.2015 vide Reg.No.7395, Book No.1, Vol. No.8344 on page 103 to 112 on 09.07.2015 executed before Sub-Registrar IX, New Delhi. It has further been submitted that respondent no.2 not adhered to financial discipline and failed to deliver financial commitments, consequently, declared as NPA on 31.03.2019. It has further been submitted that respondent bank issued notice u/s 13 (2)

¶89

¶90

DRT-I, DELHI

¶91

SA No.439 of 2022 & TSA No.203 of 2023

¶92

on 05.04.2019 for Rs.3,42,86,616.20, took symbolic possession on 08.07.2019 and filed application u/s 14 before Ld. ACMM who passed order dated 05.08.2019 and appointed Court Receiver. It has further been submitted that applicant was witness in the title documents deposited by respondent no.2 with respondent bank and had knowledge about loan sanctioned. It has further been submitted that the applicant has been in unauthorized and illegal possession of mortgaged property. It has further been submitted that applicant is not entitled for any interim measures against the Receiver's notice and if granted, grave, serious irreparable loss would be caused to respondent bank as large amount of public money is at stake. It has further been submitted that the Ld.CMM (South), Patiala House Court, Delhi had taken into account the loan documents and title documents of property in question. It has further been submitted that the applicant was already in possession of property in question as on date of Agreement to Sell and deliberately concealed that her husband Sh.Narender Kumar Jain was the owner of suit property and respondent no.2 was not even the owner of the property as on 30.06.2015 and put forward concocted story. It has further been submitted that the property has been auctioned to respondent no.3 for Rs.400.50 lacs on 08.04.2022 and Certificate of Sale has already been issued. It has further been submitted that

¶93

¶94

DRT-I, DELHI

¶95

SA No.439 of 2022 & TSA No.203 of 2023

¶96

applicant is required to handover peaceful and vacant possession of the property in question to respondent bank. It has further been submitted that in order to get restrain order against Court Receiver, applicant shown her willingness to deposit Rs.50.00 lacs as per order dated 12.04.2022. It has further been submitted that applicant approached Hon'ble High Court in November 2021 due to non-functioning of DRTs and for getting deferment for taking possession of property had offered to deposit certain amounts which was allowed by Hon'ble High Court vide order dated 16.11.2021 that deposits will be without prejudice to the rights and contentions of parties and subject to order by Hon'ble DRT. It has further been submitted that respondent bank has taken all legal action under SARFAESI before putting the property to auction. Accordingly, this securitization application including I.As are liable to be dismissed and applicant is not entitled for any relief.

¶97

The Respondent No.3 (being auction purchaser) filed I.A.No.1547/2022 for impleading which was allowed vide order dated 03.06.2022 submitted that SA filed by applicant for restraining respondent no.1 and Court Receiver from taking physical possession of property in question. It has further been submitted that Respondent bank vide publication dated 21.03.2022 put the property for auction and respondent no.3

¶98

¶99

SA No.439 of 2022 & TSA No.203 of 2023

¶100

DRT-I, DELHI

¶101

deposited 10% of reserve price as EMD and on 08.04.2022 was declared successful auction purchaser for Rs.400.50 lacs as highest bidder. It has further been submitted that respondent no.3 deposited rest consideration amount of Rs.3,00,37,500/as demanded through official confirmatory mail. It has further been submitted that respondent bank issued Sale Certificate on 06.05.2022 duly acknowledged the sale price and handover symbolic possession of property assuring that Ld. CMM has passed order for appointing local commissioner for physical possession of the property and will soon handover physical possession. It has further been submitted that the respondent no.3 reminded respondent bank but ignored on one pretext or other ignored the legible request and conveyed that SA is pending adjudication. It has further been submitted that the respondent no.3 fully complied with the terms of auction and paid full consideration amount of Rs.4.00 crore which is hard earned money but owing to complacent nature and dilatory actics of Securitization Applicant, unable for a ride and uffering huge irreparable loss. It has further been submitted hat Sale stands confirmed as it is not challenged by applicant nd request to dismiss the application of applicant and direct he bank to take physical possession and for executing sale eed in favour of applicant. It has further been submitted that t here is pre-planned conspiracy between applicant, her

5,/

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶106

husband and respondent no.2 as defendant no.2 represented that property purchased from Shri Narender Kumar Jain, husband of applicant vide Agreement to Sell dated 24.01.2015 and complete the purchase, availed loan of Rs.417 lacs which was sanctioned. It has further been submitted that how Narender Kumar Jain sold the property to defendant no.2, if that be so how on 30.06.2015 itself sold to applicant. It has further been submitted that deductions from ATS corroborate the sale transaction between applicant and respondent no.2 as a sham and bogus transaction and advance amount of Rs.265.00 lacs with no proof and physical possession prior to ATS. It has further been submitted that Narender Kumar Jain only executed unregistered ATS dated 24.01.2015 with respondent no.2 basis for loan availed by bank. It has further been submitted that applicant does not deserve for any relief as has no locus standi in the case and cannot be construed as an aggrieved person to raise an action under Sarfaesi Act. It has further been submitted that respondent bank did not disclose pending litigation and orders of Hon'ble High Court and his Hon'ble Tribunal to respondent no.3 and no such detail in uction notice as to encumbrance in taking over possession of roperty in question which is sole prerogative of respondent o.3 and applicant in no capacity is entitled to agitate this round in her favour and hence, the securitisation application

¶107

5d -

¶108

25 DRT-I, DELHI SA No.439 of 2022 & TSA No.203 of 2023 be dismissed with costs and direct the bank to handover physical possession of the property.

¶109

Heard the rival contentions of the parties and perused the records thoroughly.

¶110

In the present matter, the borrower has availed the loan facilities from the respondent bank against the mortgage of the property in question. Apparently, there is default on the part of the borrower/mortgagor/guarantor in paying the dues of the respondent bank and the borrower/mortgagor/guarantor have failed to pay the dues of the respondent bank and thereafter the account was declared as NPA. It has been argued on behalf of the applicant that the present securitization applications are not barred by limitation because the order dated 12.04.2022 records that the respondent Bank had submitted that it has already auctioned the property in question on 08.04.2022 and therefore, the period of limitation would start running from 12.04.2022. It has further been argued that the respondent No.2 bank gave details of the auction purchaser and sale certificate to the counsel for the applicant vide email dated 10.06.2022 and the SA challenging auction i.e. SA No.439/2022 was filed on 06.07.2022 well within the period of limitation as stipulated under the Act and as such the limitation for filing the

¶111

¶112

DRT-I, DELHI

¶113

SA No.439 of 2022 & TSA No.203 of 2023

¶114

SA would start running from 10.06.2022 when in compliance of the order dated 03.06.2022 details of auction purchaser and sale certificate was given to the Applicant without which the Applicant could not have laid a substantive challenge to the auction conducted on 08.04.2022 and therefore, SA No. 439/2022 challenging auction is well within a period of limitation filed within 45 days from 10.06.2022 when details of auction purchaser and sale certificate was given to the Applicant in compliance of the order dated 03.06.2022. It has further been argued that the Housing Loan to Rahul Shah (Respondent No.2) was disbursed in June, 2015 and after disbursal and prior to declaration of loan account as NPA on 31.03.2019 (roughly for about 4 years), only the Applicant and her husband Mr. Narender Jain has been paying the EMIs i.e. Rs.1,66,56,000/which has been duly adjusted by the Respondent No.2 in the loan account of Rahul Shah ('the borrower') and it is pertinent to mention here that if the Applicant was not paying the EMIs, the loan account would have been declared as NPA by the Respondent No.2 Bank right after disbursal of loan to Rahul Shah as he did not pay any EMI to the Bank and therefore, today the Respondent No.2 after adjusting the amount paid by the Applicant and her husband in the loan account cannot plead and/or argue that the Applicant is a complete stranger to the transaction and has no locus to challenge the measures of the

¶115

¶116

DRT-I, DELHI

¶117

SA No.439 of 2022 & TSA No.203 of 2023

¶118

Bank and even Section (17) (1) of the SARFAESI Act, 2002 categorically states that any person (including the borrower) aggrieved by the measures and in the present case the Applicant is an aggrieved person being in possession of the property in question even prior to the sanction of loan to Rahul Shah. It has further been argued that while deciding the Application under Section (17) of the Act, this Tribunal have only to adjudicate that the measures initiated by the Bank under Section 14 of the Act or Rule (8) of the Security Interest (Enforcement) Rules, 2002 are in accordance to the provisions of the Act and the Rules and there is no infraction of the mandatory provisions and not decide whether the agreement to sell confers any legal right as has been canvassed by the Respondent Nos. 2 and 3 and the Applicant has locus to file the present SA being an aggrieved party under Section 17 of the Act who is in possession of the property in question even prior to the sanction of loan to Rahul Shah and who has been duly recognized by the Respondent No. 2 bank by not just accepting the payment but also giving due credit in the loan account of Rahul Shah which is evident from the Statement of account filed by Respondent No. 2 bank on 18.10.2024. It has further been argued that the sale deed could not be executed by the applicant as Rahul Shah has been absconding after the disbursal of the loan amount which fact has also been admitted cd

¶119

¶120

DRT-I, DELHI

¶121

SA No.439 of 2022 & TSA No.203 of 2023

¶122

by the counsel for the Respondent No.2 during arguments and therefore, the argument of the Respondent Nos. 2 and 3 that sale deed has not been executed till date holds no good. It has further been argued that the Respondent No. 2 Bank could not have issued auction notice dated 21.03.2022 as in terms of the Hon'ble Delhi High Court order dated 16.11.2021 in WP No. 12882/2021 the High Court had directed the applicant to deposit overdue amount of Rs.85.00 Lacs by 17.01.2022 which admittedly stood paid by the Applicant and when the overdue amount was paid by the Applicant and the receiver appointed was directed to defer possession by the Hon'ble Delhi High Court, there was no occasion for Respondent No.2 Bank to issue auction notice dated 21.03.2022 and it is settled proposition of law that once an account is classified as NPA it is not always an NPA and if arrears of interest and principal are paid, the account will be classified as standard.-It has further been argued that it is an admitted fact that the sale notice dated 21.03.2022 [Page 26 of the reply of Bank to SA filed on 16.05.2023] was published in Financial Express (English edition) and Jansatta (Hindi edition) on 21.03.2022 i.e. the date of sale notice and it is settled proposition of law that the sale notice cannot be published on the same date as on the date of issuance of sale notice and in case of 1st auction a clear thirty days' notice period has to be maintained between issuance of sale notice sd

¶123

¶124

SA No.439 of 2022 & TSA No.203 of 2023

¶125

DRT-I, DELHI

¶126

under Rule 8 (6) of the Rules of 2002 and publication of sale notice under Rule 9 (1) and for subsequent auctions fifteen days' notice period has to be maintained between issuance of sale notice under Rule 8 (6) of the Rules of 2002 and publication of sale notice under Rule 9 (1). It has further been argued that in terms of Rule 8 (5) of the Rules, 2002, before effecting sale of the immovable property referred to in sub-rule (1) of Rule (9), the authorized officer shall obtain valuation of the property from the approved valuer and it is settled proposition of law that in terms of Rule 8 (5) the step of getting the valuation done by the Banks/ Financial Institutions have to be done 'immediately before the proposed sale. It has further been argued that in the present case, the Respondent No.2 Bank neither responded to the said issue nor placed the valuation report on record which reaffirms the fact that the valuation has not been done by the Respondent No.2 in close proximity to the date of sale as the property has been sold for a song and therefore, on this ground also the auction dated 08.04.2022 needs to be set aside. It has further been argued that it is an admitted position that the pendency of TSA No.203 of 2023 and also the interim order restraining the court receiver from taking possession of the property in question has not been disclosed in the said sale notice and the said fact has also been admitted by Defendant No.3 in its reply to the SA filed on 02.05.2023 at

¶127

¶128

DRT-I, DELHI

¶129

SA No.439 of 2022 & TSA No.203 of 2023

¶130

Para IV Page 7 and admittedly, the Bank did not disclose the same to auction purchaser. It has further been argued that neither in the auction notice any such details as to the nonencumbrance in taking over of the possession is mentioned and any action qua disclosure of pending litigation causing encumbrance over the property is the sole prerogative of the auction purchaser and the applicant is no capacity is entitled to agitate this ground in its favour. It has further been argued that to sum up, the applicant is an aggrieved party under Section (17) of the Act who is in possession of the property in question even prior to the sanction of loan to Rahul Shah (borrower) and has paid a sum of Rs.1,66,56,000/- before declaration of loan account as NPA on 31.03.2019 which has been duly adjusted by the Respondent No.2 in the loan account of Rahul Shah and a sum of Rs.1,77,50,000/- after declaration of loan as NPA [in total has paid a sum of Rs.3,44,06,000/- to the Respondent No.2 Bank] and, therefore, has locus to file the present SA which is within the period of limitation filed within 45 days from 10.06.2022 when details of auction purchaser and sale certificate was given to the Applicant in compliance of the order dated 03.06.2022. It has further been argued that the Respondent No.2 while conducting auction of the property has violated mandatory provisions of the Act and Rules especially Rule 8 (5), Rule 8 (6) and Rule 9 (1) of the Rules, 2002 as Scl

¶131

¶132

DRT-I, DELHI

¶133

SA No.439 of 2022 & TSA No.203 of 2023

¶134

elaborated hereinabove and therefore, the auction dated 08.04.2022 needs to be set aside and the applicant be allowed to pay the balance outstanding amount if any in the loan account or in the alternative this Tribunal may be pleased to direct the Respondent No.1 Bank to refund an amount of Rs.3,44,06,000/- deposited by the applicant [i.e. Rs.1,66,56,000 before issuance of notice U/s 13 (2) of SARFAESI Act, 2002 and Rs.1,77,50,000/- after declaration of loan account as NPA in compliance of order of Hon'ble Delhi High Court and DRT] against the loan account in question alongwith interest from 26.04.2016 till 12.04 2022.

¶135

On the other hand, it has been argued on behalf of the respondent bank that the applicant in collusion with respondent no.2 had played fraud upon respondent bank and respondent no.2 availed Housing Loan of Rs.417.00 lacs @10.00% interest per annum for purchase of property in question on 27.06.2015. It has further been argued that the respondent no.2 declared himself to be owner of property in question and entered into Agreement to Sell with applicant on 30.06.2015 on Stamp Paper of Rs.100/- dated 06.10.2015 which is sham document and sham transaction in the Agreement. It has further been argued that the respondent no.2 had purchased property in question from Sh. Narender Kumar Jain for Rs.590.00 lacs vide Sale Deed

¶136

¶137

DRT-I, DELHI

¶138

SA No.439 of 2022 & TSA No.203 of 2023

¶139

dated 01.07.2015 and the applicant paid Rs.265 lacs through RTGS to respondent no.2 and remaining amount was to be paid at the time of registration of sale deed but date of final payment is conspicuously missing in Agreement to Sell. It has further been argued that respondent no.2 after creating mortgage as security did not adhere to financial discipline and failed to deliver financial commitments, consequently, declared as NPA on 31.03.2019 and accordingly, the respondent bank issued notice u/s 13 (2) on 05.04.2019 for Rs.3,42,86,616.20, took symbolic possession on 08.07.2019 and filed application u/s 14 before Ld. ACMM who passed order dated 05.08.2019 and appointed Court Receiver. It has further been argued that the applicant was witness in the title documents deposited by respondent no.2 with respondent bank and had knowledge about loan sanctioned and the applicant has been in unauthorized and illegal possession of mortgaged property. It has further been submitted that the applicant was already in possession of property in question as on date of Agreement to Sell and deliberately concealed that her husband Sh.Narender Kumar Jain was the owner of suit property and respondent no.2 was not even the owner of the property as on 30.06.2015 and put forward concocted story. It has further been argued that the property has been auctioned to respondent no.3 for Rs.400.50 lacs on 08.04.2022 and Certificate of Sale has already

¶140

¶141

DRT-I, DELHI

¶142

SA No.439 of 2022 & TSA No.203 of 2023

¶143

been issued and the applicant is required to handover peaceful and vacant possession of the property in question to respondent bank. It has further been argued that in order to get restrain order against Court Receiver, applicant shown her willingness to deposit Rs.50.00 lacs as per order dated 12.04.2022 and the applicant approached Hon'ble High Court of Delhi Oin November 2021 due to non-functioning of DRTs and for getting deferment for taking possession of property had offered to deposit certain amounts which was allowed by Hon'ble High Court vide order dated 16.11.2021 that deposits will be without prejudice to the rights and contentions of parties and subject to order by Hon'ble DRT. It has further been argued that the respondent bank has taken all legal action under SARFAESI before putting the property to auction. Accordingly, it has been prayed for dismissal of this SA.

¶144

It has been argued on behalf of the respondent auction purchaser that the Respondent No.3 namely Gagandeep Mahindru is the successful auction purchaser (in SA/181/2021 e-numbered as TSA/2023/2023 and SA/439/2022) of the ubject Property bearing House No.R-29, Block-R, Inderpuri, ew Delhi-110012 admeasuring 200 sq. yards consisting of the round floor, first floor and second floor with roof ["the subject roperty"]. It has further been submitted that the Respondent

¶145

¶146

DRT-I, DELHI

¶147

SA No.439 of 2022 & TSA No.203 of 2023

¶148

No.1 Bank vide a public sale notice dated 21.03.2022 called for the auction of the subject Property and on 08.04.2022 the Auction was conducted and accordingly, the Auction Purchaser was declared as the successful auction purchaser (highest bidder), amount being Rs.4,00,50,000/- and in lieu of the same, the Respondent No.1 Bank on 06.05.2022 issued a Sale certificate under Rule (6) of the SARFAESI Rules in the favour of the Respondent No.3 and vide the Sale certificate, the Respondent No.1 Bank acknowledged the receipt of sale price being Rs.4,00,50,000/- and handed over the symbolic possession to the Respondent No.3 and thus the sale qua the subject Property stood confirmed in favour of the Auction Purchaser/Respondent No.3. It has further been argued that the Applicant has not only come with unclean hands but in collusion with her husband i.e., Narender Kumar Jain and Rahul Shah, and has duped the Respondent No.1 Bank with an evil intention to usurp the money and the Applicant has played fraud with this Tribunal and in light of the same, both the Securitization Applications bearing TSA/203/2023 and SA/439/2022 at the outset deserves to be dismissed with heavy costs. It has further been argued that a loan agreement dated 30.06.2015 had been executed between the Respondent No.1 Bank and the Respondent No.2 and vide the loan agreement, the Respondent No.2 represented that he has purchased the

ScJ

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶153

subject Property from its owner namely Mr. Narender Kumar Jain vide Agreement to Sell dated 24.01.2015 and in order to complete the purchase, he intends to avail the loan facility for Rs.4.17 crores from the Respondent No.1 Bank. It has further been argued that the Applicant has set up a case of alleged ownership in the present matter on the basis of forged and fabricated documents to claim purchase of the subject Property from Rahul Shah and in lieu of the same she relies upon the Agreement to Sell dated 30.06.2015 purportedly executed between Santosh Jain and Rahul Shah. It has further been argued that interesting deductions from the said ATS corroborates that the sale transaction between Santosh Jain and Rahul Shah is a sham and a bogus transaction as the ATS concerning the subject property on the one hand shows the date of execution as 30.06.2015, and on the other hand, the stamp paper of Rs.100 attached with the said ATS is dated 06.10.2015, which shows it to be collusive and fraudulent. It has further been argued that the sale consideration shown in the ATS is of Rs.5.9 crores and Rs.2.65 crores is shown to be received as advance with no proof regarding the same and urther, surprisingly the ATS mentions that the physical possession had been given to the Applicant i.e. Santosh Jain nd it is interesting to note that the physical possession even rior to the execution of the ATS was with Santosh Jain and

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶158

admittedly, the forged and fabricated ATS dated 30.06.2015 mentions that Narender Jain was the last recorded owner of the subject Property and is the husband of Santosh Jain. It has further been argued that Narender Jain had executed an unregistered ATS dated 24.01.2015 with Rahul Shah basis which the loan had been availed and was advanced by the Bank, however, in the said ATS, it has been averred that Rahul Shah has purchased the property vide registered Sale Deed dated 01.07.2015. It has further been submitted that the Applicant who is the wife of last recorded owner of the subject Property i.e., Narender Jain was not aware of the registered Sale Deed executed between her husband and Rahul Shah, however, it is noteworthy that said false averment of the Applicant gets countered by the perusal of the registered Sale Deed as she herself is the signing witness to the registered Sale Deed dated 01.07.2015. It has further been argued that the Procedure as envisaged in the Rule 8 (6) of the SARFAESI Rules is duly followed by the Respondent Bank i.e., serving, publication and affixation of sale notice without Prejudice, pplicant's averments qua non-service of Sale Notice and other iolations of Rule 8 (6) are untenable as service of the notice(s) re only to be made to the borrowers/mortgagors/ guarantors nd the Applicant is the third-party to the Securitization pplications who very cleverly is trying to step into the shoes of

¶159

¶160

DRT-I, DELHI

¶161

SA No.439 of 2022 & TSA No.203 of 2023

¶162

the borrower, without having any locus. It has further been argued that admittedly, the Respondent No.1 did not disclose the pending litigation and Orders passed by the Hon'ble High Court of Delhi or this Hon'ble Tribunal qua the possession of the subject Property, to the Auction purchaser and neither in the Auction Notice any details regarding the encumbrance in taking the possession was mentioned and without prejudice, it is submitted that any action qua the non-disclosure of the pending litigation causing encumbrance over the subject Property is the sole prerogative of the Auction Purchaser and not of any thirdparty, the Applicant in no capacity is entitled to agitate this ground in its favour. It has further been argued that it is an admitted position on record that the fresh demand notice dated 15.06.2021 under Section 13 (2) has never been challenged by the Applicant till date and it is a well settled law that a decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be adjudicated and it is further noteworthy that the grant of relief not asked for and further, for which no prayer has been ever made cannot be granted, therefore, this Tribunal cannot grant a relief which has not been specifically prayed by the parties, hence, rendering the SA/181/2019 re-numbered as TSA/203/2023 as infructuous. It has further been argued that it is a settled law that a transfer of immovable property by way of sale can only

¶163

¶164

DRT-I, DELHI

¶165

SA No.439 of 2022 & TSA No.203 of 2023

¶166

be by a deed of conveyance (sale deed) and in the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred. It has further been argued that any contract of sale i.e., agreement to sell which is not a registered deed of conveyance i.e., deed of sale would fall short of the requirements of Sections 54 of the Transfer of Property Act and will not confer any title nor transfer any interest in an immovable property and the sale of immovable property can be made only by a registered instrument and merely executing a sham document does not create any interest or charge on an immovable property. It has further been argued that there is a clear admission by the Securitization Applicant regarding the admission of loan, mortgage and default and therefore, the Sale cannot be set aside unless fraud is proved. It has further been argued that the Applicant despite having no locus/right is seeking to challenge the procedural irregularities in the Auction conducted under the Security Enforcement Rules, 2002 and it is pertinent to note that the right to challenge procedural irregularities is exclusively vested in the Borrower under Section 13(8) of the SARFAESI Act, 2002 and this right is further reinforced by the reference made in Rule 8(6) of the Security Enforcement Rules, 2002. It has further been argued that the ight to challenge the procedural irregularities under Rule 8 of

¶167

¶168

DRT-I, DELHI

¶169

SA No.439 of 2022 & TSA No.203 of 2023

¶170

the Security Enforcement Rules, 2002 is available only to the Borrower, as the Rule 8 (1) specifically mentions that the possession notice shall be delivered to the Borrower and the Securitization Applicant herein has challenged the proceedings without any locus and further, once the publication of the Auction Notice has taken place and the sale certificate has been issued in favour of the Auction purchaser; it is the vested right of the Auction Purchaser upon the Property/ Secured Asset put to auction and in the present case, the sale of the subject Property has been duly confirmed in the name of the Auction Purchaser after complying with all the requisite legal mandates and therefore, the right of the Auction purchaser ought to be protected. It has further been argued that section 13 (8) of the SARFAESI Act, 2002 unequivocally demonstrates that the right of redemption if any, is only the prerogative of the borrower and an unrelated party, such as the Applicant herein has no right of redemption under the mandate of Section 13 (8) and Section 13 (8) of the SARFAESI Act, 2002 and Rule 8 (6) of the Security Enforcement Rules, 2002 clearly demonstrates that the right of redemption is only available to the Borrower and not to any other person/third-party, who on receiving the notice till the time of publication of the auction notice, can seek for the right of redemption. It has further been argued that the payments made by Santosh Jain, from the year 2016 till Dec

¶171

¶172

DRT-I, DELHI

¶173

SA No.439 of 2022 & TSA No.203 of 2023

¶174

2020 were purely voluntary in nature and they do not confer any contractual rights upon the Respondent No.1 Bank and the Respondent No.1 Bank at no point ever has acknowledged/recognized the Applicant as Borrower or coborrower, nor has it ever executed any formal document in this regard with the Applicant herein and therefore, the Securitization Applicant being a third-party, was never recognized as a Borrower by the Respondent No.1 Bank and in the absence of any contractual rights against the Respondent No.1 Bank, Santosh Jain cannot assert implied privity with the Respondent No.1 Bank solely on the basis of voluntary payments made by her.

¶175

Apparently, the present securitization application has been filed by the third-party applicant claiming to be the owner of the property in question on the basis of an agreement to sell dated 30.06.2015 and the respondents have raised the objection that the applicant has no locus to file the present securitization applications. Now, we have to see whether the

¶176

pplicant has any right to challenge the measures/actions of he respondent bank initiated under the SARFAESI Act and efore that we may go through the section 17 (1) of the ARFAESI Act, 2002, which is reproduced herein below:

¶177

¶178

DRT-I, DELHI

¶179

SA No.439 of 2022 & TSA No.203 of 2023

¶180

1Z Application against measures to recover secured debts(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his authorized officer under this Chapter, [may make an application along with such fees as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken.

¶181

Apparently, the present applicant is claiming to have interest in the property in question on the basis of an agreement to sell dated 30.06.2015 executed by the respondent no.2 in favor of the applicant and the applicant has deposited certain amount with the respondent bank and admittedly, the applicant is in possession of the property in question. Thus, as per the Section (17) (1) of the SARFAESI Act, 2002 the present applicant is aggrieved by the measures / actions taken under the SARFAESI Act, 2002 qua the property in question and accordingly, the present securitization applications are maintainable before this Tribunal. Though, the issue whether the applicant is having valid, legal right over the property in question is to be decided at the later stage.

¶182

The present securitization applicant has raised the bjection that the respondent bank has illegally auctioned the roperty in question without following the provisions of the ARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 002. However, it has been argued on behalf of the respondent r^{ank that the respondent bank has auctioned the property in}

¶183

5 cl

¶184

42 SA No.439 of 2022 & TSA No.203 of 2023

¶185

DRT-I, DELHI

¶186

question as per the SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002. That since the present securitization applicant has raised the said issue, therefore, the same is being decided by this Tribunal.

¶187

On perusal of the records including reply of the respondent bank it appears that the respondent bank has issued the sale notice dated 21.03.2022 qua the property in question and the respondent bank has published the said sale notice dated 21.03.2022 on the same day i.e. 21.03.2022, which is not feasible and the same is also bad in law. Even otherwise, as per the postal receipt, the said sale notice dated 21.03.2022 was dispatched on 23.03.2021 i.e. after the publication of the said sale notice.

¶188

Further, on perusal of the records, it appears that as per the sale notice dated 21.03.2022 (annexed at page no.16 of the reply), the property in question is a leasehold property, however, the said fact of leasehold is not mentioned in the sale notice dated 21.03.2022 published in the newspapers meaning thereby there is non-compliance of Rule 8 (7) (a) of the Security Interest (Enforcement) Rules, 2002 on the part of the respondent bank. Further, on perusal of the records it appears that the respondent bank has also failed to mention the details of encumbrance about the pendency of the present

¶189

¶190

SA No.439 of 2022 & TSA No.203 of 2023

¶191

DRT-I, DELHI

¶192

securitization application in the said sale notice dated 21.03.2022 and thus the respondent bank has failed to comply with Rule 8 (7) (a) of the Security Interest (Enforcement) Rules, 2002, which is reproduced herein below:

¶193

Rule 8 (7) (a):

¶194

every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web- site of the secured creditor, which shall include;

¶195

(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

¶196

Further, on the perusal of the records, it appears that as per the photographs regarding affixation of notice (annexed at page no.20 and 21 of the reply filed by the respondent bank on 16.05.2023) the property in question is consisting of more than two storey buildings, but the floor-wise details has not been mentioned by the respondent bank in the sale notice dated 21.03.2022 and even the area of the said property in question is also not mentioned in the said sale notice dated 21.03.2022 and if the said details were mentioned in the said sale notice the respondent bank could have fetched more auctioning money, but the respondent bank has failed to do so and accordingly, the said sale notice dated. 21.03.2022 is bad in law and also against the judgment dated 20.09.2017 passed by the Hon'ble High Court of Delhi in the case of Rajesh Gems and

¶197

¶198

DRT-I, DELHI

¶199

SA No.439 of 2022 & TSA No.203 of 2023

¶200

Jewels Pvt. Ltd. Vs IOB vide which the Hon'ble High Court of

¶201

Delhi has held as under:

¶202

'°...We are of the opinion that it is extremely desirable for all Banks/Financial Institutions to be as transparent as possible when putting immovable properties, mortgaged with them/attached by Court order to auction, by furnishing all the relevant details that can make it an attractive proposition for bidders to participate in the auctions conducted by them. This would also be in the larger public interest inasmuch as the best possible price for the properties could be fetched when put to auction. We deem it appropriate to direct the respondent/Bank in the present proceedings to ensure that henceforth, the public notices issued for auctioning all immovable properties under the SARFAESI Act, contain all the relevant details and state whether the same is freehold or leasehold, give its measurement, location etc., including other relevant details for it to attract as many bids as is possible "

¶203

Further, during the pendency of the present proceedings,

¶204

the respondent bank has put the property in question by issuing the sale notice dated 21.03.2022 thereby fixing the auction on 08.04.2022 without obtaining the prior permission of this Tribunal, that too, when there was restrain order from this Tribunal as well as the order dated 16.11.2021 [W.P. (C) 12882/2021] of Hon'ble High Court of Delhi against the possession of the property in question and such conduct of the respondent bank is highly deprecated by this Tribunal.

¶205

Further, the Hon'ble Supreme Court of India in the judgment of Rajiv Subramaniyam reported in [2014] 5 SCC page 651 and referred para 14 of the judgment has held as under:

¶206

¶207

DRT-I, DELHI

¶208

SA No.439 of 2022 & TSA No.203 of 2023

¶209

„,As noticed above, this Court in Mathew Varghees case also examined Rules 8 and 9 of the Rules, 2002. On a detailed analysis of Ru/es 8 and 9(1), it has been held that any sale effected without complying with the same would be unconstitutional and, therefore, null and void."

¶210

Thus, the respondent bank has failed to auction the property in question as per the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 and therefore, the Auction Sale Notice dated 21.03.2021 vide which the property in question was auctioned sold on 08.04.2021 by the respondent bank is liable to be quashed and set aside.

¶211

Now, this Tribunal has to see whether the present securitization applicant has legal, valid and enforceable right and interest in the property in question. Apparently, the applicant Ms. Santosh Jain is claiming to have interest in the property in question on the basis of unregistered agreement to sell dated 30.06.2015 executed between the respondent no.2 (Mr. Rahul Shah) and the applicant (Ms. Santosh Jain). The Transfer of immovable property inter vivo is governed by the Transfer of Property Act, 1882.

¶212

Section 5 of the said TP Act defines "transfer of property" as follows: "5. 'Transfer of property' defined. —In the following sections 'transfer of property' means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself or to himself and one or more other living persons and 'to transfer property' is to perform such act."

¶213

The Transfer of Property Act envisages five different modes for transferring a property but for the purpose of the

¶214

¶215

DRT-I, DELHI

¶216

SA No.439 of 2022 & TSA No.203 of 2023

¶217

present case we are only concerned with one of the modes i.e., by way of "Sale" and the same is dealt under section 54 of the TP Act which defines "sale" and a "contract for sale" as follows:

¶218

"54. 'Sale' defined. — 'Sale' is a transfer of ownership in exchange for a price paid or promised or part-paid and part promised.

¶219

Sale how made. —Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

¶220

Contract for sale. —A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property"

¶221

That the aforesaid provision lays down a specific mode of execution of sale deed with respect to immovable property for concluding the sale of a property. In sale for an immovable property the value of which exceeds Rs. 100/-, the three requirements of law are that the transfer of property of sale must take place through a validly executed sale deed, i.e., it must be in writing, properly attested and registered. Unless the sale deed is in writing, attested and registered, the transaction cannot be construed as sale, or in other words, the property will not be transferred.

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶226

Apparently, there is a difference between a sale deed and an agreement for sale, or a contract for sale. A contract for sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. While a sale is a transfer of ownership; a contract for sale is merely a document creating a right to obtain another document, namely a registered sale deed to complete the transaction of sale of an immovable property. The Section 54 of Transfer of Property Act in its definition of sale does not include an agreement of sale and neither confers any proprietary rights in favour of the transferee nor by itself create any interest or charge in the property. If after entering into a contract for sale of property, the seller without any reasonable excuse avoids executing a sale deed, the buyer can proceed to file a suit for specific performance of the contract.

¶227

The issue of an agreement for sale has been dealt with by Hon'ble Supreme Court in the case of Suraj Lamp and Industries Private Limited (2) through Director v. State of Haryana and Another 3 and observed as under: •

¶228

"16. Section 54 of the TP Act makes it clear that a contract of sale, that is, an agreement of sale does not, of itself, create any interest in or charge on such property. This Court in Narandas Karsondas v. S.A. Kamtam [(1977) 3 SCC 247] observed:

¶229

"32. A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶234

Section 54 of the Transfer of Property Act. (See Ram Baran Prasad v. Ram Mohit Hazra [AIR 1967 SC 744]). The fiduciary character of the personal obligation created by a contract for sale is recognised in Section 3 of the Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein.

¶235

In India, the word 'transfer' is defined with reference to the word 'convey'. ... The word 'conveys' in Section 5 of the Transfer of Property Act is used in the wider sense of conveying ownership. ***

¶236

... that only on execution of conveyance, ownership passes from one party to another...."

¶237

In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [(2004) 8 SCC 614] this Court held:

¶238

"10. Protection provided under Section 53-A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed into service against a third party."

¶239

It is thus clear that a transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred.

¶240

Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of the TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the TP Act). According to the TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the TP Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject-matter."

¶241

In the present matter, undisputedly the applicant is

¶242

claiming that there is only an agreement to sell, and there is no

¶243

¶244

DRT-I, DELHI

¶245

SA No.439 of 2022 & TSA No.203 of 2023

¶246

sale deed executed in her favour by the respondent no.2 and as per the settled position of law, this document does not confer a valid title on the applicant as it is not a deed of conveyance as per Section 54 of the TP Act and at best, it only enables the applicant to seek for specific performance for the execution of a sale deed and does not create an interest or charge on the suit property. Accordingly, the present applicant is not having valid title, right and interest in the property in question.

¶247

Apart from the above, after creating the mortgage in favor of the respondent bank, the respondent no.2 did not have any legal right to execute an agreement to sell dated 30.06.2015 in favor of the applicant qua the property in question without the prior permission of the secured creditor / respondent bank. Further, on perusal of the records, it appears that the applicant is relying upon the unregistered agreement to sell dated 30.06.2015 and apparently, the said agreement was executed on 30.06.2015, whereas the stamp paper of Rs.100/- (which was issued in the name of Santosh Jain and Rahul Shah, respondent no.2) attached with the said agreement to sell is of 06.10.2015 and thus the said agreement to sell dated 30.06.2015 is also bad in law and appears to be sham and forged document. Accordingly, the securitization applicant namely Ms. Santosh Jain has failed to prove that she is bonafide

DRT-I, DELHI

SA No.439 of 2022 & TSA No.203 of 2023

¶252

owner of the property in question and thus she is not having legal, valid and enforcement rights over the property in question and accordingly, the applicant Ms. Santosh Jain is liable to surrender the physical possession of the property in question to the respondent bank immediately.

¶253

In view of the above facts and circumstances and SARFAESI Act and Security Interest (Enforcement) Rules, this Tribunal is of the affirmed view that there was no illegality or irregularity on the part of the respondent bank in taking measures under section 13 (2) and 13 (4) of the SARFAESI Act, 2002. However, since the respondent bank has failed to auction the property in question as per the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 and as per the aforesaid judgements of Hon'ble Supreme Court and judgement of Hon'ble High Court of Delhi, therefore, the Auction Sale Notice dated 21.03.2021 vide which the property in question was auctioned sold on 08.04.2021 by the respondent bank is liable to be quashed and set aside. Further, keeping in view of the aforesaid facts and circumstances, the securitization applicant namely Ms. Santosh Jain has failed to prove that she is the bonafide owner of the property in question and thus she is not having legal, valid and enforcement rights over the property in question and accordingly, the applicant is liable to

¶254

	51
DRT-I, DELHI	SA No.439 of 2022 &	TSA No.203 of 2023

¶255

surrender the physical possession of the property in question to
the respondent bank immediately. Further, the applicant Ms.
Santosh Jain as well as auction purchaser are entitled to get
back their money, which were deposited by them, from the
respondent bank as per law.

¶256

ORDER

¶257

The SARFAESI Applications filed by the applicant alongwith pending applications, if any, stands disposed of with the following directions:

¶258

2. Since the respondent bank has failed to auction the property in question as per the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 and as per the aforesaid judgements of Hon'ble Supreme Court and judgement of Hon'ble High Court of Delhi, therefore, the Auction Sale Notice dated 21.03.2021 vide which the property in question was auctioned sold on 08.04.2021 by the respondent bank is hereby quashed and set aside with liberty to the respondent bank to proceed further under the SARFAESI Act, 2002 as per law.

¶259

3. That the securitization applicant namely Ms. Santosh Jain is not having legal, valid and enforcement rights over the property in question and the securitization applicant Ms. antosh Jain is hereby directed to surrender the physical fd-

¶260

¶261

DRT-I, DELHI SA No.439 of 2022 & TSA No.203 of 2023

¶262

possession of the property in question to the respondent bank immediately.

¶263

¶264

The applicant Ms. Santosh Jain as well as auction purchaser are entitled to get back their money, which were deposited by them, from the respondent bank as per law. 5. The present order be uploaded immediately on the website of this Tribunal. Final Order signed, sealed, dated and pronounced in the open court on this 10th October, 2025. Dictated & Corrected by me. (GOVIND BA1---F3H SHARMA) PRESIDING OFFICER, DRT-I, Delhi

¶265

Santosh Jain v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Santosh Jain v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Canara Bank versus Sushma Singh

Indian Bank (Allahabad Bank) versus Vijayantjyani

Kotak Mahindra Bank Limited versus Baljit Singh

Vk Trading Company versus Punjab National Bank

Rohit Jaswal versus the Kangra Central Cooperative Bank Limited

Shradha Saburi Educational Society versus Punjab National Bank