Allowed

Mr Wahabkhan Yasinkhan Pathan and One v. Yavatmal Urban Co-Operative Bank

DRT3 Aug 2026SA/273/2023

Case brief

AI extract

What is this about?

Applicants challenged a bank's recovery action under SARFAESI Act regarding Apartment No. 105, claiming they purchased the flat from a developer via registered sale deed after the bank had issued a No Objection Certificate. The Tribunal allowed the application, setting aside enforcement actions.

What did the court decide?

Application under Section 17 SARFAESI Act set aside actions taken by respondent bank regarding Apartment No. 105; no specific direction to open seal mentioned in order text.

Mr Wahabkhan Yasinkhan Pathan and One versus Yavatmal Urban… — Banking and Recovery | DRT (2026)

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Page 1 of 25 S.A. No. 273/2023

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PRESENTED ON : 04.07.2023 REGISTERED ON : 13.07.2023

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Exh. No. 26

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BEFORE THE P.O., DRT, NAGPUR Delivered by Pankaj Kumar,

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S.A. No. 273/2023

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1.	Mr. Wahabkhan S/o. Yasinkhan Pathan Aged – 66 Years, Occupation – Retired, Resident of Shastri Nagar, Chandrapur, Tahsil & District – Chandrapur (Maharashtra State)	:	Applicants
2.	Ms. Shabanaj D/o. Wahabkhan Pathan Aged – 36 Years, Occupation – Household, Resident of Shastri Nagar, Chandrapur, Tahsil & District – Chandrapur (Maharashtra State)
	..Versus..
1.	The Yavatmal Urban Co-operative Bank Ltd., Yavatmal Head Office at LIC Chowk, Garden Road, Yavatmal Tah. and Dist. Yavatmal, having branch at Deo Nagar, Nagpur, Tah. and Dist. Nagpur Through its Authorized Officer Bhushans Arvind Somukadam, Aged about 50 Years, Occupation : Service	:	Respondents
2.	M/s. Sirsikar Developers and Builder Pvt. Ltd. A company incorporated under the provisions of Companies Act, having its office at Plot No. 99, F/No. 301, Nirmal Apartments, Laxminagar, Nagpur Acting through its Directors (a)Smt. Vandana Wd/o. Raju Sirsikar, 228, Abhyankar Nagar, Near NMC Ground, Nagpur, Tah. and Dist. Nagpur – 440010 (b)Ku. Aditi D/o. Raju Sirsikar, 228, Abhyankar Nagar, Near NMC Ground, Nagpur, Tah. and Dist. Nagpur – 440010 (Maharashtra State)

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Page 2 of 25 S.A. No. 273/2023

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Learned Counsel for Applicants	Adv. Anwar Ali Saiyyed Adv. Akhtar N. Ansari
Learned Counsels for Respondent	Adv. Sanjeev P. Deshpande
No.1	Adv. Kushal Jain
Learned Counsels for Respondent	Adv. Atul Pande
Nos. 2(a) & 2(b)	Adv. Atul Joshi

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J U D G M E N T

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(Delivered on 3^rd Day of August, 2026)

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1) This is an application filed by applicants under Section 17 of SARFAESI Act, 2002 praying therein as under: -

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i. To set aside and quash all the actions taken by non-applicant no.1 under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 so far as said Apartment /flat No. 105 is concerned, being illegal and bad in law and further be pleased to set aside and quash order dated 02.05.2023 passed by the Hon'ble Chief Judicial Magistrate, Nagpur passed in Criminal M.A. No. 1438/2023, The Yavatmal Urban Co-operative Bank Ltd. Vs. M/s. Sirsikar Developer and Builder Pvt. Ltd. and Others so far as said Apartment No. 105 is concerned and putting seal on the door lock of the applicants on the said Apartment/flat No. 105 (suit property) on 14.06.2023.

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ii. To grant appropriate orders thereby permanently restraining the non-applicant no.1 from taking further action under The Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 and ad-interim ex-party to that effect be granted.

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Page 3 of 25 S.A. No. 273/2023

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iii. The non-applicant no.1 be permanently restrained from creating third party interest in the said Apartment No. 105 and ad - interim ex-party to that effect be granted.

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iv. The non-applicant no.1 be directed to open the seal pasted on the door lock of applicants on the said Apartment No. 105 and restore/handover the possession of said Apartment No. 105 to applicants in the interest of justice.

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v. During the pendency of instant proceedings, non-applicant no.1 be directed to maintain status-quo in respect of the said Apartment No. 105 and ad-interim ex-parte relief to that effect be granted.

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vi. To direct the non-applicant no.1 to pay the compensation to applicants whatever this Hon'ble Tribunal deems fit considering the aforesaid illegal acts committed by non -applicant No.1 and further be pleased to saddle the costs of these proceedings on the non-applicants.

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vii. And be further pleased to pass such other order and grant such other relief in the facts and circumstances of the case and in the interest of justice and for which act of kindness the applicant shall remain duty bound and ever pray .

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2) Brief facts of the case on which applicants have challenged the action of respondent are as under : -

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i. It has been submitted that non-applicant no. 2 represented the applicants that non-applicant no. 2 is having good, valid and marketable title in said Apartment No. 105 and as applicants

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Page 4 of 25 S.A. No. 273/2023

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being desirous of owning said Apartment No. 105 for their residential use approached the non-applicant No. 2 and expressed their desire and willingness to purchase the said Apartment No. 105.

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ii. After the detailed negotiation the non-applicant No. 2 agreed to sell and applicants agreed to purchase the said Apartment No. 105 for a total consideration of Rs. 26,00,000/ - on the terms and conditions agreed between the parties.

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iii. On 21/04/2016 the non-applicant No. 1 issued no-objection certificate thereby giving its No-Objection to non-applicant No. 2 for selling the said Apartment No. 105 (suit property) to applicants. Marked and annexed hereto as ANNEXURE-1.

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iv. It has been submitted that applicants paid an amount of Rs.13,00,000/- to the non-applicant No. 2 from time-to-time by various cheques, the receipt whereof was acknowledged by the non-applicant No. 2. The applicants had obtained housing loan of Rs.13,00,000/- from State Bank of India, Jaiprakash Nagar Branch, Nagpur, bearing Home Loan Account No. 35980728024 and paid the said amount of Rs.13,00,000/- to the non-applicant No. 2 towards balance consideration.

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v. After receipt of entire consideration amount of Rs.26,00,000/ - the non-applicant No. 2 executed sale deed dated 09/08/2016 of said Apartment/flat No. 105 in favour of applicants. The sale Deed dated 09/08/2016 of said Apartment/flat No. 105 was registered in the Office of the Joint Sub-Registrar Class-II,

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Nagpur City No. 4, at Sr. No. 4306/2016 dated 09/08/2016. Marked and annexed hereto as ANNEXURE-2 .

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vi. After the execution and registration of the Sale Deed dated 09/08/2016 the applicants became the absolute owner and were in lawful occupation and possession of the said Apartment No. 105 (suit property).

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vii. As per the knowledge of applicants on or about 28/01/2021 the Recovery Officer appointed by the Competent Authority under Section 156 of the Maharashtra Co-operative Societies Act, 1960 issued proclamation regarding attachment of immovable properties mortgaged by the non-applicant No. 2 with the nonapplicant No. 1. It has been submitted that as the said Apartment/flat No. 105 was already released by the non - applicant No. 1 by issuing aforesaid No-Objection Letter dated 21/04/2016 and therefore, the said Apartment /flat No. 105 was not put under proclamation dated 28/01/2021. Marked and annexed hereto as ANNEXURE-3.

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viii. On 01/04/2023 the names of the applicants were recorded in the Revenue Records maintained by the City Survey Office No. 3, Nagpur vide Mutation Entry No. 53310 dated 01/04/2023. Marked and annexed hereto as ANNEXURE-4 .

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ix. The names of the Applicants were also recorded in the Revenue Records maintained by the Nagpur Municipal Corporation, Nagpur. Marked and annexed hereto as ANNEXURE-5 is the copy of property tax receipt for the year 2018-2020 along with

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copy of demand of property tax for the year 01/04/2023 to 31/03/2024 by Nagpur Municipal Corporation, Nagpur.

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x. It is submitted that the applicants had repaid housing l oan of Rs.13,00,000/-. Therefore, No-due Certificate dated 16/05/2023 was issued by the State Bank of India, Jaiprakash Nagar Branch, Nagpur. Marked and annexed hereto as ANNEXURE-6. xi. On 14/06/2023 the applicants came to know from the persons who are residing in the vicinity of the said Apartment No. 105 that the non-applicant No. 1 had illegally pasted seal on the door lock of suit property i.e. Apartment/flat No. 105.

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xii. The applicants made enquiry about the illegal act committed by the respondent No. 1 thereby, putting its seal on the door lock on said Apartment/ flat No. 105. Then it is learnt that the nonapplicant No. 2 had obtained loan from non-applicant No. 1 by mortgaging its property. Non-applicant No. 1 had obtained order dated 02/05/2023 in Criminal M.A. No. 1438/2023 and accordingly pasted the seal on door lock of the said Apartment No. 105. Marked and annexed hereto as ANNEXURE-7 is the copy of the order.

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xiii. It has been submitted that the alleged notice if any issued by non-applicant No. 1 is not in accordance with the Rule 2 (a) of the Security Interest (Enforcement) Rules, 2002 as the person issuing the notice has no authority and is exercising power of superintendence, direction and control of the business or affairs of the alleged secured creditor or he is holding the rank

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Page 7 of 25 S.A. No. 273/2023

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to be appointed as Authorized Officer and thus alleged Notice if any issued is invalid on the ground of lack of authority.

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xiv. It is submitted that said Apartment No. 105 (suit property) is not a security asset as required under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Therefore, action taken by non-applicant No.1 deserves to be declared illegal and bad in law.

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xv. The non-applicant No. 1 have intentionally not disclosed about the issuance of No-objection Certificate dated 21/04/2016 to non-applicant No. 2 for selling the said Apartment /flat No. 105 to applicants in Criminal M.A. No. 1438/2023 filed by the non - applicant No. 1 before Hon'ble Chief Judicial Magistrate, Nagpur.

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xvi. That it appears that non-applicant No. 1 had filed false affidavit before the Hon'ble Chief Judicial Magistrate, Nagpur and did not disclose in the said affidavit regarding the ownership and possession of the applicants on the said Apartment /flat No. 105 (suit property) and non-service of notice upon the applicants by non-applicant No. 1, thereby disobeying the directives of the Hon'ble Apex Court given in various matters and thus the Hon'ble Chief Judicial Magistrate, Nagpur has allowed the application of the non-applicant No. 1 filed under Section 14 The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 vide its order dated 02/05/2023. Subsequently on the basis of impugned order dated 02/05/2023 seal was put on the door lock over the

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Page 8 of 25 S.A. No. 273/2023

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said Apartment No. 105 on 14/06/2023 behind the back of the applicants.

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xvii. SCHEDULE - I SUBJECT PROPERTY

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'The undivided 2.63% share and interest in All THAT piece and parcel of land containing by admeasuring 1454.660 Sq. Mtrs. (OR 15685 Sq. Ft.) bearing Khasra/Survey No. 159/6/2 of Mouza: SOMALWADA, P.S.K. 44, together with the entire R.C.C. Superstructure comprising Apartment No. 105, covering a Built-up area of 63.13 Sq. Mtrs. on the FIRST FLOOR of a Building constructed thereon and known and styled as "TOWN HOUSE APARTMENT" bearing Corporation Hose No. 3448/D, City Survey No. 597 and Sheet No. 728 situated at Somalwada, Nagpur, within the limits of the Nagpur Municipal Corporation, Ward No. 15, in Tahsil and District Nagpur an d bounded as under:- On the East - By existing Road; On the West - By land of Kh. Nos. 159/5, 159/1; On the North By Kh. No. 159/8; On the South - By land of Kh. No. 159/7 י (hereinafter in short referred to as Apartment No. 105).

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xviii. That the relief sought is enforceable in law. The act of the nonapplicant No. 1 is such that there exists no standard to ascertain the actual damage caused or likely to be caused. There is no legal bar of any kind whatsoever in the matter of grant of relief as prayed for, which is being assailed on the following grounds:

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Page 9 of 25 S.A. No. 273/2023

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4) Brief grounds on which applicants have challenged the action of respondent bank are as under: -

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i. That, the entire approach of non-applicant No. 1 is faulty, perverse, biased, against the principle of law and natural justice, by suppression of material facts and therefore, the impugned order 02/05/2023 and taking the possession on 14/06/2023 by pasting seal on door lock on the said Apartment No. 105 behind the back of applicants and in their absence and without following due process of law to proceed under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 itself liable to be set aside. ii. The Hon'ble Chief Judicial Magistrate, Nagpur committed great mistake in the eyes of law in not appreciating the mandatory provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 and even did not care to inquire from the non-applicant No. 1 about the status of the subject Apartment No. 105 and thereafter to issue a notice or a copy thereof knowing fully well that the property vest with the applicants and thus without complying with the same and more particularly stated in the facts of the application, causing serious prejudice to the applicants. The impugned order dated 02/05/2023 and putting seal on 14/06/2023 by non-applicant No. 1 are done mechanically and therefore, liable to be set aside.

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iii. That the notice of possession is neither issued nor published within the mandatory period as such there is a violation of the

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provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 and the Security Interest (Enforcement) Rules, 2002 is bad in law.

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iv. That the non-applicant No. 1 failed to appreciate that at no point of time applicants shown their readiness and willingness to stood as mortgagor for non-applicant No.2 and at no point of time they had executed any mortgage deed in favour of non - applicant No. 1 and as such the action is void.

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5) Respondent No. 1 has filed reply to Securitization Application at Exh. 12 as under :-

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i. It has been denied that action taken by respondent no. 1 under Section 13 & 14 of the SARFAESI Act is illegal and it has also been denied that illegal seal is pasted on the door lock and wrongful possession is taken.

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ii. It has been denied that non-applicant No. 2 represented the applicants, that non-applicant No. 2 is having good, valid and marketable title in said Apartment No. 105 and as applicants being desirous of owning said Apartment No. 105 for their residential use, approached the non-applicant No. 2 and expressed their desire and willingness to purchase the said Apartment No. 105.

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iii. It has been denied that after the detailed negotiation the non - applicant No. 2 agreed to sell and applicants agreed to purchase the said Apartment No. 105 for a total consideration of Rs.26,00,000/- on the terms and conditions agreed between the parties.

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Page 11 of 25 S.A. No. 273/2023

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iv. It is a matter of record that on 21/04/2016 the respondent no. 1 issued no objection certificate thereby giving its No-Objection to respondent No. 2 for sale of the said Flat No. 105 to applicants in favour of the applicant.

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v. It has been denied that the applicants paid an amount of Rs.13,00,000/- to the respondent No. 2 from time-to-time by various cheques. It is denied that the applicants had obtained housing loan of Rs.13,00,000/- from the State Bank of India, Jaiprakash Nagar Branch, Nagpur bearing Home Loan Account No.35980728024 and paid the said amount of Rs.13,00,000/- to the non-applicant No. 2 towards balance consideration.

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vi. It has been denied that after receipt of entire consideration respondent no.2 amount of Rs.26,00,000/-, the executed sale deed dated 09/08/2016 of said Apartment/flat No.105 in favour of the applicants. It is denied that the sale Deed dated 09/08/2016 of said Apartment/flat No. 105 was registered in the Office of the Joint Sub-Registrar Class-II, Nagpur City No.4 at Sr. No.4306/2016 dated 09/08/2016.

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vii. It has been denied that after the execution and registration of the Sale Deed dated 09/08/2016 the applicants became the absolute owner and were in lawful occupation and possession of the said Apartment No. 105 (suit property).

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viii. It has been submitted that applicants did not comply with the terms and condition of the NOC dated 21/04/2016 as the respondent bank specifically directed the party concern to deposit "Total Sale Proceed" with the respondent bank in loan

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account of Respondent No.2, however in the present matter the applicant did not deposit the entire sale proceed with the respondent bank. The deposition of entire sale proceed with the respondent bank was condition precedent for sale as per the NOC dated 21/04/2016 and non-compliance of said condition renders entire sale void ab initio.

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ix. It is denied that applicants never received any notice if any it has been issued by the persons/authority. It has also been denied that said Apartment No. 105 is not a security assets as required under the SARFAESI Act.

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x. It is denied that no mortgage was subsisting nor even any interest is created over the suit property and it is denied that same cannot be termed as security interest/agreement within the purview of the SARFAESI Act, 2002.

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xi. It is denied that the order for taking physical possession by the respondent No. 1 is illegal as they have no right to take the possession of said Apartment No. 105 which is not a legally secured property under the Act as such the entire action is liable to be set aside.

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xii. In view of above facts and circumstances, the applicant is not entitled to any of the prayers as claimed in the present appeal, therefore the present proceeding is liable to be dismissed with costs.

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6) Respondent Nos. 2(a) & 2(b) have filed reply to Securitization Application at Exh. 17 as under: -

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i. It is not disputed that the applicants have purchased Apartment No. 105 in the building known and styled as "Town House Apartment" for consideration of Rs. 26,00,000.00. However, it is denied for want of knowledge that the applicants have deposited Rs. 13.00 lakhs by various cheques. Further any loan of Rs. 13.00 lakhs were availed by the applicants is denied.

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ii. It is not disputed that the applicants became the absolute owner and were in lawful and peaceful possession of the apartment No. 105.

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iii. It is submitted that the answering respondents are no way concerned and connected with any loan transaction between the applicants and their bankers and thus having no knowledge about the loan transactions of the applicants. That from perusal of the annexure placed on record at ANNEXURE - 6 it appears that the applicants had availed loan from its banker which they had repaid, however it is specifically denied that said loan was availed for purchase of apartment no. 105.

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iv. It is specifically denied that the applicants on 14.06.2023 was informed or came to know about the illegal action of the respondent on the basis of the order dated 02.05.2023 passed in Criminal M A No. 1438/2023.

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v. There are absolutely no allegations against the answering respondents thus needs no on merits from the answering respondents. However, it is specifically submitted that the applicant had full knowledge regarding the mortgage of the

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Page 14 of 25 S.A. No. 273/2023

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property and loan availed by the respondent No. 2 from respondent No. 1.

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7) During hearing, Respondent No. 1 has filed Additional Affidavit at Exh. 20, alongwith documents, stating therein as under:-

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i. That, the several flat owners of the Town House Apartment, i.e. the secured asset, filed various Securitisation Applications before this Hon'ble Tribunal against the recovery action initiated by the respondent no.1 bank in the matter of M/s. Sirsikar Developers and Builders Pvt. Ltd.

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ii. That, out of the said bunch of securitization applications, some of the flat owners namely Ashish S/o Ganeshrao Yedke (S.A. No.263/2023), Chandrakant S/o Manoharrao Umate (S.A. No.294/2023), Prakash S/o Bandu Urkunde (S.A. No.292/2023), Aditya S/o Krishnarao Marjive (S.A. No.297/2023), Vaishali W/o Satish Holay (S.A. No.295/2023) had filed respective applications for withdrawal of the respective Securitisation Applications, wherein they have categorically stated that, to comply with the conditional NOC issued by the respondent no.1 bank, they were ready to deposit the remaining amount which was not deposited pursuant to the conditional NOC in the loan account in the name of M/s Sirsikar Developers and Builders Pvt. Ltd. bearing Account No.167/68, mentioned in the conditional NOC. iii. That, the respondent bank duly considered the said applications and accepted their proposal and allowed to deposit the balance

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amount of the sale consideration pursuant to the condi tional NOC mentioned above.

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iv. That, the aforementioned applicants/flat owners have deposited remaining amount, which was not deposited pursuant to the conditional NOC at earlier point of time. That, as stated by the said flat owners, they had paid the amount to the respondent no.2, however, to comply with the conditional NOC, they have deposited the entire sale consideration in the loan account as per conditional NOC and as such they got final NOC from the respondent no.1 bank.

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v. That, by considering the said aspect, this Hon'ble Tribunal was pleased to allow them to withdraw their respective proceeding. It is most respectfully submitted that the claim of the present applicants is also the same, which is involved in the proceedings of other flat owners. The true copies of the final NOC are annexed herewith and marked as ANNEXURE-A.

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vi. That, in view of above facts and circumstances, the applicants are not entitled to any of the prayers as claimed in the present appeal, therefore the present proceeding is liable to be dismissed with heavy and exemplary costs of Rs.1,00,000/ -.

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8) During hearing, applicants have filed Additional Affidavit at Exh. 21, stating therein as under :-

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i. On 25/02/2016, the present applicant/deponent along with his daughter (Applicant No. 2) had entered in to an agreement to sale with the Builder i.e. M/s Sirsikar Developers and Builder

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(Respondent No. 2) for purchase of Suit Property (Apartment/flat No.105) for the valuable sale consideration of amount of Rs. 26,00,000/-. Copy of the agreement to sale is hereby annexed as Annexure No. 1 .

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ii. Accordingly, as per the manner/scheduled of payment mentioned in the aforesaid agreement, applicant/deponent had paid an amount of Rs. 5,00,000/- vide cheque dated 25/02/2016 bearing No. 424539, an amount of Rs. 4,00,000/ - vide cheque dated 23/03/2016 bearing No. 424541 and an amount of Rs. 4,00,000/- vide Cheque dated 25/04/2016 bearing No. 424544, in total an amount of Rs. 13,00,000/- (Rupees Thirteen Lacs) to the Builder towards the earnest amount and same were duly received and acknowledged by the Builder. The remaining balance sale consideration amount of Rs. 13,00,000/ - was agreed to be paid on or before execution of sale deed and at the time of actual possession of said apartment/flat. Copies of the aforesaid cheques are hereby annexed as Annexure Nos. 2 to 4 .

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iii. The applicant/deponent thereafter had approached to the State Bank of India with the request for grant of loan of Rs. 13,00,000/-(Rupees Thirteen Lacs only) towards the purchase loan of apartment No. 105 (suit property) as the sale consideration amount was of Rs. 26,00,000/- The State Bank of India, Branch at Jaiprakash Nagar, Nagpur had approved/sanctioned the said Home loan for the purchase of suit property and accordingly Cheque dated 05/08/2016

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amounting of Rs. 13,00,000/- (Rupees Thirteen Lacs) bearing No. 626335 had been issued in favour of the respondent No. 1 bank (loan account No. 167/68 of respondent No. 2) and same had been handed over to builder for its deposition and accordingly it was deposited with the Bank. The copy of the Cheque is hereby annexed as Annexure No. 5 .

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iv. It has been submitted that applicant had paid an entire sale consideration amount of Rs. 26,00,000/-(Rupees twenty Six lacs only) by aforesaid manner. After the payment of entire sale consideration amount, sale deed of the suit property was executed in favour of the applicants on 09/08/2016 and possession of suit property was handed over to the applicants by the respondent No. 2 Builder. It is submitted that said Sale Deed is remained unchallenged till date in any Court of law.

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v. It is further submitted that respondent No. 2 (Builder) in its reply specifically stated that entire sale consideration amount of Rs. 26,00,000/- (Rupees Twenty Six lacs) had been deposited/ paid to the respondent No.1 and accordingly, after the receipt of the entire sale consideration amount from the applicants which was deposited in the loan account, sale deed of suit property was executed in favour applicants on 09/08/2016 and had handed over the physical pos session of suit property (Apartment No. 105) to the applicants and there is no outstanding dues/amount pending against the suit property (Apartment No. 105).

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9) During hearing, Applicants have filed Written Notes of Arguments at Exh. 22, stating therein as under:-

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i. It is submitted that the respondent No. 1 Bank is attempting to create an impression before this Hon'ble Tribunal that the suit property/applicant's Flat No. 105 continues to be liable for the alleged outstanding dues of the respondent No. 2 Builder , on the ground that final amount of Rs. 13,00,000/- was allegedly not received by the bank. It is submitted that said contention of the bank is wholly untenable and contrary to the facts and documentary evidence available on the record. The Applicant submits that the entire transaction was undertaken strictly in accordance agreement dated 25/02/2016 and the NOC issued by Respondent No.1 Bank dated 21.04.2016. The Applicant had no control over subsequent accounting, crediting, adjustment or appropriation of the said amount by the Bank. It is further submitted that any alleged failure on the part of the Builder or Bank in accounting for the said amount cannot be attributed to the Applicants. Once the Applicants handed over the cheque drawn in favour of the Bank in compliance with the condition imposed by the Bank itself, the Applicant discharged his obligation as purchaser. Any alleged failure on the part of the Builder or Bank in accounting for the said amount cannot be attributed to the Applicant.

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ii. The relationship between Respondent No.1 Bank and Respondent No.2 Builder arises out of the project finance agreement. The Applicant was never a party to such agreement.

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Therefore, any dispute relating to adjustment of loan proceeds, appropriation of sale proceeds or outstanding loan liability is purely a dispute between Respondent Nos.1 and 2. The Hon'ble Supreme Court has repeatedly held that third -party rights acquired bona fide cannot be defeated because of disputes between the borrower and the secured creditor.

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iii. The respondent No. 1 Bank issued NOC dated 21.04.2016 and permitted Respondent No.2 Builder to execute the Sale Deed and accordingly Sale Deed was thereafter registered on 09.08.2016. Possession was delivered to the Applicant. It is further submitted that respondent no. 1 Bank remained silent for nearly seven years, during this entire period, the Bank never issued any show caused or demand notice to the Applicant alleging that the NOC condition was violated; that sale consideration was unpaid; that Flat No.105 continued to be mortgaged; that the sale transaction was unauthorized. It is submitted that such prolonged silence amounts to acquiescence. The Hon'ble Supreme Court in Pune Municipal Corporation v. State of Maharashtra has recognized that conduct and inaction of a party may have legal consequences where rights of another party have been created on the basis of such conduct.

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iv. It is submitted that Respondent no. 1 had obtained an order dated 02/05/2023 which is under challenge in the present matter from the learned Chief Judicial Magistrate under Section 14 of the SARFAESI Act. It is submitted that the said order is

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not binding upon the present applicant as said order had been obtained by the respondent no. 1 without joining the applicant as a party.

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v. The Hon'ble Supreme Court in 'Canara Bank Versus Dedasis Das' held that observance of the principles of natural justice is essential whether civil consequences follow. In the present case, taking possession of the Applicant's residential Flat clearly caused serious civil consequences and hence the action of respondent No. 1 is liable to be set aside insofar as Flat No. 105 is concerned.

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vi. Respondent No.1 has relied upon the CERSAI entry showing creation of security interest. The Applicant respectfully submits that the CERSAI entry relied upon by Respondent No.1 does not resolve the dispute in favour of the Bank. The Applicant submits that the CERSAI record itself requires strict scrutiny because: (a) the name of the housing scheme is not specifically mentioned;(b) only plot number and built-up area are reflected;(c) the entry indicates submission of security interest, whereas approval/confirmation is disputed.

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vii. The Applicant submits that the Bank is required to establish:(i) the exact nature of mortgage; (ii) the description of the mortgaged property;(iii) whether Flat No.105 continued to remain under mortgage after issuance of NOC; (iv) whether the Bank released or permitted sale of the said unit. In absence of such proof, the Applicant's registered title cannot be disturbed.

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viii. The Hon'ble Supreme Court in Harshad Govardhan Sondagar. vs. International Assets Reconstruction Co. Ltd has held that rights and interests of persons other than borrowers claiming lawful interest in secured assets are required to be considered while enforcing security interest. The ratio of the said judgment clearly establishes that SARFAESI proceedings cannot be used mechanically against persons having independent legal rights.

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ix. It submitted that the proceeding before the learned C.J.M. under Section 14 of SARFAESI Act is limited in nature. The learned C.J.M. is required to assist the secured creditor in taking possession after satisfaction of statutory requirement., such proceeding cannot be adjudicate dispute question of ownership behind the back of a registered owner. In the present case in hand, the applicant had already acquired title in the year 2016 and therefore, without hearing of the applicant, possession of the suit property could not have been taken. The Hon'ble Supreme Court in Standard Chartered Bank v. V. Noble Kumar has explained the scope of Section 14 proceedings and the obligation of the secured creditor to comply with statutory requirements. The said judgment does not permit the secured creditor to override the rights of persons having independent title.

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x. It is submitted that the action of the respondent No. 1 violets the fundamental principle of natural justice that no person should be condemned unheard. The Applicant was the registered owner and occupant of Flat No.105. Still,

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Respondent No.1 obtained possession order without joining the Applicant. Such action has caused serious prejudice and civil consequences to the Applicant.

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xi. LIST OF AUTHORITIES RELIED UPON

¶119

Mardia Chemicals Ltd. v. Union of India

¶120

Transcore v. Union of India

¶121

Harshad Govardhan Sondagar v. International Assets

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Reconstruction Co. Ltd.

¶123

Standard Chartered Bank v. V. Noble Kumar

¶124

Mansi Brar Fernandes v. Shubha Sharma.

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10) I have heard Ld. Counsel for both sides at length.

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11) It is apparent clear that the applicants are claimed to be the owner of Apartment/Flat No. 105 in the building known as “Town House Apartment” situated at Kh. No. 159/6/2 C.S. No. 597, Sheet no. 728, Mauza – Somalwada, Tah and Dist. Nagpur in NMC. It is also apparent clear that the Term Loan was sanctioned to the M/s. Sirsikar Developers and Builders Pvt Ltd i.e. respondent No.2 on 14.03.2015 for which registered Mortgage was executed between the parties on 16.03.2015 as per Annexure - A attached with Exh. 25. and subsequently development term loan was also executed on 07.10.2015. The same is reflected in the Property Card of Mutation Entry No. 33109 dated 11.06.2015.

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12) The Ld. Counsel for the applicants has submitted that for the purpose of purchase of Apartment/Flat No. 105 in the aforesaid building Agreement to Sale was executed between the parties on 25.02.2016 for a consideration of Rs. 26,00,000/ - as per photocopy of Documents attached with Exh. 21. Part payment of Rs. 13 Lakhs

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was given to the builder on the subsequent dates and the Sale Deed was executed between the parties on 09.08.2016 after issuance of No Dues Certificate for mortgage of the Apartment/Flat No. 105 on 21.04.2016. It has been further contended on his behalf that for the rest of Rs. 13 Lakhs, he approached the State Bank of India for Housing Loan which was subsequently sanctioned on 16.05.2023 after No Objection Certificate issued in this regard by Respondent No. 1.

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13) The ld. Counsel for the Respondent no. 1 has submitted that the Rs. 13 Lakhs advanced to the Builder and Developer i.e. Respondent No. 2 was never deposited in the loan account no. 167/68. The same has been opposed by the Ld. Counsel for the applicants who has submitted that the amount deposited by the respondent no. 2 has been diverted to the CC Account of the Developer for the reasons best known to them for which Bajaj Nagar P.S. Case No. 130/2024 has been lodged against them and it is still pending.

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14) The Ld. Counsel for the applicant has further submitted that the respondent no. 1 had earlier approached the Registrar of the Cooperative Societies U/s. 101 of the Maharashtra Co -operative Societies Act, 1960 and RRC No. 82/2020 dated 04.11.2020 was issued in this regard by the Competent Authority U/s. 156 of the Act on basis of which possession notice was issued by the Recovery Officer of the respondent bank on 28.01.2021 in which there is no reference of Flat No. 105.

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15) Two Separate pursis vide Diary No. 4903/2026 & 4877/2026 have been filed on behalf of Respondent No.1 regarding outstanding amount against the Applicants and against the Respondent no. 2 i.e. Builder/Developer. It has been contended on his behalf that the respondent no.1 can take help of SARFAESI Act for recovery of

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public money as well as evoking the provisions of the Maharashtra Co-operative Societies Act, 1960 for which they have declared the loan as NPA on 30.04.2021 and notices under section 13(2) & 13(4) has been issued against the developer on 23.02.2022 and 02.05.2022.

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16) It has been contended on behalf of the applicants that the propert y was not actually registered under CERSAI on 24.03.2022 as per Diary No. 4518/2026, rather it was registered on 16.06.2023 as per official documents on record. It has been further contended that the impugned order of the Ld. CJM Nagpur has passed order U/s. 14 of the SARFAESI Act much prior to the registration of the Mortgaged Property with the CERSAI on 02.05.2023 in connection with Cri. M.A No. 1438/2023 where the applicant has not been made a party for the reasons best known to the respondent no. 1.

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17) The Ld. Counsel for the applicant has submitted that there is a clear cut dispute between the secured creditor and developer as per documents on records and the applicant should not be allowed to suffer due to laches on part of respondents. In that view of matter he has drawn attention of this Tribunal towards judgment passed by Hon’ble supreme Court reported in AIR OnLine 2019 Supreme Court 2195 dated 23.07.2019 whereby it has been held that the occupation of the flat owners should not be disturbed due to fa ult committed by that secured creditor and the developer and the judgment relied by the respondent no.1 is not applicable in the prevailing circumstances.

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18) Accordingly, I pass the following order :-

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ORDER

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S.A. No. 273/2023 is hereby allowed.

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No order as to costs.

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Nagpur Presiding Officer Debts Recovery Tribunal Dated : 03.08.2026 Nagpur.

Mr Wahabkhan Yasinkhan Pathan and One v. Yavatmal Urban Co-Operative Bank

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Mr Wahabkhan Yasinkhan Pathan and One v. Yavatmal Urban Co-Operative Bank

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