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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
M. Seetharama Murti, J. Uma Devi, JJ.
Kamireddi Atchuthamba - Appellants
Vs.
State Bank of India - Respondent
W.P. No. 44146 of 2017
Decided On : 13-08-2019
Constitution of India,1950 – Article 226 – Writ petition by the petitioners challenging the order of the Debts Recovery Appellate Tribunal – Request was also made to set aside the same and consequently direct the respondents to desist from proceeding against the flats purchased by the petitioners – Appeal – Held, Petitioners who purchased the subject flats, which are subject to mortgage, even without verifying the original title deed and without making an enquiry as to with whom the original title deed/s related to the subject flats was/were lying cannot be heard to say that they are bona fide purchasers – When once the purchase transactions of the petitioners in regard to the subject flats are subsequent to the mortgage in favour of the 1st respondent bank, they being third parties to the mortgage transaction and their title being subject to the mortgage, they cannot have any valid objection for the bank taking statutory measures against the borrower and/or guarantors and they cannot challenge the action of the bank initiated by the bank after due invocation of the statutory procedure under the SARFAESI Act and the rules made – The Tribunal, which had an occasion to deal with all the factual aspect, in detail, recorded a finding that there is no material irregularity or illegality committed by the 1st respondent in the entire proceedings initiated under the SARFAESI Act and the rules made thereunder and that the petitioners could not substantiate their contentions warranting interference with the proceedings initiated by the bank under the SARFAESI Act and that the bank/secured creditor also established that the recourse taken by the secured creditor under Section 13(4) of the Act is in accordance with the provisions of the SARFAESI Act and the rules made thereunder – Court find that the writ petition is devoid of merit more particularly in view of the narrow scope of Article 226 of the Constitution of India –Writ Petition is dismissed. (Para 11, 12 and 13)
Facts of the case:
This writ petition, under Article 226 of the Constitution of India, is filed by the petitioners challenging the order, dated 08.12.2017, of the Debts Recovery Appellate Tribunal, Kolkata, passed in Appeal No. 17 of 2014/245, whereby the order, dated 13.01.2014 of the Debt Recovery Tribunal, Visakhapatnam, in S.A. No. 303 of 2012 was confirmed. A request was also made to set aside the same and consequently direct the respondents to desist from proceeding against the flats purchased by the petitioners viz., Flat Nos. 2A, 3A, 5A & 5B of Sri Raj Enclave Apartment constructed in Rs. Nos. 4/1 & 4/2 of Gavaravaram village, Sanivarapurpet Panchayat, Eluru.
Findings of the case:
Petitioners who purchased the subject flats, which are subject to mortgage, even without verifying the original title deed and without making an enquiry as to with whom the original title deed/s related to the subject flats was/were lying cannot be heard to say that they are bona fide purchasers – When once the purchase transactions of the petitioners in regard to the subject flats are subsequent to the mortgage in favour of the 1st respondent bank, they being third parties to the mortgage transaction and their title being subject to the mortgage, they cannot have any valid objection for the bank taking statutory measures against the borrower and/or guarantors and they cannot challenge the action of the bank initiated by the bank after due invocation of the statutory procedure under the SARFAESI Act and the rules made – The Tribunal, which had an occasion to deal with all the factual aspect, in detail, recorded a finding that there is no material irregularity or illegality committed by the 1st respondent in the entire proceedings initiated under the SARFAESI Act and the rules made thereunder and that the petitioners could not substantiate their contentions warranting interference with the proceedings initiated by the bank under the SARFAESI Act and that the bank/secured creditor also established that the recourse taken by the secured creditor under Section 13(4) of the Act is in accordance with the provisions of the SARFAESI Act and the rules made thereunder – Court find that the writ petition is devoid of merit more particularly in view of the narrow scope of Article 226 of the Constitution of India.
Result: Writ Petition is dismissed.
JUDGMENT :
M. Seetharama Murti, J.
1. This writ petition, under Article 226 of the Constitution of India, is filed by the petitioners challenging the order, dated 08.12.2017, of the Debts Recovery Appellate Tribunal, Kolkata, passed in Appeal No. 17 of 2014/245, whereby the order, dated 13.01.2014 of the Debt Recovery Tribunal, Visakhapatnam, in S.A. No. 303 of 2012 was confirmed. A request was also made to set aside the same and consequently direct the respondents to desist from proceeding against the flats purchased by the petitioners viz., Flat Nos. 2A, 3A, 5A & 5B of Sri Raj Enclave Apartment constructed in Rs. Nos. 4/1 & 4/2 of Gavaravaram village, Sanivarapurpet Panchayat, Eluru.
2. We have heard the submissions of Sri N. Subba Rao, learned counsel, appearing for the writ petitioners and of Sri C. Subodh, learned standing counsel appearing for the 1st respondent bank. There is no representation for the 2nd respondent. We have perused the material record.
3. The case of the petitioners is this: -'The petitioners purchased from the 2nd respondent, who is the owner of the above said flats ('subject flats', for brevity), for valid considerations, under registered sale deeds, dated 02.07.2012, bearing document Nos. 2401/2012 to 2404/2012. They had obtained copies of encumbrance certificates and other material as well as opinion of an advocate before purchasing the subject flats. The encumbrance certificates obtained by them do not reflect any mortgage over the subject flats. The petitioners were under the bona fide impression that there are no encumbrances on the property. Being in possession of the flats, the petitioners developed their respective flats by making improvements. While so, the 1st respondent bank initiated action under the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, ['the SARFAESI Act', for short]. In the notice issued under Section 13(2) of the said Act, it was stated that the 2nd respondent obtained a loan by mortgaging the property, which was sold to the petitioners. There is no valid mortgage deed subsisting as per the records of the Sub Registrar. As per the circular instructions of the Reserve Bank, equitable mortgage is required to be registered with the Registrar concerned in order to prevent the mortgagors from selling the mortgaged properties and acting detrimental to the interests of the bankers. No such registered mortgage was obtained by the 1s' respondent bank. For the said lapse, the 1st respondent bank is disentitled to recover money by proceeding against the flats purchased by the petitioners, who are bona fide purchasers. The 1st respondent bank having failed to follow the procedure in the above regard initiated proceedings against the petitioners, while the petitioners are in possession and enjoyment of the properties pursuant to their sale deeds. After issuance of notice under Section 13(2), the same was published, on 15.10.2012, indicating that M/s. Sai Krishna Enterprises obtained a loan from the 1st respondent bank and that the 2nd respondent and others stood as guarantors for the said loan. Soon after the publication of the said notice, the petitioners submitted representations and informed all the facts including the fact that the encumbrance certificates obtained prior to their purchases, on 18.06.2012, do not indicate the existence of any mortgage and that the mortgage deed, if any, in favour of the bank is not valid and that for the fault of the bank, the petitioners cannot be penalised. When the 1st respondent bank failed to consider the said representation, the petitioners filed SA No. 303 of 2012 before the DRT. In the said SA, it is also contended that though the bank said that it has taken symbolic possession, the petitioners are in continuous possession and enjoyment of their respective flats and that the 1st respondent bank issued a demand notice to the borrower but not affixed any notice on the properti
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