IMPORTANT POINT
Recovery proceedings should not go on, till suit decided finally one way or the other.

S. Ravindra Bhat, J.—With consent to the parties, matter was heard for disposal. The petitioner claims to be aggrieved by an order of Debt Recovery Appellate Tribunal (DRAT) dated 14.7.2014 in Appeal No. 5/2014 (DEL-II).

2. The respondent (hereinafter referred to as “the Bank”) had initiated recovery proceedings under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and filed an application before the Debt Recovery Tribunal (DRT). The bank contended that the petitioner had deposited a sale deed dated 26.5.2003 and created an equitable mortgage. The Sale deed was executed by Ms. Manjeet Kaur in favour of one Divender Pal Singh. It was also alleged that the mortgager had deposited the copy of the Sale deed dated 30.10.1958 in favour of Mr. Hari Singh, agreement to Sell, General Power of Attorney, Special Power of Attorney, Receipt and Will all dated 10.4.1990 executed by Mr. Hari Singh in favour of Mrs. Manjeet Kaur. According to the bank, the borrower was M/s. R.P.S. Oil Company, and the mortgage was created to secure the loan transaction in which it was involved. The present petitioner was not a party to those proceedings. The DRT by its final order dated 23.4.2012 decreed the Bank’s claim, in sum of Rs.35,62,112 the respondent/borrower, became the judgment debtor.

3. The bank, during the recovery proceedings obtained possession of the property was, in the meanwhile obtained under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereafter “SARFAESI”). The petitioner became aware of the alleged fraudulent transaction at that stage and consequently filed a suit (Suit No.427/2006) for recovery of possession. He claimed to have been completely in the dark and therefore filed the suit. It was contended that the Sale deed which the bank relied on and alleged to have been executed and forming the subject matter of the equitable mortgage, was a fraudulent document and, therefore, a nullity. As noticed earlier, the petitioner was not the party to the proceedings under the DRT. The petitioner also moved the District Judge, in the pending suit (CS (OS) 427/06), with an application for stay of the recovery proceedings. The District Judge by an order dated 22.12.2006 directed maintenance of status quo but declined grant of any stay of proceedings pending before the DRT. The DRT by its final order dated 23.4.2012 allowed the original application of the bank and decreed its claim. Consequently, the Recovery Officer (R.O) proceeded, pursuant to application of the bank, to take steps for recovery of the decreed amount. The RO was not subject to any restraint order. He therefore, issued an order, rejecting the petitioner’s objections. That order became the subject matter of further Appeal bearing No.5/2014 to DRT. Eventually, the petitioner moved the DRAT against the order of DRT. In an application restraint of the proceedings before the RO was sought to be obtained. The impugned order of DRAT declined the application.

4. It is contended that in this case the petitioner has consistently been approaching the concerned authorities at all appropriate stages. Learned counsel firstly contended that the petitioner’s genuineness as to his complaint about the transaction (relied upon by the bank) being fraudulent to fasten liability upon him is borne by the fact that the moment he became aware of SARFAESI proceedings and was aggrieved he approached the Civil Court which after considering the question of maintainability proceeded to entertain the suit and even issued a status quo order. Learned counsel highlighted that as on date issues were framed and the parties-including the respondent bank, have to proceed to trial. Learned counsel submitted that in these circumstances, the DRT and later the DRAT acted rather mechanically declining to stay recovery proceedings. It was argued that the bank’s interests are amply protected because if the mortgage is ul