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2011 (2) GCD 1581 (Guj) (DB)
Hon’ble Mr. Chief Justice S.J. Mukhopadhaya &
Hon’ble Mr. Justice Mr. J.B. Pardiwala
Pranjivan Purushottam Zaveri & Anr.
Versus
Dena Bank Through Authorized Officer and/or Assistant & Ors.
Special Civil Application No. 4822 of 2010—Decided on 25/4/2011
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — Sections 13, 13(4), 14, 17, 17(2) and 19 — Dismissal of appeal by Debts Recovery Appellate Tribunal — Ground that petitioners have no locus to challenge mortgage in favour of respondent Bank by Respondent No. 2 — Sustainability — Finding of — The disputed property was purchased by petitioners from Respondent No. 2 by sale deed and took over possession — Subsequently Respondent No. 1 Dena Bank made an application under Section 14 of the Act before Chief Metropolitan Magistrate and took over possession from petitioners alleging that the disputed property was mortgaged with it and that Bank was a Secured Creditor under the Act — The petitioner contended that alleged mortgage with Respondent No. 1 was a forged mortgage — It was made on forged documents — Court, therefore, opened that it was within the power of Debts Recovery Tribunal to adjudicate the issue of legality and validity of mortgage and legality and validity of secured interest with Respondent No. 1 — Court therefore, quashed and set aside impugned order of DRT and DRAT and remitted the entire matter to the Debts Recovery Tribunal to once again took into the entire issue thread bare and give independent finding in this regard.
Held :
The crux of the contention which deserves consideration is that, if there is no valid and legal security interest created by Respondent No. 2 in favour of Respondent No. 1-Bank, at the time of creating a mortgage because of defective title being handed over to the Bank, then, under such circumstances, it wold not be within the powers of the Bank as a secured creditor to enforce such a security interest and proceed under Section 13 of the SARFAESI Act. We are not able to understand as to why the DRT as well as the appellate Tribunal has not thought fit to examine this issue more particularly when it is the positive case of the petitioners herein that Respondent No. 2 has committed fraud and has duped the Bank by producing defective title deeds and that too, to the extent of producing a forge share certificate said to have been issued by the society. This case of the petitioners cannot be just brushed aside easily and it would also not be in the larger interest of justice to say that the petitioners cannot challenge the validity and legality of the mortgage. If there is no valid security interest created in favour of the bank, then there is no valid mortgage, and if there is no valid mortgage, then the petitioners, who are the purchasers of the property, can definitely say that the bank could not have enforced such a defective security interest. [Para 12]
In a given case, more particularly in light of the facts and circumstances of the present case, it is within the powers of the DRT to adjudicate the issue of legality and validity of a mortgage and the legality and validity of security interest created in favour of the Bank. [Para 18(i)]
In this view of the matter, we are of the opinion that the ends of justice would be served if we remit the entire matter to the Debts Recovery Tribunal to once again look into the entire issue threadbare and give an independent finding in this regard.
[Para 18(iii)]
Law Laid Down :
If there is no valid security interest created in favour of Bank, the Bank can not enforce such a defective security interest.
J.B. Pardiwala, J.—Petitioners - husband and wife have preferred this Petition under Articles 226 and 227 of the Constitution of India praying for following reliefs:
“(B) This Hon’ble Court may be pleased to issue writ of certiorari or any other appropriate writ, order or direction, to quash and set aside the impugned judgment and order of the Debts Recovery Appellate Tribunal at Mumbai dated 15.4.2010 at Annexure-A passed in Appeal No. 291 of 2007, confirming the judgment and order of Debts Recovery Tribunal-I, Ahmedabad dated 31.7.2007 passed in Appeal No. 25/2007 under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and this Hon’ble Court may be pleased to allow the appeal of the petitioners by quashing and setting aside the action Respondent No. 1 taken under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of the disputed Bungalow.
(C) This Hon’ble Court may be pleased to issue writ of mandamus or writ in the nature of mandamus and / or any other appropriate writ, order or direction, declaring that security interest is not legal and valid created in favour of Respondent No. 1 Bank by Respondent No. 2 in respect of the disputed property being 13-A, Shyam Sattadhar Cooperative Housing Society Limited, Sola Road, Bhuyangdev, Ahmedabad and further be pleased to declare that the petitioners are owners of the said property pursuant to the sale deed executed by Respondent No. 2 in favour of the petitioners and entitled to the possession of the said Bungalow in question.
(D) This Hon’ble Court may be pleased to issue writ of mandamus and / or any other appropriate writ, order or direction, declaring that respondent dispossessed the petitioners from disputed property and further be pleased to direct Respondent No. 1 to restore the possession of the said disputed property to the petitioners forthwith.
(E) Pending hearing and final disposal of this petition, this Hon’ble Court may be pleased to restrain Respondent No. 1, its officers, servants and agents from transferring, alienating, and / or, in any manner, disposing of the disputed property being residential house 13-A, Shyam Sattadhar Cooperative Housing Society Limited, Sola Road, Bhuyangdev, Ahmedabad and / or in alternative, if sale certificate is issued and conveyance deed is executed by Respondent No. 1, then execution, operation and implementation of such share certificates and conveyance deed be stayed and the disputed property be restored back to the petitioners.”
2. Facts relevant for the purpose of deciding this petition can be summarised as under:
2.1 Petitioner No. 1 was working with Gujarat Agricultural University at Dantiwada as a Scientist Class-I. As on today, he has his own independent profession and engaged in the activity of research and development in seeds and marketing of the improved seeds and knowledge. Petitioner No. 2 is the wife of Petitioner No. 1 and she is assisting in the business of her husband.
2.2 Petitioners were in search of a residential premises. They read an advertisement published in the newspaper by Respondent No. 2 through one broker for sale of residential property namely 13-A, Shyam Sattadhar Cooperative Housing Society Limited, Sola Road, Bhuyangdev, Ahmedabad. This advertisement was published in Gujarat Samachar, a vernacular local newspaper, Ahmedabad edition on 10.9.2006.
2.3 Petitioners approached the broker through whom the advertisement was published and the broker in turn gave physical inspection of the bungalow to the petitioners and also copy of title documents, including title clearance report obtained by Respondent No. 2, copy of original share certificate, etc. Petitioners ultimately settled the deal and bought the property in question for Rs. 17.51 lacs. Respondent No. 2 executed sale deed in favour of the petitioners dated 10.10.2006.
2.4 Petitioners wanted to avail loan facility from
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