JUDGMENT

MANMOHAN, ACJ: (ORAL)

1. The present writ petition has been filed under Article 226 of the Constitution of India to set aside the order dated 25th August, 2014 passed by the Debt Recovery Appellate Tribunal (‘DRAT’) in Appeal No. 434/2012, whereby the appeal was dismissed and the order dated 29th October, 2012 passed by Debt Recovery Tribunal – II, Delhi (‘DRT’) was upheld.

2. The DRT vide order dated 29th October, 2012 dismissed the objections filed by the Petitioner objecting to the sale of the mortgaged property.

3. The facts, in brief, giving rise to the present petition are as under:

4. The Petitioner herein received a Notice dated 16th July, 2009 from the Respondent No. 1, Bank for taking possession of property comprising of the entire third floor (with terrace rights) built on property bearing no. 49-A, Khasra No.548/135, Village Sheikh Sarai, Savitri Nagar, New Delhi (‘mortgaged property’) under Section 13(4) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’).

4.1. The Petitioner states that he is neither the co-borrower nor the guarantor for the loan advanced by Respondent No. 1 Bank to M/s Right Channel Resources (‘borrower’) and guaranteed by Respondent No. 2. The mortgage was admittedly created on 21st February, 2005

4.2. The Petitioner states that the third floor of property bearing no. 49-A comprises of two separate flats and one of the flats i.e., flat no. 301 was sold by Respondent No.2 to Petitioner herein (‘flat no. 301’) in the year 2002. The Petitioner claims to be a bona fide purchaser of the flat no. 301 from Respondent No. 2 and states that since the flat no. 301 stood sold to the Petitioner in the year 2002, therefore, no valid or binding mortgage could have been created by Respondent No. 2 in the year 2005. He further states on this defence he filed an application under Section 17(1) of the SARFAESI Act before the DRT to oppose the proceedings initiated by the Respondent No. 1 Bank.

4.3. Petitioner states that flat no. 301 was purchased on 12th June, 2002 and since then he has been in actual possession of the said flat as its owner. He claims ownership rights on the basis of, what he calls, the ‘customary documents’ i.e. unregistered Agreement to Sell (‘ATS’), registered Will, Special Power of Attorney (‘SPA’), registered General Power of Attorney (‘GPA’), affidavit, cash receipt and possession letter executed by Respondent No. 2 in favour of the Petitioner and all dated 12th June, 2002. He claims that the flat no. 301 was purchased by him for sale consideration of Rs. 1.50 lakhs, which was paid in cash to the Respondent No. 2.

4.4. The Petitioner states that on the basis of the aforesaid ‘customary documents’, the Petitioner has become the rightful owner of flat no. 301 and therefore, Respondent No. 2 was left with no right, title or interest in the said flat after 12th June, 2002. It is stated that the alleged mortgage in favour of Respondent No. 1 was created on 21st February, 2005 which is after the execution of the aforesaid customary documents dated 12th June, 2002 and therefore, he could not have created any valid mortgage for the flat no. 301 in favour of Respondent No. 1.

4.5. Petitioner states that he learnt about the alleged mortgage on 16th July 2009, when the Petitioner herein received a notice under Section 13(4) of the SARFAESI Act from Respondent No. 1 Bank to vacate the flat no. 301 within one week since the entire third floor with terrace was mortgaged, failing which Respondent No. 1 Bank shall seal flat no. 301.

5. It is stated that aggrieved by the said notice, the Petitioner challenged the action of the Respondent No. 1 Bank by filing an application under section 17(1) of the SARFAESI Act before the DRT which was numbered as SA No. 50/2009.

6. The DRT vide order dated 29th October 2012 dismissed the said application on the finding that Petitioner had not acquired any valid title with respect to flat no. 301 on the