To invoke provisions u/s 17(1) SARFAESI Act, interest as an owner or even possessory right is must

The Debts Recovery Appellate Tribunal (DRAT), New Delhi has passed an order to invoke the provisions under Section 17(1) of SARFAESI Act 2002, the person approaching the Tribunal has to show that he/she has any interest as an owner or even possessory right, in the alleged secured asset. DRAT observed that S.A. applicants had no locus standi to approach the DRT against the SARFAESI measures initiated by the appellant bank to enforce its secured interest in the mortgaged property in question. The order was passed on 5 December 2020 by the Chairperson P. K. Bhasin in the case of Punjab National Bank v. Mrs. Usha Kumari and Another, REED 2020 DRAT Del 8807.

In one S.A. the applicant Usha Kumari was claiming to be the owner of a part of the property, while in the other S.A. the S.A. applicant Madhu Arora was claiming to be the owner of another part of the said property. Both of them had claimed to have acquired ownership through General Power of Attorney, Agreement to Sell, Will etc. executed in their favour by one Late Smt. Banso Devi, who as per the case both sides were the owner of the said entire property. As per the case of applicants, late Banso Devi had executed title documents in respect of the said property in favour of its borrower Smt. Anju Chaudhary in the year 2010 and on the basis of those documents bank had given loan to Anju Chaudhary. 

It was not disputed by the counsel for the respondent Mrs. Usha Kumari and Ms. Madhu Arora that S.A. applicants as well as Anju Chaudhary and late Smt. Banso Devi are related to each another. 

Ld. DRT has allowed the appellant bank’s O.A. and directed issuance of recovery certificate in its favour for a sum of Rs.2,10,83,632/- with interest against the defendants in the O.A. but rejected the bank’s case of mortgage on the ground that Late Smt. Banso Devi had expired in the year 2004 while title documents of in favour of Anju Chaudhary purportedly had been executed in the year 2010. The DRT declined to accept the bank’s case of equitable mortgage and consequently no order was passed in O.A. for recovery of the decretal amount by selling the mortgaged property in question in the event of the borrowers/ CDs not clearing the decretal amount. As far as the two S.A.s are concerned, the same were allowed and it was held that there was no valid mortgage in favour of the bank. It is the rejection of the bank’s claim as a mortgagee/secured creditor with which the bank has felt aggrieved and has filed these two appeals. The DRT has rejected the bank’s case of mortgage on the ground that Late Smt. Banso Devi had expired in the year 2004 while title documents of in favour of Anju Chaudhary purportedly had been executed in the year 2010.

The appellant bank is aggrieved by a common order passed by the DRT in bank’s Original Application under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and two Securitization Applications filed by one Mrs. Usha Kumari and another by Ms. Madhu Arora, who respondent no.1 in both these appeals.

The Original Application was filed by the bank to recover its dues of Rs.2,10,83,632.00 from respondent Anju Chaudhary to whose proprietorship firm loan was granted over a crore of rupees. It was claimed that two loan facilities one of CC Limit of Rs.140.00 lakhs and another vehicle Loan of Rs.11.34 lakhs had been given, but there was default in repayment and that due to default in repayment the borrower’s account was declared as NPA and the proceedings under SARFAESI Act were also initiated. To resist the action of the bank under Section 13(4) two separate Securitization Applications were filed which stand allowed by the DRT along with the O.A. of the appellant bank vide a common order.

Ld. Counsel for the bank has submitted that this fact was not known to the bank when loan was given to Anju Chaudhary’s Firm. She had deposited with the bank title document issued in favour of Banso Devi when she had approached the bank for loan, she and she had also produced the title documents purporting to have been executed by late Smt. Banso Devi in her favour and that way equitable mortgage stood created in favour of the bank. He also submitted that all these family members have colluded with each other to defraud the bank of over Rs. 2 crores and the bank cannot be made to suffer by making it incompetent to sell its mortgage asset as has been done by the learned DRT and that in any event the SA.A. applicants had no locus standi to challenge the measures of the appellant bank since they were not having any sale deed in their favour executed by Banso Devi. 

Learned counsel for the respondents / securitization applicants, on the other hand, supported the impugned order of learned DRT to the effect that there was no valid mortgage and consequently SARFAESI measures initiated by the bank were illegal. It was submitted that on the face of it title documents in possession of the bank, including a registered sale deed allegedly executed by Banso Devi in favour of Anju Chaudhary, are forged for the reason the same purport to have been executed by Late Smt. Banso Devi in the year 2010 while she died in the year 2004. It was also the case of S.A. applicants that since Banso Devi had died in the year 2004 she could not have stood guarantor on 2011 as was the case of the bank so everything was a fraud and further that the bank itself had lodged an FIR about the fraud having been played on it by the borrower and her conspirators.

After hearing the counsel for the RP and the landowners, the NCLT ordered, “S.A. applicants had failed to show that they had any interest to protect in the mortgaged property in question and therefore they could not resist the SARFAESI measures initiated by the appellant bank to recover its dues of crores of rupees. To invoke the provisions of SARFAESI Act under Section 17(1) of SARFAESI Act the person approaching has to show that he/she has any interest as an owner or even possessory right, in the alleged secured asset. The two SA applicants in this case failed to establish either of the two. Consequently, these two appeals are allowed and there shall now be an order in the bank’s O.A. that in case the decretal amount is not paid by the borrowers-defendants within a period of 30 days, the bank will be at liberty to recover the same by selling the above referred mortgaged property. Consequently, the two S.A.s will now stand dismissed and the bank will be at liberty to proceed further with its SARFAESI measures also by taking over physical possession of the mortgaged property in case the bank’s dues are not cleared within one month.”

Satish Kumar Rout, Advocate represented the Bank. Ms. Jagriti Pandey, Advocate represented S.A.s applicants.

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