DRAT Upholds SARFAESI Action as Unregistered Documents like Agreement to Sell, Will, GPA Cannot Override Prior Registered Mortgage
- REEDLAW
- Jul 31
- 3 min read
Updated: 5 days ago
REEDLAW Legal News Network reports that the Debt Recovery Appellate Tribunal (DRAT) has upheld enforcement action under the SARFAESI Act, ruling that unregistered documents such as an agreement to sell, will, or general power of attorney (GPA) cannot override a prior registered mortgage.
The Debts Recovery Appellate Tribunal (DRAT), Delhi Bench, comprising Justice Brijesh Sethi (Chairperson), while adjudicating a Miscellaneous Appeal, held that a person claiming ownership based on unregistered documents such as an agreement to sell, GPA, Will, and receipt holds no valid legal title against a prior registered mortgage supported by a registered gift deed and duly recorded with CERSAI. Consequently, no relief can be granted against lawful SARFAESI proceedings initiated by the secured creditor.
The Debts Recovery Appellate Tribunal (DRAT), presided over by Justice Brijesh Sethi (Chairperson), dismissed the appeal filed by the appellant challenging two orders passed by the DRT-II, Delhi. The first challenged order dated 28.03.2025 had declined the appellant's interim prayer for restraining the financial institution and court receiver from taking physical possession of the disputed property. The second order dated 11.06.2025 had rejected the appellant’s restoration application seeking possession and to restrain the financial institution from selling the property.
The appellant claimed ownership over the subject property based on unregistered documents such as an agreement to sell, GPA, Will, and a receipt dated 17.02.2024. However, the respondent financial institution contended that the subject property had already been mortgaged to it by its borrowers on 17.11.2023, based on a registered gift deed dated 17.10.2023, and that the charge had been duly registered with CERSAI on the same date. The financial institution had disbursed the loan following due diligence, including a valuation of the property from the inside.
The Tribunal took note of the fact that the mortgage created in favour of the respondent was earlier in time and legally supported by a registered document, whereas the appellant’s claim was founded solely on unregistered instruments, which are not recognized as conferring legal title. The Tribunal also observed that the financial institution’s charge over the property was duly registered with CERSAI under Section 26D of the SARFAESI Act, giving it enforceable rights under Section 13(4).
The DRAT found no irregularity in the findings of the DRT, which had rightly concluded that the appellant lacked a valid title and was not entitled to any relief. Consequently, the appeal was dismissed, and the file was directed to be consigned to the record room.
Mr. Om Pal Mathur, Advocate, represented the Appellant.
Mr. Samrendra Kumar, Advocate, appeared for the Respondent No. 1.
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