DRAT held that an unregistered agreement for sale failed to establish ownership rights in recovery proceedings under the RDDB & FI Act, 1993.
The Debts Recovery Appellate Tribunal (DRAT), Mumbai Bench of Justice Ashok Menon (Chairperson) reviewed an appeal and held that an unregistered and insufficiently stamped agreement for sale does not confer any legal right over immovable property, emphasizing that objections to recovery proceedings under Section 31A of the RDDB & FI Act must be raised by borrowers and not third parties seeking possession. Consequently, the appellant's failure to substantiate tenancy or ownership claims rendered the appeal devoid of merit, leading to its dismissal.
The present legal note pertains to the dismissal of Appeal No. 8 of 2015 by the Debts Recovery Tribunal (D.R.T.), Aurangabad, concerning a challenge to the Recovery Officer's order in Recovery Proceedings No. 35 of 2006. The appellant contested the auction sale of a secured asset, claiming possession under a lease and part performance of an agreement to sell. The property in question, CTS No. 15184 in Aurangabad, was mortgaged by the original owner, the late Punjaji Tamkhane, to the respondent bank. Following Punjaji's default, the bank initiated recovery proceedings, leading to the auction of the property, which the appellant sought to challenge.
The appellant's claims of tenancy and rights as a vendee under the agreement to sell were deemed unsubstantiated. The agreement was found to be unregistered and insufficiently stamped, violating provisions of the Indian Registration Act, 1908, and the Bombay Stamp Act, 1958. The Civil Court had earlier dismissed the appellant's claim for specific performance, instead granting a decree for the return of earnest money, which is now under appeal. The appellant’s objections before the Recovery Officer were similarly unsuccessful, and the auction sale was confirmed in favour of the highest bidder.
Key legal contentions raised by the appellant included the jurisdiction of the D.R.T. and the validity of the Recovery Officer's actions. However, the Tribunal held that objections regarding jurisdiction should have been raised earlier under Section 31A of the RDDB & FI Act and were primarily the responsibility of the borrowers, not the appellant. Additionally, reliance on precedents such as Suraj Lamps & Industries Pvt. Ltd. v. State of Haryana & Anr. (2012) was used to reinforce the requirement for proper registration and stamping of agreements to claim rights over immovable property.
The Tribunal concluded that the appellant had failed to establish any legal right to the property, either as a tenant or under part performance of the agreement. It was held that the appellant’s contentions lacked merit, and the appeal was dismissed. Interim orders were granted to continue for two weeks to allow compliance with the decision.
Mr. M.M. Avhad, Advocate represented the Appellant.
Mr. Darshan J. Solanki, i/b M/s Theba & Associates, Advocate appeared for the Respondent.
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