DRAT held that unregistered agreements and unsupported claims did not override SARFAESI proceedings or create enforceable rights over the mortgaged property.
The Debts Recovery Appellate Tribunal (DRAT), Delhi Bench of Justice Brijesh Sethi (Chairperson) reviewed an appeal and observed that unregistered agreements and unsupported claims of possession do not create a valid mortgage or enforceable interest under Section 58 or Section 53A of the Transfer of Property Act, 1882 and in the absence of a legal right or title, no interim relief can be granted against the bank's statutory rights under the SARFAESI Act to recover dues from a mortgaged property.
The Debts Recovery Appellate Tribunal (DRAT) examined an appeal filed by the appellant, challenging the Debt Recovery Tribunal's (DRT-II) dismissal of an interim application seeking to restrain the respondent bank from taking possession of a disputed property. The appellant, a practising doctor, asserted ownership and possession of the property, a freehold flat in Vasant Kunj, New Delhi, based on agreements and undertakings executed by respondent no. 2, who had defaulted on a friendly loan. The appellant contended that respondent No. 2 had dishonoured repayment cheques and subsequently handed over possession of the property in December 2015. The bank, however, had mortgaged the property and initiated recovery measures under the SARFAESI Act, declaring the loan account as a Non-Performing Asset (NPA) and issuing statutory notices.
The DRT had dismissed the appellant’s Securitization Application (SA), holding that the documents relied upon did not meet statutory requirements to establish a mortgage or charge under Section 58 of the Transfer of Property Act. It further noted that the appellant had no locus standi to challenge the bank’s actions, as the agreements were unregistered and insufficient to confer legal title or interest in the property. Additionally, the appellant had previously withdrawn a civil suit related to the same agreements, further undermining his claims.
Upon appeal, the DRAT upheld the DRT’s findings, emphasizing that interim relief could not be granted in the absence of a valid legal right or enforceable claim over the property. The tribunal rejected the appellant’s reliance on Section 53A of the Transfer of Property Act, concluding that the agreements presented did not constitute valid contracts for part performance. It also distinguished prior Supreme Court judgments cited by the appellant, finding them inapplicable to the case’s facts.
The DRAT observed that pending civil disputes between the appellant and respondent No. 2 regarding possession and title precluded any interference with the bank’s rights. The tribunal reiterated that the appellant’s payments to the bank conferred no equity or legal rights over the mortgaged property, as explicitly noted in prior orders. The tribunal affirmed that the respondent bank had lawfully proceeded under the SARFAESI Act, and there was no irregularity or illegality in the DRT’s decision.
The appeal was dismissed for lack of merit, and the DRAT confirmed the bank’s right to recover its dues by taking possession of the property. The decision reinforced the principle that unregistered agreements and unsupported claims of possession cannot defeat the statutory rights of secured creditors.
Mr. B.S. Nagar, Advocate represented the Appellant.
Mr. Rajinder Wali, Advocate appeared for Respondent No. 1.
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