Relief to Indian Bank: DRAT Dismisses Securitization Application in absence of Evidence to indicate illegality of order passed u/s 14 of SARFAESI Act [Read Order]
It is clearly established that the father of Defendant No.3, S. Vijayalakshmi, namely N. Sundareswaran, the borrower had deposited the document of title deeds for creation of equitable mortgage.
Indian Bank -DRAT - Securitization Application - SARFAESI Act - taxscan
Indian Bank -DRAT - Securitization Application - SARFAESI Act - taxscan
The Chennai bench of the Debts Recovery Appellate Tribunal(DRAT) in a ruling in favour of Indian Bank, dismissed the Securitization application in the absence of Evidence to indicate illegality of the order passed under section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, (SARFAESI) Act, 2002.
Mr.A.Subramaniyan, the Appellants have filed the SA, claiming that they are neither borrowers nor guarantors. First Appellant is the owner in possession of 8 cents of land and the second Appellant is the owner in possession of 11.065 cents, as detailed in the SA. First Appellant purchased this property through a registered sale deed No.1366/2003 from the 3rd Respondent and her children (Jagadev and Lakshmi), second Appellant purchased through registered sale deed No.5169/0023 dated 10.11.2003 from 3rd Respondent and her children (Jagadev and Lakshmi).
The first Respondent, Indian Bank, initiated proceedings under SARFAESI Act, 2002, especially filed Petition under Section 14 of the SARFAESI Act in CMP No.902/2012 before the CJM, Kollam. CJM appointed advocate commissioner to take physical possession of the property.
Presiding Officer, taking into consideration all the submissions made by Counsel for parties and records produced, dismissed the aforesaid TSA, necessitating filing of this Appeal.
Counsel for Appellants submitted that the Appellants are the bonafide purchasers of the property on which the Bank alleges the security interest was created by borrowers. No such security interest was created. Without considering this vital aspect, the Securitisation Application TSA 332/2016 was dismissed by Presiding Officer, DRT –II, Ernakulam.
Counsel for Respondent Bank strongly opposed this Appeal on the ground the security interest was created in respect of this property with large extent by one Late Sundareswaran on behalf of M/s. N. Sundareswaran firm for availing various credit facilities by deposit of original title deeds on 12.12.1969. When mortgage was in subsistence, it appears that the said Sundareswaran has transferred the title and interest over the property in favour of third Respondent. Taking advantage of that, third Respondent and her children sold some portion of the property Appellants are not bonafide purchasers. In confirmation of the equitable mortgage and subsequent enhancement of the credit facilities.
Due to this the first Respondent Bank is not able to take possession, sell the property and realize the debt due. Learned Counsel prayed for confirming the order of Learned Presiding Officer and dismisses this Appeal. Section 13(2) Notice was issued, demanding a sum of
Rs.112,04,05,628.14p, due as on 31.7.2007.
It is further submitted that the submission of Learned Counsel for Appellants that original title deed was not deposited by the mortgagor is not correct. It was, in fact, deposited, perused by Presiding Officer and observed that original title deed deposited by the mortgagor is available in the case records in TA No.1281/2016.
The main ground of challenge by the Appellants to the Securitisaton Application proceedings is that, the Appellants are the bonafide purchasers for value and they are neither borrowers nor guarantors. There is no security interest created over the property purchased by the Appellants. No other grounds are raised with regard to non compliance of conditions required for passing order under Section 14 of the SARFAESI Act, 2002.
Since the very challenge was made against the security interest, the Tribunal summoned the documents from DRT. As seen from the documents, it is clearly established that the father of Defendant No.3, S. Vijayalakshmi, namely N. Sundareswaran, the borrower had deposited the document of title deeds for creation of equitable mortgage. The date of mortgage was 12.12.1969. On the basis of this mortgage, the loan facilities had been sanctioned.
The sale in favour of Appellants was only in 2003, long subsequent to the creation of mortgage on the basis of a gift deed dated 28.12.1975. Even this Gift Deed came into existence subsequent to mortgage. Therefore, it is quite obvious and clear that the Appellants purchased the property during subsistence of mortgage. Their purchase is only subject to the mortgage. As already stated, there is nothing to indicate that the order passed under Section 14 was illegal or irregular.
The Debt Recovery Appellate Tribunal Bench comprising Justice G. Chandrasekharan viewed that the Presiding Officer, DRT-II, Ernakulam, rightly dismissed the Securitisation Application, and therefore, the Appeal in RA (SA) 77/2019 is dismissed as devoid of merits.
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