Subsequent Purchaser Cannot Defeat Prior Mortgage: DRT Delhi Dismisses Securitisation Application Filed by Flat Buyer [Read Order]

The Debts Recovery Tribunal-II (DRT) in Delhi has dismissed an application for securitization by a flat buyer who had challenged the action taken by Punjab & Sind Bank under the SARFAESI Act.

The securitization application filed by the buyer of a flat against the action initiated by Punjab & Sind Bank under the SARFAESI Act was dismissed by the Debts Recovery Tribunal (DRT) in Delhi.

The securitization application was filed by Ms. Vanshika Singh and another applicant under Section 17(1) of the SARFAESI Act against the actions initiated by the Bank regarding a flat situated at D-362, Laxmi Nagar, Delhi.

The applicants had stated that they were bona fide purchasers for a consideration and had purchased the upper second-floor flat through a registered sale deed dated 01.01.2016 from the erstwhile owner, Rajesh Sahdev.

The applicants had stated that the property had been free from encumbrances at the time of purchase and that they had no knowledge of the mortgage.

However, it had been revealed that Rajesh Sahdev had created an equitable mortgage in favor of the respondent Bank on 08.07.2015, depositing the original title deeds and obtaining a loan of ₹26 lakh.

The applicants had stated that the flat that they had purchased had been constructed after the creation of the mortgage and therefore had not formed a part of the mortgage.The Bank, in turn stated that the entire property including the roof rights was mortgaged prior to the sale of the property.

It was stated that the applicants’ purchase of the property was subsequent to the mortgage and therefore, subject to the Bank’s security interest in the property.

After examining the matter, the Tribunal comprising Sushil Kumar Rastogi, Presiding Officer, held that the mortgage in favor of the Bank was prior to the sale deed executed in favor of the applicants.

Therefore, in the absence of any evidence to the contrary, indicating the exclusion of the upper floor of the property from the mortgage, it was held that the entire property, including the subsequent construction was a part of the mortgaged property.

Accordingly,It was held that the Bank’s charge was superior to the claim of the applicants, and the securitization application was dismissed.

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