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Allahabad High Court · body

2012 DIGILAW 2084 (ALL)

Malti Devi Kakkar v. Allahabad Bank

2012-09-10

R.K.GUPTA

body2012
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. They are heard. Preliminary objection is raised during the course of argument on behalf of the Bank that the appellant No. 1 has unnecessarily been impleaded as one of the appellant's, though she has not chosen to file the Securitisation Application under Section 17 of the SARFAESI Act, 2002 before the Tribunal. It is clear from the judgment passed by the Tribunal on 15th March, 2012 in the two securitisation applications i.e. S.A. No. 29/2011 and S.A. No. 155/2010 that the appellant No. 1 was not a party before the Tribunal, as she has not chosen to file the Securitisation Application before the Tribunal. Under these circumstances, she has no right to prefer the appeal under Section 18 of the SARFAESI Act, 2002, therefore, the present appeal shall not be treated to be an appeal by the appellant No. 1. 2. With regard to the appellant Nos. 2 and 3 are concerned, they preferred the securitization application before the Tribunal which was registered as S.A. No. 155/10. The said securitisation applications were dismissed by the Tribunal by an order dated 15th March, 2012, which is impugned order in the present appeal. Under these circumstances, the present appeal is treated to be an appeal by the appellant Nos. 2 and 3. 3. The facts leading to the present case are that the mortgagor Ravi Shankar Mehrotra is the respondent No. 7 in the present appeal. He was also arrayed as respondent No. 7 before the Tribunal. Shri Ravi Shankar Mehrotra was the guarantor. The principal borrower was the respondent No. 3. Since the principal borrower failed to repay the dues, therefore, the Bank took action by issuing notice under Section 13(2) of the SARFAESI Act, 2002. 4. In spite of the notice the dues were not clear, therefore, the Bank took action under Section 13(4) of the SARFAESI Act, 2002. After taking over the possession of the property, the mortgaged property was put to auction. 5. It is the case of the Bank that the highest bid towards the said mortgaged property was received for a sum of Rs. 7.50 lacs, but the auction has not been confirmed. 6. After taking over the possession of the property, the mortgaged property was put to auction. 5. It is the case of the Bank that the highest bid towards the said mortgaged property was received for a sum of Rs. 7.50 lacs, but the auction has not been confirmed. 6. The present appellants filed the securitisation application on the ground that it was an ancestral property and such ancestral property could not have been mortgaged by the respondent No. 7 i.e. their father and on this ground it was challenged that the property is related to HUF, therefore, the mortgage was bad. The Tribunal did not accept the submission so made on behalf of the present appellants and dismissed the case. 7. Learned Counsel for the appellants submitted that even though they have lost the opportunity to establish their claim that the property as such belongs to HUF yet, by virtue of Section 91 of the Transfer of Property Act, 1882, the appellants since have right and interest over the property, therefore, they can redeem the said property after paying the value of the property which was mortgaged and the property which is in question in the present case. 8. On behalf of the respondent-Bank it was submitted that right of redemption under Section 13(8) of the SARFAESI Act, 2002 is only available to the appellants, if the dues of the secured creditor together with all costs, charges and expenses incurred are tendered to the secured creditor at any time before the date fixed for sale or transfer and on the basis it is submitted that right of redemption now is not available. 9. The rival submissions so made on behalf of the parties are considered. 10. This is to be seen that this Appellate Tribunal is Appeal Sr. No. 305/2011, Ladli Prasad Srivastava v. Punjab National Bank, decided on 10th January, 2012 has held that by virtue of Section 13(8) of the SARFAESI Act, 2002 right of redemption can also be availed by the borrower including the guarantor, if the property is not sold or transferred. Admittedly, in the present case, the property as such was put to auction, but the auction as such has not been confirmed. Physical possession of the property is still with the appellants. Thus, the right of redemption, even after the sale, is available, but cannot be availed after transfer of the property. Admittedly, in the present case, the property as such was put to auction, but the auction as such has not been confirmed. Physical possession of the property is still with the appellants. Thus, the right of redemption, even after the sale, is available, but cannot be availed after transfer of the property. In this reference the question arises with the meaning and scope of Section 13(8) of the SARFAESI Act, 2002. For the purpose of convenience, Section 13(8) of the SARFAESI Act, 2002 is reproduced, which reads as under: 13(8). If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset. 11. Section 13(8) of the SARFAESI Act, 2002 applies to the eventualities where the dues of the secured creditor are less than the value of the mortgaged property. If all the dues are cleared by tendering the same to the secured creditor, then the property as such will neither be sold nor be transferred, but not in the present case the value of the property is less than the amount which is recoverable by the Bank. 12. Learned Counsel for the Bank submitted that the Bank has to recover approximately more than Rs. 1.00 crore from the borrower and guarantor. The value of the mortgaged property in auction is received only for a sum of Rs. 7.50 lacs and, thus, the value of the mortgaged property is very less than the amount which is recoverable. Under these circumstances, Section 91 of the Transfer of Property Act, 1882 would be relevant to apply in the present situation. 13. Section 91 of the Transfer of Property Act, 1882 provides that besides the mortgagor, any of the persons may redeem, or institute a Suit for redemption of the mortgaged property. The persons, who are entitled for redemption of the property, or such persons other than the mortgagee who has any interest in, or charge upon the property mortgaged or in or upon the right to redeem the same. The persons, who are entitled for redemption of the property, or such persons other than the mortgagee who has any interest in, or charge upon the property mortgaged or in or upon the right to redeem the same. Any surety for the payment of the mortgage debt or any part thereof or any creditor of the mortgagor who has in a Suit for the administration of his estate obtained a decree for sale of the mortgaged property, would be the persons entitled to redeem the mortgaged property. 14. It was the claim of the appellants that the property is an ancestral property and they have right and interest over the mortgaged property therefore in terms of Section 91 of the Transfer of Property Act. 1882 they are the persons having right and interest over the property and are claiming redemption of the mortgaged property. Under these circumstances, Section 91 of the Transfer of Property Act, 1882 would be applicable with regard to the redemption of the mortgaged property. The value of the mortgaged property has only been received by the Bank through an open auction for a sum of Rs. 6.50 lacs, the dues of the secured creditor are approximately more than Rs. 1.00 crore. The actual dues are yet to be calculated. Under these circumstances, even though the mortgaged property is sold, then by virtue of Section 91 of the Transfer of Property Act, 1882 right of redemption of such mortgaged property continues to be there and it would be appropriate to permit the redemption of the property. 15. The property was put to auction on 22nd February, 2011. It was the highest bid for a sum of Rs. 7.50 lacs, which was accepted by the Bank, and the auction purchaser has deposited only 10% of the reserved price. Under these circumstances, it will be appropriate to direct for redemption of the property inclusive of all charges i.e. publication charges and the administrative charges including interest, which the Bank has to pay on the earnest money deposited by the auction purchaser, therefore, it will be in the fitness of the circumstances of the case to direct the appellants to pay a sum of Rs. 9.00 lacs for redemption of the mortgaged property, but the redemption as such will not come in the way of the Bank to recover its remaining dues from the borrower and the guarantor. 16. 9.00 lacs for redemption of the mortgaged property, but the redemption as such will not come in the way of the Bank to recover its remaining dues from the borrower and the guarantor. 16. It was also submitted on behalf of the respondent Bank that Section 91 of the Transfer of Property Act, 1882 is for filing of a suit for redemption of the property and in absence of any such suit, the redemption is not permissible even under Section 91 of the Transfer of Property Act, 1882. In this reference this is to be seen that filing of a civil suit with regard to the auction of the property which is subject matter of the SARFAESI Act, 2002, therefore, only the remedy, which is available to the present appellants having interest and right on the property and who are interested to redeem the property, would be the remedy available to them under SARFAESI Act, 2002 and not by filing the Civil Suit. Right of redemption since has been prayed for by the appellants while arguing the case before this Tribunal, therefore, right of redemption had been accepted as aforesaid. The appellants have already deposited a sum of Rs. 8.00 lacs. The appellants shall further deposit a sum of Rs. 1.00 lac with the respondent Bank within thirty days from today. If the amount is not deposited within the period as above, then the Bank shall be free to confirm the auction. The other points with regard to the ancestral property and validity of the mortgage have not been pressed by the appellants in the light of the right of redemption, which was insisted upon by the appellants. On such deposit the title deed will be returned to the appellants by the Bank. However, as directed earlier, this order will not preclude the Bank to recover its remaining dues from the borrower and the guarantor. The appeal stands allowed to the extent above.