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Allahabad High Court · body

2013 DIGILAW 2765 (ALL)

Union Bank of India v. Isha Sachdeva

2013-11-11

R.K.GUPTA

body2013
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. They are heard. The Appeal No. R-138/13 is preferred by the appellant-Bank challenging the order dated 10th April, 2013 passed by the Tribunal in S.A. No. 7/2011. Another appeal has also been preferred by the auction purchaser-Vatika Goods Pvt. Ltd. challenging the same order. The Tribunal by this impugned order has set aside the auction sale which was conducted by the Bank on 24th December, 2010. 2. The relevant facts for the adjudication of the present case are that respondent No. 2 in Appeal preferred by the Bank is the borrower. So far as the respondent No. 1 is concerned, she purchased the property subsequent to the mortgage. The respondent No. 3 in the Appeal preferred by the Bank is the mortgagor, who created the mortgage for grant of the loan facility in favour of the respondent No. 2. The mortgage was created on 19th January, 2009. So far as the respondent No. 1 is concerned, she purchased the property on 10th March, 2010. 3. Since there was default committed by the borrower i.e. respondent No. 2, therefore, the Bank took the action for recovery of its debt from the borrower and the mortgagor. Firstly, the demand notice under Section 13(2) of the S.A.R.F.A.E.S.I. Act, 2002 was issued and thereafter, the Bank proceeded to take possession of the property by taking recourse of Section 13(4) of the Act, 2002. While recovering said amount, the property belonging to the respondent No. 3 in Appeal preferred by the Bank was put to auction and the sale proclamation was published. The respondent No. 1 purchased the property from the respondent No. 3 after the mortgage. 4. According to the sale proclamation, the property was put to auction on 24th December, 2010, where the respondent No. 4 in Appeal preferred by the Bank was the successful bidder, whose bid was accepted. 5. The respondent No. 1 filed the securitization application before the Tribunal challenging the auction notice dated 22nd November, 2010 and also to restrain the Bank from executing the sale deed in favour of the auction purchaser in pursuance to auction dated 24th December, 2010 and also prayed for quashment of the order passed by the District Magistrate on 5th January, 2011 on the ground that she is the real owner under the sale-deed executed by the respondent No. 3 in her favour. The said securitization application was filed by the respondent No. 1 on 2nd February, 2011. The Tribunal accepted the securitization application partly preferred by the respondent No. 1 and set aside the part of the auction of the property, which was sold by Mr. Awadhesh Kumar and Mr. Akhilesh Kumar and upheld the mortgage which was created by the respondent No. 3 to the extent of his share. Thus, the Tribunal allowed the securitization application partly with respect to the share of other two brothers on the property, which was of Awadhesh Kumar and Akhilesh Kumar on the ground that since they have not created any mortgage and they were absolute owners of the part of the property, therefore, to that extent sale of the property in favour of the respondent No. 1 on 10th March, 2010 by Awadhesh Kumar and Akhilesh Kumar was held to be valid. The sale, which related to the share of Mr. Naresh Kumar was held bad because the sale was conducted with the discharge of the charge under the mortgage, created by Naresh Kumar. 6. On the basis of the aforesaid, the auction purchaser as well as the Bank, both have preferred the Appeals before this Tribunal challenging the order passed by the Tribunal. 7. Learned Counsel for the appellant submitted that in the present case though the securitization application was filed by the respondent No. 1, but the same was barred by limitation. An application for condonation of delay was moved, but the Tribunal has not cared to decide the said application for condonation of delay. 8. On behalf of the respondent No. 1 it was submitted that the securitization application preferred by the respondent No. 1 was within time and there was no need to file the application for condonation of delay, but the same was wrongly filed. 9. In view of the rival submissions so made on behalf of the respondent No. 1, this Tribunal has looked into, whether the securitization application preferred by the respondent No. 1 was within time? 10. Admittedly, the securitization application was filed on 2nd February, 2011 by the respondent No. 1 and in the same the sale proclamation was challenged and it was also prayed that the Bank be restrained from executing the sale deed in favour of the auction purchaser in pursuance of the auction dated 24th December, 2010. 10. Admittedly, the securitization application was filed on 2nd February, 2011 by the respondent No. 1 and in the same the sale proclamation was challenged and it was also prayed that the Bank be restrained from executing the sale deed in favour of the auction purchaser in pursuance of the auction dated 24th December, 2010. It was also prayed that the order passed by the District Magistrate on 5th January, 2011 be quashed. 11. Under Section 17 of the S.A.R.F.A.E.S.I. Act, 2002 the period of 45 days is prescribed to prefer the securitization application from the date the secured creditor proceeds with to take action. 12. In the present case, the secured creditor proceeded to auction the property. The date for auction of the property was fixed on 24th December, 2010. On the said date the auction was conducted and the highest bid from the successful bidder was accepted. The securitization application was preferred on 2nd February, 2011 and it was filed on 40th day from the date the auction was conducted. 13. Under the circumstances, I am inclined to hold that the securitization application which was filed by the respondent No. 1 before the D.R.T. was within time and was not barred by limitation. 14. Learned Counsel for the Bank submitted that in the present case the Tribunal should not have determined the right of the ownership of the respective parties. It was contended that in the present case, in pursuance to the sale deed dated 2nd November, 2006 three brothers purchased the property jointly and the sale deed was executed on 2nd November, 2006. 15. Learned Counsel for the Bank submitted that the issue decided by the Tribunal with regard to the right of ownership was beyond the jurisdiction of the Tribunal in terms of the judgment passed by the Hon'ble High Court of Madhya Pradesh in Prabha Jain v. Central Bank of India, III (2013) BC 571 : 2012(1) D.R.T.C. 824 (MP). In this judgment, the Hon'ble High Court of Madhya Pradesh has held that validity of sale deed of a property mortgaged with the Bank cannot be decided by the D.R.T. In the present case, the question is entirely different. In this judgment, the Hon'ble High Court of Madhya Pradesh has held that validity of sale deed of a property mortgaged with the Bank cannot be decided by the D.R.T. In the present case, the question is entirely different. In the present case, there was no requirement to decide and adjudicate upon the validity of the sale deed dated 2nd November, 2006 which was executed in favour of three brothers i.e. Naresh Kumar, mortgagor, Awadhesh Kumar and Akhilesh Kumar. 16. In the present case, the Tribunal-has decided that Naresh Kumar was not an absolute owner, who created the mortgage on the property with the Bank and was having no right to create the mortgage of whole property and for the purpose of ascertaining the same, the Tribunal held that by virtue of sale deed dated 2nd November, 2006 the property was purchased by three brothers jointly. Therefore, in the absence of consent or otherwise, Naresh Kumar should not have created the mortgage for the share of other two brothers i.e. Awadhesh Kumar and Akhilesh Kumar, though Naresh Kumar was having valid title to the extent of his share and he could have created the mortgage validly in favour of the Bank for his share and such mortgage would be a valid mortgage to the extent of the share which belongs to the mortgagor i.e. Naresh Kumar. The Tribunal in this reference has relied upon certain documents. The same documents have also been filed before this Tribunal. 17. This is to be seen that when Naresh Kumar created the mortgage, then he submitted that he is the owner in possession of the whole property on which the mortgage was created. The affidavit is dated 12th January, 2009 and the declaration in this regard was also given, which is also dated 12th January, 2009. The mortgage was created on 19th January, 2009. 18. This is to be seen that Naresh Kumar was claiming himself to be an absolute owner of the whole property on the basis of the family settlement, but while giving the affidavit the date of family settlement it was not disclosed in the affidavit, reference of which is given hereinabove. The property in question was not the ancestral property but was purchased by all the three brothers jointly. Thus, the family settlement will not be of any help either for the Bank or, for Mr. Naresh Kumar. The property in question was not the ancestral property but was purchased by all the three brothers jointly. Thus, the family settlement will not be of any help either for the Bank or, for Mr. Naresh Kumar. Under the circumstances, how the family settlement will have the effect of extinguishing the rights of other two brothers, which they acquired the right of ownership through registered sale deed dated 2nd November, 2006. 19. The family settlement relates to the pre-existing rights and does not create any new right. Since all the brothers purchased the property individually through a common registered sale deed, therefore, they have individually right on the property to the extent of their share and under the garb of family settlement, the preexisting rights of ownership under the registered sale deed cannot be extinguished and when the right of ownership is acquired through registered sale deed, then such right has to be either relinquished or extinguished through registered sale deed. Since no new rights are created through family settlement, therefore, earlier rights continued in favour of all the three brothers. 20. Surprisingly enough, once Naresh Kumar has given affidavit to the Bank claiming that he is an absolute owner in possession of the property, then the Bank treated him only to be an absolute owner of the property while sanctioning the loan, but subsequently, the Bank issued the notice under Section 13(2) of the S.A.R.F.A.E.S.I. Act, 2002 on 3rd March, 2010 and the copy of the notice under Section 13(2) of the Act, 2002 was also given to all owners i.e. three brothers namely Naresh Kumar, Awadhesh Kumar and Akhilesh Kumar. Thereafter, when the possession notice was published, then in the same also, the names of three owners as aforesaid, were published and they were shown as mortgagors. The Bank when published the auction notice, then also in the same, all the three brothers were shown to be the owners and mortgagors. 21. It is very surprising that Naresh Kumar according to his affidavit and documents was claiming himself to be an absolute owner in possession of the property on the basis of the family settlement. This is however not understood, as to why the Bank subsequently treated three brothers i.e. Naresh Kumar, Awadhesh Kumar and Akhilesh Kumar either as the owners of the said property or the mortgagors. 22. This is however not understood, as to why the Bank subsequently treated three brothers i.e. Naresh Kumar, Awadhesh Kumar and Akhilesh Kumar either as the owners of the said property or the mortgagors. 22. There is nothing on record that the other two brothers i.e. Awadhesh Kumar and Akhilesh Kumar have signed any documents with the Bank for creation of the mortgage over the property to their extent for advancing the facility to the respondent No. 2. 23. On the basis of the aforesaid, the Tribunal was justified in holding that the property was belonging to three brothers jointly and they became owners of the same property through the sale deed which was executed on 2nd November, 2006 and Naresh Kumar was not the absolute owner of the whole property who created the mortgage with the Bank on the whole property. Thus, the Tribunal has rightly held that the mortgage was valid to the extent of share of Naresh Kumar and was invalid to the share which belongs to other two brothers i.e. Awadhesh Kumar and Akhilesh Kumar, and further rightly held that the sale in favour of respondent No. 1 by these brothers, to the extent of their share is valid. 24. This is one more surprising aspect of the matter that all three brothers including Naresh Kumar have executed the sale deed in favour of the respondent No. 1 under the sale deed dated 10th March, 2010. If on the basis of the affidavit dated 12th January, 2010, on which the reliance was placed by the Bank, Naresh Kumar was the absolute owner in possession of the property, then as to how the other two brothers i.e. Awadhesh Kumar and Akhilesh Kumar have executed the sale deed in favour of the subsequent purchaser i.e. respondent No. 1 on 10th March, 2010. This goes to show that whatever the affidavit which was submitted to the Bank by Naresh Kumar was not correct, through which he claimed that he is the absolute owner in possession of the property under the family settlement deed, which was executed on 30th October, 2006 and it was notarized on 6th November, 2006. Awadhesh Kumar filed the securitization application before the Tribunal. 25. Learned Counsel for the Bank further submitted that in the present case, the findings recorded by the Tribunal are contrary to the law. Awadhesh Kumar filed the securitization application before the Tribunal. 25. Learned Counsel for the Bank further submitted that in the present case, the findings recorded by the Tribunal are contrary to the law. In Para No. 17 of the judgment impugned, the Tribunal held that for want of registration under Section 17(1)(b) of the Registration Act family arrangement has no force. To this extent, the finding arrived at by the Tribunal cannot be supported by the law, but in the present case, the facts are otherwise. 26. This is to be seen that because of the two documents i.e. Family Settlement and the Power of Attorney, filed by the Bank before the Tribunal and also before this Tribunal, the other two brothers have relinquished their rights of ownership from the property and these two brothers are Avadhesh Kumar and Akhilesh Kumar and they have relinquished their share from the property in favour of Naresh Kumar. This what stated in these two documents. 27. Now, the real question for determination is there, whether the deed of relinquishment was required to be registered under Section 17(1)(b) of the Registration Act? Similarly, the power of attorney also states about the relinquishment of rights by two brothers. If there was deed of relinquishment, then Section 17(1)(b) of the Registration Act provides for passing of valid deed and it requires registration. 28. Learned Counsel for the respondent No. 1 relied upon a judgment passed by the Hon'ble High Court of Judicature at Allahabad in Mangal Prasad v. Vth Additional District Judge, Basti, AIR 1992 Allahabad 235. Paragraph Nos. 11 and 12 of the judgment is reproduced hereinbelow: 11. A bare reading of the document shows that by the document itself the property has been divided by metes and bounds. It is not that it recites that a partition has already been taken place and the document records only a memorandum of the said petition. By the impugned document, the ancestral property was divided by metes and bounds between the two real brothers and by the said document the property which was jointly purchased by the two real brothers was given exclusively in the share of one brother and the other was deprived of the said property. This clearly amounts to creating a fresh right in the property and extinguishing the existing right in the said property. 12. This clearly amounts to creating a fresh right in the property and extinguishing the existing right in the said property. 12. If the document is a recognition of pre-existing right then it can be called the memo of partition but if the rights are created or extinguished by the said document, the document requires registration. In the present case for the first time by the document itself the entire property was divided by metes and bounds and the property jointly purchased by the two brothers was given in favour of one brother depriving the other brother of his share in the said property. This resulted in a situation that document created an exclusive right in respect of joint property in favour of one brother and the right of other brother was extinguished. Such a document clearly required registration and was insufficiently stamped. The Trial Court has rightly impounded the document. The submission of the petitioner's Counsel that the document is only a memorandum of partition is not correct and the submission is belied by the language of the document itself. I am clearly of the opinion that by the impugned document itself the property was divided between the two real brothers and a joint property was given in favour of one brother resulting in a situation where the rights in respect of a joint property were created in favour of one brother and the rights of the other brother extinguished in the said property. This is clearly a case where in the rights in respect of a property were created and extinguished. Such a document clearly requires registration (See AIR 1976 S.C. 807 ). 29. On the basis of the said judgment, the deed of relinquishment, by which the right of ownership from the property is relinquished and new rights in favour of respondent No. 3 are created, then it requires registration. But in the present case, it is true that family settlement does not require registration. If the deed of relinquishment requires registration and if it is not registered, then no valid title is passed or can be claimed by any person on the property on the basis of the relinquishment by the other co-sharers. The alleged family settlement in fact is not a family settlement but is a deed of relinquishment by which new rights are created in favour of respondent No. 3 by his two brothers. 30. The alleged family settlement in fact is not a family settlement but is a deed of relinquishment by which new rights are created in favour of respondent No. 3 by his two brothers. 30. In the present case, firstly this is to be seen that no mortgage documents were created by the other two brothers other than Naresh Kumar. Naresh Kumar on the basis of the relinquishment of right of other two brothers claimed that he is the owner in possession of the whole property mortgaged. But on the basis of certain documents, the Bank never treated him to be an absolute owner in possession of the property and on the contrary, when the action under Sections 13(2) and 13(4) of the S.A.R.F.A.E.S.I. Act, 2002 was taken and the possession notice was published and auction notice was published, then the Bank itself treated the other two brothers to be the owner of the property, who never created the mortgage. Admittedly, in the present case, the property was of a joint ownership, which was purchased by three brothers under the sale deed executed on 2nd November, 2005. 31. No other point is raised. In view of the aforesaid, I am inclined to hold that the judgment passed by the Tribunal is in accordance with law and does not require any interference. For the reasons as aforesaid, the Appeal of the auction purchaser is also liable to be dismissed. Accordingly, both the Appeals are dismissed.