P. Murugan v. Authorised Officer, Indian Bank, Asset Recovery Management Branch
2025-01-08
K.R.SHRIRAM, SENTHILKUMAR RAMAMOORTHY
body2025
DigiLaw.ai
ORDER : (K.R. SHRIRAM, C.J.) Petitioner is owner of a property comprised in Plot No.69, Harita Enclave in Survey No.384/1A1 and 1A2 at Tambaram Village of Kancheepuram District measuring about 3,160 sq. ft. of land. Petitioner claims to have purchased the said plot of land from one C.N. Embar and one A.S. Ramanujam both of whom were represented by one V. Balasubramanian and one Blue Jagers Estates Ltd. (BJEL) represented by Managing Director V. Sampath. Petitioner relies upon a registered sale deed dated 22.01.1999 on the file of Sub Registrar Office (SRO), Tambaram. A patta bearing no.2930 for the said property has also been issued in favour of petitioner by the Revenue authorities. 2. It is undisputed that Embar and Ramanujam were the absolute owners of the land measuring 86 cents in Survey No.384/1A1 and 1A2 i.e., the said land. The said Embar and Ramanujam, together with owners of other adjacent lands, in all measuring about 9.86 acres, decided to form a layout approved by Chennai Metropolitan Development Authority (CMDA) as housesites. Sampath, Managing Director of BJEL was appointed by said Embar and Ramanujam as their constituted Power of Attorney for the purpose of obtaining CMDA approval for layout, developing said lands and to sell the same. 3. It appears that BJEL had availed credit facilities from Indian Bank by creating equitable mortgage of the entire layout in Harita Enclave. The bank initiated proceedings under SARFAESI Act to recover its dues from BJEL and proposed to auction the entire layout which included the said land. In continuation thereof, first respondent bank also filed an original application being O.A. No.1098 of 1998 before Debts Recovery Tribunal–I, Chennai, for recovering a sum of Rs.2,15,38,158/-. 4. Petitioner, who, at the relevant point of time, was working in Tanzania, during one of his visits on or about 12.05.2009, realised that his property was auctioned by first respondent bank on or about 05.11.2008. For this, petitioner relies on a sale notice dated 30.09.2008. Petitioner's case is no notice was served on him with regard to SARFAESI proceedings. It is also stated that first respondent bank had received Rs.130 per sq. ft. and released the lands of adjacent plot owners from further proceedings under the SARFAESI Act. 5.
For this, petitioner relies on a sale notice dated 30.09.2008. Petitioner's case is no notice was served on him with regard to SARFAESI proceedings. It is also stated that first respondent bank had received Rs.130 per sq. ft. and released the lands of adjacent plot owners from further proceedings under the SARFAESI Act. 5. It is stated, as a background, that one N.S. Investments had availed a loan in 1989 and on 31.05.1995, BJEL took over the liability of said N.S. Investments and in the process, first respondent bank sanctioned a loan of Rs.2 crores to BJEL. During this transaction, the said Sampath of BJEL handed over the title deeds pertaining to various layouts to first respondent bank. 6. BJEL thereafter filed a criminal complaint in Cr.No.155 of 2010 as against first respondent bank alleging that first respondent bank had cheated and created false documents of mortgage. Criminal complaint was also filed by third parties against said Sampath alleging collusion between BJEL and first respondent bank. Proceedings were initiated by first respondent bank officials to quash the FIR registered against them. Central Crime Branch also filed a counter affidavit in which it was stated that investigation disclosed prima facie case of involvement and participation of bank officials in fabricating equitable mortgage dated 21.09.1990. High Court dismissed the quash petition filed by first respondent bank and its officials against which first respondent bank filed appeal before Hon'ble Apex Court being Crl.A. No.1525 of 2011. During the pendency of the appeal, BJEL, first respondent bank and the plot owners entered into a compromise and filed a joint memo dated 24.12.2011. In view of said joint memo, Hon'ble Apex Court disposed of appeals as infructuous. Terms of compromise in the joint memo that was filed before Hon'ble Apex Court, along with criminal miscellaneous petitions, pending criminal appeals, briefly contain the following terms: “(a) Withdraw the OA No.1098 of 1998 filed before the Debt Recovery Tribunal-I, Chennai by filing necessary joint memo. (b) Withdraw all civil, criminal proceedings/complaints listed hereunder: MA 184/2010 before DRAT Chennai. (c) Return all the original property title deeds as available on records with the bank, after due compliance of the above procedure. (d) Not pursue/initiate any further SARFAESI proceedings against any securities.
(b) Withdraw all civil, criminal proceedings/complaints listed hereunder: MA 184/2010 before DRAT Chennai. (c) Return all the original property title deeds as available on records with the bank, after due compliance of the above procedure. (d) Not pursue/initiate any further SARFAESI proceedings against any securities. (e) If any claim is made on the bank by third parties regarding SARFAESI action taken by the bank, the same shall be taken towards its logical conclusion in accordance with law. (f) File necessary mutual consent memo before DRT requesting to withdraw OA/SAs”. 7. Petitioner filed an application being S.A. No.95 of 2009 for the following relief: “In view of the facts mentioned above, the applicant prays that this Hon'ble Tribunal may be pleased to declare all the proceedings initiated in respect of the property of the applicant mentioned in the schedule below under the SARFAESI Act as null and void including the sale certificate dated 13.01.2009 presented on 27.02.2009 and registered as Document No.1097 of 2009 on the file of the SRO, Tambaram and release the same in terms of the offer of redemption made to other adjacent land owners in respect of the same loan account and thus render justice.” 8. This Securitisation Application was dismissed by DRT by order dated 14.03.2013. Petitioner carried the matter on appeal and Debt Recovery Appellate Tribunal (DRAT), by its order dated 27.12.2023, dismissed the appeal. According to DRAT, possession notice was issued on 20.09.2008, sale notice was issued on 30.09.2008 and sale was conducted on 05.11.2008 and sale certificate had already been registered and registered document had already been issued and the appeal was without any merits. Against this order dated 27.12.2023, this writ petition has been preferred. 9. The person to whom the property was sold allegedly is second respondent, who, though served, is not before us. 10. Sri. Om Prakash and Sri. Kalyanaraman, both stated that second respondent never appeared before DRT but appeared before DRAT. 11. We would note that even on earlier occasions before this Court, second respondent has not appeared. 12.
9. The person to whom the property was sold allegedly is second respondent, who, though served, is not before us. 10. Sri. Om Prakash and Sri. Kalyanaraman, both stated that second respondent never appeared before DRT but appeared before DRAT. 11. We would note that even on earlier occasions before this Court, second respondent has not appeared. 12. It is the case of the petitioner that one V.Sathyanarayanan who was the owner of a property adjacent to petitioner's property and who was similarly situated as that of petitioner, had filed S.A. No.409 of 2014 challenging the sale, if any, held on 05.11.2008 by first respondent bank relying upon orders of the Hon'ble Apex Court and the joint memo filed therein. The said S.A. No.409 of 2014 was allowed by the DRT and the sale and the consequential sale certificate were set aside. 13. It is the further case of the petitioner that another plot owner, viz., Vasantha Srinivasan, whose plot was adjacent to petitioner's plot, also had filed a Securitisation Application being S.A.No.152 of 2008 before DRT which allowed her Securitisation Application as well on 14.03.2013. By the said order, possession notice dated 20.09.2008 and sale notice dated 30.09.2008 were set aside. Appeal being R.A. (S.A.) No.93 of 2018 filed by the bank against the said order before the DRAT was also dismissed and the order of the DRT was confirmed. 14. Sri. Om Prakash submitted that DRT and DRAT grossly erred in treating the petitioner differently from the said V.Sathyanarayanan or Vasantha Srinivasan. It was submitted that even petitioner was similarly situated as these two individuals and when their Securitisation Applications were allowed and appeals against the orders of DRT were also dismissed, petitioner should also be given the same benefit. Sri.
Om Prakash submitted that DRT and DRAT grossly erred in treating the petitioner differently from the said V.Sathyanarayanan or Vasantha Srinivasan. It was submitted that even petitioner was similarly situated as these two individuals and when their Securitisation Applications were allowed and appeals against the orders of DRT were also dismissed, petitioner should also be given the same benefit. Sri. Om Prakash submitted that DRT having held that no encumbrance has been shown in the sale notice, first respondent bank knew that the schedule property was already assigned to the plot owner by a sale deed dated 26.10.1999 and when no document was available to establish that the first respondent bank had complied with the provisions under sub-rules 5,6 and 7 of Rule 8 of Security Interest (Enforcement) Rules, 2002, and no document is produced to establish that the impugned sale notice was properly served, affixed and published in accordance with law or that nothing is available to establish that clear 30 days notice has been given and the sale notice did not contain the encumbrance as contended by the applicant, the question of rejecting petitioner's application did not arise. 15. We would agree with Sri. Om Prakash in this regard because sale notice dated 30.09.2008 was a common notice. Though it is not addressed to petitioner but addressed to Embar, Ramanujam, Sampath, BJEL, etc., it covered petitioner's plot of land as well. That is the only sale notice that was issued and when the said sale notice has been held to be not valid, naturally, all plots covered by the said sale notice also should get the benefit. Petitioner's plot of land appears at Serial No.24 being Plot No.69 of the said sale notice. We should also note that the order passed by DRT in the case of Vasantha Srinivasan is dated 14.03.2013, in the case of V. Sathyanarayanan, it is dated 07.01.2016. The order in the case of Vasantha Srinivasan was challenged by the bank before DRAT which has been dismissed on 27.03.2023 as against which bank has filed writ petition and the same is not even numbered. 16. It is also not clear whether the respondent no.2 has challenged the order passed in the case of V.Sathyanarayanan and Vasantha Srinivasan since respondent no.2 is a purchaser even in the case of V.Sathyanarananan and Vasantha Srinivasan.
16. It is also not clear whether the respondent no.2 has challenged the order passed in the case of V.Sathyanarayanan and Vasantha Srinivasan since respondent no.2 is a purchaser even in the case of V.Sathyanarananan and Vasantha Srinivasan. At the cost of repetition, we should note that there also, when the sale notice itself is said to be invalid, sale pursuant to an invalid sale notice also has to be invalid. 17. Therefore, when the sale notice itself is held bad in law and invalid, any sale pursuant to the said sale notice also has to be invalid. 18. Moreover, terms of compromise in the joint memo which are referred to in the order of Hon'ble Apex Court, at the cost of repetition, read as under: “(a) Withdraw the OA No.1098 of 1998 filed before the Debt Recovery Tribunal-I, Chennai by filing necessary joint memo. (b) Withdraw all civil, criminal proceedings/complaints listed hereunder: MA 184/2010 before DRAT Chennai. (c) Return all the original property title deeds as available on records with the bank, after due compliance of the above procedure. (d) Not pursue/initiate any further SARFAESI proceedings against any securities. (e) If any claim is made on the bank by third parties regarding SARFAESI action taken by the bank, the same shall be taken towards its logical conclusion in accordance with law. (f) File necessary mutual consent memo before DRT requesting to withdraw OA/SAs”. 19. Clause (c), supra, provides that the first respondent bank would return all the original property title deeds as available on record with the bank after complying with the procedure mentioned in clauses (a) and (b), supra. It is not the case of the first respondent bank before us that those procedures have not been complied with. Moreover, it is almost 13 years since the joint memo of compromise was filed in the Hon'ble Apex Court. 20. Clause (d) of the joint memo provides that bank shall not pursue or initiate any further SARFAESI proceedings against any securities. 21. Therefore, the question of proceeding with the piece and parcel of land being Plot No.69 in Survey No.384/1A1 and 1A2 at Tambaram Village also, will not arise. The first respondent bank is bound to return the title deeds that pertain to petitioner's plot of land as also not initiate any SARFAESI proceedings against said plot of land. 22. Sri.
21. Therefore, the question of proceeding with the piece and parcel of land being Plot No.69 in Survey No.384/1A1 and 1A2 at Tambaram Village also, will not arise. The first respondent bank is bound to return the title deeds that pertain to petitioner's plot of land as also not initiate any SARFAESI proceedings against said plot of land. 22. Sri. Kalyanaraman submitted that clause (e), supra, provides that if any claim is made on the first respondent bank by third parties regarding SARFAESI action taken by the first respondent bank, the same shall be taken towards its logical conclusion in accordance with law and the first respondent bank is, therefore, entitled to oppose the original applications, appeals and this petition filed by petitioner. 23. Sri. Om Prakash rightly submitted that if bank complies with its obligations as mentioned in clauses (c) and (d) of the joint memo mentioned above, the question of petitioner pursuing any action against bank also will not arise. 24. We should also mention that in the compromise memo dated 24.12.2011 filed in the Hon'ble Apex Court, first respondent bank has admitted that it has recovered Rs.679.50 lakhs and as the amount collected was as per the recovery policy, first respondent bank accepts the borrower's request (Sampath who was the Managing Director of BJEL) for ending the recovery measure and treat the already recovered amount towards full and final settlement of the company's dues. The only condition thereto was that, the company would withdraw all civil and criminal proceedings initiated against first respondent bank and its officials before various legal fora unconditionally. It is not the first respondent bank's case that this condition has not been fulfilled. 25. Therefore, having accepted the amount of Rs.679.50 lakhs in full and final settlement of all its claims against the borrower, the question of bank holding on to any document relating to the said plot of land also does not arise. In fact, holding on to the document would amount to committing breach of the order passed by the Hon'ble Apex Court and the undertaking given to the Hon'ble Apex Court. 26. In the circumstances, the proceedings initiated in respect of the said plot of land of petitioner is null and void.
In fact, holding on to the document would amount to committing breach of the order passed by the Hon'ble Apex Court and the undertaking given to the Hon'ble Apex Court. 26. In the circumstances, the proceedings initiated in respect of the said plot of land of petitioner is null and void. Since the sale notice itself has been held invalid, sale certificate pursuant to an invalid sale notice is also null and void and so also, registered document no.1097 of 2009 on the file SRO, Tambaram. Consequently, impugned order dated 27.12.2023 is also quashed and set aside. 27. In view of the above, the first respondent bank has to hand over the documents relating to said plot of land. The question that now arises is to whom the documents should be handed over. We are informed BJEL does not exist. We are also informed that the plot owners of the layout have formed an association being “Harita Enclave Association”. Therefore, the bank shall hand over the documents to Harita Enclave Association, under advice to petitioner, if not already handed over to BJEL or the borrower. Harita Enclave Association shall keep the documents in its custody for the benefit of petitioner. Writ petition stands disposed of accordingly. No costs. Connected W.M.P. stands closed.