Appeal No. 161 of 2001. Case: Florita Buildcon Pvt. Ltd. Vs A.R.C.I. Ltd. and Ors.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 161 of 2001
Party NameFlorita Buildcon Pvt. Ltd. Vs A.R.C.I. Ltd. and Ors.
CounselFor Appellant: Mr. Mayur Khandeparkar, Mr. Umesh Shetty and Mr. T.N. Tripathi, Advocates i/b. Mr. T.N. Tripathi & Co. and For Respondents: Mr. Nitin Thakkar, Sr. Advocate, Mr. Dinesh Purandare and Mr. Vinod Kothari, Advocates i/b. Apex Law Partners
JudgesRaj Mani Chauhan, J. (Chairperson)
IssueCode of Civil Procedure, 1908 (CPC) - Order XLI Rule 22, Order XXI Rule 21, Order XXI Rule 91; Indian Contract Act, 1872 - Sections 20, 65; Maharashtra Ownership Flats (regulation Of The Promotion Of Construction, Sale, Management And Transfer) Act, 1963 - Section 2(a-1); Securitisation And Reconstruction Of Financial Assets And Enforcement Of ...
CitationI (2014) BC 104 (DRAT)
Judgement DateSeptember 23, 2013
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

Raj Mani Chauhan, J. (Chairperson)

  1. This Appeal under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "SARFAESI Act") has been directed by the Original Applicant (hereinafter referred to as the "appellant") against the judgment and order dated 29th July, 2011 passed by Shri K.J. Paratwar, the then learned Presiding Officer (in short the "learned Presiding Officer"), Debts Recovery Tribunal-II (in short the "DRT"), Mumbai in the Securitisation Application (in short the S.A.) No. 48/2009, Florita Buildcon Pvt. Ltd. v. Asset Reconstruction Company (India) Ltd., whereby the learned Presiding Officer has dismissed the aforesaid S.A. filed by the appellant. The relevant facts giving rise to the present Appeal as borne out from the pleading of the parties as well as from the documentary evidence available on record may be summarized as under:

    Admittedly, one Smt. Anusaya Kantilal Shah was owner in possession of an open plot, bearing Survey No. 131, admeasuring 22156.535 sq. mtrs., situated in Village Versova, Taluka Andheri, District Mumbai, within boundaries of Ward 'K' of the Municipal Corporation of Greatest Mumbai (MCGM). Smt. Anusaya Kantilal Shah divided the aforesaid plot into 19 sub-plots, sometime in the year 1970. She submitted a layout plan before the MCGM for development of the plot. The layout plan was sanctioned by competent authority on 19th February, 1976. The survey sub-plot Nos. 131/19 and 131/4 which formed 15% of total area of the main plot were earmarked as the Recreation Ground (in short the "R.G."). The dispute in the present Appeal relates to the cancellation of auction sale of survey sub-plot No. 131/19 (hereinafter referred as the "said plot") conducted by the Authorized Officer of respondent No. 1 on 15th September, 2009 as well as for refund of the sale consideration paid by the appellant.

  2. Smt. Anusaya Kantilal Shah on 3rd April, 1971 transferred the said plot, admeasuring 1743 sq. mtrs. in favour of the respondent No. 2, Shaikh Hussain Nanesahab; respondent No. 3, Mehboob Subhan Nanesahab and respondent No. 4, Mohammed Yusuf Nanesahab through unregistered deed of conveyance. Smt. Anusaya Kantilal Shah on 8th March, 1997 executed deed of confirmation, confirming the deed of conveyance dated 3rd April, 1971 executed by her in favour of the respondent Nos. 2 to 4 which was got registered on 20th June, 1997. Smt. Anusaya Kantilal Shah on 22nd December, 1977 transferred the said plot in favour of Shri Ramchandra Harishchandra Jadhav and his three brothers by unregistered deed of conveyance. She on 18th February, 1998 executed the registered deed of confirmation in favour of Shri Ramchandra Harishchandra Jadhav and his three brothers confirming deed of conveyance dated 22nd December, 1997 executed by her.

  3. Admittedly one, D.N. Exports had availed certain credit facilities sanctioned by the erstwhile Bank of India (in short the "Bank") on 23rd May, 2000. The respondent Nos. 2 to 4 stood guarantors to the amount of credit facilities availed by the borrowers. They created equitable mortgage of the said plot in favour of the Bank to secure the amount of credit facilities availed by the borrower. They on 24th May, 2000 had executed a declaration in favour of the Bank, declaring that they created equitable mortgage of their said plot in favour of the Bank to secure the amount of credit facilities availed by the borrower.

  4. It is borne out from the record that Shri Ramchandra Harishchandra Jadhav and his three brothers had filed original Civil Suit No. 43/2000 against respondent Nos. 2 to 4 in the City Civil Court at Mumbai in which the parties filed consent terms. The suit was disposed of by the City Civil Court on the basis of the consent terms filed by the parties. As per the consent terms, Mr. Rajesh Deora was allowed to develop the aforesaid said plot. Mr. Rajesh Deora deputed C. Subhash and Associates, their Architect to develop the said plot.

  5. When the Architect proceeded with the development work, the Executive Engineer of Municipal Corporation of Greater Mumbai (MCGM) informed him that the said plot falls within the Coastal Regulation Zone (CRZ) which is reserved as R.G. Plot. The plot can be only developed as per the terms and conditions of the sanctioned layout and in conformity with the D.C. Regulations. C. Subhash and Associate, the Architect, thereafter sought written permission from MCGM to develop the said plot and raise construction. But the Deputy Chief Engineer, MCGM, vide his letter dated 20th March, 2002 declined to grant any permission for raising construction on the said plot.

  6. Admittedly, the borrower, D.N. Exports committed default of repayment of the amount of credit facilities availed by it. Consequently, the Bank filed Original Application (O.A.) No. 2036/2001 against the borrowers and guarantors in the DRT, Chennai for recovery of its outstanding dues. The Bank had already classified the account of the borrowers as Non-Performing Asset (NPA).

  7. During pending Original Application, the Bank also proceeded under the SARFAESI Act to recover its outstanding dues. The Authorized Officer of the Bank on 22nd October, 2002 issued a demand notice under Section 13(2) of the SARFAESI Act to the borrower, indicating an outstanding dues of Rs. 11,47,34,218.81 (Rupees eleven crores forty-seven lacs thirty-four thousand two hundred eighteen and Paise eighty-one only) and called upon the borrower to pay the outstanding dues within 60 days from the date of receipt of the demand notice. The borrower despite service of demand notice did not repay any amount as demanded by the Authorized Officer.

  8. The Bank on 31st March, 2008 assigned its debt along with the underlying securities in favour of respondent No. 1, Asset Reconstruction Company (India) Ltd. (ARCIL), who stepped into the shoes of the Bank. The DRT, Chennai vide impugned judgment and order dated 30th July, 2008 allowed the Original Application filed by the Bank for recovery of an amount of Rs. 7,29,15,861.81 together with interest @ 18% p.a. with quarterly rest from the date of application till the date of realization.

  9. The Authorized Officer of respondent No. 1 on 24th May, 2009 took over the physical possession of the said plot and published possession notice on the same day in the newspaper "Free Press Journal". The Authorized Officer on 24th July, 2009 sent a letter to the appellant, informing that he had taken over the physical possession of the said plot. If the appellant is interested to purchase the said plot, it may inform accordingly.

  10. The appellant thereafter got the title of the said plot searched through its Advocates, T.N. Tripathi & Co., after conducting the search, reported that Smt. Anusaya Kantilal Shah had sold the Suit property in favour of respondent Nos. 2 to 4 and in favour of Mr. Ramchandra Jadhav and his brothers through registered deed of conveyance.

  11. The Authorized Officer of respondent No. 1 issued notice, inviting quotations from willing purchasers to sell the said plot on "as is where is and as is what is basis". It was provided in the bid documents that the successful purchaser shall be deemed to purchase the said plot with full knowledge and subject to all the reservations, if any, in the Master Plan, Development Plan, Town Planning Scheme and encumbrances, if any attach to the said plot. The intending purchaser were advised to ascertain liabilities, encumbrances attached to the said plot as well as to ascertain the title of the said plot, exercising their due diligence and after getting fully satisfied, may participate in the auction sale.

  12. The Authorized Officer of respondent No. 1 published sale notice in the "Free Press Journal" newspaper on 23rd July, 2009 inviting quotations from willing purchasers to purchase the said plot on "as is where is and as is what is basis". The Director of the appellant was intending to purchase the said plot. Therefore, he on 25th August, 2009 collected the bid documents from the office of respondent No. 1, containing the terms and conditions inviting bids. The director of the appellant after receiving the bid documents containing the terms and conditions of the sale learnt that the said plot was going to be sold by the Authorized Officer of respondent No. 1 on "as is what is and as is where is" basis. The appellant vide letter dated 10th September, 2009 submitted its quotation for participation in the auction sale to be conducted on 15th November, 2009. It forwarded the following three Pay Orders to the respondent as per requirement of the terms and conditions for participation in the auction sale:

    Details of the Pay Orders

  13. The Authorized Officer of respondent No. 1 conducted the auction sale of the said plot on the scheduled date i.e., 15th September, 2009. The appellant who had participated in the auction sale had offered to purchase the said plot for Rs. 7.01 Crores which was found to be the highest. Consequently, the Authorized Officer declared the appellant as "successful purchaser". The appellant, as provided in the terms and conditions of the sale, on the same date deposited 25% of the sale price with the Authorized Officer. The Authorized Officer on 16th September, 2009 intimated the appellant about the confirmation of sale in its favour. The appellant on 22nd September, 2009 paid the balance 75% amount of the sale consideration i.e. Rs. 5,25,75,000/- to the respondent No. 1 as contemplated in the terms and conditions of the sale.

  14. The Authorized Officer handed over the possession of the said plot to the appellant on 24th September, 2009. The appellant after taking over the possession of the said plot, covered the said plot, by putting tin sheds, but the officers of MCGM threatened him to remove the tin sheds, disclosing that the said plot was falling within the C.R.Z. which was R.G. plot. On the objection of...

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