Appeal No. 463 of 2006. Case: Sadanand Narsappa Mendon Vs LIC Housing Finance Ltd.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberAppeal No. 463 of 2006
Party NameSadanand Narsappa Mendon Vs LIC Housing Finance Ltd.
CounselFor Appellant: Vikas Singh, Advocate i/b. Lambay & Co. and For Respondents: Sandip Barve, B.K. Barve and Sheetal Tanpare, Advocates
JudgesRaj Mani Chauhan, J. (Chairperson)
IssueRecovery of Debts Due To Banks And Financial Institutions Act, 1993 - Section 19(25); Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 - Sections 13(2), 13(4), 14, 17, 18(1)
CitationIV (2014) BC 6 (DRAT)
Judgement DateJanuary 01, 2014
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

Raj Mani Chauhan, J. (Chairperson)

  1. The challenge under the present Appeal under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) is the judgment and order dated 7th November, 2006 passed by Shri K.P. Kotecha, the then learned Presiding Officer (learned P.O.), Debts Recovery Tribunal (DRT) No. 1, Mumbai, in Securitisation Application (S.A.) No. 94/2006 (Sadanand Narsappa Mendon v. LIC Housing Finance Limited) whereby the learned Presiding Officer has dismissed the aforesaid S.A. filed by the Appellant. The relevant facts giving rise to the present Appeal may be briefly stated as under:

  2. The property involved in the present Appeal is the Flat No. 525 situated on First Floor, Building No. 27, Poisar Ashirwad Co-operative Housing Society Limited, Samata Nagar, Kandivali (East), Mumbai-400101 (hereinafter referred to as the said flat).

  3. Admittedly, Maharashtra Housing & Area Development Authority (MHADA) was the owner of a piece of land admeasuring 896.29 sq. metres situated at S. No. 56, City Survey No. 838 (pt) and 840 (pt) being part of Boards Lands at Poisar, Kandivali (East), Mumbai-400101, in the Sub-registration District Borivali, Mumbai. MHADA constructed a building No. 27 upon the aforesaid piece of land consisting of 20 tenements. MHADA transferred the aforesaid building in favour of Poisar Ashirwad Co-operative Housing Society Ltd. and granted lease of the land for 999 years in favour of the society on 23rd June, 2006. MHADA before transferring of the said building had allotted the said flat to one Mr. Shivram Somappa Suvarna vide allotment letter dated 28th March, 1984. Mr. S.S. Suvarna on the basis of aforesaid allotment letter, applied for Housing Loan to the respondent, LIC. Housing Finance Limited. The respondent on the aforesaid application of Mr. S.S. Suvarna sanctioned housing loan of Rs. 6,00,000/- in favour of Mr. S.S. Suvarna vide its letter dated 9th February, 2001 on the terms and conditions provided in the loan agreement entered into between it and the borrower. Mr. Dhirendra R. Vaghani and Mr. Dinesh Subbanna Mendon stood guarantors to the term loan availed by the borrower. The borrower on 16th March, 2001 created equitable mortgage of the said flat in favour of the respondent by depositing title deeds of the said flat to secure the amount of housing loan.

  4. Indisputedly the account of the borrower became irregular. Consequently the Respondent classified his account as Non-Performing Asset (N.P.A.) and proceeded under the SARFAESI Act recover its dues. The authorized officer of the respondent on 17th December, 2004 issued demand notice under Section 13(2) of the SARFAESI Act to the borrower and guarantors calling upon them to pay the outstanding dues of Rs. 5,29,018/- due as on 31st December, 2004 within 60 days from the date of issuance of the notice. The borrower and the guarantors could not pay the amount as demanded by the authorized officer. The authorized officer thereafter moved an application under Section 14 of the SARFAESI Act before the Chief Metropolitan Magistrate, Esplanade, Mumbai, for taking over the possession of the secured asset and thereafter to hand over possession of the secured asset to him. The application was allowed by the CMM vide order dated 17th February, 2006. The CMM directed the Assistant Registrar to take over the possession of the said flat after giving 15 days notice to the borrower.

  5. Mr. P.G. Joshi, Assistant Registrar, Chief Metropolitan Magistrate's Office, Esplanade, Mumbai, in pursuant to the aforesaid order dated 17th February, 2006 passed by the CMM issued notice on 5th April, 2006 to the borrower, Mr. Shivram S. Suvarna, informing him to hand over possession of the said flat within 15 days from the date of receipt of the notice failing which he may take over the possession of the said with the help of Police. The aforesaid notice was also pasted on the said flat on 31st May, 2006. The appellant, who was in possession of the said flat, consulted his Advocate, Mr. A.V. Joshi, as he was occupying the said flat on the basis of agreement of sale executed by Mr. S.S. Suvarna. Mr. A.V. Joshi, Advocate, or the instructions of the appellant sent a letter/notice to the Assistant Registrar, on 14th July, 2006 requesting him not to take over possession of the said flat in pursuant to the order dated 17th February, 2006 passed by the CMM, on the ground that the appellant was in possession of the said flat as bona fide purchaser for valuable consideration and without notice of any prior mortgage.

  6. The authorized officer of the respondent on 21st July, 2006 moved MA No. 282/MISC/2005 before the CMM, with the prayer to enforce his order dated 17th February, 2006. The CMM allowed the aforesaid M.A. vide order dated 5th September, 2006 and directed the Assistant Registrar to the execute order dated 17th February, 2006 passed by him on the application filed by the authorized officer of the Respondent under Section 14 of the SARFAESI Act.

  7. Mr. P.G. Joshi, Assistant Registrar, thereafter on 11th September, 2006 wrote a letter to the Sr. Inspector of Police, Samata Nagar Police Station, Mumbai-400101, for providing Police force for taking over the possession of the said flat on 19th September, 2006, Shri Joshi sent the copy of the aforesaid letter to the Secretary, Poisar Ashirwad Co-operative Housing Society, Kandiwli (East), Mumbai-400067 and to the appellant, Shri Sadanand Narsappa Mendon.

  8. The appellant on 18th September, 2006 wrote to the Sr. Inspector of Police, Samata Nagar Police Station, Mumbai-400101, that he is owner in possession of the said flat and as per order dated 17th February, 2006 and 5th September, 2006 passed by the CMM, Mr. S.S. Suvarna has to be dispossessed from the said flat, while Mr. S.S. Suvarna never had been in possession of the said flat since 2005. It appears that Mr. S.S. Suvarna has colluded with the Respondent to dislodge him from the said flat. He, therefore, requested the Sr. Inspector of Police not to dispossess him from the said flat in pursuant to the aforesaid orders passed by CMM.

  9. The Assistant Registrar, Mr. P.G. Joshi, on 19th September, 2006 with the help of Police took over the forcible possession of the said flat ousting the appellant along with his family members from the said flat. He prepared site report of taking over the possession of the said flat as well as prepared inventory of the movables found therein.

  10. The appellant being aggrieved by the action taken by the authorized officer of the Respondent under Sections 13(4) and 14 of the SARFAESI Act as well as on account of his forcible dispossession from the said flat filed Appeal/Securitization Application (S.A.) No. 94 of 2006 on 3rd October, 2006 under Section 17 of the SARFAESI Act in the DRT-I, Mumbai.

  11. The appellant in the aforesaid S.A. has alleged that he was in search of a flat. He approached to Mr. S.S. Suvarna to purchase the said flat. Mr. S.S. Suvarna accepted his proposal and agreed to sell the said flat in his favour. He enquired from Mr. S.S. Suvarna as to whether there were any encumbrance on the said flat who disclosed that the said flat was free from all encumbrances. The appellant by way of precaution published a notice in the newspaper i.e. Free Press Journal on 10th August, 2005 informing the public at large that he wants to purchase the sale flat so that if any person has claim over the said flat, he may come forward to put up his claim. But, despite publication in the newspaper none turned up to put up his claim over the said flat. He also got title search report of the said flat. He also came to know that the Building No. 27 is located on a piece of land admeasuring 896.29 sq. metres situated at S. No. 56, City Survey Nos. 838 (pt) and 840 (pt) being part of Boards Lands at Poisar, Kandivali (East), Mumbai-400101, which belongs to MHADA, therefore, he has to obtain No Objection Certificate (N.O.C.) from MHADA to purchase the said flat for which he has to pay transfer charges to MHADA. He also came to know that there were dues of the society amounting to Rs. 25,000/- against Mr. S.S. Suvarna, he, therefore, paid the same to the society. He also paid Rs. 35.000/- to MHADA towards transfer charges. He thereafter purchased the said fiat from Mr. S.S. Suvarna on 31st December, 2005 through a registered agreement of sale. Mr. Suvarna after transfer of said flat to him handed over the possession of the said flat to him.

  12. The appellant further alleged that he was unaware of the fact that Mr. Suvarna had availed any housing loan from the respondent and had created equitable mortgage of the said flat in favour of the respondent. He for the first time on 31st May, 2006 came to know about the said mortgage when the notice was pasted by the Assistant Registrar, CMM, on the said flat. The appellant alleged that he had taken all the possible precautions to ascertain the ownership of Mr. S.S. Suvarna regarding the said flat and after being satisfied about his title purchased the said flat for valuable consideration. In this way he is bona fide purchaser of the said flat.

  13. The appellant has further alleged that the MHADA constructed the aforesaid building No. 27 on a price of land admeasuring 896.29 sq. metres situated at S. No. 56, City Survey Nos. 838 (pt) and 840 (pt) being part of Boards Lands at Poisar, Kandivali (East), Mumbai-400101 which belongs to it. MHADA had not transferred the land to the society, rather it has transferred only the building to the society. The MHADA had transferred the lease hold rights of the land in favour of the appellant on 23rd June, 2006.

  14. The appellant further contended that respondent had sanctioned housing loan to Mr. S.S. Suvarna in February, 2001. At that time the society was not the owner of the said flat. As per the lease agreement prior permission of the MHADA to...

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