TMI Blog2016 (5) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with law on its own merits without being influenced by the observations made by us in this order. - LETTERS PATENT APPEAL NO. 395 of 2016, SPECIAL CIVIL APPLICATION NO. 1843 of 2016, CIVIL APPLICATION NO. 4254 of 2016 - - - Dated:- 6-5-2016 - MR. R.SUBHASH REDDY AND MR. VIPUL M. PANCHOLI, JJ. FOR THE APPELLANT : MR AM PAREKH, ADVOCATE FOR THE RESPONDENT : MR BHAVESH CHOKSHI FOR MRS VD NANAVATI, CAVEATOR ORAL ORDER (PER : HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI) 1. This appeal is filed under Clause 15 of the Letters Patent challenging the CAV judgment dated 11.4.2016 passed by the learned Single Judge in Special Civil Application No.1843 of 2016 with Civil Application No.2578 of 2016, whereby the learned Single Judge dismissed the petition filed by the present appellant. 2. The brief facts leading to filing of the present appeal are as under: 2.1 It is the case of the appellant that she is not a borrower to the loan granted by the respondent-bank but is a third party in possession of the property in question. The appellant was not aware of the mortgage being created in favour of the respondent-bank by the principal borrowers. The principal bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner-appellant. 4. Heard learned advocate Mr.Parekh for the appellant and learned advocate Mr.Bhavesh Chokshi for learned advocate Mrs.V.D.Nanavati for the respondent-bank. 4.1 Learned advocate Mr.Parekh appearing for the appellant mainly contended that the appellant is not the borrower and not obtained the loan from the respondent-bank but she has purchased the property in question under Agreement to Sale executed in favour of the Power of Attorney holder of the borrowers. The appellant was not aware about the mortgage being created in favour of the respondent-bank by the principal borrowers. The appellant is in possession of the premises in question and though the appellant issued the notice to the District Magistrate and informed about the stay granted by the Civil Court, opportunity of being heard was not granted to the appellant before passing the impugned order by the District Magistrate and therefore the impugned order be quashed and set aside. 4.2 Learned advocate Mr.Parekh thereafter contended that the learned Single Judge has committed an error by dismissing the petition and observing that the petitioner-appellant can avail the alternative remedy by filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28.2.2014, Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh executed the Power of Attorney in favour of Jyotsnaben and Geetaba wherein also the outstanding loan is clearly mentioned. The said document is produced at page 105 of the compilation. Learned advocate Mr.Chokshi thereafter contended that on 26.6.2014 Jyotsnaben and Geetaba executed the Agreement to Sale in favour of the appellant in capacity as Power of Attorney holder of Mrs.Manjeet and Mr.Sandeep in which also there is a reference with regard to loan on the property. On 27.8.2014, the respondent-bank issued the notice under Section 13(2) of the SARFAESI Act and thereafter on 30.8.2014, the appellant filed a suit for specific performance of Agreement to Sale dated 26.6.2014 i.e. within two months of execution of Agreement to Sale. On 23.9.2014, the respondentbank issued the demand notice in the newspaper qua property in question and Jyotsnaben and Geetaba replied to the said demand notice wherein they have not stated that the appellant is now holding the Agreement to Sale qua the property in question. The proceedings under SARFAESI Act was thereafter proceeded further and on 9.4.2015, the respondent-bank filed an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers V/s State of Maharashtra and Others, reported in (2011)(2) SCC 782 3. Bharatbhai Ramniklal Sata V/s Collector and District Magistrate and Another, reported in AIR 2010 Gujarat 72 4. In the case of Dr.K.Venkatesh and four others v/s Indian Overseas Bank, Hyderabad and two others delivered on 30.7.2015 by the Andhra Pradesh High Court. 5. Issan Overseas Limited V/s Union of India Ministry of Finance, reported in 2012(0)GLHEL-HC 228186. 6. We have considered the submissions canvassed on behalf of the learned advocates for the parties. We have also gone through the material produced on record, the impugned order passed by the learned Single Judge and the decisions upon which the reliance is placed by the learned advocates for the parties. 7. From the record, it emerges that Mrs.Manjeet and Mr.Sandeep obtained the loan from the respondent-bank and entered into a loan agreement with regard to the property in question on 30.11.2011. The property in question has been mortgaged with the respondent-bank. Thereafter, on 18.2.2014, Mrs.Manjeet and Mr.Sandeep entered into an Agreement to Sale with Jyotsnaben and Geetaba with regard to the property in question and immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to Sale with Jyotsnaben and Geetaba. In spite of the aforesaid aspect, the appellant has suppressed the material fact before this Court. The conduct of the appellant is also required to be scrutinized closely. After the Agreement to Sale was executed in favour of the appellant on 26.6.2014, when the respondent-bank issued notice under Section 13(2) of the SARFAESI Act on 27.8.2014, the appellant suddenly filed a suit on 30.8.2014 for specific performance of Agreement to Sale dated 26.6.2014 i.e merely within two months of Agreement to Sale. In the said proceedings, the appellant has not joined the respondent-bank as partydefendant. In the aforesaid facts and circumstances of the case, the question which is to be decided by this Court is whether any relief is to be granted to the appellant while exercising powers under Article 226 of the Constitution of India and more particularly, when the appellant has not approached before this Court with clean hands and the conduct of the appellant is suspicious. When the alternative statutory remedy is available under Section 17 of the SARFAESI Act in the facts of the present case, whether this Court should entertain the petition filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT. (Emphasis supplied by us) 22.We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person 1 affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT. 11. In the case of Satyavati Tondon (supra), the Hon ble Supreme Court has held in paragraph 17 as under: 17. There is another reason why the impugned order should be set aside. If respondent No.1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression `any person used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 5 as under: 3. Now, so far as the challenge to the order passed by the Chief Metropolitan Magistrate, Ahmedabad, below Exh.1 in the application filed by the Bank under Section 14 of the Act, 2002 is concerned, we may only say that the petitioner has an alternative efficacious remedy under the Act, 2002, in the form of an appeal, as provided under the provisions of Section 17 of the Act, 2002. The record reveals that on 18th January, 2011, the Division Bench of this Court passed the following order:- 2. We have heard learned counsel appearing for the petitioner on interim relief since it is contended by the learned counsel for the petitioner that the petitioner may be dispossessed anytime pursuant to the impugned order. 3. It appears that it is not the case of the petitioner that the loan is not taken or the amount is not recoverable. It further appears from the order of the Ld. Magistrate that the amount of ₹ 3,50,32,281/- [Rupees three crore fifty lac thirty two thousand two hundred eighty one only] is to be recovered by the bank. If the petitioner is to enjoy the interim relief, it must deposit the aforesaid amount with the bank subject to further orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar(Supra), relied upon by the learned advocate for the appellant-petitioner, the Hon ble Supreme Court has held that under Articles 226 and 227 of the Constitution, the High Court can entertain the petition against the order passed by the District Magistrate under Section 14 of the SARFAESI Act. However, if the facts of the said case are carefully examined, the Hon ble Supreme Court has observed that there may be cases where before the mortgage is created in respect of the immovable property, the borrower had already leased out the immovable property in favour of a lessee either as the owner or as a person competent or authorized to transfer the immovable property in accordance with Section 7 of the Transfer of Property Act, 1882 (TPA). If such a lease is made by virtue of Section 8 TPA, the lessee will have the right to enjoy the leased property in accordance with the terms and conditions of the lease irrespective whether the subsequent mortgagee of immovable property has knowledge of such a lease or not. Thus, the decision upon which the reliance is placed by the learned advocate for the appellant is not helpful to him, in the facts of the present case. 15. In view of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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