Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Authorized Officer Versus Dilipbhai Jayantilal Sanghavi

Restraining the Bank from proceeding further with eauction with respect to the mortgaged property in question - Held that:- Though the original applicant claims to have purchased the mortgaged property in question by registered sale deed on 25.04.2014 and on payment of sale consideration and though according to him when the Bank took the actual, physical possession on 12.06.2014 pursuant to the order psased by the learned District Magistrate under Section 14 of the SARFAESI Act, from the panchna .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

after the Bank had taken the actual, physical possession by drawing the panchnama and doing the videography. From the aforesaid it can be said that a systematic fraud has been committed by the mortgagor in connivance with the original applicant with malafide intention only with a view to dupe the legitimate dues of the Bank and the realization of large sum of amount by the Bank to the extent of ₹ 3,46,55,433 + further interest charges etc. - It is required to be noted that even the ori .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed order restraining the Bank from proceeding further with eauction of the mortgaged property which was mortgaged by the mortgagor while taking the huge loan / credit / financial assistance. - So far as the submission on behalf of the original applicant that as against the impugned order the petitioner Bank has a statutory remedy available by way of appeal before the Debts Recovery Tribunal, Mumbai and therefore, the present petition may not be entertained is concerned, at the outset it is r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

action in whose favour is a nullity, we are of the opinion that this is a fit case to entertain the petition and exercise the powers under Article 226 of the Constitution of India. - Impugned order passed by the learned Debts Recovery Tribunal – I, Ahmedabad in Securitization Application is hereby quashed and set aside and the petitioner Bank is permitted to proceed ahead with eauction of the mortgaged property in question viz. Bungalow No.15, Shukan Palace – I, Ghatlodiya, Ahmedabad. Rule i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

common judgment and order. [1.1] At the outset Special Civil Application No.7030/2016 is to be treated as lead matter and therefore, facts of Special Civil Application No.7030/2016 are narrated. [2.0] Special Civil Application No.7030/2016 has been preferred by the original opponent - State Bank of India through its Authorized Officer challenging the impugned order dated 11.03.2016 passed by the learned Debts Recovery Tribunal - I, Ahmedabad (hereinafter referred to as Tribunal ) in Securitizat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der to quash and set aside the impugned order dated 31.08.2015 passed by the learned Tribunal below Exh.T/18 (AnnexureK) as well as the order dated 31.08.2015 passed by the learned Tribunal in Original Application No.232/2014 (AnnexureL) by which the application submitted by the petitioners for joining them as party respondent in Original Application No.232/2014 has been rejected. [3.0] Facts leading to the Special Civil Application No.7030/2016 in nutshell are as under: [3.1] That so far as Spe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o mortgaged the entire project known as Shukan PalaceI consisting of 24 bungalows situated at Survey No.705/1, Khata No.258, F.P. No.58, T.P. No.48, Moje Sola, Taluka Daskroi (which is not the subject matter of present petition i.e. Special Civil Application No.7030/2016). That the petitioner Bank had taken the measures under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act ) with respect to the mort .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

notice under the SARFEASI Act was also published on 15.06.2014. That thereafter following the procedure under Section 14 of the SARFAESI Act the Bank took the physical possession on 13.02.2016 by drawing the panchnama and having videography. That after the possession of the mortgaged property was taken over by the Bank, eauction was fixed on 25.03.2016 and for the purpose of the same date of inspection was kept on 10.03.2016. At that stage the respondent No.1 herein claiming to be the purchaser .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mortgaged property. The said application was opposed by the Bank by submitting that the respondent No.1 has no locus to file the said securitization application and challenge the securritization proceedings as he has purchased the mortgaged property in breach of the provisions of the SARFAESI Act and after the proceedings under the SARFAESI Act were initiated and therefore, the sale deed / transaction in favour of the respondent No.1 - original application is nullity. The application was also op .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ibunal. Despite the above by impugned order the learned Tribunal has passed the impugned order and has granted the interim relief restraining the Bank from proceeding further with the auction with respect to the mortgaged property in question. [3.2] Feeling aggrieved and dissatisfied with the impugned order restraining the Bank from proceeding further with eauction with respect to the mortgaged property in question, the Bank has preferred the present Special Civil Application under Article 226 / .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dvocate appearing on behalf of the petitioner that while passing the interim order the learned Tribunal has not properly appreciated the fact that as such the respondent No.1 - original applicant claims to have purchased the property in question on 25.04.2014 i.e. much after the proceedings under the SARFAESI Act were initiated. It is submitted that therefore the transaction, if any, in favour of the original applicant was nullity and in breach of the provisions of the SARFAESI Act more particul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the SARFAESI Act. It is submitted that therefore the learned Tribunal ought to have appreciated that even the Securitization Application itself was not maintainable at the instance of the original applicant, more particularly when earlier at no point of time the mortgagor challenged the securitization proceedings and/or the notice under Section 13(2) of the SARFAESI Act, which are now sought to be challenged by the original applicant on the basis of the subsequent alleged sale deed dated 25.04. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the order passed by the learned District Magistrate under Section 14 of the SARFAESI Act, the original applicant though alleged to have purchased the mortgaged property on 25.04.2014 was not in possession. [4.2] It is submitted that the learned Tribunal has materially erred in not properly appreciating the fact that alleged transaction in favour of the original applicant was with the malafide intention to defeat the lawful right of the Bank of realization of the security of outstanding amount o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as been paid by cheques and full consideration has been paid now. It is an admitted position that at the time when the sale deed was executed, no amount was paid and the same is alleged to have been paid now subsequently. It is submitted that deliberately and conveniently in the sale deed though cheques were mentioned but the date of cheques was not mentioned. It is submitted that therefore the so called registered sale deed in favour of the applicant is nothing but a fraud with a view to dupe t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tle deed of the mortgaged property. It is submitted that therefore and in the facts and circumstances of the case the learned Tribunal has materially erred in not only entertaining the securitization application at the instance of respondent No.1 herein - original applicant and passing the impugned order restraining the Bank from proceeding further with eauction to sell the mortgaged property of which the possession was already taken over by the Bank after following due procedure under the provi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of preferring appeal before the learned Tribunal. It is submitted that therefore the present petition may not be entertained on the ground that the petitioner has statutory remedy of appeal available. He has also made submissions on merits also and number of submissions have been made with respect to the earlier order passed by the learned District Magistrate under Section 14 of the SARFAESI Act as well as the procedure of taking possession by the Bank Officer and also with respect to the earlie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cant was in possession and without issuing any notice to him the possession has been taken over which is absolutely illegal. [5.2] It is further submitted by Shri Mehta, learned advocate appearing on behalf of the respondent No.1 that even the order passed by the learned District Magistrate under Section 14 of the SARFAESI Act authorizing the petitioner Bank to take over the possession of the properly is absolutely illegal and against the decision of this Court. It is submitted that therefore th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nk from proceeding further with the eauction of the property in question of which now the original applicant is the owner, by further observing that there are arguable points, it is requested not to entertain the present petition and not to interfere with the impugned order passed by the learned Tribunal. [5.3] Shri Mehta, learned advocate appearing on behalf of the original applicant has heavily relied upon the decision of the Hon ble Supreme Court in the case of Standard Chartered Bank vs. V. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

support of his submissions that the Bank had no jurisdiction to decide whether the transaction in favour of the original applicant is void under Section 13 of the SARFAESI Act or not. Making above submissions and relying upon above decisions it is requested to dismiss the present petition. [6.0] In rejoinder Shri Desai, learned advocate appearing on behalf of the petitioner has submitted that as at present the post of Member of the Debts Recovery Tribunal, Mumbai is vacant and the Bench is not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with eauction of the mortgaged property in question that too at the instance of the original applicant whose transaction is a nullity, it is requested to exercise the powers under Article 226 of the Constitution of India. [6.2] Shri Desai, learned advocate appearing on behalf of the petitioner has also relied upon the decision of the Division Bench of Madras High Court in the case of Lakshmi Products vs. State Bank of India reported in 2007 AIR (Madras) 148 as well as the subsequent decision of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to be noted that the present is a glaring example of fraud committed by the mortgagor in connivance with the subsequent purchaser only with a view to dupe the realization of the legitimate dues of the Bank to recover the outstanding amount of ₹ 3,46,55,433 + further interest charges etc. At this stage it is required to be noted that it is not in dispute that so far as the borrowers / mortgagors and the partners of M/s. Shukan Palace Infrastructure have duped number of investors and even .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tent of ₹ 3,46,55,433/. Therefore, the Bank initiated auction under the provisions of the SARFAESI Act to realize its dues. That the Bank initiated the auction under Section 13(2) of the SARFAESI Act by issuing notice to the concerned borrowers / mortgagors on 18.01.2014. The original applicant is alleged to have purchased the mortgaged property in question by sale deed dated 25.04.2014 which is much after the Bank issued notice under Section 13(2) of the SARFAESI Act. On the basis of such .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

published on 15.06.2014 as per the Rules. No objection was raised by the mortgagor either challenging the notice under Section 13(2) of the SARFAESI Act or initiation of the proceedings under the SARFAESI Act with respect to the mortgaged property in question. That by submitting the securitization application, the original applicant has challenged the notice under Section 13(2) of the SARFAESI Act on the basis of the sale deed dated 25.04.2014, though earlier at no point of time the mortgagor ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ease or otherwise with respect to the secured assets referred to in notice under Section 13(2) of the SARFAESI Act, after the notice under Section 13(2) of the SARFAESI Act shall be void and a nullity. As per subsection (13) of Section 13 of the SARFAESI Act, no borrower shall after receipt of the notice referred to in subsection (2), transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of the secured assets referred to in the notice, without prior .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is of such sale deed which is a nullity. Under the circumstances, as such the learned Tribunal ought not to have entertained the securitization application. In any case the learned Tribunal ought not to have granted such an order restraining the Bank from eauctioning the mortgaged property in question at the instance of the original applicant whose transaction is a nullity. [7.3] How the mortgagor and the original applicant have played the fraud can be demonstrated from the fact that though the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

when the sale deed was executed in his favour. It is also required to be noted that though the original applicant claims to have purchased the mortgaged property in question by registered sale deed on 25.04.2014 and on payment of sale consideration and though according to him when the Bank took the actual, physical possession on 12.06.2014 pursuant to the order psased by the learned District Magistrate under Section 14 of the SARFAESI Act, from the panchnama it appears that at the time when the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ossession by drawing the panchnama and doing the videography. From the aforesaid it can be said that a systematic fraud has been committed by the mortgagor in connivance with the original applicant with malafide intention only with a view to dupe the legitimate dues of the Bank and the realization of large sum of amount by the Bank to the extent of ₹ 3,46,55,433 + further interest charges etc. It is required to be noted that even the original borrower / mortgagor, M/s. Shukan Palace Infras .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ention on behalf of the original applicant and the reliance placed upon the decision of the Hon ble Supreme Court in the case of Gangadhar Vishwanath Ranade (Supra) in support of his above submission that the Bank Officer / Bank had no jurisdiction to declare the transfer of property in favour of a third party to be void is concerned, on considering the provisions of the Income Tax Act which fell for consideration before the Hon ble Supreme Court and considering the facts of the case on hand, sa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is required to be noted that so far as the original mortgagor is concerned, he has not challenged the order of taking over the possession. As observed hereinabove, the possession was taken over from the wife of the mortgagor / mortgagor and not from the original applicant. The aforesaid has not been appreciated by the learned Tribunal while passing the impugned order. [7.7] Now, so far as the submission on behalf of the original applicant that as against the impugned order the petitioner Bank ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

earned Tribunal has exceeded in its jurisdiction in entertaining the securitization application and passing the impugned order at the instance of the original applicant, the transaction in whose favour is a nullity, we are of the opinion that this is a fit case to entertain the petition and exercise the powers under Article 226 of the Constitution of India. [8.0] In view of the above and for the reasons stated above the petition succeeds. Impugned order dated 11.03.2016 passed by the learned Deb .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Update Alerts     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version