Delhi District Court
Smt. Pushpa Rani vs State Bank Of India on 10 August, 2018
Pushpa Rani V. State Bank of India & Anr.
IN THE COURT OF SH. ARUN SUKHIJA,
ADDITIONAL DISTRICT JUDGE - 07, (CENTRAL DISTRICT)
TIS HAZARI COURTS, DELHI.
SUIT NO. : 116/2011
UNIQUE CASE ID NO. : 616860/2016
IN THE MATTER OF :
Smt. Pushpa Rani
W/o Sh. Raj Kumar Garg
R/o House NO. J3/58 A,
First Floor, Rajouri Garden,
New Delhi. ....Plaintiff
VERSUS
1. State Bank of India
Erstwhile State Bank of Patiala
substituted vide order dated 31.05.2017
Branch Darya Ganj,
Through its Chief Manager,
New Delhi.
2. The Chairman
State Bank of India
erstwhile State Bank of Patiala
substituted vide order dated 31.05.2017
Head Office, 18 19, Devdas Kamlleg Block,
Synergy Building, Bandra Kurla
ComplexBandra East,
Mumbai - 400 051. ....Defendants
Suit No. 116/2011 Page 1 of 62
Pushpa Rani V. State Bank of India & Anr.
SUIT FOR RECOVERY OF RS.10,00,000/, IN ALTERNATIVE
SUIT FOR POSSESSION AND DAMAGES
Date of institution of the Suit : 14/12/2011
Date on which Judgment was reserved : 12/07/2018
Date of Judgment : 10/08/2018
JUDGMENT
By way of present judgment, this court shall conscientiously adjudi cate upon suit for recovery of Rs.10,00,000/ (Rupees Ten Lakhs only), or in the alternate for possession and damages filed by the plaintiff against the defendants.
CASE OF THE PLAINTIFF AS PER PLAINT Succinctly the necessary facts for just adjudication of the present suit, as stated in the plaint, are:
(a) that the plaintiff is an old lady of 65 years. In response to the advertisement by the defendant no.1, Darya Ganj, Delhi branch inviting applications for bidding of the flat bearing no.
G1, Ground Floor, B1/24, DLF, Dilshad Garden Extension II, Ghaziabad, plaintiff submitted her bid for Rs.5,79,000/ on Suit No. 116/2011 Page 2 of 62 Pushpa Rani V. State Bank of India & Anr.
31/05/2007. The plaintiff was declared the successful bidder for the abovesaid flat and as per terms & conditions, the plaintiff deposited the full amount with defendant no.1 as per details given below:
1. An amount of Rs.50,000/ vide banker cheque no. 044132, dated 30/05/2007.
2. An amount of Rs.1,00,000/ by cheque no. 450257, dated 31/05/2007.
3. An amount of Rs.4,29,000/ vide cheque no. 802703, dated 11/06/2007.
(b) The abovesaid cheques were duly encashed by the defendant no.1. In spite of the fact that plaintiff deposited the full and final amount with defendant no.1, plaintiff was not handed over vacant physical possession of the abovesaid flat in spite of repeated requests, as required under law. The plaintiff re quested the Chief Manager of Darya Ganj Branch to hand over vacant peaceful possession of the flat and execution of the sale deed and issuance of sale certificate but defendant Suit No. 116/2011 Page 3 of 62 Pushpa Rani V. State Bank of India & Anr.
no.1 failed to handover the vacant possession of the above said flat to the plaintiff.
(c) The bid of the plaintiff was accepted on 31/05/2007 but de fendant no.1 applied to the District Magistrate very late for providing police assistance in getting the possession by the bank. In spite of the order dated 02/03/2009 of D.M., Ghazi abad, defendants have not taken the possession and further have not handedover the possession to the plaintiff. The plaintiff approached defendants a number of times for vacant possession, issuance of sale certificate and registration of the sale deed but they failed to do so. When there was no respon dent from the defendants, plaintiff requested through letter dated 07/09/2010 for refund of money paid by her with inter est @ 13% per annum and Rs.5,00,000/ for damages for the mental agony, then with malafide intention, defendants sent a sale certificate dated 21/09/2010 with false averments.
(d) Defendants have falsely stated in the sale certificate that pos session has been handedover to the plaintiff which is totally Suit No. 116/2011 Page 4 of 62 Pushpa Rani V. State Bank of India & Anr.
wrong as possession of the said flat was never handedover to the plaintiff at any point of time. It has been submitted that when the son of plaintiff namely Sh. Balram Krishan Garg contacted Shr. Gurmukh Singh, Chief Manager of defendant no.1, he was informed that physical vacant possession shall be handedover to the plaintiff on 06/10/2010. Further, it has been stated that till date the defendants have not taken the possession in spite of the orders of DM, Ghaziabad. It has been submitted that son of plaintiff was told that bank has put a notice on the floor of flat in question to vacate the flat till 06/10/2010.
(e) On 06/10/2010, the plaintiff alongwith her husband went to the defendant bank at Bali Nagar and contacted the Chief Manager Sh. Gurmukh Singh, he apologized and told the plaintiff and her husband that bank was unable to deliver the physical vacant possession of the flat to plaintiff because bank had not deposited the required amount, as directed by the DHO, Ghaziabad for police assistant. Sh. Gurmukh Singh further informed the plaintiff and her husband that Suit No. 116/2011 Page 5 of 62 Pushpa Rani V. State Bank of India & Anr.
bank is depositing Rs.10,000/ for getting the police force for vacation of the flat in question.
(f) Thereafter, on 20/10/2010, husband of the plaintiff contacted the said Chief Manager on mobile and he was informed that Chief Manager was sick and was on leave and it was assured to him by the said official that bank will takeover the vacant possession very soon. On 13/11/2010, the husband of the plaintiff again contacted the Chief Manager (SARC) and he was informed that Chief Manager was on leave for 15 days and matter will be takenup on priority basis. The plaintiff again informed the defendants vide letter dated 17/11/2010, duly received by the bank at Darya Ganj Branch, Bali Nagar Branch and Chairman, Head Office, Patiala, Punjab that plaintiff had paid the full amount of the bid after taking loan from HDFC Bank and she is paying interest on the loan amount @ 13% p.a.
(g) Plaintiff requested the defendants to refund her amount of Rs.5,79,000/ with interest @ 13% p.a. which she was paying Suit No. 116/2011 Page 6 of 62 Pushpa Rani V. State Bank of India & Anr.
to HDFC Bank alongwith Rs.5,00,000/ damages for mental agony caused to her by the defendants for not giving her the vacant possession, as required under law, within a reasonable period. It has been stated that plaintiff is a senior citizen and is suffering from hypertension and blood sugar due to fraud done by the defendants as the defendants were under legal obligation to get the possession of the flat in question before auction and it was mandatory duty of the defendants to apply to DM, Ghaziabad for getting the possession with the police assistance.
(h)The defendants were also under legal obligation to issue sale certificate and get the sale deed registered in favour of the plaintiff. There is negligence on the part of the bank and bank was falsely assuring the plaintiff to handover the pos session of the flat in question and registration of the sale deed. There is also deficiency in service on the part of the bank by issuing sale certificate with false averments regarding handing over possession of the flat in question to the plaintiff. Suit No. 116/2011 Page 7 of 62
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(i) There is also a deficiency in service on the part of the defen dants when they issued false sale certificate in favour of the plaintiff near about after forty months. The defendants were continuously assuring the plaintiff that possession of the flat in question shall be given to the plaintiff after getting the same through police from the erstwhile owner.
(j) The Defendants have also spent about Rs.2,000/ in corre spondence, personal visits and to and fro charges besides Rs.22,000/ as legal expenses. The plaintiff had sent a legal notice dated 11/02/2011 calling upon the defendants to pay an amount of Rs.5,79,000/ with interest @ 13% p.a. with monthly rests from 31/05/2007 and Rs.5,00,000/ as dam ages. Defendants were also called upon to pay Rs.22,000/ as expenses of legal notice.
(k)In alternative, if this court comes to the conclusion that plain tiff is not entitled to the abovesaid amount, in that case defen dants are liable to handover the possession of the abovesaid flat to the plaintiff alongwith Rs.4,21,000/ as damages/ com Suit No. 116/2011 Page 8 of 62 Pushpa Rani V. State Bank of India & Anr.
pensation suffered by the plaintiff for nondelivery of the flat in question for mental agony suffered by the plaintiff. The rental value of the flat in question is more than Rs.6,000/ p.m.
(l) The plaintiff has come to know that the defendants have paid an amount of Rs.10,025/ to the police, Ghaziabad, as di rected earlier, for police help for getting possession of the flat in question from the mortgagor. It has been submitted that the flat in question was mortgaged with the defendant. Due to the nonpayment of the loan amount, defendant bank auc tioned the abovesaid flat after giving advertisement in the newspaper. As the plaintiff was highest bidder, she was de clared successful bidder and thereafter, plaintiff made full payment to the defendants for flat bearing no. G1, Ground Floor, B1/24, DLF, Dilshad Garg Extn.II, Ghaziabad. In spite of repeated requests oral as well as written, the defen dants have neither refunded the abovesaid amount nor handedover the possession of the flat in question to the Suit No. 116/2011 Page 9 of 62 Pushpa Rani V. State Bank of India & Anr.
plaintiff. At last, the defendants refused to give any relief to the plaintiff on 20/11/2011.
CASE OF THE DEFENDANTS AS PER WRITTEN STATEMENT Summons for settlement of issues were issued to the defendants and the defendants have filed common written statement. Suc cinctly, the defendants have made the following averments:
(a) the suit of the plaintiff is not maintainable and is liable to be dismissed as the plaintiff has not stated true and correct facts before this court. It has been submitted that Sh. Narain Lal and Sh. Naresh Kumar, borrowers have obtained a housing loan of Rs.4,75,000/ from the defendants and created equi table mortgage of their property bearing flat no. G1, Ground Floor, Plot No. B1/24, DLF Dilshad Garden Extension, Ghaziabad, U.P. in favour of the defendants and signed vari ous loan documents in favour of the defendants but these borrowers have failed to pay the dues of the defendants bank despite demands.
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(b) Thereafter, the defendants sent notice under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) to recover the amount from the defaulter borrowers but they failed to pay the dues in terms of the said notice.
(c) The defendants thereafter initiated further proceedings under the SARFAESI Act and notice for auction (by sealed tender) in terms of SARFAESI Act, 2002 was published by the defen dants in the newspaper Veer Arjun dated 01/05/2007 and defendants invited the interested parties to participate in the auction for purchase of the property bearing flat no. G1, Ground Floor, Plot No. B1/24, DLF Dilshad Garden Extn., Ghaziabad, U.P. on "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS" for recovery of secured debt of State Bank of Patiala.
(d) The plaintiff was the highest bidder at the auction and the flat in question was purchased by the plaintiff in public auction dated 31/05/2007 for a sum of Rs.5,79,000/. Thereafter, on the application filed by the defendants with the office of Dis Suit No. 116/2011 Page 11 of 62 Pushpa Rani V. State Bank of India & Anr.
trict Magistrate, Ghaziabad, U.P. under SARFAESI Act, the order dated 02/03/2009 was passed by the DM, Ghaziabad and after that defendants requested police for police aid and amount was deposited by the defendants in Government Trea sury at Ghaziabad for securing police aid and police was re quested many times by the defendants to provide police aid to defendants to get vacant possession of the said property from the borrowers namely S/Sh. Narain Lal and Naresh Kumar but of no avail. Sale Certificate dated 21/09/2010 was issued by the defendants and sent to the plaintiff.
(e) The defendants had taken the physical possession of the property in question on 06/01/2012 with the help of police aid as per the order dated 02/03/2009 passed by the DM, Ghaziabad, U.P. It has been submitted that suit is not main tainable and is liable to be dismissed because defendants vide letter dated 30/12/2011 requested the plaintiff to remain present on 06/01/2012 at the property in question to take va cant possession and the same was duly acknowledged by Shri Raj Kumar Garg, husband of the plaintiff but plaintiff has Suit No. 116/2011 Page 12 of 62 Pushpa Rani V. State Bank of India & Anr.
failed to present herself at the property in question. Further, the officials of the defendant's bank many times requested the plaintiff telephonically to come and obtain/ receive the vacant possession of the suit property from the defendants but of no avail.
(f) The defendants after obtaining the vacant possession of the suit property on 06/01/2012 from the borrowers, the defen dants sent a letter dated 06/01/2012 to the plaintiff and re quested the plaintiff to take/receiver the vacant possession of the suit property from the defendants and further requested that plaintiff can take/ receive the vacant possession of the suit property on any working day from the defendants but plaintiff refused to accept the same and said that she will take vacant possession of the suit property before the Court only.
(g) On merits, the contents of the plaint have been denied. It has been denied that the plaintiff approached the defendants number of time for vacant possession, insurance & sale cer tificate and registration of sale deed but they failed to do so. Sale Certificate dated 21/09/2010 was issued and sent by the Suit No. 116/2011 Page 13 of 62 Pushpa Rani V. State Bank of India & Anr.
defendants to the plaintiff. It has been prayed to dismiss the present suit with heavy costs.
REPLICATION AND ISSUES The plaintiff filed replication and controverting the assertion made in the written statement and reiterated the contents of the plaint. It has been stated that delay of delivery of posses sion from 31.05.2007 to 06.01.2012 is unexplained and is clearcut deficiency in service. It has further been stated that defendants have not performed their duties and hence, they cannot take the benefit of their own wrongs. Defendants woke up only after filing of the present suit. Defendants have ad mitted that on the date of auction, they were not in posses sion of the suit property and they have admitted that their representation in publication was false to their knowledge. It has been submitted that it is the natural consequence of the sale that defendant has to give best and perfect title as well as physical possession to the plaintiff.
From the pleadings of the parties, following issues were framed vide order dated 22/11/2012: Suit No. 116/2011 Page 14 of 62 Pushpa Rani V. State Bank of India & Anr.
ISSUES (1) Whether the defendant auctioned the flat no. G1, Ground Floor, B1/24, DLF Dilshad Garden ExtensionIII, Ghaziabad in favour of the plaintiff as per the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Se curity Interest Act, 2002 (SARFAESI ACT) and the terms and conditions fixed for auction of the suit property? OPD (2) Whether the plaintiff is entitled for the decree of recovery of Rs.10,00,000/, as prayed for in the plaint? OPP (3) In the alternative, whether the plaintiff is entitled for the decree of possession and damages, as prayed for in the plaint? OPP (4) Whether the plaintiff is entitled for the interest? If yes, at what rate and for which period? OPP (5) Relief EVIDENCE OF THE PLAINTIFF AND DEFENDANTS AND DOCU MENTS RELIED UPON BY THEM Plaintiff, in order to prove her case, led plaintiff evidence and got ex amined herself PW1 and tendered her evidence through affidavit Ex. PW1. She has relied upon the following documents: Receipt dated 31/05/2007 as Ex.P1.
Letter dated 11/06/2007 as Ex.P2.
Letter dated 02/03/2009 as Ex.P3.
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Sale Certificate dated 21/09/2010 as Ex.P4.
Notice dated 24/09/2010 as Ex.P5.
Receipt dated 24/03/2011 as Ex.P6.
Letter dated 30/12/2011 as Ex.P7.
Letter dated 06/01/2012 as Ex.P8.
Sale cum notice for auction as Ex.P9.
UPC receipt dated 12/02/2010 as Ex.P9A.
Courier receipts (Colly.) as Ex.P12.
Special Power of Attorney as Ex.P13.
Notice under Order 12 Rule 8 as Ex.P14.
Courier receipt as Ex.P15.
Copy of letter dated 17.11.2010 as MarkA.
Copy of letter dated 07.09.2010 as MarkB.
Copy of letter dated 17.10.2010 as MarkC.
Copy of letter dated 12.07.2011 as MarkD.
Copies of written undertakings dated 17/11/2011 and
01/02/2012 as Ex.PW1/4 and Ex.PW1/5 respectively; Copy of complaint dated 29/04/2012 as Ex.PW1/6; Suit No. 116/2011 Page 16 of 62
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Legal notice dated 17/05/2012 as Ex.PW1/7; Six postal receipts and speed post as Ex.PW1/8 (Colly.); Six track reports of speed post as Ex.PW1/9 (Colly.). Plaintiff besides herself has also examined the following witnesses: Sh. S.C. Sharma, Manager, State Bank of Patiala SARC, 2 nd Floor, Lodhi Road, NBCC Place, New Delhi as PW2, who brought sale cum notice for auction dated 01.05.2007 and the same is Ex.PW2/1.
Sh. Hardev Singh, Manager, Secretariat of MD, Head Office, State Bank of Patiala, DMall, Patiala, Punjab, as PW3, who brought Receipt Dispatch Register and the relevant copies of the pages of Receipt Dispatch Register is Ex.PW3/1 (Colly. 4 pages). Copy of letter dated 17.11.2010 is Ex.PW3/2 and copy of legal no tice dated 11.02.2011 is Ex.PW3/3.
Sh. Raj Kumar Garg, as PW4, who tender his affidavit in evi dence as Ex.PW4/A. Suit No. 116/2011 Page 17 of 62 Pushpa Rani V. State Bank of India & Anr.
To rebut the case of the plaintiff, defendants led DE and examined defendant no.1 as DW1, who tendered his evidence through affi davit Ex. DW1/A. Se has relied upon the following documents:
(a) office copy of notice dated 26.10.2004 as Ex.DW1, sale cum notice for auction dated 01.05.2007 as Ex.D1,
(b) original order dated 02.03.2009 passed by the District Magis trate, Ghaziabad as Ex.D2,
(c) original notice dated 24.09.2010 as Ex.D3.
(d) Ex.D4 which is the receiving by SHO, P.S. Sahibabad,
(e) photocopy of notice dated 24.09.2010 which was pasted at the suit property on 24.09.2010 as MarkE,
(f) sale certificate dated 21.09.2010 as Ex.D5,
(g) AD card as Ex.D6,
(h) copy of receipt dated 24.03.2011 for deposit of Rs.10,025/ as Ex.D7,
(i) photocopy of notice dated 27.12.2011 as Ex.D8,
(j) photocopy of letter dated 31.12.2011 as Ex.D9,
(k) office copy of letter dated 06.01.2012 as Ex.D10,
(l) copy of minutes of the meeting as MarkA, Suit No. 116/2011 Page 18 of 62 Pushpa Rani V. State Bank of India & Anr.
(m) photocopy of letter dated 29.12.2011 by the defendant to the SHO as MarkB,
(n) copy of possession proceedings dated 06.01.2012 as MarkC and
(o) copy of possession notice dated 06.01.2012 as MarkD.
(p) Subsequently, on 20.02.2017, DW1 had produced the office copy of written application dated 29.12.2011 served on SHO, P.S. Sahibabad and the same was exhibited as Ex.DW1/3, original of possession proceedings dated 06.01.2012 was ex hibited as Ex.DW1/4.
The defendants also examined Sh. Ved Prakash Dhamija as DW2, who tendered his affidavit in evidence as Ex.DW2/A. This court heard the final arguments, as advanced by Ld. Counsel for the parties and perused the material available on record. Written arguments/submissions are already on the record. ISSUE WISE FINDINGS:
ISSUE NO.1 (1) Whether the defendant auctioned the flat no.
G1, Ground Floor, B1/24, DLF Dilshad Garden ExtensionIII, Ghaziabad in favour of the plaintiff as Suit No. 116/2011 Page 19 of 62 Pushpa Rani V. State Bank of India & Anr.
per the provisions of Securitization and Reconstruc tion of Financial Assets and Enforcement of Secu rity Interest Act, 2002 (SARFAESI ACT) and the terms and conditions fixed for auction of the suit property? OPD ADMITTED CASE OF THE PARTIES:
(A) A Notice for sale cum notice for auction (by sealed tender) was published in Veer Arjun dated 01.05.2007, which was exhibited thrice in different copies and the same were marked as Ex.P9, Ex.PW2/1 and Exhibit D1.
(B) The tender of plaintiff was accepted by the defendants and plaintiffs paid 25% of the purchase price amounting to Rs.1,50,000/ on 31/05/2007. Plaintiff paid balance amount of Rs.4,29,000/ on 11/06/2007, four days before the due date. Possession was not handed over to the plaintiff by the bank.(Ex.PW1/2 and PW1/3) (C) The order dated 02/03/2009 issued by Ld. District Magis trate, Ghaziabad has also been admitted by the defendants where defendants have requested for police aid to get the possession and to attach the property in dispute. (Ex.PW 1/4).Suit No. 116/2011 Page 20 of 62
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(D) The defendants have admitted that possession was not handed over to the plaintiff whereas they have issued Sale Certificate, which was exhibited thrice in different copies as Exhibits P9, PW2/1 and D1. It is admitted by the defen dants that no Sale Deed was executed between the parties. (E) Although, in the pleadings, the defendants have denied let ters dated 17/11/2010 but later on when senior officers of the bank were summoned to produce the originals, they have admitted Ex.PW3/2, letter dated 17/11/2010, (wherein the Plaintiff has requested the bank to pay back the full amount of the bid with interest @ 13% as 3 years and 6 months were elapsed and they have not obtained possession). (F) The defendants have also admitted Ex.PW1/9, receipt dated 24/03/2011 of Rs.10,025/ as expenses for Police aid. (G) DW1 has admitted in his cross examination that suit prop erty was not in physical possession of the bank on the date of auction and on the date of deposit of the amount. He has also admitted that bank was not in possession of the suit property on the date of issuance of sale certificate. It is also Suit No. 116/2011 Page 21 of 62 Pushpa Rani V. State Bank of India & Anr.
an admitted fact that on the date of filing of the suit, defen dants were not in physical possession of the suit property. (H) The Defendants initially denied receipt of legal notice dated 11/02/2011 Ex.PW3/3 issued by the plaintiff but later on when senior official of the bank was summoned, they admit ted the receipt of the legal notice. No reply was given or any action taken on the Ex.PW3/2 and Ex.PW3/3. This wit ness has also admitted in the cross examination that it was the liability of the bank to hand over the physical possession of the auctioned property whenever the bank gets possession of the same. This witness has further admitted that bank had taken the physical possession on after filing of the present suit.
ARGUMENTS OF THE DEFENDANTS The onus to prove Issue No.1 is upon the defendants, therefore, ar guments of the defendants are dealt herewith at the first instance. (1) There are many contradiction in the statement of PW1 (plain tiff) and PW4 (husband of plaintiff) during their cross exami nation by counsel for defendants.
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(2) The PW1 and PW4 have admitted in their cross examination that auction of property in dispute was conducted on "as is where is basis and is what is basis" as mentioned in the sale cum notice for auction published in the Veer Arjun newspaper on 01.05.2007. When PW4 was asked whether he has in spected the property prior to auction he has stated yes but it was locked. PW4 further stated that it is correct that defen dant bank has deposited the amount with the District Magis trate Ghaziabad and it is correct that Bank has got the pos session of suit property after much efforts. It is also admitted by PW4 that he has received the letter dated 30.12.2011 Ex hibit D9 from defendant bank and he had not reached the suit property on 06.01.2012 to receive the vacant possession of the suit property. In response to the question possession the plaintiff answered that she will take possession of suit property before court only, PW4 answered that he will act ac cording to direction of court. PW4 admitted that defendant deposited Rs.10,025 with Government Treasury Ghaziabad on 24.03.2011.
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(3) PW4 has admitted in his cross examination dated 31.08.2016 that it is correct that after reading and going through the sale cum notice for auction Exhibit P9 plaintiff had applied for bid of the property in question. PW4 had stated that he has signed his affidavit exhibit PW4/A in chamber of his advo cate. The keys of the property in question was deposited in the court in the presence of counsel of plaintiff and PW4 but PW4 in his cross examination on 18.11.2016 has knowingly given wrong answer stating therein that he cannot say whether defendant has got deposited the key of suit property in the court.
(4) Defendants have proved its case through DW1 Shri Gurmukh Singh and DW2 Shri Ved Prakash Dhamija and nothing has come in their cross examination.
(5) That defendant bank is not liable to pay any amount to plain tiff as it is the plaintiff who did not take physical possession of said property by her own will despite many requests by the deponent and other officials of defendant bank and receipt of letters from defendant bank since 06.01.2012. Plaintiff had Suit No. 116/2011 Page 24 of 62 Pushpa Rani V. State Bank of India & Anr.
malafide intention to cause wrongful gain to herself and wrongful loss to defendant bank.
(6) That since 06.01.2012 the possession of the said property is with the defendant bank and plaintiff did not take physical possession of said property from defendant despite the said property was sold in auction to plaintiff on "AS IS WHERE IS BASIS AND AS IS WHAT IS BASIS". Later on, defendant bank has deposited the key of said property with this Hon'ble court on 21.10.2016.
(7) The Plaintiff has also heavily relied upon the following part of crossexamination of PW1 Smt. Pushpa Rani done by the de fendants on 30.03.2016: "I had not visited Gaziabad before applying for the property in question. After applying my husband has visited the property in question. I had not vis ited the property in question before auction. My husband has also not visited the property before auction. It's correct that it was mentioned in advt. dated 1.05.2007 that property will be sold in auc tion in "As is where is basis" and "As is what is ba sis". It's correct that at time of auction I was aware that property in question was in possession of 2 borrowers...."
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(8) The defendants have also argued that the following docu ments are admitted by the Plaintiffs:
(a) Sale cum notice for auction dated 01.05.2007 as Ex.D1.
(b) original order dated 02.03.2009 passed by the District Magis trate, Ghaziabad as Ex.D2,
(c) Original notice dated 24.09.2010 as Ex.D3.
(d) Ex.D4 which is the receiving by SHO, P.S. Sahibabad,
(e) sale certificate dated 21.09.2010 as Ex.D5,
(f) AD card as Ex.D6,
(g) copy of receipt dated 24.03.2011 for deposit of Rs.10,025/ as Ex.D7,
(h) photocopy of notice dated 27.12.2011 as Ex.D8,
(i) photocopy of letter dated 31.12.2011 as Ex.D9,
(j) office copy of letter dated 06.01.2012 as Ex.D10 (9) The defendants have relied upon the following Judgments:
(a) Punjab Urban Planning Vs. Raghu Nath Gupta & Ors. dated 16.08.2012 Suit No. 116/2011 Page 26 of 62 Pushpa Rani V. State Bank of India & Anr.
(b) Mahendra Mehato & Anr. Versus Central Bank of India (Calcutta High Court) dated 29.08.2014 ARGUMENTS OF THE PLAINTIFF
(a) The defendants have taken the plea that suit property was sold as "as is where is basis" or "as is what is basis". De fence of the defendant of "as is where is basis" or "as is what is basis" is misconceived. This clause does not mean that defendants had no duty to deliver the vacant physical possession of the suit property to the plaintiff. It was also not mentioned in Exhibits P9, PW2/1 and D1 that plain tiff shall get the possession herself or defendants are not bound to deliver the possession. Defence of defendants is misleading and is misconceived and is against the manda tory provisions of law as well as judgments of Hon'ble Supreme Court of India and other High Courts.
(b) The defendant bank is a statutory body and is under legal obligation to disclose all the facts to the public before auc tion of the suit property. A public undertaking is required to ensure fairness, nondiscrimination and nonarbitrari Suit No. 116/2011 Page 27 of 62 Pushpa Rani V. State Bank of India & Anr.
ness. In their dealings and their decision making process, there action is open to judicial review and scrutiny. Action of public undertaking must be bonafide and not arbitrary.
(c) The plaintiff has relied upon the provisions of Securitiza tion Act and upon the following Judgments:
(i) AIR 2010 Supreme Court 338
(ii) AIR 2017 Madras 228
(iii) AIR 2017 NOC 686 Bombay
(d) The defendant is a statutory body. Defendant took false pleas in this case and the conduct of defendants is as such that they have suppressed material facts from the court. Defendants denied the receipt of letter and legal notice is sued by plaintiff. Defendants took a false plea in their evi dence which was not pleaded at any time at the time of fil ing of written statement.
(e) That defendants have made following false averments in para no.5 of the evidence by way of affidavit of DW1: "I say that during the month of October, 2010, I had requested plaintiff through her husband to re ceive the physical possession of the suit property Suit No. 116/2011 Page 28 of 62 Pushpa Rani V. State Bank of India & Anr.
without the intervention of police because borrow ers were ready to give possession but Shri Raj Ku mar Garg refused to take physical possession with out the intervention of police)."
This plea was after thought and was not taken in written statement. There is no proof in writing or otherwise that defendant made such offer. Had it been so, then there was no need for the plaintiff to get the possession of the suit property on payment of police charges of Rs.10,025/. Had it been so, then there was no need to send letter dated 17/11/2010 Ex.PW3/2 by plaintiff to the bank request ing therein for payment of interest till she gets the vacant possession along with Rs.5,00,000/ or mental agony. It is clear from the facts and circumstances of the present case that officers of the bank were not interested to give posses sion of suit property to the plaintiff. Admittedly, plaintiff deposited the entire amount on 11/06/2007 but defendant did not get the possession of the suit property from the bor rowers till the date of filing of the suit. Suit No. 116/2011 Page 29 of 62
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(f) The plaintiff contention is that the rights of the parties were crystallized on filing of the suit and subsequent act of the defendants for obtaining the possession under the SAR FAESI Act does not affect the rights of the Plaintiff to claim the refund of the amount deposited with the Bank and damages on account mental agony and harassment.
(g) It is submitted that the defendant has filed two judgments before this court, titled as 'Punjab Urban Planning and De velopment Authority Vs. Raghunath Gupta & ors.'. Facts of this case are totally different. In this case, Raghunath Gupta who was successful bidder, did not pay the install ments in time. He got the possession of shop auctioned. PUDA completed the development work by 20/12/2002 and provided the facilities. Respondent Raghunath filed a writ petition seeking directions for PUDA not to charge in terest on the balance installments till the basic amenities were provided on the site. In this case Hon'ble Supreme Court was of the view that PUDA was not callous or indif Suit No. 116/2011 Page 30 of 62 Pushpa Rani V. State Bank of India & Anr.
ferent or had caused an inordinate delay in providing the basic amenities to the allottees.
(h) But in the present case even possession has not been deliv ered in spite of written request and legal notices. In present case plaintiff is not claiming any amenities. There is inordinate delay from 31.05.2007 to the date of the filing of the suit, i.e. 30.11.2011.
(i) It has further been submitted that defendant has filed one another judgment of Calcutta High Court titled as 'Mahin dra Mehto & Anr. Vs. Central Bank of India'. Facts of this case are also not applicable to the facts and circumstances of the present case.
(j) In present case in public notice it has been shown that de fendant has taken the possession which is false from the pleading of the defendant and statement given by oath of defendant's witnesses. Defendant's witnesses have admit ted that he was duty bound to deliver the possession to plaintiff after getting the physical possession from borrow ers. In Sale certificate defendant falsely stated that posses Suit No. 116/2011 Page 31 of 62 Pushpa Rani V. State Bank of India & Anr.
sion has been given whereas after issuance of said Sale Certificate defendant applied for police aid for getting the possession from the borrowers.
FINDINGS OF THE COURT:
INTERPETATION OF SALE CUM NOTICE FOR AUCTION DATED 01.05.2017 Ex.P9, Ex.PW2/1 and Ex.D1.
The moot question in the present case is the interpretation of the admitted document i.e. Sale cum notice for auction dated 24.4.2007 published on 01.05.20017 i.e. Ex.P9, Ex.PW2/1 and Ex.D1 and the effect of provisions of Section 13 and 14 of The Securitization and Reconstruction of Financial Assets and Enforcement of Secu rity Interest Act, 2002 read with Rules 8 and 9 of Security Interest (Enforcement) Rules, 2002 on the said Sale cum Notice. The rele vant portion of the Sale Cum Notice for auction is reproduced here under for apposite understanding: "SALE CUM NOTICE FOR AUCTION (BY SEALED TENDER) In terms of Securitization Reconstruction of Finan cial Assets and Enforcement of Security Interest Act 2002 (SARFAESI) read with rule 6,7,8,9 of Se curity Interest (Enforcement) Rules, 2002 persua Suit No. 116/2011 Page 32 of 62 Pushpa Rani V. State Bank of India & Anr.
sion of the possession of the properties/ secured assets detailed herein below having been taken by the undersigned as authorized officer of the State bank Of Patiala, the secured creditor under (SAR FAESI) Act, 2002 for recovery of secured debit of State Bank Of Patiala as mentioned here below with cost and charges. It has been decided by the undersigned to sell the properties mentioned here below by the PUBLIC AUCTION THROUGH TEN DER IN SEALED COVER of recovery of the afore said amount alongwith interest. Interested parties are invited by the undersigned to participate in the said auction for purchase of the following proper ties on "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS".
XXXXXXXXX Property shall be auctioned/ sold free of encum brances, any statutory dues payable on any prop erty shall be born by the purchaser. Date, time and place of inspection of above properties by the prospective bidders shall be between 11.00 hrs and 17.00 hrs. at respective branches on any working day with prior arrangement with the Branch Manager.
Extract of Terms & Conditions of the Auction:
1. All the intending bidders/ Tenderers should address a letter to the undersigned of their inten tion to participate in the auction and deposit the aforesaid earnest money deposited (EMD) being 5% of the reserve price for each lot, only by way of de mand draft / pay order issued in favour of State Bank Of Patiala, Darya Ganj, New Delhi branch payable at New Delhi so as to reach the authorized Suit No. 116/2011 Page 33 of 62 Pushpa Rani V. State Bank of India & Anr.
officer by 11.00 a.m. on the date of auction along with their offer price for the property intended to be purchased.
2. The amounts so deposited as Earnest Money Deposit will not carry any interest.
3. No person who had not deposited the EMD as aforesaid will be permitted in the said auction.
4. The successful Bidder / Tenderer will imme diately be required to deposit 25 % of the sale price by way of cash / pay order after adjusting their EMD already paid. Upon the failure of the highest Bidder to immediately deposit the 25% of the prop erty/ies will be reauctioned and sold to the next highest Bidder or cancelled and EMD of the previ ous highest Bidders shall be forfeited forthwith.
5. The balance amounts (75 %) of the sale price is to be paid within 15 days of the confirmation. The same or such extended period as permitted upon in writing by the authorized officer. In case of failure of deposit of the balance amount within the prescribed period the amount earlier deposited shall be forfeited.
6. The Authorized Officer is not bound to accept the highest price and reject the same without as signing any reason. Therefore in case of such re jection the Authorized Officer can negotiate with any of the Bidder or other parties for sale of the property by private treaty.
7. All attendant charges including registration, stamp duty, taxes etc. shall be exclusively born by the purchaser.
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8. Authorized Officer reserve the right to with draw any property from the sale.
9. The secured creditor does not in any way warrant the fitness quality and usability of the property being sold.
10. A copy of the complete particulars of Terms & Conditions of the sale is available with the offi cer of the undersigned as above mentioned ad dress between 10.00 hrs. to 16.00 hrs.
11. The prospective purchaser are in their own interest advise to refer to the copy of the complete Terms & conditions available with the undersigned for any clarification or Branch Manager of State Bank of Patiala, Darya Ganj, New Delhi Branch.
12. The Bank shall not be responsible for any er ror, omission in this proclamation.
13. The Tenderer should write on the envelop the detail of property for which Tender is submitted along with his name and addresses. There should be separate SEALED COVER envelop for each property.
Date: 24/04/07
Place: New Delhi Authorized
Officer"
The aforesaid Sale Cum Notice for Auction Ex.P9, Ex.PW2/1 and Ex.D1 depicts that in pursuance of Securitization and Reconstruc tion of Financial Assets and Enforcement of Security Interest Act, Suit No. 116/2011 Page 35 of 62 Pushpa Rani V. State Bank of India & Anr.
2002 read with rules 6, 7, 8 and 9 of Security Interest (Enforce ment) Rules, 2002 the property in question was taken in posses sion. The relevant portion of the provisions of Section 13 and 14 The Securitization and Reconstruction Of Financial Assets (in Short SARFAESI Act) is reproduced hereinbelow for the apt understand ing:
13. Enforcement of security interest. (1) Notwithstanding anything contained in section 69 or section 69A of th Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the in tervention of the court or tribunal, by such credi tor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in re spect of such debt is classified by the secured creditor as nonperforming asset, then, the se cured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under subsection (4).
(3)..................
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(4) In case the borrower fails to discharge his lia bility in full within the period specified in subsec tion (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:
(a) take possession of the secured assets of the bor rower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the bor rower is held as security for the debt:, Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of business of the borrower which is relatable to the security for the debt.".]
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the pos session of which has been taken over by the se cured creditor;
(d) require at any time by notice in writing, any per son who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the Suit No. 116/2011 Page 37 of 62 Pushpa Rani V. State Bank of India & Anr.
secured creditor, so much of the money as is suffi cient to pay the secured debt.
"14.Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.--
"(1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Mag istrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such re quest being made to him
(a) take possession of such asset and documents relating thereto; and
(b) forward such asset and documents to the se cured creditor.
"(2) For the purpose of securing compliance with the provisions of subsection (1), the Chief Metro politan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opin ion, be necessary.Suit No. 116/2011 Page 38 of 62
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"(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority."
The Rules 6 and 7 of Security Interest (Enforcement) Rules, 2002 pertains to movable property thus, only the relevant portion of Rules 8 and 9 of Security Interest (Enforcement) Rules, 2002 are reproduced herein for the apt understanding: "8. Sale of immovable secured assets. (1) Where the secured asset is an immovable prop erty, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appen dix IV to these rules, to the borrower and by af fixing the possession notice on the outer door or at such conspicuous place of the property. (2) The possession notice as referred to in subrule (1) shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspa per] one in vernacular language having sufficient circulation in that locality, by the authorised offi cer.
(3) In the event of possession of immovable property is actually taken by the authorised of ficer, such property shall be kept in his own custody or in the custody of any person autho rised or appointed by him, who shall take as Suit No. 116/2011 Page 39 of 62 Pushpa Rani V. State Bank of India & Anr.
much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property. (4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed off.
(5) Before effecting sale of the immovable prop erty referred to in subrule (1) of rule 9, the au thorised officer shall obtain valuation of the property from an approved valuer and in con sultation with the secured creditor, fix the re serve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:
(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction; or
(d) by private treaty.
(6) the authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under subrule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one Suit No. 116/2011 Page 40 of 62 Pushpa Rani V. State Bank of India & Anr.
in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,
(a) the description of the immovable property to be sold, including the details of the encum brances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any other mode shall be completed;
(e) depositing earnest money as may stipulated by the secured creditor;
(f) any other thing which the authorised officer con siders it material for a purchaser to know in order to judge the nature and value of the property. (7) Every notice of sale shall be affixed on a con spicuous part of the immovable property and may, if the authorized officer deems it fit, put on the website of the secured creditor on the Internet. (8) Sale by any methods other than public auction or public tender, shall be on such terms as may be settled between the parties in writing.
"9. Time of sale, Issue of sale certificate and delivery of possession, etc. (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the pro viso to subrule (6) or notice of sale has been served to the borrower.
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(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor:
Provided that no sale under this rule shall be con firmed, if the amount offered by sale price is less than the reserve price, specified under subrule (5) of rule 9 :
Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the se cured creditor effect the sale at such price.
(3) On every sale of immovable property, the pur chaser shall immediately pay a deposit of twenty five per cent. of the amount of the sale price, to the authorised officer conducting the sale and in de fault of such deposit, the property shall forthwith be sold again.
(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirma tion of sale of the immovable property or such ex tended period as may be agreed upon in writing between the parties.
(5) In default of payment within the period mentioned in subrule (4), the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subse quently sold.Suit No. 116/2011 Page 42 of 62
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(6) On confirmation of sale by the secured creditor and if the terms of payment have been com plied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the pur chaser in the Form given in Appendix V to these rules.
(7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he thinks fit, allow the purchaser to de posit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or fur ther cost, expenses and interest as may be de termined by him.
[Provided that if after meeting the cost of removing encumbrances and contingencies there is any sur plus available out of money deposited by the pur chaser such surplus shall be paid to the purchaser within fifteen day, from date of finalisation of the sale.
(8) On such deposit of money for discharge of the en cumbrances, the authorised officer shall issue or cause the purchaser to issue notices to the per sons interested in or entitled to the money de posited with him and take steps to make, the pay ment accordingly.
(9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in subrule (7) above. Suit No. 116/2011 Page 43 of 62
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(10) The certificate of sale issued under subrule (6) shall specifically mention that whether the pur chaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not."
The language of Ex. P9, Ex.PW2/1 and Ex. D1 is unequivocal and unambiguous that the defendant bank has taken possession under the SARFAESI Act read with aforesaid Rules 6, 7, 8 and 9 of Security Interest (Enforcement) Rules, 2002. The plain meaning which only can be attached to the said document is that the plain tiff has actually taken the physical possession of the property in question and no other meaning can be attached to the said docu ment. The plain and simple interpretation leads to only one conclu sion that the defendant bank has taken actual and physical posses sion of the property under Rules 8 and 9 of Security Interest (En forcement) Rules, 2002 r/w Sections 13 and 14 of the SARFAESI Act. The bank has not notified in the Sale Cum Auction for Notice that they have taken the symbolic possession and nonmentioning of the same leads to only one conclusion that the actual possession has been taken by the bank.
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The perusal of the Sale Certificate dated 21/09/2010 Ex. P4 clearly depicts that the same is not in accordance with Rule 9(6) of the Security Interest (Enforcement) Rules, 2002. The provision of Rule 9(6) of the Security Interest (Enforcement) Rules, 2002 envis ages that the Sale Certificate shall be issued in terms of AppendixV after the confirmation of sale. The confirmation of the sale has to be done in accordance with Rule 9(2) of the said Rules. The Appendix V is reproduced herein for the sake of brevity: "APPENDIX V [See rule 9 (6)] SALE CERTIFICATE (for immovable property) Whereas The undersigned being the authorised officer of the................................(name of the Institution) under the Securitization and Reconstruction of the Financial Assets and Enforcement of Security In terest [Act, 2002 (54 of 2002)] and in exercise of the powers conferred under section 13 read with rule 12 of the Security Interest (Enforcement) Rules, 2002 sold on behalf of the........................................(name of the secured creditor/institution) in favour of..................(pur chaser), the immovable property shown in the schedule below secured in favour of the............. (name of the secured creditor) by.................(the names of the borrowers) towards the financial fa cility............. (description) offered by..................... Suit No. 116/2011 Page 45 of 62
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(secured creditor). The undersigned acknowledge the receipt of the sale price [of Rs. .......... (Ruees................only] in full and handed over the delivery and possession of the scheduled property. The sale of the scheduled property was made free from all encumbrances known to the se cured creditor listed below on deposit of the money demanded by the undersigned."
The perusal of the aforesaid AppendixV read with Rule 9(6) of the aforesaid Rules, it is apparent that the defendant bank has not is sued the Sale Certificate in accordance with law i.e. in terms of Ap pendix V. It is an admitted position that the bank has recovered en tire auction money within the time, as prescribed and it is also an admitted position that the possession was not handedover to the plaintiff and as per the AppendixV, after receipt of the entire amount, the Sale Certificate had to be issued mentioning therein that the possession of the property in question has been handed over and delivered to the auction purchaser. The provision of rule 9(6) clearly postulates that on confirmation of sale by the se cured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour Suit No. 116/2011 Page 46 of 62 Pushpa Rani V. State Bank of India & Anr.
of the purchaser in the Form given in Appendix V to these rules.
Thus, in rule 9(6) the word "shall" means mandatory. The defen dant bank had clandestinely issued the Sale Certificate dated 21/09/2010 - Ex.P4, Ex. PW2/P1, Ex.D5 and sent to the Plain tiff mentioning the words "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS" against the Possession. The said Sale Certificate is totally in contravention of Rule 9(6) read with Appendix V. The de fendant Bank has not followed the statutory rules. In this reference, para nos. 14, 15, 16, 17, 18, 19 and 20 of the Di vision Bench Judgment titled as S. Shanmuganathan Vs. The Autho rized Officer Indian Overseas Bank reported in AIR 2017 Madras 228 are reproduced herein for apt understanding: "14. There is a statutory obligation cast on the bank to notify the encumbrance and delivery of the property to the purchaser free from encumbrance. STATUTORY OBLIGATION
15. Rule 8(6)(a) of the Security Interest (Enforce ment) Rules, 2002 reads as follows:
(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor:"
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16. There is no dispute that rule 8(6)(a) and 8(6)(f) are mandatory in nature. The Purchaser should be put on specific notice about all the encumbrances and other materials so as to enable him to take a conscious decision with regard to his participation in the auction and the amount to be quoted in his bid. The disclosure is not an empty formality. The auction notification is defective and improper in case the encumbrances and known litigations are not disclosed. Since there is a statutory obligation on the part of the secured creditor under rule 9(9) to deliver the property free from encumbrance to the purchaser, such disclosure must be made well before the auction to give an option to the purchaser to take part in the auction.
17. In the subject case, the bank was aware of the pending litigations with respect to the secured as set. Even then the bank failed to disclose it in the auction notification.
18. There is a statutory obligation on the part of the bank to disclose the encumbrances in the sale notice. The failure to adhere to such duty would come within the ambit of sub Section (2) of Section 18 of the Contract Act, enabling the other party to avoid the contract.
19. When the statute mandates that a particular thing shall be done in a particular manner, it shall be done only in that manner.
20. In Indian Banks' Association, Bombay and oth ers vs. Devkala Consultancy Service and others, 2004 (11) SCC 1, the Supreme Court observed that "it is well settled that when a procedure has been Suit No. 116/2011 Page 48 of 62 Pushpa Rani V. State Bank of India & Anr.
laid down, the Statutory Authority must exercise its power in the manner prescribed or not at all." The relevant portions of the judgment of AIR 2017 (NOC) 686 (BOM.) Blue Coast Hotels Limited V. IFCI Ltd. & Anr. are also reproduced herein for apt understanding: (J) Securitization and Reconstruction of Fi nancial Assets and Enforcement of Security In terest Act(54 of 2002), Ss. 13(4), (6), 40, 14 - Recovery of debt - Taking possession of prop erty - Concepts of "physical" and "symbolic" possession are to be read in context of provi sion of Act and Rules - Both concepts are recognised under Act - Provisions of S. 14 are to be invoked for actual/physical possession even if symbolic possession is taken.
It cannot be said that the "possession given"
means "physical" possession alone. The two con cepts of "physical" and "symbolic" possession are to be read in the context of the provisions of the Act and the Rules made thereunder. Both these concepts are recognized even under the SARFAESI Act. The symbolic possession, even if taken, still for actual possession/ physical possession, S. 14 provisions are required to be invoked. For physical possession, in case issues are in dispute or con flicts, the parties need to move under S. 14, whereas the symbolic possession in given facts and circumstances to avoid transfer and to protect the property, secured creditors after following due procedure, can take symbolic possession of the property keeping the parties in person to retain the possession for various purposes and objects. It is Suit No. 116/2011 Page 49 of 62 Pushpa Rani V. State Bank of India & Anr.
also to be kept in mind the interest of borrower to secure the maximum and good price of the prop erty through the public sale/auction by following due procedure of law. This is also means that the property should be transferred with physi cal possession and clear title. This, to be read in the context and in view of the purposive in terpretation and reinforcement of the amended provisions of the SARFAESI Act. (Paras 132,
155).
(K) Securitization and Reconstruction of Finan cial Assets and Enforcement of Security Inter est Act (54 of 2002), Ss. 31(1), 13 - Recovery of debt - Auction sale of property - Secured credi tor bound to follow mandatory provisions at ev ery stage - He is also under obligation to ensure the sale of secured assets and property, fetches in full market value - Further auction sale of property by secured creditor without first ob taining physical possession of property - Is contrary to law.
"The auction/ sale of the property by secured creditor for recovery of debts based under the symbolic possession was contrary to the scheme of SARFAESI Act and the rules. The sale of immovable property building and land on "As is where is" and "whatever there is" ba sis in June 2013, without obtaining prior physi cal possession is illegal and contrary to the law. The inference of collusion between IFCI, secured creditor and ITC, auction purchaser cannot be ruled out, particularly when the other bidders may not have come forward as there was no physical Suit No. 116/2011 Page 50 of 62 Pushpa Rani V. State Bank of India & Anr.
possession being handed over at t he time of the sale. It resulted in the property not fetching its po tential market purchase price and ITC was the sole bidder who bid only Rs.1000/ more than the re served price. (Para 155) "The secured creditor in proceedings for recov ery of debt is bound to follow the mandatory provisions, at every stage, by keeping in mind the interest of borrower, apart from recovering its due/debts. They are under obligation to en sure that the sale of the secured assets and property fetches its full market value, by giving full opportunity to the owner, including the wide publicity and declaration at large, and fur ther to handover to the purchaser after sale of the property. Therefore, any such sale conducted merely on the basis of symbolic possession, with out deciding the rights concerned including, the full opportunity to the owner of the property, would definitely affect the sale price and in realis ing the full and real market value of the secured assets. The same procedure and principle applies also to the movables, as contemplated in Cls. 4 and 5 of the Regulations. Any breach of these pro visions would definitely required to be dealt with and tested on the foundation of interest of the bor rower/owner of the properties. (Para 137) That as per statutory provisions, authorized officer of the bank had to take the possession of immovable property in actual and there after only, he can process the auction sale. Bank has not followed Suit No. 116/2011 Page 51 of 62 Pushpa Rani V. State Bank of India & Anr.
the mandatory provisions of law. The Sale Certificate dated 21/09/2010 which is Ex.P4, Ex. PW2/P1 and Ex.D5, issued by the bank was not in accordance with law, as adumbrated herein above. The admitted position is that the bank has not even notified in Ex.P9, Ex.PW2/1 and Ex.D1 that the property in auction is not in actual possession of the bank. The word "possession" has been incorporated coupled with the SARFAESI Act and the Rules 6 to 9 of the aforesaid Rules which only can be understood that the actual possession has been taken over by the defendant bank. The word "symbolic possession" has not been incorporated in Ex.P9, Ex.PW2/1 and Ex.D1. In my considered view, the same would re quired to be incorporated in order to notify to the public at large that the actual possession is required to be taken in the said prop erty and in terms thereof, the auction purchaser may bid for the property.
Admittedly, the defendant bank has taken the symbolic possession on 20/06/2004 and the actual possession was taken on 06/01/2012. The defendant bank had not taken the actual posses sion for a period of about eight years. However, as per the mandate Suit No. 116/2011 Page 52 of 62 Pushpa Rani V. State Bank of India & Anr.
of Section 13(4) of SARFAESI Act, the bank has to wait only for a period of 60 days after serving the notice under Section 13(2) of the SARFAESI Act. The provision of Section 14 of the SARFAESI Act provides the procedure for taking the possession if the bank is not able to take the possession peacefully. The defendant bank admit tedly has not initiated any proceedings under Section 14 of the SARFAESI Act immediately. The order of the District Magistrate was passed on 02/03/2009 i.e. after about two years from the date of auction of the property in question. In spite of the order of the Dis trict Magistrate, the defendant bank has not diligently pursued the matter for obtaining the actual and physical possession of the prop erty in question and admittedly, after about three years from the said order dated 02/03/2009, the defendant bank took possession with police aid only on 06/01/2012.
The defendant bank has been vehemently harping upon the admis sion of the plaintiff, which the plaintiff has elicited out in the cross examination conducted on 30.3.2016. She has elicited out that "at time of auction she was aware that property in question was in pos session of 2 borrowers".Suit No. 116/2011 Page 53 of 62
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The Court cannot lose the sight of the fact that the plaintiff was an old aged lady of about 68 years at the time of her evidence. The evi dence of the plaintiff was recorded by Local Commissioner on the application filed by the plaintiff. The Court has appointed the Local Commissioner vide order dated 15.1.2016 and it was observed by the Court in the said order that the condition of the plaintiff is apa thetic and she is suffering from various old aged ailments. The evi dence of the plaintiff has to be read as whole wherein initially, she has stated that neither she nor her husband has visited the suit property before auction. Evaluating the entire testimony of the Plaintiff, she appears to be oscillating witness on account of her age and illness.
It is admitted case of the parties that PW4 i.e. the husband and special power attorney of the Plaintiff, had conducted the entire proceedings. The document Ex. P13 is the Special power of Attor ney dated 6.2.2012 clearly depicts that the husband of the Plaintiff was following the entire matter and the evidence of the PW4 is con sistent in material particulars and the defendant bank has not been able to shake his testimony on material particulars and he has cat Suit No. 116/2011 Page 54 of 62 Pushpa Rani V. State Bank of India & Anr.
egorically stated that when the suit property was inspected, at that time the suit property was locked. The PW4 has denied the sugges tion that borrowers Sh. Narain Lal and Sh. Naresh Kumar were re siding in the property when he has inspected the property. More over, in terms of the Judgment of Division Bench of Hon'ble High Court of Madras which was referred hereinabove, even if the pur chasers were known about the encumbrances, yet it was the in cumbent duty of the bank to notify in the Public Notice regarding encumbrances. The bank in the present case clearly notified that they have taken possession and it is not notified that they are in symbolical possession. The Division Bench of Hon'ble High Court of Bombay clearly held that the property should be transferred with physical possession and clear title and the auction/ sale of the property by secured creditor for recovery of debts based under the symbolic possession was contrary to the scheme of SAR FAESI Act and the rules. The sale of immovable property build ing and land on "As is where is" and "whatever there is" basis Suit No. 116/2011 Page 55 of 62 Pushpa Rani V. State Bank of India & Anr.
in June 2013, without obtaining prior physical possession is il legal and contrary to the law.
The Judgment of Hon'ble Calcutta High Court relied upon by the defendants is of a single Bench and in the said Judgment, it is not clear whether Sale Cum Auction Notice has notified "symbolical possession or merely possession". Moreover, the Appendix V read with Rules 9(6) of Security Interest (Enforcement) Rules, 2002 do not appear to have been brought to the Notice of the Hon'ble High Court. The aforesaid Judgments of Madras and Bombay High Court are of Division Bench Judgments and they vividly deal with the questions which are subject matter of the present suit. The Ld. Counsel for the defendant bank has also heavily relied upon the expression "as is where is basis" or "as is what is basis". The said clause cannot be stretched to the "possession of the prop erty" because as far as possession of the property is concerned, the bank has clearly and apparently notified that they had taken the possession in pursuance of SARFAESI Act and in pursuance of Rules 6, 7, 8 and 9 of Security Interest (Enforcement) Rules, 2002. It was not notified by bank that the bank had taken only the sym Suit No. 116/2011 Page 56 of 62 Pushpa Rani V. State Bank of India & Anr.
bolical possession. The connotation of possession taken over with the aforesaid Act and Rules clearly connotes that actual physical possession was with the defendant bank. The clause "as is where is basis" or "as is what is basis" can be maximum stretched to condi tion and facilities of the property in question but the same cannot be stretched to the possession of the property. Moreover, the Judg ment of Division Bench of Hon'ble Bombay (Mumbai) High Court clearly caters the argument of the defendant Bank. The Judgment of Hon'ble Supreme Court relied upon by the defen dants is also totally distinguishable on factual matrix and it does not relate to SARFAESI Act and it was not the case where statutory provisions were to be complied by the Authority. The Hon'ble Supreme Court was also dealing the condition and facility pertain ing and attached to the property sold in that case but the same does not relate to the question to the possession of the property and apparently in that case the possession had also been handed over by the Authority to the auction purchaser. Considered from any view point, the Issue No.1 is decided against the defendants and in favour of the plaintiff. Suit No. 116/2011 Page 57 of 62
Pushpa Rani V. State Bank of India & Anr.
ISSUE NOs.2 to 4:
(2) Whether the plaintiff is entitled for the decree of recovery of Rs.10,00,000/, as prayed for in the plaint? OPP (3) In the alternative, whether the plaintiff is enti tled for the decree of possession and damages, as prayed for in the plaint? OPP (4) Whether the plaintiff is entitled for the inter est? If yes, at what rate and for which period? OPP This Court while deciding Issue No.1 has categorically held that de fendant bank has not complied with the statutory provisions of law.
It is apposite to mention here that the Sale Certificate has already been issued, although, as held above, the same was not in accor dance with Appendix V. The Court is of the opinion that interest of justice would be met if the alternative relief claimed is granted in terms of this order.
It is admitted position that the actual possession was not handed over to the Plaintiff on 11.06.2007, when the entire auction amount was received by the defendant bank. The Plaintiff was deprived of the possession in spite of the receipt of entire auction amount. In case the Plaintiff would have been given possession of property at Suit No. 116/2011 Page 58 of 62 Pushpa Rani V. State Bank of India & Anr.
the relevant time in the year 2007, she would have enjoyed the property in one form or another.
The court has to assess the rental amount of the suit property and the period for which the Plaintiff is entitled. There is no indepen dent evidence on record to establish the expected rental income from the said property. The averment of Rs.6,000/ was made but the plaintiff has not led any independent evidence to such effect. It is admitted position of the parties that the bank has offered the possession on 06.1.2012 to the Plaintiff vide letter dated 31.12.2001 vide Exhibit D9 but the Plaintiff declined to take pos session. In the cross examination, it is stated by PW1 and PW4 that they would take the possession as per the order/direction of the Court. Considering the area, nature, size of the flat and the value of the property, the interest of justice would be met if the de fendant no.1 bank is directed to pay an amount of Rs.2,500/ per month from 12.06.2007 to 11.06.2010 and further an amount of Rs.2,750/ per month from 12.06.2010 to 06.01.2012 by way of compensation/damages. The defendant No.1 bank shall pay the said amount within 30 days from date of passing of this order and Suit No. 116/2011 Page 59 of 62 Pushpa Rani V. State Bank of India & Anr.
in case the bank fails to pay the said amount within the period of 30 days, then the bank shall pay simple interest @ 9% on the said amount after expiry of 30 days till its payment. The defendant bank or the authorized officer of the bank shall also be liable to issue the fresh Sale Certificate in respect of the suit property strictly in terms of Appendix V of Security Interest (En forcement) Rules, 2002. The defendant bank shall also execute and get registered necessary Sale deed in favour of the Plaintiff in accor dance with law. The said direction is necessary in order to give ef fective title to the Plaintiff. However, the necessary stamp duty, reg istration charges and taxes etc. for the registration shall be exclu sively borne by the Plaintiff.
Accordingly, the issue nos. 2, 3 and 4 are decided in aforesaid terms.
RELIEF The defendant No.2 is the Chairman of defendant No.1 bank and he is not personally liable for the acts of defendant no.1 Bank. Accord ingly, the defendant no.1 bank only is held liable in the present case. Therefore, I hereby pass the following Suit No. 116/2011 Page 60 of 62 Pushpa Rani V. State Bank of India & Anr.
FINAL ORDER
1. The defendant no.1 bank is directed to pay an amount of Rs.2,500/ per month from 12.06.2007 to 11.06.2010 and further an amount of Rs.2,750/ per month from 12.06.2010 to 06.01.2012 by way of compensation/ damages. The defen dant No.1 bank shall pay the said amount within 30 days from date of passing of this order and in case the bank fails to pay the said amount within the period of 30 days, then the bank shall pay simple interest @ 9% on the said amount after expiry of 30 days till its payment.
2. The defendant bank or the authorized officer of the bank shall also be liable to issue the fresh Sale Certificate in respect of the suit property strictly in terms of Appendix V of Security Interest (Enforcement) Rules, 2002.
3. The defendant bank shall also execute and get registered nec essary Sale deed in favour of the Plaintiff in accordance with law. The necessary stamp duty, registration charges and taxes etc. for the registration shall be exclusively borne by the Plain tiff.
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Pushpa Rani V. State Bank of India & Anr.
4. The keys (which were deposited in the Court on 21.10.2016) of the suit property i.e. flat bearing no. G1, Ground Floor, B 1/24, DLF, Dilshad Garden ExtensionII, Ghaziabad shall be released to the Plaintiff.
5. The cost of the suit is also awarded in favour of the plaintiff and against defendant No.1.
Decreesheet be prepared accordingly.
File be consigned to Record Room after due compliance.
Announced in the open court (ARUN SUKHIJA)
on 10/08/2018 ADJ07 (Central)
Tis Hazari Courts, Delhi
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