Ashok Menon, Chairperson
1. This appeal impugns the order dated 05.08.2024 dismissing Interlocutory Application (I.A.) No. 1875 of 2024 in Securitisation Application (S.A) at Diary No. 1695 of 2024 by the Debts Recovery Tribunal, Pune (DRT).
2. The appellants are third parties who claim to have agreed to purchase the subject property on 27.03.2024 from the borrowers (Respondents Nos.5 and 6) who had mortgaged the said property for availing a loan from the first respondent HDFC Bank and had defaulted in repayment resulting in measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) being initiated by the bank for recovery of debt allegedly due from them.
3. The appellants had allegedly agreed to purchase the subject property for a total sale consideration of ₹2.28 crores and a sum of ₹56,72,000/- was paid to the vendors towards the sale consideration. A balance of ₹1.69 crores was agreed to be paid directly to the HDFC bank on registration of the sale agreement. The agreement is seen as registered with the Joint Sub-Registrar Class-II, Haveli.
4. The appellants would contend that they had purchased the property with the knowledge and consent of the bank. The borrowers had entered into an OTS proposal with the bank and according to that proposal, ₹6.10 crores was agreed to be paid to clear the debt. The fourth respondent had agreed to deposit ₹2.75 crores on or before 31. 03.2024 by sale of the property. Thereafter, ₹3.35 crores was to be paid on or before 30.06.2024. The borrowers defaulted in payment, and the OTS failed. Hence, the bank proceeded with the Sarfaesi measures under Secs. 13(4) and 14 of the SARFAESI Act. Possession of the property was intended to be taken on 05.08.2024 and the appellants approached the DRT to release the property after accepting ₹1.69 crores. The bank refused to accept the proposal since the OTS had failed as the borrowers had before 31.03.2024, paid only a sum of ₹1.06 crores upfront towards ₹2.75 crores due in compliance with the OTS agreement. The OTS was cancelled on 20.04.2024.
5. The appellants wanted their possession over the property to be protected and the charge over the property released in view of the fact that they had paid the entire amount due from them in accordance with the agreement for sale.
6. The DRT refused to grant any protection to the appellants holding that the appellants had entered into an agreement for sale of the property only on 27.03.2024, which was after the issuance of the demand notice under Sec. 13(2) and an order under Sec. 14 to take possession was obtained from the District Magistrate on 30.10.2023. After having failed to comply with the OTS proposal, the borrowers/mortgagors could not have challenged the Sarfaesi measures and hence, the appellants have approached with an application to stall the Sarfaesi action. The application was, therefore, dismissed. The appellants are aggrieved and hence, in appeal.
7. The only question that arises for consideration in the appeal is whether the appellants have established their exclusive right to continue in possession of the subject property under the agreement for sale which they entered into with the borrowers on 24.03.2024 without the permission of the bank.
8. There is no doubt that the Sarfaesi measures were in progress against the subject property when the appellants allegedly purchased it. Sec. 13(13) of the SARFAESI Act reads thus:
“(13) No borrower shall, after receipt of notice referred to in sub-section (2), transfer by way of sale, lease or otherwise (other than in ordinary course of his business) any of his secured assets referred to in the notice, without prior written consent of the secured creditor.”(emphasis supplied).
9. A reading of the section would indicate that it was incumbent on the appellants/ mortgagors to have obtained prior written consent from the bank before proceeding to purchase the property. Admittedly, there is no such prior written consent of the creditor in the instant case. Hence, prima facie, the sale would not be valid and squarely hit by the embargo under Sec. 13(13).
10. The Hon’ble Supreme Court has in Suraj Lamp and Industries Pvt. Ltd. vs State of Haryana & Ors (2012) 1 SCC 656 held while considering the scope of an agreement for sale held that Sec. 54 of the Transfer of Property Act makes it clear that a contract of sale, i.e. an agreement of sale does not, of itself, create any interest in or charge on the property. The Hon’ble Supreme Court has in Rambhau Namdeo Gajre vs Narayan Bapuji Dhotra 2004 (8) SCC 614 held that the protection provided under Sec. 53 A of the T.P. Act to the proposed transferee is a shield only against a transferer and would only disentitle the transferer from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement.
11. The embargo under Sec. 13(13) of the SARFAESI Act would disentitle the appellants from seeking to protect their possession based on the purported agreement for sale. They are not entitled to any protection against the bank which has a charge over the subject property.
The DRT was justified in declining to grant any protection to the appellants. I find no reason to upset that finding. The appeal has no merits and is, therefore, dismissed.
