Mohammed Shahid Rafi vs Hdfc Bank Limited And 5 Ors
2022 Latest Caselaw 13446 Bom

      IRESH SIDDHARAM   Digitally signed by IRESH
                        SIDDHARAM MASHAL
      MASHAL            Date: 2022.12.23 19:08:53 +0530




                                                                   1                    2.22276.22 WPL.doc

ISM

                               IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                          ORDINARY ORIGINAL CIVIL JURISDICTION

                                                   WRIT PETITION (L) NO. 22276 OF 2022

                Mohammed Shahid Rafi                                                .....Petitioner
                           V/s.
                HDFC Bank Limited and 5 Ors.                                        .....Respondent


                Mr Harjot Singh i/b. Raval Shah and Co. for the Petitioner.
                Mr. Sharath Pai a/w Ms. Sushmita Gandhi a/w Ms. Anamika Singh a/w Ms.
                Nidhi Chauhan i/b Indus Law For Res. No. 1 and 2.


                                                          CORAM : NITIN JAMDAR AND
                                                                  GAURI GODSE, JJ.

                                                          DATE :       22 DECEMBER 2022.

                ORDER [PER: GAURI GODSE, J.]

This petition is filed for challenging the order dated 4 July 2022 passed by Debts Recovery Appellate Tribunal (DRAT) Mumbai in Interim Application No. 210 of 2022 in Misc. Appeal No. 77 of 2022. By the said order, application filed by the petitioner praying to stay the action of taking physical possession by respondent nos. 1 and 2 (Bank) on the basis of 2 2.22276.22 WPL.doc

notice dated 26 November 2021 issued by the learned Chief Metropolitan Magistrate in Case No. 1120/SA/2019, is rejected. The petitioner claims to be owner and in possession of flat no. 501, 'Rafi Mansion' situated at Bandra, Mumbai(the said flat). The said flat was secured with the bank by the borrowers who are respondent nos. 3 to 6.

2. The petitioner had executed registered agreement for sale dated 29 November 2017, in favour of respondent no. 3 for conveying the said flat for a total consideration of Rs. 3.20 crores. On the basis of the said agreement for sale, respondent no. 3 mortgaged the said flat with the bank for obtaining cash credit facility by executing registered mortgage deed dated 23 January 2018. On the basis of the mortgage deed, the bank had initiated the proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) and had issued a notice dated 17 November 2018 under section 13(2) of SARFAESI Act. It is the petitioner's case that entire consideration amount as per the agreement dated 29 November 2017 was not received by him and hence notice was issued to respondent no. 3. Since respondent no. 3 had shown unwillingness to make the payment of balance consideration amount, there was a cancellation deed executed on 10 December 2018 and the same was registered. The petitioner further contended that in the agreement for sale it was specifically agreed that the possession of the said 3 2.22276.22 WPL.doc

flat was to be handed over to respondent no. 3 only after payment of the entire consideration amount was done. Petitioner thus contended that since the payment was not received, parties executed cancellation deed and the possession of the said flat always remained with the petitioner. Petitioner thus contended that the mortgage deed as well as the demand notice issued by the bank was not to his knowledge. It is the case of the petitioner that the sanction letter issued by the bank in favour of respondent no. 3 was not issued after following due diligence and that guidelines of Reserve Bank of India (RBI) were also not followed. Thus, the contention of the petitioner was that the respondent no. 3 and respondent nos. 4 to 6 (Directors of respondent no. 3) and the Bank had played fraud upon the petitioner and had got the mortgage deed executed in respect of the said flat owned by the petitioner and which was also in possession of the petitioner. With these contentions, the petitioner had challenged the demand notice issued by the Bank, by taking out appropriate proceedings in Debt Recovery Tribunal (DRT).

3. Before approaching the DRT, petitioner had filed Suit No. 922 of 2019 in this court for declaration of his ownership rights. In the said suit, the petitioner had prayed for interim protection, however, notice of motion for interim relief was rejected by this court on 17 September 2019. The rejection of the interim relief in the notice of motion was confirmed by the 4 2.22276.22 WPL.doc

Division Bench of this court on 24 September 2019 in Appeal (L) No. 450 of 2019. Thereafter, the petitioner filed SA No. 342 of 2019 in DRT- II for setting aside the demand notice issued by the Bank under Section 13(2) of the SARFAESI Act and notice dated 17 November 2018 as well as the possession notice issued under section 13(4) and 14 of the SARFAESI Act, as well as order dated 3 July 2019 passed by the learned Additional Chief Metropolitan Magistrate. Petitioner had also filed Interim Application No. 1332 of 2019 in SA No. 342 of 2019 praying to stay action of taking physical possession of the said flat. The said Interim Application was dismissed of on 24 May 2022. Hence, the petitioner had filed Appeal No. 77 of 2022 before DRAT. In the said Appeal, the petitioner had filed Misc. Application No. 210 of 2022 praying for stay of the action of taking physical possession by the bank on the basis of notice dated 26 November 2021 issued by the learned Chief Metropolitan Magistrate's Court in Case No. 1120/SA/2019. The said application for interim protection was rejected by DRAT by an order dated 4 July 2022. Hence, the Petitioner filed the present Writ Petition.

4. The Petitioner's contention is that he is in possession of the said flat being owner and that the agreement for sale executed in favour of respondent no. 3 was subsequently canceled and hence respondent no. 3 was not entitled to mortgage the said flat in favour of the bank. Petitioner 5 2.22276.22 WPL.doc

thus contended that the said flat was mortgaged in favour of the Bank by playing fraud upon the petitioner. Thus, the petitioner contended that being the owner and in possession of the said flat, he was entitled to interim protection and the bank had no authority to take physical possession from the petitioner for the purpose of recovering the loan amount disbursed to respondent no. 3.

5. It was contended on behalf of the Bank that all the contentions raised by the petitioner were specifically examined and dealt with by this court in the Notice of Motion (L) No. 2035 of 2019 in Suit (L) No. 922 of 2019 filed by the petitioner. In the Judgment and order dated 17 September 2019 passed in Notice of Motion (L) No. 2035 of 2019 in Suit (L) No. 922 of 2019 all these contentions raised by the Petitioner were examined in detail and interim protection claimed by the petitioner was declined. This court in the said order has specifically recorded a finding that the facts on record and the reasons for executing the deed of cancellation shows that the petitioner and respondent nos. 3 to 6 may have been in other business relations and as evident from the deed of cancellation, the various amounts invested by the petitioner into the business entities of respondent no. 3, did not entail any kind of right in favour of the petitioner. The deposit of original title documents with the bank presupposes that the documents were handed over to the respondent-bank and on the basis of the same, 6 2.22276.22 WPL.doc

bank had proceeded and executed the mortgage document. It was further contended on behalf of the bank that though the petitioner sought to raise a contention that the entire amount of consideration was not received by him, perusal of agreement for sale in favour of respondent no. 3 specifically recorded that entire consideration amount was paid and the petitioner had also signed a receipt with respect to same. Learned counsel appearing on behalf of the bank further relied upon the statement of the petitioner recorded in the police station whereby the petitioner had not only admitted receipt of entire consideration amount from the respondent no. 3, but had also given details with respect to investments made by the petitioner with the respondent no. 3. On the basis of these facts it was contended by the bank that once the petitioner had admitted that he had received entire consideration amount, the petitioner cannot be termed as unpaid seller as sought to be claimed by him. Thus, it was submitted on behalf of the bank that there was no merit in the contentions and submissions made on behalf of the petitioner and there was no interference warranted in the impugned order passed by DRAT.

6. We have perused the impugned order as well as the agreement for sale, deed of cancellation and statements of the petitioner recorded in the police station. There is no satisfactory explanation given by the petitioner in response to the submissions made on behalf of the Bank, regarding the 7 2.22276.22 WPL.doc

amount towards sale consideration received by the petitioner from respondent no. 3 and the investments made by the petitioner with respondent no. 3. Petitioner was unable to justify any of his actions with respect to accepting entire consideration amount and inspite of receipt of the amount claiming to be an unpaid seller. Perusal of the order of rejection of interim relief by this Court in the suit filed by the petitioner, shows that all the contentions raised by the petitioner with respect to being unpaid seller is examined and dealt with in detail and the contentions raised by the petitioner are specifically rejected. Apart from submitting that the petitioner was unpaid seller and that the Bank had not followed due diligence as well as RBI guidelines before sanction of loan to respondent no. 3, no other submission is made by the petitioner in support of his contentions.

7. We do not find any merit in the submission made on behalf of the petitioner that the mortgage created in favour of the Bank by the respondent no. 3 was to defraud the petitioner and that the Bank was not entitled to take physical possession of the said flat. Perusal of dates of issuance of demand notice as well as cancellation deed by the petitioner and respondent no. 3 very obviously shows that agreement for sale as well as the date of cancellation was executed by the petitioner and respondent no. 3 only with an intention to seek financial assistance from the bank. The 8 2.22276.22 WPL.doc

DRAT has dealt with all the contentions raised by the petitioner and has correctly concluded that deed of cancellation though prepared on 10 December 2018 was registered only on 11 February 2019 i.e. after the notice of possession was issued by the learned Chief Metropolitan Magistrate's Court on 7 February 2019. Thus, DRAT rightly refused to grant protection to the petitioner on the basis of the petitioner's contention that he continued to be owner of the said flat. Thus, we do not find any merit in the arguments made by the petitioner. There is no reason to interfere with the impugned order passed by the DRAT.

8. For the reasons recorded above, Petition is rejected. There will be no order as to costs.

[GAURI GODSE, J.]                                 [NITIN JAMDAR, J.]