Delhi High Court
Ravinder Singh Payal vs Gic Housing Finance Ltd. & Anr on 29 April, 2015
$~12
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on 29th April, 2015
+ W.P.(C) 8579/2014, C.M. No. 19788/2014
RAVINDER SINGH PAYAL ..... Petitioner
Through: Ms. Deepali Gupta, Adv.
versus
GIC HOUSING FINANCE LTD. & ANR ..... Respondents
Through: Mr. Kanwal Chaudhary and Mr.Akhil
Gupta, Advs.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE R.K.GAUBA
%
1. In these proceedings the jurisdiction of this Court under Articles 226-
227 of the Constitution of India is invoked to assail the order dated
17.10.2014 of Debt Recovery Appellate Tribunal Delhi (hereinafter referred
to as "the DRAT) in appeal No.25/2013 arising out of Securitization
Application (SA) No.29/2007 which had been dismissed by the Debt
Recovery Tribunal-II Delhi (hereinafter referred to as "the DRT") by order
dated 16.07.2012.
2. The background facts, briefly stated, are that the petitioner, intending
to purchase a lower income group (LIG) residential flat (bearing No. C-2
(LIG), second floor, plot No.436, Niti Khand-1, Indirapuram, Ghaziabad
WP(C)8579/2014 Page 1
"the property") from the second respondent ("the builder") had approached
the first respondent (the creditor) for financial support. An application was
made on 31.12.2001 for housing loan of ₹5,25,000/-. The sale consideration
of the property purchased from the second respondent is shown in the sale
documents to be ₹2,61,000/-. A tripartite agreement was executed on
29.05.2002 by the petitioner and the respondents whereby loan of
₹5,25,000/- was advanced to be repaid by the petitioner over 15 years
through 180 equated monthly installments (EMIs) of ₹6,133/-. As per the
agreement, the rate of interest was fixed at 11.5% per annum. The first
respondent initially made over to the second respondent an amount of
₹4,75,000/- followed by release of further ₹50,000/- on 28.06.2002. In
terms of the contract executed at the stage of the loan, the property was
mortgaged with the first respondent as security. It, however, needs to be
noted that the petitioner had also entered into two agreements with the
second respondent (builder), one concerning sale of the flat, for
consideration of ₹2,61,000/- and another for finishing work against
consideration of ₹3,24,000/-.
3. Admittedly, there was default on the part of the petitioner in payment
of EMIs. It appears the petitioner had made some representations to the first
respondent, firstly on 07.08.2002 and then on 18.12.2002 seeking
rectification of the document to show the loan amount in respect of the
purchase of the property for ₹2,61,000/- only. The pleadings and
documents on either side do not clarify as to whether these representations
were considered by the respondent bank or any response communicated to
the petitioner in that context at any stage.
WP(C)8579/2014 Page 2
4. The respondent bank invoked the provisions of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter referred to as "the SARFAESI Act") and issued a
notice on 21.11.2005 (dispatched on 18.01.2006) under Section 13(2). The
petitioner objected to these measures. The bank issued another notice under
Section 13(2) on 29.05.2006, followed by still another notice, now under
Section 13(4), on 14.11.2006 taking out symbolic possession of the
mortgaged property. The petitioner sent a reply on 29.11.2006. It appears
the bank approached the Additional District Magistrate, Ghaziabad (ADM)
under Section 14 of the SARFAESI Act, information in which regard was
given by the ADM to the petitioner in terms of his order dated 26.06.2007.
5. Eventually, the petitioner moved DRT by submitting the SA under
Section 17 of the SARFAESI Act on 06.08.2007. In the course of hearing
on the said SA, the petitioner sought for interim protection which was
granted subject to the condition of his depositing with the first respondent of
an amount of ₹15,000/- within a month followed by further payment of
₹3,000/- per month till further orders.
6. The SA was dismissed by DRT by order dated 16.07.2012. It appears
that the petitioner's contentions on the question of limitation and the amount
of loan given against the mortgage did not find favour with the Tribunal.
The DRT found the petitioner in default and the action under Section 13(4)
of the SARFAESI Act valid. The petitioner appealed, but unsuccessfully,
before DRAT which rejected his contentions by the impugned order passed
on 17.10.2014.
WP(C)8579/2014 Page 3
7. When this petition came up for consideration on 08.12.2014, another
Division Bench of this Court, then in seisin of the case, recorded its
observations as under:-
"On facts, we are not inclined to interfere with the impugned
order. The contention of the petitioner that only ₹2,61,000/-
were advanced to him, has been rightly disbelieved and
rejected by the Debt Recovery Tribunal as well as Debt
Recovery Appellate Tribunal. The respondent bank had urged
relying upon the loan agreement executed on 29.05.2002
amongst the petitioner, respondent-bank and the builder, that
loan of ₹5,25,000/- was advanced by way of the two cheques.
The first cheque of ₹4,75,000/- was issued on 29.05.2002 and
the second cheque of ₹50,000/- was issued on 28.06.2002.
These cheques were in favour of the builder as per the tripartite
agreement.
The bank had also asserted that two agreements were executed
on 04.06.2002 between the petitioner and the builder. The first
agreement was the sale deed for ₹2,61,000/- and the second
agreement was styled as finishing agreement for ₹3,24,000/-.
In the sale deed, the figure of ₹3,24,000/- was not mentioned,
as it would have entailed payment of stamp duty. Thus, the
petitioner and the builder had avoided referring to the finishing
agreement, to evade stamp duty.
The bank in the reply has referred to the default in payment of
EMIs by the petitioner herein. ₹6900/- was paid in the year
2002-03 and ₹10,000/- was paid in the year 2005-06. No other
payments were made till 2008-09.
The petitioner along with the present appeal has not filed
photocopies of the tripartite agreement dated 29.05.2002 as
well as the finishing agreement dated 04.06.2002 for
₹3,24,000/-. Noticeably, cheque of ₹4,75,000/- was issued in
favour of the builder on 29.05.2002, before the sale deed dated
04.06.2002 was executed.
WP(C)8579/2014 Page 4
We agree with the two Tribunals that the story propounded by
the petitioner that only ₹2,61,000/- was advanced under the
loan agreement, is made up and unbelievable"
8. The counsel for the petitioner, however, submitted on 08.12.2014 that
equitable mortgage in respect of the property could not have been created
under Section 58 (f) of the Transfer of Property Act, since the Ghaziabad
District had not been notified for such purpose. Taking note of the fact that
this plea had not been raised before the two forums below, the Court
nonetheless sought clarification. On 22.12.2014, it was submitted that there
is a notification to such effect vis-à-vis District Ghaziabad. The contention
to that effect was not insisted upon thereafter by the petitioner. He instead
pressed the writ petition restricted to relief on the question of interest.
9. Against above back-drop, the matter was considered and this Court
passed the following order on 08.04.2015:-
"After hearing counsel for the parties this Court is of the
opinion that in the given circumstances of the case since the
notice under Section 13(2) of SARFAESI Act has issued on
29.05.2006, and the bank has been charging the contractual
rate at 11½% per annum all the while, which has been applied
resulting in the current outstanding amount of ₹10,22,765/-
even though the petitioner has concededly deposited a sum of
₹10,92,359/- towards the original loan of ₹5,25,000/-, the bank
should re-work the liabilities by applying the reduced rate of
interest w.e.f. 1.1.2007 i.e. 6% per annum. The bank shall
produce the calculation in this regard on the next date of
hearing.."
10. Pursuant to the directions in the above quoted order dated 08.04.2015,
the first respondent has submitted a statement of calculation of total dues
worked out on the basis of reduced rate of interest @ 6% per annum with
WP(C)8579/2014 Page 5
effect from 01.01.2007. In terms of these calculations, the total amount that
remains outstanding from the side of the petitioner in favour of the first
respondent is ₹3,38,115/- only.
11. The counsel for the first respondent, however, submitted that the bank
would suffer losses if the contractual rate of interest is reduced. He
nonetheless fairly conceded that against the original loan of ₹5,25,000/-
taken in 2002, for purposes of acquiring a residential flat shown in the sale
document against total consideration of ₹2,61,000/- only, the petitioner has
deposited till date an amount of ₹10,92,359/-.
12. It is not disputed that the petitioner has been paying the installments
of ₹3,000/- per month in terms of the interim order granted on 21.07.2008 by
DRT during pendency of the SA. The loan amount was declared to be a
Non-performing Asset (NPA) sometime around November, 2005. The bank
invoked provisions of the SARFAESI Act by issuing notices under Section
13(2) on 21.11.2005 and 29.05.2006. The petitioner had moved the DRT
under Section 17 of the SARFAESI Act on 06.08.2007. It appears some
confusion has prevailed in his mind, under some advise, as to the amount of
the mortgage money, apparently on account of his two separate agreements
with the builder, one concerning purchase of the property showing the total
consideration of ₹2,61,000/- only. Technically, his contentions are
unacceptable and these have been rightly rejected by DRT and DRAT. But,
in the given facts and circumstances, we are of the opinion, that the
application of the contractual rate of interest at 11.5% per annum, post
initiation of action under the SARFAESI Act which became subject matter
of challenge under Section 17, would act oppressively. We, thus, find a case
made out for some relief on this score.
WP(C)8579/2014 Page 6
13. Keeping in view the statement of calculation submitted by the first
respondent pursuant to directions in the order dated 08.04.2015, we are of
the view that ends of justice would be met if the petitioner is directed to pay
to the first respondent an amount of ₹5 lakhs to discharge in full his liability
arising out of the loan in question.
14. For the foregoing reasons, the petitioner's liability is limited to ₹5
lakhs in the circumstances of the case. The same shall be paid to the
respondent within six weeks from today. The impugned orders of the DRT
and the DRAT are accordingly set aside.
15. It is clarified that in the event of non-compliance with the court's
order, the respondents are at liberty to revive the proceedings to recover
their dues in terms of the DRAT order.
16. The writ petition and pending application are disposed of in the above
terms.
R.K.GAUBA, J
S. RAVINDRA BHAT, J
APRIL 29, 2015
mr
WP(C)8579/2014 Page 7
