Mohammad Adnan v. Reserve Bank of India & Ors.

1. This petition seeks the setting aside of all proceedings emanating from O.A. No. 984/2016, which was disposed-off by Debt Recovery Tribunal-II (DRT-II), New Delhi by order dated 05.09.2022, holding inter alia reads as under:- “…3. On notice by this Tribunal, all the Defendants failed to cause appearance, despite publication, hence, they were all ordered to be proceeded against ex-parte, vide order dated 24.05.2017 of this Tribunal. However, on an application preferred by Defendant Nos. 1&2, the order was recalled, qua them only, vide order dated 27.08.2018 and their written statement was allowed to be taken on record. During the pendency of the present OA, on 28.11.2018, PNB Housing Finance Ltd., preferred an application Order-1 Rule-10 of CPC, for impleading it as necessary party, on the ground that the charged property has been financed by them to one Sh. Ranjan Chandra Dey and a Housing Loan of Rs.43,41,000/- has been granted by them, on 26.08.2015, against the security of the charged property, which has been mortgaged in its favour.

PNBHFL came to knowledge of this case, when it read the notice U/s 13(4) in the Newspaper during the routine checkup. Thereafter, no one appeared on behalf of PNBHFL. Hence said application is not disposed of till date.

4. In their joint written statement, Defendant Nos. 1 & 2 have stated that the present application is not maintainable as the charged property is situated in Greater Noida and the cause of action arose, outside the territorial jurisdiction of this Tribunal. The booking of the charged property was done under the subvention scheme, whereby the answering defendants were not bound to pay any EMIs, till the delivery of possession of the charged property and the same was to be paid by Defendant No.3. The officials of Defendant No.3, themselves, made arrangements for grant of loan. In terms of the provisions of the tripartite agreement, in case of its failure to deliver the possession of the charged property, in terms of timeline of two years and six months in the allotment letter, Defendant No. 3 had undertaken to refund the amount advanced by the applicant bank, with interest, as well as the amounts deposited by the answering defendants. It is also stated that the project is complete and possession has been handed over to 50% of the allottees, but the same has not been handed over to the answering defendants. Defendant No.3 has allotted and handed over possession of the charged property, to a third party, thereby committing fraud of double-selling the same flat. Hence, it is prayed to dismiss the present application, qua the answering defendants. xxx xxx xxx

8. I have heard the arguments by the applicant bank & the contesting defendants and also gone through the records. The contesting defendants have executed the facility agreement, for availment of the Housing Loan. Hence, the case of the applicant bank stands fully established against the defendants with respect to nonpayment of EMI/outstanding amount; non-execution of sale deed by defendant no.3 in favour of defendant no.1 &2, which give rise to presumption that project is not completed by defendant no.3 and if completed sale deed executed in favour of some third party; and violation of terms and conditions of the tripartite agreement on the part of defendant no.3, by not returning the loan amount to applicant bank and earnest/margin money to defendant no. 1 &2.

9. By releasing the whole loan amount at the initial stage in favor of defendant no.3, the applicant bank indirectly financed the project of defendant no.3, without caring for execution of sale deed in favour of defendant no.1 &2 after completion of project. Defendant no.3 failed to hand over the physical possession of the.flat to defendant no.1 & 2 after completing the same and sold the same flats of its project to many buyers and FIR no. 50/2017 at PS Anand Vihar is lodged in this regard. In absence of any sale deed in favour of defendant no.1 & 2, I can not ignore the averments of PNBHFL that the charged property has been financed by them to one Sh. Ranjan Chandra Dey and a Housing Loan of Rs.43,41,000/- has been granted by them, on 26.08.2015. Thus, it is clear that in this case also the physical possession of the flat is given to some third person by defendant no.3 and thereby violated the terms & conditions of the agreement to sell, allotment letter and tri-partite agreement. Clause k of para serial no.4 (1) of tri-partite agreement reflects that- "The owner/developer hereby agrees not to cancel/rescind/terminate the said sale agreement without taking a prior written consent from the bank. Notwithstanding anything contained in the sale agreement, the bank shall only give such consent after fully securing the refund of allottee/borrower dues under the Facility Agreement payable due to such cancellation/ termination directly to the bank. "Thus, this condition is also violated by defendant no.3 and thereby committed fraud with" applicant bank and defendant no.1 & 2. Defendant No.3, has undertaken to refund, to the applicant bank, including interest, to the extent of its outstanding, all the amounts received on behalf of the allottee/Borrower, as per Clause 'o', in the event of Builder failing to give possession to the Borrower/failing to complete the sale transaction and registration thereof. In the present case, the Builder has re-allotted the charged property to a third party and possession was never handed over to the contesting defendants. Therefore,' the sole liability for the refund of amount to applicant bank, as well as defendant no.1 & 2, alongwith interest is that of Defendant No. 3. In fact, Defendant Nos. 1 & 2, deserve a discharge.

10.

(i) In light of the above facts & circumstances, the Original Application is hereby allowed to the effect that the applicant bank is entitled to receive a sum of Rs.43,19,769/- (Rupees Forty Three Lakhs, Nineteen Thousand, Seven Hundred and Sixty Nine Only), less the amount already received during this intervening period (if any), along with pendente-lite and future simple interest @ 9.0% per annum, and costs, till realization, from 26.10.2016, as mentioned in following Para l0(ii).

(ii) In case of failure to hand over possession to the allottee and pay to the applicant bank, on the part of defendant No.3/subsequent transferee of the project; or completion of project, but execution of sale deed in favour of any third party; the aforesaid amount shall be recovered from the sale of properties of Defendant No.3, with direction to compensate defendant nos.[1] & 2, from the excess amount with respect to margin/earnest money paid by defendant nos.[1] & 2 to defendant no.3 and amount/EMIs paid to applicant bank, along with interest. In case, the defendant No. 3 is under liquidation, applicant bank is at liberty to stake its claim before the Liquidator/ NCLT, as the case may be. It is made clear that this order is subject to any direction given by Hon'ble High Court, or by Hon'ble Supreme Court of lndia, if any, with respect to defendant no.3. Alternatively, in case of completion of the housing project and execution of sale deed in favour of Defendant No.1, but failure to pay to the applicant bank, on the part of Defendant Nos. 1 & 2, the aforesaid amount shall be recovered from the sale of charged property, being Flat No. 1701, Floor 17th, Tower-D, "AVJ Heights" Plot No GH-12/2, Sector Zeta-1, Greater Noida (UP) - 201307, after notifying the proposed auction sale of the said property on ebikery site, and after obtaining the valuation of the property. Excess amount of the auction sale proceeds, over the recoverable dues, if any, be returned to defendant Nos. 1 & 2.

(iii) The Recovery Certificate be issued forthwith and be sent to Recovery Officer, DRT-II, Delhi. …”

2. What is to be seen from the above directions is that the due amounts had to be paid by R-3/Property Developer. The entire monies were paid in one lump-sum, which according to the learned counsel for the petitioner is contrary to the directions issued by the Reserve Bank of India on 03.09.2013. He submits that the petitioner is neither in possession of the property, nor has monies been returned to him and he is remediless. The sequence of repayment has been spelt out in paragraph 10(ii) of the aforesaid order i.e. possession of the apartment is to be delivered to the petitioner on completion of the project. But if the project is already completed, then the monies would be payable by the petitioner only upon the handing over of the possession of the apartment to him.

3. The procedure prescribed in paragraph 10(ii) has to be followed and till the said procedure is followed, the petitioner cannot be called upon to pay any monies to the Bank, as the R-3/Property Developer is to make good the payments in the first instance.

4. The learned counsel for the petitioner submits that neither the possession of the property has been given nor have the monies been paid. Therefore, he should not be rendered remediless. This contention would always be open to the petitioner in such proceedings as may come about.

5. Recovery Certificate bearing no. 273/2022 has been issued in this case. However, the learned counsel for the Bank submits that the same would have to follow the procedure as directed in the order of the DRT. Corporate Insolvency Resolution Process (CIRP) proceedings apropos the AVJ Builders/Property Developer are underway. The petitioner’s claim before the Resolution Professional (RP) has been admitted.

6. Since the procedure prescribed in the aforesaid order of the DRT has to be followed, the need for the petitioners to file any affidavits in any proceeding before the Recovery Officer does not arise till such time that R-3/AVJ Builders completes its part of the obligation. Their right to file a reply and pursue remedies in law would stand reserved.

7. The petition along with pending applications, if any, is disposedoff in the above terms.