M/s J K Transports and Others vs STATE BANK OF INDIA on 6 April 2023

1) Smt. Pavana G.P. Aged about 38 Years W/o. Shrihari Residing at 547, 9th Cross, 7th Block, Jayanagara, Bangalore – 560082

2) Mrs. Krithy Pradeep W/o. Pradeep.C.S. Aged about, 44 years Residing at No.1, Farah Garden, No.17/1, Welington Street, Richmond Town, Bangalore – 560025

… PETITIONERS/

APPLICANTS AND

1. State Bank of India Stressed Assets Management Branch No.61, 4th Floor, Residency Road, Bangalore – 560 025 Represented by its Chief Manager, Sri.G.B. Kulkarni

2. J.K. Transports A partnership firm Represented by its Partners Having its, office at No.332/1, Sri Ramanjuabhattacharya Nialya, 3rd Cross, Krishna Temple Road, Mallathalli,

Bangalore – 560072

3. Sri. K. Ramkrishna Major S/o. Sri. Gopalakrishnaiah No.32/1. Ramanujabhattacharya, Nilaya, 3rd Cross, Krishna Temple Road, Mallathalli, Bangalore – 56072

4. Shri.A. Sjamlar Major S/o. Sri.H. Anjaneyappa At No.N-189, Kanakanakote Cross, Yelachanahalli, Kanakapura Road, Uttarahalli Hobli, Bangalore South Taluk Bangalore.

... RESPONDENTS/

DEFENDANTS Counsels on record/appeared for: Applicant : Sri. K.S. Kalleshappa Respondent -R1 : Sri. Vignesh Shetty R2 to R4, R6,R7 : Exparte

FINAL ORDER on APPEAL

The Orders passed by the Recovery Officer, dated 01.08.2016 in D.C.P. No. 6100 in O.A.No. 431/2009 is impugned in the present Appeal and the amount outstanding due in the loan account is Rs.3,14,49,477/- (Rupees Three Crore Fourteen Lakhs Forty Nine Thousand Four Hundred And Seventy Seven only) along with interest.

2. The appellants are third parties have challenged the order dated 01.08.2016 passed by the Recovery Officer in D.C.P.No.6100 in O.A.No.431/2009.

3. The contention of the appellant is that the respondent bank filed the above O.A. against the respondents 2 to 4 and obtained an ex-parte order dated 09.10.2009 in pursuance of which a R.C. was issued in the above DCP dated 09.10.2010; that an order of attachment was passed on 20.08.2014 by the Recovery Officer who further ordered to take possession of the property; that the Recovery Officer rejected the objectors application vide the impugned order; held the property documents were with HDFC Bank Ltd., when the appellant purchased the subject property; that the property is now under the mortgage of the said bank; that no notice was served on the appellant; that the bank is not proceeding against the mortgaged asset but is proceeding against the present property on the basis of attachment order.

4. The appellants purchased the subject property on 23.06.2015 from one Ramakrishna Reddy T.V, that the said Ramakrishna Reddy purchased the subject property on 20.12.2010; that the appellants went to the respondent bank with their friend for an enquiry about their friend’s account then the bank officials informed the appellants that their property is under attachment; that on the date of attachment, none of the respondents were the owners of the subject property, hence prays that the impugned order be set aside.

5. The respondent bank has filed its objections contending that the appeal is filed by a 3rd party which is not maintainable; that the bank had filed an I.A.No.2003/2009 in the said O.A. for an order of attachment of the property of the 3rd respondent and this Tribunal was pleased to pass an ex-parte interim order of attachment on 19.08.2009.

6. At time of allowing the O.A. on 09.10.2009, the said interim order of attachment was made absolute; that this order was not challenged by the said 3rd respondent K. Ramakrishna till date and hence the said order of absolute attachment has become final and binding on all concerned.

7. That on publication of the sale, one Mrs. Noor Ahmedi Khanum claiming herself to be owner of the subject property based on an agreement of sale and GPA executed by the said K.Ramakrishna filed objections in the above DCP proceedings and sought to be impleaded in the proceedings which was objected to by the bank.

8. The Recovery Officer rejected the same by order dated 11.03.2015; that the said HDFC Bank also filed an application on 29.04.2015 for raising the attachment but the same was later disposed of on the compromise reached between the said HDFC Bank and the present respondent bank for sale of the property and the proceeds be paid first to HDFC Bank and the balance to the respondent bank.

9. Sri. K. Ramakrishna in gross violation of the mortgage created by him in favour of the said HDFC Bank and in violation of the order of attachment, sold the subject property to one Ramakrishna Reddy under the sale deed and it is found in the said sale deed that the entire sale consideration of Rs.1,20,25,000/- has been paid in cash which clearly indicates that the sale was stage managed; that even if it was true, the same shall be subject to the said mortgage and attachment; that at the time of execution of the sale deed, the Vendor Ramakrishna Reddy was in Central Jail and the sale consideration of Rs.2.25 Crores also does not seems to have been paid.

10. The entire set of original title deeds are with HDFC Bank and hence the sale deeds are invalid or subject to Mortgage and the Attachment order towards the due of respondent bank which is more than Rs.9 crores and more than Rs.80 lakhs to the HDFC Bank; that the said HDFC Bank ought to have been impleaded as a party; that the property of A.Shankar is not available for sale as it is mortgaged with six other banks fraudulently resulting in criminal cases; that the title of the appellants are subject to mortgage and attachment; that there are no other properties available for the bank to recover its dues; hence the appeal be dismissed. Heard the submission of both the counsels and perused the available records of the case.

11. The present appeal is filed by a third party who is an objector to recovery proceedings initiated by the Ld. Recovery officer. The Order passed by the Ld. Recovery Officer in DCP No.6100 in OA.No.431/2009 dated 01.08.2016 is impugned in the present Appeal.

12. The Ld. Recovery Officer has held that the Order in the OA was not challenged by the defendants and though the schedule property is not the subject matter of the OA. Secondly, the certificate holder bank by way of an IA had sought inclusion of the property on 06.07.2009 as there were inadequate securities provided by Defendant No.2.

13. On perusal of the Order dated 01.08.2016, it is seen that the schedule property was attached on 19.08.2009 and the recovery officer has initiated sale proceedings. The Ld. Recovery Officer further held that the sale effected by Defendant No.2 in favor of a third party on 20.12.2010 is null and void. The prayer of the Objectors to lift the attachment made on 20.08.2014 is rejected as untenable.

14. The Order of attachment on the identified property of commercial-residential property bearing CITB/BDA corner site No.760 of Block No.II, Matadhalli (R.T.Nagar) Bangalore now assigned as corporation No.760 (CITB.BDA No.760) situated at 2nd Block, R.T. Nagar BBMP Ward No.97, PID No.97-03-760, Bangalore attached by the Recovery Officer in IA No.2003/2009 on 19.08.2009 which was subsequently made absolute on 09.10.2009.

15. The applicants have produced the obsolete sale deed dated 20.12.2010 executed by K.R. Ramakrishna favouring T.V. Ramakrishna Reddy and the sale deed dated 17.04.2015

executed by Ramakrishna Reddy T.V. favoring Smt. Pavana.G.P and Smt. Keerthy Pradeep.

16. It is seen from the records that M/s. J.K. Transports had availed credit facilities from the respondent bank and K. Ramakrishna is the second defendant in the OA. M/s. J.K. Transport is an ownership firm represented by its partner Sri. K. Ramakrishna, Smt. K. Basavana Madavi and Sri. A. Shankar who was carrying on the business of transport of buses which was hired to BMTC. The defendants had availed a loan of Rs.2,70,00,000/- (Rupees Two Crore Seventy Lakhs Only) and had executed the documents dated 03.08.2006 and had hypothecated Ashok Leyland Engines – 11 Nos. as security towards the credit facilities.

17. The OA came to be allowed on 09.10.2009 directing the bank to recover a sum of Rs.3,02,27,005/- along with cost and interest at 13% p.a. with monthly rests from the date of filling till the date of realization. Accordingly, a recovery certificate was drawn up on 05.11.2009.

18. It is matter of record that the commercial residential property bearing property CITB/BDA corner site No.760 of Block No.II, Matadhalli (R.T.Nagara) Bangalore now assigned as corporation No.760 (CITB.BDA No.760) situated at 2nd Block, R.T. Nagar BBMP Ward No.97, PID No.97-03-760, Bangalore is not the mortgaged property towards the loan availed by the borrower.

19. It is pertinent to note that the subject schedule property of the appeal was not a mortgage property for the OA claim filed by the bank. Records also reveal that Sri. Ramakrishna Reddy T.V, the 2nd defendant has sold the property to Smt. Pavana.G.P., Mrs. Krithy Pradeep on 20.12.2010 after filing of the OA on 07.07.2009.

20. On perusal of the sale deed dated 17.04.2015, it is seen that the vendor Sri. Ramakrishna Reddy T.V. has expressed his desire to sell the property in order to clear the loan liability with HDFC bank and had agreed to sell the property for a total sale consideration of Rs.2.25 crores. In the sale deed it is also reflected that the purchaser has made the payment towards HDFC loan account no.90150998 HDFC Bank Indiranagar Branch. As part of the total sale consideration has been paid on behalf of the vendor Ramakrishna Reddy T.V and the balance Rs. 50 lakhs were accepted by the seller, is clearly reflected that the sale of the identified property owned by Ramakrishna Reddy to clear the loan liability availed by him from HDFC bank.

21. Furthermore, during the recovery proceedings HDFC bank has also come on record and had expressed their no objection in putting the property to auction under the recovery proceedings.

22. The records reveal that the Recovery Officer had attached the property on 19.08.2009 which was made absolute on 09.10.2009. However, the applicant vendor Ramakrishna Reddy T.V has sold the property on 23.06.2015. Even going by the attachment order on the identified property there is no record to establish that the order of attachment was communicated to the concerned Sub Registrar Office cautioning any purchaser of the charge on the property. It is matter of record the Order of attachment is made absolute on 09.10.2009, the same is not communicated to the Sub Registrar. As the Order of attachment is not reflected in the Office of the Sub Registrar, the purchaser cannot be held liable of the loan availed by their seller that too when the property is not mortgaged to the loan.

23. However, the learned Recovery Officer on perusal of the documents produced has held as the objector Smt. Pavana G.P had filed their objections on 04.01.2016 contending that they are the full and absolute owners of the commercial, residential property bearing No. CDB/BDA No. 760 of Block No.11, Matadahalli (RT Nagar), Bangalore now assigned as Corporation No. 760 (CITB BDA No. 7600, situated at 2nd Block, R.t. Nagar. The objectors had purchased the property in question on 23.06.2015 from Sri. Ramakrishna Reddy T.V. It is also a matter of record that schedule property was not subject matter in O.A No 431/2009 which stood attached on 20.08.2014 where the respondents were not the owners of the property.

24. The certificate holder bank filed their objections on 27.04.2016 contending that the any order passed by this authority, and if the party is aggrieved by the said order, the only recourse left to the aggrieved party is to file an appeal before the Appellate Authority to set aside the order cannot sustain

25. The certificate holder bank had filed I.A on 06.07.2009 to attach the property which came to be made absolute on 09.10.2009. The learned recovery officer on perusal of the facts as held that the schedule property is not a subject matter in the O.A substantially came to attached on the application by Certificate Holder Bank on 19.08.2009 and held that the sale effect by defendant No. 2 in favor of 3rd party on 20.12.2010 is null and void as to the objection raised by the objectors in the application herein.

26. It is clear from the order passed by the learned recovery officer that the schedule property of the objector is not a mortgage property and the order of attachment so made is not communicated the sub-registrar office giving a caution to the purchaser of the property about the order. The applicants who are the benefactor purchaser has credited the sale consideration to the loan account of Sri.Ramakrishna Reddy to the loan availed by him from HDFC Bank.

27. Hence, the order passed by the learned recovery officer is only to be set aside. Accordingly the order dated 01.08.2016 passed by Recovery office in D.C.P No. 6100 in O.A No 431/2009 is hereby set aside and the order of attachment which is made absolute on 09.10.2009 stands vacated. Consequently Appeal 2/2017 is allowed. No order as to cost. Interim order if any granted stands vacated. (Dictated to the Stenographer (LR/AJ), after its transcription and necessary corrections, signed and Order is passed on this day 06th April 2023)

Sd/-

PRESIDING OFFICER

DRT-2, BENGALURU

APPENDIX

LIST OF DOCUMENTS PRODUCED BY THE APPELLANT

Sl No. Particulars Annexure

Copy of the Order dated 01.08.2016 in DCP No.6100 --

Copy of the Order in O.A.No.431/20091 --

Copy of the Petition in O.A.No.431/2009 --

Copy of the Order in D.C.P. No.6100 --

Copy of the sale deed --

Copy of the sale deed --

Copy of the Katha Extract --

Copy of the Katha Certificate --

Encumbrance Certificate --

Bank Statement of HDFC Bank --

LIST OF DOCUMENTS PRODUCED BY THE RESPONDENT No.1- NIL

SD/- PRESIDING OFFICER

DRT-2, BENGALURU