Promila Ghai v. Oriental Bank of Commerce and Ors

order as to costs. S. RAVINDRA BHAT (JUDGE) VIBHU BAKHRU (JUDGE) MAY 23, 2014

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 07.05.2014 Pronounced on: 23.05.2014 + W.P. (C) 5335/2011 & CM Nos.10833/2011, 12672/2013 & 3454/2014 PROMILA GHAI ..... Petitioner Through: Mr. Abhinav Vasisht, Sr. Advocate with Mr. Gaurav Kakar & Mr. Anuj Malhotra, Advocates. Versus ORIENTAL BANK OF COMMERCE & ORS...... Respondents Through: Mr. H.P. Bhardwaj, Advocate for R-1. Mr. Chetan Sharma, Sr. Advocate with Mr. Anil K. Khaware, Advocate for R-2 & 3. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE VIBHU BAKHRU MR. JUSTICE S. RAVINDRA BHAT % 1. In this proceeding under Article 226, an order of the Debt Recovery Appellate Tribunal (DRAT) made on 27.6.2011 dismissing the Petitioner's appeal has been impugned. 2. The appeal before DRAT emanated from proceedings initiated by the first respondent bank (hereinafter referred to as "the OBC") against M/s Mahine Tools, Sh. P.S. Tanwar and Sh. Hemant Vij ("borrowers") for recovery of ₹ 13,17,420.70 with interest. These Page 2 proceedings were initiated before the DRAT in respect of borrowings of the said M/s Mahine Tools. Sh. Hemant Vij was impleaded as the third respondent in those proceedings and later as a guarantor and mortgager of the suit property (measuring 24 canals out of Khewat No.164, Khasra No.74 and 78, Village Gaval Pahari, Tehsil Sohna, Gurgaon hereinafter referred to as "suit property"). The DRAT decreed the suit in favour of the OBC and recovery certificate was issued on 13.7.2002. The certificate debtors, i.e., the defendants/borrowers before the DRAT had unsuccessfully sought to compromise the matter. On 08.10.2002, the property was attached by the Recovery Officer. 3. The petitioner claimed that she became aware of the attachment only in the year 2005 when she saw the advertisement that it was scheduled to be auctioned on 06.05.2005. It was in these circumstances that she claims to have made inquiries about the antecedent facts and become aware about the debt, amounts due and payable to the OBC and the fact of attachment. The auction, which took place on 06.05.2005 – in the scheduled manner- saw Sh. H.C. Nanda and Sh. Puneet Nanda (hereinafter referred to collectively as "the auction purchasers") emerging as highest bidders. They bid ₹ 47.10 lakh for the property. The petitioner preferred objections before the Recovery Officer which were dismissed on 04.10.2005. Being aggrieved, she preferred an appeal before the DRT under Section 13 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "Recovery of Debts Act"). This was Page 3 dismissed on 25.09.2007. In these circumstances, she further appealed to the DRAT. 4. Before the DRAT, the petitioner's contentions were that she was bona fide purchaser of the suit property, without notice of the prior encumbrance. She relied upon a duly registered sale deed of 25.09.1995 and a subsequent mutation of the property in the Revenue records. She had contended that the OBC's omission to have the property noted or mutated in the revenue record disentitled it to claim or enforce any prior encumbrance or rights that overrode her entitlement to the suit property as a purchaser for valuable consideration without notice. It was also urged that the OBC had, in fact, agreed to settle the matter with the borrowers and in these circumstances, further auction was not justified. The petitioner also urged that she compromised the matter with the OBC and moved an application on 23.01.2007. The hearing before the DRT on 11.05.2007 recorded that the OBC had agreed to accept the amounts deposited by the petitioner, i.e., ₹ 50 lakhs. In these circumstances, she stated that the auction ought to have been set aside. 5. The other arguments made on behalf of the petitioner were that the property was improperly valued, and that the equities in favour of the auction purchasers were so inchoate and weak that the sale confirmation ought not to be given. The last argument made