Bank of India & Ors. v. Rajendra S/o Parshuram Gainkar & Ors

…Appellant

…Respondent

Case No: Appeal No. 94/2013

Date of Judgement: 07/09/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr. O.A. Das along with Ms Pallavi Chari i/b Mr O.A. Das, Advocate.

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Facts:

The Learned Presiding Officer concluded that apart from the agreements to sell the flats upon completion, no sale deeds were executed in favor of the borrowers. Hence, none of the borrowers had any right, title, interest, or possession over the flats. On the other hand, the applicants in the S.As had obtained possession of the properties in 2009 through the registration of sale deeds in their favor and were in exclusive enjoyment of the flats until the filing of the S.As. The Presiding Officer held that unless there was a concluded sale in favor of the borrowers, they did not have exclusive rights, title, and interest over the flats to create a valid mortgage. Consequently, all the S.As were allowed, and the Sarfaesi measures initiated by the Bank of India were quashed. The Presiding Officer found no reason to interfere with the impugned judgments and orders, as the borrowers did not get possession of the flats within the stipulated time, did not pay any tax for the building, and did not execute or register the sale deeds in accordance with the agreements. The agreements indicated that the flats remained with the seller until the sale deed was executed and possession was delivered, and no action for specific performance of the contract was sought by the borrowers. The Presiding Officer observed that the collusion between the borrowers and the builders/developers could not be ruled out, as the borrowers were all members of the same family, and the agreements seemed to be executed with the specific intention of availing the loan. Since the applicants had been in exclusive possession and enjoyment of the properties ever since the sale deeds were executed in their favor, the Presiding Officer upheld the impugned judgments and orders and dismissed the appeals.

Arguments by All Parties:

The respondent (Union Bank of India) argued that the sale never concluded in favor of the borrowers, as the borrowers had entered into an agreement with the builder and developer much before the commencement of the construction, and the agreement clearly stated that the sale deed would be executed and registered after full and final settlement of accounts upon receipt of the bank loan or within one month of the agreement, whichever was earlier. They contended that possession of the property was agreed to be delivered only at the time of executing the sale deed, and the agreement specified that time was the essence of the contract. The respondent argued that the borrowers had agreed to pay corporation taxes or any other government/semi-government dues concerning the apartments, and failure to fulfill their obligation to pay the balance amount and get the sale deed registered and possession delivered would render the agreement invalid. They asserted that the borrowers had no right, title, or interest over the flats, and consequently, the appellants would also not have any right as mortgagees over the flats.

Cases Cited:

Sections and Laws Referred:

Section 48 of the Transfer of Property Act

Section 47 of the Registration Act

Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963

Bombay Stamp Act, 1958

Explanation I to Article 25 of Schedule I to the Bombay Stamp Act