Sh. Harish Chanana Vs. Kotak Mahindra Bank – DRAT Delhi Bench

I. Case Reference Case Citation : (2021) 62 DRAT Case Name : Sh. Harish Chanana Vs. Kotak Mahindra Bank […]


I. Case Reference

Case Citation : (2021) 62 DRAT
Case Name : Sh. Harish Chanana Vs. Kotak Mahindra Bank
Appeal No. : Appeal No. 504/2017 arising out of S.A.A.R. No. 10115/2016 (DRT-II, Chandigarh)
Judgment Date : 23-Jul-21
Court/Bench : DRAT Delhi Bench
Act : SARFAESI Act 2002
Present for Appellant(s) : Mr. Mayank Bansal, counsel
Present for Respondent(s) : Mr. Arun Aggarwal, counsel for respondent no. 1 bank, Ms. Seema Gupta, counsel for respondent no. 6 bank 
Chairperson : Mr. Justice P.K. Bhasin

II. Full text of the judgment


The appellant has challenged the order dated 1.11.2017 passed by the DRT-II, Chandigarh whereby his prayer of interim relief has been declined as also the Securitisaion Application.

2. The appellant is neither borrower nor guarantor of any loan sanctioned by Kotak Mahindra Bank. He has taken loan from Canara Bank and as security for repayment thereof he had mortgaged the property in question, i.e. Plot No. 357, Sector-11, Panipat, Haryana.

3. Kotak Mahindra Bank, respondent No.1, sought to invoke SARFAESI provisions in respect of the property in question which the appellant claims to be owned by him. The appellant has pleaded in his S.A. that he has all the documents of previous owners right from the beginning have been in possession of the appellant ever since.

4. The necessity to file the present S.A. against Kotak Mahindra Bank arose when this bank tried to dispossess the appellant from the mortgaged property in question having been mortgaged in its favour by respondents 2 and 3. The appellant claims the title documents in possession of the bank to be forged and fabricated and no valid mortgage could be created based on those documents.

5. The learned DRT has rejected the Securitisation Application filed by the appellant on the ground that the mortgage in favour of Kotak Mahindra Bank was prior in time.

6. The impugned order reads as under:-

“Shri Ravi Goyal, Assistant Manager of the Canara Bank has produced the original conveyance deed, which is kept in their custody.

Same is seen and returned to the officer.

This application has been filed by a third party and has been registered as an SARR. The objections raised at the time of filing was the no notice under Section 13 (2) and under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 have been attached to this application. Further, that since, the matter was pending before the District Magistrate, Panipat and no District Magistrate order has also been filed along with this application.

Despite those objections, counsel for the applicant insists that the matter be listed before the Court and as such the matter was listed before Court without being registered as a Securitization Application (SA).

Reply has been filed by the respondent.

Along with the reply, the notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, issued by the respondent to the borrower/guarantor/mortgagor has been filed.

Along with the reply, the copy of the award passed by the Arbitrator dated 28.03.2011 in the matter between the bank and the borrowers have also been filed.

Alongwith the reply, respondent no. 1 had also filed the certificate of the Hooda as Annexure R1/6 granting permission to the respondent (City Finance) to mortgage the said property, which is under challenge in this application.

The applicant in this application is a subsequent purchaser of the property.

The property in question was mortgaged by the borrower on 12.02.2007 with the respondent and the applicants herein have purchased the same property on 22.03.2012.

Since, the respondent has to recover its dues either from the mortgaged property or from the assets of the borrowers and the property of the applicant being the property that has been mortgaged with the respondent, no relief can be granted to the applicant in this application, as is claimed for.

Since, the property is mortgage with respondent no.1 and they have to recover their dues from the mortgage property or from the borrower, I find no merit in this application.


Since, this application is registered as SARR, a proper Securitization Application number be given to this application and thereafter, copy of the order be supplied to the parties as per rule and after due compliance the record be consigned to the record room.”

7. Feeling aggrieved, the appellant has come up in appeal. The appellant and the respondent no.1 have filed written arguments

8. Before proceeding to examine the reasons given by the DRT for rejecting the S.A. I may note here a strange procedure adopted be the DRT. It has first dismissed the S.A. without even registering the S.A. and giving it ‘SARR’ number and after dismissal of the S.A. it was ordered to be registered. A procedure totally unknown. The Registry of DRT has simply to register the S.A. and then it is for the Presiding Officer to decide all the objections raised by Registry. This procedure adopted by the Registry in this case and in all cases by the Registries of other DRTs must stop.

9. Now I come to the impugned order. A bare perusal of the impugned order shows that the DRT has accepted the case pf the borrowers of Kotak Mahindra Bank by not issuing any notice to them. They have not come out with any defence about the mortgage created by them. So, how the DRT could hold that their mortgage was valid. The DRT has not at all dealt with the case of the appellant that no mortgage could be created in favour of Kotak Mahindra Bank by respondents 2 and 3 because the title deeds in its possession were forged one. The learned DRT has not even discussed remotely the plea of the appellant that he possessed all the previous chain of documents. In my view, that is not the correct way of dealing with the S.A. Just because Kotak Mahindra Bank has to recover its dues, that does not mean that it can take away anybody’s property by invoking SARFAESI Act. The DRT ought to have discussed and examined the plea of the appellant that the title deeds right from the beginning were in original in his custody which he had deposited with Canara Bank from whom he had taken loan against security of this property. Interestingly, Canara Bank was asked to produce title deeds in its possession, which it did produce, and the learned DRT has not expressed any view thereafter on the said sale deed.

10. In view of the above, the present appeal is liable to succeed and the matter deserves to be remitted back for fresh decision by a speaking order issuing notice to all the parties dealing each of the above-noted pleas taken by the appellant in his S.A. The matter is accordingly remanded back to the DRT with a direction to pass a fresh order in accordance with law, uninfluenced by any view expressed in the impugned order and anything said in this order.

11. The S.A. will be taken up by the DRT on 2.8.2021 at 2 p.m. The Registrar of the DRT shall send necessary VC link for the said date to all the parties.

12. Copy of this order be communicated to the DRT for compliance.


23rd July, 2021 

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