MRS. LEELAMMA MATHEW versus M/S INDIAN OVERSEAS BANK & ORS.

Citation: [2022] 18 S.C.R. 696 · Decided: 17-11-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 18 S.C.R.
MRS. LEELAMMA MATHEW
v.
M/S INDIAN OVERSEAS BANK & ORS.
(Civil Appeal No. 7128 Of 2022)
NOVEMBER 17, 2022.
[M. R. SHAH AND KRISHNA MURARI, JJ.]
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) –
s.14 – Security Interest (Enforcement) Rules, 2002 (Rules) – r.8(6)(a)
and (f) – Transfer of Property Act – ss.54,55(1)(a) – Defendant-
Bank secured a property under the 2002 Act – Thereafter, the secured
asset admeasuring 54 cents was put to auction – Appellant-plaintiff
submitted quotation for sale – Bank took the possession of the
property – Plaintiff paid total consideration amount – Thereafter,
Tehsildar submitted report that actual measurement of land was 39.60
cents and debtor had already transferred 14.40 cents out of total
admeasuring 54 cents prior to the creation of the mortgage with the
Bank – Despite the findings, the Bank issued sale certificate for 54
cents and handing over possession of the secured property
admeasuring 39.60 cents – Plaintiff instituted suit for recovery of
damages/compensation with respect to 14.40 cents – Trial Court
decreed suit and directed the defendant-Bank to pay to the plaintiff
a sum of Rs.58,10,000/- with 12% p.a. – High Court quashed and
set aside the decree passed by the Trial Court inter alia on the
grounds (i) that as the fraud has not been established and proved
the suit was barred in view of Section 34 of the SARFAESI Act; (ii)
That the plaintiff was aware of the fact that the actual area of the
secured property put to auction is less than 54 cents and therefore
it cannot be said that there was any non-disclosure on the part of
the Bank; (iii) that the property was put to auction “as is where is”
and “as is what is” basis? – Held: High Court erred in
holding that the suit was barred by s. 34 of the SARFAESI Act – At
the outset it is required to be noted that the suit was for damages/
compensation, with respect to the balance land, which could not
have been decided by the DRT or Appellate Tribunal, s. 34 of the
SARFAESI Act shall be applicable only in a case where the Debt
[2022] 18 S.C.R. 696
696
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Recovery Tribunal and/or Appellate Tribunal is empowered to decide
the matter under the SARFAESI Act – Auction notice was for 54
cents; plaintiff paid total consideration for 54 cents; sale certificate
issued was for 54 cents – So, it was not open to Bank to contend
that though Bank had handed over possession of 34.60 cents still
the sale consideration recovered would be 54 cents – Section 54 of
Transfer of Property cast a duty on the seller to disclose any buyer
any material defect in the property of which the buyer is not aware
and which the buyer could not ordinarily discover – Under the
circumstances also the submission on behalf of the Bank that the
property was put to auction on “as is where is”and “as is what is”
condition, thereafter the plaintiff shall not be entitled to
compensation of the less area cannot be accepted.
Allowing the appeal, the Court
Held : 1.1 Actual possession was handed over to the Bank
in the month of October, 2007 pursuant to the order passed by
the CJM - That thereafter the Tehsildar submitted the report
dated 21.11.2007 submitting that the actual measurement of the
land is 39.60 cents and that the debtor had already transferred
14.40 cents out of land admeasuring 54 cents prior to creation of
the mortgage with the Bank. Despite the above the Bank issued
the sale certificate dated 21.11.2007 for 54 cents of land, however,
handed over the possession of the secured property admeasuring
39.60 cents only. The sale consideration received by the Bank
was for 54 cents. That thereafter the sale certificate was
registered in the month of October, 2010. Thereafter the plaintiff
filed the suit for recovery of damages with respect to 14.40 cents.
The final certificate was registered on 01.10.2010 and thereafter
when the suit was filed in the year 2012 it cannot be said that the
suit was barred by limitation. [Para 5.1][705-D-G]
1.2 Finding recorded by the High Court that the suit was
barred by Section 34 of the SARFAESI Act is concerned, at the
outset it is required to be noted that the suit was for damages/
compensation, with respect to balance land, which could not have
been decided by the DRT or Appellate Tribunal, Section 34 of
the SARFAESI Act shall be applicable only in a case where the
MRS. LEELAMMA MATHEW v.

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