Date of filing: 12.06.2013.
Date of disposal: 24.01.2014.
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM - II:
VIJAYAWADA, KRISHNA DISTRICT
Present: Sri A. M. L. Narasimha Rao, B.Sc., B. L., President
Smt N. Tripura Sundari, B. Com., B. L., Member
Sri S. Sreeram, B.A., B.Com., B.L., Member
Friday, the 24th day of January, 2014
C.C.No.110 of 2013
Between:
Tiyyagura Seetha Rami Reddy, S/o Madhava Reddy, Hindu, Aged about 46 years, Agriculture & Business, R/o Telaprolu Village, Unguturu Mandal, Krishna District.
….. Complainant
And
State Bank of India, Gandhi Nagar Branch, Station Road, Gandhi Nagar, Vijayawada – 520003.
. … Opposite Party.
This complaint coming on before the Forum for final hearing on 20.01.2014, in the presence Sri B. Koti Reddy, advocate for complainant; Sri D. Satyanarayana advocate for opposite party and upon perusing the material available on record, this Forum delivers the following:
O R D E R
(Delivered by Hon’ble President Sri A. M. L. Narasimha Rao,)
1. This complaint is filed under Section 12 of Consumer Protection Act, 1986 for a direction to the opposite party to pay a sum of Rs.50,000/- as compensation for the failure to return the title deed deposited with the opposite party and to pay costs of the complaint.
2. The averments of the complaint in brief are as follows:
One Devireddy Srinivasa Reddy was the Managing Partner of a Firm, Rupesh Mines and Minerals. The complainant was shown as Managing partner of the firm. Srinivasa Reddy approached the opposite party for loan to the Firm. The opposite party sanctioned loan and the complainant offered his properties to show solvency. The complainant has deposited his title deeds a sale deed and a partition deed dated 3.11.2005 with the opposite party bank. Only one item of the partition deed was mortgaged with the opposite party. The mortgaged property was sold away by the opposite party in an auction on 2.2.2012. The complainant sent a notice on 18.9.2012 asking the opposite party to return the partition deed dated 3.11.2005 as he had some other properties allotted to his share and covered by the partition deed. The opposite party sent a reply notice dated 5.10.2012 stating that the bank had delivered the partition deed also to the auction purchaser. It is contrary to law. The complainant is entitled to retain the partition deed as per Section 55 (3) Proviso (a) of Transfer of Property Act. The opposite party being a service provider is expected to return the titled deed to the complainant as loan is discharged. There is deficiency in service on the part of the opposite party. The complainant therefore claims Rs.50,000/- towards deficiency in service as he could not use the original partition deed for the purpose of mortgage of several items to raise funds. Therefore the present complaint is filed.
3. The opposite party filed its version denying the allegations and further stating as follows:
The complainant and Srinivasa Reddy are Managing Partners of the firm M/s Rupesh Mines and Minerals. The said firm availed credit facility under a loan account from the opposite party bank. The complainant stood as guarantor and created mortgage of the property by depositing the original title deeds. The mortgage deed was registered on 23.2.2006. As the firm committed default in repayment of debt, the opposite party had followed the procedure and the mortgage of the complainant was sold in public auction. The sale certificate and the documents deposited by the complainant at the time of creating mortgage were handed over to the highest bidder in the auction. The opposite party had handed over the original documents as per the procedure laid down under Securitization and Reconstruction of Financial Assets on Security Interest Act, 2002 (SARFAESI Act). The complainant was aware of the auction and sale of the property. The complainant never approached the opposite party for the deposited documents. The purchaser is entitled to sale certificate and documents relating to property and so they were delivered to the complainant. Section 55 (3) of Transfer of Property is not applicable to these proceedings because the auction was conducted under SARFAESI Act. There is no deficiency in service on the part of the opposite party. The complainant has to approach the pertinent court under SARFAESI Act, if there is any grievance. This Forum has no jurisdiction to entertain this complaint. The opposite party never violated any rule. The complainant is not entitled to compensation as claimed.
4. The complainant filed his affidavit as deposition of PW.1 and marked Exs.A1 to A7. The Branch Manager of the opposite party filed his affidavit as deposition of DW.1 and no documents are marked on behalf of the opposite party.
5. Heard the arguments advanced by the learned counsel for both the parties. Both the parties have also filed memoranda of written arguments.
6. The points that fall for determination are:
- Whether this Forum has jurisdiction to entertain this complaint?
- Whether there is deficiency in service on the party of the opposite party in parting with the deposited title deed of the complainant?
- Whether the complainant is entitled to the reliefs asked for?
Point No.1:
7. One of the objections taken by the opposite party is that the complaint is not maintainable as the sale was held in an auction under the provisions of SARFAESI Act. There is no dispute on the facts. The complainant had mortgaged one of the items covered by partition deed dated 3.11.2005 with the opposite party as guarantor for a loan sanctioned to the Firm. As the loan remained unpaid the opposite party had conducted auction and sold away the mortgaged item of the complainant to the highest bidder. The opposite party admits that it delivered the deposited title deed of the complainant to the auction purchaser. There is also no dispute that the partition deed deposited with the opposite party related to five items of property allotted to the share of the complainant. Only one of the those five items was sold and the other four items remained with the complainant.
8. Section 34 of SARFAESI Act reads as follows:
”No Civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993”.
In the present complaint the complainant is not questioning any action taken or to be taken under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act or under SARFAESI Act. Therefore the bar provided by Section 34 of SARFAESI Act, does not apply to the present complaint. We do not find any provision in SARFAESI Act either for delivering the title deed to the auction purchaser or for any direction to the bank to return the deposited title deed to the original owner of the property (borrower or guarantor). Section 13 of SARFAESI Act provides the procedure to be followed in sale of secured assets. This provision does not empower the creditor or the transferee of secured asset to handover the title deed relating to non-secured assets. The provisions of SARFAESI Act do not confer any right over the unsecured aspects. Therefore we are of the opinion that the jurisdiction of this Forum is not barred under provisions of SARFAESI Act so far as the present dispute is concerned.
Point No.2:
9. The facts admitted and stated above show that the complainant’s title deed for five items was deposited with the opposite party creating mortgage on only one of those items. The opposite party while selling away the mortgaged property to the highest bidder in the auction, had delivered the title deed i.e., registered partition deed dated 3.11.2005 to the auction purchaser. The complainant now asks for his title deed. The auction was held on 2.2.2012 as per the averments of the complaint and not denied by the opposite party. The complainant sent notice to the opposite party on 18.9.2012 under Ex.A2. The opposite party issued a reply under Ex.A1 on 5.10.2012 stating about the delivery of the title deed to the auction purchaser. The question is whether the failure to hand over the documents to the complainant is a deficiency on the part of the opposite party.
10. The bank is aware that the title deed deposited with the bank covers five items of property allotted to the complainant in the partition and that only one of those five items has mortgaged with the opposite party. Section 55 (3) of Transfer of Property Act reads as follows:
“Section 55….
3) Where whole of the purchase-money has been paid to the seller, he is also bound to deliver to the buyer all documents of title relating to the property which are in the seller’s possession or power;
Provided that, (a) where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and, (b) where the whole of such property is sold to different buyers, the buyers of the lot of greatest value is entitled to such documents. But in case (a) the seller, and in case (b) the buyer, of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the vase may be, and at the cost of the person making the request, to produce the said documents and furnish such true copies thereof or extracts therefrom as he my require; and in the meantime, the seller, or the buyer of the lot of greatest value, as the case may be, shall keep the said documents safe, uncancelled and undefaced, unless prevented from so doing by fire or other inevitable accident.”
This provision would show the entitlement of buyer to all the document of title relate to property but such right is subject to the right of the seller to retain the documents if the seller had retained any item of the property comprised in such documents. While conducting the auction the bank is acting as owner of the property. According to the provision under Section 13 Sub-Section (6) of SARFAESI Act, the transferee of the secured asset will have all the rights in the secured asset i.e., the property mortgaged with the bank, as if the transfer has been made by the owner of such secured asset. When certain rights are conferred on the bank or transferee of the secured asset, the obligations attached to such right as the one contained in Section 55 (3) of Transfer of Property Act, referred to above, shall remain attached to such rights. The bank or the transferee of secured asset is bound to follow the rule and perform the obligation. The failure to follow the provision of Section 55 (3) proviso of Transfer of Property Act is doubtlessly deficiency on the part of the bank. It is the bank that had parted with the title deed. The bank had not given any prior intimation to the complainant about delivery of the documents to the auction purchaser. Therefore we are of the considered opinion that there is deficiency in service on the part of the bank in not returning the title deed to the complainant knowing fully well that it relates to four other items of the complainant besides the mortgaged item of property.
Point No.3:
11. When point no.2 is answered in the affirmative, the complainant shall be entitled to relief. When the complainant has four items of the property, his inability to even to raise loan on them due to failure to show the original title deed is doubtlessly a serious loss occasioned to the complainant. It is only due to action of the opposite party. The value of the property remained with the complainant and covered by the partition deed seems to have value far more than Rs.1 crore. When document related to such valuable asset is not given to the complainant the claim for compensation of Rs.50,000/- made by the complainant seems reasonable. However the bank may be given opportunity to secure the original documents from the auction purchaser and to limit liability of compensation. So the opposite party may be required to secure and deliver the title deed of the complainant to him and to pay reasonable compensation of Rs.10,000/- and on failure to deliver the documents to pay addition compensation of Rs.40,000/-. The complainant shall also be entitled to costs of Rs.2,000/-
12. In the result this complaint is allowed and the opposite party is directed to secure the original title deed i.e., the registered partition deed dated 3.11.2005 deposited by the complainant with the opposite party and deliver it to the complainant within one month from the date of this order and also to pay Rs.10,000/- towards compensation and Rs.2,000/- toward costs to the complainant within one month from the date of this order. If the opposite party failed to deliver the title deed within the given time the opposite party shall deliver a certificate disclosing the fact of parting with document in favour of auction purchaser and the opposite party shall also pay additional compensation of Rs.40,000/- to the complainant.
Dictated to steno, N. Hazarathaiah, transcribed by him, corrected by me and pronounced by us in the open Forum, this the 24th day of January, 2014.
PRESIDENT MEMBER MEMBER
Appendix of evidence
Witnesses examined
For the complainant: For the opposite party:
Tiyyagura Seetha Rami Reddy – PW-1. Branch Manager of OP-DW.1
(by affidavit) (by affidavit)
Documents marked
On behalf of the complainant:
Ex.A1 05.01.2012 Copy of reply notice issued by OP to complainants counsel. Ex.A2 18.09.2012 Photocopy of legal notice got issued by complainant to OP
Ex.A3 Photocopy of partition deed.
Ex.A4 Photocopy of certificate of properties value.
Ex.A5 Photocopy of certificate of properties value.
Ex.A6 Copy of certificate of properties value.
Ex.A7 Copy of certificate of properties value.
On behalf of the opposite party:
PRESIDENT
