MARINA ANNETTE RODRIGUES Vs. VIJAYA BANK

JUDGEMENT

(1.) The petitioner, as owner of certain immovable property bearing No.24, 2nd cross, Thomas Road, Kammanahalli, Bangalore, measuring east to west 60 feet and north to south 50 feet, totally measuring 3000 sq.ft., entered into a Joint Development Agreement with the second respondent Mr.G.Sirish Kumar Reddy on 10.02.2017 (Annexure-'A'). Under the said agreement, petitioner permitted and authorized the second respondent (hereinafter referred to as the "Developer") to develop the above property by constructing a residential apartment building therein as per the plan sanctioned by the competent planning authority. It was specifically recited in the agreement that the petitioner shall not revoke the permission so granted till completion of the entire project within the prescribed period of 12 months from the date of commencement certificate issued by BBMP and a grace period of 6 months. The agency created under the said agreement was one coupled with interest. Clause 5.8 of the said agreement provided as under:-

(2.) Pursuant to the above Joint Development Agreement, a General Power of Attorney was executed on 10.02.2017 by the petitioner in favour of the second respondent/ Developer to effect construction in the above properties and also to raise, borrow funds from Banks and financial institutions on security of the schedule property to the extent referred in para 10 of General Power of Attorney (Annexure-'B'). A Sharing Agreement (Annexure-'C') was also entered into between the parties on 13.02.2017, whereunder the following flats or apartments were allotted to the share of the second respondent/Developer.

(3.) The case of the petitioner is that respondent No.2/Developer applied for loan for developing a residential project in property No.558A situated at Ramamurthy Nagar Main Road and obtained project term loan of Rs.534.00 lakhs from respondent No.1 / Vijaya Bank as per sanction memo dated 23.03.2017 (Annexure-'D'). The petitioner was not aware of the loan transaction between the Bank and the Developer. After obtaining the loan from the Bank, respondent No.2 / Developer utilized the said amount for construction of the apartments at Ramamurthy Nagar. Respondent No.2 did not complete the residential apartment on the property covered in the Joint Development Agreement entered into between the petitioner and the second respondent. That being the case, respondent No.1 - Bank issued a demand notice dated 01.01.2019 in exercise of powers conferred under Section 13(12) read with Rule 3 of the Security Interest (Enforcement) Rules 2002, calling upon the borrower/guarantor to repay Rs.4,08,92,776.60 (Rupees Four crores eight lakhs ninety two thousand seven hundred seventy six and paise sixty only) together with interest, costs, charges within 60 days from the date of receipt of the notice. The borrower/guarantor/mortgagor having failed to repay the amount, Bank took possession of the property described in the notice including the property belonging to the petitioner vide possession notice dated 11.03.2019 (Annexure-'J'). Immediately, the petitioner issued a letter to respondent No.1/Bank bringing it to the notice of the Bank that the second respondent/Developer was not authorized to raise loan for construction of the scheduled property and there was a clear case of criminal breach of trust and therefore, the petitioner requested the Bank to remove the property from SARFAESI proceedings. Since respondent No.1 failed to respond to this notice, petitioner lodged a complaint with RBI for redressal on 04.04.2019 (Annexure-'L'). RBI gave an endorsement saying that the complaint was not maintainable. In the meanwhile, respondent No.1 - Bank filed an application before the learned Magistrate under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act" for short) seeking assistance of the Court to take physical possession of the mortgaged property. Pursuant to the orders of the learned Magistrate dated 27.08.2019, respondent No.1/Bank took physical possession of the schedule property and hence the petitioner has sought for the following reliefs:-