WP(C) Nos.34750/2022 and 40680/2022: Ajith C.S v Housing Development Finance Corporation Limited; Unnikrishnan & Geetha Unnikrishnan v Housing Development Finance Corporation Limited

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ## `THE HONOURABLE MR. JUSTICE GOPINATH P.` ``` TUESDAY, THE 20[TH] DAY OF DECEMBER 2022 / 29TH AGRAHAYANA, 1944 ``` ## `WP(C) NO. 34750 OF 2022` ## `PETITIONER:` ``` 1AJITH C.S AGED 47 YEARS S/O, SANKARANARAYANAN, CHAKKUMPURATHU HOUSE, PUNKUNNAM DESOM, THRISSUR VILLAGE, THRISSUR TALUK, THRISSUR DISTRICT , PIN - 680002 BY ADV AAMIR SOHRAB M. M. ``` ## `RESPONDENTS:` |`1`|`AUTHORISED OFFICER`| |---|---| ||`HOUSING DEVELOPMENT FINANCE CORPORATION`| ||`LIMITED (HDFC LTD.), HDFC HOUSE, P.B NO. 1667, RAVIPURAM`| ||`JUNCTION, M.G ROAD, KOCHI , PIN - 682015`| |`2`|`HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC LTD.)`| ||`HDFC HOUSE, P.B NO. 1667,`| ||`RAVIPURAM JUNCTION, M.G ROAD, KOCHI`| ||`REPRESENTED BY ITS AUTHORISED OFFICER, PIN - 682015`| |`3`|`VINOD MOHANDAS MENON`| ||`AGED 42 YEARS`| ||`S/O MOHANDAS MENON,`KRISHNA', PULLATT LANE,`| ||`THIRUVAMBADY P.O, THRISSUR , PIN - 680002`| |`4`|`C.K UNNIKRISHNAN`| ||`AGED 57 YEARS`| ||`FLAT NO.3A, SREE VAIKUNDAM`| ||`HERITAGE, PUNKUNNAM, THRISSUR , PIN - 680002`| |`5`|`R. SETHURAM`| ||`AGED 48 YEARS`| ||`S/O RAJU, RAJ BHAVAN, ADIYAT LANE,`| ||`POOTHOLE P.O, THRISSUR , PIN - 680004`| |`6`|`CENTRAL REGISTRY OF SECURITISATION ASSET RECONSTRUCTION AND`| ||`SECURITY INTEREST OF INDIA`| ||`TOWER 1, OFFICE BLOCK, 4TH FLOOR,PLATE A, NBCC,`| ||`KIDWAI NAGAR (EAST), NEW DELHI`| ||`REPRESENTED BY ITS CHIEF OPERATING OFFICER, PIN - 110023`| ||`BY ADVS.`| ||`S.AMBILY`| ||`LAKSHMI ANIL(K/002184/2022)`| ||`K.K.CHANDRAN PILLAI (SR.)(C-41)`| ``` WPC Nos.34750 & 40680 of 2022 ``` 2 ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ## `THE HONOURABLE MR. JUSTICE GOPINATH P.` ``` TUESDAY, THE 20[TH] DAY OF DECEMBER 2022 / 29TH AGRAHAYANA, 1944 ``` ## `WP(C) NO. 40680 OF 2022` ## `PETITIONERS:` ``` 1UNNIKRISHNAN AGED 63 YEARS S/O KUTTY SANAKARAN NAIR, MELEPPAT HOUSE, KODUMUNDA.P.O, PATTAMBI, PALAKKAD. , PIN - 679303 2GEETHA UNNIKRISHNAN AGED 56 YEARS W/O UNNIKRISHNAN, MELEPPAT HOUSE, KODUMUNDA.P.O, PATTAMBI, PALAKKAD., PIN - 679303 BY ADVS. MAYA M. V.M.KRISHNAKUMAR ``` ## `RESPONDENTS:` - `1 THE AUTHORISED OFFICER HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC LTD), HDFC HOUSE, P.B.NO.1667, RAVIPURAM JUNCTION, M.G.ROAD, KOCHI - 682015` - `2 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC LTD) HDFC HOUSE, P.B.NO.1667, RAVIPURAM JUNCTION, M.G.ROAD, KOCHI REPRESENTED BY ITS AUTHORISED OFFICE, PIN - 682015` - `3 AJITH.C.S S/O SANKARANARAYANAN, CHAKKUMPURATH HOUSE, PUNKUNNAM DESOM, THRISSUR VILLAGE, THRISSUR DISTRICT , PIN - 680002` - `4 R.SETHURAM S/O RAJU, RAJ BHAVAN, ADIYAT LANE, POOTHOLE.P.O, THRISSUR , PIN - 680002` - `5 VINOD MOHANDAS MENON S/O MOHANDAS MENON, 'KRISHNA', PULLATT LANE, THIRUVAMBADY.P.O, THRISSUR , PIN - 680002 BY ADVS. AMBILY S LAKSHMI ANIL(K/002184/2022) K.K.CHANDRAN PILLAI (SR.)(C-41)` ``` WPC Nos.34750 & 40680 of 2022 ``` 4 ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WPC Nos.34750 & 40680 of 2022 ``` 5 ## **JUDGMENT** ## **Dated this the 20[th] day of December, 2022** The petitioner has filed this writ petition [W.P.(C.) No.34750/2022] being aggrieved by the fact that the respondent financial institution has initiated proceedings under the SARFAESI Act, 2002 against an item of property (a residential apartment along with undivided share), in respect of which a loan was availed by the 3[rd] respondent. 2. The brief facts are that the petitioner was the builder/developer of a residential apartment complex known as ‘Sri Vaikundam Heritage’. He entered into a tripartite agreement with the 3[rd] respondent borrower and the respondent financial institution, under which a loan was extended by the respondent financial institution to the 3[rd] respondent. The payouts under the loan agreement were made directly to the petitioner (this is not disputed) for ``` WPC Nos.34750 & 40680 of 2022 ``` 6 completing the construction of the building. The petitioner was supposed to execute documents of title in favour of the 3[rd] respondent and deposit the same with the respondent - financial institution. However, the petitioner failed to do so and transferred the residential apartment in question along with an undivided interest in the immovable property to the 4[th] respondent. The 4[th] respondent has therefore filed the connected writ petition, namely, W.P.(C.) No.40680/2022, pointing out that he is not the borrower and that the proceedings initiated by the bank are ab initio void and contrary to law. 3. Learned counsel appearing for the petitioner in W.P.(C.)No.34750/2022 would submit that even assuming that the petitioner failed to execute a document of title in favour of the 3[rd] respondent and also failed to deposit such title deeds with the respondent financial institution, the proceedings ``` WPC Nos.34750 & 40680 of 2022 ``` 7 cannot be initiated against the property which was the subject matter of the loan transaction since no mortgage has been created. It is submitted that the property was conveyed to the petitioners in W.P.(C.) No.40680/2022. Therefore, the proceedings initiated by the bank in respect of that property are illegal and unsustainable. The learned counsel appearing for the petitioners in W.P.(C.) No.40680/2022 would also support the contentions taken by the learned counsel for the petitioner in W.P.(C.) No.34750/2022. 4. Adv.K.K.Chandran Pillai, the learned Senior Counsel appearing for the respondent financial institution, on the instructions of Adv.S.Ambili, would submit that the respondent financial institution had entered into a tripartite agreement with the 3[rd] respondent in W.P.(C.)No.34750/2022 (the borrower) and the petitioner in that writ petition (the builder). It is submitted that under the terms of the agreement, amounts were disbursed directly to the ``` WPC Nos.34750 & 40680 of 2022 ``` 8 builder. The builder was supposed to execute title documents in favour of the borrower and deposit those documents of title with the respondent - financial institution. It is submitted that surreptitiously and illegally, and with the intention of making a wrongful gain to himself, the builder sold the apartment to a third party (the petitioners in W.P. (C.) No.40680/2022). It is submitted that the transaction is vitiated by fraud, and since the facts are not disputed, the petitioner in W.P.(C.) No.34750/2022 is clearly not entitled to any relief from this Court in the exercise of jurisdiction under Article 226 of the Constitution of India. It is submitted that the grant of relief under Article 226 of the Constitution of India is purely discretionary. The petitioner who admittedly committed fraud is not entitled to the grant of any relief. It is also submitted that if the petitioners in W.P.(C.) No.40680/2022 have any grievance in the matter, it is for them to ``` WPC Nos.34750 & 40680 of 2022 ``` 9 approach the Debts Recovery Tribunal, and they cannot approach this Court under Article 226 of the Constitution of India. It is submitted that the proceedings initiated and continued against the property in question are valid and legal in terms of the tripartite agreement (Ext.P2 in W.P.(C.) No.34750/2022). 5. Having heard the learned counsel appearing for the petitioners in these cases and the learned Senior Counsel appearing for the respondent financial institution, I am of the view that the petitioner in W.P.(C.) No.34750/2022 is not entitled to any discretionary relief in proceedings under Article 226 of the Constitution of India. The petitioner had (and this is not disputed) entered into a tripartite agreement and, under the terms of that agreement, received certain amounts from the respondent financial institution. He was required to execute documents of title in favour of the 3[rd] respondent in ``` WPC Nos.34750 & 40680 of 2022 ``` 10 W.P.(C.) No.34750/2022 and to deposit those documents with respondents 1 and 2. Instead of complying with the terms of the tripartite agreement, the petitioner in W.P.(C.) No.34750/2022 transferred the property in question to the petitioners in W.P.(C.) No.40680/2022. Prima facie, the conduct of the petitioner is indicative of fraud. It appears that he had collected amounts from the bank (under the loan granted to the 3rd respondent) and had also collected amounts from the petitioner in the connected writ petition to make an unlawful gain. ## 6. In **State of Maharashtra v. Digambar** , (1995) 4 SCC 683, it was held:- “14. …….. Moreover, how a citizen claiming discretionary relief under Article 226 of the Constitution against a State, could be relieved of his obligation to establish his unblame worthy conduct for getting such relief, where the State against which relief is sought is a Welfare State, is also difficult to comprehend. …………… Therefore, where a High Court grants relief to a citizen or any other person under Article 226 of the Constitution against any person including the State without considering his blameworthy conduct, such as laches or undue delay, acquiescence or waiver, the relief so granted becomes unsustainable even if the relief was granted ``` WPC Nos.34750 & 40680 of 2022 ``` 11 in respect of alleged deprivation of his legal right by the State.” ## In **M.P. Mittal v. State of Haryana and others** , (1984) 4 SCC 371, it was held:- “5. Now there is no dispute that the appellant knowingly and deliberately entered into the Guarantee agreement, and is liable as Guarantor to make payment of the dividend due from Messrs. Depro Foods Limited. Nor is it disputed that the amount due, with interest, stands at Rs 2,02,166/in respect of the period ending with the year 1977. It was not contended that the appellant in fact does not possess sufficient funds or cannot avail of sufficient personal property for the purpose of discharging the liability. The record also shows that before instituting coercive proceedings, the Assistant Collector provided the appellant an opportunity to pay up the amount due from him, and that the appellant made no attempt to discharge the liability. When that is so, we are of opinion that he is not entitled to relief in these proceedings. The appeal arises out of a writ petition, and it is well settled that when a petitioner invokes the jurisdiction of the High Court under Article 226 of the Constitution, it is open to the High Court to consider whether, in the exercise of its undoubted discretionary jurisdiction, it should decline relief to such petitioner if the grant of relief would defeat the interests of justice. The Court always has power to refuse relief where the petitioner seeks to invoke its writ jurisdiction in order to secure a dishonest advantage or perpetuate an unjust gain. This is a case where the High Court was fully justified in refusing relief. On that ground alone, the appeal must fail.” ``` WPC Nos.34750 & 40680 of 2022 ``` 12 By his conduct, the petitioner in W.P.(C.) No.34750/2022 is not entitled to discretionary relief under Article 226 of the Constitution of India. Therefore, W.P.(C.) No.34750/2022 is dismissed, making it clear that I have not examined the question as to whether the respondent-financial Institution can continue with the proceedings against the property in question. Relief has been refused, considering the conduct of the petitioner. ## **W.P.(C.) No.40680/2022** The petitioners in W.P.(C.) No.40680/2022 are the subsequent purchasers of the property which is the subject matter of the loan agreement with the financial institution in question. It may be that they were innocent and had no knowledge of the transactions between the builder, financial institution and the 3rd respondent in W.P (C) 34750 of 2022. If they have any grievance in respect of proceedings initiated by the respondent financial institution, it is ``` WPC Nos.34750 & 40680 of 2022 ``` 13 for them to approach the Tribunal by filing a Securitisation Application under Section 17 of the SARFAESI Act. They are clearly not entitled to any relief in the facts and circumstances of these cases. Accordingly, W.P.(C.) No.40680/2022 is closed reserving the liberty of the petitioners, to approach the Tribunal under Section 17 of the SARFAESI Act, if they have any grievance in respect of the action taken by the respondent financial institution. The period during which W.P.(C.) No.40680/2022 was pending before this Court namely from 12.12.2022 till today shall be excluded for the purpose of determining any period of limitation within which they had to approach the Tribunal under Section 17 of the SARFAESI Act. ## **Sd/-** ## **GOPINATH P.** ## **JUDGE** SKP/20-12 ``` WPC Nos.34750 & 40680 of 2022 ``` 14 ## `APPENDIX OF WP(C) 34750/2022` |`PETITIONER’S EXHIBITS:`|| |---|---| |`EXHIBIT P1`|`TRUE COPY OF THE SALE AGREEMENT EXECUTED BY AND`| ||`BETWEEN THE PETITIONER, RESPONDENT NO.5 AND`| ||`RESPONDENT NO.3, DATED 11.08.2009`| |`EXHIBIT P2`|`TRUE COPY OF THE TRIPARTITE AGREEMENT EXECUTED`| ||`BY AND BETWEEN RESPONDENT NO.3 , PETITIONER AND`| ||`RESPONDENT NO.5 AS ONE AND RESPONDENT NO.2`| ||`COMPANY, DATED 26.09.2009`| |`EXHIBIT P3`|`TRUE COPY OF THE HOME LOAN AGREEMENT EXECUTED`| ||`BY AND BETWEEN RESPONDENT NO.2 COMPANY AND`| ||`RESPONDENT NO.3, DATED 30.09.2009`| |`EXHIBIT P4`|`TRUE COPY OF THE PROMISSORY NOTE EXECUTED BY`| ||`RESPONDENT NO.3 IN FAVOUR OF RESPONDENT NO.2`| ||`COMPANY, DATED 30.09.2009`| |`EXHIBIT P5`|`TRUE COPY OF CRL. M.P NO. 2926/2022 FILED BY`| ||`RESPONDENT NO.2 COMPANY BEFORE THE HON'BLE`| ||`CHIEF JUDICIAL MAGISTRATE' S COURT, THRISSUR,`| ||`DATED 14.07.2022`| |`EXHIBIT P6`|`TRUE COPY OF THE AFFIDAVIT ACCOMPANYING CRL.`| ||`M.P NO. 2926/2022, DATED 14.07.2022.`| |`EXHIBIT P7`|`TRUE COPY OF THE ORDER PASSED BY THE HON'BLE`| ||`CHIEF JUDICIAL MAGISTRATE, THRISSUR IN CRL. M.P`| ||`NO. 2926/2022, DATED 25.07.2022`| |`RESPONDENTS' EXHIBITS:NIL`|| ``` WPC Nos.34750 & 40680 of 2022 ``` 15 ## `APPENDIX OF WP(C) 40680/2022` ``` PETITIONERS’ EXHIBITS: EXHIBIT P1TRUE COPY OF THE SALE DEED NO.3484/1/2010 OF THRISSUR SUB REGISTRY DATED 14.09.2010 EXHIBIT P2TRUE COPY OF THE BUILDING TAX RECEIPT ISSUED BY THRISSUR CORPORATION FOR PETITIONERS' APARTMENT DATED 26/4/2022 EXHIBIT P3. TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 13.11.2018 ISSUED BY THE SUB REGISTRAR OFFICE THRISSUR EXHIBIT P4TRUE COPY OF THE NOTICE ISSUED BY ADVOCATE COMMISSIONER DATED 13.10.2022 TO RESPONDENTS 3 AND 5 EXHIBIT P5TRUE COPY OF THE WRIT PETITION FILED BY THE 3RD RESPONDENT, WP(C).NO.34750/2022 WITHOUT EXHIBITS ``` ``` RESPONDENTS' EXHIBITS:NIL ``` ``` TRUE COPY ``` ``` P.A.TO JUDGE ```