Case No: 1326/08 (CJM Court, Alipore, Kolkata, Process Order Ref: 775/08, FIR No. 90/08

 

In 2003, Pandav Roy, an I.T Professional then living in UK decided to buy an independent Row House in Merlin Greens, a complex developed by M/s. Merlin Projects Ltd., as he felt that this would be an ideal place for his parents to spend their twilight years.

 

On 01/05/2003, Partha Roy, father & Constituted Attorney of Pandav Roy entered into an Allotment Agreement and a Supplementary Agreement with Merlin Projects Ltd., (hereinafter referred to as the ‘Builder’) for purchase of Row House No.B-15 in Merlin Greens Complex at an agreed Consideration  of Rs.16.25 Lakhs which included Rs.2.00 Lakhs towards life-time maintenance services, provision of related services like water supply, generator etc. and membership of ‘Ibiza Club’, a recreational facility located in the complex.

 

The above Allotment Agreement indicated delivery period as 12 months, but soon afterwards the Builder informed that the Row House was ready for immediate delivery.

 

In view of the delivery period being advanced, the purchasers informed the Builder that they would have to avail a Housing Loan to raise the required amount.

 

On learning of their intention to avail of a housing loan, the Builder stated that he had excellent contacts with many Banks and would ensure that the loan was sanctioned quickly. He then introduced Partha Roy (hereinafter referred to as the ‘Complainant’) to the then Manager of Union Bank of India, Sarat Bose Road Branch (hereinafter referred to as the ‘Bank’) and requested him to assist the Complainant for quick processing of the loan.

 

The said Bank Manager, on reviewing income and personal documents of the Complainant and his son confirmed that they were eligible for getting a housing loan of Rs.15,00,000/-.

 

Although the Builder had declared that the Row House was ready for possession, it was found on closer inspection that some works were still incomplete and after these were completed the Complainant submitted a Housing Loan application for Rs.15 Lakhs in Union Bank of India with Pandav Roy as the ‘Main Applicant’ and the Complainant as the ‘Co-Applicant’. It was clearly mentioned in the said loan application that the property proposed to be purchased was ready for delivery of possession.

 

The Complainant was not asked to furnish documents like copy of Mother Deed, Mutation Certificate, Tax Receipts, Building Plans etc. and the then Bank Manager said that these documents would be directly collected by the Bank from the Builder.

 

On 22/01/2004, the Complainant received a letter from the Bank stating that their loan application had been provisionally sanctioned, subject to execution of a “Tripartite Agreement” whereby the Builder would stand as a Guarantor of the loan till the property was mortgaged to the Bank. It was stated in this letter that the said “Tripartite Agreement” was required to secure advance payments made by the Bank to the Builder.

 

The Complainant later found that the Bank had misinformed him about the requirement of a “Tripartite Agreement” because as per settled practice, for financing a property ready for possession, no advance payment is required to be made by the Bank to the Builder.

 

In such instances, the Builder first conveys the property to the Borrower, hands over the duly executed Title Deed / IGR to an Officer deputed by the Bank and payment due to the Builder is then disbursed by the Bank. Therefore, no further Guarantor is required as the property itself is hypothecated to the Bank as a Guarantee.

 

The Bank Manager induced the Complainant to execute the said “Tripartite Agreement” by stating that this would ensure quick sanction of the loan. He explained that 25^th February was the cut-off date for disbursement of loans for any financial year and only loans disbursed within this date were included in the Bank’s disbursement target for that financial year. Therefore, it was always a motivation for higher authorities of the Bank to sanction the loan quickly, if the loan was secured by a Tripartite Agreement. The Bank Manager also said that without the “Tripartite Agreement”, loan sanction could be delayed by 6 months.

 

The Builder also induced the Complainant to execute the said “Tripartite Agreement” by saying that it would enable the Bank to sanction the loan on a priority basis and the property could then be delivered to the Complainant quickly. Otherwise the Builder would have to sell the said Row House to some other customer with ready funds.

The Complainant, reposing confidence on the Bank and the Builder, executed the said “Tripartite Agreement” after paying the balance Earnest Money as stipulated.

 

Payment of Rs.2,43,750/- as Earnest Money was recorded in the aforementioned “Tripartite Agreement” signed by the Builder and countersigned by the Bank Manager. The Complainant was informed that all payments made to the Builder would also be recorded in a ‘Memo of Consideration’ which would form part & parcel of the Sale Deed.

 

On 25/02/2004, the Complainant received a Final Loan Sanction Letter asking him to meet the Bank Manager and issue instructions regarding disbursement of the said loan.

 

However, on visiting the Bank on the next day, the Complainant was shocked to find that an amount of Rs.13,81,250/- had already been disbursed to the Builder and only Rs.1,18,750/- was remaining in the Borrowers’ loan account to meet Registration expenses. This meant that including Earnest Money of Rs.2,43,750/- previously paid, the Builder had received the agreed consideration of Rs.16,25,000/- without conveying title of the property to the Borrowers and without creating an equitable mortgage on the Bank.

 

The Complainant was given a copy of a cover letter issued by the Bank to the Builder forwarding Pay Order for Rs.13,81,250/- dated 25/02/2004 and in this letter, the Builder was instructed to deliver possession of the Row House to the Borrowers.

 

Release of full payment to the Builder without taking charge of duly executed Title Deeds violated terms & conditions of the said “Tripartite Agreement” which stipulated that the Bank could disburse the loan only after original Title Deed in favour of the Borrowers (along with documents that form a part & parcel of a Title Deed) were deposited with the Bank and the Builder was legally required to submit the Title Deed and the said documents in the Bank to create an equitable mortgage, before receiving payment.

 

By making payment in full to the Builder in an irregular manner, the Borrowers were made liable for repayment of a loan of Rs.13,81,250/- for a property on which they held no legal ownership rights. Moreover, the Bank had not created any ‘security interest’ on the said property by way of holding the Title Deeds and the Builder continued to enjoy official ownership of the property even after receiving the agreed consideration in full.

 

Meanwhile, in anticipation of moving to their new house, the Complainant had rented out portions of the house where they were then staying and was committed to vacate these portions shortly (a compulsion known to both the Builder and the Bank Manager).

 

Having no other option and considering it prudent to at least take physical possession of the property, the Complainant moved into the new property on 20/04/2004. However, no Possession Letter was issued by the Builder and the Complainant was told that official possession could not be granted till a Bank appointed Architect inspected the property and confirmed that it was constructed as per Sanctioned Building Plans.

 

The Builder applied for an electric meter in the Complainant’s name which was duly installed. Other services as stipulated in the agreement between the Builder and the Borrowers were also provided by the Builder and even a picture of Complainant and his wife was printed in the Sales Brochure of the Builder depicting them as residents of Merlin Greens Complex.

 

After moving into the property, the Complainant repeatedly requested the Bank and the Builder to get the property conveyed in their favour, but no action was taken under some pretext or the other. The Complainant failed to understand why the Bank and the Builder ignored his requests because even the registration cost was immediately available in the loan account of the Complainant.

 

Becoming highly concerned about their ownership status, the Complainant intermittently made EMI payments while continuing to demand conveyance of title in their favour. However, after making 18 EMI payments the Complainant refused to make any further payments till the title was conveyed to them and he also informed the Bank that he wanted to pre-pay the entire loan amount by availing a cheaper loan from UK.

 

After EMI payments were stopped, the Builder vide a letter dated 15/09/2006 alleged that they had not been paid Earnest Money in full and that the Borrowers had cheated them by illegally taking possession of the said property. These allegations were baseless because receipt of Earnest Money had been duly recorded in the Tripartite Agreement signed by the Builder and witnessed by the Bank Manager. Moreover, possession was granted to the Complainant under written instructions of the Bank vide their letter dated 25/02/2004.

 

However, the Builder fabricated a dispute based on above allegations and unilaterally cancelled all bi-partite agreements executed between them. Thereafter the Builder declared the Complainant as a ‘Trespasser’ and disconnected water supply, generator power-back up, security services etc., to the subject property in order to evict the Complainant.

 

Apprehending that his family was in imminent danger of being evicted from the property, the Complainant (a Senior Citizen) desperately tried to settle the dispute by offering to pay the amount which was being falsely claimed by the Builder in return for the title being duly conveyed to the Borrowers. On 21/01/2007 he visited the Builder’s office with a Bank Draft for the said amount, but the Builder rejected his offer to settle the dispute amicably.

 

The Complainant then offered to pre-pay their loan to the Bank subject to the property being conveyed to them, but the then Bank Manager refused to intervene stating that the property had not been conveyed to the Borrowers due to an ‘inter-se’ dispute between the Builder and the Borrowers which did not concern the Bank.

 

In view of above circumstances, the Complainant had no other option but to vacate the property after having legally and peacefully occupied the same for 2½ years and they were compelled to move into a rented flat, under humiliating conditions.

 

In March 2007, the Complainant lodged a Case against the Builder with the State Consumer Disputes Redressal Commission complaining that even after receiving the agreed consideration the Builder’s had failed to convey the property to the Buyer and had withdrawn promised services (like water supply, generator etc.). This case is still pending.

 

In June 2007, the Bank served a Demand Notice under provisions of SARFAESI Act 2002 and the Borrowers again offered to repay their loan dues in full which the Bank ignored and in July 2007, the Bank issued a Repossession Notice under provision of the SARFAESI Act instructing the Borrowers to hand over possession of the property to the Bank.

 

The Complainant filed a Writ Petition in Calcutta High Court challenging enforcement of SARFAESI Act on a property on which the Bank had not created any ‘Security Interest’ by taking charge of Title Deeds. Moreover, since the Borrowers had repeatedly expressed their willingness to pre-pay the loan, enforcement of the SARFAESI Act was unwarranted.

 

The Bank claimed that a ‘Security Interest’ had been created in favour of the Bank by means of the said “Tripartite Agreement” and that the property had not been conveyed to the Borrowers due to a ‘mutual arrangement or collusion’ between the Builder and the Bank.

 

The Appellate Bench of Calcutta High Court then ordered that the point of maintainability of the Writ Petition was to be kept open for mention by either party and the Bank was asked to submit their ‘Affidavit in Opposition’. It was further ordered that future action taken by the Bank should abide by result of the writ application.

 

The Complainant was prepared to contest the issue because the said “Tripartite Agreement” did not empower the Bank to sell/transfer the property and was therefore not a ‘security interest’ as claimed. Moreover, the Bank had claimed that the title had not been conveyed as a result of an ‘arrangement’ or ‘collusion’ between the Builder and the Borrowers while in all previous correspondence, the Bank had stated that the title had not been conveyed due to a ‘dispute’ between the Builder and the Borrowers. Therefore, statements made by the Bank under oath were false and made with the intent to deprive the Borrowers of their property.

 

At that stage, Bank officials approached the Complainant and proposed that if the property was voluntarily handed over to the Bank then on repayment of their loan dues the Bank as empowered u/s 13 (6) (8) of the SARFAESI Act could deliver back possession of the property with title, rights and interests by executing a suitable Sale Deed in favour of the Borrowers.

 

Since their only interest was to secure legal ownership and live peacefully in the said premises, the Complainant agreed to the Bank’s proposal and voluntarily handed over the property to the Bank. He then wrote to the Bank expressing willingness to repay the loan subject to title of the property being conveyed to them and the Bank agreed to do so.

 

To complete the transaction, the Complainant requested the Bank to furnish copies of the ‘link documents’ that form part & parcel of a Title Deed, namely: (i) Copy of Mother Deed (ii)  Mutation Certificate (iii) Tax Bills (iv) Agricultural Conversion Certificate / Town & Country Planning Dept. Approval (v) Sanctioned Building Plan (vi) Completion Certificate (vii) Possession Certificate.

 

It was then found that the Bank did not have the said ‘link documents’ in their possession and had sanctioned & disbursed the loan without obtaining or verifying the same. Moreover, the premises had not been inspected and passed by a Bank appointed Architect to check if the construction conformed to sanctioned Building Plan.

 

In view of above problems, the Complainant informed the Bank that they would not complete the transaction till the Bank demonstrated its ability to convey a clean title and provided copies of documents that form a part & parcel of a Title Deed for legal verification.

 

On being informed as above, the Bank in violation of directives of the Calcutta High Court offered the property for sale by Public Auction on 08/12/2007.

 

However, it was poetic justice that even after receiving the bid amount of Rs.20.51 Lakhs from one Mr. J.P Murarka, the nominee of the highest bidder (an Enforcement Agent of the Bank) the title of the property could not be conveyed by the Bank to the said Mr. J.P Murarka because the Bank had no legal right to sell / transfer a property the title of which was officially held by the Builder and not the Bank.

 

In anticipation of regaining the property, the Borrowers had not removed several personal belongings from the property. After the property was auctioned, the Bank instructed the Borrowers to contact the aforementioned Mr. J.P Murarka to facilitate removal of their belongings. However, the Builder, claiming that the property belonged to them, denied access to Mr. J.P Murarka and both the Builder and the Mr. J.P Murarka have now sealed the property with the personal belongings of the Complainant lying unprotected in the premises.

 

As mentioned earlier, the Bank received Rs.20.51 Lakhs from auction sale of the property whereas the Borrowers’ dues were approximately Rs.15 Lakhs The Bank appropriated the difference towards alleged legal expenses incurred by the Bank.

 

After exploring all possible avenues and feeling that they had been cheated, the Complainant filed a Criminal complaint against Bank and Builder for offences committed u/s 420/427/120B of IPC and the Chief Judicial Magistrate, Alipore Court, taking due cognizance of the complaint, issued orders u/s 156 (3) of Cr.P.C directing Kolkata Police to investigate the case.