DRT Allows Auctions Of Properties Mortgaged To The Lender, Even If The Same Was Purportedly Sold By Borrower To Third Parties.

Background

Mr. Rajen Dhruv and Mr. Hiren Dhruv promoters of Orbit Venture Developers ("OVD") were desirous of re-developing Oshiwara Adarsh CHS Ltd and in order to vacate the 20 tenements in Oshiwara Adarsh CHS Ltd sought help of the Applicant i.e. J71 Properties & Pictures Pvt Ltd and Amarjeet Jitendra Shukla ("Applicants").

Mr. Rajen Dhruv and Mr. Hiren Dhruv entered into an undated Memorandum of Understanding, where it was agreed that Mr. Rajen Dhruv and Mr. Hiren Dhruv will allot an area of 5000 sq ft in the new building to be constructed by them subject to grant of redevelopment rights. Subsequent to the execution of Development Agreement dated 16^th August 2007, Allotment Letter was issued by OVD, stating that flat nos. 3601 and 3602 are allotted to Applicants ("Subject Flats").

Further, OVD through Mr. Rajen Dhruv and Mr. Hiren Dhruv for the purpose of refinancing the loan approached AFL i.e Lender, which granted term loan for an amount of Rs.130 crores to OVD i.e. Borrower. Subsequently, Indenture of Mortgage ("IOM") was executed between OVD and AFL, where inter alia, 12 unsold flats (including subject flats) together with relevant car parking spaces in the Project together with relevant car parking spaces mortgage to AFL to secure the loan. OVD failed to perform its obligation under IOM hence, AFL classified the account of OVD as Non – Performing Asset (NPA) and issued public notices in respect of the flats situated at the suit property.

Pursuant to the provision of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, AFL took possession of the Subject Flat for the purpose of recovering its monies from the sale of subject flats. Pursuant to taking possession of the Subject Flats and in accordance with law, AFL has issued a Sale Notice dated 06th August, 2022 and has scheduled an E-Auction on 08th September, 2022.

With a view to stop the sale of the Subject Flats, and claiming illegal right over the Subject Flats, the Applicant filed a Securitisation Application before the DRT seeking stay on the sale of Subject Flat. The Applicant moved before DRT for seeking stay of the auction. The subject matter was heard at length by the DRT, wherein AFL contented the Applicant is not a bonafide flat purchaser and has not produced any documents to show his rights over the said flats. In view of the aforesaid submission, the Hon'ble DRT did not pass any interim order of stay of sale by E-auction, thereby enabling AFL to continue with the sale of Subject Flat.

Case: J71 Properties & Pictures Pvt Ltd and Anr. Vs Orbit Ventures Developers and Ors.

Securitization Application no. 108 OF 2022

Axis Finance Limited was represented by Mr. Rajesh Nagory a/w Mr. Nishit Dhruva, Ms. Khushbu Chhajed, Ms. Niyati Merchant, Mr. Yash Dhruva.