Isabella Mariam

The High Court of Delhi Division Bench of Justice Vibhu Bakhru and Justice Tejas Karia dismissed a petition challenging the bank’s actions under the SARFAESI Act, holding that there was no concluded settlement between the petitioner and the respondent bank. The Court stated that in the absence of any agreed One-Time Settlement (OTS) or acknowledged remission of dues, the petitioner could not compel the bank to return possession or title documents of the mortgaged property. Consequently, the Court vacated its interim relief order and permitted the respondent bank to proceed with the sale of the secured asset under applicable law.

The petitioner-initiated writ proceedings seeking quashing of two orders: one dated 23.12.2019 from the Debts Recovery Appellate Tribunal (DRAT), Delhi, and the other dated 02.04.2019 from Debts Recovery Tribunal-II (DRT-II), Delhi. The petitioner claimed she had discharged all dues related to a mortgaged property located at First Floor, C-140, Defence Colony, New Delhi, despite not being a borrower or guarantor in the original loan agreements.

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The petitioner asserted that she received a possession notice from the Court Receiver on 16.02.2019, despite having settled all amounts due under a family arrangement and subsequent court decree. She contended that the original borrowers were entities managed by her deceased brother, Late Shri Jagrit Khaitan, who had mortgaged his portion of the property. Following his demise, a family settlement dated 03.04.2013 vested obligations upon the petitioner to clear dues in exchange for full ownership of the mortgaged property.

It was her claim that pursuant to this settlement; she made substantial payments aggregating to Rs. 1.65 crores and paid the final balance of Rs. 58,23,092.63 by 23.03.2016, in accordance with a payment schedule allegedly recorded by the DRT-III.

However, due to her husband's illness and her daughter’s sudden death, the petitioner was unable to follow up on the retrieval of title deeds. She later received notice in 2019 of the bank's intention to take possession, prompting her to approach DRT-II and subsequently the DRAT.

In response, the respondent bank contested the existence of any settlement agreement, asserting that no communication confirming remission or closure of the debt had been issued. The bank maintained that dues remained unpaid and that payments made by the petitioner were partial and pursuant to court directions, not any negotiated agreement.

The petitioner cited communications dated 11.09.2015 and 23.03.2016 to support her claim that all dues were settled. She also relied upon decisions under Sections 41 and 63 of the Indian Contract Act, 1872, to argue that the bank was estopped from demanding additional amounts once a lesser sum was accepted.

Despite interim protection granted by the High Court, the petitioner was unable to secure a conclusive resolution through negotiations. An application for permission to sell the property to satisfy dues was also filed.

The Court examined the factual sequence, correspondence, and prior tribunal orders and observed that there was no "reference to any settlement proposal/OTS or any agreement by Respondent No.1 bank to accept any particular amount of Rs. 1.65 crores as full and final settlement of the outstanding dues."

The Bench recorded that the only mention of Rs. 1.65 crores was in the petitioner’s counsel’s statement during an ex parte hearing dated 03.12.2013, where the respondent bank was not represented. The Court further stated, "Notably, there was no mention of the amount of Rs. 1.65 crores in the subsequent order dated 03.07.2015, wherein the Petitioner had once again undertaken to pay the entire dues of Respondent No.1 bank."

Addressing the letters relied upon by the petitioner, the Court observed, "Even a perusal of the letters dated 11.09.2015, 21.03.2016 and 23.03.2016, clearly shows that Respondent No.1 bank only provided the details of the outstanding balance as on the date of respective letters."

On the matter of promissory estoppel, the Court held that "in the absence of any such agreement or acceptance by Respondent No.1 bank, Sections 41 and 63 of the Contract Act, 1872 would not be attracted in the present case."

With regard to procedural conduct, the Court noted, "There is nothing on record to show that the Petitioner ever approached Respondent No.1 bank for the return of the original title deeds of the property."

Finally, the Court observed, "This Court has provided sufficient opportunity to the Petitioner to arrive at a settlement with Respondent No.1 bank on mutually agreeable terms. Despite that the parties have been unable to arrive at a mutual agreement to settle."

In its concluding section, the High Court issued several definitive directions. It held, "Respondent No.1 bank is entitled to proceed with the sale of the property and recover all its up-to-date dues, payable by the Petitioner on behalf of Respondent Nos. 2 to 5, from the sale proceeds of the property."

The Court vacated its earlier interim relief order, "Accordingly, the interim relief granted by this Court vide orders dated 12.02.2020 and 19.02.2020 is hereby vacated."

It granted liberty to the respondent bank, "Respondent No.1 bank is at liberty to proceed with the sale of the property in accordance with the provisions of the SARFAESI Act and recover the outstanding dues from the sale of the property."

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The Court clarified, "It is clarified that in the event any surplus amount remains available after recovery of the entire dues and applicable charges, Respondent No.1 bank shall remit the balance amount to the Petitioner."

The petition was thus dismissed, "Accordingly, the present petition is dismissed with above directions. There shall be no order as to costs. All pending applications also stand disposed of."

Advocates Representing the Parties:

For the Petitioners: Mr. M. Batta, Senior Advocate with Mr. Vivek Malik and Mr. Vivek Sinha, Advocates

For the Respondents: Mr. Jai Mohan and Mr. Aayush Gupta, Advocates for Respondent No.1/SBI; Mr. Gaurav Kakar and Mr. Nishant Anand, Advocates for Respondents No. 2 to 5

Case Title: Indu Narain v. State Bank of India & Ors.

Neutral Citation: 2025: DHC:4428-DB

Case Number: W.P.(C) 1627/2020

Bench: Justice Tejas Karia, Justice Vibhu Bakhru

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