• Legal hold of a property

I am kumar from Tamil Nadu having a property issue as described below.
Party A sold house to Party B on Aug2004.
Later in Aug2005, Party A cancelled the Sale Deed(of aug2004) that he had with Party B.
In Jul2006, Party A sold the same property to Party C.
In Oct2007, I (Party D) bought the property from Party C.

I was able to see above details on the EC that i got online from Registration Dept Website last week.

Recently, a Financial institution (like bank) told us that they have original documents of the propery since they gave loan to Party B. Also, since they could not trace party B, they would need to sell the property through auction. 

But, When I check EC while buying house in 2007, I didn't see any entries related to Party B eventhough the EC got/printed for a period of 15 years. So, I bought house in 2007 (without taking a loan) since I felt that the title is clean.

Questions:
1. As the Financial Institution eagerly wanted to see my documents, I have a doubt that about their hold on the property. Can Party A sell property to Party C when there is a loan? 

2. One of the friend said, we can file a case against registration dept since they also involved in this fraud as they could have edited EC details before printing it for my request in 2007. He is saying that registration dept paid fine in the past against court order for a similar case. Is that possible?

3. If Financial Institution has full rights to sell the property, what actions I can take at this time to avoid losing my property.
Asked 3 months ago in Property Law from United States
Religion: Hindu
If property was mortgaged to bank by B no third party rights could have been created by builder 

2) bank must have advanced money to builder on basis of sale deed 

3) bank can auction property for non payment of loan amount 

4) title of C is not clear and marketable 

5) you have to sue the seller to recover your money with interest as per indemnity clause in sale deed
Ajay Sethi
Advocate, Mumbai
49200 Answers
2934 Consultations

5.0 on 5.0

1. No without permission of the bank who has mortgage/loan the property cannot be sold to C.

2. See if the property is mortgaged with bank it should show in the records further it was not then there is two case either seller has cheated you along help of department or the bank claim is false. SO in case bank has clear title then your title are not clear so you have to file a cheating and fraud case agaisnt seller and a recovery suit to recover your amount with interest.

3. If financial institution send any notice for auction sale or possession challenge same. if in case your title is not clear and the institution can sale property but same time you can recover damages and amount from the seller.
Shubham Jhajharia
Advocate, Ahmedabad
5381 Answers
15 Consultations

5.0 on 5.0

1. Transaction between A and B happened in 2004. The 2004 sale deed would be deposited with the bank as security for the loan given by bank to B. 

2. What was the bank doing all this while? 

3. Since you got the details from the registration website, it appears to me that the cancellation deed between A and B for cancelling the 2004 transaction, was duly registered with the sub- registrar. 

3. Once a document is registered then it comes in public domain and all members of the public including the bank are deemed to have knowledge about such document. 

4. So the bank definitely had knowledge about the cancellation of sale transaction between A and B. 

5. Once the original sale transaction is cancelled, the bank cannot exercise it's right of lien or charge over the property for which it had lent a loan to B. 

6. For recovering the loan taken by B, the bank has to follow B and his personal properties, which does not include the subject property. 

7. The bank is trying to play mischief with the original sale document between A and B which must have been deposited by B with the bank as security against the loan granted to B. 

8. Now your queries-

1. Had B retained the property and wished to sell the same to another party say C, then in that case B would be obligated to obtain the NOC from the bank before effecting the sale transaction in favour of C. In your case, A had not taken any loan from the bank. He merely entered into a sale deed with B and later on cancelled that transaction by executing a registered sale deed. So A was no way debarred from selling his property to another party, in this case C. 

2. The bank must have secured the loan by retaining the original sale document between A and B with it. The bank does not enter into any registered document with the borrower and so the registration department does not have details of any such loan transaction for the property. Anyway I will cross check this further and get back. 

3. For the time being you need not do anything. Let the bank initiate legal action. The bank may issue you a legal notice since you are now the owner on record. Basis the contents of the legal notice and demand made therein, appropriate steps can be taken for giving a fitting reply to the bank. Let me also check if bank can initiate legal action after a lapse of so many years and thus would be exempted from the law of limitation. Assuming there is no such exemption in favour of bank; if it initiates any legal action against the property now, then it would be clearly barred by law of limitation since an aggrieved party has to take legal steps within a maximum period of 3 years from date of default. 

9. Also please inform, when you bought the property from C, did C give you the originals of all the previous documents? Like sale deed between A and B, cancellation deed between A and B and sale deed between B and C?
Yusuf Rampurawala
Advocate, Mumbai
1449 Answers
4 Consultations

5.0 on 5.0

1. If A had sold the property to B by a registered sale deed, then he cannot cancel the same unilaterally next year, also when A had availed mortgage loan from loan, then he cannot sell the property to a third person before discharging the loan fully.
If A had sold the property to B by an unregistered sale deed, then the cancellation is possible.

2. It is possible that A had fraudulently sold the property to B by obtaining certified registration copy of the original document if the original document was held by bank for mortgage loan.
The banks do not register the title document while granting mortgage loans, they register only the memorandum of deposit of title deeds.
Therefore any action against the registration department would not fetch any fruitful result.
This is a fraud played by A hence you cannot hold others responsible for this debacle or scam.

3. You may file an injunction suit agaisnt the financial institution restraining them from selling the properties or a suit for declaration of your title with an application seeking temporary injunction restraining the financier from selling the property till the disposal of the main suit.
T Kalaiselvan
Advocate, Vellore
39402 Answers
422 Consultations

5.0 on 5.0

You need to file a criminal case of 420, 406, 120B and 34 of IPC to A for cheating and missapropriation of your money.
You need not to provide any document to bank as they are stranger to you and let the file a civil case making A, B and you as a party.
You have the possession of the property and have the registration as you say that the agreement between A and B cancelled so the bank should not have the original registration Doc's or you got registration on duplicate documents.
The action of A is involved in cheating along with the B and Bank officials.
Vimlesh Prasad Mishra
Advocate, Lucknow
2666 Answers
5 Consultations

4.9 on 5.0

Firstly, the when you would have gone to the property you must have inquired though there is a simply presumption of normal inquiry at buyers end, and you did that.

Secondly, the sale deed must also be registered, so it is the registrar who found it without any dispute over the same property and registered it to you.

Thirdly, and also the limitation period has been elapsed for the institution to claim their right over the same.

Fourthly, you can go to the civil court from injunction to sell the same as you are having a valid title over it.

Rest you can have a detail conversation with me through Kanoon
Sanjay Baniwal
Advocate, South Delhi
2007 Answers
5 Consultations

4.9 on 5.0

Hello sir, you have purchased the property from the bank , you are a bonafide purchaser therefore your title over the property cannot be challenged ..It is also to be seen ,that howcome the first sale deed in favour of B was cancelled by the party A
Hemant Chaudhary
Advocate, Gurgaon
3464 Answers
15 Consultations

4.9 on 5.0

Dear Client,

Through what mode sale deed was cancelled as registered sale deed cannot be cancelled by Sub registrar. 
No Authority Can Cancel Registered Documents: SC [Read Judgment]...

Read more at: http://www.livelaw.in/no-authority-can-cancel-registered-documents-sc/

Whether original sale deed was handed to Party A by B? Is yes, than bank cannot have original documents, and if any mortgage on copy of sale deed than Financial Institution at fault. It cannot proceed against you. 

Don`t show any thing to F I, Property mortgage cannot be sold, neither its possible, as originals should be with F I, and without taking delivery of original previous property documents, property purchased by C than he is negligent purchaser, 

I hope u have complete chain of original documents of property since its origin, and if u also lapsed here, than than than ......

Registration dept. is at fault, if sale deed executed between, A n B canceled by registrar, otherwise at the time of registration of sale deed, copies of previous sale deed is annexed. property mortgage with bank cannot be in knowledge unless not disclose in sale deed.
Yogendra Singh Rajawat
Advocate, Jaipur
4626 Answers
2 Consultations

4.7 on 5.0

1. Party A had once sold the property to party B by registering the sale deed and thereafter cancelled the said sale deed as reported by you. Did the parties A and B registered their cancellation deed before the registrar and did A take back the original sale deed he had registered in favour of B which has thereafter been cancelled? Party A can sell the said property if his sale deed in favour of B has been cancelled and he took back the original sale deed he had registered in favour of B. B can not take loan without depositing the original sale deed of the property for mortgaging the same with the said Financial Institution.

2. You should have made property search from the office of the Registrar without relying on the website since a error in uploading can cause disaster. However, keep evidence of the faulty entries made in the portal by preserving the screen shot of the concerned web page. If you have EC signed by the Registra';s office then certainly you can file a writ petition against the Registrar for his inacton but before that find from the Financial Institution what document they are holding since fake title deed can easily been made by the borrowers for depositing with the Bank for taking loan. Do not show your sale deed to them first.

3. If you are in possession of the property then file a declaratory suit before the civil court praying for a declaration that the property belongs to you as per the EC issued by the Registrar making the said Financial Institution the opposite party and the Registrar the proforma defendant and thereafter file an application praying for a stay on the Financial institution restraining them in initiating SARFAESI proceeding to take possession of your said property before the ownership issue is decided by the Court. If the Financial Institution initiates SAREFASI proceeding and issues Possession Notice u/s13(4) of SARFAESI Act,2002, then file an application before the local Debt Recovery Tribunal u/s17 of the Act seeking relief.
Krishna Kishore Ganguly
Advocate, Kolkata
19371 Answers
473 Consultations

5.0 on 5.0

Hi,
In case of loan, the documents are kept with the FI and party A can sell after creating forged documents only. You may file case against all the parties including FI.
Ganesh Singh
Advocate, Delhi
1442 Answers

4.5 on 5.0

They can't sell when there is a loan.
Yes you can file case first get documents for the same through RTI from that department.you can stay the same through court.
Prashant Nayak
Advocate, Mumbai
3018 Answers
2 Consultations

4.8 on 5.0

Financial institution would have original sale deed
Ajay Sethi
Advocate, Mumbai
49200 Answers
2934 Consultations

5.0 on 5.0

If there has been bank loan then sale deed must be with bank/ financial institution only and the parties may have committed fraud by collusion.
Shubham Jhajharia
Advocate, Ahmedabad
5381 Answers
15 Consultations

5.0 on 5.0

The cancellation of registered sale deed by the seller to the buyer after the buyer has availed mortgage loan on the basis of the registered sale deed, is invalid and illegal or high handed criminal activity.


From your contents it cannot be said that the financial institution may not have original documents, the seller and buyer might have obtained certified copy and got the registered sale deed cancelled or anything might have taken place, or even the finance company might have involved itself through its corrupt practice or staff.
T Kalaiselvan
Advocate, Vellore
39402 Answers
422 Consultations

5.0 on 5.0

1. Equitable mortgage on a property is created by B by depositing the original title deed to the lending Bank.

2. Since both A and B have cancelled the said registration of their sale deed though the bank claims to have mortgaged the said property , there can be two chances as given under;

a. The bank does not have the original title deed of B with them, or

b. The bank has a forged title deed of the title deed of B since the practice of forging title deed for taking loan from the bank by submitting the forged title deed is rampant in India.

3. However, both the cases go in your favour.
Krishna Kishore Ganguly
Advocate, Kolkata
19371 Answers
473 Consultations

5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer