State Bank of India Vs Initiating Officer (Appellate Tribunal under SAFEMA, New Delhi)
Prior Mortgage Does Not Cleanse Benami Property—Bank Cannot Defeat Confiscation Merely by Claiming Priority Under SARFAESI: SAFEMA Tribunal
The Prohibition of Benami Property Transactions Act, 1988 provides for attachment and eventual confiscation of property found to be benami. In the present case, the Appellate Tribunal under SAFEMA held that a bank cannot secure release of an alleged benami property merely because the property was mortgaged to it before the attachment order. The Tribunal treated the attachment as an action directed towards the property itself and not as an ordinary recovery proceeding for government dues.
Background
The dispute concerned Flat No. B-304 in Blue Berry Apartment, DB City, Gwalior, registered in the name of Surendra Kumar Agrawal.
During an Income-tax search, documents were found indicating that the flat had originally been booked and negotiated by Sandeep Mangal alias Sonu Mangal. A cash receipt of ₹6,79,320 was also issued in his name.
Surendra Agrawal, the registered owner, stated that he was working in a shop and earning merely ₹5,000 to ₹7,000 per month. The authorities concluded that he lacked the financial capacity to acquire the flat.
Although a housing loan of ₹22 lakh had been obtained from Canara Bank in Surendra Agrawal’s name, the investigation showed that substantial repayments were made from the bank account of Sandeep Mangal’s proprietary concern. Out of the total amount of ₹25.61 lakh credited to the housing loan account, approximately ₹16.01 lakh was transferred from Sandeep Mangal’s account.
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