APHC010524202025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3558] MONDAY, THE TWENTY FOURTH DAY OF NOVEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE CHEEKATI MANAVENDRANATH ROY THE HONOURABLE SRI JUSTICE TUHIN KUMAR GEDELA WRIT PETITION NO: 26985/2025 Between: 1. MAGANTI SATYA SURYA KUMARI, W/O MAGANTI CHANDRASEKHARAM, AGED ABOUT 71 YEARS, R/O BRUNDAVAN COLONY, LABBIPET, VIJAYAWADA, NTR DISTRICT ...PETITIONER AND 1. HINDUJA LEYLAND FINANCE LTD, RREP. BY ITS AUTHORISED OFFICER, CHENNAI, HAVING ITS BRANCH OFFICE AT D.NO.54-20- 10/1A, GURUNANAK COLONY, VIJAYAWADA. 2. M/S VIJAYA LAKSHMI BOTTLES PVT LTD, REP. BY ITS DIRECTOR, MAGANTI CHANDRAMOULI, BRUNDAVAN COLONY, LABBIPETA, VIJAYAWADA ...RESPONDENT(S): Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ or direction particularly one in nature of writ of mandamus declaring the possession notice dated 11.07.2025 issued by the 1st Respondent under Section 13(4) of the SARFAESI Act as illegal and without jurisdiction insofar as it relates to the subject property covered by the decree dated 07.05.2025 in O.S. No. 838 of 2024, and consequently restrain the 1st Respondent from taking possession or interfering with my possession over the subject property, and pass 2 IA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to Stay of all further proceedings in pursuance to the possession notice dated 11.07.2025 issued by the 1st Respondent under Section 13(4) of the SARFAESI Act pending disposal of the present Writ petition and to pass IA NO: 2 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim orders granted in WP.No.26985 of 2025, dt.26-09-2025 and to pass Counsel for the Petitioner: 1. Y N VIVEKANANDA Counsel for the Respondent(S): 1. VARAPRASAD NEPPALI 3 The Court made the following ORDER: (Per Sri Justice Cheekati Manavendranath Roy) This writ petition under Article 226 of the Constitution of India, is filed for issuance of Writ of Mandamus declaring the notice, dated 11.07.2025 issued by the 1st respondent to take possession of the secured asset under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2022 (for short “the SARFAESI Act”), as illegal and without jurisdiction and consequently restrain the 1st respondent from taking possession of the property from the petitioner or interfering with the possession in respect of the subject property. 2. Heard Sri Y.N.Vivekanada, learned counsel for the petitioner and Sri K.Chidambaram, learned counsel appearing for the 1st respondent. Though notice against the 2nd respondent is not served, since the main relief is against the 1st respondent, notice in respect of the 2nd respondent is dispensed with. 3. Brief overview of the facts pertaining to the lis in this writ petition may be stated as follows: (a) The 2nd respondent is the principal borrower, who availed loan from the 1st respondent. At the time of availing loan, the 2nd respondent has offered the subject property which is a vacant site in an extent of 9,062 Sq.yards, as security for repayment of the loan amount to the 1st respondent. Subsequently, the 2nd respondent committed default of repayment of the loan amount. Therefore, the 1st respondent has initiated the proceedings under the SARFAESI Act and issued notice under Section 13(4) of the SARFAESI Act to 4 take possession of the secured asset to initiate subsequent measures for sale of the said property for realization of the loan amount. The said notice was issued to the 2nd respondent/ principal borrower. (b) The writ petitioner is a third party to the said loan transaction. According to the case pleaded by the writ petitioner, the 2nd respondent, who is the owner of the secured asset agreed to sell a part of the secured asset which is an extent of 1200 Sq.yards to the petitioner and he has executed an agreement to sell, dated 30.06.2002 to that effect in her favour after receiving the entire sale consideration of Rs.15.00 lakhs. It is stated that the possession of the said 1200 Sq.yards was also delivered by the 2nd respondent to the petitioner under the aforesaid agreement to sell. So, it is stated that it is a possessory agreement to sell that was executed by the 2nd respondent in favour of the petitioner long back in the month of June, 2002. (c) As the 2nd respondent borrowed money from the 1st respondent, on 24.09.2021, it is stated that the possessory agreement to sell in favour of the petitioner has been in force by them and as the 2nd respondent did not turn up for execution of a registered sale deed in favour of the petitioner in spite of her repeated demands, the writ petitioner was constrained to file suit O.S.No.838 of 2024 on the file of the V Additional Civil Judge (Junior Division), Vijayawada seeking decree of Specific Performance and the said suit was decreed ex parte, in favour of the petitioner on 07.05.2025. Thereafter, the petitioner has filed an execution petition to obtain a registered sale deed in faovur of the 5 petitioner and it is not yet numbered and it is under the consideration of the Executing Court. (d) Therefore, it is the case of the writ petitioner that as she is the holder of possessory agreement to sell and also a decree holder in respect of part of the secured asset, the bank cannot take possession by issuing a notice under Section 13(4) of the SARFAESI Act and to sell the same in the auction. (e) According to the petitioner, her rights under the possessory agreement to sell and the decree for Specific Performance would be defeated in case the property is dealt with under SARFAESI Act by the 1st respondent. (f) Therefore, challenging the legal validity of notice issued under Section 13(4) by the 1st respondent to the 2nd respondent, the writ petition has been filed seeking the aforesaid relief. 4. Admittedly, the 2nd respondent is the owner of the secured asset. The petitioner is only a holder of possessory agreement to sell and a decree holder in a suit for Specific Performance filed by the petitioner in respect of part of the secured asset on the basis of the possessory agreement to sell said to have been executed in her favour by the 2nd respondent. 5. It is settled law that a possessory agreement to sell is not a document of title and it will not confer any right, interest or title in respect of the said property. Section 54 of the Transfer of Property Act, 1882 (for short “the TP Act”) defines “Sale”. A reading of the definition of sale under Section 54 of the TP Act clearly mandates that a contract for sale of immovable property is only 6 a contract that a sale of such property shall take place on terms settled between the parties and it does not of itself, create any interest in or charge on such property. 6. Considering the said definition of sale under Section 54 of the TP Act, the Supreme Court in the case of Meghamala vs.G.Narasimha Reddy 1 clearly held that “an agreement to sell does not create any right or title in favour of intending buyer.” 7. Therefore, as per the definition of “Sale” as envisaged under Section 54 of the TP Act and as per the law enunciated in the above judgment of the Supreme Court, the legal position is now clear that the agreement to sell or contract of sale does not create right or interest or any charge in the property in favour of the holder of the agreement to sell. Her status is that of a prospective vendee. After execution of a regular sale deed in terms of Section 17 of the Registration Act, then only, the petitioner becomes absolute owner of the said property. 8. In the case of Babasaheb Dhondiba Kute vs. Radhu Vithoba Barde2, it is held that the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 1908. Till the time of such registration, no conveyance could be said to have taken place. 1 2010 (8) SCC 383 2 2024 INSC 122 7 9. In fact, there is a long line of case law on the said proposition of law. Needless to cite all the aforesaid judgments in view of the clear definition of “Sale” given in Section 54 of the TP Act and in view of the law decided in the above two judgments of the Apex Court cited supra. So, when the status of the writ petitioner is only that of a prospective vendee and when no title or interest or charge is conferred in her favour in respect of the property covered by the agreement to sell, she cannot legitimately seek to stall the measures and proceedings initiated by the 1st respondent under the SARFAESI Act by way of issuing notice under Section 13(4) of the SARFAESI Act. It is a statutory right conferred on the 1st respondent to initiate measures under the Act for recovery of the loan amount from the principal borrower. So, the petitioner cannot seek to impeach the legal validity of the proceedings initiated by the 1st respondent in exercise of the right conferred on it under the Act. 10. If at all the petitioner obtains any registered sale deed either from the 2nd respondent or from the Court in the execution proceedings that may be initiated by the 1st respondent, then the petitioner has to workout her remedies available under law in respect of the part of the secured asset on the basis of the possessory agreement to sell and on the basis of the decree for Specific Performance for redressal of her grievance in appropriate forum by initiating appropriate proceedings according to law. But certainly, in the present writ petition, the petitioner cannot stall the measures and the proceedings initiated by the Bank for recovery of the loan amount. As it is stated that the writ petitioner is the holder of a possessory agreement to sell, she is at liberty to 8 pursue her right regarding possession over the property in terms of Section 53A of TP Act at the time of initiating appropriate proceedings in the appropriate forum. 11. It is made clear that we have not dealt with any merits of the case relating to the said right claimed by the petitioner and we have only decided this lis as per the settled legal position as discussed supra. If at all any proceedings are initiated by the petitioner in the appropriate forum, the same shall be decided and adjudicated in accordance with law on merits. 12. Accordingly, this Writ Petition is disposed of. There shall be no order as to costs. As a sequel, Interlocutory Applications pending, if any, shall stand closed. ________________________________________ JUSTICE CHEEKATI MANAVENDRANATH ROY _____________________________ JUSTICE TUHIN KUMAR GEDELA Date: 24.11.2025 KA 9 THE HONOURABLE SRI JUSTICE CHEEKATI MANAVENDRANATH ROY THE HONOURABLE SRI JUSTICE TUHIN KUMAR GEDELA WRIT PETITION NO: 26985/2025 Date: 24.11.2025 KA