M RAFIQ DEEN Vs. ALLAHABAD BANK
LAWS(DR)-2005-8-7
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on August 31,2005

Appellant
VERSUS
Respondents

JUDGEMENT

K.Gnanaprakasam, - (1.) THE 6th defendant in the O.A. viz., M. Rafiq Deen is the appellant.
(2.) Brief facts of the case are as follows: The 1st defendant in the O.A. viz., M/s. Vensons & Vensons, had obtained loan from the respondent Bank and they have executed security document on 1.2.1992 and one T.S. Ramesh stood guarantee for the repayment of the loan amount by the defendants 1 to 4 and had executed a continuing guarantee dated 1.2.1992 in favour of the respondent Bank. The 5th defendant is the legal heir of the deceased T.S. Ramesh. As the borrowers have not repaid the loan, O.A. 674/2001 was instituted for recovery of Rs. 16,53,855/- together with interest @ 17.85% per annum from the date of application till the date of realisation and the same was allowed by order dated 12.1.2005. The appellant who is the 6th defendant in the O.A., in his reply statement had stated that one T.S. Ramesh was the owner of Item-3 of the property and to oblige his friends S. Lakshmanan, he gave his property as security to the Indian Overseas Bank and also executed an equitable mortgage in favour of I.O.B. by deposit of title deeds. Ramesh offered to sell the property to discharge the loan due to the Indian Overseas Bank and the appellant came forward to purchase and his offer was accepted for Rs. 4,60,000/- and for getting the original documents of title deeds for verification, Ramesh required a sum of Rs. 1,63,738.35 p out of the sale consideration to pay to the Indian Overseas Bank to clear the mortgage and the said amount was paid by the appellant by way of pay order dated 30.10.1990 and cash of Rs. 36,261.65 p was also paid and in total Rs. 2,00,000/- was paid as advance to Ramesh. The balance of sale consideration of Rs. 2,60,000/- was paid by pay order dated 16.4.1991 and Ramesh had executed the sale deeds in favour of the appellant and two others on 16.4.1991 and Ramesh had executed the sale deeds in favour of the appellant and two others on 16.4.1991 and 25.6.1991. The appellant had verified the Encumbrance Certificate for the properties from 1.1.1975 to 12.12.1991 and there was no encumbrance. The appellant, after purchase applied for encumbrance from 1.1.1990 to 9.2.1999 and there was no encumbrance except the sale deeds in favour of the appellant and his brothers and brothers' wives. The appellant got back all the original documents of title deeds from the Indian Overseas Bank. While so, on 2.1.1998, appellant saw a Public Notice in the Hindu, issued by the respondent Bank mentioning about the mortgage alleged to have been executed by T.S. Ramesh on account of M/s. Vensons & Vensons and the appellant filed its objection on 1.2.1997 and also satisfied the respondent Bank about the genuineness of the objections. The appellant claims that he is a bonafide purchaser for value without notice of encumbrance and prayed for the dismissal of the O.A. O.A. was decreed in favour of the respondent Bank and Clause 'C' of the decree states that the sale in favour of the appellant is subject to the mortgage in favour of the respondent Bank and the same is questioned in the appeal. The point for consideration is whether the mortgage in favour of the respondent Bank after the sale of the property to the appellant is valid and binding upon the appellant.
(3.) THE learned Advocate for the appellant has submitted that his vendor T.S. Ramesh did not at all mortgage the property in favour of the respondent Bank and there, was only an agreement to mortgage dated 2.1.1991 (Ex. A-10), which is not at all a deed of mortgage. In fact, in the said agreement it is stated that, "It has been agreed by and between the parties hereto that the guarantor should create in favour of the Bank as cover for his guarantee a Mortgage by Deposit of Title Deeds." Further recitals in the agreement is pointed out, which stated that, "THE said Mortgage by Deposit of Title Deeds shall be created by the Guarantor for the purpose of securing payment to the Bank." As such, there was only an agreement to mortgage as on 2.1.1991 and there was no mortgage at all. It is further pointed out that the respondent Bank had indicated about the sanction of the loan by their letter dated 16.12.1991 (Ex. A2) wherein it is stated, "We are pleased to sanction the following limits." Under the terms and conditions stated in the said letter, Clause-5 states, "Simple mortgage of land and building owned by Sri. T.S. Ramesh situated at D.N. 35, Mambalam Road, T. Nagar." Clause-6 says, "Guarantee of Sri. T.S. Ramesh as well as all the partners of the firm." THE Bank by its letter dated 13.2.1993 (Ex. A-20) addressed to the 1st defendant had stated that, "Memorandum of mortgage will be done within a week." To the said letter, M/s. Vensons & Vensons replied on 26.2.1993 (Ex. A-21) wherein they stated. "We do understand that it was lapse on our part to complete the Memorandum of Mortgage formalities of the collateral security given to you to avail this DPG Scheme and hence we request you to kindly release this DPG Scheme immediately on submission to you Memorandum of Mortgage of the property." By relying upon these documents, it is argued on behalf of the appellant that his vendor T.S. Ramesh did not all execute the mortgage upto 26.2.1993, but whereas, the sale in favour of the appellant and others was as early as 16.4.1991 and as such the mortgage said to have been created by T.S. Ramesh in favour of the respondent Bank is not valid and binding upon the appellant. THE Affidavit given by T.S. Ramesh dated 17.12.1990 (Ex. A-13) is a created one with ante date to subserve the sale deed executed in favour of the appellant. Though it is stated in the Affidavit that T.S. Ramesh had lost the original sale deed in the month of June, 1988 during shifting of his house, he had applied for the Registration copy of the sale deeds only on 18.7.1990, after two years. But no public notice was given about the loss of the original sale deeds in the year 1980 itself and it is, therefore, argued that this Affidavit has been procured with ante date to support the alleged mortgage said to have been executed by T.S. Ramesh in favour of the respondent Bank on 2.1.1991. Even under the Exh. A-10, under Clause-4 it is stated, "THE Guarantor further undertakes to execute and complete a legal mortgage by written instrument at his costs, if and when required by the Bank." But no legal mortgage was created in favour of the respondent Bank. That even in this agreement to mortgage, nowhere it is stated that T.S. Ramesh had lost his title deeds and he had produced only the Registration copy of the sale deeds. It is further pointed out that even at the time of filing of the O.A., the respondent Bank has not filed any valid equitable mortgage created by T.S. Ramesh. That in the list of documents shown in the O.A., Serial No. 13 dated 1.2.1992 is only a agreement of guarantee by the late T.S. Ramesh to the respondent Bank. Sl. No. 14 dated 17.12.1990 is an Affidavit by T.S Ramesh Sl. No. 15 is dated 2.1.1991, which is an agreement to mortgage by late T.S. Ramesh to the respondent Bank. Sl. No. 18 dated 12.1.1997 is a paper publication given by the respondent Bank, wherein it is stated that the property situated at Door No. 35 (New No. 33), Mambalam High Road, T. Nagar, Chennai-17, belonging to T.S. Ramesh is mortgaged to Allahabad Bank, Anna Nagar Branch, Madras, for advances made to M/s. Vensons & Vensons by depositing title deeds. THE above mortgage is still in existence. Public are hereby warned not to have any dealings either by way of sale/lease/mortgage etc. without the permission in writing from the Manager, Allahabad Bank, Anna Nagar East, Chennai-600102. In the said publication, the Bank has indicated only about the mortgage created by late T.S. Ramesh. It is not known what was the circumstances which warranted the respondent Bank to issue a paper publication in the year 1997, in respect of the loan said to have been given in the year 1991. It is further submitted that the mortgage said to have been executed by late T.S. Ramesh in respect of the property purchased by the appellant and others, is not valid and binding upon the appellant and others.;


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