Dismissed

State Bank of India v. United Bank of India

DRAT12 Oct 2023REGULAR APPEAL/52/2014

Case brief

AI extract

What is this about?

Appeal against dismissal of Stay Application where two banks claimed equitable mortgages on the same property via title deed deposit. Tribunal held that mortgage created on 02.04.2009 was subsequent to mortgage on 06.05.2008, confirming first charge belongs to earlier lender.

What did the court decide?

No order as to costs. Impugned order of DRT confirmed.

State Bank of India versus United Bank of India — Execution and Attachment | DRAT (2023)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Appeal No. 52 of 2014

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(Arising out of S.A. 1374 of 2013 DRT-II Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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12.10.2023

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State Bank of India, having its corporate office at State Bank Bhawan, Madam Cama Road, Noriman Point, Mumbai – 400021 and Local Head Office at Sambriddhi Bhawan, 1, Strand Road, Kolkata – 700001 and carrying on business at Baidyabati Branch, 287, G.T.Road, PO, Baidyabati, PS Serampore, Dist. Hoogly, PIN 712222.

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… Appellant -Vs-

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United Bank of India, having office at Hooghly Regional Office at 23, Rai M.C.Lahiri Street, Serampore, PIN 712201.

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Sri Sadip Bandyopadhyay residing at 9, K.L.Banerjee Street, PO. Telinipara, Dist. Hooghly.

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For the appellants : Mr. P.K.Roy, Learned Advocate. Mr. S. Bandopadhyay, Ld. Advocate.

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For the respondents: Mr. N.K.Rakshit, ld. advocate– Resp. no.1 Ms. Laboni Rakshit, ld. Advocate – Resp.no.1.

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THE APPELLATE TRIBUNAL :

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Instant appeal has arisen against the judgement and order dated 04.03.2014 passed by learned DRT-II Kolkata in S.A. No. 1374 of 2013 whereby S.A. was dismissed. Feeling aggrieved the appellant preferred the appeal.

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As per pleadings of the parties, respondent no.2 Sandip Bandyopadhyay requested the appellant bank on 13.09.2007 for sanction of loan. Accordingly, appellant bank sanctioned housing

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loan of Rs.4.94 lakhs in favour of respondent no.2 vide sanction letter dated 23.10.2007. Respondent no.2 executed security documents on 15.11.2007. Original title deed being Deed No. 1543 of 2008 was deposited with the appellant bank thereby equitable mortgage of the said property i.e. Falt No. 3C, 3^rd floor, “Monalisa Apartment” was created. A confirmation letter confirming deposit of such deed was also executed on 02.04.2009. Due to irregular payment of loan instalments, loan account was classified as NPA and notice u/s 13(2) of the SARFAESI Act, 2002 (hereinafter referred to as ‘the Act’) dated 23.06.2010 was served upon the respondent no.2 demanding Rs.5.87 lakhs with further interest. Symbolic possession was taken by issuing notice dated 09.01.2013 which was affixed on the secured asset and published in two newspapers on 12.01.2013.

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When the appellant bank was contemplating to sale the secured asset they came across an E-auction sale notice dated 10.11.2013 published by respondent no.1 bank in ‘The Telegraph’ and ‘The Ananda Bazar Patrika’ newspaper for sale of the aforesaid property. Hence, S.A. was filed praying for restraining respondent no.1 bank to put the property on e-auction sale as the property is already mortgaged with the appellant bank.

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Respondent no.1 bank refuted the claim of the appellant

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bank and submitted that housing loan of Rs.7.00 lakhs was sanctioned on 15.11.2006 in favour of Shri Nirmal Kumar Das for

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purchase of Flat No. 3C, 3^rd floor, “Moalisha Apartment” on the condition that said flat would be mortgaged in favour of the respondent no.1 bank as security. Borrower attended Bank on 06.05.2008 and deposited the original title deed thereby creating equitable mortgage. Since repayment of loan became irregular, loan account was classified as NPA on 15.09.2009. Notice u/s 13(2) of the Act dated 28.09.2010 was issued. Symbolic possession was taken by the authorized officer of the bank on 19.09.2012 by affixing notice on the secured asset and also published in the newspapers. The property was put to auction sale by issuing sale notice dated 29.12.2013. Valuation report was also obtained and reserve price fixed at Rs.7.00 lakh. Pursuant to order of the learned DRT dated 19.12.2013 corrigendum to the E-auction sale notice was published re-fixing the reserve price at Rs.8.60 lakhs. Sale was fixed on 03.02.2014. 30 days’ notice was given to the borrower.

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Appellant bank is claiming mortgage on 02.04.2009 while the mortgage with the respondent no.1 bank was created on 06.05.2008. Accordingly, respondent no.1 bank is holding prior charge of the equitable mortgage of the property.

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It is a peculiar case wherein two nationalized banks are contesting their claim against each other. Both of them sanctioned loan to different persons on the basis of two different sale deeds of the same property. Both are claiming that the mortgagor created equitable mortgage by depositing title deed.

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At the very outset, I would like to observe that both the bank were negligent enough at the time of disbursing of loan. They did not take care of obtaining non-encumbrance certificate or made enquiry about the title of the mortgagor. It is also observed by the learned DRT in its judgement and order.

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Equitable mortgage by depositing title deed is defined u/s 58F of the Transfer of Property Act, which reads as under :

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“ Mortgage by deposit of title-deeds. - - Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay and in any other town which the 8 [State Government concerned] may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immoveable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.”

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A bare perusal of the provision would show that mortgage by depositing title deed would be created on delivery by the mortgagor the document of title of immovable property with the intention to create a security thereon.

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Hon’ble Supreme Court in the case of Syndicate Bank Vs. Estate Officer & Manager, A.P.I.I.C. Ltd. & Ors [(2007) 8 SCC 361] has held that Section 58 of the Transfer of Property Act inter alia provides that where a person in any of the towns mentioned therein delivers to a creditor or his agent documents of title to immovable property with intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds. It would be seen from this provision that three essentials are required for an equitable mortgage, namely, (1) a debt, (2)

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deposit of title deeds and (3) the intention that the delivery should be security for the debt.

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Now it is to be seen as to whether equitable mortgage was created in favour of the appellant bank prior to the creation of mortgage in favour of respondent no.1 bank, who is holding first charge over the property? Appellant bank has submitted that respondent no.2 Sandip Bandyopadhyay had executed the deed of undertaking-cum-indemnity and deposited with the bank on 02.04.2009 the original title deed i.e. the deed of conveyance dated 19.11.2007 which was registered as Deed No. 1543 of 2008. It means that equitable mortgage was created in favour of the appellant bank on 02.04.2009 when the original title deed was deposited by respondent no.2 in favour of the appellant.

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Per contra, respondent no.1 bank claims that one Shri Nirmal Kumar Das had created equitable mortgage of the property on 06.05.2008 by depositing original title deed dated 30.04.2008 which was registered as Deed No. 2861 of 2008. A letter of deposit of title deed was also executed on 06.05.2008. It is not the case of either party that sale deed deposited with them are forged but at the same time both the bank did not make any effort to verify the genuineness of the sale deed. Further, it is not on record that whether any non-encumbrance certificate was obtained over the property or not?

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As far as first charge is concerned a bare perusal of the sale deed deposited with the parties will show that the original sale deed was deposited with the appellant bank on 02.04.2009 while the original sale deed executed by Nirmal Kumar Das on 06.05.2008. Accordingly, sale deed deposited with the appellant bank is later in time than the sale deed deposited with the respondent no.1 bank. It means that equitable mortgage created in favour of the appellant bank was later in time than the equitable mortgage in favour of respondent no.1. Accordingly, the mortgage created in favour of the appellant bank shall be subject to existing charge/mortgage of respondent no.1 bank.

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Learned counsel for the appellant bank made an attempt to challenge the mortgage in favour of the respondent no.1 bank on the basis of letter dated 06.05.2008 written by the United Bank of India, Sheoraphully Branch to the Senior Manager, United Bank of India, Serampore Branch wherein specimen entry in the title deed registrar letter relating to mortgage by deposit of title deeds by the borrower was attached, which was signed by Nirmal Kumar Das, but it is undated. Learned counsel submits that since this letter is undated, it is a concocted document. I do not find any force in the submission. Letter dated 06.05.2008 written by the Sheoraphully Branch of United Bank of India to the Senior Manager, United Bank of India clearly indicate that the original title deed was annexed with the letter for creation of equitable mortgage. Endorsement was also made by the Senior Manager,

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United Bank of India, Sheoraphully Branch to the effect that equitable mortgage was created on 06.05.2008. This document could not be disbelieved. At the same time, equitable mortgage was created in favour of the appellant bank by Sandip Bandyopadhyay by depositing original title deed on 02.04.2009. Earlier agreement was singed by Sandip Bondyopadhyay wherein in the Column of “Security” it is mentioned as under :

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“Flat No. 3C measuring 700 Sft. on the 3^rd floor MouzaSheoraphully Ward no. 9, Holding no.6, Nonadanga Road, under Baidyabati Municipality, P.S. Srerampur, Dist. Hooghly. Equitable mortgage of flat/property/land with original set of documents.

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Further, it is also mentioned in Column “11-Documents:” as under

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The following documents will be executed by you before disbursement: Term Loan agreement for Home Loan – Documents, Affidavits and Confirmation Letter in respect of Equitable Mortgage – Annexure I in respect of Disclosure to CIBIL – Letter in respect of SBI Life – Affidavit.

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It means that the original title deed was not deposited by Sandip Bondyopadhyay with the appellant bank prior to 02.04.2009. In the deed of undertaking dated 15.11.2007 it is also stated that

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“Whereas, the mortgagor has entered into an agreement to sale with M/s. Banerjee Land Developers & Construction, Chandannagar and thereby agreed to purchase flat no. 3C, admeasuring 700 Sft on 3^rd floor of the building being constructed at Plot No. 3997, Survey No. 1312 at Mouza Sheoraphully. The said agreement is registered in the office of Sub-Registrar And Whereas the bank has sanctioned a Home Loan of Rs.4.94 lakhs to the mortgagor for the purpose of purchase of flat. The mortgagor has agreed to repay the said loan in 179 equal monthly instalments of Rs.5397/- each with interest @ 10.25% per annum with monthly rests.”

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Hence, it is clear that equitable mortgage was created only on 02.04.2009 when the original title deed was deposited by Sandip Bandyopadhyay in favour of the appellant bank. It is later in time to the equitable mortgage created in favour of the respondent no.1 bank.

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Learned DRT has recorded a finding that property was sold for Rs.9.40 lakhs but no argument was raised by the appellant on this issue.

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On the basis of the discussion made above, I am of the view that learned DRT has arrived at a logical finding. There is no illegality or irregularity in the impugned order. Hence, the appeal is liable to be dismissed.

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O R D E R

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