Dismissed

The Federal Bank Ltd. v. Sri G N Panduranga & Ors.

DRAT8 Aug 2025REGULAR APPEAL/192/2017

Case brief

AI extract

What is this about?

This appeal arose from an order rejecting the Appellant Bank's claim to enforce loan recovery prayers against a property already assigned to the third Respondent (Asset Restructring Company). The Tribal found that the third Respondent had no contractual obligation to retain title deeds regarding other unassigned loans and thus dismissed the appeal.

What did the court decide?

Confirmation of the order dated 17.07.2017 passed by DRT-II, Karnataka at Bengaluru in TA 992/2017.

The Federal Bank Ltd. versus Sri G N Panduranga… — Contract and Commercial Disputes | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 8^th day of August, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA 192/2017

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(Arising out of TA 992/2017 (0A 887/2015) on the file of DRT-II, Karnataka at Bangalore)

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Between

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The Federal Bank Limited, Registered Office at Federal Towers P.B.No.103, Aluva, Kerala 683 101 And its Asset Recovery Branch, No.4, 2^nd Cross, CSI Compond, Mission Road, Bangalore 560 027. … Appellant

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And

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Sri G.N. Panduranga Aged about 57 years, S/o G. Narayanaswamy Naidu,

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Smt. G. Komala, W/o GN Panduranga,

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Aged about 50 years, Both residing at No.12, 8^th Cross, Behind Old ESI, Magadi Road, Bangalore. 560 023, Also at No.18/2-2, 15^th Cross, A. Block, Magadi Road, Bhuvanshwarinagar, Bangalore 560 023.

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Asset Restructring Company (India) Limited, Registered Office at The Ruby, 10^th Floor, 29 Senapathi Bapet Marg, Dadar (W), Mumbai 400 028. .. Respondents

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Counsel for Appellants : M/s. Sathiyanarayanan Counsel for Respondents : Mr. Jayachandran –R3

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(R1 & R2 given up)

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ORDER

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This appeal is filed challenging the order dated

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17/07/2017 passed in TA 992/2017(OA 887/2015) by the learned Presiding Officer, Debts Recovery Tribunal-II, Karnataka at Bangalore.

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The appellant Bank filed the aforesaid original

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application for recovery of a sum of Rs.18,18,259/- with interest and costs from the respondents 1 and 2. It is the case of the appellant/Bank that the respondents 1 and 2 availed three (3) loan facilities and offered the property described in the Schedule-A as a security for the loans and executed mortgage by deposit of title deeds. Subsequently, the housing loan account was assigned in favour of the

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third respondent. The third respondent was also informed that the property in connection with the loan assigned is also the property mortgaged for other two loans and therefore, requested the third respondent not to release the documents till the other two loans are settled by the borrowers. When that be the case, the learned Presiding Officer, though allowed the TA No.992/2017 (O.A.887/2015) for a sum of Rs.18,18,259/- with interest and costs as prayed for under para No. 6 (a) (b) (d) & (e) but rejected the other prayers under para 6 (c) (f) (h) (i) (j) . Thus, this appeal is filed.

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Learned counsel for the appellant/Bank produced the

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deed of assignment executed between the appellant and the third respondent on 30/12/2013 to show that the housing loan sanctioned to the respondents 1 and 2 had been assigned and found mentioned in Sl.No.28 of the loans assigned. He also brought to the notice of the Tribunal that the MOU documents dated 30/10/2007 to show the execution of the mortgage by deposit of title deeds for housing loan of Rs.15 lakhs. When additional housing loan of Rs.2.25 lakhs was sanctioned, the above said mortgage was extended for this loan also. In this regard, he produced the execution of mortgage deed dated 23/03/2009. When a sum of Rs.12,00,000/- was sanctioned towards a vehicle loan, again the mortgage already created was extended on 05/5/2009. The extension of mortgage document is also produced.

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The letter dated 09/02/2015 addressed by the appellant/Bank to the third respondent is produced to show that the request made by the appellant/Bank with the third respondent not to release the documents till the borrowers settle the entire liability with the appellant for the reason that the same property was offered as security asset for other two loans as well. Two e-mail communications dated 09/02/2015 and 30/03/2015 also filed to show the extended mortgage and the communication with regard to the pending issue.

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It is the submission of the learned counsel for the appellant/Bank that when the mortgage in respect of all the three loans is clearly established, the learned Presiding Officer has rejected the claim of the Bank to sell the property for realizing the debt due is not in accordance with law and therefore, the appellant/Bank wants a reversal of the said order.

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No representation for the respondents 1 and 2.

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In reply, the learned counsel for the third

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respondent submitted that admittedly, the housing loan of Rs.15,00,000/- was assigned to the third respondent. The third respondent was not made aware of any other loans sanctioned on mortgage of very same property offered as security for the housing

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loan. It is not mentioned in the assignment deed and no separate agreement or undertaking was executed in this regard. The assignment deed shows that the entire property is offered as mortgage for the loan assigned. Therefore, the third respondent has every right to enforce the mortgage in the event of the borrower failing to pay the amount. The learned Presiding Officer, DRT-II, Bangalore, rightly dismissed the claim and therefore he prays for the dismissal of the appeal.

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Considered the rival submissions and perused the

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records.

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It is seen from the records that the respondents 1 and 2 availed the housing loan of Rs.15,00,000/- in October 2007. (ii) Additional housing loan of Rs.2.25 lakhs in March 2009 and (iii) vehicle loan of Rs.12,00,000/- in May 2009.

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The documents filed in support of the mortgage/deposit of title deeds on 30/10/2007 shows that for the housing loan of Rs.15,00,000/- ‘A’ schedule property was offered as security and on deposit of title deeds, mortgage was created. Subsequently, additional housing loan was given in March 2009 and Vehicle loan was given in May 2009. Therefore, the mortgage was

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extended to cover these loans by executing separate letter for depositing title deeds with an intention to create mortgage on 23/03/2009 and 05/05/2009 respectively.

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The assignment deed between the appellant and the

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third respondent came to be executed on 30/12/2013. It is not only the loan assigned by the appellant/Bank in favour of the third respondent. There are as many as 47 loans have been assigned. One among them, is the housing loan of Rs.15,00,000/- found mentioned in Sl.No.28. ‘A’ schedule property of the respondents 1 and 2 is shown as the property secured for enforcement of liability. Admittedly, there is no separate contract or agreement executed between the appellant/Bank and the third respondent indicating that there are two other loans covered by the property mortgaged for the housing loan. Only in 2015, a letter dated 09/02/2015 was addressed to the third respondent by the appellant/Bank stating that all the three afore mentioned loans are secured by the mortgage of the very same property and therefore, requesting the third respondent not to release the documents till respondents 1 and 2 close the entire liability to the appellant/Bank. It is also not known that any reply

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has been sent to the notice. In the absence of any contract or agreement between the appellant/Bank and the third respondent, the third respondent is not required to retain the documents produced in

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support of mortgage and it is empowered to act against the property for the housing loan assigned in favour of the third respondent. This letter cannot be relied for binding the third respondent. The e-mail communications dated 09/02/2015 and 30/03/2015 only show about the pending issues and that the third respondent would ensure the interest of the Bank and also protect the borrowers. There was no undertaking or commitment by the third respondent that it would not release the documents to the borrowers.

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The TA 992/2017 (OA 887/2015) was filed claiming three loan amounts showing ’A’ schedule property and B schedule property as a security for the loans. Now the subject property herein is ‘A’ schedule property, which is shown as a property for recovery of the loan assigned in favour of the third respondent. When that property is sold for realising the loan assigned to third respondent, this Tribunal is of the view that the appellant/Bank cannot enforce the order passed for recovery of other loans against this property. Therefore, this Tribunal finds that there is no case made out for interfering with the order of the learned Presiding Officer, DRT-II, Bangalore.

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In the facts and circumstances of the case, this appeal

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is dismissed confirming the order of the learned Presiding Officer,

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Debts Recovery Tribunal-II, Karnataka at Bengaluru, in TA 992/2017

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( OA No. 887/015), dated 17.07.2017.

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Parties shall bear their own costs.

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Pending IAs, if any, shall stand closed.

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(Dictated to. Stenographer (ra), in open Court, transcribed by her, corrected and signed by me this 8^th of August 2025)

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Sd/-

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(JUSTICE G. CHANDRASEKHARAN)

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CHAIRPERSON

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The Federal Bank Ltd. v. Sri G N Panduranga & Ors.

Case brief

What is this about?

What did the court decide?

The Federal Bank Ltd. v. Sri G N Panduranga & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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