Allowed

State Bank Of India v. K S Bhagwan Prop Ms K Venkannah and Ors.

DRAT3 Apr 2025REGULAR APPEAL/1/2018

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed the bank's appeal, setting aside the lower court's dismissal of the OA against legal heirs. The Tribunal held that a general Power of Attorney empowered the attorney to mortgage properties and that the Supreme Court did not opine against 10% interest.

What did the court decide?

O.A. allowed with costs for recovery of Rs.18,38,306.50 plus 10% simple interest from date of plaint till realization.

State Bank Of India versus K S Bhagwan Prop Ms K Venkannah… — Banking and Recovery | DRAT (2025)

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Reportable / Non-reportable

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL - KOLKATA

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HON'BLE Justice Anil Kumar Srivastava, Chairperson

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APPEAL No. 01 of 2018

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(Arising out of O.A. No. 519 of 2002 – DRT- Visakhapatnam)

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03.04.2025

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State Bank of India, Kakinada, East Godavari Dist. A.P.

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... Appellant

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--Vs--

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K S BHAGWAN PROP of Ms K VENKANNAH, Chuurch Square, Jagannaickpur, Kakinada, East Godavari Dist. A.P.

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2.Sri K Venue S/O. K. Venkannah (since deceased) residing at Karan Apartments, Jayanthi Place, Begumpet, Hyderabad-16

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3.Sri Kotamarthi Ramakrishna Anand S/O. Late K Venkannah, residing at Church Square, Jagannaickpur, Kakinada, East Godavari District, A.P.

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4.Life Insurance Corporation Of India office at Jeevan Prakash, Divisional Office, Visakhapatnam

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5.Srimati Sakuntala W/O. Late K Venu, residing at Church Square, Kakinada-2

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6.K V Vinod S/O. Late K Venu, residing at Church Square, Kakinada-2

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7.K Vikram Raghu S/O. Late K Venu, residing at Church Square, Kakinada-2

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8.Srimati K Vinetha D/O. Late K Venu, residing at Church Square, Kakinada-2

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... Respondents

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For Appellant : Mr. Soudip Pal Chowdhury, ld. Adv. Ms. Saswati Sikder, ld. Adv.

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For Respondent: Mr. A.K. Dhandhania, ld. Senior Adv. virtually Mr. Prosit Deb, ld. Adv.

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Ms. Sanchita Sarkar, ld. Adv. for resp no.3

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The Appellate Tribunal

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Instant appeal has arisen against the judgement

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and order dated 04.10.2017 passed by the learned DRT Visakhapatnam in O.A. No. 519 of 2002 [State Bank of India, Kakinada Vs. K.S. Bhagwan, Proprietor of M/s K.Vekannah& seven others] whereby learned DRT has

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allowed the O.A. for recovery of an amount of Rs. 18,38,306.50 along with 10% interest per annum pendente lite and future against defendant no.1, K.S. Bhagwan. However, O.A. was dismissed against defendant no.2, since deceased, represented by legal heir defendant no.5 to 8, and defendant no.3. O.A. was also dismissed against defendant no.4, Life Insurance Corporation of India, as unnecessary to the present O.A. proceeding.

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Initially a suit being OS No. 200 of 1987 was filed by the bank before the Subordinate Judge, Kakinada. Said Suit was transferred to DRT, Bangalore on 11.10.1996. Thereafter, the suit was transferred and re-transferred to various DRTs in the State of Telangana and Andhra

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Pradesh. Ultimately, DRT Visakhapatnam heard the matter and delivered the impugned judgement and order

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dated 04.10.2017.

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As per pleading of the appellant bank, it is stated

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that defendants have availed credit facilities since long. In 1984 the firm was reconstituted and defendant no.1

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became the sole proprietor of the firm. Credit facilities were enhanced by the bank in favour of defendant no.1 and defendant no.2 and 3 stood guarantors of the said

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loan giving collateral security by way of creating equitable mortgage of the properties at schedule A to C belonging to the defendant no.2 and 3. Irrevocable Registered Settlement Deed dated 24.04.1957 was already with the bank. Subsequently, in May, 1986 credit facilities were enhanced. Bank extended the

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equitable mortgage on the strength of the Power of Attorney of defendant no.2 and 3. Defendant no.1 wrote

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three letters for himself and defendant no.2 and 3 to the

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bank for confirming deposit of Registered Settlement

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deed on 10.05.1985 whichwould cover the enhanced

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credit facilities as security and for the amount due to the

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bank from the defendant no.1. In the said letter

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defendants have admitted that they were called by the bank on 20.05.1986 and they admitted that equitable mortgage of schedule properties A to C so created on

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10.05.1985 shall also continueas security for the enhanced credit facilities. Later defendant no.1

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suspended his business. Loan account became irregular. Legal notice was issued demanding outstanding dues. Defendants did not clear up the dues. Hence the Suit filed before the Civil Court, Kakinada which was transferred to DRT.

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Defendant no.2 contested the O.A. proceeding

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before DRT by filing written statement of defence wherein it is stated that he separated from the family since 1964.

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Since he was residing far away place, he has given general Power of Attorney to defendant no.1 for managing his properties. Defendant no.2 alleged that scope of the power of attorney was limited and the same

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did not empower defendant no.1 to mortgage the

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property for availing credit facilitiesin favour of a firm

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wherein he was the sole proprietor. It is further stated

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that defendant no.2 did not even know the fact of enhancing the credit facilities granted in favour of defendant no.1. It is further stated that it is not true that defendant no.2 stood as a guarantor. Defendant no.2 did

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not intend to mortgage the property. Defendant no.1 does not have any authority or power to mortgage the property on the strength of the impugned general Power

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of Attorneywhich was executed for managing the property. The mortgage created by defendant no. 1 in favour of bank is not valid and binding on him as a guarantor to the credit facilitieswhich was availed by defendant no.1. It is further stated that power of attorney was revoked on 01.06.1984. Defendant no.2 does not have any knowledge of granting the enhance

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credit facilities and execution of mortgage documents. Defendant no.2 denied that he was called by the bank on

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20.05.1986 and also denied that he admitted or intended

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to continue the equitable mortgage so crated on

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10.05.1985 as a security for enhanced credit facility limit.

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It is stated that defendant no.2 did not extend the

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equitable mortgage created on 20.05.1986. Defendant no.2 has filed S.A. 163 of 2009, which was dismissed. However, learned DRT has recorded a finding that dismissal of S.A. cannot debar him to contest the O.A.Defendant no.2, since deceased, defendant no.5 to 8 being his legal heirs represented the case.

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Defendant no.3 also contested the O.A. proceeding

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before DRT by filing written statement of defence wherein it is stated that he was in England from February 1969 to

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May, 1984. While he was in England, he gave a general

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Power of Attorney to defendant no.1 for managing the properties, which was revoked on 01.06.1984 after his return from England. The scope of Power of Attorney so

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executed during his stay in England did not empower defendant no.1 to mortgage the property for availing loan in his favour. The original irrevocable registered Settlement Deed dated 24.04.1957 executed by

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defendant’s father is with him only and it is not correct

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that it was deposited with the bank. It is further stated

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that defendant no.1 could not have power to represent

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on behalf of defendant no.3 and execute mortgage documents on the strength of the impugned general Power of Attorney which was revoked on 01.06.1984. The allegation that defendant no.3 was called by the bank on 20.05.1986 is not true and it is also not true that defendant no.3 on 20.05.1986 extended the mortgage created on 10.05.1985. It is further stated that he never

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has such intention to mortgage the property owned by him as security to the loan availed by defendant no.1. It

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is further stated that ‘C’ schedule property is absolutely owned by him and it is not true that the Godown at ‘C’ schedule property belongs to all the defendants. Defendant no.2 is the owner of the Godown situated at ‘C’ schedule property and he has no objection if the bank takes over the stocks lying in the Godown. Defendant no.3 has filed S.A. 89 of 2009, which was dismissed. However, learned DRT has recorded a finding that dismissal of S.A. cannot debar him to contest the O.A.

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6. Defendant no.1 filed a written statement admitting

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the liability and prayed for passing of the decree.

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It is the case of defendant no.4, Life Insurance

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Corporation, (LIC), that defendant no.2 has created equitable mortgage to his house door No.46-1-19 situated at Kakinada by depositing the original IrrevocableSettlement deed dated 24.04.1957 executed by his father. On the other hand, defendant no.1 created equitable mortgage on the strength of impugned general

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Power of Attorney in favour of the bank wherein no specific power was given to create equitable mortgage of the same property. Learned DRT has recorded a finding that defendant no.1 has no power to create mortgage on the strength of the impugned general Power of Attorney, which was revoked on 01.06.1984. O.A. was dismissed

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against LIC as they are unnecessary party to the O.A. proceeding.

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Learned DRT allowed the O.A. for recovery of an

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amount of Rs.18,38,306.50 against defendant no.1, K.S.

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Bhagwan together with interest at the rate of 10% per

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annum simple from the date of filing the Suit till realisation and also by sale of mortgage properties and

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the hypothecated property, if any. However, O.A. was dismissed against defendant no.2 and 3 as well as defendant no. 5 to 8 holding that they are not liable to pay the debt. O.A. was also dismissed against defendant no.4, Life Insurance Corporation of India, on the issue of misjoinder of party.

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Learned DRT recorded a finding that copies of

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Exhibit A5,Settlement Deed,given to defendant no. 2 and 3 are original and are not depositedby D2 and D3, therefore, it cannot be said that equitable mortgage was created against the properties of defendant no. 2 and 3.

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It is further held that defendant no. 2 and 3 are not guarantors of the loan advanced to defendant no.1 as they have not created equitable mortgage against their properties. It is further held that no equitable mortgage was created in favour of the bank. Defendant no.1 cannot execute the documents regarding guarantee agreement when no specific power entrusted to him by

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the defendant no.2 and 3 for mortgaging the title deed in

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favour of the bank. Defendant no.1 was not authorised

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to mortgage the schedule property on behalf of defendant no.2 and 3 when general Power of Attorney

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does not give any specific power to mortgage.

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I have heard the learned counsel for the parties and perused the records.

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Learned counsel for the appellant bank would submit that learned DRT has erred in recording its finding which is against the record. It is submitted that it is not in dispute that Power of Attorney was executed by

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defendant no.2 and 3 in favour of defendant no.1. It is also not disputed by defendant/respondent that

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defendant no.1 extended the loan facilities granted by

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the bank in his favour wherein he executed the guarantee documents for and on behalf of defendant no.2 and 3 on

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the basis of Power of Attorney executed in favour of

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defendant no.1. It is further submitted that it was a

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general Power of Attorney wherein no specific power to

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mortgage was given rather defendant no.2 and 3 have

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executed a general Power of Attorney in favour of

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defendant no.1 for managing their property only.

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It is further submitted that equitable mortgage was

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created in favour of the bank by deposit of Settlement Deed executed by one K. Venkannah on 24^th April, 1957 (Exhibit A5). Registered Sale Deed executed by Vadrevu Viswa Sundara Rao in favour of Kotamarthi Venkanna on 29.12.1945. Exhibit A6 was also deposited by defendant no.1 for creating equitable mortgage. Supporting documents to the Settlement Deed were also deposited which are Exhibit A7. It is submitted that equitable mortgage was duly created in favour of the bank.

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It is further submitted by the learned counsel for the

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appellant that no plea was taken in the written statement that separate settlement deedswere executed for all the beneficiaries in whose favour the settlement was made. There is no challenge made by the defendants to the Settlement Deed. It is further submitted that a fact not pleaded cannot be proved.

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Learned counsel for the appellant would further submit that original Power of Attorney was produced before the bank officers. It is proved by the statement of

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PW1, Mr. D.V. Bhaskara Rao, Deputy Manager, State Bank of India, Rajahmundry. Original power of attorney was duly produced, which was entered in the Power of Attorney Register maintained in the bank and the same was returned to defendant no.1 after putting bank stamp.

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A xerox copy of the same was obtained, which is on

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record. No evidence of rebuttal was produced by the defendants. Even, defendants did not appear in the witness box to challenge the veracity of the statement made by the bank witness or documentsso produced by the bank.

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It is further submitted that execution of Power of

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Attorney of defendant no.2 and 3 is admitted by the defendants. Accordingly, Power of Attorney has to be read in evidence. Learned counsel for the appellant would further submit that there is no challenge made by

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the defendants about the validity of the mortgage.

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Learned counsel for the appellant bank would further submit that 10% interest was granted by the learned

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DRT. No cross appeal is filed by the defendants challenging the rate of interest awarded by the learned DRT.

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Per contra, learned counsel for the respondents would submit that the Power of Attorney was executed by defendant no.2 and 3 for limited purpose of managing their property. No power was given to defendant no.1 to mortgage the property or stood as guarantor for availingcredit facilities in favour of him. It is further submitted that the Power of Attorney was revoked on

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01.01.1984, but it was registered on 05.02.1987. No document was ever executed by the defendant no.2 and

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3 in favour of the bank rather all the documents including

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creation of equitable mortgage and guarantee documents were executed by defendant no.1 on the basis of Power

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of Attorney executed in his favour. Defendant no.1 exceeded his power in executing those documents, it was

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never the intents and purpose of the Power of Attorney to

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execute any such type of documents.

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It is further submitted that original Power of Attorney was not filed before the bank rather a xerox copy was filed and Power of Attorney Register maintained

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by the bank cannot be read as primary evidence or

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secondary evidence.

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Learned counsel for the respondents would further submit that equitable mortgage was created on the basis of Settlement Deed executed by Mr. K. Venkannah in the year 1957. At that time separate settlement deedswere

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executed and handed over to all the beneficiaries including defendant no.2 and 3 as well as defendant

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no.1, but the original deeds executed in favour of defendant no.2 and 3 have not been deposited with the

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bank.No equitable mortgage was created in accordance

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with law.

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It is further submitted that admittedly defendant

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no.1 used the Power of Attorney for his own purpose,

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which shows that he exercised the power extended by

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defendant no.2 and 3 for his own benefit. Equitable mortgage was created by defendant no.1 in collusion with

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the bank officers. Learned counsel for the respondents further submits that rate of interest as granted by the learned DRT is against the law. The pendentelite and future interest could not be granted as the same is disproportionate to the facts of the case. Reliance is placed upon the Constitutional Bench Judgement of the Hon’ble Apex Court in Central Bank of India Vs.

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Ravindra & Ors. [(2002)1 SCC 367].

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Admittedly, Original Suit No. 200 of 1987 was filed

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by the State Bank of India, appellant herein, against respondent no. 1, 2 and 3. Respondent no. 2, K Venu,

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died pending suit proceeding and was substituted by legal representatives being respondent no. 5 to 8. Claim in

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the suit was made on the basis of execution of documents for credit facilities granted in favour of defendant no.1 K.S.Bhagawan, principal borrower,along with the guarantor and mortgagor defendant no.2 and 3,

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K Venu and K. Ramakrishna Anand. Different credit

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facilities were granted and were further enhanced, which

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are not in dispute. It is also not in dispute that all the

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documents were executed by defendant no.1 in his own personal capacity as proprietor of M/s. K. Venkannah and as Power of Attorney holder of defendant no.2 and 3. It

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is also not in dispute from the pleadings of the parties that Power of Attorney was executed by defendant no. 2 and 3 in favour of defendant no.1, rather it is admitted by the defendants in the written statements that they executed the Power of Attorney in favour of defendant no.1, who is their brother, but it was not executed for creating any equitable mortgage. It is also not in dispute that a Settlement Deed was executed by the father of defendant no.1, 2 and 3, KotamarthiVenkannah, on 24.04.1957. Settlement Deed along with earlier Deed were deposited by the defendant no.1 with the bank for creation of equitable mortgage. It is also not in dispute that respondent no.1, K.S. Bhagwan, filed affidavit memo

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before the Court of the Subordinate Judge, Kakinada on

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21.11.1987 wherein it is stated that he is submitting

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todecree against himself and prays an order for payment

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of decretal amount. It means that defendant no.1

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accepted the scheme of the bank and it is an admission.

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Now, we have to see as to whether any equitable mortgage was created in favour of the bank by defendant no. 2 and 3 through defendant no.1, Power of Attorney

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holder? There is an impact of the Power of Attorney. It

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is to be seen as to whether defendant no.1 legally executed the documents in favour of the bank as mortgagor and guarantor for and on behalf of defendant no.2 and 3? Plaintiff bank produced Mr. D.V. Bhaskara Rao, Deputy Manager, State Bank of India, Rajahmundry, as witness,PW1, before the Civil Court, who has produced

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following documents :

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A1	10.05.1985	Ancillary agreement executed by D1 in favour of plaintiff bank for Rs4 lakh in respect of cash credit Mundy type limit.
A2	10.05.1985	Ancillary agreement executed by D1 in favour of plaintiff bank for Rs.6 lakh in respect of packing credit limit.
A3	10.05.1985	General agreement executed by D1 in favour of plaintiff bank for Rs.10 lakh
A4	10.05.1985	Guarantee agreement executed by D1 as general power of attorney holder for D2 and 3 for Rs.10 lakh.
A5	24.04.1957	Irrecoverable registered settlement deed executed by K.Venkannah in favour of defendant and 2 others.
A6	29.12.1945	Registered sale deed executed by Vadrevu Viswa Sundara Rao in favour of Kotamarthi Venkanna.
A7	10.10.1955	Supporting documents to document nno.10 title

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		deed.
A8	02.07.1985	Letter executed by D1 in favour of plaintiff bank with regard to confirmation of deposit of title deed.
A9	02.07.1985	Letter from D3 represented by power of attorney holder.
A10	02.07.1985	Letter fromD2 represented by power of attorney holder.
A11	20.05.1986	Supplementary general agreement for Rs.6 lakh and covering the enhanced limit of Rs.16 lakh executed by D1 in favour of bank.
A12	20.05.1986	Ancillary agreement executed by D1 in favour of bank for Rs.9 lakh in r/o packing credit limit
A13	20.05.1986	Ancillary agreement executed by D1 in favour ofbank for Rs.7 lakh in r/o cash credit mundy limit
A14	20.05.1986	Guarantee agreement executed by D1 as general power of attorney holder for d. 2 and 3 for Rs. 16 lakh
A15	20.05.1986	Shipping lien letter executed by D1 in favour of bank for Rs. 9 lakh.
A16	26.05.1986	Letter by D1 addressed to the bank extending the equitable mortgage
A17	26.05.1986	Letter from D2 represented by power of attorney holder extending equitable mortgage
A18	26.05.1986	Letter from D3 represented by power of attorney holder D1 extending the equitable mortgage
A22	23.06.1975	Xerox copy of the general power of attorney executed by D2 in favour of D1
A23	16.01.1969	Xerox copy of the general power of attorney executed by D3 in favour of D1.
A38	15.07.1987	Office copy of legal notice issued by the advocate to the defendant along with postal receipts.
A39		Returned cover from D1
A41	18.07.1987	Acknowledgement from D2
A42	17.07.1987	Acknowledgement from D3

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It is noteworthy to observe at this stage that no witness is produced on behalf of the defendants. Neither defendant no.2 nor defendatn no.3 appear in the witness

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box to challenge the veracity of the documents filed by the bank.

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Power of Attorney was executed by Kotamarti Venu,

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defendant no.2, in favour of defendant no.1, K.S.

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Bhagwan on 23^rd June 1975 while Power of Attorney by

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Kotamarti Ramakrishna Anand was executed in favour of

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defendant no.1 on16^th January, 1969. Both the Power of Attorney are admitted to be executed in the written statement, with only exception that neither it was conferred any power to extend personal guarantee on their behalf for granting any credit facilities in favour of

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respondent no.1 nor Power of Attorney was executed for executing mortgage documents on their behalf in favour of the bank.At this stage it would be appropriate to refer

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the relevant clauses of the Power of Attorney, which are

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as under :

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“General Power of Attorney :

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Know all men by the presents that I, Kotamarti Ramakrishna Anand, son of Sri Venbjannah Garu aged 27 years resident of Jagannaickpur, Kakinada-2, East Godavari Dist. And I RamisettiSitakumari D/o Sri Venkannah Garu and W/o Sri Sitarama Swamy Garu, now resident of Jagannaickpur, Kakinada2, East Godavari Dist., do hereby constitute and appoint Sri K.S.Bhagavan, son of Sri Venkannah Garu, resident of Jagannaickpur, Kakinada-2, our lawful attorneys for us in our name and on our behalf to do and execute all any of the following acts, deeds and things,

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To manage all our properties

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To sell, exchange, surrender lease, dispose or transfer and convey in any manner any of our property and obtain the benefit thereof in such manner as our said attorneys shall think proper.

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To sign and execute all documents for us and in our name and to present them for registration before registrar or subregistrar office and then to admit execution, receive consideration etc. and do all necessary acts in such connection.

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To appear for and represent us before all courts, Registrar or Sub-Registrar, collector or Deputy Collector office, all Revenue offices, Income Tax and Sales tax offices and all other offices.

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To sign, verify and file plaints, written statement, petitions, appeals etc. in any court.

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To appoint constitute on our behalf Advocates, Attorneys whenever our said attorneys shall think proper to do so.

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To compromise, compound or withdraw cases, claims and disputes between us and any other person.

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To demand, sue for, enforce payments of, recover, receive and give proper receipts and discharges for all moneys, debts, goods, securities for money or other property now belonging or hereafter to belong to us.

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To commence, carry on or defend all actions and other proceedings concerning our property or any part thereof or concerning any thing in which we may be a party.

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10.To enter into agreements or contracts and perform all such acts.

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11.To invest any of our moneys in such manner at much rate of interest upon such securities as our said attorneys shall in their absolute discretions think fit, to deposit our moneys or any part thereof with any bank.

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12.To draw endorse, sign any cheques, dividends or interest warrants or other investments payable to us and to sign our name and execute on our behalf all contracts, transfers, assignments, deeds and instruments whatsoever.

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13.To borrow from time to time such sums of moneys and upon such terms as our said attorneys may think fit.

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14.To purchaser to take on lease for us and for our benefit any property whatever as our said attorneys shall think proper.

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15.To appoint and remove at pleasure any substitute or agent under pur said power of attorney in respect of all o r any of the matters aforesaid upon such terms as they our said attorneys shall think fit.

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And generally to do execute and perform any other act deed, matter or thing whatever which in the opinion of our said attorneys ought to be done executed and performed in relation to our property or in or about our concerns enjoyments and business as fully and effectively in all respect as we could do the same as if we were personally present.

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And we hereby agree and undertake to ratify and confirm all and whatever our said attorneys or any substitute or substitutes or agent or agents appointed by them under the power in that behalf herein before contained shall do or purport to do by virtue of this deed.”

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“General Power of Attorney : Know all men by the presents that I, Kotamarti Venu , son of Sri Venbjannah aged 43 years resident of Jagannaickpur, Kakinada-2, East Godavari Dist. And I RamisettiSitakumari D/o Sri Venkannah Garu and W/o Sri Sitarama Swamy Garu, now resident of Jagannaickpur, Kakinada-2, East Godavari Dist., do hereby constitute and appoint Sri K.S.Bhagavan, son of Sri Venkannah Garu, resident of Jagannaickpur, Kakinada-2, our lawful attorneys for us in our name and on our behalf to do and execute all any of the following acts, deeds and things,

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To manage all our properties

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To sell, exchange, surrender lease, dispose or transfer and convey in any manner any of our property and obtain the benefit thereof in such manner as our said attorneys shall think proper. 03. To sign and execute all documents for us and in our name and to present them for registration before registrar or sub-registrar office and then to admit execution, receive consideration etc. and do all necessary acts in such connection.

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04.To appear for and represent us before all courts, Registrar or Sub-Registrar, collector or Deputy Collector office, all Revenue offices, Income Tax and Sales tax offices and all other offices.

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05.To sign, verify and file plaints, written statement, petitions, appeals etc. in any court.

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06.To appoint constitute on our behalf Advocates, Attorneys whenever our said attorneys shall think proper to do so.

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07.To compromise, compound or withdraw cases, claims and disputes between us and any other person.

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08.To demand, sue for, enforce payments of, recover, receive and give proper receipts and discharges for all moneys, debts, goods, securities for money or other property now belonging or hereafter to belong to us.

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09.To commence, carry on or defend all actions and other proceedings concerning our property or any part thereof or concerning any thing in which we may be a party.

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10.To enter into agreements or contracts and perform all such acts.

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11.To invest any of our moneys in such manner at much rate of interest upon such securities as our said attorneys shall in their absolute discretions think fit, to deposit our moneys or any part thereof with any bank.

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12.To draw endorse, sign any cheques, dividends or interest warrants or other investments payable to us and to sign our name and execute on our behalf all contracts, transfers, assignments, deeds and instruments whatsoever.

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13.To borrow from time to time such sums of moneys and upon such terms as our said attorneys may think fit.

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14.To purchaser to take on lease for us and for our benefit any property whatever as our said attorneys shall think proper.

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15.To appoint and remove at pleasure any substitute or agent under pur said power of attorney in respect of all o r any of the matters aforesaid upon such terms as they our said attorneys shall think fit.

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In Suraj Lamp & Industries Pvt. Ltd. Vs. State

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of Haryana &Anr. [(2012) 1 SCC 656] Hon’ble Apex

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Court has held that the Power of Attorney is creation of

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an agency whereby the grantor authorises the grantee to

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do the acts specified therein on behalf of grantor, which

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when executed will be binding on the grantor as if done

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by him. Hon’ble Apex Court has placed reliance upon the

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case of the State of Rajasthan Vs. Basant Nahata

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[(2005) 12 SSC 77] wherein it was held that by reason of

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a deed of Power of Attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage theaffairs of the principal generally conferring necessary authority upon another person. A deed of Power of Attorney is executed by the principal in favour of the agent. The agent derives

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a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A Power of Attorney as is well known, a document of convenience. It was further held that the donee in exercise of his power under such Power of Attorney only

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acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the Power of Attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and donee.

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In P.V.Sankara Kurup Vs. Leelavathy Nambiar

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[AIR 1994 SC 2694] Hon’ble Apex Court has held that

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petitioner is an agent and trustee acted in the fiduciary capacity on behalf of the respondent-plaintiff as general power of attorney.

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In TimbloIrmaos Ltd. Margao Vs. Jorge Anibal

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Matos Sequeira &Anr. [AIR 1977 SCC 734] Hon’ble Apex Court has held that most important factor in interpreting a Power of Attorney is the purpose for which

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it is executed. It is evident that the purpose for which it is executed must appear primarily from the terms of the power of attorney itself and it is only if there is an unresolved problem left by the language of the document, that we need consider the manner in which the words used could be related to the facts and circumstances of the case or the nature or course of dealings. It was further held that the mode of construing a document and the rules to be applied to extract its meaning correctly depend upon not only upon the nature and object but also upon the frame, provisions and

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language of the documents. In cases of uncertainty, the

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rule embodied in Proviso 2 to Section 92 of the Evidence

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Act, which is applicable to contracts, can be invoked.

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In V. Ravikumar Vs. S. Kumar [2025 SCC OnLine SC 513] Hon’ble Apex Court has held that cancellation of Power of Attorney shall have no effect on the

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conveyances made which are clearly on the strength of

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the power conferred upon the appellant.

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In a recent judgement of the Hon’ble Apex Court in M.S. Ananthamurthy&Anr. Vs. J. Manjula etc.

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[2025 SCC OnLine 448] decided on 27.02.2025 it was

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held that relationship between the executant of a general

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Power of Attorney and the holder of the power is one of

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principal and agent. A principal is bound by the acts done by an agent or the contracts made by him on behalf

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of the principal. It was further held that Power of

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Attorney is a creation of an agency by which the grantor/donor/executant authorises the

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grantee/done/holder/attorney to do the acts specified on

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his behalf, which will be binding on the executant as if

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the acts were done by him. Hon’ble Apex Court has

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placed reliance upon Timblo Irmas Ltd (supra) and held

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that words used in a Power of Attorney must be interpreted in the context of the whole, the purpose of the powers conferred must then be examined through the circumstances in which it was executed and finally, necessary powers must be implied.

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On the strength of the case laws, if we examined the Power of Attorney as referred to above, we find that

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a general power was entrusted by the executor in favour

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of the executeeto sell, exchange, surrender lease, dispose or transfer and convey in any manner any of our property and obtain the benefit thereof. Further, it was

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recorded in Para 8 that to demand, sue, enforce payments, recover, receive and give proper receipts and discharges for all moneys, debts, goods, securities for money or other property now belonging or hereafter to

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belong to us.Further, it is found place in the Power of Attorney that purchaser to take on lease for us and for

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our benefit any property whatever as our said attorneys

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shall think proper. Finally, it is recorded to execute and

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perform any other act deed, matter or thing whatever

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which in the opinion of our said attorneys ought to be done executed and performed in relation to our property or in or about our concerns enjoyments and business as

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fully and effectively in all respect as we could do the

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same as if we were personally present.

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A particular paragraph or portion of the Power of Attorney cannot be read in isolation rather it has to be read as a whole. To conclude as to what was conveyed by the executor and what was the intention to convey in favour of the executee. A plain reading of the documents will show that executor of the Power of Attorney empowered the executee to do all the acts including

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transfer or create liability on behalf of the them. Hence, it was an absolute general Power of Attorney.

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Execution of Power of Attorney is neither denied nor disputed. In the written statement no plea is taken

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about the validity of the mortgage. Learned counsel for

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the respondent argued that mortgage was not validly

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created. Secondly, it is further argued that original Power

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of Attorney was not deposited with the bank. Thirdly,

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Settlement Deed which was deposited with the bank was not original one, rather separate Settlement Seeds in favour of the beneficiaries were executed, however,

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original Settlement Deed executed in favour of respondent no.2 and 3 were not deposited. Hence, no valid equitable mortgage was created in favour of the bank.

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Bare perusal of the written statement will show that no such plea has been taken by the defendants in the written statement. It is not pleaded that separate Settlement Deeds were executed in favour of the beneficiaries. Settlement Deeds in favour of defendant

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no. 2 and 3 were individually handed over to them, but they have not deposited to the bank, it is also not stated.

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Law is settled on the issue that fact which is not specifically pleaded cannot be proved by evidence as evidence cannot travel beyond the pleadings as has been

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held by the Hon’ble Apex Court in Manisha Mahendra

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Gala & Ors. Vs. Shalini Bhagwan Avatramani& Ors.

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[(2024) 6 SCC 130].

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There is no pleading made on behalf of defendant no. 2 and 3 that separate Settlement Deeds were executed in favour of five beneficiaries. Hence, this plea cannot be permitted to be raised. Further, even in the cross-examination of bank witness, no such crossexamination was made on this issue.Even no suggestion was given on this issue. Bank witnesses were also not examined on the validity of the mortgage. Settlement Deed in original was deposited along with previous title deed with the bank. Accordingly, equitable mortgage was duly created in favour of the bank.

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PW1, Mr. D.V. Bhaskara Rao, Deputy Manager, State Bank of India, stated that original Power of Attorney was produced before the bank officer and the same was noted down in the Power of Attorney Register maintained in the bank and returned after bank stamp. Xerox copy of the same was kept on record, which was

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duly proved by the witness. There was no cross-

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examination on the issue that the original Power of Attorney was not produced before the concerned bank officer. It is further stated that defendant no.1should reproduce the original power of attorney, but he did not produce the same.

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As far as admissibility of the Power of Attorney is concerned, that is a admitted fact on evidence that defendant no. 2 and 3 executed the Power of Attorney in favour of respondent no.1. It is settled legal proposition

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that admitted fact need not be proved.

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Learned counsel for the respondents has place reliance on the judgement delivered by Hon’ble High Court of Gauhati at Agartala in Bidhan Paul Vs. Paresh Chandra Ghosh [AIR 2002 GAUHATI 46] wherein it was held that a certified copy of a registered deed of Power of Attorney is automatically admissible in evidence having its presumptive value within the meaning of Section 79 of the Evidence Act. Such type of certified copy of any such

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documents can only be put in evidence being secondary

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evidence only, if the pre-conditions embodied u/s 65 of

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the Evidence Act is fulfilled and that is only by formal

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proof. Pre-conditions embodied u/s 65 of the Evidence

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Act has not been fulfilled nor the said exhibit has been admitted in evidence having exhausted mode of formal proof and the said certified copy of the registered deed of Power of Attorney is not admissible nor carried any presumptive value and accordingly the substantial question of law so formulated is answered in the affirmative.

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Above case law is not applicable in the present case.

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In the present case there was no denial about the execution of the Power of Attorney, rather the only challenge is made to the extent of power conferred by the executor to the executee in the Power of Attorney.

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Secondly, bank witness has categorically proved that original Power of Attorney was produced with the bank, noting of the same was entered in the Power of Attorney

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which was duly proved. Hence, the Power of Attorney

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executed by defendant no.2 and 3 in favour of defendant

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no.1 is admissible in evidence.

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Equitable mortgage was created in favour of the bank by the defendant no.1, 2 and 3 through defendant no.1, being Power of Attorney holder. There is no plea in

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the written statement that defendant no.1 had misused the Power of Attorney rather it is stated that defendant

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no.1 was not empowered to create any mortgage regarding the properties of defendant no.1, 2 and 3. As has been discussed earlier that specific power was given to execute all or any of the act, deeds and things by the executor,defendant no.2 and 3. Further, power to enter into any agreement or contract was also given. At the very initial stage in Para 2 general power to sell,

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exchange, surrender, lease, dispose or transfer and convey in any manner of the properties of defendant no.2 and 3 and to obtain the benefit thereof was given. Defendant no.2 and 3 empowered defendant no.1 as their agent. They also agree and undertake to ratify and

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confirm all actions of defendant no.1 through the Power

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of Attorney. Accordingly, the execution of documents for

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creating equitable mortgage by defendant no.2 and 3 in

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favour of the bank is duly proved.

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On the basis of the discussions made above I am of the considered view that learned DRT has erred in recording a finding that defendant no.1 has abused his position as Power of Attorney holder and acted in a way detrimental to the interests of defendant no.2 and 3 for

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his own benefit. Learned DRT has also erred in holding that defendant no.3 and the legal representatives defendant no.5 to 8 of defendant no.2 are not liable to

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pay the debt of the bank and it is further held that valid

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mortgage is not created in favour of the bank.

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As far as rate of interest is concerned, learned DRT

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has granted interest at the rate of 10 per cent simple on the decretal amount including pendente lite and future interest from the date of the plaint till realization or sale

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of mortgaged property belongs to defendant no.1 and hypothecated property, if any available.

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In a recent judgement in Tomorrowland Ltd. Vs.

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Housing & Urban Development Corporation Ltd.

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&Anr. [2025 SCC OnLine SC 309] decided on 13.02.2025

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Hon’ble Apex Court in Para 49 of the judgement has placed reliance upon the Constitution Bench judgement of

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the Hon’ble Apex Court in Central Bank of India Vs. Ravindra & Ors. [(2002) 1 SCC 367] wherein it was

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held that award of interest pendente lite and post-decree

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is discretionary with the Court as it is essentially governed by Section 34 CPC de hors the contract between the parties. In a given case if the Court finds that in the principal sum adjudged on the date of the suit

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the component of interest is disproportionate with the component of the principal sum actually advanced the

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Court may exercise its discretion in awarding interest pendente lite and post-decree interest at a lower rate or

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may even decline awarding such interest. The discretion

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shall be exercised fairly, judiciously and for reasons and

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not in an arbitrary or fanciful manner. Hence, I am of the

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view that learned DRT has exercised its jurisdiction to

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grant interest on the decretal amount.

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On the basis of the discussion made above I am of the view that appeal deserves to be allowed. Impugned judgement and order dated 04.10.2017 passed by

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learned DRT Visakhapatnam is liable to be set aside except the grant of interest.

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Appeal No. 01 of 2018 is allowed. O.A. 519 of 2002

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is allowed with cost for recovery of an amount of Rs.18,38,306.50 from defendant no.1 and 3 as well as

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legal representatives of defendant no.2 i.e. defendant no.

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5 to 8. Defendants are liable to pay simple interest at

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the rate of 10 per cent on the decretal amount from the

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date of plaint till realization of the debt due from the secured assets as has been described in Schedule A, B and C to the plaint. Dismissal of the O.A. against

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defendant no.4 is confirmed.

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File be consigned to record room.

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Copy of the order be supplied to the appellant and the respondents and a copy be also forwarded to the concerned DRT.

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Copy of the judgement/Final Order be uploaded in the Tribunal’s website.

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Order dictated, signed and pronounced by me in the open Court on this the 3rd day of April, 2025.

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