Allowed

Bank of India v. M S S M Enterprises

DRAT19 Jun 2025REGULAR APPEAL/32/2024

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed the appeal against a Debts Recovery Tribunal order. The Tribunal modified the lower court decision to validate an equitable mortgage created by a deceased guarantor, accepting a family member certificate from a competent Tahsildar authority as sufficient proof of heirship, thus allowing the bank to realize dues from the specific property.

What did the court decide?

The impugned judgment and order dated 30.01.2024 modified to allow the OA claim against OA Schedule-B immovable property, entitling the Appellant Bank to realize its dues from the property.

Bank of India versus M S S M Enterprises — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA (CAMP AT DRT, HYDERABAD)

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THE HON'BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Regular Appeal No.32 of 2024

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(Arising out of OA No.456/2017 of DRT-2, Hyderabad)

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Bank of India Hyderabad Asset Recovery Branch PTI Building, A.C. Guards Hyderabad. Rep. by its CA.

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…….Appellant

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-Versus-

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M/s. S.M. Enterprises

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Plot No.8, Road No.1 Vivekanandanagar

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Kukatpally, Hyderabad-72.

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Mr. Maddala Ramesh Reddy 8-2-601/B/22, Road No.10 Banjara Hills, Hyderabad-34.

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Mrs. Namratha Dayal W/o.V.Nagesh Dayal H. No. 14-150

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Sriram Nagar Colony

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Patancheru, Hyderabad-81.

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Mr.N.Sai Prakash Dayal S/o. Late V.Nagesh Dayal H. No. 14-150 Sriram Nagar Colony Patancheru, Hyderabad-81.

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Ms.N.Priyanaka Dayal D/o. Late V.Nagesh Dayal H. No. 14-150 Sriram Nagar Colony Patancheru, Hyderabad-81.

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J. Harikrishna Plot No.659, Vivekanadnagar Kukatpally, Hyderabad-72. ………Respondents

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Counsel for the Appellant … Ms. Anindita Das (through virtual mode)

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Counsel for Respondent No. 2 … Mr.Debasish Chakraborty (through virtual mode)

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Counsel for Respondent Nos. 1, 3, 4, 5 & 6 … None

19^TH JUNE, 2025

JUDGMENT

The Appellate Tribunal :

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I have heard learned counsel for the Appellant Bank as well as learned counsel for Respondent No.2 and perused the record.

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Despite service of notice, other Respondents are not represented.

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Instant appeal has arisen against the Judgment and Order dated 30.01.2024 passed by Learned DRT-2, Hyderabad in OA No.456 of 2017 (old No.745 of 2016 of DRT-1, Hyderabad) whereby the learned DRT allowed the OA against defendants 1 to 4 holding that they are jointly and severally liable to pay to the applicant bank an amount of Rs.3,27,73,695.78 ps with future interest @12% p.a. simple pendete lite and future. Further it was directed that the OA claim is secured by way of equitable mortgage of OA Schedule-A immovable property and applicant bank is entitled to proceed against the same to realize its debt. Bank is also entitled to proceed against the person and properties of defendants 1 to 4 to realize its dues. However, OA claim against Schedule-B immovable property was dismissed. Feeling aggrieved by this finding, Appellant Bank preferred the Appeal.

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Facts in respect of the disputed claim are that Defendant No.1 is the partnership firm, respondents 2 and 3 are it partners who availed a cash credit loan of Rs.2.40 crores vide sanction letter dated 22.07.2013. Necessary documents were executed. Respondent No.4 is the guarantor of the loan and Deed of Guarantee was also executed. Defendant No.3 V. Nagesh Dayal who is now represented through his legal heirs i.e., Respondents 4, 5 and 6 in the Appeal, created an equitable mortgage by deposit of title deeds. Account became irregular, it was also classified as NPA on 29.07.2015. Demand Notice dated 30.07.2015 was issued and possession notice was issued on 20.04.2016. Legal notices were also issued to the Defendants but the amount was not paid and accordingly OA was filed.

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In the OA proceedings, Defendant Nos.1 and 2 put in their appearance and filed the written statement wherein it was stated that the OA was barred by limitation, Bank charged interest contrary to terms of the agreement, Bank obtained signatures on blank forms, details of Schedule-B property were not properly described and mortgage created by Defendant No.3 was not valid.

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Defendant Nos.3 and 4 did not put in appearance before learned DRT and accordingly they were set ex parte . Learned DRT framed the following issue for determination:-

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“11. The point that arises for consideration is:-

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Whether the Applicant Bank has proved the OA claim against the defendants and the OA schedule movable and immovable properties?”

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After going through the evidence led by the parties, learned DRT passed the impugned order. It was held that the Defendant No.3 had no right over the property without obtaining legal heir certificate through court proceedings and the mortgage created by Defendant No.3 should not have been accepted. Accordingly on this count, OA claim against Schedule-B property was dismissed.

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Learned counsel for the Appellant Bank submits that the equitable mortgage was duly created by V. Nagesh Dayal who was the son of P. Vidya Ratan Dayal. Memorandum of Deposit of Title Deeds was executed and learned DRT erred in recording a finding in respect of Schedule-B property. Learned counsel for the Bank further submits that OA schedule-B property has already been sold under the SARFAESI proceedings.

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Learned counsel for the Respondent No.2 submits that a settlement has been arrived with the Bank but the Respondent No.2, as far as the Appeal is concerned, did not contest the same.

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As far as equitable mortgage created by V. Nagesh Dayal is concerned, he was Defendant No.3 in the OA proceedings. He was the son of P. Vidyaratan Dayal who died on 31.03.2008 and a family member certificate was obtained from the Tahsildar, Patancheru Mandal on 27.06.2008 wherein V. Nagesh Dayal was shown as the only family member being son of P. Vidya Ratan Dayal. The death certificate of P. Vidya Ratan Dayal is also on record. It shows that he died on 31.03.2008. Memorandum of Deposit of Title Deeds was duly executed by V. Nagesh Dayal in favour of the Bank on 27.07.2013 wherein title deed being Document No.2828 of 1999 dated 09.07.1999 registered with SRO, Sangareddy was deposited by V. Nagesh Dayal. Learned DRT erred in recording a finding that a certificate of family members should have been obtained from the Civil Court rather when the family member certificate was obtained from a competent authority of the office of Tahsildar, Patanchru Mandal, which is not in dispute, the same is admissible in evidence. Equitable mortgage was duly created by V.Nagesh Dayal which fact is not disputed by him by putting appearance before the Tribunal. Accordingly I am of the considered view that learned DRT erred in dismissing the OA claim against OA schedule-B property. Appeal deserves to be allowed and is allowed.

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O R D E R

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Appeal is allowed. The impugned judgment and order dated 30.01.2024 is modified to the extent that claim against OA schedule-B property is also allowed. Appellant Bank would be at liberty to realize its dues from the OA schedule-B property.

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Interlocutory Applications pending if any, shall stand disposed of.

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Copy of the order be supplied to Appellant Bank and the Respondents and a copy also be forwarded to the concerned DRT and uploaded in the official website.

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File be consigned to Record room.

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Order dictated and pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson

Bank of India v. M S S M Enterprises

Case brief

What is this about?

What did the court decide?

Bank of India v. M S S M Enterprises

Case brief

What is this about?

What did the court decide?

What the court decided

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