Allowed

Central Bank Of India v. Pals Aqua Products

DRAT17 Mar 2025REGULAR APPEAL/60/2017

Case brief

AI extract

What is this about?

The DRTA allowed the bank's appeal, setting aside the lower court's order that denied mortgage relief. The Tribunal found original title deeds were validly deposited, re-establishing the mortgage. The recovery application was allowed in its entirety with interest at 14% and authority to sell properties in Schedules 'A' and 'B'.

What did the court decide?

Appeal allowed in toto. OA set aside and allowed for recovery of Rs. 14,33,191 with 14% p.a. interest. Bank entitled to sell properties in Schedules 'A' and 'B'.

Central Bank Of India versus Pals Aqua Products — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the17^th March, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan

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CHAIRPERSON

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RA60/2017

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(O.A No. 116/2007 on the file of DRT-I, Chennai)

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Between

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Central Bank of India, Rep. by its Senior Manager, Anna Nagar Branch, AC-10, II- Avenue, Anna Nagar West,

Chennai – 600 040.

…… Appellant

And

M/s. Pals Aqua Products,

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No. 5, Gopal Street, T. Nagar,

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Chennai – 600 017.

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R.M. Palaniappan

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Proprietor, Pals Aqua Products, F-2, First Floor, Sakthi Ganesh Apartments, 6/42, Sakthi Vinayagar Koil Street, Vinayagapuram, Ambattur, Chennai – 600 053.

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Saroja

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“ Mahalakshmi Illam”

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Old No. 28, New No. 34, 35 Vetrivel Street, Kamaraj Nagar, Red Hills Chennai – 600 052.

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……Respondent

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Counsel for Appellant : Mr. B. Thilak Narayanan for M/s. T. M. Harihara Counsel for R.3 : Ms. K. Sudha for M/s. G. desingu

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ORDER

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This Appeal is filed against the order passed in OA

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116/2007 by Learned Presiding Officer, DRT-I, Chennai, on 14.07.2015.

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The Applicant Bank filed this OA against the Defendants 1 to 3, for recovery of a sum of Rs.14,33,191/together with interest at 14% p.a. with monthly rests, jointly and severally, from the date of OA till the date of recovery; also for the relief of sale of properties, costs etc.

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2.1 Learned Presiding Officer had partly allowed the OA holding that the Applicant Bank is entitled to recover a sum of Rs.14,33,191/- from the Defendants, jointly and severally, together with interest at 12% p.a. (simple) from the date of OA till the date of realization together with costs. He further ordered for sale of the properties described in Schedule ‘B’ to OA, in case of default in making payments by the Defendants and made Defendants 2 and 3 personally liable

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for the amount due, in case the sale proceeds are not found sufficient to cover the amount due. When it comes to ‘A’ Schedule property mortgaged by the Respondent No.3 to secure the loan, Learned Presiding Officer found that the Applicant Bank is not entitled to proceed against this property. Challenging the order disallowing the Bank’s right to proceed against the property mentioned in Schedule ‘A’ to the OA and reduction of interest, this Appeal is filed by the Bank.

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Learned Counsel for the Appellant Bank submitted that the order allowing OA in part and denying the right to proceed against the property mentioned in Schedule ‘A’ to OA and reduction of interest is against the evidence and law. Respondent No.3 had produced her original documents of title for creation of mortgage by deposit of title deed and executed Guarantee Deed. The relevant documents had been produced before the Tribunal below, but, without properly considering the evidence produced, the impugned order was passed, therefore, this Appeal has been filed.

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In reply, Learned Counsel for Respondent No.3 submitted that Respondent No.2 approached through one Mr. Chandran for sale or mortgage of her immovable property bearing old No. 28, new Nos. 34 and 35, Vetrivel Street, Kamaraj Nagar, Red Hills, Chennai -52. This property was already mortgaged with M/s. Sriman Madhwa Sidhanta Onnahini Permanent Nidhi Ltd., Triplicane. Therefore, Respondent No.3 had produced the xerox copy of the documents relating to this property to the Respondent No.2. Respondent No.2 took her to Anna Nagar and obtained signature in various printed forms including the postal inland letter under the guise of arranging to sell or mortgage her property. Respondent No.3 never deposited the title deeds of her property. She never intended to create equitable mortgage by deposit of title deeds. As earlier stated, the original documents were already given to M/s. Sriman Madhwa Sidhanta Onnahini Permanent Nidhi Ltd.

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4.1 Learned Counsel for Respondent No.3 further submitted that Learned Presiding Officer rightly found that the Respondent No.3 had not produced the original title deeds for creation of mortgage for deposit of title deeds, and thus, denied the relief in so far as the sale of the property described in Schedule ‘A’ to the OA, was concerned. Thus, she prayed for confirmation of order of Learned Presiding Officer and for dismissal of this Appeal.

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Considered the rival submissions and perused the records.

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When the matter was heard on 27.02.2025, Learned Counsel for Appellant Bank submitted that the borrower had cheated the Bank by producing colour xerox of the original documents of title. In the said circumstance, this Tribunal directed the Registry to call for the original documents produced before the Tribunal below. Accordingly, the original documents had been produced.

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6.1 The perusal of the original documents produced before DRT shows that the original sale deed in favour of Respondent No.3 dated 25.06.1983 executed by one S. Thangavel, was produced before the Tribunal, and now produced before this Appellate Tribunal for perusal. It is not known how Learned Counsel for Appellant Bank submitted that the borrower had cheated the Bank by producing the colour xerox of the original sale deed.

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6.2 The perusal of the original documents, especially, Exhibit A5, Guarantee Deed dated 29.11.2003, shows that the Respondent No.3 had executed Form of Guarantee for Advances and Credits Generally, on 29.11.2003 for sanctioning loan in favour of Respondents 1 and 2. Both Respondent No.3 and borrowers, Respondents 1 and 2, had executed Exhibit A4, Text of the Consent Clause to be included in the loan documents to be executed by guarantors. There is an Inland letter dated 01.12.2003

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marked as Exhibit A7 to show that Respondent No.3 has sent this letter indicating deposit of documents of title for creating security interest. Apart from sale deed in favour of Respondent No.3, Patta, House Tax Receipt, Encumbrance Certificate and Building Plan are marked as Exhibits A16 to A22. These documents have been produced by Respondent No.3 along with her original sale deed for creation of mortgage by deposit of title deeds.

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6.3 When it is claimed by Respondent No.3 that Respondent No.3 had already mortgaged the property by depositing the aforesaid documents with M/s. Sriman Madhwa Sidhanta Onnahini Permanent Nidhi Ltd., it appears that she has not produced any evidence in support of this case. The original sale deed was produced before the Tribunal below, and it is also produced before this Appellate Tribunal now, therefore, it is not known how the Learned Presiding Officer, DRT, recorded a finding that Respondent No.3 handed over only copy of documents and original title

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deeds were not deposited with the Applicant Bank, and

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therefore, the mortgage created by Respondent No.3 is not valid. This finding of the Tribunal apparently goes against the evidence available, and therefore, this finding has to necessarily be set aside, and accordingly, set aside. Respondent No.3 validly created the mortgage by deposit of title deeds by depositing her original title deeds, executed guarantee deed, and therefore, the Appellant Bank is entitled to proceed against the mortgaged property described in Schedule ‘A’ to the OA as well, for recovery of loan amount due.

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In the said circumstances, the order disallowing the right to proceed against property mentioned in Schedule ‘A’ to the OA and reducing the interest rate from 14% p.a. with monthly rests to 12% p.a. (simple) are set aside, and the OA is allowed in toto . That is, the Appellant Bank is entitled to recover a sum of Rs.14,33,191/- from the Defendants 1 to 3, jointly and severally, together with interest at 14% p.a., with monthly rests, from the date of OA till the date of realization, with right to proceed against the properties described in

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Schedules ‘A’ and “B’ to OA, for realizing the loan amount

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due to it.

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In the result, the Appeal in R.A:60/2017 is allowed with costs of the Appellant Bank. All pending IAs, if any,

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stand closed.

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(Dictated to Athistamani, PS, in open Court, transcribed by her, corrected and signed by me, this17^th March, 2025)

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[ Justice G. Chandrasekharan] CHAIRPERSON

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Central Bank Of India v. Pals Aqua Products

Case brief

What is this about?

What did the court decide?

Central Bank Of India v. Pals Aqua Products

Case brief

What is this about?

What did the court decide?

What the court decided

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