Dismissed

State Bank of India v. Prathyusha Resources Infra Pvt. Ltd.

DRT26 Mar 2026TA/451/2023

Case brief

AI extract

What is this about?

In an IA seeking return of title deeds deposited as security by a co-defendant, the Tribunal held the petition premature. The bank asserted an equitable mortgage; substantive disputes on possession and title should be resolved at final hearing. The plea was also barred by res judicata as previously dismissed.

What did the court decide?

Return of original documents (Exhibits A-43 & A-44) denied; Application dismissed as premature.

State Bank of India versus Prathyusha Resources Infra Pvt. Ltd. — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 26^th day of March, 2026

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PRESENT: SHRI SHARANG DHAR UPADHYAY

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Presiding Officer

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IA No.40 of 2025 In

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TA No.451 of 2023

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B. Masthan Rao D. No.6, Royal Enclave Besant Avenue, Adyar Chennai – 600 020

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…Petitioner / 13^th defendant

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Versus

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State Bank of India Stressed Assets Management Branch Rep. by its Assistant General Manager No.32, 2^nd Floor, Red Cross Buildings Red Cross Road, Egmore Chennai – 600 008 …1^st Respondent / Applicant Bank

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Prathyusha Resources & Infra Pvt. Ltd. (Formerly Prathyusha Associates Shipping Pvt. Ltd.) Having Corporate Office at Umaiyal Villa, 3^rd Floor, Door No. Old No.18, New No.8 12^th Cross Street, Indira Nagar, Adyar Chennai – 600 020 …2^nd Respondent / 1^st defendant

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ORDER

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This Interlocutory Application has been filed by the Petitioner / 13^th defendant praying to direct the Registry to return the documents Exhibits A-43 and A-44 relating to the properties set out as Item

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No.8 and 9 in Schedule ‘B’ to the petitioner / 13^th defendant.

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Averments in the application by Petitioners / Applicants

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The petitioner is neither a borrower nor guarantor nor security provider in respect of the alleged debt claimed by the 1^st Respondent / Applicant Bank from the 2^nd Respondent / 1^st defendant. It is stated that the petitioner has been wrongly arrayed as a defendant. It is also stated that the petitioner neither executed any guarantee, Memorandum of Deposit of Title deeds nor have deposited any title deeds in favour of the 1^st Respondent bank in respect of the properties more fully described as Item Nos. 8 and 9 of Schedule ‘B’ to the TA. The petitioner never created any mortgage as gave any security for the credit facility availed by the 2^nd Respondent / 1^st defendant.

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It is stated that the 1^st respondent bank claimed for attachment of the said property on the basis of an implied guarantee and deemed mortgage which is not sustainable either in law or on facts. The petitioner never guaranteed the 2^nd Respondent’s debt nor created any security over his properties which are set out as Item Nos. 8 and 9 in Schedule ‘B’ to the TA. The 2^nd Respondent is fully aware about this fact and has wrongly misused the title deeds of the petitioner’s property.

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During 2019, as the OA was at the final stage of arguments, the petitioner filed IA No.471/2019 seeking for return of his title deeds, however, the Tribunal by order dated 22.9.2023 dismissed the said IA on the ground that the TA had to be decided before directing return of the documents and that the IA was premature.

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The 1^st respondent thereafter filed additional document being extract of Equitable Mortgage (EM) Register, to contend that the petitioner had deposited the title deeds. The petitioner therefore filed IA No.434/2024 and 435/2024 to disclose the names of the signatories of the EM register and to cross examine them. The 1^st respondent filed its counter disclosing the names of three signatories and alleged that the first one of them is deceased.

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The EM Register extract is an internal documents of the 1^st respondent bank and there is no signature of the petitioner or any proof that he had either visited the bank or deposited the title deeds. Such register is not binding on the petitioner and had no evidentiary value.

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The 1^st respondent failed to establish any valid basis to proceed against the property or retain the Exhibits A-43 and A-44 and there is no likelihood of the bank succeeding against the petitioner based on the pleadings, proof affidavit and documents relied upon by it.

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It is stated that the earlier IA No.471 of 2019 was dismissed only on the ground that as the OA had not been adjudicated, the IA was premature. Even after giving time the 1^st Respondent bank failed to produce any valid evidence to prove that the petitioner has created the mortgage. Considering the final hearing being delayed due to multiple applications being filed by the 1^st Respondent and there is no bar to seek the said relief at this stage, especially when the entire case of the 1^st Respondent against the petitioner has been fully disclosed and there is nothing more which the 1^st Respondent can add to it.

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It is also stated that the 1^st respondent is fully aware that the petitioner neither executed any guarantee nor deposited the title deeds of the properties referred supra and it has also been unable to produce even an iota of evidence against the petitioner to the contrary. In such circumstances, the bank has no right to retain the title deeds or proceed against the said properties. It is stated that neither the 1^st Respondent nor the 2^nd Respondent is entitled to the said property or the documents and the said documents are to be returned to the petitioner.

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It is stated that as the 1^st Respondent / Applicant Bank has filed the original documents in this Tribunal, the registry of this Tribunal be directed to return the same to the Petitioner / 13^th defendant.

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Counter filed by 1^st Respondent Bank

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The OA was filed for recovery of a sum of Rs.88,16,76,422/- against the defendants 1 to 13 along with future interest. The 13^th defendant is the mortgagor / guarantor to the loan availed by the 1^st defendant. The applicant had filed Proof Affidavit on 30.5.2018 along with Exhibits A-1 to A-73. At this juncture the Petitioner / 13^th defendant had filed the above application for return of the original documents claiming that he is neither borrower nor a guarantor. The said application is wholly frivolous and not maintainable either in law or on facts and is liable to be dismissed in limini.

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The preliminary objection of the respondent is that all the parties / defendants 2 to 12 in above OA have not been arrayed as party respondents in the IA. The defendants 2 to 12 are to be added as necessary parties, as the 1^st Respondent was sold as a going concern by the Liquidator, NCLT in December 2023 and to adjudicate the above application as the presence of the said parties are deemed necessary.

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It is stated that in the above loan accounts, the property belonging to the 2^nd defendant i.e., Sri. P. Raja Rao situated at II Floor of commercial building (under construction) of area 42,121.04 sq. ft. on land in SF Nos.11, 128/AA, 129, 116 an 117 in Nanakram Gua

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Village, Serilingampallly Mandal, RR District was initially mortgage in favour of the bank on 26.03.2011 for the loans availed. Subsequently the same was released on 15.02.2012 on the condition that the 2^nd defendant will provide alternate security and towards this the 2^nd defendant affirmed its intent to create an additional security for the loans availed and had agreed to provide additional security vide the Board Resolution dated 02.09.2013. Accordingly, the petitioner herein by way of deposit of original title deeds mortgaged the same with this respondent. The said properties stand in the name of the 13^th defendant and are marked as Ex. A-43 and A-44.

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The averment to the effect that the petitioner / 13^th defendant has been considered on the basis of only implied guarantee and deemed mortgagor is denied. The original title deeds of the aforesaid property were handed over to this Respondent with an intent to create equitable mortgage over the same as alternate additional security by the 2^nd respondent / 1^st defendant and based that this respondent proceeded to create equitable mortgage dated 15.10.2013 over the said properties. The petitioner cannot be allowed to wriggle out merely on the ground that no registered mortgage was created. The averment that the bank has wrongly misused the title deeds of the properties of the petitioner is wholly denied as false and frivolous.

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In Para 5 it is stated that the respondent has not produced valid evidence of mortgage as against the petitioner herein, from which it transpires that the petitioner failed to cooperate and did not come forward to register the MoD of the said title deeds in favour of the bank and hence the 13^th defendant has been arrayed as a party in this case.

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It is rather unfortunate that the petitioner has now chosen to come with the defence of a misleading statement and that having not executed any guarantee agreement nor deposited the title deeds for loan availed by the 2^nd Respondent. The 1^st Respondent stands by its version of events and asserts that where there is a clear intention of the Petitioner / 13^th defendant to create a mortgage despite the lacuna in document, an implied mortgage comes into existence given the intention of the parties. By the implied conduct of the Petitioner / 13^th defendant it is clear that he had agreed to be a mortgagor for the respective properties vide Item Nos. 8 and 9 of Schedule ‘B’ to the TA. Thus he is a mortgagor by conduct.

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The 1^st Respondent has filed equitable mortgage dated 15.10.2013 as additional documents and the same was allowed by this Tribunal vide its order dated 22.9.2023. This respondent has also filed Board Resolution dated 02.09.2013 as additional documents vide IA No.1073 & 1074 of 2023 and the same is pending orders before this

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Tribunal. The petitioner is aware of the fact that his properties are given only for the purpose of creating additional security and thereafter with intention to create mortgage for the loan availed by 2^nd respondent / 1^st defendant on releasing the earlier mortgaged property belonging to 2^nd defendant in TA No.451/2023 i.e., Shri P. Raja Rao.

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The present application is not maintainable on law and fact and hit by Res Judicata as the petitioner had filed a similar application vide IA No.471 of 2019 and the same was dismissed by the Tribunal vide order dated 22.09.2023. The application is liable to be dismissed with costs.

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Point for consideration

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Upon hearing the parties and on perusal of the records the following points arise for consideration:-

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(a) Whether the Petitioner is entitled to return of original documents (Exhibits A-43 & A-44) at this stage?

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(b) Whether the present application is barred by principles analogous to res judicata or otherwise not maintainable?

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(d) To what relief, if any, the Petitioner is entitled?

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Answers to the Points for consideration

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In so far as the Point (a) regarding entitlement for return of documents, it is seen that the core contention of the Petitioner is that no mortgage has been created and therefore the Bank cannot retain the original title deeds. On the other hand, the 1^st Respondent Bank asserts that the title deeds were deposited with intent to create an equitable mortgage and relies upon documentary materials in support of the same. The issues relating to existence of deposit of title deeds, intention to create security, and status of the Petitioner as a mortgagor, are all substantive and disputed questions of fact which can be adjudicated only upon full consideration of pleadings, evidence, and trial in the main T.A. At this interlocutory stage, no conclusive finding can be rendered on these aspects. Granting return of documents at this stage would prejudice the case of the 1^st Respondent Bank and would amount to pre-judging the issues involved in the main proceedings. Accordingly, the Petitioner is not entitled to return of the documents at this stage. This point is answered against the Petitioner.

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In so far as Point (b) is concerned, it is not in dispute that an earlier application in I.A. No.471 of 2019 filed by the Petitioner seeking similar relief was dismissed by this Tribunal on 22.09.2023 on the ground that the application was premature. Though the said dismissal was not on merits, the reasoning therein clearly indicates that the issue of return of documents is intrinsically linked with the final adjudication of the T.A. In the absence of any substantial change in circumstances, the present application seeking the same relief at this stage is not maintainable. This point is answered against the Petitioner.

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In so far as Point (c) is concerned, it is to be stated that the documents sought to be returned (Exhibits A-43 & A-44) are relied upon by the 1^st Respondent Bank in support of its claim of equitable mortgage. These documents form part of the evidentiary record and are necessary for proper and effective adjudication of the issues involved in the T.A. Hence, their retention on the file of this Tribunal is justified till final disposal of the matter. This point is answered in favour of the 1st Respondent Bank.

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In so far as Point (d) is concerned, it is to be stated that in view of the findings recorded on the above points, the Petitioner is not entitled to the relief sought in the present application.

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24. Accordingly, the following:

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ORDER

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The Interlocutory Application is dismissed as premature . No order

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as to costs.

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Sd/(SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II CHENNAI

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 26^th day of March, 2026)

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State Bank of India v. Prathyusha Resources Infra Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

State Bank of India v. Prathyusha Resources Infra Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

All orders in this case

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