The appellant-purchaser challenged the dismissal of her suit claiming a sale deed was forged to create a dual equitable mortgage. The High Court held that the vendor could not pass title better than she possessed, and the charge traveled with the property. The appeal was dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
[122] IN THE HIGH COURT OF P UNJAB AND HARYANA AT CHANDIG A RH
RSA-180 3 -2024 (O&M) Date of D ecision : 23.08.2024
Kirandee p Kaur …Appellant
versus
Sangeeta Arora and another ….Respondents
Coram : HON’BLE MR. JUSTICE PANKAJ JAIN
Present: Mr. Umesh Aggarwal, Advo c ate for the appellant.
PANKAJ JAIN, J. (ORAL)
[2] For the convenience, parties are hereinafter referred to by t h eir original p ositions in the civil suit i.e. appellant as the plaintiff and the responde n ts as defendants.
[3] Plaintiff filed a suit for de c laration to the effect that the s ale deed dat e d 15.12.1996 bearing stamp p a per Nos.399614, 399615 exec u ted by Jasmi n der Singh in favour of Sangeeta Arora i.e. defendant No.1 a nd predeces s or-in-interest to the plaintiff is f orged, fabricated, void-ab-inito a nd non-est i n the eyes of law and not bindi n g upon the ownership rights of the plaintiff. Further relief sought was f o r granting decree for manda t ory injunctio n directing defendant No.2 to r e cover its outstanding loan am o unt from def e ndant No.1.
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[4] Defendant No.1 is a vendor from whom plaintiff purchased the property i n question. From the facts of t he case, it is discernible and it is a pleaded case of the plaintiff also that de fe ndant No.1 with an intent to c h eat plaintiff a nd defendant No.2, got prepare d two sets of sale deed with res p ect to the sa m e property on the same date fr o m its previous owner. By wa y of one sale d eed, equitable mortgage qua p roperty in question was create d to avail loa n from Punjab and Sind Bank a n d vide sale deed in dispute, sec o nd equitable mortgage from the same prop e rty was created in favour of S o uth Indian B a nk-defendant No.2. It is the c ase of the plaintiff that defen d ant No.1 did not disclose the factum of mort g age created in favour of defen d ant No.2 at t h e time of sale deed, though mo r tgage in favour of Punjab and S ind Bank wa s disclosed. Plaintiff paid the e n tire amount to the Punjab and S ind Bank an d the deeds in question were r eleased. On the above facts, the plaintiff f iled present suit trying to resist recovery at the hands of defen d ant No.2 clai m ing that the sale deed vide wh i ch equitable mortgage was cre a ted in favour of defendant No.2 was forged a n d fabricated sale deed.
[5] Defendant No.1 opted not t o appear and proceeded ex p a rte. Defenda n t No.2 filed written statement c ontesting the suit. It was clai m ed that defe n dant No.1 approached defend a nt No.2 for availing housing l o an. Equitable mortgage was created on 19. 0 1.2007 by depositing original t itle deeds of t he property in dispute.
[6] On the basis of the pleadin g s of the parties, following iss u ed were fra m ed:-
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2. Whether plaintiff is en t itled to mandatory injunction a s prayed for? OPP
3. Whether the suit is not legally maintainable? OPD
4. Whether the plaintiff h a s no locus standi to file the present suit? OPD
5. Whether no cause of a ction has arisen in favour of plaintiff to file the pre s ent suit? OPD
6. Whether the suit is ba d for mis joinder and non joinde r of necessary parties? O PD
7. Whether the plaintiff h a s not come to the court with cl e an hands and suppressed true and material facts, if so i ts effect? OPD
8. Relief. ”
[7] Both the Courts below dis m issed the suit filed by the plain t iff, holding t h at the forgery could not be pro v ed. Hence, this appeal.
[8] Counsel for the appellan t while assailing the impug n ed judgment s submits that the Courts below failed to appreciate the fact tha t on the face o f it, defendant No.1 forged the sale deed under challenge. On the date she p urchased the property, intentio n ally two sale deeds were execu t ed. Both the sale deeds were utilized to a vail the housing loans from t wo different b anks. Defendant No.2-Bank e rred in releasing loan to defen d ant No.1, all o wing her to mortgage the prop e rty despite the same being alre a dy mortgage d with Punjab and Sind Bank. He thus submits that as defen d ant No.2 was not being due diligent, the Cou r ts ought to have decreed t he
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suit filed by the plaintiff as there is no reason to initiate recovery aga i nst plaintiff a s she never availed any loan f rom respondent No.2. He fur t her refers to judgment dated 14.12.2017 pass e d in Civil Suit (CNR No.PBA S 02004365-2012) titled as ‘ Kirandeep Kaur versus Sangeeta Arora and another ’ , which was a suit for perman e nt injunction filed by the plai n tiff seeking restraining of defendant N o .2 from forcibly and illeg a lly disposses s ing the plaintiff except in du e course of law and refers to the findings t o the effect that it has been established that the sale deed on the basis of w hich the property was sold to t h e plaintiff was a genuine sale d eed and the p laintiff was a bona fide purch a ser and further that the plainti f f is admittedl y in possession of the suit prop e rty and her possession is not ill e gal in any m a nner as she has cleared the lo a n which was disclosed to her and paid the entire consideration of the pr o perty over which she is clai m ing absolute r ight. He further submits that t h e aforesaid findings have not been challenged.
[9] I have heard learned cou n sel for the appellant and h ave carefully g one through records of the cas e .
[10] The argument raised by counsel for the appellant is misconce i ved. So far as the title of the a ppeallant in terms of the sale d eed executed by defendant No.1 in her favo u r is concerned, the same is no t in dispute nor is the possession of the pl a intiff in dispute. The questio n is whether p laintiff can resist recovery proc e edings at the hands of defenda n t
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No.2 on t h e basis of equitable mortgage q ua the property in question cre a ted by defen d ant No.1 in favour of defend a nt No.2. The pleaded case of the plaintiff h erself is that her vendor, i.e. defendant No.1, with an inten t to cheat pla i ntiff got prepared two sets of s a le deeds of the suit property on the same dat e from the previous owner and utilized the same to avail hou s ing loan fro m two different banks. Meaning thereby, impliedly plaintiff ad m its that there were two sale deeds executed b y vendor of defendant No.1 for the same pro p erty. Trite it is that the mort g age by deposit of title deeds i s a charge o v er the property itself. Referen c e can be made to Section 58 of the Transfer o f Property Act, 1882 which rea d s as under:-
“58. Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed” defined .— (a) A mortgage is the transfer o f an interest in specific immove a ble property for the purpose o f securing the payment of money a d vanced or to be advanced by wa y of loan, an existing or future debt, or the performance of a n engagement which may give rise t o a pecuniary liability.
The transferor is calle d a mortgagor, the transferee a mortgagee; the principal money and interest of which payment i s secured for the time being are c a lled the mortgage-money, and th e instrument (if any) by which th e transfer is effected is called a mortgage-deed
( b)Simple mortgage . — Where, without deliverin g possession of the mortgaged pro p erty, the mortgagor binds himsel f personally to pay the mortgage - money, and agrees, expressly o r impliedly, that, in the event of his failing to pay according to hi s contract, the mortgagee shall hav e a right to cause the mortgaged
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property to be sold and the proce e ds of sale to be applied, so far a s may be necessary, in payme n t of the mortgage-money, th e transaction is called a simple mo r tgage and the mortgagee a simpl e
mortgagee
( c) Mortgage by conditional sale .— Where, the mortgago r ostensibly sells the mortgaged pr o perty—
on condition that on de f ault of payment of the mortgage - money on a certain date the sale s hall become absolute, or on condition that on s u ch payment being made the sal e shall become void, oron conditio n that on such payment being mad e the buyer shall transfer the prope r ty to the seller, the transaction is calle d mortgage by conditional sale an d the mortgagee a mortgagee by co n ditional sale:
[Provided that no such t r ansaction shall be deemed to be a mortgage, unless the condition i s embodied in the document whic h effects or purports to effect the sa l e.]
( d) Usufructuary mortgage .— Where the mortgago r delivers possessionor expressly o r by implication binds himself t o deliver possession of the mortga g ed property to the mortgagee, an d authorises him to retain such p ossession until payment of th e mortgage-money, and to receive t he rents and profits accruing fro m the propertyor any part of such r e nts and profits and to appropriat e the same in lieu of interest, or i n payment of the mortgage-money, or partly in lieu of interest or p a rtly in payment of the mortgage - money, the transaction is called a n usufructuary mortgage and th e mortgagee an usufructuary mortg a gee.
(e) English mortgage .— Where the mortgagor bind s himself to repay the mortgage - money on a certain date, an d transfers the mortgaged propert y absolutely to the mortgagee, bu t subject to a proviso that he will r e -transfer it to the mortgagor upo n payment of the mortgage-money a s agreed, the transaction is calle d an English mortgage.
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(f) Mortgage by deposit of title-deeds .— Where a person i n any of the following towns, name l y, the towns of Calcutta, Madras, and Bombay, and in any other t own which the State Governmen t concerned may, by notification i n the Official Gazette, specify i n this behalf, delivers to a creditor or his agent documents of title t o immoveable property, with inten t to create a security thereon, th e transaction is called a mortgage b y deposit of title-deeds.
(g) Anomalous mortgage . —A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuar y mortgage, an English mortgage o r a mortgage by deposit of title - deeds within the meaning of thi s section is called an anomalou s mortgage.”
[11] The charge so created trave l s with the property. Section 5 5 of the Transfer of Property Act, 1882 furth e r provides for rights and liabilities of buyer a nd seller, which reads as under:-
“ 55. Rights and liabilities of buyer and seller .— In the absence o f a contract to the contrary, the buyer and the seller of immove a ble property respectively are su bj ect to the liabilities, and have the rights, mentioned in the rules n ext following, or such of them as are applicable to the property sold : —
(1) The seller is bound—
(a) to disclose to t h e buyer any material defect in the property or in the seller’s title thereto of which the seller is, an d the buyer is not, aware, and whi c h the buyer could not with ordi n ary care discover;
(b) to produce to the buyer on his request for examina t ion all documents of title relatin g to the property which are in the seller’s possession or power;
(c) to answer to the best of his information all rele v ant questions put to him by the b u yer in respect to the property or the title thereto;
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(d) on payment or t e nder of the amount due in respe c t of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place; (e) between the da t e of the contract of sale and the delivery of the property, to tak e as much care of the property an d all documents of title relating the r eto which are in his possession a s an owner of ordinary prudence would take of such property and documents;
(f) to give, on being s o required, the buyer, or such pe r son as he directs, such possession of the property as its nature admits ; (g) to pay all publi c charges and rent accrued du e in respect of the property up to t h e date of the sale, the interest o n all encumbrances on such propert y due on such date, and, except w h ere the property is sold subject to encumbrances, to discharge all encumbrances on the property t hen existing.
(2) The seller shall be dee m ed to contract with the buyer that the interest which the seller prof e sses to transfer to the buyer sub s ists and that he has power to trans f er the same: Provided that, where the sale is made by a person in a fiduc i ary character, he shall be deeme d to contract with the buyer that the seller has done no act whe r eby the property is encumbere d or whereby he is hindered from tr a nsferring it. The benefit of the contract mentioned in this rule shall be annexe d to, and shall go with, the interest of the transferee as such, and ma y be enforced by every person in w hom that interest is for the whol e or any part thereof from time to ti m e vested. (3) Where the whole of the p urchase-money has been paid to the seller, he is also bound to deli v er to the buyer all documents of t itle relating to the property whi c h are in the seller’s possessio n or power:
Provided that, (a) whe r e the seller retains any part of the property comprised in such do c uments, he is entitled to retain the m
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all, and, (b) where the whole of such property is sold to diffe r ent buyers, the buye of the lot o f greatest value is entitled to s uch documents. But in case (a) the s eller, and in case (b) the buyer, o f the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other b uyers, as the case may be, and at the cost of the person making the request, to produce the said docum e nts and furnish such true copies t h ereof or extracts therefrom as he m ay require; and in the meantime, the seller, or the buyer of the l o t of greatest value, as the case m a y be, shall keep the said docum e nts safe, uncancelled and undefac e d, unless prevented from so doin g by fire or other inevitable acciden t .
(4) The seller is entitled —
(a) to the rents and profits of the property till the ownership thereof passe s to the buyer;
(b) where the ownership of the property has pa s sed to the buyer before pa y ment of the whole of the purch a semoney, to a charge upon the property in the hands o f the buyer,any transferee wi t hout consideration or any transf e ree with notice of the n o n-payment, for the amount of the purchase-money, or an y part thereof remaining unpaid, and for interest on such amount or part from the date on w h ich possession has been del i vered.
(5)The buyer is b o und—
(a) to dis c lose to the seller any fact as to the nature or extent of th e seller’s interest in the propert y of which the buyer is aw a re, but of which he has reaso n to believe that the seller is not aware, and which materially increases the value of s u ch interest;
(b) to pay or tender, at the time and plac e of completing the sale, the purchase-money to the seller or s uch person as he directs: pr o vided that, where the property is s old free from encumbranc e s, the buyer may retain out of the purchase-money the am o unt of any encumbrances on the
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property existing at th e date of the sale, and shall pay the amount so retained to the persons entitled thereto;
(c) where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or d ecrease in value of the property not caused by the seller;
(d) where the ownership of the property has passed to the buyer, as b etween himself and the seller, to p ay all public charges and rent which may become payabl e in respect of the propert y , the principal moneys due on any encumbrances subject t o which the property is sold, and the interest thereon afterwa r ds accruing due. (6) The buyer is entitled—
(a) where the owner s hip of the property has passed to h im, to the benefit of any im p rovement in, or increase in valu e of, the property, and to the r ents and profits thereof; (b) unless he has im p roperly declined to accept delive ry of the property, to a charg e on the property, as against the s e ller and all persons claim i ng under him, to the extent of the seller’s interest in th e property, for the amount of any purchase-money proper l y paid by the buyer in anticipatio n of the delivery and for in t erest on such amount; and, whe n he properly declines to ac c ept the delivery, also for the ear n est (if any) and for the cos t s (if any) awarded to him of a su i t to compel specific perfor m ance of the contract or to obta i n a decree for its rescission.
An omission to m a ke such disclosures as are menti o ned in this section, paragra p h (1), clause (a), and paragraph (5), clause (a), is fraudulent.”
[12] The buyer, when purchases the property also succeeds to the liability along with the property. Thus, t he issue is whether plainti f f-
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appellant can claim to have purchased a property free from encumbr a nce when the same was already encumbered w ith respondent No.2.
[13] It is basic principle of law th a t a vendor cannot pass a title b e tter than ves t ed in him. In the hands of d efendant No.1, the property w as encumbe r ed by creating equitable mort g age in favour of defendant N o .2, thus plai n tiff may have a right to agitag e against defendant No.1, clai m ing that she w as conned by defendant No. 1 but so far as defendant No. 2 is concerne d , in view of the pleadings raise d in the plaint by the plaintiff th a t it is defend a nt No.1 who got executed two sale deeds and created mortgag e in favour o f defendant No.2, no fault can be found with the findings recor d ed by the C o urts below.
[14] In view of the above, the pre s ent appeal is dismissed . [15] Pending application(s), if an y , also stands disposed off .
(PANKAJ JAIN) JUDGE
23.08.20 2 4
‘R. Sharma'
Whether speaking/ reasoned : Yes/No Whether reportable : Yes/No
RAJNEESH SHARMA 2024.09.19 23:59 I attest to the accuracy and integrity of this document
1 issue framed by the court
Whether the plaintiff can resist recovery proceedings based on an equitable mortgage created by the vendor in favour of the bank?
2 provisions across 1 enactments
Kirandeep Kaur
Sangeeta Arora
another
Pankaj Jain
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
