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2020 DIGILAW 178 (ORI)

Suprava Nayak v. HDFC Bank Ltd.

2020-09-23

BIBHU PRASAD ROUTRAY, S.K.MISHRA

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JUDGMENT : Bibhu Prasad Routray, J. 1. This writ petition has been filed by the petitioner with a prayer for issuance of a writ of certiorari to set aside the judgment and order dated 05.02.2019 (Annexure-4) passed by the learned Debts Recovery Appellate Tribunal, Kolkata in Appeal No. 121 of 2018, whereby the order dated 10.05.2018 passed by the Debts Recovery Tribunal, Cuttack in SA No. 01 of 2017 has been set aside. 2. The factual aspects of the case, as per the petitioner, in brief are that the petitioner is a bona fide purchaser of a piece of land measuring Ac. 0.073 dec. in plot No. 57 under Khata No. 1003 of Mouza Bhubaneswar Sahar Unit 35, Badagada (hereinafter called as the 'secured asset'). She purchased the same from one Khirod Pattnaik, Opp. Party No. 5 herein, by executing a sale deed dated 19.03.2010 (Annexure-2) upon payment of a consideration amount of Rs. 7,25,000/- (seven lakhs twenty five thousand), in pursuance to the agreement for sale, between them dated 22.11.2006. After purchasing the said land, she constructed a two storied building thereon after mutating the land in her favour and taking necessary permission from the Bhubaneswar Development Authority. She gave the said house on rent. It is stated that, suddenly on 03.06.2015 the officials of opposite party-Bank i.e. HDFC Bank with local police personnel dispossessed the tenant from the said house basing on an order passed by the District Magistrate, Khorda under Section 14 of the Securitization and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called "the SARFAESI Act"), even without issuing any prior intimation to the petitioner. Subsequently, it was learnt by her that the vendor of the said land (O.P. No. 5) had mortgaged the said case land as 'secured asset' by availing a loan from the opposite party-Bank and therefore, the Bank has taken action for dispossessing the petitioner there from as per the provisions under the SARFAESI Act. 3. Being aggrieved by the said action of the opposite party-Bank, she approached the learned Debts Recovery Tribunal, Cuttack (DRT) under Section 17 of the SARFAESI Act by filing SA No. 01/2017 praying to quash the notices issued by the Bank under Sections 13(4) and 14 of the SARFAESI Act. 3. Being aggrieved by the said action of the opposite party-Bank, she approached the learned Debts Recovery Tribunal, Cuttack (DRT) under Section 17 of the SARFAESI Act by filing SA No. 01/2017 praying to quash the notices issued by the Bank under Sections 13(4) and 14 of the SARFAESI Act. The contention of the petitioner before the DRT, Cuttack was that the action of the Bank is vitiated due to lack of valid equitable mortgage of the case land land/secured asset. 4. The opposite party-Bank contested before the DRT, Cuttack. It is the case of the Bank that, the vendor of the petitioner i.e., O.P. No. 5 took loan from the erstwhile Centurion Bank Ltd., which later merged in HDFC Bank, to the tune of Rs. 60.00 lakhs including enhanced loan amount as the proprietor of his business M/s. Blue Tooth and furnished a collateral security of assets including the present secured asset in the year 2007 by creating an equitable mortgage in favour of the Bank. The said property was mortgaged by O.P. No. 5, particularly on 27.10.2007 by depositing the original title deed of the secured asset and furnished his intention to keep the said property as security by way of an affidavit. Therefore, the alleged sale deed executed after the charge created in favour of the Bank does not confer any right on the petitioner and her contention that no equitable mortgage was created in favour of the bank is not correct. 5. The learned DRT, Cuttack in its judgment dated 10.05.2018 directed in favour of the petitioner and set aside the possession notice dated 06.01.2016 issued by the Bank with further direction to redeliver the possession of the property (secured asset) to the petitioner. 6. The Bank, thereafter, approached the Debts Recovery Appellate Tribunal, Kolkata against the said order of the DRT, Cuttack. The Appellate Tribunal upon adjudication of the case, by its judgment dated 05.02.2019 reversed the finding of the DRT, Cuttack and directed in favour of the Bank by allowing the appeal and setting aside the order of the DRT, Cuttack impugned therein. Being aggrieved by the said order of the learned Appellate Tribunal, the petitioner has approached this Court by filing present writ petition. 7. We have heard Mr. A. Mahanta, learned counsel for the petitioner and Mr. S.K. Padhi, learned Sr. Advocate on behalf of the opposite party-Bank. 8. Being aggrieved by the said order of the learned Appellate Tribunal, the petitioner has approached this Court by filing present writ petition. 7. We have heard Mr. A. Mahanta, learned counsel for the petitioner and Mr. S.K. Padhi, learned Sr. Advocate on behalf of the opposite party-Bank. 8. It is the contention of the petitioner that the agreement for sale of the secured asset was executed on 22.11.2006 between O.P. No. 5 and the petitioner and pursuant to that agreement the sale deed was executed on 19.03.2010. Therefore, the mortgage having been created in favour of the Bank by her vendor (O.P. 5) after execution of agreement for sale is not valid in the eye of law. It is also the contention of the petitioner that, the Bank has failed to substantiate its case before the Tribunal to show creation of a valid equitable mortgage in respect of the secured asset in its favour, which has been erroneously appreciated by the learned Appellate Tribunal reversing the finding of the DRT, Cuttack. It is further argued on behalf of the petitioner that the development which has undertaken on the case land by constructing a two storied residential house thereon has not been properly appreciated by the Appellate Tribunal. 9. On the other hand, it is submitted by Mr. S.K. Padhi, learned Sr. Advocate on behalf of the Bank that, the opposite party No. 5 has taken the loan by depositing the original title deed of the secured asset as a collateral security and therefore, what is contended by the petitioner is not sustainable in the eye of law. It is further submitted that once the property is mortgaged with the Bank by depositing the original title deed with the Bank in the year 2007, the petitioner should not have purchased the said land in the year 2010 without verifying the original title deed with the O.P. No. 5. O.P. No. 5 had mortgaged that property with the Bank being its owner having valid title over the property, and execution of a subsequent sale deed by him in favour of the petitioner before satisfaction of the mortgage will never convey the title free from the charge. O.P. No. 5 had mortgaged that property with the Bank being its owner having valid title over the property, and execution of a subsequent sale deed by him in favour of the petitioner before satisfaction of the mortgage will never convey the title free from the charge. Further, it is not correct to say that no valid equitable mortgage was created in favour of the Bank and as the petitioner has no case in her favour, the Appellate Tribunal has rightly answered all the points, with proper reasoning, in favour of the Bank and against the petitioner in the impugned judgment by setting aside the order of the DRT, Cuttack, which requires no interference. 10. We have carefully perused the orders passed by the learned DRT, Cuttack as well as the learned Appellate Tribunal, Kolkata and examined the respective stands taken by the petitioner as well as the opposite party-Bank. 11. Before going to the merits of the case, it is required to mention here that the vendor of the petitioner i.e., O.P. 5 did not choose to appear in the present case despite the notice was served on him and refused to accept the notice. 12. A simple point involves in the present case is whether a valid equitable mortgage of the secured asset was created in favour of the bank prior to execution of sale deed by the O.P. No. 5 in favour of the petitioner? 13. In a case of equitable mortgage, three things are to be seen, viz. (i) there is a debt; (ii) there is deposit of valid title deeds; and (ii) the intention that the deeds shall be the security for the debt. It is the case of the Bank that the O.P. No. 5 took credit facility to the tune of Rs. 40.00 lakhs (forty lakhs) initially for his business M/s. Blue Tooth, whose proprietor is the said O.P. no. 5, the vendor of the petitioner and subsequently enhanced the said loan amount to Rs. 60.00 lakhs (sixty lakhs) by adding the present secured asset as a co-lateral security along with other properties. In support of creating the mortgage of the secured asset, its original title deed was deposited before the Bank on 27.10.2007 along with an affidavit showing intention to create the mortgage in respect of the property in question and a declaration of absolute ownership was also furnished. In support of creating the mortgage of the secured asset, its original title deed was deposited before the Bank on 27.10.2007 along with an affidavit showing intention to create the mortgage in respect of the property in question and a declaration of absolute ownership was also furnished. In order to substantiate the claim of creation of a valid equitable mortgage, the Bank in its written statement of defence before the DRT, Cuttack, has stated that O.P. No. 5 not only has deposited the original sale deed executed in his favour, but also deposited the earlier sale deed executed in favour of his vendor. In course of hearing, Mr. Padhi, learned Sr. Advocate appearing on behalf of the Bank also filed an affidavit sworn by the Bank officials to this effect. 14. The copy of the written statement annexed by the petitioner under Annexure-3 series reveals the written intention furnished by O.P. No. 5 in the form of affidavit and the declaration made by him to that effect, which are also fortified from Annexure-A/1 appended to the affidavit dated 12.12.2019 furnished by the Bank Authority before this Court. The debt taken by O.P. No. 5 from the Bank is an undisputed fact. Therefore, all the requirements for creating equitable mortgage being found satisfied, no fault is seen in the findings arrived at by the Appellate Tribunal that, an equitable mortgage was created by the vendor of the petitioner on 27.10.2007 in favour of the Bank. The contention of the petitioner that a right was accrued in her favour through agreement for sale in the year 2006 prior to creation of the mortgage, has no leg to stand and is bound fall, because, as per the settled law, the agreement for sale does not by-itself create any interest or right over the property. So no right could be said to have accrued or created in favour of the petitioner by any such agreement to sale. Therefore, upon examination of the contention of both the parties, the creation of a valid equitable mortgage in favour of the Bank, as arrived by the learned Appellate Tribunal cannot be faulted. Moreover, O.P. No. 5 did not choose to appear before this Court and he was not even made a party by the petitioner before the Tribunal for the reason best known to her. Moreover, O.P. No. 5 did not choose to appear before this Court and he was not even made a party by the petitioner before the Tribunal for the reason best known to her. It is also not the case of the petitioner that her vendor (O.P. 5) has refused creation of any equitable mortgage of the case land in favour of the Bank in the proceedings initiated by the Bank against him in O.A. No. 338 of 2010 under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 15. Regarding the contention of the petitioner that she has developed the land and constructed a two storied building thereon after getting due permission from the local authorities so also publication of RoR in her name, are admittedly subsequent to creation of mortgage in favour of the Bank. Therefore, the same will not help the petitioner to nullify the charge of the Bank over the secured asset. It is needless to say that the RoR neither creates nor extinguishes right in favour of any party. Further, it is rightly held by the learned Appellate Tribunal in the impugned order that if any accession is made to the mortgaged property after the date of mortgage, the mortgagee is entitled to such accession as per Section 70 of the Transfer of Properties Act. It is also required to be stated here that once a charge is created by creation of a valid mortgage, the same is carried with the property till the mortgage is satisfied. Moreover the case is seen falling within the ambit of Illustration (b) to section 70. 16. Considering all such facts and circumstance of the case and in terms of the principles of law, we are of the view that findings arrived at by the learned Appellate Tribunal in the impugned order are just and proper and we do not see any cogent reason to interfere with the same. In view of the above, the writ petition is dismissed being devoid of any merit. No costs. S.K. Mishra, J. I agree.