TaxTMI 
TaxTMI 
2025 (3) TMI 489
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....covery of Debts and Bankruptcy Act 1993 (for short 'RDDB Act'). ARCL claims to have power to recover dues from the borrower pursuant to Assignment Deed executed by the State Bank of India (for short 'SBI'), dated 30th March 2005. It is further case of ARCL that the erstwhile assignor, SBI had granted various credit facilities to the borrower M/s. Aggarwal Silk & Synthetics Pvt. Ltd., to which Mr. Rameshchandra Aggarwal and Ms. Shashi Aggarwal executed a personal guarantee. Mr. Rameshchandra Aggarwal mortgaged his immovable property being land admeasuring Survey No. 44, Hissa No. 5/1, land admeasuring 31 gunthas and Survey No.44, Hissa No. 10/1, land admeasuring 6 ½ gunthas, total land admeasuring 37 ½ gunthas situated at Village Valiv, Taluka Vasai, District Palghar (hereinafter referred to as 'the suit property') in favour of the then assignor, SBI. 3. According to the ARCL since the borrower company failed to pay the loan amount, they on 12th April 2006 filed the Original Application No. 131 of 2006 before the DRT, Mumbai to recover a sum of Rs.2,12,55,129/- from the borrower company and its guarantors. 4. Subsequently, on 21st April 2006, the respondent no.1 ....
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.... in the suit property. He submitted that Mr. Ramchandra Aggarwal had executed a mortgage by deposit of title deeds for the purpose of availing credit facilities, which included the certified copy of the Conveyance Deed dated 22nd December 1993 and the original lodgment receipt issued by the Sub-Registrar of Assurances, Vasai bearing Sr. No. 3306 of 1993 dated 22nd December 1993 and letter dated 17th August 2000 addressed by the Sub-Registrar of Assurances, Vasai requesting to send the indenture to SBI after registration. He submitted that it is settled law that the mortgage by the deposit of title deed can be created based on the title along with original registration receipt. He submitted that in the following judgments, the Court has considered the circumstances where the originals are missing/lost or not forthcoming for any reason whatsoever :- (a) The judgment of Andhra Pradesh High Court in case of Kanigalla Prakasa Rao vs. Nanduri Ramakrishna Rao & Ors. (1981 SCC OnLine AP 154) (b) The judgment of Andhra Pradesh High Court in case of Ch. Sambasiva Rao vs. Bank of Baroda reptd. By Branch Manager, Gontur (1988 SCC OnLine AP 346) (c) The judgment of Ke....
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....rtgages by deposit of title deeds on the basis of lodgment of original registration receipt, was considered by the Single Judge of this Court in the judgment of Suresh Gyanchand Kumar (supra) and more particularly in paragraph nos. 13 and 18. 11.5 He further submitted that the erstwhile assignor of SBI had registered a charge with the Registrar of Companies, with regard to the financial credit facilities granted to the borrower, hence due caution and diligence at the time of creation of the mortgage was shown by the erstwhile assignor. 11.6. He further submitted that PNB had accepted the mortgage by deposit of title deeds on 12th April 2006 from Mr. Rameshchandra Aggarwal when PNB had sufficient notice that there was an existing mortgage on the subject property for which detailed scrutiny is required. He submitted that PNB should have considered that the memorandum of deposit of title deeds in favour of PNB records that the original registration receipt is deposited with PNB. When in fact the original registration receipt was deposited with the SBI. Further the memorandum of deposit of title deeds records that the conveyance is dated 22nd September 1993 which is incorrect, he....
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....s no explanation on the part of ARCL as to what steps they had taken to secure the original title deed. So also, there is no explanation as to the steps taken by ARCL when according to them they became aware about the mortgage of the subject property in favour of PNB. He submitted that it is this gross neglect on the part of ARCL and its predecessor in interest, which enabled the mortgagor to commit fraud which induced the PNB to advance money to the mortgagor on the security of the subject property. Hence, for such fraud it must be ARCL who should suffer and not PNB. 12.4 He submitted that ARCL has not produced the original copy of the lodgment receipt. He submitted that the question of the PNB being negligent does not arise, since the loan facilities was granted by PNB after the original title deed was deposited with them. He further submitted that there is no explanation from ARCL, as to how the mortgagor acquired the original title deed from the Office of the Sub-Registrar, prior to depositing them with the PNB, if infact the original lodgment receipt was with ARCL. 12.5 This means that one of the following two things must have happened :- (a) the petitione....
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....of Section 19(25) of the RDDB Act, 1993, thereby seeking modification of the judgment dated 6th November 2008 contending that the SBI had a prior mortgage in respect of the same property. The DRT after considering the arguments of both the sides, accepted the submissions of ARCL and allowed the Miscellaneous Application No. 31 of 2010 thereby cancelling the mortgage decree granted in favour of PNB. 17. It is a matter of record that against the decree passed by the Tribunal in Original Application No. 29 of 2007, no appeal was preferred. 18. So also, it is not in dispute that in ARCL (erstwhile SBI) while granting loan, the original title deed was not deposited. So also, it is not disputed that in the said mortgage proceedings, the title deeds were never submitted only on the basis of lodgment receipt, the loan was sanctioned and disbursed. So also, it is the case of PNB that even the original lodgment receipt has not been tendered in this Court, and the only argument in that regard is that the original lodgment receipt has been lost. As regards the loan sanctioned by PNB, the original title deeds was submitted to them and on the basis of the original title deed, an equitable ....
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....udence. It is no doubt true that about two months after creation of such equitable mortgage, the Indian Bank had obtained an affidavit from the original owner that the original title deeds were lost. This, however, instead of fortifying the case of the Indian Bank on the question of negligence, in our opinion, it would only be a circumstance to prove that at the time of creation of equitable mortgage, the Indian Bank had not acted prudently as would have been expected from a Nationalised Bank. 13. If the original owner had stated at the beginning that original title deeds were lost, in normal circumstances, a Bank would be expected to make certain verification or even require the intending borrower to publish adequate notice. Moreover, the fact that the affidavit was taken two months after would only indicate that at the initial stage no query was made regarding the absence of original title deeds. Otherwise, under such normal circumstances, one would have expected that the Bank would obtain an affidavit on the date of transaction itself. From the facts and circumstances of the case, it is apparent that the Indian Bank in its apparent hurry to enter into the transaction, h....