TaxTMI 
TaxTMI 
2025 (6) TMI 174
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....regard to the suit property. A further declaration is sought that the deeds of simple mortgage dated 30th July 2018 in favour of Appellant - Omkara Asset Reconstruction Pvt. Ltd. - original defendant No.5 are void and illegal and for taking all necessary steps to cancel the deeds of simple mortgage dated 30th July 2018. In the suit J.C. Flowers prayed for a direction to Respondent No.4 - Piramal Capital and Housing Finance Limited ("Piramal Capital" for short) - original defendant No.1 to deposit the mortgage deeds with the Trial Court. Further, a direction was sought to Piramal Capital to disclose on oath, any rights created in favour of third parties in respect of the suit property. The directions were also sought from Respondent No.2 - Sumer Radius Realty Private Limited ("Sumer Radius" for short)- original defendant No.2 and Respondent No.3 - Sumer Buildcorp Private Limited ("Sumer Buildcorp" for short) - original defendant No.3 to disclose on oath third party rights created in the Suit property. An injunction is sought against Omkara Asset Reconstruction Pvt. Ltd. ("Omkara Asset" for short) and Piramal Capital from acting on or relying on the subject mortgage deeds. Further, d....
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....ered into a loan agreement for a facility of Rs. 350,00,00,000/- [Term Loan ("TL1" for short)] on 29th January 2016. In order to secure the TL1, Sumer Radius as borrower, Sumer Buildcorp as mortgagor and Radius Estate Projects Pvt. Ltd. ("REPPL" for short) as confirming party executed a deed of mortgage with respect to their Santacruz property (forming part of the suit property). 5. Sumer Radius approached Yes Bank in March 2016 for a further loan of Rs. 3,50,00,00,000/-. By a sanction letter dated 31st March 2016, two additional term loan facility of Rs. 111,00,00,000-/ ("TL2") and Rs. 239,00,00,000/- ("TL3) aggregating to Rs. 350,00,00,000/- were granted in favour of Sumer Radius. In order to secure TL2 and TL3, Sumer Radius as a borrower, Sumer Buildcorp as mortgagor and REPPL as confirming party executed a deed of mortgage with respect to the Santacruz property in Yes Bank's favour. Clause 5 of this mortgage deed is identical to Clause 5 of the earlier mortgage deed. 6. Yes Bank granted a loan of Rs. 205,00,00,000/- on 24th March 2017 to one Raghuleela Builders (Raghuleela was impleaded as defendant No.4 to the captioned Suit but subsequently dropped by J.C. Flowers). Sum....
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....in respect of the property. Yes bank withdrew the NOC dated 31st July 2018 on 2nd August 2019. The National Company Law Tribunal, Mumbai ("NCLT") passed an order on 6th September 2021 admitting REPPL into corporate insolvency resolution process. Yes Bank addressed a letter to the Ministry of Corporate Affairs on 18th February 2022 requesting it to cancel Piramal Capital's charge on the Suit property. Yes Bank filed an Interlocutory Application dated 17th May 2022 being Interim Application No.1367 of 2022 before the NCLT, Mumbai in the CIRP of REPPL seeking similar relief as in the Interim Application filed by J.C. Flowers. 10. On 7th June 2022 Yes Bank filed the present Suit. By an Assignment Agreement dated 16th December 2022, the loans advanced by Yes Bank to Sumer Radius were assigned in favour of J.C. Flowers-the plaintiff. By and under an Assignment Agreement dated 30th June 2023, the loans advanced by Piramal Capital to REPPL and Sumer Radius, along with all corresponding security (including the rights of Piramal Capital under the deeds of simple mortgage) were assigned in favour of the Appellant - Omkara Asset. By an order dated 20th February 2024, this Court permitted Yes ....
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....clear that the two mortgage deeds in Yes Bank's favour provides for the consequence of a subsequent mortgage created without obtaining Yes Bank's NOC, namely such mortgage will rank inferior to that of the Respondent No.1. This per force means that the subsequent mortgage is in existence and in force for it to rank inferior to J.C. Flowers mortgage. The emphasis of learned Senior Advocate's contention is that if the mortgage deed is to be treated as void/legally unenforceable then the language of the last part of Clause 5 quoted above would be rendered superfluous. The submission is that an interpretation which renders some words/a phrase of the contract otiose is legally impermissible. According to learned Senior Advocate, the learned Single Judge erred in holding that the mortgage deeds were voidable at the instance of Respondent No.1, as such a finding would be completed contrary to the terms of Clause 5 of the Yes Bank's mortgage deeds and would therefore amount to rewriting the contract which is wholly impermissible. In fact a proper reading of Clause 5 makes it clear that the mortgage deeds dated 30th July 2018 in favour of Piramal Capital are enforceable. Learned....
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....Mr. Sancheti, learned Senior Advocate for J.C. Flowers, on the other hand invited our attention to the findings of learned Single Judge, in support of his submissions. Our attention is invited to the relevant pleadings in the Plaint, relevant documents and the findings in the impugned order to submit that the discretion exercised by the learned Single Judge in granting the interim reliefs is not arbitrary, capricious or perverse to warrant an intervention in the appellate jurisdiction of this Court. 17. We have heard learned Senior Advocate for the parties at length. Let us first notice the relevant observations of the learned Single Judge. According to the learned Single Judge, the deeds of simple mortgage were executed prior to the conditional NOC issued by Yes Bank and for a subsequent mortgage to have come into existence, NOC from Yes Bank was a mandatory requirement. Section 48 of the Transfer of Property Act, 1882 did not apply as it pre-supposes that a mortgage created subsequently is a validly created mortgage. The deeds of simple mortgage were created in violation of Yes Bank's mortgage deed and therefore voidable at the instance of J.C. Flowers. 18. The subsequent m....
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....and also a declaration that the same are void and illegal. Learned Single Judge further observed that any application under Section 60(5) of the IBC would deal with the priority of charge and not the very legality of the impugned mortgage itself. It is in these circumstances the learned Single Judge held that these reliefs would squarely fall within the purview of the jurisdiction of this Court. 22. Before proceeding to test the order of the learned Single Judge, we must bear in mind the well settled principles laid down regarding the scope of an Appeal under Section 13 of the Commercial Courts Act against an order granting injunction. The scope of an appeal from an order has already been delineated by the Supreme Court in Wander Limited vs. Antox India Pvt. Ltd. (1990 (supp) SCC 727), Shyam Sel and Power Limited and another vs. Shyam Steel Industries Limited (2023) 1 SCC 634 and Ramakant Ambalal Choksi vs. Harish Ambalal Choksi and others ((2024 SCC OnLine SC 3538). We may also refer to a Full Bench decision in UTO Nederland B. V. & Anr. vs. Tilaknagar Industries Ltd. of this Court dated 28th April 2025 in Appeal No.66 of 2012. In view of the enunciation of law by Supreme Court, ....
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....es, without the prior written consent of the Mortgagee. Any mortgage/ charge created hereafter by the Mortgagor on the Mortgaged Properties, in violation of this Deed, shall be subject to the present mortgage/charge created in favour of the Mortgagee under this Deed, and the mortgage/ charge created in terms of this Deed shall in all circumstances rank superior." (emphasis supplied) 24. It is well settled that the mortgage document must be read as a whole and must be construed in a manner so as not to render any part thereof nugatory or otiose. The decision in Life Insurance Corporation of India and another vs. Dharam Vir Anand (1998) 7 SCC 348 and Radha Sundar Dutta vs. Mohd. Jahadur Rahim and others (AIR 1959 SC 24) is in support of the proposition. We agree with learned Senior Advocate Mr. Sancheti appearing for J.C. Flowers that the earlier part of Clause 5 ought to be given effect to, as a disposition once made cannot be taken away by a later clause/part. In the present case the mortgage deed needs to be interpreted against Sumer Radius and Sumer Buildcorp and in favour of J.C. Flowers. It is pertinent to note that the sanction letter and loan agreement mandated that Sumer R....
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....ns and warranties :- "3. REPRESENTATIONS AND WARRANTIES (a) Special Terms and Conditions: The Borrower agrees that the Facilities hereby granted shall also be subject to the Borrower providing the special representations and warranties and agreeing/complying with the conditions as specified in the Facility Letter and other Transaction Documents. (i) Good Title: (i) The Borrower possesses or shall possess valid, right and marketable title and interest over the Assets and revenues of the Borrower on which it grants or purports to grant security interests) pursuant to the Security Documents, in each case free and clear of any security interest (other than those permitted by the Bank) and further confirms that the security interest(s) created or expressed to be created by the Security Documents is and shall be valid and enforceable. Further, the Borrower shall not, hereafter, encumber any of its Assets or part thereof (including uncalled share capital or any part thereof) without the prior written consent of the Bank nor do or allow anything to be done that may prejudice the Security created in favour of the Bank/Person acting on behalf of the Bank." 28. The Recital B in the d....
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....r :- "13. UNDERTAKINGS (d) not create any mortgages, charges and encumbrances over the Mortgaged Properties in favour of any person except which are expressly permitted to be created under the Financing Documents and as are disclosed to the Secured Parties in writing." 32. It would also be significant to notice the relevant clause in the sanction letter dated 27th July 2018 issued by DLFH i.e. the predecessor of the Omkara Asset. The following clauses relevant which read as under :- "2. The borrower has to arrange-for the conditional NOC for creation of exclusive charge in favour of DHFL w.r.t the facilities availed against the security of Avenue 54 from the respective lenders; 4. The borrower w.r.t the existing facilities proposed to be taken over by DHFL has to comply with the following conditions- a) Procure and submit Original No Dues Certificate from the respective Lenders within 2 working days from date of closure of the respective facilities; b) Release of charge of the existing lenders within 2 working days from the date of closure of the loan availed; c) deposit the Original Title deeds with DHFL within 7 working days from the date of closure of respective l....