Bank of Baroda vs Ramesh Balkrishna Kamble & Ors

Ashok Menon, Chairperson

The original Applicant in Original Application (O.A.) No. 349 of 2010 on the files of the Debts Recovery Tribunal (DRT)-III, Mumbai is the Appellant who is aggrieved by the judgment in the aforesaid O.A. dated 29/11/2012 allowing the O.A. in part without granting the relief of charge over the mortgaged properties.

The facts, in brief, are thus:

The Appellant, Bank of Baroda lent money to the 1st Respondent for the purchase of two flats Nos. A-301 and B-301 admeasuring 1025 ft² each on the 3rd floor of Samarth Villa, Koparkhairane (GES), Navi Mumbai. The 2nd Respondent is the guarantor for the transaction, and the 3rd Respondent M/s S.R. Constructions is a proprietorship, the proprietor of which is the builder and constructor of the flats. The 4th and 5th Respondents claim to have purchased flat Nos. A-301 and No. B-301respectively. The 6th Respondent also claims to be the owner of flat No. B-301. The 7th Respondent is the Central Bank of India which had allegedly advanced a loan to the 1st Respondent for the purchase of flats by producing bogus/forged documents. The 1st Respondent had executed a loan agreement, declaration/undertaking/authority, a letter of instalment dated 23/08/2006 to substantiate the deposit of the title deeds with the intention to create an equitable mortgage of the aforesaid two flats made on 09/08/2006. The 2nd Respondent had executed a guarantee in favour of the housing loan availed by the 1st Respondent. The loan amount of ₹13,15,000/-was dispersed to account No. 1176 maintained by the 3rd Respondent M/s S.R. Constructions in Vijaya Bank, Vashi. The 1st Respondent defaulted payment of the instalments, and the Appellant issued a letter on 15/02/2008 requesting him to clear the overdue amount. In response to that, the 1st Respondent paid only ₹30,000/- on 27/03/2008. The account of the 1st Respondent was declared as Non-Performing Assets (NPA) on 31/03/2008, and in consequence, a demand notice was issued under section 13 (2) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, for short). Symbolic possession of flat No. A-301 was taken by the bank under section 13 (4) of the SARFAESI Act. The Appellant received an order from the EOW, Mumbai under sections 91 and 160 of the Cr.PC seeking the production of documents and recording statements. The Appellant also received a notice on 08/02/2010 sent by a lawyer under instructions from the 6th Respondent claiming that he is the owner in possession of flat No. B-301.

Thereafter, Appellant filed the aforesaid O.A. No. 349/2010 before the DRT for the realisation of ₹18,15,543.88 due from Respondent numbers 1 and 2 together with interest at the rate of 12.5% per annum with monthly rests on the charge over the mortgaged flats. The Respondents remained ex parte in the proceedings before the DRT. Thereafter, the O.A. was allowed in part against Respondents No. 1 and 2 directing them to pay jointly and severally a sum of ₹18,15,543.88 together with interest as claimed. The relief pertaining to the charge over the mortgaged flats was declined. No relief whatsoever was granted against Respondents Nos. 3 to 7. Hence this appeal.

All the Respondents except Respondent No. 7 remained ex parte. Although Respondent 7 appeared through counsel, no reply was filed. The learned counsel for the Appellant, Mr Jayesh R. Patel and the learned counsel for Respondent No. 7, Mr J.K. Jadhav were heard. Documents perused.

The Ld. Presiding Officer in the impugned judgment, in the first instance, observed that by producing the original documents, the Applicant bank has proved that defendant No. 1 had created a valid charge of the disputed flats as security for the debt. However, the Ld. P.O. has further observed thus in para 12 of the judgment:

“12. The evidence on record show that the defendant No. 1 Ramesh Balakrishna Kamble has produced forged and bogus documents in respect of the disputed flats for availing the loan and availed loan not only from the Applicant bank but also from defendant No. 6 Central Bank of India. Since the documents produced by the defendant No. 1 before the Applicant bank are forged documents and there is no material to show that the defendant No. 1 was having valid and subsisting title over the said disputed flats free from encumbrances, I am of the view that the Applicant bank has not proved that the Applicant bank has got valid charge over the disputed flats in favour of the Applicant bank by the defendant No. 1 it is subject to the claim of the other parties with regard to the title of the said disputed flats and also subject to the prior charge created in favour of other banks and financial institutions. The evidence available on record also show that one Mr Namdeo Vishwambhar Mahatre, the defendant No. 6, had issued a notice to the Applicant Bank of Baroda through his advocate claiming that the said properties are owned by him.” (sic)

Thereafter, the Ld. P.O. decreed the O.A. in favour of the Applicant in accordance with the claim except for the claim for the charge over the mortgaged properties. Mr Patel appearing for the Appellant submits that the Ld. P.O. had in paragraph 10 of the judgment come to the conclusion that the Appellant has proved the creation of a valid charge over the mortgaged properties by producing the original documents. Thereafter, there was a turnaround in para 12 of the judgment by observing that the 1st defendant has produced forged and bogus documents to obtain a loan not only from the Applicant but also from other banks. The Ld. Counsel submits that the findings of the Ld. P.O. are contradictory. Without any material on record, the Ld. P.O. came to the conclusion that the documents produced by the 1st defendant are forged and fabricated.

Mr Jadhav, the learned counsel appearing for the 7th Respondent Bank submits that the Appellant has not claimed any relief against defendant numbers 3 to 7 and hence, no reliefs whatsoever were granted against them in the impugned judgment. There is, therefore, no reason to interfere with the judgment as regards the 7th defendant.

The intention of the mortgagor is what is important to create an equitable mortgage. There is no doubt that the title deeds pertaining to the secured property has been deposited by the first Respondent with the intention to create a mortgage. None of the Respondents had appeared to contest the claim of the Applicant in the O.A. It is true that the sixth Respondent had through his counsel issued a notice to the Appellant claiming exclusive right over the subject property. Despite being served with summons in the O.A. the sixth Respondent did not appear to contest. Similarly, neither the builder who is the third Respondent nor Respondents Nos. 4 and 5 who could have raised a claim over the property had appeared to contest the claim put forth by the Applicant. The conclusion of the Ld. P.O. regarding the first Respondent producing forged documents to cheat not only the Appellant but also other Banks is not based on any material or evidence. In absence of contest by the Respondents, the title deed produced by the Appellant before the D.R.T. is to be presumed genuine. Persons who could have raised a claim over the property in challenge to the title of the first Respondent over the property did not appear to contest the O.A. despite being given an opportunity to do so. The fact that the criminal investigation pending against the first Respondent with regard to concocted documents being produced by him before the seventh Respondent Bank is no reason to conclude that the title deeds produced before the Appellant Bank are concocted and forged. The findings of the Ld. P.O. in the impugned judgment cannot be sustained and requires to be reversed.

In the result, the Appeal is allowed. The impugned judgment and order stand modified to the effect that the property mentioned in the schedule in the application shall remain a charge for the realisation of the amount decreed. A recovery Certificate to that effect be issued.