Central Bank Of India vs Vijaya Bank And Ors.

Ranjit Singh, J

Aggrieved against the order passed by the Tribunal below allowing Original Application No. 109/2011 filed by respondent Vijaya Bank, appellant Central Bank of India, impleaded as one of the respondents in the Original Application, has filed No. 267/2015. Central Bank of India had also filed an S.A. before the Tribunal below concerning the property connected with the claim in the Original Application filed by Vijaya Bank. The Tribunal below has dismissed the S.A. on 5th September, 2014. Miscellaneous Appeal No. 60/2015 is therefore filed to challenge this order passed in S.A.

Central Bank of India has filed yet another Appeal against the order dismissing one Original Application (No. 182/2011) filed by it to claim an amount due to mortgage of the same property. Notice is yet to be issued in this Appeal. However, this Appeal was kept for hearing along with the other two connected Appeals as noticed above.

All these Appeals, being inter-connected are taken up for hearing together and are being disposed of by this common order.

For the purpose of discussion, facts are being noticed from the Appeal No. 267/2015 which is filed to impugn order passed in the Original Application filed by Vijaya Bank.

The respondent Vijaya Bank had filed an application (Original Application} under Section 19 of the RDDBFI Act for recovery of Rs. 17,64,198/- from respondents Mr. Pawan Kumar Aggarwal, Smt. Mamta Aggarwal, and Mr. Vinod Kumar Aggarwal and Mr. Ratan Lal Aggarwal.

The Bank had sanctioned Rs. 19 lacs against mortgage of a property bearing No. RZ-93B, H-37 and H-38, Street No. 3, Sadh Nagar, Palam Colony, New Delhi. The defendants noticed above had executed security documents on 16th October, 2003. The amount was to be repaid in 180 equal monthly instalments of Rs. 19,285 commencing from the year 2003. When the defendants failed to make the payment, the account was declared as NPA on 30th September, 2010 and notice under Section 13(2) of the SARFAESI Act was issued on 26th October, 2010. During this time only, respondent Vijaya Bank came to know that the property had been mortgaged with Central Bank of India, Andhra Bank, Union Bank of India, Indian Bank and Punjab National Bank. Accordingly, while approaching the Tribunal for recovery of the amount due, all these Banks were impleaded as defendant Nos. 5 to 9. In this background, the respondent Vijaya Bank claimed an amount of Rs. 17,64,198/- from the borrowers.

The borrower defendants failed to appear in response to the summons issued and, therefore, were proceeded ex-parte. The Banks impleaded as defendants in the Original Application filed their Written Statements. Appellant Central Bank of India was impleaded as defendant No. 5. In its Written Statement, the appellant Bank disclosed that the same borrower, i.e., Mr. Pawan Kumar Aggarwal, had availed a term loan of Rs. 26 lacs, which was sanctioned on 16th May, 2009 and the property bearing No. RZ-93B, Sadh Nagar, Palam Colony, New Delhi, having an area of 100 sq. yds. constructed with basement, ground floor, first floor and second floor was mortgaged with the appellant Bank. The stand of Andhra Bank (defendant No. 6) was that a Housing Loan of Rs. 12 lac was granted to the borrower defendant Nos. 1 and 2, Mr. Pawan Kumar Aggarwal and Smt. Mamta Aggarwal, who had created mortgage over the property with the said Bank. It has claimed charge prior to the charge of Central Bank of India. Union Bank of India (defendant No. 7) also came up with a claim that it had granted a Housing Loan of Rs. 5 lacs to the same borrowers on 12th July, 2003 against collateral security of immovable property RZ-93B, basement and ground floor situated at Sadh Nagar, Palam Colony, New Delhi. Defendant Nos. 3 and 4 were granted Housing Loan of Rs. 5 lacs against collateral security of property of RZ-93B first floor and second floor Sant Nagar, Palam Colony, New Delhi and original title deed was deposited. Thus, it was stated that the entire property was mortgaged with Union Bank of India on 14th July, 2003 and 19th July, 2003. Union Bank of India accordingly claimed priority over the facilities sanctioned by Vijaya Bank on 16th October, 2003. The mortgage in favour of Vijaya Bank was also created subsequently.

On the basis of these pleadings, the Tribunal below considered the issue whether respondent Vijaya Bank was having any priority of charge over the property mortgaged with it. While considering this issue, the Tribunal below has noticed that the appellant Central Bank of India and Andhra Bank had filed Written Statements, but they did not lead any evidence. The Tribunal below accordingly viewed that in the absence of evidence their claim cannot be considered. The dispute, thus, primarily remained between Vijaya Bank and Union Bank of India which had filed their evidence.

Noticing that mortgage was created in favour of respondent Vijaya Bank on 16th October, 2003 and the fact that Union Bank of India had granted Housing Loan on 12th July, 2003 on the basis of mortgage created on 14th July, 2003 and 19th July, 2003, the said Bank was held to have priority over the charge of Vijaya Bank. The Original Application was accordingly allowed giving priority for the recovery of the amount to respondent Union Bank of India. Central Bank has accordingly filed this Appeal whereas Vijaya Bank has not come up in Appeal against the impugned order.

Once the S.A. filed by Central Bank, impleading Indian Bank and Union Bank of India besides the borrowers Mr. Pawan Kumar Aggarwal and Smt. Mamta Aggarwal was dismissed, Central Bank has filed another Appeal. While dismissing the S.A., the Tribunal has taken note of the order passed in Original Application 109/2011 filed by Vijaya Bank. The Tribunal has noticed that Central Bank being a party to the Original Application, the finding returned therein would bind the said Bank in the S.A. proceeding as well. It is also noticed that the document deposited with Central Bank were registered sale deed dated 7th March, 2005 in favour of Mr. Pawan Kumar Aggarwal, but said Mr. Pawan Kumar Aggarwal had sold this property to Smt. Shakuntla Devi w/o Nem Chand Aggarwal, Smt. Mamta Aggarwal w/o Pawan Kumar Aggarwal, Mr. Vinod Aggarwal s/o Nem Chand and Mr. Ratan Aggarwal s/o Nem Chand. The Tribunal accordingly found that w.e.f. 1st September, 2003, Mr. Pawan Kumar Aggarwal had no right over the property and, thus, the title deed deposited with Central Bank on 7th March, 2005 would not go to create any legal and valid mortgage in favour of the appellant Bank, having no legal validity. The Tribunal has also noticed that Mr. Pawan Kumar Aggarwal fraudulently tried to get his own property sold to himself by creating a power of attorney in the name of Mr. Vijay Kumar Gupta by playing fraud when the same had already been transferred in the name of four other persons noted above, in the year 2003. This fraud and the defect in the title of the borrower Mr. Pawan Kumar Aggarwal ought to have been properly considered by Central Bank of India. The fact remains that Central Bank thus apparently did not have any valid mortgage over the property as the mortgagor Mr. Pawan Kumar Aggarwal had no right over the property as on 18th May, 2009 to create this mortgage.

The Tribunal has dismissed the Original Application filed by the appellant Central Bank of India on the basis of the finding returned in the above noted Original Application filed by Vijaya Bank as well as the finding returned in the S.A. It is because of all these reasons why this Appeal filed by Central Bank of India to challenge the order passed in the Original Application filed by it was kept for hearing along with these two Appeals filed earlier and were pending consideration.

The Counsel for the appellant would challenge the finding returned by the Tribunal below on the ground that the same title deed had been deposited by the borrowers while obtaining facilities from Union Bank of India whose right to recover its dues has been given priority over others. In this regard, Counsel has made reference to the sale deed dated 10th February, 2003 executed by Mr. P. Narshimha Murti in favour of Mr. Pavan Kumar Aggarwal. However, the Counsel for the appellant has failed to notice one aspect that when the borrower Mr. Pawan Kumar Aggarwal created an equitable mortgage in favour of Union Bank of India on 14th July, 2003 and 19th July, 2003, he was still owner of the property, as he had transferred the property by sale dated 1st September, 2003. On the date the mortgage was created on 14th July, 2003 and 19th July, 2003, Mr. Pawan Kumar Aggarwal was legally entitled to create this mortgage, being the owner of the property. He lost his title by way of sale, though it may be fraudulent, on 1st September, 2003. Thus, the mortgage created in favour of the appellant Bank on 18th May, 2009 would be of no avail. The sale deed deposited with the appellant Bank was of 7th March, 2005, which cannot be taken as valid. The finding returned by the Tribunal below, holding that Union Bank of India has legal, valid and prior claim is well-supported by documents and evidence on record.

The appellant Bank was given opportunity and time to show its title, but it failed to lead any evidence. Merely because the Original Application filed by the appellant Bank was pending would be no reason to ignore the finding returned by the Tribunal below in the Original Application filed by Vijaya Bank and the S.A. filed by the appellant. I find no valid reason to interfere in the impugned order passed by the Tribunal below.

There is even 67 days delay in filing the Appeal (Inward No. 352/2015). Notice in this Appeal has not even been issued. The reason to seek condonation of delay is that the appellant misplaced the earlier certified copy of the order and for this reason they had to apply for the supply of certified copy again, which resulted in the delay. Since this Appeal is being dismissed in limine, without issuing notice, the delay in filing the Appeal be taken to have been ignored.

As a result, all the three Appeals are dismissed.