Mohan Singh vs Syndicate Bank

Ranjit Singh, J

Rejoinder is filed but with some delay. The delay in filing the rejoinder is condoned and the rejoinder is taken on record.

Mohan Singh has filed this appeal to impugn the order passed by DRT-II, Delhi on the ground that the order in regard to the property alleged to have been mortgaged was passed against a dead person, who was his father, Late Bara Singh, father of applicant, is alleged to have offered as an equitable mortgage immovable property being Municipal No. 8-K-224N3, Govindpuri, Part of Khasra No. 599/9 in Village Tekhand, Delhi (hereinafter referred to as the property). This property was offered against the sanctioning or Packing Credit Limit of RS. 5 lacs and FDBP Limit of RS. 15 lacs on 11.2.1993 full. Various documents were executed in this regard. The Limit was enhanced to RS. 25 lacs as per letter dated 26.4.1993. Respondents 3 and 4 had then executed fresh loan documents in this regard.

It is alleged that Bara Singh did not execute any fresh documents. The letter of guarantee and other documents are exhibited on record. Respondent NO. 2 had allegedly availed of the credit facilities from time to time. The proceeds of the bill were credited by respondent No. 1 to the Current Account after deducting charges. Certain bills were sent to foreign bank which remained un-discharged and unpaid. It is alleged that the buyer did not retire the documents. As per the allegation, Bara Singh, the mortgagor, failed to discharge his obligation of Rs. 65,51,399/-, which was due and outstanding along with interest up to 15.12.1995.

Legal notice was served on 29.11.1995 on respondents calling upon the respondent Nos. 2 to 4 to pay the entire amount due, but they failed to make any payment. Respondent NO. 1 accordingly filed an O.A. where respondent Nos. 2 and 3 were declared ex parte and proceeded against vide order dated 24.8.1997.

On behalf of respondent No. 4, a written statement disputing the allegations was filed. It is stated that the enhanced sanction was never guaranteed. At the very early stage of the O.A. proceedings, i.e., on 10.7.1996, it was stated before the Tribunal that Mr. Bara Singh had in fact expired on 12.4.1970. The summons perhaps were accepted by the applicant and the counter/reply was filed disclosing the death of Mr. Bara Singh, which took place about 22 years prior to the alleged transaction. Plea accordingly was that he could not have created the mortgage in respect of the abovesaid property on 11.2.1993. Despite having learnt about this fact, the Tribunal seems to have continued with, the proceedings and passed the final order allowing the O.A. on 4.7.2012.

In regard to the proceedings against Mr. Bara Singh, who is stated to have died, it is observed by the Tribunal that summons issued to him was accepted by his son who filed a written statement before the Tribunal bringing the factum of his death which had taken place on 12.4.1970. Even copy of the death certificate was produced and was referred to in its order by the Tribunal. The Tribunal had asked the bank to explain the position.

Impugned orders reveals that, an affidavit was filed by the bank. The bank also stated before the Tribunal that one person probably impersonating as Bara Singh appeared and completed all the formalities required for an equitable mortgage. On the basis of this material on record, the Tribunal noticed that there was no dispute that the title deed belonged to the property of late Bara Singh. The son Mr. Bara Singh, i.e., the present applicant, had allegedly stated before the Tribunal that the title deed was given to one Rajiv Raj Bhall for getting an amount of Rs. 73,000/- out of which only Rs. 8,000/- was paid whereafter the title deed was never returned to him. He also pointed out to the Tribunal that the signature of respondent No. 4 (Bara Sing h) had been forged. The Tribunal has observed that the son of late respondent is not as innocent as he claimed to be. It is also noticed that the bank did not take any step to implead the legal heirs of late respondent No. 4. The Tribunal even has noticed that there cannot be a decree against a dead person and accordingly held that no decree can be passed against respondent No. 4. The Tribunal, however, found fraud in the action of mortgaging the property with the bank and held that parties cannot enjoy the fruits of fraud. The Tribunal has further observed that the bank was not aware of the fraud committed and would not be a party to the fraud. It is also observed that when the fraud was detected the bank lodged a complaint with the police. It is then observed that the legal heirs of Bara Singh had delivered the documents so as to raise this loan and the present story was concocted by them. Since they have not allegedly taken any steps to invalidate the mortgage, the Tribunal held that the bank shall be entitled to recover the debt by proceeding against the mortgaged property as there was a valid mortgage.

Even if a fraud was played by the legal heirs of deceased respondent No. 4, they could be heard only if they were parties before the Tribunal. Concededly, the legal heirs were not impleaded as respondents. It is not the case where the bank was not aware of this factual position. Once the bank came to know about the death of respondent No. 4, which was prior to the mortgage, the Tribunal was required to ask the bank to implead them if it was to return a finding against the legal heirs. It seems that the Tribunal has been unduly influenced by the fraud, which may or may not be there, and has accordingly passed the impugned order allowing the property to be utilized by the bank for the recovery of the loan. The Tribunal below in its anxiety and upon the detection of fraud, perhaps, failed to take notice of the fact that to pass an effective order it was appropriate to implead the legal heirs of Bara Singh who was dead: even prior to the filing of the O.A. The Tribunal rightly noticed the law that there cannot be a decree against a dead person but seems to have found an unfair way to pass the order. The allegation of fraud apparently surfaced only when son of respondent No. 4 came forward to disclose certain facts.

The predicament which the applicant would face, being the son of a deceased person, whose property stands embroiled in case, can very well be noticed from the present proceedings. Being not a party to the proceedings before the Tribunal below he is not in a position to file this appeal and therefore sought permission for doing so. It would not be legally appropriate to allow this order to stand against dead person. Proper course would be to set aside the [order impugned against respondent No. 4 and permit the Bank to implead the legal hears of Respondent No. 4 and then to proceed with the case in accordance with law. This alone is a legal course.

Another fact which is revealed during the course of the hearing is that present applicant is not the only legal heir of respondent No. 4. As per the counsel for the applicant, he has disclosed the names of the other legal heirs in the proceedings pending before the R.O. Since the bank is now well aware of the name of the legal heirs of respondent No. 4, it can conveniently move an application before the Presiding Officer to implead them. The Tribunal, thereafter, would proceed with the case serve notice on the LRs and decide the matter afresh.

For passing above direction there would be a need to deal with two other application filed by the applicant. There is a delay of 173 days in filing the appeal. Since, the applicant was not a party before the Tribunal below he cannot be strictly bound by the delay and would need some consideration. The delay in filing appeal, if any, is thus condoned.

There is yet another handle which the applicant is to cross. Despite being aware, the Bank did not implead the applicant as LR of the respondent. The applicant was not a party before the Tribunal and so can be held liable for the pre-deposit condition. This condition, if insisted would be unfair. Accordingly, the condition of pre-deposit is waived and the application (I.A. No. 89/2014) is allowed.

Let the appeal be numbered.

The appeal, accordingly, stands disposed of in terms of the above direction and the impugned order is set aside qua respondent No. 4. It is made clear that the recovery proceedings against the remaining defendant/CDs shall continue.

Copy of this order be furnished to the parties as per law.