Prithpal Kaur vs Central Bank Of India And Ors.

Smt. Prithpal Kaur, who is a subsequent purchaser of property 28/18, East Patel Nagar, New Delhi from one late Gurbaksh Singh, who had mortgaged the said property, is fighting hard to save the same for which her Counsel has raised numerous legal and factual pleas. The Tribunal below otherwise has allowed the Original Application filed by the Central Bank of India, loaning Bank, which had advanced certain credit facilities to Kingston Electronics Pvt. Ltd. The Bank has been held entitled to recover a sum of Rs. 2,57,40,392/- from Kingston Electronics (respondent No. 2), Smt. Surjit Kaur (respondent No. 3), Mr. Manmohan Singh Nagpal (respondent No. 4), Mr. Mandeep Nagpal (respondent No. 6), Ms. Preeti (respondent No. 7) jointly and severally with interest @ 12% p.a. from 8th February, 1993 onwards till recovery with cost. The liability of respondent Nos. 4, 6 and 7 is limited to the extent of the property inherited from Mr. S. S. Nagpal, their father.

The appellant Smt. Prithpal Kaur has filed this Appeal to impugn this order passed by the Tribunal below not to challenge the liability against the respondents, but only qua her property i.e., 28/18, East Patel Nagar, New Delhi which she claims to have purchased from late Gurbaksh Singh through sale deed dated 26th March, 1990 executed pursuant to agreement to sell dated 5th June, 1988. In fact, the appellant had not been impleaded as party defendant in the Original Application. She had to move an application for being impleaded when a letter addressed to one Mr. G.S. Bhatia was delivered at her residential address on 10th February, 2003. This communication revealed that certain accounts maintained with the respondent Bank was irregular and Mr. G.S. Bhatia could avail one-time settlement scheme propounded by Reserve Bank of India. Soon thereafter, the appellant found a notice affixed on outer wall of her house purporting to take possession of the same. The appellant thereafter made inquiries and learned that respondent-Bank had filed Original Application No. 282/1995 which was pending before the Tribunal below.

Further inspection of the record revealed that the Bank was claiming the house of the appellant to be a mortgaged property and had arrayed Mr. G.S. Bhatia as purchaser of the said residential property. The appellant immediately preferred an application under Order 1 Rule 10 of C.P.C. for being impleaded as a necessary party in the Original Application. She also prayed for stay of the further proceedings. After getting a reply from the Bank, the Tribunal allowed the prayer of the appellant vide its order dated 20th May, 2004 for being impleaded as party in the Original Application.

The copy of Original Application along with the documents was provided to the appellant. The appellant then filed Written Statement with all the documents in support of the same. The respondent Bank did not choose to file any rejoinder to the said Written Statement. In fact, when the appellant was impleaded as party in the Original Application, the evidence on behalf of the Bank had already been filed by way of affidavit.

Mr. Ravinder Kapoor (AW-1) had filed affidavit of evidence in support of the Original Application though he was not employed or working in the branch in the year 1995 the period during which the loan facilities were extended to respondent No. 2. This witness was later given up and all the documents tendered by him were retendered through other witnesses. The grievance of the appellant is that Tribunal allowed the Bank to adopt this unauthorised mode despite Mr. Ravinder Kapoor himself having tendered these documents stating that he was posted in the branch only in 1994. The appellant had been granted permission to cross-examine witnesses, but some of the witnesses who were made to file the documents later could not be produced for cross-examination. Earlier the application moved by the appellant for grant of permission to cross-examine Bank witness was declined by the Tribunal initially and this order was upheld in an Appeal filed before this Tribunal, but permission was granted by the High Court when the appellant impugned these orders by filing a writ petition.

The appellant had also filed a detailed affidavit of evidence along with various documents. Since the request of the appellant to cross-examine the Bank's witness was allowed, the Counsel for the appellant would plead with some justification that the evidence and material produced on record by those witnesses who could not be produced for the purpose of cross-examination would be no evidence in the eyes of law and as such cannot be taken into consideration in any manner to advance the case of the respondent-Bank. The appellant would also highlight other fact that Bank chose not to file any further evidence after filing of evidence by the appellant as the earlier affidavit of evidence had been filed prior to the impleadment of the appellant.

In this manner, the Original Application filed by the Bank was heard. The appellant had also filed written submissions raising a number of legal and factual pleas. The Original Application has been allowed. The grievance of the appellant, however, is that the Tribunal below not only failed to consider the legal plea and submissions made by the appellant, but ignored the evidence which came on record through cross-examination of the Bank's witnesses which clearly exposed the evidence of the Bank being a total hearsay and hence inadmissible. As per the appellant, The Tribunal below has ignored this important legal aspect without any justification and this ground is enough to call for interference in the impugned order passed by the Tribunal below.

Let us now notice in brief the case set up the Bank in its Original Application for which the Bank has claimed charge over the property of the appellant. Respondent-Bank had instituted Suit No. 637/1994 before the High Court of Delhi for recovery of the amount already noticed. Respondent No. 2, Kingston Electronics is a private limited company, Mr. S.S. Nagpal being its Managing Director. Mr. Nagpal had requested for certain facilities from the Bank on 2nd January, 1984. A loan of Rs. 52 lacs was sanctioned for expansion programme of the company Mr. Nagpal and his wife Smt. Surjit Kaur (respondent No. 3) executed security documents. They also stood personal surety and guaranteed the repayment of the outstanding dues as per 3rd May, 1984.

On 30th April, 1985, Mr. Gurbaksh Singh deposited the title deed of his property as a collateral security by way of equitable mortgage to secure the repayment of the credit facilities sanctioned or to be sanctioned by the Bank and availed or to be availed of by respondent No. 2. This property was a land measure 200 sq. yds. together with all structure, super structure built thereupon situated at 28/18, East Patel Nagar, New Delhi, Mr. Gurbaksh Singh also submitted an affidavit that he was the sole owner of the property and the title was free from any encumbrances. On this day only, i.e., 30th April, 1985, Mr. Gurbaksh Singh confirmed the deposit of title deed. On one same day, i.e. 30th April, 1985, Mr. Nagpal and Mr. Kanwarjit Singh (respondent No. 5) called at the branch office of the Bank and deposited title deed of their property as a collateral security by way of equitable mortgage to secure the repayment of the credit facilities. This was property measuring 200 sq.yds together with building constructed thereupon situated at No. 28/17, East Patel Nagar, New Delhi. Title deed of this property was also deposited the same day while Mr. S.S. Nagpal called on the branch office for this purpose. Mr. Nagpal also deposited title deed of respondent No. 2 as collateral security by way of equitable mortgage to secure the repayment of the dues. This is document relating to Ground Floor having an area of 46 sq. mts. situated at Block No. F bearing No. 256 on the ground floor in the layout plan of flatted factory complex situated at Okhla, New Delhi.

On 24th January, 1985, Mr. Nagpal had requested for converting the pledge facility into hypothecation facility and for additional drawing power up to Rs. 24 lacs. On 14th March, 1985, the request for overdraft facility of Rs. 50,000/- was allowed and another request for overdraft facility for 10 days was allowed on 8th July, 1985. An additional overdraft facility of Rs.50,000/- was granted on 27th July., 1985 till 10th August, 1985. A loan of Rs. 84,000/- for purchase of a generator was also allowed to respondent No. 2 All these liabilities were acknowledged.

Uttar Pradesh Financial Corporation requested the Bank on 30th July, 1987 for permission to create second charge in respect of property A-21, Sector 9, Noida. Mr. Nagpal and his wife stood personal surety and guarantee for repayment as per letter of continuing guarantee dated 17th December, 1987. There were other loan facilities also which were acknowledged and Mr.Nagpal pledged shares to the Bank as collateral security. These facts are just noticed as background as otherwise may not be much relevant for deciding the controversy in the present Appeal which is limited to the right of the appellant subsequent purchaser of the mortgaged property.

Mr. Manmohan Singh Nagpal (respondent No. 4), Mr. Kanwarjit Singh (respondent No. 5), Mr. Mandeep Nagpal (respondent No. 6) and Ms. Preeti (respondent No. 7) are legal heirs of late Mr. Gurbaksh Singh. Since Mr. Nagpal also died, his wife Smt. Surjit Kaur, Mr. Kanwarjit Singh, Mr Mandeep Nagpal and Ms. Preeti are sued as LRs of said Mr. Nagpal, Mr. G. S. Bhatia (respondent No. 8) had been impleaded as subsequent purchaser with the assertion that he had unauthorisedly purchased the property No. 28/18, East Patel Nagar, New Delhi. In this background, the Bank had filed the Original Application the recovery of the amount as noticed above.

The appellant, who in fact is the purchaser of the property No. 28/18, East Patel Nagar, New Delhi, was impleaded as defendant No. 12 on an application moved in the manner as already noticed above. In her written statement filed before the Tribunal below, the appellant pleaded to be a bona fide purchaser of the property which was claimed to be in her possession since 1988. In this regard, appellant has relied on the agreement to sell dated 5th June, 1988. She was claimed to have purchased this property for consideration of Rs. 8.50 lacs out of which Rs. 4.50 lacs had already been paid. As per the appellant, tenants then occupying first floor, Barsati floor also atoned to the appellant. The appellant has disclosed that at the time of execution of agreement late Gurbaksh Singh had represented that respondent No. 2 had availed certain facilities and late Gurbaksh Singh had furnished the property as security for sum of Rs. 4 lacs. Mr. Gurbaksh Singh undertook that it would be his obligation to get this encumbrance released. It was only in this understanding that Rs. 4.50 lacs were furnished to Mr. Gurbaksh Singh at the time of agreement, On 22nd September, 1989, Mr. Gurbaksh Singh had executed Power of Attorney in favour of the husband of the appellant and had also executed various documents in favour of defendant in respect of this property on 8th February, 1989 including affidavit and Will. On 2nd April, 1990, Mr.Gurbaksh Singh represented that the property was free from all encumbrances and charges and so the sale deed was executed in favour of the appellant.

As already noticed, the parties have led evidence. The Tribunal, after noticing and discussing the evidence of respective parties, has finally held that the Bank is entitled to recover the amount as already noticed. The appellant accordingly has approached this Tribunal to challenge the finding so far as direction to recovery the amount from the property purchased by the appellant is concerned. The appellant would point out that another property alleged to have been equitably mortgaged on the same date has, however, been relieved by the Tribunal below against which the Bank has chosen not to file any Appeal. The grievance of the appellant accordingly is if the same evidence has been disbelieved to discard the equitable mortgage executed by one of the respondents, no reason would exist to believe the same evidence to uphold the so-called alleged mortgage executed by Mr. Gurbaksh Singh.

Not only this, the appellant has raised numerous pleas to challenge the finding returned by the Tribunal below and has pressed the present Appeal rather hard to seeking setting aside that part of the impugned order whereby the equitable mortgage executed by Mr. Gurbaksh Singh has been upheld. As per the appellant, this has been done while ignoring the evidence and the material and thus the finding by the Tribunal below cannot be sustained.

Let us now, notice the ground of challenge urged by the appellant. As per the appellant, it is required to be seen whether the mortgage of the property can be said to have been validly made by a person who was neither a borrower or a guarantor. Another point of consideration is whether the mortgage having been withdrawn/revoked by a mortgagor, the Bank could still seek recovery of the amount though no liability arose in the period of mortgage and revocation thereof. The question, as per the appellant, is whether the Bank can seek recovery of the amount upon revocation. The appellant would also plead that the mortgage stood revoked and withdrawn by Mr. Gurbaksh Singh vide his letter dated 14th May, 1985. As per the appellant, the document relied upon by the Bank showing deposit of the title deed would require compulsory registration. The appellant would also plead that production of the mere photocopy of a Register showing deposit of the title deed cannot be taken into consideration being inadmissible evidence. The plea also is that the same document has been disbelieved for relieving another property mortgaged and so could not be relied upon for upholding the equitable mortgage. The appellant would also challenge the act of filing Suit by impleading a non existent fictitious person showing him to have allegedly purchased the property and effect thereof.

Thus, the learned Counsel for the appellant has raised a number of pleas and has taken me through the evidence on record. The Counsel would also contend that the appellant Smt. Prithpal Kaur had made extensive pleading in her defence, but the same has not been considered at all. The Counsel would further point out that the mortgage permission was for 60 days and so the mortgage was not valid beyond this period.

The star submission, of course, is the letter dated 14th May, 1985 (Exh. DW 12/13) whereby Mr. Gurbaksh Singh wrote to the Bank that he is not interested in extending the mortgage and sought release of the property. The Bank had not filed any response, but alter two years, on 7th October, 1987 (Exh. DW 12/14) sent a letter informing Mr. Gurbaksh Singh about the enhanced facilities and that his property shall remain mortgaged and for which the Bank had even thanked said Mr. Gurbaksh Singh. Mr. Gurbaksh Singh promptly wrote back on 20th October, 1987 (Exh. DW 12/15) drawing attention to his earlier letter dated 14th May, 1985 whereby he had informed the Bank that he had withdrawn from the mortgage. The Counsel has also referred to various letters that Mr. Gurbaksh Singh wrote to the Member of Parliament and even to the Finance Minister. Soon after the letter of Mr. Gurbaksh Singh dated 20th October, 1987, respondent No. 2 had written to the Chief Manager of the Bank for creation of a second charge on the factory and for release of the mortgage of the property of Mr. Gurbaksh Singh with a request to return of the lease deed of House No. 28/18. Mr. Gurbaksh's the letter is dated 29th December, 1987 is Ext. DW 12/17 which was written for return of the document of this property.

Reference is also made to various other letters in this regard. Once he did not get any response from the Bank. Mr. Gurbaksh Singh approached the Member of Parliament who then further wrote to the then Finance Minister stating that the Bank was unnecessarily causing harassment. Mr. Gurbaksh Singh then had written to the Finance Minister also (Exh. DW 12/22). Said Gurbaksh then had also again approached the Finance Minister on 8th February, 1992. On this basis, the Counsel for the appellant would seriously contend that Mr. Gurbaksh Singh had withdrawn his mortgage and thus the Bank had no legal or moral right to claim charge over his property on the basis of a mortgage.

Since the appellant has primarily stressed on a letter dated 14th May, 1985 for release of hypothecation of the property, the contents thereof may call for examination. This letter is no record as Ext. DW 12/13. Mr. Gurbaksh Singh had written this letter that he had agreed to hypothecate this property and statement to this effect was taken from him in his handwriting in the first week May 1985. He has further written in the letter that as per his understanding no fresh loan facilities were given against the hypothecation. Mr. Gurbaksh Singh has then recorded that he is aged 75½ years and by way of a family settlement he has bequeathed his property to his youngest son. Finally, he wrote that he would be grateful if the Bank would kindly release the hypothecation of 28/18, East Patel Nagar and return the lease deed and other documents filed by him.

The Counsel for the respondent-Bank would highlight the contents of this letter to urge that Mr. Gurbaksh Singh had made an admission for having hypothecated this property and accordingly sought release thereof. The Counsel would accordingly submit that the question of fact as raised by the Counsel for the appellant that mortgage of the property has not been proved would stand belied from this document and another document which is written by Mr. Gurbaksh Singh. The Counsel for the appellant, however, would rely on this letter to pray that Mr. Gurbaksh Singh had prayed for release of the property from hypothecation and as such he cannot be held liable for any loan or other liability of Kingston Electronics after 14th May, 1985. In this regard only, the Counsel for the appellant would highlight letter dated 7th October, 1987 (Exh. DW 12/14) which was a letter written by the Bank informing Mr. Gurbaksh Singh about the enhanced credit facilities availed by Kingston Electronics and the fact that the company had passed a resolution that property of Mr. Gurbaksh Singh would remain as collateral security for the enhanced facilities. In this letter, the Chief Manager of the Bank had thanked Mr. Gurbaksh Singh for agreeing to stand as guarantor and mortgagor for the enhance facilities. The Counsel for the appellant would say that there was no guarantee given by Mr. Gurbaksh Singh and the Bank being conscious of this fact that the mortgage without guarantee is of o use, sought to illegally show a guarantee by Mr. Gurbaksh Singh through this letter in a manner which is not appropriate or acceptable. The prompt reply given by Mr. Gurbaksh Singh is highlighted by the Counsel when he on 20th October, 1987 wrote back to the Bank stating that:

"I regret to note that my request has not been acceded to up to this date. Instead, I am asked to my agreeing to stand as guarantor and mortgage my property for the enhanced facility sanctioned to Kingston Electronics Pvt. Ltd. I regret to say that proposal is not acceptable to me which please note. I had agreed to give equitable mortgage of my house in lieu of half portion of House No. 28/17 of S.S. Nagpal valued at Rs. 4 lacs which was not acceptable by the Bank as it had an undivided half share only. I had never stood as guarantor to loan to Kingston Electronics Pvt. Ltd."

Counsel would also refer to letter 22nd October, 1987 (Exh. DW 12/16) which, as per the appellant, was intentionally not produced by the Bank, wherein the company had asked the Bank to return the titled deed of house No. 28/18 and had offered sale deed of factory premises as a security in lieu of this property. As per the Counsel, this proposal had been agreed to as if reflected from the reference made to the factory premises in document Ext. PW 4/23 which show that factory property was accepted as security instead of property 28/18, East Patel Nagar.

Having made reference to all these documents, the Counsel for the appellant would challenge the veracity of evidence produced by the Bank to urge that the document had not been proved and were wrongly marked as exhibits or even if exhibited in evidence the contents thereof were not proved in any legal manner. The Counsel for the appellant, therefore, would submit that the Bank was unable to prove the mortgage of the property in question and also could not prove in any satisfactory manner the amount which was due to the Bank and hence the liability qua the appellant cannot be fastened on the basis of this infirm and inadmissible evidence.

In his affidavit Mr. Ravinder Kapoor has deposed that he had worked as Chief Manger since 8th August, 1994 and being posted in the Janpath Branch was conversant with the facts. The Suit before the Delhi High Court had been filed through Mr. P.C. Goel who was the then Chief Minister and Attorney of the applicant Bank. Obviously, as such Mr. Ravinder Kapoor could not have claimed to have knowledge of the case if earlier Mr. P.C. Goel was the one who had filed the Suit before the Delhi High Court. Mr. Ravinder Kapoor had also produced the attorney given in favour of Mr. P.C. Goel authorising him to sign and verify the plaint on behalf of the Bank. This witness then had referred to the fact of Mr. Gurbaksh Singh having created an equitable mortgage and so also to the mortgage created by Mr. S.S. Nagpal. In his affidavit, he has also disclosed that respondent Nos. 9 to 11 had unauthorisedly bought this property and then had deposed in detail and has produced various documents which were marked and exhibited. This witness, however, could not be produced subsequently for the purpose of cross-examination perhaps not being available. The grievance of the appellant is that though documents produced by this witness have not been proved, but the Presiding Officer of the Tribunal below has relied upon PWs 1/16, 1/17 and 1/18, which the Presiding Officer could not have done.

Thereafter, the Bank produced another witness named Mr. A.R. Mittal. He had also produced certain documents, but this witness, again, was not made available for cross-examination. As per the Counsel, Mr. Mittal otherwise proved the loan documents of 1987. His affidavit in Chief was without proper verification. He also could not be produced for cross-examination. His evidence thus would suffer from the same defect as of Mr. Kapoor.

The Bank then produced Mr. Ramesh Kakkar as witness who proved loan documents dated 31st May, 1984. This witness statedly gave no evidence of mortgage allegedly executed by Mr. Gurbaksh Singh. Then comes the evidence of star witness of the prosecution Mr. P.C. Goel. Who filed his evidence by way of affidavit. This witness was made available for cross-examination and it is this cross-examination which has been highlighted by the Counsel for the appellant to urge that the main witness of the Bank could not prove its case as can be seen from the evidence which has came on record through his cross-examination. The Counsel for the appellant has made laborious efforts to take me through the evidence and the cross-examination which, has been referred to by the Tribunal as irrelevant. What came on record through his evidence may now be noticed.

The original of the Power of Attorney in favour of the witness was not on record. He even was not Chief Manager, which fact came out during his cross-examination. The witness had to concede that he was a Senior Manager and not Chief Manager. The Tribunal below had made an observation that the designation of the witness was corrected by hand by writing Chief Manager and not Senior Manager. It could be shown that the sanctioning authority for the loan was Chief Manager which fact the witness conceded. The witness could not state the sanctioning power of Chief Manager during the relevant period or that of the Zonal Officer. He however conceded that he was posted as Chief Manager of Ashok Hotel branch from December, 1991 to May, 1993 but still could not recollect the power or upper limit of the Chief Manager to sanction the loan. When asked that the power of the Chief Manager between 1934 and 1986 was less than Rs. 10 lacs, the witness remained evasive by answering that he did not remember the same. The witness could not show any sanction even after examining the record as none was available. The witness conceded that on each occasion sanction letter was required to be issued. This witness even could not answer whether the term loan sanctioned by the Bank was ever availed by the respondent company. The witness even failed to recollect after seeing the documents if the amount of Rs. 4 lacs mentioned in Ext. P1/11 was within overall limit of CC hypothecation of Rs. 8 lacs. The witness was then shown the document Ext. P 1/12 and he confirmed that it related to some term loan. Thereafter, when questioned as to what was the facility/limit sanctioned on 3rd May, 1984, the witness answered that CC limit (hypothecation) to be Rs. 8 lacs and CC limit (pledge) to be Rs. 16 lacs and term loan of Rs. 3.45 lacs. Though given notice to bring the original documents, the witness did not produce or show the original documents. The appellant had made a request for producing original documents through a notice dated 15th November, 2010.

Further, the witness could not answer as to what was the existing facilities on 14th May, 1985. When the attention of the witness was invited to the statement of account to depose about the outstanding as on 14th May, 1985, the Tribunal below had intervened to record an observation that the statements of account filed by the Bank were photocopies and had not been exhibited. Disregarding this fact that the statement of account was not proved by the Bank, the Counsel for the appellant still went ahead to further question the witness on this document. The witness still could not state to what was the status of the account on 14th May, 1985.

The witness was also questioned in regard to the transfer entry of Rs. 50,88,639.75 when the debit balance in the said account on the said date stood at Rs. 5,74,027/-. The witness had respondent by stating that this entry is correction of escota machine. He accordingly could not say whether the debit balance entry on 10th August, 1988 showing outstanding balance as Rs. 6,11,427/- to be correct or not. The witness could not confirm the debit balance on 10th August, 1988. A suggestion was then put to the witness that on 12th May, 1984 (marked A) the debit outstanding was Rs. 24.540/-, when the witness answered that correct debit balance amount was Rs. 860.72 as per the statement. The witness subsequently could not explain various entries about which he was questioned. The majority of answers by the witness were "I cannot say". The witness thus could get away by being evasive. He seems to have forgotten to remember that this may make his evidence suspect and doubtful.

The witness was also questioned if he had met Mr. Gurbaksh Singh during his tenure, to which he answered that he could not say. He also could not recollect if he had handled any correspondence from Mr. Gurbaksh Singh. When asked that Mr. Gurbaksh Singh never signed or executed any personal guarantee, the witness answered that it could be verified from the record. The witness was shown document Ext. PW 1/5 and he had to admit that it was a guarantee deed and had not been signed by Mr. Gurbaksh Singh and was only signed by Mr. S.S. Nagpal and Smt. Surjit Kaur. When questioned that Mr. Gurbaksh Singh had refused to sign and execute any personal guarantee or to extend the mortgage to any new facility/limit, the witness conceded that it was not in his knowledge.

The witness was shown certain entries from the photocopy of ledger regarding balance and term loan debit balance, as despite request made the witness had not brought original account ledgers. The witness had been given time to see and peruse the record and to show if there was any letter of guarantee which he could produced but the witness stated that even after seeking record he could not find any deed of guarantee.

This witness was further questioned about the document which was produced by the Bank to have been signed by Mr. Gurbaksh Singh. This was a photocopy which was marked as PW 1/16. When asked as to where the original of the document was, the witness answered that it was a part of documents of the Bank executed by late Mr. Gurbaksh Singh depositing the title deeds to the property No. 28/18, East Patel Nagar, New Delhi and the original must be with the Bank. Despite notice, the witness had not brought the original. The document did not contain any signature of Mr. Gurbaksh Singh. He was accordingly questioned whether this document was executed by Mr. Gurbaksh Singh as was stated by the witness. The witness had to answer that it was correct that he did not execute this document. The witness agreed that it was part of the Register, original of which was not brought. The witness offered no comment when questioned that the Bank had deliberately not produced the original of the Register. The witness was then questioned about the communication dated 4th May, 1985 wherein Mr. Gurbaksh Singh had informed the Bank that he did not intend to give any personal guarantee and the answer of the witness to this question was that he had no comment.

The witness was then given time to bring the original of letter dated 7th October, 1987, but he did not do so. In this letter, reference had been made to a resolution by the Board of respondent No. 2 and the communication that Mr. Gurbaksh Singh had agreed to extend the mortgage. When questioned the answer of the witness was that it may be with the Bank. No such document was filed. The witness made no comment when questioned that Mr. Gurbaksh Singh had repeatedly refused to execute the guarantee or to extend mortgage even prior to 7th October, 1987. The witness stated that he had no knowledge if respondent No. 2 had created mortgage over the Noida property in lieu of the property at 28/18, East Patel Nagar. The witness otherwise agreed that as per his experience it would be correct to stage that prior to the grant of limits/facilities or any enhancements a written request of the borrower would be required by the Bank and thereafter considering such request specific sanction letter would be issued before sanctioning any limit. The witness could not show any letter refuting the letter written by Mr. Gurbaksh Singh dated 14th May, 1985 or that if the Bank had respondent to this letter. The witness was not aware of any step taken pursuant to this letter. The witness agreed that after issuance of letter dated 20th October, 1987 (Ext. DW 12/15) no document either extending the mortgage or personal guarantee was signed or executed or furnished by late Gurbaksh Singh. The witness also could not show any action by the Bank on repeated representation made by Mr. Gurbaksh Singh.

The witness agreed that Mr. Gurbaksh Singh through his letter dated 20th March, 1991 had sent the bonds of value for discharge in favour of the Bank but the witness could not say if they were encashed. The witness offered no comment when questioned if Mr. Gurbaksh Singh was required to extend the mortgage or execute or furnish a personal guarantee to secure the newly sanctioned limit. The witness was also questioned if the letter written by Mr. Gurbaksh Singh to the Chief Manager was forwarded to the Zonal Office but the witness expressed his inability to recollect or answer.

The Counsel for the appellant has also highlighted the fact that late S.S. Nagpal as well as Smt. Surjit Kaur had executed various documents on 10th December, 1990 and this fact was admitted as correct by the witness. The witness conceded that he did not find any document filed by the Bank to refute the suggestion that no document of any nature by way of extension of mortgage, personal guarantee were signed or executed by late Gurbaksh Singh. The witness agreed with the suggestion put to him that in his entire employment of 41½ years he had found it to be a consistent practice of accepting mortgage of a third party with personal guarantee. It could be established that the appellant had been staying in this properly as could be made out from the report of the Local Commissioner and despite this fact in the knowledge of the Bank, it did not implead the appellant as a party respondent.

Highlighting the above evidence which came on record, the Counsel for the appellant would contend that the Bank failed to prove as to what was the amount due and on this basis the liability could not be fastened on to the appellant. The Counsel would contend that the Bank also could not prove if Mr. Gurbaksh Singh has created any mortgage of the property on 30th April, 1984. The recitals made in the Register could not be proved as photocopy only was led in evidence and original document was not produced before the Tribunal. Counsel would contend that these documents were led into evidence by Mr. Ravinder Kapoor who was not made available to the appellant for the purpose of cross-examination. His evidence and number of documents exhibited through him would required to be discarded being inadmissible. As per the Counsel, no evidentiary value can be attached to such documents. The Counsel would further contend that even if it is assumed or taken to be proved that Mr. Gurbaksh Singh had mortgaged the property in question, still he had withdrawn the mortgage on 14th May, 1985 and whatever be the liability standing on that date was discharged when Mr. Gurbaksh Singh submitted bonds for a sum of Rs. 4 lacs for encashment. The Counsel for the appellant would also urge that Mr. P.C. Goel was posted in the branch when the loan was sanctioned but he had never met Mr. Gurbaksh Singh. Counsel submit, that the letter written by Mr. Gurbaksh Singh confirming the deposit of the title deed amounted to creating a mortgage and this document could not be read in evidence as having not been registered in terms of Section 17 of the Registration Act.

In support of his plea, that mortgage without guarantee cannot create liability, the Counsel has relied upon the unreported judgment in the case of Union Bank of India v. Grand Enterprises, Suit No. 809/1976, decided on 23rd April, 1982. This was a case where Union Bank of India had filed a Suit for recovery of Rs. 1,63,88.90. It was stated in the plaint that defendant No. 4 in the Suit deposited titled deeds of the property of Plot No. 28, Block C. Shakur Basti, Rani Bagh, Delhi and thus created an equitable mortgage in favour of the plaintiff Bank. The evidence of the Branch Manager of the Bank was recorded under Order 10 Rule 1 of C.P.C. which stated that after seeing the Register he could not say whether defendant No. 4 attended the Branch of the plaintiff Bank. The issue which accordingly arose before the Court was whether defendant No. 4 had deposited the title deeds with the plaintiff for collaterally securing the dues of defendant Nos. 1 to 3 by way of equitable mortgage and whether she was liable for any amount in view of the fact that she was neither a guarantor nor a loanee. The Court after considering the submission made before it, has recorded that the defendant No. 4 never stood as guarantor for the credit facilities granted to the other defendants. The Court accordingly found that she was under no liability whatsoever and if she did deposit her title deed, no liability of the payment of the amount could be fastened on her. The Court has observed that the deposit of the title deed could create mortgage only if defendant No. 4 had a liability to pay as a principal debtor or as a guarantor. The Court accordingly held that Suit against defendant No. 4 was not maintainable.

As per the Counsel for the appellant this judgment would apply squarely to the facts of the present case and as such, Mr. Gurbaksh Singh could not be held liable for any facility that was advanced in favour of respondent No. 2 even if it is admitted that he had deposited the title deed to create any equitable mortgage, but had admittedly not given any guarantee. In this regard, the evidence which has been referred to in detail would clearly proved that no guarantee had been got executed from Mr. Gurbaksh Singh and mere deposit of title deed even if admitted may not make said Mr. Gurbaksh Singh liable for the recovery of the amount advanced to respondent No. 2 company. Besides, there is serious dispute in regard to the facts of creation of an equitable mortgage. No doubt, the Counsel for the respondent has relied upon the letters where Mr. Gurbaksh Singh has conceded to have created mortgage of deposit of title deed, but it was the responsibility of the Bank to prove its case. Even the original Register photocopy of which was relied upon by the Bank was not produced before the Tribunal below. It has not been pleaded before me that any permission was sought from the Tribunal to produce secondary evidence. Despite notice by the appellant to produce the original document, the same was not produced before the Tribunal. Even the statement of account it said to be a photocopy and not the original as can be noticed from the observation made by the Tribunal during the course of recording evidence. Reference to his observation has been made by me above. The evidence of the star witness Mr. P.C. Goel produced by the appellant stood completely shaken during his cross-examination and it would not be safe to rely upon the version of this witnesses. To the majority of questions, he gave an evasive answer and upon being cornered had to make a few concession in favour of the appellant. In this state of evidence it would be unsafe to hold that the Bank had been able to prove documents relied upon by the Bank or its case so far as it relates to the mortgage of this property is concerned. Since there is no challenge to the liability otherwise fastened on to the other respondents, any observation made in this order would be in the context of the plea raised by and on behalf of the appellant alone.

The Counsel for the Bank was really at loss to explain as to why the Bank did not chose to prefer an Appeal against 28/17, East Patel Nagar which was also allegedly mortgaged on the same date and was sought to be established on the basis of same document. If this document was not considered by the Tribunal below to be an authentic and correct record of the transaction which took place on 30.4.1985 to release the property at 28/17, West Patel Nagar of Mr. S.S. Nagpal on the ground that he was out of country, the same would definitely acquire a doubtful-character. If a wrong record is made in respect of one document where is the guarantee that such a record was not wrong in respect of other entry. To add to all this, the original document is not produced and even the copy is not proved by the star witness of the Bank. The Counsel for the appellant has also pointed out the signatures on the page which, according to him, appeared to be Mr. P. C. Goel but still the said witness failed to acknowledge this fact that Mr. Gurbaksh Singh has ever come in person to deposit the title deed. Mere admission on this ground when the original documents are not forthcoming, that too, in a letter where Mr. Gurbaksh Singh has sought his release from the mortgage cannot be read in parts to rely on the admission and to discard the document so far as remaining part is concerned. If this document can be relied upon to hold that Mr. Gurbaksh Singh has made an admission of deposit of title deed and thus equitable mortgage of the property stood established, then this document cannot be ignored for that part of the recital that Mr. Gurbaksh Singh was no more interested in continuing with the hypothecation of the property and had sought release of the title documents. The Bank ought to have responded to this prayer. The Bank, however, did not object to the prayer made by the appellant. The writing made subsequently after two years on 7th October, 1987 was promptly replied to by Mr. Gurbaksh Singh drawing the attention of the Bank to his letter dated 14th May, 1985. There is no evidence to show that the Bank had contested the plea or raised any objection ever to this communication addressed by Mr. Gurbaksh Singh that he had sought release of the title deed of his property. The Bank obviously had kept silent so much so that Mr. Gurbaksh Singh had then was forced to exchange correspondence with the Finance Minister of the country and, ultimately, on a response received by the Bank he had deposited the bonds to discharge the liability which was statedly standing. The Bank ought to have come to record to show if such bonds were encashed or not. Evasive action of the Bank in this regard cannot be appreciated would lead to an adverse inference against the Bank since this evidence was with the Bank but if failed to produce the same. It may have to be assumed that those bonds were encashed.

The submission made by the Counsel for the Bank on the strength of the judgment in the case of Narayana Pillai Raghavan Pillai v. Narayani Amma Ponnamma, AIR 1992 SC 146, to emphasize that as per Section 58 of the Transfer of Property Act, which defines mortgage as a transfer of interest in specific immovable property for the purposes of securing the payment of money advanced or to be advanced by way of loan, existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability, would also be of no help to the Bank. The Counsel for the appellant has distinguished the judgment by pointing out that, the plaintiff respondent and defendant - appellant were the successors in interest of the original mortgagor and mortgagee respectively and that would be distinction in this case and that of the appellant.

The Counsel for the Bank also relied upon the case of United Bank of India Ltd. v. Lekhram Sonaram and Co., AIR 1965 SC 1591, where defendant had written a letter to the Manager stating that documents of title were deposited, with an intend to create equitable mortgage upon all his rights and it was held to create an equitable mortgage. The Counsel seeks support from the observation made in this regard where the plea of the defendant that his document required registration was negated. As is observed, by the Court in this case this letter was not meant to be an integral part of the transaction between the parties. The letter did not mention what was the principal amount to be borrowed and had also not referred to what was the rate of interest of the loan. The Hon'ble Supreme Court accordingly hold that the High Court was at error in holding that the document was intended to be integral party of the transaction and was to create an interest in the immovable property and accordingly further has observed that it did not require any registration. Counsel has also referred to K.J. Nathan v. S.V. Maruty Reddy, AIR 1965 SC 430, where the Court has observed that no document executed on the day of deposit, still under the Transfer of Property Act a mortgage by deposit of title deeds is one of the forms of mortgages where under there is a transfer of interest in a specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. It is held that such a mortgage of property takes effect against a mortgage deed subsequently executed and registered in respect of the property. The line of submission is made on the strength of Section 68 of the Transfer of Property Act. This section provides that the mortgagee has a right to sue for the mortgage-money in case where the mortgagor binds himself to pay the same. In response, the Counsel for the appellant has referred to the proviso which, according to the Counsel, has completely been missed by the Counsel for the respondent while relying on Section 68 of Transfer of Property Act. The proviso states that in the case referred to in Clause (a) of Section 68, a transferee from the mortgagor or from his legal representative shall not be liable to be sued for the mortgage-money.

The Counsel for the appellant otherwise would again stress that mortgage without guarantee is without consideration and mere marking of a document does not prove a document as such. In support of this, he has relied upon Chandradhar Goswami v. Gauhati Bank Ltd., (1967) 37 Comp. Cas. 108, Sudhir Engineering Company v. Nitco Roadways Ltd., 1995 (34) D.R.J., and Narbada Devi Gupta v. Birendra Kumar Jaiswal, VI (2003) SLT 527 = (2003) 8 SCC 745.

Considering all facts and submissions made before me, I am of the view that the Bank could not succeed in proving its case. Even if it is accepted that mortgage was created, the same as withdrawn on 14th May, 1985, which fact was not properly considered by the Tribunal below. The Tribunal below is not justified in completely ignoring the evidence which came on record by way of cross-examination of witness produced by the Bank. The Tribunal below ought to have appreciated the evidence either to hold that this did not make any difference or to say that this went on to dent the case of the Bank. Be that as it may, I am of the view that the Bank's version got seriously dented by the cross-examination and it would be highly unsafe to place implicit reliance on the same to hold that the case of Bank stood proved. It will not be thus fair, legal or appropriate to fasten the liability on to the appellant on the basis of this evidence. The legal submissions made by the Counsel for the appellant apparently are justified and accordingly this Appeal is allowed and the part of the judgment contained in para 18 (iii) holding the Bank entitled to recover the debt by the sale of mortgaged property described in para 17-A (i.e. House No. 28/18, East Patel Nagar, New Delhi) is set aside. This order will not have any effect if this property is having charge in respect of any other loan liability.