Punjab National Bank vs Sunil Sahani & Anr.

The present case was heard and reserved for judgment vide order dated 15.12.2025 passed by this Tribunal.

Learned counsel for the appellant contended that the question involved in the present appeal is, as to whether the Bank has a general lien over the title deeds deposited by the borrower pursuant to the amount, which is outstanding against the borrower with regard to the other loans, apart from the loan, in which the property was mortgaged and a reference has been made to the Section 171 of the Contract Act.

Learned counsel for the respondents contended that in the present matter, the property was mortgaged and the entire amount has been paid and no dues certificate has also been issued, but the title deeds are not being returned on the ground that in some other loan accounts, some OTS amount is due, therefore, as per Section 171, the Bank is not entitled to retain the title deed. Learned counsel for the respondents has relied upon the judgment passed by the Hon'ble Apex Court in Zonal Manager, Central Bank of India Vs. Devi Ispat Ltd. & Ors, (2020) 11, SCC 186, which has been followed by the Hon'ble Bombay High Court, Nagpur Bench, Nagpur in M/s Mahalaxmi Textiles Vs. Syndicate Bank, decided on 06.07.2022 as well as Hon'ble Gujarat High Court in Writ Petition No. 32 of 2022-Mr. Sunil Vs. Union Bank of India. It was, therefore, prayed that the appeal filed by the appellant may be dismissed and the bank may be directed to return the title deed of the property, which was mortgaged in the present case.

Learned counsel for the appellant further submitted that in both the judgments, which has been referred to by the learned counsel for the respondents, permission was sought by the borrower from the Bank to sell the property in question and subsequent to grant of such permission, the property was auctioned and amount was deposited with the Bank, which is not in the present case, therefore, ratio of both the judgments will not apply to the present case. Learned counsel further submitted that the borrower had two loan accounts with the Bank, one in the name of Sunil Sahani and another in the name of M/s Sunny Marketing. It was further contended that initially, the borrowers had sent a onetime settlement proposal for settling both the loan accounts, but subsequently, they have entered into settlement for the account in the name of Sunil Sahani. It was also contended that only one property was mortgaged in the said account and after negotiation between the parties, the Bank has issued a letter dated 14.01.2021 communicating the sanction of OTS proposal of borrower, which is appended at page No. 18 of the paper book. Learned counsel further submitted that in the said approval letter for OTS proposal dated 14.01.2012, it is nowhere stated or permitted by the Bank to the borrower to sell the mortgaged property and only it is mentioned in the said letter that after deposit of money, no dues certificate will be issued, but there is no whisper about the returning of title deed.

Learned counsel for the appellant has drawn attention of this court to page No. 59 of the paper book, which is reply of the Bank dated 16.04.2022 to the letter dated 28.03.2022 of Sunil Sahani, whereby Sunil Sahani was intimated that he has mortgaged the property, as guarantor in the loan account of M/s Sunny Marketing, therefore, his liability is Co-extensive with the primary borrower in the account of M/s Sunny Marketing, which was NPA, therefore, it was intimated that the title deed will not be returned till the time Bank's dues are satisfied in full. It was thus argued that his property, which was mortgaged in the loan account of Sunil Sahani, is sufficient to liquidate the entire Bank's dues, therefore, the property, which was mortgaged, was not released so that the final dues could be settled. In support of his contention, section 171 of the Contract Act was referred to by the learned counsel for the appellant.

Learned counsel for the appellant has relied upon paras 5 and 6 of the judgment passed by the Hon'ble Supreme Court in Syndicate Bank and Vs. Vijay Kumar and Ors., decided on 05.03.1992, wherein the Bankers lien has been defined.

It was further contended that the Bank had contested the issue before the Tribunal below with regard to release of the title deeds. The Tribunal below has misread the documents and the order impugned was passed in-disregard to the documents available on record and has not even considered the issue of Banker's lien. Learned counsel for the appellant has also contended that the point in issue involved in the present case is detailed in para 3-A to M of his rejoinder affidavit. It was, therefore, prayed that the appeal may be allowed.

Considered the arguments of the learned counsels for the parties and perused the material available on record.

The present appeal has been filed under Section 20 of the RDB Act, 1993 challenging the order dated 25.05.2022, whereby the IA No. 801/2022 filed by the respondents has been allowed by the Tribunal below directing the bank to issue no dues certificate and return the title deed of the property in question within 15 days.

It appears that the appellant-Bank had filed an Original Application No. 1441/2019 before the Tribunal below. During the pendency of the said O.A., the respondent-borrower approached the appellant-bank for one time settlement, which was accepted by the Bank with certain conditions vide letter dated 14.01.2021. As per the said OTS, the total amount of Rs.2.25 crores was to be paid within 180 days from the date of issuance of the said approval letter and accordingly, the same was paid by the respondent-borrower, which is not disputed by the appellant-bank.

While going through the approval letter dated 14.01.2021 filed at page no. 18 of the memo of appeal, it is found that the said letter was received by the respondent-borrower, but with an endorsement "accepted as per our letter dated 14.01.2021". The last para of the letter dated 14.01.2021 issued by the respondent-borrower says as under:-

On the basis of the OTS proposal dated 22.12.2020 of the respondent-borrower, the appellant-Bank had approved the OTS offer of the respondent-borrower, but the bank has nowhere denied in its OTS approval letter dated 14.01.2021 that after receipt of entire OTS amount, the title deed in respect of the property in question shall not be returned due to the liability of the respondent no. 1 in another account pertaining to M/s Sunny Marketing. It is also relevant to point out that when the respondent-borrower received the sanction letter of OTS proposal dated 14.01.2021 by endorsing "accepted as per our letter dated 14.01.2021" and if the said condition was not accepted by the Bank, then at the very same time, the Bank ought to have cleared its position that the No Dues Certificate will only be issued and title deed in respect of the properties involved in the case shall not be released, but the bank kept silent on this point till the receipt of the entire OTS amount from the borrower and thereafter, such stand has been taken by the bank, which cannot be accepted/permitted in the interest of natural justice and also for the reason that the respondent-borrower in para 6 of its offer letter dated 22.12.2020 has clearly mentioned "Upon payment of entire OTS amount consortium banks shall issue "No Dues Certificate" in favour of partners/mortgagors/guarantors, bank shall also withdraw litigations initiated from Debts Recovery Tribunal, Jabalpur and other Legal forum if any, and release all the title documents mortgaged with the bank" and while sanctioning the said proposal vide letter dated 14.01.2021, the bank has not denied to accept the said condition and not thereafter till the entire OTS amount was paid.

So far as the contention of the appellant-Bank that the respondent no. 1 is a guarantor to the loan of M/s Sunny Marketing, therefore, the title deed in respect of the property in question cannot be released, is not tenable, because the respondent-Bank has never denied for return of title deed in respect of the property mortgaged with the Bank to the loan advanced in favour of Sunil Sahani till the full OTS amount is paid. Further, the contention of the appellant that in the sanction letter dated 14.01.2021, it is nowhere mentioned that the title deed will be returned, is also not tenable, because in the said letter, it is true that the same has not been mentioned, but it is also not mentioned that the same shall not be returned, meaning thereby, the condition mentioned by the borrower in its acceptance letter dated 14.01.2021, which was received by the bank on 18.01.2021, that the Bank shall release the title documents in respect of the property in question, is considered to have been accepted by the Bank, because if anything remains un-rebutted, that will be presumed to have been accepted, therefore, at this stage, Bank cannot be permitted to retain the said documents after receipt of entire OTS amount.

With regard to the recovery of loan amount pertaining to M/s Sunny Marketing, it is stated that the property involved in the present case is not a collateral security in the said account, therefore, the bank cannot be permitted to retain the documents of the borrower for the recovery of the another loan account pertaining to M/s Sunny Marketing, as for the said loan account, Bank has already filed a separate Original Application being OA No. 527/2020. If the said OA is allowed and the recovery certificate is issued, then the Bank would have every right to attach/sell any property of the respondent no. 1-borrower, whether the same was mortgaged or not, therefore, holding/retaining of the documents pertaining to the property mortgaged in the present case by the appellant cannot be held to be justifiable on part of the Bank. Thus the Tribunal below has rightly directed the Bank to issue the No Dues Certificate and release the title deed of the property mortgaged in the present case.

So far as the contention of the appellant that bank can exercise his right of lien on the security remaining in his possession, is concerned, no doubt, the right of the bank is protected u/s 171 of the Contract Act, but the facts and circumstances of the present case is different, therefore, the same is not applicable. In the present case, the matter has been settled mutually with certain conditions between the parties, therefore, no party can go beyond the conditions as laid down in the OTS. However, from the reading of the sanction letter dated 14.01.2021 of the appellant along with the acceptance letter dated 14.01.2021 of the borrower, it is crystal clear that after deposition of entire OTS amount, each and every dispute between the parties with regard to the present case would come to an end, but it has not been done on behalf of the Bank, therefore, appellant-bank cannot be permitted to take shelter of any law to prolong the dispute and harass the borrower in the present case.

In view of the above, the order impugned does not call for any interference by this Tribunal. Consequently, the appeal filed by the appellant is dismissed with no order as to costs.

A copy of this order be forwarded to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.