Punjab & Sind Bank vs Surinder Kaur And Ors.

Ranjit Singh, J

O.A. No. 276 of 1996 filed by the appellant Bank was allowed on April 21, 2011 The Bank is held entitled to recover a sum of Rs. 41,26,988.58 with costs. The respondents herein have been held jointly and severally liable to pay the amount with interest @ 13.5% per annum with quarterly rest from the date of filing of the application till realization within sixty days thereof failing which the amount was to be recovered from the sale of the secured assets i.e. West Patel Nagar property Vide the impugned order, deed of property No. E-22, Panchsheel Park, New Delhi had been ordered to be returned to respondent No. 5, who was defendant No. 5, in the O.A. The Bank is aggrieved against this part of the order and accordingly has filed the present appeal. Facts, in brief, are that M/s. Skipper Builders Pvt. Ltd. had approached the appellant Bank for grant of ODP limit to the extent of Rs. 6.50 lacs on February 20, 1977. It offered properties at 6/13, Vasant Vihar, New Delhi and C-148, Naraina Industrial Area, Ring Road, New Delhi as security by way of equitable mortgage in respect of the loan. The aforesaid credit facility was granted to respondent No. 1 on 25th July, 1977 and the defendants executed various loan documents on July 27, 1977. Smt. Iqbal Kaur deposited with the Bank title deed of property i.e. E-6/13, Vasant Vihar, New Delhi. Shri Ajit Singh, proprietor of Maffia Electronics deposited another title deed of property No. C-148, Naraina Industrial Area.

The account started running irregular after availing of the credit facility. The Bank vide its letter dated May 18, 1978 called upon the defendant borrower to furnish the permission from the competent Authority under the Urban Land Ceiling Act in respect of the aforesaid mortgaged properties. The debt balance in the account was Rs. 8,33,203/- against sanction of Rs. 6.50 lacs.

On December 1, 1978 respondent No. 1 requested the Bank to release the above noted two mortgaged properties of Vasant Vihar and Naraina Industrial Area and prayed that the credit limit be secured by property bearing No. 8/25, West Patel Nagar, New Delhi, respondent No. 1 also requested the Bank to reduce ODP limit of Rs. 6.50 lacs and convert it into term loan of Rs. 4 lacs. It promised to pay the balance amount, which was never paid. In terms of the request, the Bank sanctioned term loan of Rs. 4 lacs on December 26, 1978 against the ODP limit of Rs. 6.50 lacs. This was against the mortgaged property bearing No. 8/26, West Patel Nagar New Delhi, which was owned jointly by respondent Nos. 1, 2 and 3. The loan was also guaranteed by respondent Nos. 2 and 3. The loan was disbursed on January 3, 1979 and a sum of Rs. 4 lacs was credited in the earlier ODP account of respondent No. 1. Respondent No. 1 executed various loaning documents on January 3, 1979 respondent Nos. 1 to 3 deposited with the Bank original title deed of property No. 8/25, West Patel Nagar as a security on December 7, 1978, respondent Nos. 3 and 4 also executed guarantee agreement.

Respondent No. 1, however, failed to deposit the balance amount in ODP account when the Bank initiated various communications requiring respondent No, 1 to pay the amount along with interest accrued, respondent No. 1 acknowledged the liability in the ODP account to the tune of Rs. 2.97 lacs but failed to repay the same.

On 19th December, 1981 defendant No. 1 acknowledged the debit balance of Rs. 6,85,791.80 in LAP account and executed fresh loan documents on the said date in favour of the appellant Bank. In fact, on November 27, 1981 a sum of Rs. 4,91,785.21 was outstanding ODP account and a sum of Rs. 10,14,067.67 was outstanding at the foot of ODP account of Sardar Tejwant Singh respondent No. 4. In order to secure repayment of the said outstanding amount, respondent No. 5 Shri Sardul Singh Jolly deposited title deed of immovable property bearing No. E-22, Panchsheel Park, New Delhi with the Bank with an intention to secure the dues of the appellant. Respondent No. 1 also executed continuing personal guarantee in favour of the appellant Bank, respondent No. 4 also executed guarantee deed on December 19, 1981 in respect of a sum of Rs. 6,85,791.80 being the amount due in LAP account. Respondent Nos. 1 to 4 once again acknowledged their liability and executed fresh security documents on July 4, 1983.

On 31st December, 1983, total aggregating amount of Rs. 17,82,163,67 was due in respect of LAP and ODP accounts. The Bank issued notice to the defendants on 4th May, 1984 calling upon them to repay the outstanding amount. On October 1, 1985 the defendants executed fresh loan documents and security documents including demand promissory note and respondent No. 5 had guaranteed repayment to the appellant in November, 1981 which is continuing guarantee. On 30th December, 1985 an amount of Rs. 14,84,180/- was outstanding in LAP account and a sum of Rs. 11,53,876.40 out standing in ODP account together with interest.

The Bank issued a legal notice to the defendants calling upon them to repay the aggregate amount of Rs. 26,37,994.40. It is stated that on July 6, 1987 the defendants executed fresh security documents in favour of the appellant in respect of the outstanding dues in the term loan account including demand promissory note. Ultimately, the Bank had to file a suit on September 26, 1988 when a sum of Rs. 19,41,696/- was outstanding in ODP account and a sum of Rs. 24,50,965/- was outstanding debt balance in LAP account inclusive of interest up to 26th September, 1988, aggregating to Rs. 43,92,661/- which was due and payable. The Bank accordingly filed suit No. 2752 of 1988 for recovery of its due along with pendente lite and future interest @ 17.5% per annum with quarterly rests. This suit was transferred to the Tribunal when the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was enacted. It was listed as OA No. 276 of 1996.

Respondent-defendants filed written statements. Since the challenge in the present appeal is limited to the directions passed by the Tribunal below for releasing the title deed of the property alleged to have been mortgaged by respondent No. 5 so his stand in the reply alone may need a notice respondent No. 5 has denied if he stood as a guarantor for any loan or money advanced. He has also denied if he had offered any property as a security respondent No. 5 pleads that in order to secure the loan, he had never deposited title deed of property No. E-22, Panchsheel Park, New Delhi, with the Bank to create an equitable mortgage. He has never personally guaranteed repayment of the said amount or confirmed deposit of the title deed. As per respondent No. 5, he was made to sign the documents on the pretext that he was merely a witness to the repayment of the said loan amount. He has also denied having received any legal notice.

In the written statement filed by respondent No. 5, he has also pleaded that the application does not disclose any cause of action against him. As per him the application against him is based on forged documents respondent 5 stated that the documents filed by the Bank in respect of the said respondent are the alleged memo of deposit of title deeds and a letter of guarantee in respect of accounts of Shri Tejwant Singh and Smt. Surinder Kaur respondent No. 5 states that he never deposited any title deed and that there is no account in the name of Shri. Tejwant Singh and Smt. Surinder Kaur. As per him, there could be no deposit of title deeds in two accounts nor any joint letter of guarantee in two accounts. He would plead that he was made to sign blank forms at the time of sanctioning of another loan, which was applied by his sister-in-law Smt. Shakuntla but the said loan never materialized These blank forms signed by the respondent remained in possession of the Bank which seems to have been utilized in respect of this account by the Bank Officers in league with respondent No. 4, who is husband of respondent No. 1.

Respondent No. 5 has also filed counter-claim with the prayer that the application be dismissed with costs and a decree for mandatory injunction requiring the Bank to return the documents be passed in favour of the said respondent.

The Bank has filed replication to the written statement filed by respondent No. 5 and has reiterated the averments made in the application. The Bank has denied the allegations made in the written statement. In response to the counter-claim, it is reiterated that the documents were deposited with the Bank with an intention to create security of equitable mortgage The Bank has also denied if there was any variation in the terms of loan.

On the basis of pleadings, the Tribunal below struck ten issues which, as per the Tribunal, required adjudication in the OA. Out of these issues, issue Nos. 2, 3, 5 and 7 related to respondent No. 5 and are noted below:

Issue No. 2: Whether the defendant No. 5 is not a necessary party and the OA is bad for misjoinder of parties?

Issue No. 3: Whether blank documents were signed by the defendants as alleged in the written statement?

Issue No. 5: Whether the defendant No. 5 created a valid and equitable mortgage in respect of property bearing No. E-22, Panchsheel Park, New Delhi with intention to create security in respect of the loan facility availed by the defendant No. 1?

Issue No. 7: Whether the counter claim is maintainable and whether the defendant No. 5 is entitled to get any compensation from the Bank as claimed in the counter-claim?

The Bank is primarily aggrieved against the finding returned on issue No. 5. As per the Bank respondent No. 5 on November 26, 1981 deposited with the Bank title deed of property situated at E-22, Panchsheel Park. New Delhi with an intention to create security thereon by way of equitable mortgage as per the Bank, respondent No. 5 had executed personal guarantee in respect of the aforesaid amount and also executed Form No. 84-AA confirming the deposit of the title deeds of property No. E-22, Panchsheel Park, New Delhi with the Bank as collateral security. These pleas were denied by respondent No. 5 by stating that he has even no remote connection with the borrower. His plea is that his sister-in-law Smt. Shakuntla applied for loan which never materialized and the Bank illegally retained the documents of property bearing No. E-22, Panchsheel Park, New Delhi which the Bank was bound to return.

The Counsel for the appellant Bank would submit that the conclusion reached by the Tribunal below that there was no valid and lawful mortgage created in favour of the Bank relating to this property is not justified. It is alleged that the title deeds i.e. agreement to sell and power of attorney, etc. in relation to this property are unregistered. The Tribunal below has accordingly viewed that the title cannot be said to be perfect in favour of defendant No. 5 and, thus, question of creating a valid and lawful mortgage in favour of the Bank relating to this property does not arise Issue No. 5 was accordingly held against the Bank and decided in favour of respondent No. 5.

To find fault with this finding, Mr. Wali appearing for the Bank has referred to another judgment passed by the same Presiding Officer of DRT-II in OA No. 205 of 1995 Shri Sardul Singh Jolly is impleaded as respondent No. 6 in OA No. 205 of 1995 and as per the averments made in the said OA, a sum of Rs. 10,14,067.67 was outstanding at the foot of ODP of defendant Shri Tejwant Singh, who is also defendant in the present OA and a sum of Rs. 491,785.21 at the foot of ODP account of defendant No. 2, who is also respondent in the present case. In the said OA also, it was alleged that to secure the total amount noted above, Shri Sardul Singh Jolly (defendant No. 6) deposited with the Bank title deed of property No. E-22, Panchsheel Park, New Delhi on November 26, 1981 with an intention to create equitable mortgage by collaterally securing the aforesaid outstanding amount and also executed personal guarantee besides executing Form No. 84-AA confirming the deposit of the above title deed After discussing the evidence and the documents in this case, the Tribunal below allowed the OA holding all the defendants including Shri Sardul Singh Jolly to be liable jointly and severally to repay this amount From this, the Counsel would contend that the plea taken by Shri Sardul Singh Jolly that he had not signed any loan document or that he had not deposited the title deed of the property of Panchsheel Park is false and misleading plea raised by him. The Counsel would submit that if the said respondent is found to have validly stood as a security to secure loan of some of the respondents Shri Tejwant Singh and Smt. Surinder Kaur then there would be no reason to disbelieve that he would not have done so in the present case as well. Plea raised by respondent No. 5 Shri Sardul Singh Jolly (respondent No. 6 in OA No. 205 of 1995) is that he had signed these documents for a loan which his sister-in-law intended to obtain from the Bank. His plea that the claim against respondent No. 5 is based on the documents which are forged by the Bank is, thus, countered by the Bank in this manner.

Mr. Wali would also point out with some justification that the finding returned by the Tribunal below in the present case in regard to the documents having been signed in blank at the time of sanctioning of another loan applied by his sister-in-law had not been accepted by the Tribunal below, but still it has been held that the mortgage was not validly created. Mr. Wali would refer to the finding recorded on issue No. 3 where the Court has considered the plea whether the blank documents were got signed by defendant or not. The finding by the Tribunal in this regard is that the defendants are literate and highly educated persons. They are entrepreneurs and running company knowing full well the consequences. They have not denied having availed the loan. After examining the plea, the Tribunal below returned the finding that it did not find anything which may lead to the conclusion that these documents were got signed blank. Reference is made to the observations of Delhi High Court in the case of Indian Bank v. Cheese Wafers (India) Pvt. Ltd., 76 (1998) DLT 392, where it is held that when a borrower has admitted his liability by executing the balance confirmation letters and did not protest against having signed blank documents during the currency of credit facilities, the plea that his signatures were obtained on blank documents is a sham, plea raised being an afterthought. Once the Tribunal below came to this conclusion that the defendant had signed the documents after fully understanding the contents thereof, it is wrong to say that the blank documents were got signed from the respondent-defendant. Plea of respondent No. 5 that he had signed these documents in blank for obtaining loan for his sister-in-law Smt. Shakuntla would appear to be rather far-fetched. Mr. Wali is again justified in submitting that in case this is the plea of respondent No. 5 then why has he not asked for the return of the title documents till date. He would also point out that there is no positive evidence led in this regard and it is only an averment made in the reply which cannot be given much credence

The Counsel for respondent No. 5, however, has made a valiant attempt to answer the questions raised by Mr. Wali. He would submit that there was no occasion for respondent No. 5 to submit the title documents with the Bank in the account which is alleged to be in the name of Shri Tejwant Singh and Smt. Surinder Kaur. The Counsel submits that there is no account in the name of Smt. Surinder Kaur and Shri Tejwant Singh and hence his plea that the Bank had forged these documents to retain it in the loan account which was not in the joint names of these two persons. What ultimately the Counsel vehemently emphasized was the fact that in the pleadings no claim against the property of Panchsheel Park was made in the suit originally filed by the Bank before the High Court of Delhi. He would refer to the prayer clause made in the plaint where money decree against defendant Nos. 1 to 5 jointly and severally for a sum of Rs. 43,92,661/- was sought together with interest @ 175% and the second prayer was for declaration that the immovable property described in Schedule 'A' was validly mortgaged and for due repayment of the decree be passed in favour of the plaintiff. The Counsel would then refer to Schedule 'A' where reference is made to property No. 8/25, West Patel Nagar and no mention is made to property No. E-22, Panchsheel Park, New Delhi, which is alleged to have been equitably mortgaged by respondent No. 5. The Counsel thus would allege that there was no pleading in this regard and in the absence of the prayer and pleading claim against property of respondent No. 5 could not be maintained by the Bank.

Mr. Wali, however, would contest both the submissions. He would first state that the declaration sought in the prayer clause was for immovable "properties" and not "property" and in this context it was averred in respect of this property as more particularly property described in Schedule 'A' are validly mortgaged for due repayment of the decree to be passed in favour of the plaintiff. Mr. Wali would explain that in the Schedule 'A' mention is made to one of the properties in particular and it cannot mean that the claim respect of the remaining property or for that matter Panchsheel Park property was not made in the suit. In this regard, the Counsel would refer to the contents of Para 29 of the plaint where this claim was specifically raised. This para reads as under:

"Defendant No. 5 Shri Shardul Singh Jolly had guaranteed in November, 1981, the amount repayable by the defendant No. 1 to the plaintiff. The aforesaid guarantee is a continuing guarantee and as a Guarantor defendant No. 5 is bound and liable to the plaintiff for the due repayment of the aforesaid amount of Rs. 10,98,470/- (Rupees ten lacs ninety-eight thousand four hundred and seventy only) for the plaintiff."

Mr. Wali accordingly contends that the Counsel for the respondent No. 5 is not justified in stating that there was no plea raised against the said respondent No. 5.

Having considered the rival contentions raised before me, I find that there is substance in the plea raised by the Counsel for the appellant. Once the Tribunal below has recorded a finding on specific issue struck that the respondents had signed the documents fully knowing the consequences and did not accept their plea that they were made to sign the documents in blank, heavy burden therefore shifted on the respondents to make good their pleas which they raised in their written statement. The title documents are in possession of the Bank. How did not these documents travel to the Bank has not been explained by respondent No. 5. His plea that he signed these documents for loan for his sister-in-law which did not materialize, is found rather far-fetched. This has to be examined in the light of the finding returned in OA No. 205 of 1995 by the same Tribunal presided over by the same Presiding Officer. Respondent No. 5 was found to have given security to the loan for the same respondents i.e. Shri Tejwant Singh and Smt. Surinder Kaur. He thus cannot be considered to be a stranger to the borrowers. If he had given guarantee by creating an equitable mortgage of his property in one loan account of the borrowers, it can very well be taken that he would have done so in the present case as well. His plea of being stranger to Shri Tejwant Singh, etc. can be termed false. There is another very strong factor which may give an indication in regard to the liability of respondent No. 5. The record would show that he had made part payment of Rs. 25 lacs in this loan account. There is not much justification forth coming from respondent No. 5 as to why would he incur such liability if his plea is that he never stood guarantor for the loan in question. The submission by the Counsel for the respondent that he did so to save his house appears to be an explanation of convenience and nothing else. As per the record, respondent No. 5 and Smt. Manjeet Kaur had deposited a sum of Rs. 25 lacs each against said amount of Rs. 36,04,611.72 which was duly received by the Bank respondent No. 5 had paid some of the amount but still the Bank did not return the property documents. This again cannot pass off as an innocent act on the part of respondent No. 5. He would not have undertaken such a huge liability in case he had no concern with the loan which as per the Bank was secured by depositing of title deed of house by respondent No. 5 in respect of property situated at Panchsheel Park. I have not been able to persuade myself to accept the submissions made on behalf of the respondent No. 5, I find that the Tribunal below is not justified in coming to the conclusion that there was no valid or lawful mortgage in favour of the Bank relating to this property. The reasoning given in this regard by the Tribunal below that the alleged title deeds i.e. agreement to sell and power of attorney, etc. in relation to his property are unregistered and therefore the title cannot be said to be perfect in favour of respondent No. 5 seems to have come out of nowhere without any pleading in this regard. Same documents have been held correctly creating title in OA No. 205/95. Contradictory finding cannot be justified. Accordingly, I find substance in the present appeal. The finding given by the Tribunal below on issue No. 5 is, therefore, set aside. The direction given by the Tribunal below to release respondent No. 5 of the liability and direction for returning the title deed of the property are set aside. The prayers made in the appeal are allowed in the above terms.