Tamilnad Mercantile Bank Ltd. vs M/s. Moolchand Finance Ltd. And Ors.

This application is filed by the applicant bank u/s 19(1) of Recovery of Debts and Bankruptcy Act, 1993 for recovery of a sum of (i) Rs.12,25,23,504.08p together with interest @ 23.75%p.a with quarterly rests from defendants 1 to 5, 37, 39 and 40 jointly and severally till date of realization; (ii) to declare the applicant has a first charge over the flats purchased by defendants 6 to 25 and 41 to 48 and constructed on land being Items No.2 and 3 of schedule "A"; (iii) to issue certificate of recovery against defendants 6 to 25 and 41 to 48 upto the extent mentioned against each of them in Item No.2 and 3 of Schedule "A"; (iv) issuance of certificate of recovery against defendants 26 to 36 upto the extent mentioned against each of them in Schedule "B" (v) issuance of certificate of recovery to the Recovery Officer for recovery of the aforesaid amount by the recovery officer by selling in open auction to Schedule "A" immovable property and Schedule "B" movable property and also (vi) for a direction to recovery officer to sell the other properties of defendants 1 to 5, 37, 39 and 40 in open auction, for costs and any other order to render justice.

Facts in brief of the Application:

2.1: The 1st defendants is a Limited Company, incorporated on 22.10.1986 and was originally called B K Finance Ltd. Subsequently, the name was changed to Suvarna Securities Ltd. and finally there was a further change to the present name i.e Moolchand Finance Ltd, vide fresh certificate of Incorporation issued by the Registrar of Companies, Madras on 5.12.1994. The defendants 2,3,4 are Directors and also guarantors in the 1st defendant company. The 5th defendant is a public limited company and has executed a corporate guarantee in favor of the applicant bank guaranteeing due repayment of the loans availed by the  1st defendant.

2.2: The execution of such guarantee in favour of the applicant bank has been duly authorized by the Board of Directors of the 5th defendant company vide resolution dated 29.5.1995. The 6th to 25th defendants and 41st to 48th defendants are the purchasers of residential apartments situated at Plot No.254, S.No.9, Gandhi Nagar, II Main Road, Adyar and No.19, Malony Road, T.Nagar more particularly described as Item No.1 and Item No.2, S.No.9, Gandhi Nagar, II Main Road, Adyar and No.19, Malony Road, T.Nagar more particularly described in the schedule 'A' annexed hereto from the 1st defendant. The 26th to 36thdefendants are lessees/Hirers under the 1st defendant who had availed Hire Purchase and Lease of movable assets more fully described in Schedule 'B' hereunder from the 1st defendant. The 37th to 40th defendants have mortgaged their immovable property more fully described as Item No.2 and 3 of Schedule 'A' hereunder with the bank by way of equitable mortgage as security for facilities granted to the 1st defendant.

2.3: The 1st defendant when it was known as Suvarna Securities Ltd. requested the bank vide letter dated 19.10.1994 for grant of various credit facilities for Hire Purchase & Leasing business and for promotion of commercial residential complexes. The 1st defendant now known as Moolchand Finance Ltd. executed a Deed of Agreement dated 19.12.94 with the applicant bank regarding the Modus Operandi of leasing business and on the same day executed a Power of Attorney empowering the applicant to recover the dues receivable by the 1st defendant from its lessees. Hence, their request was duly considered and Working Capital credit limits were sanctioned vide sanction ticket dated 28.11.94. Subsequently after a change in name, at the request of the 1st defendant, the applicant bank restructured the limits vide sanction dated 11.3.1995 as detailed below:

Nature of Facilities (in Crores)

Limit

Period

Cash Credit-I (for hire purchase & Leasing Business)

Rs.6.00

1 Year

Cash Credit-II (for promotion of Commercial, residential complexes)

Rs.3.00

1 Year

The above facilities were availed by the 1st defendant on 16.6.1995.

2.4: The cash credit-I facilities were availed from 16.6.1995 to November, 1995 for the purpose of Working Capital for the activity of Hire Purchase Financing and Leasing Finance for Industrial Equipment and other movable assets. The amount availed is Rs.6 Crores. The Modus Operandi adopted is as follows:

(i) Lease Finance:

The 1st defendant enters into Lease Agreements with third parties agreeing to purchase and let on lease equipment in consideration of the third party agreeing to pay lease rentals. The equipment is purchased by the 1st defendant. Such purchase is financed from the facility availed by the 1st defendant under Cash Credit-I. The value of the asset is disbursed by the bank directly to the supplier/manufacturer of the equipment or the lessee as the case may be. The Lessee/third party pays the 1st defendant the lease rentals on a monthly basis. The tenure of the lease is fixed under the respective lease agreements. On the expiry of the tenure of the lease, the equipment is returned to the 1st defendant or sold and the sale proceeds are realized by the 1st defendant. The amount is disbursed by the bank to the 1st defendant as and when transactions are concluded between the parties and on the basis of a requisition from the 1st defendant. The 1st defendant is required to furnish all documents between them and third parties. The monthly lease rentals and other amounts received from third parties is required to be remitted into the account of the 1st defendant, maintained with the applicant bank.

(ii) Hire Purchase:

The 1st defendant granted hire purchase finance to the third parties for purchase of vehicles. For this purpose, a Hire Purchase Agreement is entered into and part of the money to be advanced by the 1st defendant as loan is disbursed by the bank directly to the supplier. The Hire Purchase Agreement, Invoice and the Duplicate key of the vehicle are lodged with the bank and the monthly instalments are to be remitted by the 1st defendant into the account of the 1st defendant maintained with the applicant bank. The 1st defendant has executed a Demand Promissory Note dated 16.6.1995. The loans availed were secured by hypothecation of book-debts-loans and movable properties of the 1st defendant company and personal guarantee by the 2nd, 3rd and 4th and 37th, 39th and 40th defendants by their respective power of attorney holders by executing continuing personal guarantees dated 16.6.95. A corporate guarantee dated 16.6.96 has also been executed by the 5th defendant, guaranteeing repayment of the amounts advanced by the applicant to the 1st defendant. Execution of such guarantee by the 5th defendant has been duly authorized by the Board of the 5th defendant at its Board meeting vide resolution dated 29.5.1995.

b. The interest payable on the said loan is calculated according to the Bank's Ruling Rate plus tax, the present rate of interest is 21% plus penal interest 2% + 0.75% as tax on interest. The defendants are liable to pay the interest at 23.75%. The loans have been availed for the purpose of the 1st defendant's business and the liability for interest has arisen under a commercial transaction. Therefore, the applicant being a scheduled bank is entitled to realize interest at contractual rates.

c. The following documents have been executed in favour of the applicant in consideration of the sanction and availing of Cash Credit-I.

i. A demand Promissory Note dated 16.6.1995 for Rs.6 Crores promising to pay the applicant or order on demand the said sum together with interest as stipulated therein and subject to Bank Ruling Rate prevailing from time to time, with quarterly rests.

ii. The 1st defendant has also executed Letter of Waiver dated 16.6.1995 waiving presentment of the Demand Promissory Note dated 16.6.1995 for Rs.6 crores and undertaking to pay the amount due thereon, on demand without the said Demand Promissory Note being presented for payment.

iii. An Agreement dated 16.6.1995 for Demand Cash Credit on hypothecation of moveable properties of the 1st defendant company.

iv. The 2nd, 3rd and 4th and 37th, 39th and 40th defendants have personally guaranteed the said loan by executing valid continuing personal guarantees on 16.6.1995 agreeing to repay the amounts due from the 1st defendant to the applicant in case of default.

v. The 1st defendant has executed a Letter of Hypothecation of Book-Debts-Loans vide deed dated 16.6.1995 under which the amounts receivable by the 1st defendant from third parties stand hypothecated to the bank by way of first charge as security for the facilities availed by the 1st defendant.

In terms of the Letter of Hypothecation of Book-Debts-Loans all present and future debts outstanding, monies, receivables, claims, bills, contracts, securities, investments, rights and assets given on Hire Purchase/Lease to the 26 to 36th defendants stand hypothecated to the bank by way of first charge. The said assets given on lease/ Hire Purchase are more fully described in Schedule 'B' annexed hereto and the applicant is therefore entitled to a charge over the said assets given on Hire Purchaser/Lease by the 1st defendant to the 26th to 36th defendants. The necessary forms as required under the Companies Act, 1956 for creation of charge and subsequent modifications have also been filed with the Registrar of Companies, Madras on 14.12.94, 22.12.94 and 18.3.96. The 26th to 36th defendants are liable to pay to the applicant bank directly all amounts payable to the 1st defendant under the Hire Purchase/ Lease Agreements. The 1st defendant has also executed agreement and Power of Attorney both dated 19.12.94 in favor of the applicant regarding the above transaction.

The 26th to 36th defendants and the 1st defendant have entered into individual agreements in respect of each transactions, and other documents have also been executed in favor of the 1st defendant by the 26th to 36th defendants. The said documents are filed in Volume II.

2.5: CASH CREDIT - II

The 1st defendant as part of its activity of promotion of building complexes, decided to construct apartments on the land mentioned as Item 2 and 3 of Schedule 'A'. The Cash Credit-II facility was sanctioned to provide Working Capital finance facility for the projects. The 1st defendant has valid rights to put up the apartments as agreement holders. It was agreed that the 1stdefendant will accept bookings from third parties and receive advances for the residential apartments constructed only after the completion of the project and that the Registration formalities etc. are to be completed only after the applicant bank issues a No Objection Certificate in this regard.

a. The Cash Credit-II facility was availed on 16.6.1995. The amount availed is Rs.3 Crores. The 1st defendant has executed a Demand Promissory Note dated 16.6.1995. The loan availed is secured by the creation of an Equitable Mortgage by deposit of title deed relating to the properties situated at Plot No. 254, S.No.9, Gandhi Nagar, Adyar belonging to the 37th defendant detailed as Item No.2 as Schedule 'A' herein. The mortgage was created by the 38th defendant as the Power of Attorney holder of 37th defendant and Plot No.19, Malony Road, T.Nagar belonging to 39th defendant and 40th defendant detailed as Item No.3 of Schedule 'A' herein. The mortgage was created by the 3rd defendant as Power of Attorney holder of the said defendants. The 4th defendant created equitable mortgage of the property on 16.2.96 and at RamavaramVilalge, Saidapet Taluk, Saidapet belonging to the 1st defendant all the properties are more fully described as Item No.1, 2 and 3 in the Schedule 'A' hereunder. The 2, 3 and 4 defendants have executed personal guarantees and the 5th defendant has executed a corporate guarantee, guaranteeing repayment of loan to the bank on 16.6.1995.

b. The interest payable on the said loan is calculated according to the Bank's Ruling Rate plus tax, the present rate of interest is 21% + 23 0.75% as tax on interest plus 2% penalty. The applicant being a scheduled bank is entitled to realize interest at contractual rates.

c. The following documents have been executed in favour of the applicant, in consideration of the sanction and availing of Cash Credit-II.

i. A demand Promissory Note for Rs.3 Crores executed on 16.6.1995 promising to pay the applicant or order on demand the said sum together with interest as stipulated therein and subject to Bank Ruling Rate prevailing from time to time, with quarterly rests.

ii. The 1st defendant has also executed Letter of Waiver dated 16.6.1995 waiving presentment of the Demand Promissory Note dated 16.6.1995 for Rs.6 crores and undertaking to pay the amount due thereon, on demand without the said Demand Promissory Note being presented for payment.

iii. The 1st defendant has executed an Agreement dated 16.6.1995 for Demand Cash Credit on the Hypothecation of 1st defendant's goods, produce, merchandise which have already been stored and which will hereafter be stored in the premises at Gandhi Nagar, Adyar and Malony Road, T.Nagar or anywhere else.

iv. The 2nd, 3rd, 4th and the 37th defendants have personally guaranteed the said loan by executing valid containing personal guarantees on 16.6.1995. The 5th defendant has executed a corporate guarantee (as authorized by its Board) guarantee repayment of amounts due from the 1st defendant.

v. The title deeds relating to the following properties belonging to 1st, 37th, 39th and 40th defendants and more particularly described as Item No.1 and Item No.2 and Item No.3 in Schedule 'A' hereto have been deposited with the applicant on 16.2.96, 4.5.94 and 10.12.94 by 3rd, 4th and 37th defendants as Power of Attorney holder with an intention to create an equitable mortgage of the said properties in favour of the applicant.

d. The applicant stated that they have caused a search of the records of the concerned Registrar of Assurances of different areas and found that the mortgaged properties are free from any encumbrances except the sale of undivided share in the land of Items (ii) and (iii) above in favour of 6th to 26th and 41st to 48th defendants who are parties hereto. The Encumbrance Certificate No.1683 dated 4.3.96 reveals that no registration of sale took place till February 96. However, the Encumbrance Certificate No.3566 dated 20.6.96 for the subsequent period reveals the registration of sale in favour of third parties' transferees regarding Item No.2 of Schedule 'A'. The Encumbrance Certificate No.1062 dated 14.3.96 reveals that no registration of sale took place till 6.3.96. However, the E.C. No.3350 dated 4.10.96 revealed the registration of sale in favour of third parties regarding Item No.3 of Schedule 'A' hereunder. The applicant stated that the borrowings by the 1st defendant from the applicant bank has been duly authorized by the 1st respondent's Board of Directors vide resolution dated 30.3.1995 under Section 292 of the Companies Act.

e. Since the residential apartments are to be constructed on land mortgaged to the bank and sold to third parties it was agreed that all amounts realized from the sale of flats to third parties will be remitted into the bank to the credit of the 1st respondent's account, until the limit is cleared. As submitted earlier sale of apartments to third parties was permissible only after completion of the projects but it was later found that most of the apartments were agreed to be sold by the 1st defendant to the 6th to 25th and 41st to 48th respondents advances received and registration of undivided shares and land by execution of sale deeds in their favour was done, without the knowledge of the applicant bank, well before the project was completed. Besides the amounts received from the 6th to 25th and 41st 48th defendants were not remitted into the bank as agreed.

2.6: On 27.3.1996 the applicant bank wrote to the 4th defendant calling upon them

a. to remit into the bank the amounts received from the Purchasers of the flats towards advance.

b. not to register any sale without written concurrence from the bank.

c. to submit details of advances received from purchasers of flats and

d. to display bank's name from board in the premises.

With regard to Cash Credit Limit-II the applicant bank had specifically sanctioned the same for promotion of residential complex, at Plot No.254, S.No.9, Gandhi Nagar, II Main Road, Adyar and at No.19, Malony Road, T.Nagar, Madras 600017. The 1st defendant had agreed to repay the loan by remitting to the applicant bank the amounts received as advance and installments from time to time from the sale of flats, in the complexes at Adyar and T.Nagar constructed on the immovable property more particularly described as Item No.2 and 3 in Schedule 'A' annexed hereto. However, in total violation of the terms the 1st defendant has failed to remit any amount whatsoever, even though the entire property at Adyar was sold to as many as 9 parties being the 6th to 14thdefendants. In so far as the Malony Road, property is concerned the 1st defendant has sold all the flats to various parties, being 15th to 25th and 41st to 48th defendants. The 1st defendant failed to remit the amounts received from third party purchasers of flats constructed on Item Nos.2 and 3 of Schedule 'A' into the bank as agreed. The representatives of the applicant bank on visiting the 1st defendant and inspecting the records found that the accounts were not maintained properly and that there were several discrepancies in the records. The 1st defendant had deliberately suppressed information regarding the sale of flats and the amounts had been paid by the purchasers directly to the 1st defendant. Such act on the part of the 1st to 4th defendants is wholly illegal fraudulent and amounts to criminal breach of trust.

2.7: There has been repeated correspondence between the parties with regard to default committed by the 1st defendant and the officials of the applicant bank made personal visits to meet Director of the 1st defendant to resolve matters and to ensure early settlement of the dues to the bank. Although the 1st defendant came forward with several proposals it was ultimately found that none of them were concentrate and that they were being forwarded only to delay matters and not with any bona fide intention of settling the dues. The 1st defendant has however not taken any steps to regularize the account and the default continues.

2.8: The applicant bank addressed individual letters to the purchasers of flats and also published caution notice in the local dailies on 24.6.1996 cautioning the General Public that those who wish to purchase flats from the 1st defendant should obtain a No Objection Certificate from the bank. On 15.5.1996 the applicant addressed letters to the defendants 9 to 11, 13, 15, 18 and 21 informing them of the bank's prior rights over the property mentioned as Items 2 and 3 in Schedule 'A' and that the purchase of flats should be supported by No Objection Certificate from the bank. A similar letter was addressed to the 6th to 25th defendants. Seeing the advertisement published in the local dailies the 23rd defendant wrote to the applicant stating that the sale deed was registered in their favor on 7.2.1996 and that they are not liable for having purchased the flats without the No Objection Certificate. The applicant bank replied vide letter dated 17.7.1996 reiterating that any transaction in respect of the said property without the consent of the bank is not binding on the bank. It is submitted that the original documents of title relating to the property are in the custody of the bank they having been deposited with the bank with an intention to create an Equitable Mortgage in favor of the bank. The 6th to 25th and 41st to 48th defendants ought to have known, (in the absence of original title deeds) that there is a prior charge over the property or in any event they must be deemed to have knowledge of such charge. In the circumstances the purchase of flats by them from the 1st defendant with the knowledge of prior charge is at their own risk and having taken such risks they cannot now escape from their liability towards the bank. The 19th defendant wrote to the applicant bank on 5.11.1996 referring to applicant's letter dated 15.5.1996. In the said letter the 19th defendant claimed to have paid the entire sale consideration to the 1st defendant. On 3.6.1996 one Sanjeev G Pallikal, wrote to the applicant claiming that he was purchasing a flat at a cost of Rs.42.5 lakhs and that more than Rs.32 lakhs had been paid as on the said date. The bank replied on 17.7.1996, pointing out charge in its favor.

2.9: The 6th and 25th and 41st to 48th defendants had noticed or in any event are deemed to have had notice of the above mortgage charges existing in favour of the applicant bank inasmuch as the original title documents of the properties described in Schedule 'A' as Item No.2 and 3 annexed hereto are in the possession of the bank under the equitable mortgage created in favour of the bank. Although the bank has a prior charge and it was not necessary for it to correspond or deal with third parties who purchased flats, the applicant bank, by way of abundant caution in order to safeguard its interest sent individual letters to purchasers of flats informing them of the prior charge and also calling upon them to remit amounts payable by them to the 1st defendant directly to the bank. In spite of the above, if the defendants 6 to 25 and 41st to 48th defendants chose to continue their dealings with the 1st defendant and make payments to it they have done so at their own risk and having been aware of the prior charge existing in favour of the applicant, the 6th to 25th and 41st to 48th defendants have rendered themselves liable to the bank by their above act. In any event defendants 6 to 25 and 41 to 48 defendants have not acted in a prudent manner nor have they exercised due diligence in their dealings. Since the 1st defendant has committed default the applicant is entitled to proceed against the security and bring the residential apartments purchased by defendants 6 to 25 and 41 to 48 for sale and to adjust the sale proceeds against the monies due from the 1st defendant. Hence, defendants 6 to 25 and 41 to 48 are made parties hereto and it is submitted that suitable orders as may be deemed fit and proper may be passed in regard to the apartments purchased by defendants 6 to 25 and 41 to 48 details whereof are annexed hereto as Annexure-1.

2.10: Since the amounts payable as lease rentals and hire purchase installments were not being remitted to the bank the applicant wrote to defendants 26 to 36 on 10.7.1996 calling upon them to remit the amounts directly to the bank. The 28th defendant replied on 18.7.1996 stating that they have not entered into any agreement of lease with the 1st defendant. It is further stated that a sum of Rs.30 lakhs received from the 1st defendant was towards share application money and that the same had been refunded on 6.7.1995 itself. The 26th defendant replied on 16.7.1996 stating that they are surprised to note that the 1st defendant had not informed the bank that the lease was closed/ settled as the 1st defendant failed to pay the amount agreed for the lease. It was further stated that the amount paid by the 1st defendant was converted into share application money and 10,76,700 shares have been allotted to the 1st defendant. The 31st defendant replied on 30.7.1996 stating that they have not entered into any lease agreement with the 1st defendant. It is further stated that the Agreement dated 31.1.1995 was cancelled on 30.4.1995 and that no promissory note was ever signed by any authorized official of the 37th defendant. On 2.8.1996 the bank wrote to the 1st defendant enclosing the above letters and requested the 1st defendant to comment. The 1st defendant replied on 10th August, 1996 forwarding papers relating to a transaction with the 26th defendant and stating that they are following up matters with other parties. Nothing has been heard from the 1st defendant, thereafter in this regard.

2.11: The defendants have failed and neglected to pay the amount due despite repeated requests and reminders. A notice was sent by the applicant's Advocates on 30.11.1996 and 25.2.1997 to the defendants and copies of the said notices were also filed. Defendant Nos. 15,16,17,18,19,22,26 and 31 have replied on 10.12.1996, 13.12.1996, 17.12.1996, 20.11.1996 and 25.12.1996 raising untenable pleas and the other defendants never replied.

2.12: The defendants 2 to 5 executed a continuing personal guarantee in consideration for the loans availed by the 1st defendant. Subsequently after filing of the above O.A. 216 of 1997, the 2nd defendant late B. K. Kothari alias Balakrishna Kothari died. Some of his legal heirs viz, defendants 3,4, and 41 were already on record, hence the applicant bank made application to implead the of the other legal heirs of the 2nd defendant who are defendants and were impleaded as defendants no 48 to 52. The above O.A O.A.216 of 1997 was transferred to DRT-II and was renumbered as O.A.434 of 2007. During the pendency of the 19th Defendant Dr.N.Rangabashyam died hence his legal heirs were impleaded as defendants no.54,55& 56.The amounts due and payable by the defendants 1 to 5 jointly and severally as on date is set out below, as per detailed statement of account filed herewith.

Nature of Facility

Amount due

Cash Credit- I

Rs. 8,41,44,565.80

Cash Credit - II

Rs. 3,83,78,938.28

-------------------------

Total

Rs. 12,25,23,504.08

-------------------------

2.13: The 6th to 25th and 41st to 48th defendants are liable to the extent of value of flats purchased by them from the 1st defendant, details whereof were set out in Item No.2 & 3 of Schedule 'A'. Similarly the 26th to 36th defendants are liable to the extent of value of movable assets taken on lease/hire purchase from the 1st defendant, details whereof set out in Schedule 'B'. The impleaded Legal heirs of the Deceased defendants 2 and 19 are equally liable on par with deceased defendants to the Applicant bank to the extent of value of flats purchased by the respective deceased defendants. Thus stating, the Ld. Counsel for the applicant prayed for allowing the OA.

Brief of the 1st Defendant:

3.1: In the reply statement filed by 1st defendant, it is stated that Cash Credit Limit -I availed by the defendants were for the purpose of refinancing, hire purchase and lease transactions.

3.2: It is stated that proof affidavit filed by applicant bank with regard to Cash Credit Limit-II has many factual errors and omissions and suppression of facts with a motive to achieve wrongful gain against honest and gullible flat owners who have paid full consideration before purchasing the flats from M/s. Moolchand Finance Ltd., and the flat owners are included without any base.

3.3: 1st defendant stated that Mrs. Kasturi Bhai, who was the original owner for the property at No.47, 2nd Main Road, Gandhi Nagar, Chennai 600 020 intended to develop the same into flats and approached M/s. Shri Sai Estates for a Joint Venture Development. Accordingly, M/s. Shri Sai Estates agreed the proposal and obtained necessary sanction from the competent authorities for development of flats.

3.4: During the course of the flat development, M/s. Shri Sai Estates represented that they are facing financial problems for completing the development of property at No.47, 2nd Main Road, Gandhi Nagar, Chennai-20. At the request of Shri Sai Estates, Mrs. Kasthuri Bhai approached 1st defendant for development and selling the same with the consent. On receipt of request from Mrs. Kasthuri Bhai, M/s. Moolchand Finance Ltd have agreed to develop and sell the property. In order to facilities smooth execution of the project, Mrs. Kasturi Bhai had executed Power of Attorney in favour of Mr. R.Murali, Chartered Accountant dated 25.2.29914 and was registered as Doc. No.435/94 before SRO, Adayar, Chennai (Annex.A). Immediately on execution of said Power of Attorney, Mrs. Kasturi Bhai had taken Rs.49,83,333/- towards full consideration of the property from M/s. Moolchand Finance Ltd., relinquishing all her rights over the said property.

3.5: It is stated that one Mr. Subba Rao and his son Mr.Nageshwara Rao approached M/s. Moolchand Finance Ltd for Joint Development of flat at Door No.19, Malony Road, T.Nagar, Chennai-17 measuring 8 grounds and 1110 sq.ft. Immediately on agreement of the joint development, Mr. Subba Rao and Mr. Nageshwara Rao have executed Power of Attorney dated 14.10.94 in favour of Mr. Moolchand Kothari vide Doc. No.971 of 1994 before SRO, T.Nagar (Annex.B). On execution of this Power of Attorney, Mr. Subba Rao and Mr. Nageshwara Rao have taken full consideration and relinquished all their rights in favour M/s.Moolchand Finance Ltd.

3.6: It is stated that immediately on settlement of money, M/s. Moolchand Finance Ltd have taken possession and initiated steps to complete the development and construction of flats. These transactions were entered prior to approaching any banks for Cash-Credit Limit in order to complete the project in time.

3.7: During the course of flats development at T.Nagar and Adayar, as decided by Board of Directors, M/s. Moolchand Finance Ltd., has approached the applicant bank for Cash Credit Limit and the applicant bank has agreed to extend Cash Credit facility for the on going project by part financing and sanctioned Cash Credit Limit of Rs.3.00 crores vide its Sanction Letter dated 3.12.1994 and modified thereafter with regard to interchange of limits between Cash-Credit -I and Cash Credit-II vide letter dated 21.3.1995.

3.8: As per Clause 2 and Clause 3 of Sanction Letter dated 3.12.1994, the applicant bank permitted the 1st defendant to sell the flats to sell the flats as a going concern basis and the drawing power is arrived at after adjusting the advance money received from the allottees. The averment of the bank that the flats had to be sold only on completion of building was totally false and misleading. In fact the bank has modified the terms and conditions vide its letter dated 20.6.1996 (Annx.F). On receipt of this communication, 1st defendant had immediately respondent with letter dated 20.6.1996, wherein it was accepted to execute tripartite agreement for all future sales. The averment that the company should taken No Objection letter from the bank before selling was also false as there was no stipulation in the sanction letter. The 1st defendant had stated stock statement regularly indicating the payments received from various purchasers.

3.9: It is stated that the bank is having charge over the stock of land and building by execution of hypothecation deeds, the applicant bank got the charges registered with Registrar of Companies, Tamilnadu instead of sub-Registrar Office having jurisdiction over the properties. It is stated that the as per the affidavit filed by bank, the account became irregular on 16.6.1996 and NPA, in order to protect the interest, the Managing Director of Moolchand Finance Ltd has stated fresh securities to the bank dated 16.2.96, 14.12.96 and 24.10.96 which was accepted by the bank. The 1st defendant Moolchand Constructions has given 13 grounds in Ramapuram valued at Rs.100 lakhs, 26 grounds at Saligramam valued at Rs.4 crores with a charge of Rs.2.70 crores in favour of bank, Power of Attorney Holder of Vasu Studio property, 13147 sq.ft in II floor, Commander-in-chief Road, Egmore, valued at Rs.6.57 crores vide registered Power of Attorney dated 24.10.96 vide Doc. No.926 of 1996. The value of the property offered as additional collateral security is Rs.11.57 crores as against the due of Rs.3 crores for Cash Credit-II account.

3.10: The 1st defendant stated that with regard to property at Saligramam, the applicant bank filed IA 1057/99 and got the property attached, thereby protected its interest for Cash-Credit Limit-II extended to 1st defendant. Subsequently, the applicant bank entered into a compromise with Moolchand Constructions for Rs.75 lakhs towards full and final settlement of Rs.2.70 cores. By virtue of this settlement, the 1st defendant is entitled to get the credit of Rs.2.70 crores w.e.f 13.12.1996 leaving the balance of Rs.30 lakhs payable to applicant bank. Since the bank has not credited Rs.2.70 crores to the Cash-Credit Limit availed by 1st defendant, the 1st defendant have issued a legal notice dated 14.10.2004 calling upon the applicant bank to reduce the liability by Rs.270 crores w.e.f 13.12.1996 and release the genuine buyers of T.Nagar and Adayar properties with immediate effect from the clutches of legal proceedings.

3.11:  1st defendant further stated that on 12.7.1996, the applicant bank has written a letter to Moolchand Finance Limited and expressed their willingness to purchase II floor at Moolchand Towers, 31-32, Commander-in-Chief Road, Egmore, Chennai and 1st defendant had quoted Rs.5,000/- per sq.ft being the market price at which the office space were sold to other parties vide communication dated 17.7.1996. Further, with regard to 2nd floor measuring 13.147 sq.ft of office space at Moolchand Towers, the 1st defendant had sent a communication dated 2.10.1996 enclosing receipt for registered the Power of Attorney in the applicant bank's name. On 2.11.1996, 1st defendant had sent a communication enclosing original power of attorney duly registered as Doc. No. 926/96 dated 24.10.1996 favouring the applicant bank. 1st defendant had also sent a detailed communication dated 6.12.1996 in response to legal notice issued by applicant bank dated 30.11.1996 and advised the applicant bank to adjust the sale proceeds for Cash Credit Limits availed for its projects. The possession and rights of 2nd floor office has been confirmed by applicant bank's communication dated 11.1.2001. Since the sale consideration were not paid or adjusted to Cash Credit availed by 1st defendant and deliberate suppression of these facts and subsequent proof affidavit filed by applicant bank, the 1st defendant had issued a legal notice dated 9.10.2004 and demanded the payment of total consideration together with interest till realization.

3.12:  1st defendant stated that all the properties were given by the company to safeguard the interest of bank and also relieve all the genuine purchases of Adyar and T.Nagar flats who had paid full consideration to the company. In spite of receiving and appropriating the property and consideration therein, the applicant bank wilfully and wantonly harassing the genuine buyers. In fact this act of applicant bank clearly shows its malafide motive or lack of understanding with regard to facts and circumstances of the Cash Credit limit availed by 1st defendant. The wrong understanding of the facts and circumstances has caused serious injury to the 1st defendant and also to genuine flat owners. Thus stating the 1st defendant prayed for dismissal of the OA.

3.13: Ld. Counsel for the 1st defendant relied on the following rulings

a. Hon'ble Supreme Court of India in re K.J.Nathan Vs S.v. Maruthy Reddy and Ors (11.2.1964 -SC) reported in MANU/SC/0235/1964

b. Hon'ble Supreme Court of India in re H.B.Basavaraj (dead) by LRs and Ors Vs. Canara Bank and Ors ., reported in 2010 12 SCC 458 (paras 8 to 12)

c. In re Kanchan Udyog Limited Vs United Spirits Limited reported in 2017 (124) ALR 255 (para 20 to 22)

d. Hon'ble Supreme court of India in re ChandradharGoswami Vs Gauhati Bank reported in (1967 1 SCR 898a

e. Hon'ble Patna High Court in re State Bank of India Vs Raghubar Singh and Ors reported in MANU/BH?0040/1997

f. Hon'ble Punjab & Haryana High Court in re The Punjab National Bank Ltd., Delhi Vs vinod Kumar and ors reported in MANU/PH/0093/1957

g. Hon'ble Andhra Pradesh High Court in re India Bank Vs V.R.Venkataraman and Ors reported in MANU/AP/1062/2003

3.14. The 2nd defendant passed away during the pendency of the present proceedings. Some of his surviving legal heirs since already are on record as defendants 3, 4, & 41, his remaining legal heirs have been impleaded as defendants 49 to 53 vide order in I.A. No.137 of 1997.

Brief of the 3rd defendant:

4.1: In the reply statement filed by the 3rd defendant, it is stated that as a Director of 1st defendant company, 3rd defendant was compelled to execute certain printed forms which have been described by applicant bank as personal/continuing guarantees. At the time of signing the said forms, the blanks therein were not filled and hence the same is invalid and no liability can be fastened on this defendant. It is further stated that the 3rd defendant has resigned from the 1st defendant company as Director w.e.f 20.11.1995. Hence the applicant bank cannot hold the 3rd defendant responsible for any amounts, since he had ceased to be a Director of the company. The applicant bank continued to advance money to 1st defendant even after the said date. Thus contending Ld. Counsel for 3rd defendant prayed for dismissal of OA.

Brief of the 4th defendant:

5.1: In the reply statement filed by the 4th defendant, it is stated that there were two cash credit facilities and those facilities were divided into two, namely, lease finance and hire purchase facility and also sanctioned a working capital facility for building promotion activity wherein apartments were considered as stock. The terms of these transactions have already been pre-determined and reduced to writing between the 4th defendant and applicant bank.

5.2: It is stated that the money was released for the development activities of the apartments. The money has not been remitted by the 4th defendant to the bank will no way affect the title of the purchasers. It is stated that the 4th defendant is entitled to sell the stocks and receive money when the bank is willingly and knowingly agreed for sale of the apartments (stock).

5.3: It is stated that as per terms and conditions agreed by bank, the sale completed by Moolchand Finance to all the parties i.e Defendants 6 to 25 and 41 to 48 is valid and thereafter the money collected from those parties and as claimed by bank becomes the amount payable by the defendant to the bank for which separate transactions and conclusions were arrived at between 4th defendant and the bank. 6. The statement of the Official Liquidator for the 5th defendant in brief:

6.1: The 5th defendant was ordered to be wound up by the Hon'ble High Court of Madras, vide orders in Company Petition No.254/1997 dated 22.6.2000. Pursuant thereto, Official Liquidator attached to the Hon'ble High Court of Madras, was appointed as Liquidator for the 5th defendant, with a direction to take charge of the properties of the 5th defendant. The Liquidator has filed his report, inter alia, stating that, M/s. Moolchand Exports Limited was (herein after called as "Company") ordered to be wound up by the Hon'ble High Court vide orders dated 22.6.2000 made in Company Petition No.254/97, the Official Liquidator attached to the Hon'ble High Court, Madras was appointed as the Liquidator of the said Company with a direction to take charge of all the properties and effects of the Company.

6.2: Taking Possession:

Pursuant to the above directions of the Hon'ble High Court, Madras, the Official Liquidator after ascertaining affairs of the company in liquidation from the records of the Registrar of companies, Chennai took possession of all the movable and immovable assets along with books and records of the company in liquidation available from its Registered Office cum Factory premises situated at S.No 151/1, and.151/2 in Door No.2/4, Mount- Poonamallee Road, Ramapuram Chennai- 89.

6.3: DRT Proceedings / Sale of Assets:

It is stated that during the year 2003, the Official Liquidator has received a letter dated 17.06.2003 from Debt Recovery Tribunal- I, Chennai wherein the recovery officer of Debt Recovery Tribunal has stated that the property situated at Door No.2/4, Mount Poonamallee Road, Ramapuram, Chennai- 89 comprised in S.No.151/2 of Ramapuram Village, Saidapet Taluk was secured by way of equitable mortgage in favour of State Bank of India, Leather Industrial Branch, Chennai- 10 and said property was sold in public auction on 17.04.2003 in execution of DRC No.150/02 in OA No.1032/98 forwarded by the Hon'ble Presiding Officer of the Tribunal for recovery of debts from M/s. Moolchand Industries Limited and 10 others. It was further stated that the said sale was conducted in accordance with procedure laid down in Income Tax (Certificate Proceedings) Rule, 1962 read with Section 29 of Recovery of Debts due to Bank and Financial Institutions Act, 1993 and also requested the Official Liquidator to inform the amount required for making payment to the workers dues. He has also requested to handover possession of property to enable the Recovery Officer to handover the said property to the auction purchaser.

6.4: It is stated that the property comprised in Part of S.No.151/2 in patta No.184 measuring 50 cents (9 Grounds and 180 Sq.Fts.) together with buildings thereon was sold in favour of M/s.Gupta& Co. Gunidy, Chennai - 32 for a sale consideration of Rs.1.20 Crores. The Official Liquidator through his counsel represented before Debt Recovery Tribunal for demarcation of property sold by the Debt Recovery Tribunal from and out of immovable property in the custody of Official Liquidator. The Hon'ble Presiding Officer has given direction for demarcation vide his order dated 17.12.2003. The demarcation of assets carried out on 07.01.2004 in the presence of the officials of the Official Liquidator, Inspector of Debt Recovery Tribunal, The Manager, State Bank of India and the purchaser of the property, through the Tribunal.

6.5: It is stated that the auction purchaser M/s. Gupta & Co filed an application before this Hon'ble High Court in C.A.NO.645/04 praying for a direction to the Official Liquidator to sell and convey the remaining portion of land comprised in S.Nos.151/2C & 151/1B of Ramapuram Village to the applicant and the Hon'ble High Court, Madras has passed an order on 07.07.2004 directing the Official Liquidator to advertise in Newspapers for the sale of above said land and further directed the applicant to participate in the auction by sending his quotation in sealed cover. The Official Liquidator has complied with the directions of the Hon'ble High Court order by publishing advertisement on 30.07.2004. Subsequently the Hon'ble High Court, Madras passed an order on 14.10.2004 in C.A.No.645 of 2004 in C.P.No.254/97 by confirming sale of remaining immovable property of land comprised in S.Nos.151/1B & 151/2C including movables belonging to the Company in liquidation for a sum of Rs.80,00,000/- in favour of M/s. Gupta & Co. and the Official Liquidator had handed over the premises of the Company in liquidation after receipt of full sale consideration of Rs.80 lakhs and executed the sale deed in respect of the above said landed property. Against the same the applicant Bank preferred OSA and the same was also dismissed by the Hon'ble High court.

6.6: Invitation of Claims:

Pursuant to the orders of the Hon'ble Company Court passed in C.A.NO.1587/05 on 12.11.07, the Official Liquidator has called for claims from the creditors of the Company (In Liquidation) by fixing 05.01.2008 as the last date for submission of claims. In response to that, the Official Liquidator has received 714 claims from various creditors of the Company (In Liquidation). The aggregate claimed amount is Rs.57,16,76,503/-.

Details of claims received are as follows:

I - Secured Creditor

Tamil Nadu Mercantile Bank Ltd `

- Rs. 5,16,16,945/-

Canara Bank

- Rs.20,84,41,176/-

IDBI

- Rs.16,34,61,637/-

------------------------

Rs.42,35,19,758/-

II- Government Claims

Commercial Tax

(TNGST for the year 1995 - 96)

- Rs.4,34,85,536/-

Commercial Tax

(TNGST for the year 1996 - 97)

- Rs.2,59,24,091/-

Income Tax Department

- Rs.6,29,73,549/-

--------------------------

-Rs.13,23,83,176/-

III - Ordinary Creditors  (708claims)

-Rs. 1,57,73,569/-

----------------------

Total amount claimed

- Rs.57,16,76,503/-

6.7: The applicant bank vide letter dated 30.05.2018 informed that they have filed suit before this Tribunal, in O.A. No.109/2007 for recovery of the amount and the Tribunal by an order dated 30.10.2009 directed payment a sum of Rs.5,16,16,945/- to the applicant. Subsequently, the applicant bank had filed an application before the Hon'ble High Court of Madras, for adjudication of their claim and the Official Liquidator has adjudicated the said claim and allowed a sum of Rs.5,16,16,945/- under Section 529 of the Companies Act,1956 and also issued notice of Admission of proof on 15.07.2016 to the applicant. Pursuant to the orders of the Hon'ble High Court dated 26.02.2018 in CA No.45/2017, this office had paid Rs.1,32,00,000/- to the applicant towards its claim.

6.8: It is stated that M/s. IDBI Bank, Chennai one of the creditors has also filed OA No.170/07 against the company and its directors for nonpayment of the claimed amount to the tune of Rs.5,75,94,401/-. Pursuant to the Sanction of OA, the defendants in the OA have paid a sum of Rs.76,21,000/- including interest for the delayed payment. Hence the Hon'ble DRT has disposed the OA No.170/2007 as the amount settled out of Court in terms of Memo. Upon examination of records it is noticed that various applications filed by creditors and counters filed by the Official Liquidator are pending before the Tribunal and Hon'ble High Court of Madras. Apart from this, Commercial Tax Officer has filed a Petition against the company vide SLP (c) Nos. 7417/2018 on 06.04.2018 before Hon'ble Supreme Court against the order dated 10.11.2016 made inWP.No.6267/2006 and the Official Liquidator is one of the Respondents in the said SLP and the same is pending for disposal. Other claims of creditors are not yet adjudicated.

6.9: Statement of Affairs:

One of the Ex- Directors of the company in liquidation Shri.R.Gopuu has filed Statement of Affairs with the Official Liquidator on 26.09.2006 wherein the following details are furnished:

Assets not specifically pledged

S.No.

Particulars

Estimated Realisable Value (Rs.)

1

Free Hold Property - Land & Machinery

2,00,00,000.00

2

Plant & Machinery

19,70,584.31

3

Furniture, fittings and Utensils etc.

14,30,886.15

4

Livestock

7,83,053.94

5

Other Property viz

Computer

Office Equipments

Electrical Installations

Farm Implements & Sprinkeler

Irrigations

5,97,37.58

3,03,744.65

2,96,219.99

3,38,005.36

Total

2,51,82,230.98

Assets specifically Pledged

S.No.

Particulars

Estimated Realisable Value

Balance Bank

25,32,360.63

Cash in Hand

16,900.32

Investments other than marketable securities

7,48,14,000.00

Trade Debtors, Loans & Advances

6,98,44,615.28

Stock in trade not in the possession of the company

72,34,814.00

Freehold lands

4,02,86,500.00

Factory building

70,52,043.00

Total

20,17,81,233.23

Further Preferential creditors dues shown as Rs.14,45,186/- and under the heading of unsecured loan Rs.24,82,000/- shown as public deposit, but details of public deposits are not furnished. Since the company is a listed company, details of preferential shareholders, equity shareholders and unpaid calls are not furnished by the Ex- Director. Apart from this, the details of trade debtors and loans &advances had shown as 'Nil".

6.10: Action taken on liquidation by the office of the Official Liquidator:

It is stated that the Official liquidator has issued notices on 09.11.2017 under Rule 130 of the Companies (Court) Rules, 1959 to all the Ex-directors/respondents of the Company to attend the hearing on 16.11.2017 at 11.30 am to render necessary clarification/ information regarding certain assets/affairs of the Company. But it is noticed that none of the ex-directors have turned up on the said date. Hence, Official Liquidator has filed an application inn C.A. No.647/2018 to summon the respondents/ Ex- Directors and examine them to clarify/ furnish information about the assets, effects and affairs of the company. Consequent to the hearing dated 05.04.2019 before Hon'ble High Court, Madras in CA No.647 of 2018. One of the Ex - Director Shri. Gopuu was present at the Office of the Official Liquidator, Chennai on 10.04.2019, during the meeting the Ex- Director, Shri. Gopuu has promised that all documentary evidence and whereabouts of other Ex- Directors will be furnished on or before 30.04.2019. Accordingly he has sent an e-mail dated 30.04.2019 to the Official Liquidator and stated that the company had some agricultural barren lands in Sivaganga and Ramanathapuram Districts and further submitted a copy of the letter dated 04.01.1999 issued by Shri.Pradeep Kothari confirming the resignation of Shri. R.Gopuu. Shri. Gopuu has also furnished the address of Counsel of Shri. Pradeep Kothari, one of the Ex- Directors of the company in liquidation.

6.11: It is stated that Shri. Pradeep Kothari, one of the Ex- Director of the company in liquidation vide email dated 06.05.2019 requested the Official Liquidator to provide inspection of books and records in the custody of this office and also stated that his counsel will be back within two weeks and a detailed letter will be submitted after counsel returns. Further, the Official Liquidator has sent an e-mail to Shri. Pradeep Kothari on 24.05.2019 to remain present at the Office of the Official Liquidator at the earliest, but no reply has been received from him.

6.12: It is stated that the Official Liquidator has issued notice under Rule 130 of the Companies (Court) Rules, 1959 on 26.06.2019 to discuss about the details of money collected in the name of Orchard Unit's Scheme and affairs of the Company in liquidation on 03.07.2019. But the Ex-Directors did not turn up even though the Hon'ble High Court, Madras directed the Counsel of respondent/ex-directors to present before the Official Liquidator to disclose all affairs of the company in liquidation. However, on 05.07.2019 said case was listed and at the time of hearing it was intimated to the Hon'ble High Court, Madras that the said respondents were not furnished information regarding affairs of the company in liquidation. Then the Hon'ble High Court, Madras was pleased direct the respondent to present before the Office of the Official Liquidator. Pursuant to which another notice under Rule 130 of the Companies (Court) Rules, 1959 was sent to the Ex-Directors advised them to remain present at the Office of the Official Liquidator on 15.07.2019. If it is not complied with, same will be placed before the Hon'ble High Court, Madras and press for issue of non-bailable warrant to secure presence of ex-directors for clarifications.

6.13: The Official Liquidator had issued letter to the secured creditors to remain present on 25.07.2019 to know about the current status of the assets of the company in liquidation pledged by them. In compliance with the said letter, Chief Manager of applicant attended the meeting held on 25.07.2019 and submitted a letter dated 25.07.2019 to the Official Liquidator and in the said letter it has been stated that the property situated at No.102, Ramapuram Village, Saidapet Taluk &Chinnakovilankulam Village, Kurukalpatti Village, S.Karaikudi Village, Manamadurai Taluk, were mortgaged by the Company. It is further stated that assets situated at Plot No.254, DoorNo.47, II Main Road, Gandhi Nagar, Adyar, Chennai, stand in the name of Mrs.Kasthuri Bai. Another meeting was convened on 19.08.2019 and the Official Liquidator advised the Chief Manager of Tamilnadu Mercantile Bank, T.Nagar Branch to provide the details of sale advertisement dated 06.07.2010 pertaining to the lands mortgaged to the Tamilnadu Mercantile Bank and also advised to give the details of total money advanced and loan facility utilized and outstanding amount as on the date of winding up i.e.22.06.2000. It is also brought to the notice of office of the Official Liquidator vide letter dated 06.08.2019 by the Ex-director represented through Sandhya Kothari i.e. one general power of attorney was purported to be entered between the M/s. Tamilnadu Mercantile Bank and Moolchand Finance Limited and it is agreed by the Chief Manager, Tamilnadu Mercantile Bank that he will verify the records and submit the details in due course about the status of the general power of attorney obtained. However no reply is received till date. Further the Ex-Director has sent a letter dated 06.08.2019 to the Official Liquidator as regards present status of Assets and Liabilities of the company in liquidation and the same is under examination to take necessary steps for obtaining orders from the Hon'ble Company Court of High Court, Madras.

6.14: It is stated that the Official Liquidator has sent a letter dated 21.08.2019 to the Deputy Superintendent of Police, EOW - II, Chennai to provide complete list of payment made to the investors/deposit holders of the company in liquidation so as to proceed further in this liquidation. In compliance with the said letter the Official Liquidator has received a reply letter dated 01.10.2019 from the EOW-II wherein it has been stated that the information sought by this office is not available in EOWII as the recent historic flood of 2015 washed away of CD Files, documents and list of depositors payments details.

6.15: Funds position of the company in liquidation as on 31.12.2019:

Bank Balance :

Rs.1,97,871.60

Investment :

Rs. 5,00,000.00

Total :

Rs.6,97,871.60

6.16: It is sated that the office of OL has issued notice u/r 130 of the Companies (Court) Rules, 1959 to the Ex-directors to remain present at this office on 02.01.2019 to discuss about the list of assets and affairs belonging to the company in liquidation. Accordingly, one of the Exdirector Shri. Pradeep Kothari attended this office on that day and discussed about the affairs of the company in liquid

Brief of 6th defendant:

7.1: In the reply statement filed by 6th defendant, it is stated that the suit claiming mortgage in respect of Item No.2 in Schedule "A" of the application, in so far as it relates to the undivided share of land of an extent of 1345 sq.ft held by 6th defendant is not enforceable as 6th defendant. It is stated that 37th defendant was the owner of Item 2 of Schedule "A" property. She has entered into an agreement for sale with Sri Sai Estate on 19.3.1993. The said agreement was filed before the Income-Tax Authorities for a No-objection Certificate u/s 269 UC and the same was issued. In order to fulfil the obligations of 37th defendant under the said agreement, a Power of Attorney dated 25.2.1994 was executed by 37th defendant in favour of 38th defendant. The said Power of Attorney specifically stated that the 38th defendant can act only representing Sri Sai Estates and not in his individual capacity. The said power of attorney had not conferred any power on 38th defendant to stand as Guarantor for any loan that a third party may avail over the said property.

7.2: It is stated that the said Sri Sai Estates, a partnership firm, who is an agreement holder in respect of the property, is neither a party to the present proceedings nor to the alleged Deed of Guarantee as well as the deposit letter said to have been executed by 38th defendant representing 37th defendant. It is stated that the applicant is fully aware of the purchase by various purchasers of flats built over item no.2 of Schedule "A" property and also that there subsists an agreement between the 37th defendant and Sri Sai Estate. Hence the claim of applicant bank that 38th defendant, as power agent of 37th defendant, offered item 2 of schedule "A" property as security by way of mortgage by depositing title deeds is unsustainable in law. Further the guarantees as well as deposit has taken place on 16.6.1995 and the bank cannot plead ignorance of activities of 1st defendant. Further the sale deeds are being registered in favour of purchasers of undivided shares of land.

7.3: It is stated that the act done by 38th defendant is only in relation to the agreement of sale between the 37th defendant and Sri Sai Estates. The mortgage alleged to have been executed by 38th defendant representing 37th defendant is therefore not valid in the eye of law. It is further stated that the original documents off title were very much available for inspection with 1st defendant at their office. It is stated that the 6th defendant availed housing loan fro M/s. Weizman Finance Ltd for purchase of aforesaid flat. The representative of said finance company had inspected the original title deeds before sanctioning the loan. The bank authorities have parted with original documents after creating of alleged equitable mortgage, cannot claim any rights as against 6th defendant. In fact, in the Sale deed executed in favour of 6th defendant, it is specifically stated that the original documents are with the vendor viz. Kasturi Bai. The applicant having parted with original documents, cannot claim any valid equitable mortgage as against the share purchase by 6th defendant. Thus stating, the Ld. Counsel for 6th defendant prayed to dismiss the OA.

Brief of the 11th defendant:

8.1: In the reply statement filed by 11th defendant, it is stated that 11th defendant had not received any notice about the OA and came to know through another flat owners, i.e 6th and 38th defendant. It is stated that the 11th defendant had purchased the property bearing No.47, 2nd main road, Gandhi Nagar, Adyar, Chennai 600 020 from 37th defendant herein vide Registered Sale Deed dated 6.12.1995. At the time of purchase, the 1st defendant, who was the developer and 37th defendant represented that the land is free of all encumbrance. After reviewing the encumbrance certificate, the 11th defendant and his son had purchased the said property from 37th defendant for a consideration of Rs.4,39,764/-. The 11th defendant and his son executed a construction agreement dated 4.12.1995 with 1st defendant, wherein the said Moolchand Finance Limited agreed to construct apartments in the said 37th defendant property. Pursuant to the said agreement, the 11thdefendant paid a sum of Rs.6,35,000/- for construction of apartment, thereby investing a total sum of Rs.10,74,764/-. The 11th defendant thereafter, executed a settlement deed, settling his share in the scheduled property in favour his grand daughter, the 37th defendant herein vide registered Deed of Settlement dated 10.3.2008. The 11th defendant has paid full amount to 1st defendant in respect of the said property and denied that any mortgage existed in favour of applicant bank. The applicant bank cannot claim any amount from 11th defendant. Further it is stated that how the applicant bank would claim equitable mortgage when they did not have original title deeds deposited with them. Thus contending, Ld. Counsel for 11th defendant prayed for dismissal of the OA.

Brief of the 17th defendant:

9.1: In the reply statement filed by 17th defendant, it is stated that the 17th defendant along with his wife Mrs. B.Sheila purchased 667.075 sq.ft of undivided share of land at No.19, Melony Road, T.Nagar, Chennai 600 017 from one Mr. Moolchand Kothari, as Power of Attorney Holder of Mr. PinjalaSubba Rao and Mr. PinjalaNageshwar Rao, the Vendors of Sale Deed. This Power of Attorney was registered as Doc. No.971/4 of 1994 before SRO, T.Nagar, Chennai. As per Clause No.4 of the Power of Attorney, the Agent is empowered to execute and deliver the conveyance of the property to purchasers.

9.2: It is stated that when it is a joint property of 17th defendant along with his wife, the applicant bank has no locus to claim any relief against the person who is not impleaded as a necessary party to the OA. Further, no attachment of the property was sought for by the applicant bank and hence 17th defendant is a bona fide purchaser of the property. The entire sale consideration has also been paid in full and the 17th defendant has been put in possession of the property and is in enjoyment of the same.

9.3: It is stated that the mortgage was created on 10.12.1994 in respect of this property, however, the bank did not file any proof to demonstrate as to when the title deeds of M/s. Pinjala Subba Rao and Pinjala Nageshwar Rao were received by the Bank. Even otherwise, Ex.A81 is inadmissible in evidence that the alleged document is not dated to demonstrate when this document was executed by Mr. Moolchand Kothari. The said document does not disclose the date of MODT, the date of deposit of title deeds relating to the property at 19, Melony Road, T.Nagar, Chennai 600 017, the mortgage amount, the name of the borrower, description of property alleged to have been mortgaged and further the intention to mortgage the property is also absent. It is stated that there is no proof that interest on property was passed on to the alleged mortgage.

9.4: It is further stated that the 17th defendant is not a party to any of the alleged agreements or documents said to be executed between the applicant and the vendors. Further the 17th defendant neither borrowed any money from the applicant bank nor entered into any agreement. Therefore, no cause of action against 17th defendant would arise. The mortgage said have been created in favour of applicant bank is invalid and not entitled to any recovery certificate for selling the property. Further, it is stated that it is not the case of applicant that Mr. Pinjala Subba Rao and Mr. Pinjala Nageswar Rao were the borrower and to secure their loan, the property at T.Nagar, Chennai was mortgaged. Ex.A142, Power of Attorney did not empower the agent to execute any guarantee and the power of attorney did not empower Mr. Moolchand Kothari to put through the mortgage to secure property at T.Nagar for any third party loan. It is stated that the alleged mortgage was novated when the applicant bank accepted Vasu Studio property without any pre-condition.

9.5: It is stated that the applicant bank has entered into a compromise memo with RBF Nidhi Ltd., and it was a party to the compromise memo filed in O.s.No.3925 of 1997 filed by RBF Nidhi Ltd. By entering into this compromise memo, the applicant agreed to accept 6350 sq.ft of office space in property of Moolchand Group at EthirajSali, Egmore, Chennai-8. This compromise memo was entered into between RBF Nidhi Ltd and other creditors of Moolchand Group and M/s. Moolchand Finance Ltd, formed part of the said group. By accepting this property, the applicant bank confirmed before Hon'ble Court that property was accepted in lieu of all the dues of Moolchand Group. This compromise was approved by Hon'ble High court, Madras in CP 230/2004. Therefore, even as per this arrangement, the Principal Borrower was discharged from any further liability.

9.6: The statement of account filed by the applicant bank is inadmissible as the entries are not corroborated and further the statement of account filed on 20.12.2018 was not certified as per Banker's Book Evidence Act, 1891. Thus contending, Ld. Counsel for 17th defendant, prayed to dismiss the OA with costs.

Brief of the 19th defendant:

10.1: In the reply statement filed by 19th defendant, the 19th defendant denied the averments made in the OA. It is stated by the 19th defendant that the applicant bank has first charge as Mortgagee of Schedule A and Schedule B property are not maintainable. Further, this Tribunal has no jurisdiction to try the civil nature of transaction involving the question of title to the property described in Schedule A and B. No letter of authority is produced to sign and verify the application, as the person who signed application is not competent to institute the application. Board of Directors have not accorded sanction to initiate the application by constituting a board meeting.

10.2: It is stated by 19th defendant that there is no privity of contract between the applicant and the 19th defendant and he is not a necessary party to this application. The defendants 1 to 5 are not the owners of schedule A and B properties. Further this application is bad for nonjoinder of necessary parties viz. Pinjala Subba Rao and Pinjala Nageswara Rao, who are the erstwhile owners of T.Nagar property. It is stated that the erstwhile owners Pinjala Subba Rao and Pinjala Nageswara Rao executed a Power of Attorney deed in favour of Mr.Moolchand Kothari empowering him to sell the undivided interest in the land at premises bearing Door No.19, Malony Road, Chennai-17 comprised in survey no.R.S.No.129, Block 13, T.S.No.6686 to 6687. The said Mr.Moolchand Kothari executed a sale deed for a valuable consideration of Rs.8,64,126/- in favour of 19th defendant in Doc. No.535/1996 of Book No.I of Vol.1375 within SRO T.Nagar in respect of undivided share of 944.40 sq.ft. in the said property and is a bona fide purchaser.

10.3: It is stated by 19th defendant that he was not personally aware of the assignment between Defendants 1 to 5 and the applicant herein about availing Cash credit facility, etc. The Corporate Guarantee furnished by defendants 1 to 5 in favour of applicant is not binding on 19th defendant. M/s. Moolchand Finance Ltd has agreed to repay the loan by remitting to the applicant, the proceeds realised from time to time from the purchasers by sale of flats. Therefore, it is clear that there was an understanding between the applicant and 1st respondent to sell the constructed flats to the purchasers of undivided interest in schedule "B". This defendant cannot be mulcted with any liability whatsoever in respect of liabilities against Defendants 1 to 5

10.4: It is stated by 19th defendant that he had entered into a construction agreement with 1st respondent in respect of schedule "B" property and purchased 9440.40 sq.ft undivided share. 1st defendant constructed a flat measuring 1890 sq.ft inclusive of common area. The 19th defendant paid a sum of Rs.32,42,400/- on different date and is a bona fide purchaser. The 19th defendant is not liable to pay any amount to applicant. Thus stating, the 19th defendant prayed for dismissal of the OA.

10.5: The 19th defendant died during the pendency of the OA; hence his legal heirs were impleaded as defendants 54,55 & 56.

Brief of the 21st defendant:

11.1: In the reply statement filed by 21st defendant it is stated that the 21st defendant has no privity of contract with the applicant and the applicant has no cause of action as against him. It is stated that the 21st defendant is the bona fide purchaser of two flats (D & E in the ground floor) for valuable consideration together with an undivided share in the land from PinjalaSubba Rao and Pinjala Nageswara Rao by way of two sale deeds. The entire consideration has also been paid fully and is in possession and enjoyment of the property.

11.2: It is stated that the applicants and its officers and representatives are very well aware of all the details of the transactions of the said vendors but never chose to object or protest or even mention or allege about their alleged rights. The applicant even actively cooperated for their successful completion. The 21st defendant denies its liability for the whole or even any portion of the amount claimed by the applicant. It is stated that the applicant is guilty of collusion with defendants 1 to 4, 39 and 40.

11.3: It is stated that the 21st defendant is not a party to any of the alleged agreements or documents said to be executed between the applicant and the vendors of the properties. The amounts alleged to be advanced by the applicant to the 1st defendant were expressly intended to be specifically utilised for the promotion of residential complexes. The applicant cannot now attempt to transfer the consequent liability to the defendants, as the defendants were innocent purchasers in good faith for value without any defect. Further it is stated that the alleged mortgage was only in respect of land only and not of the apartments constructed on the land and there is no valid charge or mortgage is created and hence the application is not maintainable at all. The applicant has not come with clean hands and not entitled to any indulgence. Thus stating, the Ld. Counsel for the 21st defendant prayed the Tribunal to dismiss the OA.

Brief of the 27th defendant:

12.1: In the reply statement filed by 27th defendant, it is stated that the averments made in the application fails to show the existence of any right by the applicant with the defendant, as such, the suit is not at all maintainable either on facts or in the eye of law and hence liable to be dismissed. It is stated that the 27th defendant neither borrowed any money from the applicant nor entered into any agreement, much less the alleged Lease Rental Agreement with the 1st defendant, therefore, no cause of action as against the 27th defendant would arise. The 27th defendant has not aware of the transaction of the applicant bank with 1st defendant. Further on account of facts, no right is subsisting between the defendant with applicant bank. The 27th defendant is neither a proper nor a necessary party in the above suit. Hence the application filed by the applicant is to be dismissed. Thus stating, Ld. Counsel for the 27th defendant prayed to dismiss the OA.

Brief of the 30th defendant:

13.1: In the reply statement filed by the 30th defendant, it is stated that for the purpose of installing plant and equipment, namely, Medium Frequency Induction Furnace of 3 MT at the factory of its associate Kaveri Alloy Castings (P) Ltd., at Pondicherry, quotation by way of Proforma Invoice dated 2.6.1995 was obtained from M/s. AlidiaPowertronics (P) Ltd., New Delhi for Rs.40,00,000/-. It is stated that 30th defendant approached the 1st defendant for financial assistance to purchase and install the said equipment. In that connection, a Lease Agreement was entered into on 19.6.1995 between 1st defendant and 30thdefendant as Co-Lessee and M/s. Kaveri Alloy Castings (P) Ltd., as Lessee, for a total sum of Rs.40,00,000/-. The amount granted as the cost of plant and equipment, to be installed at the factory of Lessee M/s. Kaveri Alloy Castings (P) Ltd at Pondicherry.

13.2: The 30th defendant agreed to furnish collateral security by way of deposit of title deeds of certain immovable properties and also executed irrevocable Power of Attorney in respect of securities pledged and also gave a deed of personal guarantee dated 19.6.1995. Further the managing partner of 30th defendant viz. Mr. D.s.Rajkumar furnished collateral security, the document relating to his house property situated at Thiruvannamalai under a covering letter dated 24.7.1995.

13.3: However, the 1st defendant finance only to an extent of Rs.31,13,334/- to M/s. Alidia Powertronics (P) Ltd., New Delhi. Since the  1st defendant could not finance to the full extent of Rs.40,00,000/-, the 30th defendant set up the plant with materials supplied by M/s. Alidia Powertronics (P) Ltd., to the extent of moneis paid to them, namely, 31,13,334/- , supplemented by its own resources.

13.4: Since there was delay in the disbursement of cost of Plant and Equipment till August, 1995, a fresh Schedule -I to the Lease Agreement was executed on 5.9.1995. In terms thereof, 1st instalment was due by 5.10.1995 only. Since the 1st defendant had disbursed the amount of Rs.31,13,344/- in three instalments on 21.6.1995, 4.8.1995 and 26.8.1995, the 1st defendant vide its letter dated 5.10.1995, requested payment of balance of interest thereon upto 4.9.1995 amounting to Rs.61,389/-. The said interest was also paid along with 1st instalment of Rs.1,41,111/- in October, 1995, in all amounting to Rs.2,02,500/-. Thereafter the 30th defendant paid the instalments to 1st defendant from October 1995 to July 1995.

13.5: While so, the 30th defendant received a letter dated 10.7.1996 from the applicant bank, demanding that the instalments payable to the  1st defendant should be paid to applicant directly and the 1st defendant also confirmed the same by its letter dated 5.8.1996. Thereafter the 30th defendant paid the amount to applicant from August 1996 to September 1997. Thus the 30th defendant so far has paid a sum of Rs.33,86,664/- being Rs.14,11,110/- paid to 1st defendant and Rs.19,75,554/- paid to applicant.

13.6: It is stated that as the 1st defendant has financed to the extent of Rs.31,13,334/- and as agreed, the 30thdefendant adjusted the amount in the last six instalments commencing from 5.3.1998 and also make payments amounting to Rs.2,000/- towards secondary period. In terms of the agreement, the 30th defendant is duty bound to pay the instalment amount of Rs.1,41,111/- only up to March 1998 and Rs.2000/- towards secondary period and any allegation or contention of applicant to the contrary is unlawful and unsustainable. Therefore, the applicant is entitled only to the balance sum payable after giving credit to the amounts already paid and to the amounts which were paid during the pendency of the proceedings.

13.7: It is stated by the 1st defendant that as soon as the payments made by 30th defendant under the agreement are completed, the 1st defendant is duty bound to return those documents relating to immovable properties deposited as collateral security. In the event of applicant bank taking over the securities of 1st defendant, the applicant bank is bound to return those documents, as and when the payments due under the said agreement are completed. In support of his contentions, the 30th defendant relied on the following documents:

Letter dated 19.6.1995 from Mr. D.S.Rajkumar to 1st defendant - B-39

Abstract of Minutes of Meeting of Board of Directors dated 19.6.1995 - B 40

Personal Guarantee by D.S.Rajkumar to 1st defendant dated 196.1995 - B-41

Irrevocable Power of Attorney by D.s.Rajkumar and others to 1st defendant dated 19.6.1995 - B-42

Letter dated 21.6.1995 by 1st defendant to Kaveri Alloy Castings (P) Ltd - B-43

Letter dated 24.7.1995 by D.s.Rajkumar to 1st defendant - B-44

Letter dated 4.8.1995 by 1st defendant to 30th defendant - B-45

Letter dated 25.8.1995 by 1st defendant to 30th Defendant - B-46

Letter dated 5.9.1995 New Schedule to Lease Agreement - B -47

Letter dated 5.10.1995 by 1st defendant to 30th Defendant - B-48

Letter dated 6.10.1995 by Kaveri alloy Castings (P) Ltd to 1st defendant - B-49

Letter dated 10.7.1996 by applicant to 30th defendant - B-50

Letter dated 5.8.1996 by 1st defendant to 30th defendant - B-51

Thus contending, the Ld. Counsel for 30th defendant, prayed for an order to render justice.

Brief of the 31st defendant:

14.1: In the reply statement filed by 31st defendant, it is stated that the applicant bank granted Cash Credit Limit-I and Cash Credit Limit-II of Rs.6.00 crores and Rs.3.00 crores respectively to the defendants and however, the amount disbursed is Rs.6.00 crores. The 2nd to 5th defendants, 37th, 39th and 40th defendants are Guarantors to the above said transaction.

14.2: It is stated that the loan amounts have been disbursed to Lessee's of defendant as and when transactions are concluded from 1st defendant. The 1st defendant has to furnish all documents entered into between them and the Lessees with applicant whenever disbursement were made. The aforesaid loan amounts were availed by 1st defendant for the purpose of its business activities only.

14.3: It is stated that the 31st defendant has signed the Hire Purchase Agreement dated 31.1.95 and handed over the same to 1st defendant on a specific condition that 1st defendant should disburse the entire Hire Purchase amount of Rs.1,30,00,000/- on or before 31st March 1005. The 1st defendant has availed the amount of Rs.1,30,00,000/- from the applicant by depositing Hire Purchase Agreement dated 31.1.95, however, the 1st defendant has never disbursed any amount to the 31st defendant, at any point of time.

14.4: As the 1st defendant has not disbursed any amount as promised, the 31st defendant has invoked the said Hire Purchase Agreement dated 31.1.95 and requested the 1st defendant to return the said Hire Purchase Agreement. However, the 1st defendant, though accepted the revocation, has not returned t he documents and kept the documents on one pretext or the other.

14.5: It is stated that the loan amount of Rs.6.00 crores sanctioned by applicant to 1st defendant were disbursed to the clients of 1st defendant through the accounts maintained by 1st defendant in applicant bank. The applicant bank failed to verify the record whether the amounts have been properly utilised by 1st defendant.

14.6: It is stated that the 1st defendant has obtained loan amount by depositing Hire Purchase Agreement dated 31.1.1995 and a forged demand promissory note for Rs.1,30,00,000/- (as if it is signed by the Chairman of 31st defendant company), only after the letter dated 10.7.95 from the applicant. Immediately, the 31st defendant issued a reply bringing all the above facts to 1st defendant that there is no contract exists between the 1st defendant and 31st defendant and also about the forged demand promissory note submitted by 1st defendant to applicant. However, the applicant bank has not initiated any action against the 1st defendant even after a reply notice dated 20.12.1996.

14.7: The Hire Purchase Agreement dated 31.1.95 entered into between 1st and 31st defendant, no consideration has been passed at any point of time and the said agreement has also been revoked by both parties. Hence the applicant bank has no right to proceed against the 31stdefendant, as there is no subsisting contract between 1st and 31st defendant. Thus contending, Ld. Counsel for 31st defendant prayed to dismiss the suit.

Brief of the 38th defendant:

15.1: It is stated by the 38th defendant that he is the power of attorney holder of Mrs. Kasturi Bhai, who has been arrayed as 37th defendant, in respect of her property situated at Gandhi Nagar, Adyar more fully described in Item -II of Schedule A. The said Kasturi Bhai has executed a power of attorney in favour of M/s. Sri Sai Estates, a Partnership Firm for development and sale of said property. As M/s. Sri Sai Estates could not develop the property on its own due to financial crisis, had handed over the project for development to 1st defendant, namely Moolchand Finance Ltd.

15.2: It is stated that necessary signatures were obtained by the applicant to secure loan under the head Cash Credit -II. With the consent and knowledge of applicant, the mortgaged property was converted into stock in trade and permitted to collect money from the allottees. It is stated that even before issuing necessary letters to the 1st defendant, all undived shares were registered and payments have been received by 1st defendant.

15.3: It is stated by the 38th defendant that the applicant got another valuable security more fully described in Item No.1 of Schedule "A" of the OA which they have got in substitution of Item No.2 and 3 of Schedule "A" property. The same has been developed and sold as flats to various Genuine buyer prior to filing of this OA. By virtue of this act, the alleged liability of the flat purchasers get naturally extinguished. It is stated that the defendants 6 to 14 are innocent purchasers who does not have any privity of contract with the applicant. They have paid the sale consideration of flats they have purchased to the 1st respondent without any default. It is the 1st respondent who failed to remit the money which they collected from the flat purchasers to the applicant. The defendant also morally obliged to protect the interest of the flat owners as they have purchased the flats based on power of attorney.

15.4: It is further stated that the 1st defendant by its letter dated 14.12.1996 set as pre-condition for releasing the Item 2 and 3 of the Schedule "A" property for transferring the Liability for Moolchand Construction. By acting on the said letter, the alleged liability stands cancelled and it cannot be fastened on the flat owners thereafter. Thus stating, the 38th defendant prayed to dismiss the OA claim against defendant nos.6 to 14 and 38.

16: Brief of the 57th and 58th defendants:

16.1 In the reply statement filed by the defendants 57 and 58, it is stated that these defendants have purchased Flat No.B in first Floor from Mrs. Avicote Arpita Anna Varghese through her Power of Attorney Mr.Sanjiv George Pallikal and the sale deed is registered as Doc No.336 of 2007. The said Mrs. Avicote Arpita Anna Varghese acquired this property through Deed of Release executed by her Mother Mrs. Rebecca Premi Oomen and her Brother Mr. Rahul Oomen Verghese dated 23.10.2006 registered as Doc No.2480/2006, relinquishing their rights title share and interest in the property.

16.2: Mr.Avicote Ranjit Varghese Oommen, the 42nd Defendant herein, purchased 576.13sq.ft each in two documents registered as Doc no.1897 of 1996 and 1920 of 1996 from Mr.Pinjala Subba Rao and Mr.Pinjala Nageswara Rao. Mr.Moolchand Kothari was the Power of Attorney of Pinjala Subbarao and Nageswara rao, who were the original owners of the property. This Power of Attorney was registered as Document No.9714 of 1994 with SRO, T.Nagar, Chennai. As per Clause No.4 of the Power of Attorney, the Agent is empowered to execute and deliver the conveyance of the property to the purchasers.

16.3 It is stated that the 57th& 58th Defendants came to know about the OA filed by the Applicant Bank subsequently only through the meeting of the flat owners Association. The 57th& 58th Defendants, while purchasing the property, obtained the Encumbrance Certificate but the same did not reflect existence of any mortgage or attachment or injunction of any nature against the property, which guided them to proceed with the purchase of the property. It is submitted that the 57th and 58th Defendants are the bona fide purchaser by investing their life savings in purchasing the property and purchased in good faith for valuable consideration of the said flat together with an undivided share in the land, duly registered as document No.336 of 2007. It is stated that the entire consideration has also been fully paid and this Defendants have been put in possession of the property also and is in enjoyment thereof.

16.4: It is stated by defendants 57 and 58 that as per the averments in the O.A, the applicant bank has claimed that the mortgage was created on 10.12.1994 in respect of this property. However, the applicant bank did not file any proof to demonstrate as to when the title deeds of M/s.Pinjala Subba Rao & Pinjala Nageshwar Rao were received by the Bank. Further the alleged document (Ex.A81) is not dated to demonstrate when this document was executed by Mr.Moolchand Kothari. The said document does not disclose the date of MODT, the date of deposit of the Title Deed relating to the property at No.19, Melony Road, T.Nagar, Chennai - 600 017, the mortgage amount, the name of the borrower, description of the property alleged to have been mortgaged and the intention to mortgage the property is also absent. Further, there is no proof that interest on the property was passed on to the alleged mortgage and passing of interest in the property is a condition to claim that a valid mortgage over the property was created.

16.5: The 57th & 58th Defendants submits that they were not at all put on notice by the applicant for its alleged rights over or interest in the said property. The previous vendors/defendants, while relinquishing their rights over the flats or selling the Flat No. B in Ground Floor, did not disclose any encumbrance over the property.

16.6: The defendants 57 and 58 further stated that they are not a party to any of the alleged agreements or documents said to have been executed between the applicant and the vendors of the properties purchased by these Defendants and so also these defendants are not at all bound by any such transaction to any extent whatsoever. The applicant has no legal or moral right to foist any liability on these defendants, as the documents were not registered.

16.7: It is further stated by defendants 57 and 58 that they have neither borrowed any money from the applicant bank nor entered into any agreement and that therefore no cause of action as against these defendants would arise. Further they are not liable to pay any amount to the applicant.

16.8: The power of attorney did not empower Mr. Moolchand Kothari to put through the mortgage to secure the property at No. 19, Melony Road, T.Nagar, Chennai - 600 017 for any third party loan. Even otherwise the alleged mortgage was novated when the Applicant bank accepted Vasu Studio property without any pre-condition.

16.9: It is stated by defendants 57 and 58 that applicant bank has entered into a Compromise Memo with RBF Nidhi Ltd. and it was a party to the Compromise Memo filed in OS No.3925 of 1997 filed by RBF Nidhi Ltd. By entering into this Compromise Memo, the applicant agreed to accept 6350 sq.ft. of office space in the property of Moolchand group at EthirajSalai, Egmore, Chennai - 600 008 (Earlier known as Commander-in-Chief Road). This Compromise Memo was entered into between RBF Nidhi Ltd. and other creditors of Moolchand Group and M/s.Moolchand Finance Ltd. formed part of the said group. By accepting this property, the Applicant Bank confirmed before Hon'ble Court that property was accepted in lieu of all the dues of Moolchand Group. The said Compromise was approved by Hon'ble High Court, Madras in CP 230 of 2004. Therefore, even as per this arrangement the Principal Borrower was discharged from any further liabilities.

16.10: It is stated that the Statement of account filed by the Applicant Bank is inadmissible for the reason that the entries are not corroborated and further the statement of account filed on 20.12.2018 is not certified as required to be certified under the Bankers' Book Evidence Act, 1891. Thus, stating the Ld. Counsel for defendants 57 and 58, prayed to dismiss the OA.

Brief of the 59th defendant:

17.1: In the reply statement filed by the 59th defendant, it is stated that the 59th Defendant purchased the property at Flat No. D in 3rd Floor at No.19, Melony Road, T.Nagar, Chennai - 600 017 on 14.11.2015 from Mrs.Rajasulochana, the 47th Defendant, herein and the sale was registered as Document No.2777 of 2015 with SRO T.Nagar.Mrs.Rajasulochana, the 47th Defendant herein had purchased the said Flat No.Don 23.02.1996 and the sale was registered as Document no.489 of 1996. The 59th Defendant came to know about the OA filed by the applicant bank subsequently only through the meeting of the flat owners Association.

17.2 It is stated that the 59th Defendant, while purchasing this flat, availed housing loan from IDBI Home Finance Ltd. on 09.11.2005 and the IDBI after thoroughly verifying the title deeds of the Vendor, namely, Mrs. Rajasulochana, the 47th Defendant herein sanctioning the loan. The said loan has been fully paid by the 59thDefendantand NOC dated 23.01.2010 has been obtained from the IDBI Home Finance Ltd. Along with NOC, IDBI Home Finance Ltd., had handed over the original Title Deed and parental documents vide their letter dated 23.01.2010.

17.3: Once again, the 59th Defendant availed Loan from ICICI Bank on 30.01.2010 and had cleared the dues in 2016. The Bank had also issued a No Objection Certificate and handed over the original title deeds on 28.04.2016. Hence, this 59th Defendant is a bona fide purchaser and the title was clear when she purchased the flat by investing her life savings. There was no valid equitable mortgage created by the owners of the property when she purchased. It is stated that the said flat was purchased for valuable consideration together with an undivided share in the land duly registered as document No.2777 of 2015 and the entire sale consideration has also been fully paid and this Defendant has been put in possession of the property also and is in enjoyment thereof.

17.4: It is stated that the applicant has claimed that the mortgage was created on 10.12.1994 in respect of this property, however, did not file any proof to demonstrate as to when the title deeds of M/s.Pinjala Subba Rao & Pinjala Nageshwar Rao were received by the Bank. The said document does not disclose the date of MODT, the date of deposit of the Title Deed relating to the property at No.19, Melony Road, T.Nagar, Chennai - 600 017, the mortgage amount, the name of the borrower, description of the property alleged to have been mortgaged and the intention to mortgage the property is also absent. There is no proof to show that interest on the property was passed on to the alleged mortgage. The previous vendors/defendants, while relinquishing their rights over the flats or selling the Flat No.D in 3rd Floor, did not disclose any encumbrance over the property.

17.5: It is further stated that defendant no.59 is not a party to any of the alleged agreements or documents said to be executed between the applicant and the vendors of the properties purchased by her and not at all bound by any such transaction to any extent whatsoever, hence invalid and inadmissible in evidence. The applicant has no legal or moral right to foist any liability on this defendant as the documents are not registered.

17.6: It is stated by defendant no.59 that she neither borrowed any money from the applicant bank nor entered into any agreement and therefore, no cause of action as against her would arise and under such circumstances the suit has to be dismissed on the grounds that the entire suit is misconceived and also devoid of particulars.

17.7: The power of attorney did not empower Mr. Moolchand Kothari to put through the mortgage to secure the property at No. 19, Melony Road, T.Nagar, Chennai - 600 017 for any third party loan. Even otherwise the alleged mortgage was novated when the Applicant bank accepted Vasu Studio property without any pre-condition.

17.8: It is stated by defendants 57 and 58 that the applicant bank has entered into a Compromise Memo with RBF Nidhi Ltd. and it was a party to the Compromise Memo filed in OS No.3925 of 1997 filed by RBF Nidhi Ltd. By entering into this Compromise Memo, the applicant agreed to accept 6350 sq.ft. of office space in the property of Moolchand group at Ethiraj Salai, Egmore, Chennai - 600 008 (Earlier known as Commander-in-Chief Road). This Compromise Memo was entered into between RBF Nidhi Ltd. and other creditors of Moolchand Group and M/s.Moolchand Finance Ltd. formed part of the said group. By accepting this property, the Applicant Bank confirmed before Hon'ble Court that property was accepted in lieu of all the dues of Moolchand Group. The said Compromise was approved by Hon'ble High Court, Madras in CP 230 of 2004. Therefore, even as per this arrangement the Principal Borrower was discharged from any further liabilities.

17.9: It is stated that the Statement of account filed by the Applicant Bank is inadmissible for the reason that the entries are not corroborated and further the statement of account filed on 20.12.2018 is not certified as required to be certified under the Bankers' Book Evidence Act, 1891. Thus stating the Ld. Counsel for defendant no.59, prayed to dismiss the OA.

Brief of the 60th defendant:

18.1: In the reply statement filed by the 60th defendant, it is stated that she had purchased the property at Flat No. B in 3rd Floor at No.19, Melony Road, T.Nagar, Chennai - 600 017 on 26.4.2006 from M/s. Dual Structurals, the 25th Defendant, herein and the sale was registered as Document No.1031 of 2006 with SRO T.Nagar. The said M/s. Dural Structuarls P Ltd, 25th defendant herein had purchased the said Flat No.Bon 15.7.1996 and the sale was registered as Document no.1471 of 1996 before SRO, T.Nagar. The 60th Defendant came to know about the OA filed by the applicant bank subsequently only through the meeting of the flat owners Association.

18.2 It is stated that the 60th Defendant, while purchasing the flat obtained Encumbrance Certificate and the same did not reflect existence of any mortgage or attachment or injunction of any nature against the property. It is stated that the 60th Defendant is a bona fide purchaser by investing her life savings and the title was clear when she purchased the flat. It is stated that the said flat was purchased for valuable consideration together with an undivided share in the land duly registered as document No.1031 of 2006 and the entire sale consideration has also been fully paid and this Defendant has been put in possession of the property also and is in enjoyment thereof.

18.3: It is stated that the applicant has claimed that the mortgage was created on 10.12.1994 in respect of this property, however, did not file any proof to demonstrate as to when the title deeds of M/s.Pinjala Subba Rao & Pinjala Nageshwar Rao were received by the Bank. Further the alleged document (Ex.A81) is not dated to demonstrate when the document was executed by Mr. Moolchand Kothari. The said document does not disclose the date of MODT, the date of deposit of the Title Deed relating to the property at No.19, Melony Road, T.Nagar, Chennai - 600 017, the mortgage amount, the name of the borrower, description of the property alleged to have been mortgaged and the intention to mortgage the property is also absent. There is no proof to show that interest on the property was passed on to the alleged mortgage. Further the requirement of Section 58(f) of Transfer of Property Act, 1882 were not complied with to create any valid equitable mortgage by deposit of title deeds. The previous vendors/defendants, while relinquishing their rights over the flats or selling the Flat No. B in 3rd Floor, did not disclose any encumbrance over the property.

18.4: It is further stated that defendant no.60 is not a party to any of the alleged agreements or documents said to be executed between the applicant and the vendors of the properties purchased by her and not at all bound by any such transaction to any extent whatsoever, hence invalid and inadmissible in evidence. The applicant has no legal or moral right to foist any liability on this defendant as the documents are not registered.

18.5: It is stated by defendant no.60 that she neither borrowed any money from the applicant bank nor entered into any agreement and therefore, no cause of action as against her would arise and under such circumstances the suit has to be dismissed on the grounds that the entire suit is misconceived and also devoid of particulars.

18.6: The power of attorney did not empower Mr. Moolchand Kothari to put through the mortgage to secure the property at No. 19, Melony Road, T.Nagar, Chennai - 600 017 for any third party loan. Even otherwise the alleged mortgage was novated when the Applicant bank accepted Vasu Studio property without any pre-condition.

18.7: It is stated that applicant bank has entered into a Compromise Memo with RBF Nidhi Ltd. and it was a party to the Compromise Memo filed in OS No.3925 of 1997 filed by RBF Nidhi Ltd. By entering into this Compromise Memo, the applicant agreed to accept 6350 sq.ft. of office space in the property of Moolchand group at Ethiraj Salai, Egmore, Chennai - 600 008 (Earlier known as Commander-in-Chief Road). This Compromise Memo was entered into between RBF Nidhi Ltd. and other creditors of Moolchand Group and M/s.Moolchand Finance Ltd. formed part of the said group. By accepting this property, the Applicant Bank confirmed before Hon'ble Court that property was accepted in lieu of all the dues of Moolchand Group. The said Compromise was approved by Hon'ble High Court, Madras in CP 230 of 2004. Therefore, even as per this arrangement the Principal Borrower was discharged from any further liabilities.

18.8: It is stated that the Statement of account filed by the Applicant Bank is inadmissible for the reason that the entries are not corroborated and further the statement of account filed on 20.12.2018 is not certified as required to be certified under the Bankers' Book Evidence Act, 1891. Thus stating the Ld. Counsel for defendant no.60, prayed to dismiss the OA.

19 Brief of the 61st defendant:

19.1: In the reply statement filed by defendant no.61, it is stated that Mr. R.Gopalan, the 20th defendant herein had purchased Flat No.C in Ground Floor on 15.2.2996 from Mr. PinjalaSubba Rao and Mr. Pinjala Nageswara Rao, who acted through their Power Agent Mr. Moolchand Kothari. The sale was registered as Doc.No.481 of 1996 with SRO, T.Nagar. She had purchased the property at Flat No. C in Ground Floor at No.19, Melony Road, T.Nagar, Chennai - 600 017 on 22.4.2015 from Mr. R.Gopalan, the 20th Defendant, herein and the sale was registered as Document No.989 of 2015 with SRO T.Nagar. This Defendant came to know about the OA filed by the applicant bank subsequently only through the meeting of the flat owners Association.

19.2 It is stated by defendant no.61 that while purchasing the flat obtained Encumbrance Certificate and the same did not reflect existence of any mortgage or attachment or injunction of any nature against the property. It is stated that the 61st defendant is a bona fide purchaser by investing her life savings and the title was clear when she purchased the flat. It is stated that the said flat was purchased for valuable consideration together with an undivided share in the land duly registered as document No.989 of 2015 and the entire sale consideration has also been fully paid and this defendant has been put in possession of the property also and is in enjoyment thereof.

19.3: It is stated that the applicant has claimed that the mortgage was created on 10.12.1994 in respect of this property, however, did not file any proof to demonstrate as to when the title deeds of M/s.Pinjala Subba Rao &Pinjala Nageshwar Rao were received by the Bank. Further the alleged document (Ex.A81) is not dated to demonstrate when the document was executed by Mr. Moolchand Kothari. The said document failed to disclose the date of MODT, the date of deposit of the Title Deed relating to the property at No.19, Melony Road, T.Nagar, Chennai - 600 017, the mortgage amount, the name of the borrower, description of the property alleged to have been mortgaged and the intention to mortgage the property is also absent. There is no proof to show that interest on the property was passed on to the alleged mortgage. Further the requirement of Section 58(f) of Transfer of Property Act, 1882 were not complied with to create any valid equitable mortgage by deposit of title deeds. The previous vendors/defendants, while relinquishing their rights over the flats or selling the Flat No.C in Ground Floor, did not disclose any encumbrance over the property.

19.4: It is further stated that defendant no.61 is not a party to any of the alleged agreements or documents said to be executed between the applicant and the vendors of the properties purchased by her and not at all bound by any such transaction to any extent whatsoever, hence invalid and inadmissible in evidence. The applicant has no legal or moral right to foist any liability on this defendant as the documents are not registered. It is further stated that she neither borrowed any money from the applicant bank nor entered into any agreement and therefore, no cause of action as against her would arise and under such circumstances the suit has to be dismissed on the grounds that the entire suit is misconceived and also devoid of particulars. The applicant cannot have charge over the flat and undivided interest owned by these defendants. Further the description of each flat is not described in the schedule and is vague.

19.5: The power of attorney (Ex.A142)did not empower Mr. Moolchand Kothari to put through the mortgage to secure the property at No. 19, Melony Road, T.Nagar, Chennai - 600 017 for any third party loan. Even otherwise the alleged mortgage was novated when the Applicant bank accepted Vasu Studio property without any pre-condition.

19.6: It is stated that applicant bank has entered into a Compromise Memo with RBF Nidhi Ltd. and it was a party to the Compromise Memo filed in OS No.3925 of 1997 filed by RBF Nidhi Ltd. By entering into this Compromise Memo, the applicant agreed to accept 6350 sq.ft. of office space in the property of Moolchand group at EthirajSalai, Egmore, Chennai - 600 008 (Earlier known as Commander-in-Chief Road). This Compromise Memo was entered into between RBF Nidhi Ltd. and other creditors of Moolchand Group and M/s.Moolchand Finance Ltd. formed part of the said group. By accepting this property, the Applicant Bank confirmed before Hon'ble Court that property was accepted in lieu of all the dues of Moolchand Group. The said Compromise was approved by Hon'ble High Court, Madras in CP 230 of 2004. Therefore, even as per this arrangement the Principal Borrower was discharged from any further liabilities.

19.7: It is stated that the Statement of account filed by the Applicant Bank is inadmissible for the reason that the entries are not corroborated and further the statement of account filed on 20.12.2018 is not certified as required to be certified under the Bankers' Book Evidence Act, 1891. Thus, stating the Ld. Counsel for defendant no.61, prayed to dismiss the OA.

20 Brief of the 62nd defendant:

20.1: In the reply statement filed by defendant no.62, it is stated that they had purchased Flat No.C in Ground Floor on 4.4.2013 from Mrs. R.Kasturi and the sale was registered as Doc.No.819 of 2013 with SRO, T.Nagar. Further the defendant no.62 had purchased another property at Flat No. E in Ground Floor at No.19, Melony Road, T.Nagar, Chennai - 600 017 on 25.9.2013 from Mr. F.Susairajuand the sale was registered as Document No.2299 of 2013 with SRO T.Nagar.

20.2: It is stated that M/s. JeevandassLaljee& Sons, the 21st defendant herein purchased flat No.D& E in Ground Floor on 23.2.1996. The sale was registered as Doc. No.487 of 1996 for Flat No.D and Doc.No.486 of 1996 for Flat E with SRO, T.Nagar. Subsequently, the said 21st defendant sold Flat D, Ground Floor property to Mrs. R.Kasturi on 28.6.2012 and the was registered as Doc. No.1389 of 2012 with SRO. T,Nagar. The other flat E, Ground floors was sold to Mr. F.Susaidraj on 1.8.2013 and the sale was registered as Doc. No.1938 of 2013 with SRO, T.Nagar. This Defendant came to know about the OA filed by the applicant bank subsequently only through the meeting of the flat owners Association.

20.3 It is stated by defendant no.61 that while purchasing the flat obtained Encumbrance Certificate and the same did not reflect existence of any mortgage or attachment or injunction of any nature against the property. It is stated that defendant no.62 is a bona fide purchaser by investing. It is stated that the said flat was purchased for valuable consideration together with an undivided share in the land duly registered as document No.819 of 2013 and 2299 of 2013 respectively and the entire sale consideration has also been fully paid.

20.4: It is stated that the applicant has claimed that the mortgage was created on 10.12.1994 in respect of this property, however, did not file any proof to demonstrate as to when the title deeds of M/s.Pinjala Subba Rao &Pinjala Nageshwar Rao were received by the Bank. Further the alleged document (Ex.A81) is not dated to demonstrate when the document was executed by Mr. Moolchand Kothari. The said document failed to disclose the date of MODT, the date of deposit of the Title Deed relating to the property at No.19, Melony Road, T.Nagar, Chennai - 600 017, the mortgage amount, the name of the borrower, description of the property alleged to have been mortgaged and the intention to mortgage the property is also absent. There is no proof to show that interest on the property was passed on to the alleged mortgage. Further the requirement of Section 58(f) of Transfer of Property Act, 1882 were not complied with to create any valid equitable mortgage by deposit of title deeds. The previous vendors/defendants, while relinquishing their rights over the flats or selling the Flat No.C in Ground Floor, did not disclose any encumbrance over the property.

20.5: It is further stated that defendant no.62 is not a party to any of the alleged agreements or documents said to be executed between the applicant and the vendors of the properties purchased by her and not at all bound by any such transaction to any extent whatsoever, hence invalid and inadmissible in evidence. The applicant has no legal or moral right to foist any liability on this defendant as the documents are not registered. It is further stated that defendant no.62 neither borrowed any money from the applicant bank nor entered into any agreement and therefore, no cause of action as against this defendant would arise and under such circumstances the suit has to be dismissed on the grounds that the entire suit is misconceived and also devoid of particulars. The applicant cannot have charge over the flat and undivided interest owned by these defendants. Further the description of each flat is not described in the schedule and is vague.

20.6: The power of attorney (Ex.A142)did not empower Mr. Moolchand Kothari to put through the mortgage to secure the property at No. 19, Melony Road, T.Nagar, Chennai - 600 017 for any third party loan. Even otherwise the alleged mortgage was novated when the Applicant bank accepted Vasu Studio property without any pre-condition.

20.7: It is stated that applicant bank has entered into a Compromise Memo with RBF Nidhi Ltd. and it was a party to the Compromise Memo filed in OS No.3925 of 1997 filed by RBF Nidhi Ltd. By entering into this Compromise Memo, the applicant agreed to accept 6350 sq.ft. of office space in the property of Moolchand group at EthirajSalai, Egmore, Chennai - 600 008 (Earlier known as Commander-in-Chief Road). This Compromise Memo was entered into between RBF Nidhi Ltd. and other creditors of Moolchand Group and M/s.Moolchand Finance Ltd. formed part of the said group. By accepting this property, the Applicant Bank confirmed before Hon'ble Court that property was accepted in lieu of all the dues of Moolchand Group. The said Compromise was approved by Hon'ble High Court, Madras in CP 230 of 2004. Therefore, even as per this arrangement the Principal Borrower was discharged from any further liabilities.

20.8: It is stated that the Statement of account filed by the Applicant Bank is inadmissible for the reason that the entries are not corroborated and further the statement of account filed on 20.12.2018 is not certified as required to be certified under the Bankers' Book Evidence Act, 1891. Thus stating the Ld. Counsel for defendant no.62, prayed to dismiss the OA

Brief of the 63rd defendant:

21.1: In the reply statement filed by 63rd defendant, it is stated that he has purchased undivided share of land to the extent of 1012.35 sq.ft of land at New No.34, Old No.19, Melony Road, T.Nagar, Chennai-600 017 by means of Sale Deed dated 2.3.2012 and registered as Doc. No.4661/12 with SRO, T.Nagar, Chennai.

21.2: It is stated that originally the flat was owned by one Mr. M.V.V. Sathyanarayan Rao who is the 45th defendant in the above OA. On 14.2.1996, construction agreement was executed by M/s. Moolchand Finance Limited, Chennai 600 018 represented by its Managing Director Mr. Moolchand Kothari in favour of Mr. M.V.V.Sathyanarayan Rao, who agreed to sell 1012.35 sq.ft of undivided share of land in Schedule "A" property in favour of said Mr.M.V.V.Sathyanarayan Rao.

21.3: It is stated that the Sale Deed was executed by one Mr. Moolchand Kothari as Power of Attorney Holder of Mr. Subbu Rao and Mr. Pinjala Narayana Rao, the vendor of the Sale Deed. The said Power of Attorney was registered as Doc. No.971/4/-1994 with SRO, T.Nagar, Chennai. As per Clause No.4 of Power of Attorney, the Agent is empowered to execute and deliver the conveyance of the property to the purchasers.

21.4: On 24.3.2012, the application for transfer of ownership for Flat 2- E, No.34, Melony Road, T.Nagar, Chennai was submitted before Revenue Officer and the same has been incorporated in the Revenue Records of Corporation of Chennai and the defendant is paying property tax regularly till date. The Electricity Service Connection for the said flat also been transferred in the name of Mr. M.V.V.Sathyanarayan Rao and he is paying electricity bills till date.

21.5: It is stated that if the 1st defendant had committed any default in payment, it is matter between the Principal and the Agent. The applicant bank before partying with the funds ought to have verified and ensured whether the memorandum of the 1st defendant permits construction activities. Further the correspondence exchanged between the Applicant and the 1st defendant would prove that the applicant bank had prior knowledge about the sale of flats and yet they did not object to the same. It is further stated that the statement dated 4.6.1996 by the 1st defendant to applicant would reveal the payments made by each flat owners to the 1st defendant. It is further stated that the 1st defendant gave fresh securities to the applicant in the form of immovable assets and among the properties offered by the 1st defendant, the properties at Saligramam (Vasu Studios) and Egmore property (Ethirajsalai) are valuable and these assets are sufficient to cover the liabilities of the 1st defendant. Further on 14.12.1996, the 1st defendant informed the applicant that Vasu Studio property and Egmore property should be accepted in lieu of security created on Adyar and Melony Road, T.Nagar properties. Further, the 1st defendant's sister concern M/s. Moolchand Construction was working for transfer of liability of M/s. Moolchand Finance Ltd. Thus substitution of contract was involved.

21.6 It is stated that the applicant entered into a compromise with M/s. Moolchand Construction and released the charge on Vasu studio property for a sum of Rs.75 lakhs, far less than the market price. By parting with a valuable property for a lesser amount, the applicant had acted negligently and thereby impaired the remedy available to others.

21.7: It is stated that an irrevocable power of attorney dated 24.10.1996, registered as doc.No.926 of 1996 with the District Registrar, Madras South was excluded by 1st defendant in favor of applicant. In spite of powers, the applicant has deliberately delayed the process of sale. Thus stating, the Ld. Counsel for 63rd defendant prayed to dismiss the OA.

21.8: Ld. Counsel for defendant Nos.D15,D17,D19 (LRs of D54,D55 & D56), D23, D24, D46, D57 & D58, D59, D60,D61,D62 & D64) relied on the following judgements:

a. Saradindu Mukherjee Vs Amiya Kumar Basu reported in Manu/WB/0089/1977

b. Miller (Assignee of the Estate of Ram Kishen) Vs Babu Madho Das reported in MANU/0010/1896

c. K.J.Nathan Vs S.V.Maruty Reddy and Ors reported in MANU/SC/0235/1964

d. Jethibai vs Putlibai reported in MANU/MH?0279/1912

e. GodanNamboothri Pad Vs Kerala State Financial Corporation reported in MANU/KE/0374/1998

f. Union of India Vs Kishori Lal gupta&Brothers reported in MANU/SC/0180/1959

g. Mir Eusuff Ali and Ors Vs Panchanan Chatterjee reported in MANU/WB/0492/1910

h. Ashiq Husain and Ors Vs Chaturbhuj and Ors reported in MANU/UP?0376/1927

i. Indian Bank Vs V.R.Venkataraman and Ors reported in MANU/AP/1062/2003

j. State Bank of India Vs Raghubar Singh and Ors reported in MANU/BH/0040/1997

k. Punjab National Bank Ltd., Delhi Vs Vinod Kumar and Ors reported in MANU/PH/0093/1957

l. Central Bank of India Vs Ravindra and Ors reported in MANU/SC?0663/2001

m. Chandrahar Goswami Vs Gauhati Bank reported in MNU/SC/0031/1966

n. Murli Prasad Vs Parasnath Prasad and Ors reported in MANU/BH/0054/1967

Thus, from the contest as afore mentioned put forth by the defendants, availing of cash credit(CC-1)of a sum of Rs.6.00 crores towards promotion & construction of apartments and cash credit (CC-2) of a sum of Rs.3.00 crores towards hire purchase & leasing activities of the 1st defendant by the defendants 1 to 4 vide Ex.A3 sanction dated 18.3.1995, besides the 5th defendant (now ordered to be wound up) accepting to be the corporate guarantor for the due discharge of the aforesaid credit facilities sanctioned to and availed by the defendants 1 to 4, is not in controversy. However, the defendants have resisted the claim, inter alia, contending that;

(i) The OA claim stands discharged partially.

(ii) There is no valid mortgage over items 2&3 of application "A" schedule.

(iii) The Cash Credit-II liability of the 1st defendant to the extent of Rs.2.70 crores stands taken over by M/s. Moolchand Construction and the alleged mortgage right over items 2&3 of application "A" schedule has been substituted by a new contact by virtue of the doctrine of novation in view of Ex.B-123& Ex. B124 letters and Ex B-76 MOU between the applicant and M/s. Moolchand Construction,

(iv) The Ex. A-148 statements of accounts of the borrowers is incorrect, inadmissible and un-reliable.

22: In the light of the contest as afore mentioned, the Tribunal framed the following points for consideration:

POINTS:

Whether the applicant has established its claim? if so, for what amount and against whom?

Whether the applicant bank has failed in establishing its claim of mortgage charge over the property covered by the items nos.2 & 3 of application "A" schedule?

Whether the mortgage claim if any, of the applicant over items 2 & 3 of application "A" schedule stood substituted by new properties in terms of Ex.B-124 and the cash credit-II liability of the 1st defendant to the extent of Rs.2.71 crores has been taken over by M/s. Moolchand Construction in terms of Ex.B-123, by virtue of doctrine of novation?

Whether Ex. A-148 Statement of Account is incorrect, not inconformity with the relevant provisions of Law and Banker's Books of Evidence Act? If so, can the same be discarded?

Whether the applicant bank is entitled for pendent-lite and future interest? If so, at what rate and on what amount?

22.1: I have extensively heard the Ld. Counsel Shri V.Chandrasekaran, for Applicant, Ld. Sr. Counsel Smt.Chitra Sampath along with Shri. Prasanna Venkatesh and Shri.K.A.Ramakrishnan Advocates for Defendant No.1, 3 &4, Ld. Official Receiver for Defendant No.5, Ld. Counsel Shri. K.S. Kumar &K.M.Valsala, for defendant No.18, Ld. Counsel Shri.N.V.Srinivasan, for Defendants 15,17, 19, 23,24,46, 57 ,58, 60,61,62&64 and the Ld. Counsel Shri.R.Venkataraman for D30.

22.2: The applicant got marked Exhibits A-1 to A-149.AW1 has been cross examined with the leave of the Tribunal.

22.3: The 1st Defendant got marked Exhibits B -74 to B-151. The 15th Defendant got marked Exhibits B1 to B2. The 18th Defendant got marked Exhibits B54 to B64. The19th Defendant got marked Exhibits B3 to B18& B.65 to 73. The 20thThe Defendant got marked Exhibits B19 to B20. The 21st Defendant got marked Exhibits B21 to B34. The 23rd Defendant got marked Exhibits B35 to B36. The 24th Defendant got marked Exhibits B37 to B38. The 30th Defendant got marked Exhibits B39 to B51. The 43rd Defendant got marked Exhibits B52 to B53. The Applicant and Defendants1, 3&4,15,17,18,54,55,56,23,24,30,46,57,58to62 &64, have filed written submissions and case law.

I have carefully perused the record, written submissions and the case laws.

22.4: Before I proceed to discuss the points supra, I wish to state herein that, the procedure of adjudication of a claim or counter claim before this Tribunal is summary and parties are required to file their proof affidavit or counter proof affidavit as the case may be, in support of their respective contentions. The Tribunal shall there upon adjudicate the claim or the counter claim basing on the respective affidavits of the parties. Cross examination of a witness is not a rulebut an exception. In terms of section 19 (24) the application made to the Tribunal under subsection (1) or sub-section (2) shall be dealt with as expeditiously as possible and endeavor shall be made by to dispose of the application finally within one hundred and eighty days from the date of receipt of the application.Application of the provisions of Code of Civil Procedure while adjudicating the claim or counter claim, is limited to the extent indicated in section 22(2) of the RDB Act. Hon'ble Supreme Court of India, in re, Transcore Vs Union of India (AIR2007 SC 712), held that the "Debt Recovery Tribunal can go beyond Code of Civil Procedure". The Tribunal is not bound by the provisions of Indian Evidence Act; however, the Tribunal shall function on the bedrock of the principle of natural justice.

Since, the findings on point nos. 3 & 4 above, will affect the finding on the point No 1, points 2 &3 are discussed and answered along with point No.1.

Point-1. Whether the applicant has established its claim? if so, for what amount and against whom?

23.1: (I) Indisputably, the 1st defendant formerly known as M/s.SuvarnaSecurities Ltd. vide Ex. A1 letter dated 19.10.1994 requested the applicant bank for grant of various credit facilities for its Hire Purchase & Leasing besides promotion of commercial residential complexes. Pursuant thereto working capital credit limits of a sum of Rs.9 crores in the form of Cash Credit - I limit of Rs 5 Crores and Cash Credit - II limit of Rs.4 crores has been sanctioned vide Ex. A. 2 sanction ticket dated 2.12.94. Subsequently the name of Suvarna Securities Ltd has been changed as M/s. Moolchand Finance Ltd, the 1stdefendant herein. Thereafter, at the request of the 1st defendant, the applicant bank restructured the limits vide Ex.A3 sanction dated 18.3.1995, by modifying the Cash Credit-I limit of Rs.5.00 crores to Rs.6.00 crores for promotion of commercial & residential complexes and the Cash Credit-II limit of Rs.3.00 crores to Rs.4.00 crores for hire purchase and leasing activities. It is also admitted that the aforesaid credit facilities were duly secured by hire purchase stocks & leased assets, the buildings to be constructed at Egmore, Adyar,T.Nagar, Personal Guarantees of defendants 2,3 and 4 who are the Promoters/Directors, Corporate Guarantee of the 5th defendant, and the security over the landed properties of all the above three projects of the 1st defendant.

23.2: However, Ld. Sr. Counsel for the 1st defendant, with great effort and determination contended that, the applicant bank had taken overEx.A-21 to A-31 leases and hire purchase agreements entered into by the 1st defendant with various 3rd parties as early as 10.7.1996 and called upon the 3rd parties to pay the lease amounts directly into the loan account lying with the applicant, took over the constructive possession of the hypothecated assets and leased machineries, as such the 1st defendant had lost control over these leases and hire purchase agreements. Having thus, took possession of the hypothecated assets and leased machineries, the applicant was under contractual obligation to proceed against the hypothecated movables of defendants by selling them in public auction and adjust the sale proceeds and thereafter only shall proceed for recovery of the balance dues, if any. However, the applicant bank without discharging the said contractual obligation, unjustly filed the present claim, as such, the claim under CCH-II loan is unsustainable and liable to be dismissed with costs.

23.3: Nextly, the Ld. Sr. Counsel for the 1st defendant and the Ld. Counsels for defendants 15,17, 18, 19, 23,24,46, 57 ,58, 60,61,62, 64 and the 30th defendants in chorus, have strenuously contended that by virtue ofEx.B-123 letter from the 3rd party M/s. Moolchand Construction and Ex.B-124 letter from the 1st defendant, besides the compromise entered under Ex B-76 MOU between the applicant and the 3rd party M/s. Moolchand Construction, the earlier contract between the applicant and the defendants1to 4 impliedly stood substituted with the new properties mentioned in Ex.A.124, supra, by virtue of the doctrine of novation, as the applicant bank by its actions and conduct not only accepted the substitution of the mortgaged properties viz, Items No.2&3 of application "A" schedule with fresh valuable immovable property known as "Vasu Studios" situated at Saligramam, and the properties situated at Commander in Chief Road and Ramapuram, but also the take-over of the Cash Credit-II outstanding liability to the extent of Rs. 2.71 crores by the 3rd party M/s Moolchand Construction, thereby brought down the said liability of the 1stdefendant to Rs.30 lacks only, as such the sum as clamed in the OA, in so far as cash credit-II is concerned, is unsustainable and liable to be rejected.

23.4: Ld. Counsels in support of their submissions supra, apart from placing reliance on Ex B-123, B-124, & Ex-B-76 also placed reliance on the affidavit filed by the applicant bank in support of its petition inI.A.1057/1999 as well as on the counter affidavit filed in IA766/2001 and submitted that the applicant bank has categorically admitted its mortgage 'charge' over one of the properties offered for substitution viz, 'Vasu Studio', as such the applicant bank is estopped under law from now denying its mortgage charge asserted as above over the 'Vasu Studio' property. Ld. Counsels however, stated that the above submission is without prejudice to their contention that there is no valid mortgage over the property covered by items 2 & 3 of application A schedule.

23.5: In support of the plea of novation, Ld. Counsels relied upon the following rulings:

(i) H.B. Basavaraj (Dead) by LRs and Ors.Vs. Canara Bank and Ors. 2010(12) SCC page 458, para 8 to 12, wherein Hon'ble Supreme Court of India, held as follows,

"With regard to the second issue, the learned Counsel for the appellants contended that the contract between JKNP, the Bank and the guarantor Basavaraj had been substituted by a fresh contract by which LST was required to liquidate the amount outstanding. The learned Counsel based this on two facts mainly. One was the transfer of the loan accounts from JKNP to LST and the other factor was the deposit of amounts by the receivers appointed by the Court in O.S. No. 4/1977 for liquidation of outstanding amounts of money indeed gives rise to substitution by a new contract. The respondents on the other hand contended that substitution of an old contract by a new one under Section 62 of Act would require the express consent on behalf of both the parties. Now let us examine Section 62 of the Act which reads as follows:62. Effect of novation, rescission, and alteration of Contract- If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. This Section gives statutory form to the common law principle of novation. The basic principle behind the concept of novation is the substitution of a contract by a new one only through the consent of both the parties to the same. Such consent may be expressed as in written agreements or implied through their actions or conduct. It was defined thus by the House of Lords in Scarf v. Jardine 1882 (7) App. Case. 345:That there being a contract in existence, some new contract is substituted for it, either between the same parties (for that might be) or between different parties; the consideration mutually being the discharge of the old contract. It might be useful at this juncture to turn to the decision of this Court in Lata Construction Ltd. v. Dr.Rameshchandra and Anr. (2000) 1 SCC 586 whereby this Court held that if the rights under the old contract were kept alive even after the second agreement and rights under the first agreement had not been rescinded, then there was no substitution of contracts and, hence, no novation.9. From the facts and circumstances of this case, however, we are unable to uphold the contentions of the learned Counsel for the appellant. There was no record to show that there were withdrawals from the loan account of JKNP from which it could be inferred that the Bank had permitted the receivers to withdraw money. We agree with the High Court in recognizing the fact that only a withdrawal from the said loan account would constitute acquiescence on behalf of the bank to a change in the liability by novation. Mere deposit of amounts by a supposed third party towards liquidation of an outstanding amount cannot ipso facto lead to the novation of a contract.10. The learned Counsel for the appellant further argued that if not a novation, there was at least an alteration in the terms of the original contract when the bank had let the court appointed receivers to deal with the hypothecated property. In fact, the bank had also given another loan against the very same property which had been hypothecated also for the first loan. Alteration or variation in the terms of a contract under Section 62 of the Act implies that both parties have voluntarily agreed to the change in the terms of the agreement. In this case however, as can be gathered from the facts and circumstances of the present case, the Bank never had a say in the matter at all. In fact, it was due to a decree of the Courts that the property in question had been entrusted in the hands of a receiver. The Bank never had, in any of the dealings of its own volition, expressly accepted the change of the hands of the property ownership and thereby accepted a change in the liability. It might also be useful to recognize at this point of time, that the receiver being a public appointed servant cannot bring about a change in the said contract so as to affect the legal consequences for the borrower or the guarantor. The administrator appointed by the Government had indeed secured a loan towards the facilitation of running of the publications but had not created any new charge on the property.11. The learned Counsel for the appellants also sought to argue that the machinery hypothecated to the bank on account of the agreement between JKNP and the Bank as security for repayment of the loan was not identifiable specifically on account of lack of evidence. By this, the learned Counsel meant that the list of annexures produced or proved at the trial stage did not mention the list of any specified machinery hypothecated to the bank. The exhibited document marked p-14 clearly shows that there is a list of machinery which stood hypothecated to the bank not only against the initial sum of Rs. 2,86,000/- forwarded to the borrower but also towards any other sum which might have been borrowed by JKNP subject to a limit of Rs. 75,00,000/-. As rightly held by the High Court at present, there is no need to look into the question as to which of the machineries were specifically hypothecated to the Bank. But the facts in this case are enough to show that a charge was in fact created on the said machinery by JKNP and which had reverted back to the original owner LST in the chain of circumstances. Nevertheless there is enough evidence on record to show that there was indeed a hypothecation of the said machinery. Hence, we find no difficulty in rejecting the argument of the appellant. Accordingly, we affirm the decision of the High Court as the plea of JKNP regarding the novation of a contract was found to be unsustainable and, therefore, the liability of LST to pay the amount involved in the suit would not stand either except to the extent that LST holds any of the hypothecated machineries.12. The learned Counsel for the appellant submitted that JKNP was deprived of the possession, management and control of the suit property by an interim order of the court passed in OS No. 4/1977 and never regained the same. It was further contended that the loan obtained by the appellant was for and on behalf of the trust and, hence, JKNP cannot be held liable for repayment of the same. There is no doubt that LST being the beneficiary of the loan is liable to repay the loan amount under Section 70 of the Act; but the question here is whether it is alone responsible to pay the same. The Courts below held that LST was liable for payment of the suit claim, but the learned Counsel for respondent claimed that once take-over of the trust property was declared invalid, any liabilities incurred in the intervening period of time including actions by the State would also be unenforceable against it: However, the High Court failed to consider that LST was liable to repay the loan on the principle of Section 70 of the Contract Act inasmuch as it was LST who had been benefited from the loan, which JKNP had secured. Section 70 of the Act reads as follows:70. Obligation of person enjoying benefit of nongratuitous act- Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. We, therefore, agree with the views expressed by the trial Court and disapprove the finding of the High Court on this count. The Board of Trustees was competent to take any loan, which would be considered to be loan taken by the Trust. In such a case, any loan taken by administrator appointed by the State shall also be deemed as loan taken by the trust and, hence, the trust would be liable to repay the loan. At this juncture, it would be pertinent to observe that we find no rationale applicable to this case in the cases referred to us by the learned Counsel for the appellant at the bar namely Satyabrata Ghose v. MuneeramBangur& Co. 1954 SCR 310 which deals with the doctrine of frustration and the scope of Section 56 of the Act as well as 'impossible contracts' and also in Indian Finance Corporation of India Ltd. v. Cannanore Weaving and Spinning Mills 2002(5) SCC 54 at page 71 ( Paras 28 and 29) which talk about the meaning of a written covenant to be drawn from the exact words used and where such promised undertaken are found to be impossible to perform at a subsequent period of time. This Court finds no applicability of the rationale of above-mentioned cases to the present facts at hand.(ii).Hon'ble Supeme Court of India, in Kanchan Udyog Limited Vs. United Spirits Limited ALR 2017(124)Page 255 Para 2010 22, 20. Clause 5 of the bottler's agreement provided for supply of concentrates by the Respondent, or from such suppliers as shall be nominated by it. Twelve out of fourteen bottlers had agreed at the Bangalore convention on 15.10.1987 to the new arrangement for supply of concentrates through M/s. VEC. The Appellant also commenced placement of orders directly and received concentrates from M/s. VEC since 22.04.1988 and continued to do so even after its letter dated 11.01.1989, by placing orders on 08.03.1989 till it finally discontinued after closure of the plant in May, 1989. It is not the case of the Appellant, based on evidence, that M/s. VEC failed to supply concentrates, or that it did not meet standards, or was insufficient to meet its marketing obligations, much less that any other of the twelve bottlers had complained in this regard. The bottling of McDowells Sparkling Soda was an entirely different issue and could have been continued by the Appellant notwithstanding the controversy regarding the concentrates. The plea of the Respondents for novation of the contract referring to Section 8 and 62 of the Act, sub silentio finds support from the observations in McDermott International Inc. (supra) as follows:151. Clause 5 of the contract categorically states that MII was to procure the material which was to be reimbursed by BSCL. The extra amount incurred by MII for procuring materials having extra thickness, therefore, was not payable. To the aforementioned extent, there has been a novation of contract. MII had never asserted, despite forwarding of the contention of ONGC, that it would not comply therewith. It, thus, accepted in sub silentio.21. The novation of a contract could take place sub silentio was also noticed in BSNL v. BPL Mobile Cellular (2008) 13 SCC 597 as follows:45.They might have also been held bound if they accepted the new rates or the periods either expressly or sub silentio.22. The learned Single Judge framed an issue also with regard to waiver, estoppel and acquiescence, then answered it in the negative in a singular line, without any discussion. Waiver and acquiescence may be express or implied. Much will again depend on the nature of the contract, and the facts of each case. Waiver involves voluntary relinquishment of a known legal right, evincing awareness of the existence of the right and to waive the same. The principle is to be found in Section 63 of the Act. If a party entitled to a benefit under a contract, is denied the same, resulting in violation of a legal right, and does not protest, foregoing its legal right, and accepts compliance in another form and manner, issues will arise with regard to waiver or acquiescence by conduct. In the facts of the present case, the conduct of the Appellant in placing orders and receiving supply of concentrates directly from M/s. VEC, for a period of nearly one year, and continuing to do so even after it wrote to the Respondent in this regard, without recourse to any legal remedies for denial of its legal right to receive concentrates from the Respondent, undoubtedly amounts to waiver by conduct and acquiescence by it to the new arrangement. The plea that it was done under compulsion, and not voluntarily, is devoid of any material, substance and evidence. It is unacceptable and merits no consideration. Alternatively, if it was an assignment Under Clause 5 of the agreement, there had been no termination of the contract by the Respondent. Waiver by conduct was considered in P. Dasa Muni Reddy v. P. Appa Rao (1974) 2 SCC 725, observing as follows:13. Abandonment of right is much more than mere waiver, acquiescence or laches.....Waiver is an intentional relinquishment of a known right or advantage, benefit, claim or privilege which except for such waiver the party would have enjoyed. Waiver can also be a voluntary surrender of a right. The doctrine of waiver has been applied in cases where landlords claimed forfeiture of lease or tenancy because of breach of some condition in the contract of tenancy. The doctrine which the courts of law will recognize is a Rule of judicial policy that a person will not be allowed to take inconsistent position to gain advantage through the aid of courts. Waiver sometimes partakes of the nature of an election. Waiver is consensual in nature. It implies a meeting of the minds. It is a matter of mutual intention. The doctrine does not depend on misrepresentation. Waiver actually requires two parties, one party waiving and Anr. receiving the benefit of waiver. There can be waiver so intended by one party and so understood by the other. The essential element of waiver is that there must be a voluntary and intentional relinquishment of a right. The voluntary choice is the essence of waiver. There should exist an opportunity for choice between the relinquishment and an enforcement of the right in question."

23.6: 2.Godan Namboodri Pad Vs Kerala State Financial Corporation AIR 1998 Kerala 31, wherein it was held that:

"Section 62 of the Indian Contract Act, 1872 deals with novation of contract. In the book on Indian Contract and Specific Relief Acts by Pollock & Mulla, 10th edition at page 496, it is stated as follows:

"The meaning of "novation", the term used in the marginal note to the section, and now the accepted catchword for its subject-matter, has been thus defined in the House of Lords: "that, there being a contract in existence, some new contract is substituted for it either between the same parties (for that might be) or between different parties, the consideration mutually being the discharge of the old contract. Novation of a contract comprises two elements: the discharge of one debt or debtor and the substitution of a new debt or debtor, the discharge is governed by the proper law of the contract. A substituted contract should rescind or extinguish the previous contract. The terms of the two contracts should be so inconsistent that they cannot stand together. Novation under Section 62 is brought about by (a) introduction of new parties; or (b) by alteration between the same parties by introduction of new terms. It is not consistent with the original debtors remaining liable on the old contract. Substitution of a new contract is the core of novation. Its essential feature is that a right under the original contract is relinquished or replaced by a new contract. Where these essentials are missing there is no novation".

7 :3. Union of India V Kishorilal Gupta& others, AIR 1959 SC 1362.

"new contract revived the original contracts and therefore the parties to the original contracts could enforce their terms including the arbitration clause. The submission of Shri Aggarwal, Counsel for the respondents, may be stated thus : (1) Upon the facts of the case, there had been recession of the old contracts and substitution of a new, legally enforceable and unconditional contract, which came into immediate effect; (2) the new contract can be legally supported either under s. 62 or s. 63 of the Indian Contract Act or under the general law of contracts; (3) the non-performance of the terms of the new contract did not have the effect of reviving the rights and obligations under the old contracts as they did not remain alive for any purpose; and (6) even if the arbitration clause did not remain alive after the new contract, the arbitrator was bound to decide the case in terms of the new contract, and he having not done so, the error is apparent on the face of the record and therefore the award in liable to be set aside. The law on the first point is well-settled.

One of the modes by which a contract can be discharged is by the same process which created it, i.e., by mutual agreement; the parties to the original contract may enter into a new contract in substitution of the old one.

The legal position was clarified by the Privy Council in Payana Reena Saminathan v. Pana Lana Palaniappa [1914] A.C. 618. Lord Moulton defined the legal incidents of a substituted contract in the following terms at p. 622 :

"The 'receipt' given by the appellants, and accepted by the respondent, and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the 'receipt'. It is a clear example of what used to be well known in common law pleadings as "accord and satisfaction by a substituted agreement". No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all of new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchanged for the new rights; and the new agreement becomes a new departure, and the rights of all the parties are fully represented by it."

23.8: Ld. Counsels, have further contended that the applicant failed to establish its entitlement of OA claim of Rs.12,25,23,504.00 and that there is no basis much less a tenable basis for the sum claimed in the OA against the defendants. It is further submitted that if Ex.A-148 and A149 statements of accounts are to be construed as the basis for the OA claim, then the OA claim is liable to be dismissed as no reliance can be placed on Ex.A148 and A149, in as much as these statements of accounts apart from being a mere photo copies, are not in conformity with the provisions of Banker's Book Evidence Act, RDB Act besides the DRT procedure rules. In this context Ld. Counsels have invited the attention of the Tribunal, to sub section 2 of section 8 of Banker's Books Evidence Act, Section 19(3) of RDB Act and Rule 12(11) of DRT Procedure Rules and submitted that the photostat copies of the statements of accounts filed along with the OA and the statement of account filed along with the proof affidavit of AW1 (marked as Ex.A-148) which is a photocopy of the photocopy of the statement filed along with the OA, cannot be called as 'certified copies' in terms of sub section 2 of section 8 of Banker's Books Evidence Act, as such no reliance can be placed on the same.

23.9:Ld. Counsels also have submitted that the entries therein are incorrect and incomplete. It is further submitted that in the the OA, the applicant claimed that the defendants 1 to 4 have availed cash credit -II limit of Rs.3,00,00,000/- (Rupees three crores only), however in Ex A-148 statement of account the opening balance of cash credit II account as on 1.12.1994 (date of sanction) was shown as Rs.57,55,868.80 (Rupees fifty seven lakhs fifty five thousand eight hundred and sixty eight and paise eighty only). According to the Ld. Counsels this material error alone is enough to discard Ex. A-148 statement of account from consideration. Regarding to the claim of interest, it is submitted that the same is full of material discrepancies as interest at 23.75%p.a with quarterly rests has been claimed in the application, whereas, in Ex. A-3 sanction letter and Ex. A-6 demand promissory note the rate of interest was mentioned as 16%p.a. In Ex. A-18 Register of Charges with the ROC, the rate of interest has been declared as 17%p.a. In Ex-57 legal notice interest was claimed at 18.25%p.a and in A-57, legal notice interest was claimed at 24.5%p.a from 1.10.1996. It is further submitted that the applicant never communicated variations in the rates of interest charged from time to time to the borrowers and the account statements filed are also silent on the rate of interest charged and also on the counter veiling interest for the credits received by the applicant. It is submitted that penal interest charged has been capitalized. In so far as Ex.A-149 Statement of Account is concerned, Ld. Counsels would submit that the same is only an extract of statement of entries and not a certified copy generated by the system administrator from the system where the accounts of borrowers were maintained in the regular course of the business of the applicant bank as such no reliance can be placed on the same.

23.10: In support of the aforementioned contentions on admissibility of Ex. A-148 & A-149 statements, Ld. Counsels have placed reliance on the following rulings.

Chandra Dhar Goswami Vs Gauhati Bank, 1967 1 SCR p.898a

"The main question urged before us is that there is no evidence besides the certified copy of the account to prove that a sum of Rs. 10,000/- was advanced to the appellants and therefore in view of s. 34 of the Evidence Act the appellants cannot be saddled with liability for that amount. Section 34 is in these terms:-

"Entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."

It is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them. In the present case, however, the appellants did not accept the correctness of the books of account. We have already indicated that they went to the. length of saying that the accounts were not correctly kept, and were fraudulent. They also said that no money had been taken by them after March, 1, 1947. This being their pleading, the trial court rightly framed the third issue relating to the total amount due from the appellants to the bank. But unfortunately it overlooked to go into that issue specifically and we have already indicated how it made a mistake in arriving at the amount due when considering the issue relating to relief. In any case as the appellants had not admitted the correctness of the accounts filed by the bank, particularly after March 1, 1947, the bank had to prove payment of Rs. 10,000/- on March 19,1947 if it wanted to charge the appellants, with liability for that amount, But all that the bank did was to produce a certified copy of account under s. 4 of the Bankers' Books Evidence Act, No. XVIII of 1891. Section 4 of that Act reads thus-

"Subject to the provisions of this Act, a certified copy of any entry in a banker's book shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise".

It will be clear that s. 4 gives a special privilege to banks and allows certified copies of their accounts to be produced by them and those certified copies become prima facie evidence of the existence of the original entries in the accounts and are admitted as evidence of matters, transactions and accounts therein, but such admission is only where, and to the same extent as, the original entry itself would be admissible by law and not further or otherwise. Original entries alone under s. 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under s. 4 of the Bankers' Books Evidence Act obviously cannot charge any person with liability. Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entries whether the entries produced are the original entries or copies under s. 4 of the Banker's Books Evidence Act. We cannot 'agree with the High Court that the mere fact that the appellants did not specifically mention the sum of Rs. 10,000/- as not having been advanced to them in their written statement would make any difference on the facts of the present case. We have already pointed out that the appellants did not admit the correctness of the accounts produced specially after March 1, 1947. We have also pointed out that it was stated on their behalf that nothing was borrowed after March 1, 1947. The main appellant in whose name the account was, appeared as a witness and stated that so far as he remembered he only borrowed Rs. 8,000/- from the bank and nothing thereafter. He also stated that he did not remember to have borrowed any sum from the bank after the execution of the mortgage deed. In the face -of this pleading of the appellants and the statement of one of them, the bank had to prove that the sum of Rs. 10,000/- was in fact advanced on March, 19,1947 and could not rely on mere entries in the books of account for that purpose. This is clear from the provision in s. 34 of the Evidence Act. No attempt was made on behalf of the bank to prove by any evidence whatsoever that a sum of Rs. 10,000/- was advanced on March 19, 1947. The entry in the account books in that connection is to the effect: "To amount paid to Gauhati branch as per D/advice, dated 6th March, 1947". If this amount of Rs. 10,000/was paid by the bank on the order of the appellants or any one of them that order should have been produced in support of the entry, and then the entry would have been helpful to the bank as a corroborative piece of evidence. But the bank did nothing of the kind. The only witness produced on behalf of the bank was an officer who had nothing to do with the Tezpur branch where the transactions were entered into. We are therefore of opinion that in view of s. 34 of the Evidence Act the appellants cannot be saddled with liability for the sum of Rs. 10,000/- said to have been advanced on March, 19,1947 on the basis of a mere entry in the amount. Section 34 says that such entry alone shall not be sufficient evidence, and so some indepen- dent evidence had to be given by the bank to show that this sum was advanced. What would be the nature of such independent evidence would certainly depend upon the facts of each case; but there can be no doubt that some independent evidence to show that advance had been made has to be given. Further, as in this, case the dispute was with respect to one entry of Rs. 10,000/- it should not have been difficult for the bank to produce evidence with respect thereto. We cannot therefore agree with the High Court that the advance of Rs. 10,000/- on March 19, 1947 has been proved in this case.

2: State Bank of India Vs Raghubar Singh and Ors reported in MANU/BH/0040/1997

Learned counsel for the appellant has contended that the court below ought to have relied upon the copy of the statement of bank account of the borrower the late Satya Narain Singh (exhibit 2) as prima facie evidence of the transactions and the accounts recorded therein and decreed the claim of the plaintiff. He further submitted that there is presumption of correctness with regard to the transactions and accounts recorded in the certified copy of the statement of account of the bank under Section 4 of the Bankers' Books Evidence Act, 1891 (for short "the Act"). It would be useful to refer to Section 2(8) of the Act which prescribes the requirements of a valid certified copy of the entry in the books of the bank which can be received as a prima facie evidence in a legal proceeding. Section 2(8) of the Act runs as hereunder:

'2. (8) "certified copy" means a copy of any entry in the books of a bank together with a certificate written at the foot of such copy that it is a true copy of such entry ; that such entry is contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business; and that such book is still in the custody of the bank, such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title.'  11. In the present case, there is a short, cryptic and a defective certificate with mere statement "true copy" with signature and seal of the bank. Thus, the certificate thereon is not in terms of Section 2(8) of the Act. It has been noticed that there is no mention in exhibit 2 that the actual amount of Rs. 16,700 was advanced to the borrower on November 7, 1970, or on any subsequent date. Further, P.W.-1 has not whispered in his evidence that the dealings, between the plaintiff-bank and the borrower had been substantially and correctly stated in a nutshell in the statement of accounts (exhibit 2). Hence in the circumstances, no reliance could have been placed on the copy of the statement of accounts (exhibit 2) for decreeing the claim of the plaintiff.

The Punjab National Bank Ltd., Delhi Vs Vinod Kumar and Ors reported in MANU/PH/0093/1957

It is necessary first to decide whether the Bank has proved the account (Exhibit P.W. 1/1) because this goes to the root of the case. The defendants' account was taken from Wazi-rabad to Lahore after August 1947. The original account is in Lahore and it cannot be brought to India in view of the orders of the Pakistan Government prohibiting transfer of these accounts outside Pakistan. The Manager of the Lahore Branch has brought a copy of that account and in the witness-box has certi-fled the same to be correct. The copy that has been produced, has been certified in accordance with Section 2(8) of the Bankers' Books Evidence Act (XVIII of 1891). Under Section 3 of this Act this evidence is prima fade evidence against the defendants, and the trial Court was obviously wrong in holding that the certified copy of the entries in the Bank's books required proof by production of cheques and vouchers etc. relating to each entry. The object of this Act is to render the entries in banker's books admissible in evidence and to enable copies of the entries to be used Instead of compelling the Bank to produce the original entries. Such "a copy must be received as prima facie evidence not only of the existence of such entries but also of the matters, transactions and accounts therein recorded vide: Harding v. Williams (1880) 14 Ch. D. 197 (A). It is, therefore, clear that issue No. 1 should have been decided in favour of the Bank. I, therefore, set aside the finding of the trial Court on this issue and hold that the defendants' account relating to the transactions between the Bank and the defendants has been proved on this record.

Indian Bank V R.Venkataraman and Ors reported in MANU/AP/1062/2003

Before adverting to the said contentions, it is necessary to have a look at Section 2(8) of the Bankers' Books Evidence Act, 1891, which reads as follows:

"(8) 'certified copy' means a copy of any entry in the books of a bank together with a certificate written at the foot of such copy that it is a true copy of such entry, that such entry is contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business, and that such book is still in the custody of the bank and where the copy was obtained by a mechanical or other process which in itself ensured the accuracy of the copy, a further certificate to that effect, but where the book from which such copy was prepared has been destroyed in the usual course of the bank's business after the date on which the copy had been so prepared, a further certificate to that effect, each such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title."

The interpretation put on to the said provision by the Bombay High Court in Radheshyam G. Garg v. Smt. Safiyabai Ibrahim Lightwalla (supra) is that the certified copy are not mandatory but only directory. But it is stated in this decision that there is sufficient compliance depending upon the facts and circumstances of each case. It is stated in United Bank of India Ltd., v. Nederlandsche Standard Bank (supra) at para 42 as under:

"Next Mr. Mitter comments bitterly on the manner in which this entry had been disclosed by the plaintiff's solicitor in the affidavit of documents. It is described as Item 31 "Copy "of relevant entries in the Overdraft Cheque Passing Register of the plaintiff. This is obviously bad disclosure according to all law relating to discovery. It does not specify even the date of the entry, the 5th January, 1948. This affidavit was affirmed on the 29th August, 1949. The document which ultimately came to be produced in Court under Item 31 of the affidavit of documents is marked Ex.S, and is said to be "Certified as true copy". It is signed by K.P. Sen, the plaintiff's witness. This document was prepared under the advice of he plaintiffs solicitor Sri S.N. Sen of 10, Old Post Office Street, Calcutta. The letter dated 25th August, 1949, and the answer to question 22 of K.P. Sen show that the plaintiff Bank was asked by its solicitor to give a certified copy. In fact, to quote the language of the answer of K.P. Sen the witness, his evidence is, "we were asked by our solicitor to give a certified copy." This is criticized by Mr. Mitter because this is not certified according to the Bankers' Books Evidence Act for the good reason that under that Statute a certified copy means a copy of any entry in the books of a bank together with a certificate written at the foot of such copy:

"that it is a true copy of such entry, that such entry is contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business, and that such book is still in the custody of the Bank, such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title".

This certificate which is appended to the document Ex.S does not observe most of these restrictions. It does not give the date; it does not say that the book from which the copy is being made is in the custody of the bank. It was therefore perhaps realized that this will not go in under the Bankers' Books Evidence Act. It is good to remember that it was not disclosed even as a certified copy in the affidavit of documents. Therefore the witness K.P. Sen came to prove this document by showing his signature at the end of the certificate. Mr. Mitter, therefore, contends that if on the 25th August, 1949 according to the bank's letter to its solicitor this document was being prepared and sent to him, then, at any rate, with its date and proper description it should have been disclosed in the affidavit of documents which was affirmed almost contemporaneously on the 29th August, 1949, within a period of four days from the preparation of the document."

It is clearly held in Fatima Bee Bee v. Official Trustee (supra) as under:

"Even if Ex.S were admissible it would at best have been secondary evidence so far as it went of the passing of the cheques and it could only be used to that extent if secondary evidence were admissible. Section 4, Bankers' Books Evidence Act, 1891, provides no more than that subject to the provisions of the Act a certified copy of any entry in a banker's book shall, in all legal proceedings, be received as prima facie evidence of the existence of such entry and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as the original entry itself is now by law admissible, but not further or otherwise. Exhibit S was wrongly admitted in evidence. Its defects were immediately pointed out by the learned advocate for the defendants. Nevertheless P. David was examined with reference to the document with a view to supply the omissions from it. He stated it was certified by a Mr. Meyer, sub-accountant of the bank, who signed for the manager. That he may have had authority to sign for the manager is beside the point. He was neither the principal accountant nor the manager of the bank who alone could certify the document. The certificate reads: 'We certify that this is a true extract from the books of the bank'."

The Rangoon and Calcutta High Courts have taken one line of view, whereas the Bombay High Court has taken a different view. The provisions are required to be interpreted. The question is whether the documents, which do not contain the endorsement as required under Section 2(8) of the Bankers' Books Evidence Act can be treated as certified copy or cannot be treated as certified copy within the meaning of the said section. The intention of the framers of the said Act is clear that whenever the document is treated as certified copy it shall contain the endorsement. Mere mention of true copy cannot lead to the conclusion that it is a certified copy. There is lot of significance in insisting upon the endorsement due to the reason that originals are not being produced into Court even for the purpose of comparison. The statute gives exemption under the Bankers' Books Evidence Act from production of the originals. It lays down a particular procedure to produce the copies, which can be treated as certified copies. Moreover, in the present case, the certified copy does not contain the seal and stamp of the bank. The statute has specified the nature of the certificate to be endorsed. It is not the intention of the legislature to treat it as directory. It is mandatory. It cannot be treated as certified copy, since endorsement mentioned by the statute is not made. It is a safeguard placed on the extracts for acting on them as evidence in truth."

24: Per Contra, Ld. Counsel for the applicant, while strongly refuting the afore mentioned submissions of the Ld. Sr. Counsel for the first defendant and the Ld. Counsels for the defendants 15,17,18, 19, 23,24,46, 57,58,60,61,62,64 and the 30th defendant, submitted that as the borrowers have failed in repayment of their outstanding dues despite several reminders and letters the applicant bank got issued Ex. A-57 legal notice dated 30.11.1996 to the borrowers, as well as to the purchasers of flats from the 1st defendant and the hire purchase & lease agreement holders.Despite receipt of the same the borrowers neither denied the amount claimed in the notice nor discharged the debt, hence the applicant bank has instituted the present claim. Ld. Counsel for the applicant further submitted that in view of the default in repayment of the credit facilities, the applicant had invoked the relevant contractual clauses contained in the Hypothecation &Lease agreement in accordance with terms & conditions of the said clauses, as such it is untenable to contend that the applicant breached the terms of Ex.A-9 Hypothecation &Lease agreement. In this context Ld. Counsel referred to clause 21 of Ex-A9 and submitted that the said clause states that, nothing contained in the clauses in Ex-A9 shall be deemed to negative, qualify or otherwise prejudicially affect the right of the bank (which it is hereby expressly agreed the bank shall have) to recover from the borrowers the moneys secured by the said hypothecation notwithstanding that all or any of the hypothecated goods not have been sold or disposed of. Therefore, the plea of partial discharge of liability as now put forth is nothing but an afterthought on the part of the 1st defendant to evade the liability hence liable to be ignored.

24.1: In so far as the Statements of Accounts filed along with the OA, and Ex A-148 are concerned, Ld. Counsel for the applicant would contend that the same are the duly attested true copies of the statements generated by the system administrator from the system maintained during the regular course of the business of the applicant bank and the same reflect all the transactions between the applicant and the borrowers, as such it is not correct to say that the statements of accounts as filed are un-reliable or in admissible. It is further argued by the Ld. Counsel for the applicant, that the 1stdefendant has been furnished with copies of the statements of accounts from time to time and the defendants have never raised any objection to the same. That apart, even at the time markingEx.A-148 statement of account the none of the defendants raised any objection. Therefore, it is not open to the defendants to now raise the plea that statement of account is incorrect and that the same is not in conformity with the mandatory provisions of the Banker's Books Evidence Act, or under the RDB Act and its procedure rules.

24.2 : As regards Ex.A-149 the post OA statement of account is concerned, Ld. Counsel submitted that at the behest of the 1st defendant, this Tribunal directed the applicant bank to file a complete statements of account from the date of filing of the OA till the date of the order and accordingly the same was submitted by complying the mandatory requirements of Banker's Books Evidence Act.

24.3: Ld. Counsel in support of the above contentions, relied on the Ruling of Hon'ble High Court of Madras, in re, R.Subramanian Vs ICICI Bank Ltd reported in II (2019) BC 442,wherein it was held that;

"In the case on hand, the petitioner has not raised any objection at the time of marking the document. Even, the entries made in the statements of accounts were also not disputed by the petitioner in any manner whatsoever. The Debt Recovery Appellate Tribunal also took into consideration the said fact while reversing the order passed by the Debts Recovery Tribunal. When the learned Senior counsel appearing for the respondent No. 1 has relied upon the Apex Court judgment only for the purpose of supporting the case of the respondent No. 1, the petitioner cannot raise objections with regard to marking of the document at a later stage, when he did not object to the marking of the document at the earliest point of time. The contention raised by the petitioner that the judgment relied upon by the learned Senior Counsel appearing for the respondent No. 1 should not be applied cannot be accepted. Both the judgments, i.e.2014 (10) SCC 473 (cited supra) and 2017 (8) SCC 570 (cited supra) were relied upon by the respective parties for different purpose. No doubt, in the judgment reported in 2017 (8) SCC 570 (cited supra), two-Judge Bench of the Apex Court also took into consideration the issue involved in Anvar case (cited supra) and ultimately, left the issue with regard to Section 65-B open, to be decided in an appropriate case, by a three-Judge Bench.

On a perusal of the Anvar case (cited supra), it could be seen that the issue involved in the said judgment is only with regard to Sections 62, 65- A and 65-B of the Indian Evidence Act and not with regard to the rejection of documents marked at the time of trial. Therefore, we are of the considered view that the ratio laid down by the two-Judge Bench of the Apex Court is applicable to the present case. In the said judgment, the Apex Court has categorically stated that if objections with regard to marking of a particular document is not taken at the time of trial, the party cannot be permitted to raise objections with regard to marking of the document at the appellate stage.

In the case on hand, though the petitioner had every opportunity to raise objections with regard to marking of Ex. A58 document, for the reasons best known to him, he did not do so. That apart, even the entries made in the statements of accounts were not denied or disputed by the petitioner before the Debts Recovery Tribunal. In these circumstances, the petitioner cannot be allowed to raise objections with regard to the marking of the documents at any time he wishes.

In the judgment reported in: 2018 (2) SCC 801 [cited supra], the Hon'ble Supreme Court has categorically held that the admissibility of electronic evidence cannot be ruled out on any technicality if the same was relevant. Further, the Apex Court held that the requirement of certificate under Section 65B(4) is not always mandatory. The Apex Court also held that the applicability of requirement of certificate being procedural, can be relaxed by the Court wherever interest of justice so justifies.

In the case on hand, as already stated, the Bank has produced the statements of accounts in support of their claim along with a certificate as per Section 4 of the Bankers' Books Evidence Act, 1891, which was not objected or disputed by the petitioner at the time of marking the said document as Ex. A-58. In such circumstances, we are of the considered view that in the interest of justice, even the production of certificate by the respondent No. 1 can be relaxed. Thus, in our opinion, the ratio laid down by the Apex Court in the judgment reported in 2018 (2) SCC 801 [cited supra], applies to the present case.

The Debts Recovery Tribunal, without examining the matter in a proper manner, erroneously dismissed the Original Application filed by the respondent No. 1/Bank."

24.4: Insofar as the plea of novation of the existing contract between the applicant bank and the borrowers, Ld. Counsel would contend that the same is misconceived and unfounded, in as much as the applicant bank neither expressly nor impliedly agreed with the 1st defendant for substitution of the properties covered by items 2&3 of application "A" schedule with the Vasu Studio property or any other properties. Likewise, the applicant has not accepted the proposal of the 3rd party M/s Moolchand Construction to take over the liability of the 1st defendant to the extent of Rs.2.71 Crores. Hence the question of either restricting the liability of cash credit II to Rs.30 lakhs or substitution of the existing mortgaged properties with new properties does not even arise at all. Ld. Counsel would further contend that the compromise under Ex-B-76 with M/s Moolchand Construction was confined to the order of injunction obtained by the applicant against Vasu Studio property in which the 1st defendant has interest which is evident from the terms of the compromise under Ex. B-76 besides the order of this Tribunal dated 26.7.2004. As the 1stdefendant failed to question the order of the Tribunal dated 26.7.2004, it is now not open to the 1st defendant to raise the above plea.

24.5: In respect of the plea of the 1st defendant that there was no valid mortgage over items2&3 of application "A" schedule, Ld. Counsel referred to para 9 of the reply statement dated 20.04.2004 of the 1st defendant and submitted that creation of equitable mortgage over the properties mentioned in application "A" schedule by the 1st defendant has been categorically admitted as such it is not permissible now under law to dispute the mortgage. Ld. Counsel further submitted that there is no denial of execution Ex. A6 Demand Promissory Note dated 16.6.1995 by the 1st defendant pursuant to Ex A.3 sanction letter dated 18.3.1995 for the cashcredit-II facility of a sum of Rs.3 Crores. According to the Ld. Counsel for the applicant in terms of the above credit facility availed by the 1st defendant, the same wasto be secured by the equitable mortgage by deposit of title deeds relating to the properties situated at Plot No. 254, S.No.9, Gandhi Nagar, Adyar (Item 2 of application A schedule property) belonging to the 37th defendant and the property covered by the plot bearing No.19, Malony Road, T.Nagar belonging to 39th defendant and 40th defendant(Item No.3 of Schedule 'A').The mortgagesin respect of the above properties (item 2) were created by the 38th defendant as the Power of Attorney holder of 37th defendant under Ex. A-135and by the 3rd defendant as Power of Attorney holder of the 39 & 40thdefendants(item 3) under Ex. A-79 dated 16.6.1995. The 4thdefendanton16.2.96 created equitable mortgage over the property situate at Ramavaram (Ramapuram) village, Saidapet Taluk, Saidapet, belonging to the 1st defendant more fully described as Item No.1 application A Schedule, under Ex. A-87. Therefore, the contra argument now put forth by the defendants does not hold any water. Ld. Counsel further submitted that as the mortgagors never disputed creation of equitable mortgage over any of the properties belonging to them mentioned in application "A" schedule, the defendants are precluded and estopped under law from questioning the mortgages.

24.6:The above submissions of the Ld. Counsels, can be summarized as below.

(a) The applicant bank having repossessed the hypotheca, without first disposing of the same filed the present claim in violation of contractual clauses as such the claim is not maintainable.

(b) The applicant bank by entering in to an MOU (Ex.B-76) with M/s Moolchand Construction not only impliedly accepted for substitution of properties covered by items 2&3 of application "A" schedule property with Vasu Studio and other properties mentioned in Ex.B-124 letter and thus, the mortgage charge over items 2&3 of application "A" schedule property stood discharged but also consented for take-over of the liability of cash credit- II of the borrowers by M/s Moolchand Construction of an extent of RS.2.71 Crores, thereby discharged the 1st defendant from the liability to the extent of Rs.2.71 crores.

(c) The statements of accounts are not reliable as the same are not certified as per the Banker's Books Evidence Act, hence liable to be discarded.

24.7:Therebuttal of the Ld. Counsel for applicant can be summarized as below;

a). The Plea of partial discharge of OA claim on the ground of breach of contractual obligation by the applicant is untenable and unsustainable.

b). The borrowers have categorically admitted creation of EM on all items of properties covered by the application A schedule, hence cannot be allowed to contend contra.

c). The mortgagors themselves never disputed creation of equitable mortgage over any of their properties mentioned in application "A" schedule as such, the 1st defendant has no locus standi, to question the mortgage.

d). The theory of novation or substitution as propounded by the defendants is baseless and unfounded as there was neither any express or implied contract with any 3rd party or with the 1st defendant by the applicant accepting novation or substitution of mortgaged properties of advances.

e). The statements of accounts as filed are true and correct besides certified copies being in accordance with the Section 4 and 8 of Banker's Books Evidence Act, hence admissible and un assailable.

24.8: It is settled law that the burden to establish the plea of either partial or complete discharge of debt, is on the party pleading discharge.

24.9: I have carefully examined the plea of partial discharge in the backdrop of pleadings, admitted documents besides the case law and the only conclusion that I could firmly arrive at is that the said plea is devoid of any merit or substance. Here are the reasons for my conclusion.

(i) A mere reading of clause 21 of Ex. A-9 Hypothecation agreement, which is as follows;

"21.That the net proceeds of any sale or the disposition by the bank of the hypothecated goods or any part thereof shall be applied in or towards the satisfaction of the moneys secured by the said hypothecation and, if such net proceeds shall be insufficient to satisfy the said moneys in full, the bank shall be at liberty, but not be bound, to apply any other moneys in the hands of the bank standing in the credit of or belonging to the borrower or any of them in or towards payment of the balance remaining due to the bank and in the event of other not being any such other moneys as aforesaid in the hands of the bank or in the event of such other moneys not being applied by the bank as aforesaid or being in sufficient for satisfaction in full of the said balance, Borrower shall forthwith pay the balance remaining due of the moneys secured by the said hypothecation provided, always, that nothing herein contained shall be deemed to negative, qualify or otherwise prejudicially affect the right of the bank (which it is hereby expressly agreed the bank shall have,) to recover from the borrowers the moneys secured by the said hypothecation notwithstanding that all or any of the hypothecated goods not have been sold or disposed of."

makes abundantly clear that 1st defendant by executing Ex. A-9 hypothecation agreement unequivocally accepted the right of the bank to recover from the borrowers the moneys secured by the said hypothecation, notwithstanding that all or any of the hypothecated goods not have been sold or disposed of.

24.10: Therefore, having admittedly signed and executed Ex. A-9 agreement, it is not open to the 1st defendant to now contend contra to the clauses contained in Ex. A-9 Hypothecation Agreement. Moreover, it is not the case of the 1st defendant that the applicant bank acted with malice or negligence while dealing with the hypotheca. In fact, the applicant, in line with the said clause while asserting its right of first charge over application "A" & "B" Schedule properties, also prayed for the relief of sale of "B" schedule property (Hypotheca) for realization of its dues from the borrowers. Therefore, the plea that the applicant bank acted in breach of contractual clauses shall invariably fail, I therefore, hereby accordingly hold so.

Now, I shall discuss the next plea of the defendants 1, 3, 4, 15, 17, 18, 19, 23,24,30, 46, 57 ,58, 60,61,62 & 64 couched under Pointno.3.

POINT.3.

Whether the mortgage claim if any, of the applicant over items 2 &3 of application "A" schedule stood substituted by new properties in terms of Ex.B-124 and the cash credit-II liability of the 1st defendant to the extent of Rs.2.71 crores has been taken over by M/s. Moolchand Construction in terms of Ex.B123, by virtue of doctrine of novation?

25.1: Ld. Sr. Counsel for the1st defendant as well as the Ld. Counsel for the defendants 15, 17, 18, 19, 23,24,30, 46, 57 ,58, 60,61,62& 64 in chorusstrenuously submitted that, as the applicant bank in its affidavit filed in IA 1057/1999 emphatically relied on exhibits B-123&B-124 while asserting its 'charge' over 'Vasu Studio' property, the said assertion/admission of charge and its subsequent conduct and acts amount to tacit acceptance of the offer under Ex.A.124 letter of the 1st defendant for substitution of the items 2&3 of application A schedule property with the properties situated at Saligramam, for short 'Vasu Studio', Ramapuram besides Commander in Chief road, and also taking over of the liability of the 1st defendant to the extent of Rs.2.70 crores by third party M/s.Moolchand Construction in terms ofEx.A123 letter. Therefore, substitution of mortgage right of the applicant bank on items 2&3 of application A schedule property, reduction in the liability of the 1st defendant of an extent of Rs.2.71 crores in so far as the same relate to cash credit-II has taken place by virtue of 'doctrine of novation' hence the contractual obligations of the 1st defendant under its earlier contracts in this regard need not performed.

25.2: Per Contra, Ld. Counsel for the applicant, while vehemently refuting the afore stated submissions of the Ld. Counsels, contented that the proposals made under exhibits B-123 & B-124 letters never been accepted or acted upon either expressly or impliedly by the applicant bank, consequently, transformation of the same into a tripartite contract among the applicant, the 1st defendant and the third party M/s. Moolchand Construction has never taken place. Hence the theory of novation of the existing contract with the so-called new contract as propounded, is thoroughly misconceived and liable to be rejected.

25.3: Having carefully considered the above submissions of the Ld. Counsels for both in the frame of the factual matrix of this case and the law relied upon, and I find it hard to accept the submissions of the Ld. Counsels for the defendants that 'novation' has taken place in the instant case, mainly for the following reasons.

Firstly, the undeniable factual matrix of the case on hand besides the case law relied upon by the defendants, does not offer any support to the theory of novation as propounded by the Ld. Counsels for the defendants.

25.4: Factual Matrix.

(I). The 1st defendant in para 14 of its written statement in no uncertain terms asserted as follows;

"The first defendant submits that when the bank had indicated the NPA by the company, in order to protect the interest of the bank, the Managing Director of Moolchand Finance Limited, has submitted fresh securities to the bank dated 16.2.1996, 14.12.1996 and 24.10.1996 which was accepted by the bank. The bank has been given the following properties:

(a) 13 grounds in Ramapuram valued at Rs.100 lacs by deposit of title deeds.

(b) 26 grounds at Saligramam valued Rs.4 crores with a charge of Rs.2.70 crores in favour of the bank by Moolchand Constructions, Power of Attorney Holder of Vasu Studio property.

(c) 13147sq ft in second floor, Commander-in-Chief Road, Egmore valued at Rs.6.57 crores vide a Registered Power of Attorney dated 24.10.1996 vide Doc. No.926/1996.

The total value of the property offered as additional collateral security comes to Rs.11.57 crores as against the due of Rs.3 crores for cash credit II account. By this act of the 1st defendant, the applicant bank's interest was protected fully in respect of the cash credit II account. These facts were totally suppressed by the applicant bank in the O.A. No.216/1997 for the reasons best known to them."

In para16 of the written statement it was stated that "As matter of fact this property were offered as additional security for Rs.2.70 crores for transfer of cash credit limit availed for developing the same vide communication issued by Moolchand construction Ltd dated 13.12.1996 to the bank"

In para 20 of the written statement it was stated that "The 1st defendant submits that all these properties were duly given by the company to safe guard the interest of the bank and also relieve all genuine purchasers of the Adyar and T,Nagar flats who had paid full consideration to the Company".

In para 12 of the written statement it was stated that "As per the affidavit filed by the bank the account became irregular only on 16.6.1996".

(ii) Thus, it is as clear as crystal from the above unequivocal and categorical statement of the 1st defendant that in order to protect the interests of the creditor bank only , the1stdefendant under Ex A-124 letter has offered some more immovable properties mentioned therein, by way of additional security and there was no intention to substitute the existing securities with the properties mentioned in ex.B124 letter. So much so even assuming that the proposal under Ex. A-124 is accepted impliedly by the applicant, thesaid acceptance same would result only in a contract of acceptance of additional securities and a contract of substitution of the existing contract in the said regard with new contract between the applicant and the 1st defendant can emerge.

(iii). In Ex. A-123 letter from M/s.Moolchand Construction there is not even a whisper of substitution of the existing securities with any freshproperties as the said letter focused only on the proposal to take over of cash credit-II liability of the 1stdefendant to the extent of Rs.2.70 crores and providing security for the same in the manner stated in Ex.B123 letter by the said third party.

(iv). The unequivocal and categorical statement of the 1stdefendant that "in order to protect the interest of the creditor bank it has offered some more immovable properties only by way of additional securities" not only speaks volumes about lack of intention on the part of the borrowers to substitute the existing securities with the properties mentioned inEx.B124 letter but also cuts at root the theory of novation as propounded by the defendants.

(v) The assertion of 'charge' over Vasu Studio property by the applicant in its affidavit filed in IA1057/1999 (Ex.B-74), when considered in the back drop of Ex.B-123,Ex. B-124 letters besides Ex.A-57 legal notice, it is manifest that the applicant bank in its endeavor to prevent alienation of one of the properties offered as additional security, has asserted its 'charge' over the said property, perhaps rightlyso, for the purpose of the said petition. So much so, by no stretch of imagination one can construe the aboveendeavor on the part of the applicant aimplied 'consent' for substitution of the existing immovable securities with the new securities.

(vi). Neither the 1st defendant nor M/s Moolchand Constructions, while resisting the relief prayed by the applicant bank in IA 1057/1999, have claimed novation of contract as now claimed. Hence the plea of novation is nothing but an afterthought.

25.5: Now coming to Ex. B-76 MOU between the applicant and M/s.Moolchand Construction, the same emphatically states that;

(a) M/s Moolchand Construction agreed to allot 6250 Sq. Ft. Builtup area to the applicant bank in the proposed to be developed Vasu Studio property @Rs1200 per sq ft amounting to Rs.75,00,000.00

(b) The applicant bank agreed to accept a sum of Rs.75,00,000.00 as full and final settlement towards its claim against M/s. Moolchand Construction and agreed to have the injunction obtained in IA 1057/1999 against the  1st defendant and M/s. Moolchand Construction vacated.

(c) The applicant agreed that it shall have no right or claim over the rest of the Vasu Studio property.

(d) The applicant bank agreed not to initiate any action against M/s. Moolchand Construction in respect of the remaining Vasu Studio property for recovery of any other dues of Moolchand group of Companies, its Directors, Guarantors either now or in future.

(e) Pursuant to this MOU, sale deed in favour of the applicant bank for an extent of 6250 Sq. Ft. built up area has been executed by M/s.Moolchand Construction and the sale consideration received has been credited to the loan account of the 1st defendant.

25.6. The 1st defendant despite being aware of all these transactions never raised any objection. Therefore, having thus, acquiesced fully with the aforementioned transactions and actively remained silent all through the 1stdefendant is estopped under law from now pleading novation of contract if or partial discharge of liability if any.

25.7:In so far as the property situate at Commander in Chief road is concerned, Ex. B-120 letter from the 1st defendant to the applicant bank and its reply under Ex.B-119, amply demonstrates that the intention of both these parties is to enter into a transaction of sale of a portion of the built up area together with the UDS for location of office of the applicant but not to substitute the existing security over items 2&3 of application "A" schedule with the property at Commander in Chief road. The subsequent Ex. B-121 General Power of Attorney by 1st defendant further confirms that this property was never intended to be substituted with the existing securities.

25.8: In so far Ramapuram, property is concerned, admittedly an equitable mortgage by deposit of Title deed of the property described more fully under Item 1 of Application "A" schedule has been created on 16.2.1996 by the 1st defendant under Ex A-86, thereafter no further documentation substituting this property with any of the existing securities or any acts in furtherance thereof have taken place.

25.9: The Legal Frame:

Before I proceed to discuss the legal angle of plea of novation or substitution of contract, I feel it appropriate to quote herein, Section 62 of the Indian Contract Act, as the said provision deals with the effect of novation, rescission and altercation of contract:

Section 62.

"If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed." Illustrations

(a) A owes money to B under a contract. It is agreed between A, B and C, that B shall thenceforth accept C as his debtor instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.

(b) A owes B 10,000 rupees. A enters into an arrangement with B, and gives B a mortgage of his (A‟s) estate for 5,000 rupees in place of the debt of 10,000 rupees. This is a new contract and extinguishes the old.

(c) A owes B 1,000 rupees under a contract. B owes C 1,000 rupees. B orders A to credit C with 1,000 rupees in his books, but C does not assent to the arrangements, B still owes C 1,000 rupees and no new contract has been entered into."

25.10: Black's Law Dictionary Sixth Edition at page 1064 defines 'Novation' as,

"A type of substituted contract that has the effect of adding a party, either or obligor or obligee who was not a party to the original duty. Substitution of a new contract, debt, or obligation for an existing one, between the same or different parties. The substitution by mutual agreement of one debtor for another or of one creditor for another, whereby the old debt is extinguished. A novation substitutes a new party and discharge one of the original parties to a contract by agreement of all parties"

25.11. In Scarf v. Jardine (1882)7 A.C. 345 and (1881)5 All E.R. reprint, 651 the House of Lords, held as follows:

"that there being a contract in existence, some new contract is substituted for it either between the same parties (for that might be) or between different parties, the consideration mutually being the discharge of the old contract. Novation of a contract comprises two elements, the discharge of one debt or debtor and the substitution of a new debt or debtor. The discharge is governed by the proper law of the contract. A substituted contract should rescind or extinguish the previous contract".

25.12. In the Civil Law, there are three kinds of novation's. (i) Where the debtor and creditor remain the same, but a new debt takes the place of the old one: (ii)Where the debt remains the same, but a new debtor is substituted: (iii). Where the debt and debtor remain, but a new creditor is substituted.

25.13:In re, H.B. Basavaraj (Dead) by LRs. and Ors.Vs.Canara Bank and Ors. relied upon by the  1st defendant, Hon'ble Supreme Court of India, held that

"The basic principle behind the concept of novation is the substitution of a contract by a new one only through the consent of both the parties to the same. Such consent may be expressed as in written agreements or implied through their actions or conduct."

25.14: In re, Lata Construction Ltd V Dr.Ramachandra and Anr. 2000(1) SCC p586, Hon'ble Supreme Court of India, held that;

"One of the essential requirements of 'Novation'; as contemplated by Section 62, is that there should be complete substitution of a new contract in place of the old. It is in that situation that the original contract need not be performed. Substitution of a new contract in place of the old contract which would have the effect of rescinding or completely altering the terms of the original contract, has to be by agreement between the parties. A substituted contract should rescind or alter or extinguish the previous contract. But if the terms of the two contracts are inconsistent and they cannot stand together, the subsequent contract cannot be said to be in substitution of the earlier contract".

25.15: To summarize:

(a) Consent of the parties (need not always be express) is the sine quo non, for novation or substitution of a contract to take place.

(b) Novation implies a fresh contract in place of the original contract.

(c) Effect of novation is discharge of a party from its obligations under the old contract.

(d) The consideration of the new contract is the discharge of the old.

(e) Till the new contract contemplated is brought into existence the old contract will exist and continue to be enforceable.

25.16: In so far as the case on hand is concerned, for transforming the proposal contained in Ex B-123 & B-124 in to an agreement, there shall be a tripartite agreement among the applicant, the 1st defendant and M/s. Moolchand Construction, and the said agreement can be express or implied. Admittedly no such express tripartite agreement among the afore stated parties taken place. In Ex.B-18 legal notice dated 14.10.2004 got issued by the 1st defendant referring to Ex.A123, it was emphatically asserted by the 1st defendant, that , "Our client states that it is pertinent to note herein that the bank has failed to take the original title deeds from M/s.Moolchand Constructions when it was offered by them as collateral". The very proposal put forth by the 1st defendant under Ex. B-124 expressly and emphaticallystates that the properties mentioned therein were offered as additional securities. That apart, acceptance of the takeover proposal of a part of cash credit II loan by M/s Moolchand Construction under Ex.B-123 and substitution of the existing securities with fresh securities in terms of Ex. A-123 are totally and conspicuously silent in the subsequent Ex. B-18 legal notice got issued by the 1stdefendant on 14.10.2004.

Here, I profitably quote, the ruling, in re, H B Basavaraj, relied upon by the 1stdefendant which is to the effect that,

"The basic principle behind the concept of novation is the substitution of a contract by a new one only through the consent of both the parties to the same."

25.17. That apart, Hon'ble Supreme Court, In re, Lata Construction, supra, held that,

"Substitution of a new contract in place of the old contract which would have the effect of rescinding or completely alter theterms of the original contract, has to be by agreement between the parties"

25.18: Therefore, under these circumstances' emergence of an implied or tacit tripartite contract of novation of any kind among the applicant, the 1st defendant and M/s. Moolchand Construction does not arise at all.

25.19: In so far as Ex.B-76 MOU is concerned the same clearly states that the applicant bank accepted a sum of Rs.75,00,000.00 as full and final settlement towards its claim against M/s. Moolchand Construction and agreed to have the injunction obtained by the bank in IA 1057/1999 against the 1stdefendant and M/s. Moolchand Construction vacated and further agreed that it shall have no right or claim over the rest of the Vasu Studio property. Therefore, it is apparent that Ex-B76 MOU has been entered only for the limited purpose of modifying the order of injunction obtained by the applicant, supra, and the same has nothing to do with the liability of the 1st defendant. Moreover, the post Ex. B-123 & 124 letters, events, conduct and the developments, supra, pooh-pooh, the claim of novation of any kind by the defendants.

25.20: Hence,in view of my discussion as above, it is highly preposterous on the part of the first and the defendants 15,17,19,23,24,46,57,58 to 62 & 64 to propound an implied tripartite contract of novation among the applicant, the 1st defendant and M/s.Moolchand Construction.

26: Now I shall address Point No.4.

Point.4:

Whether Ex. A-148 Statement of Account is incorrect, not inconformity with the relevant provisions of Law and Banker's Books of Evidence Act? If so, can the same be discarded?

26.1: While it is the case of the applicant that the statements of account filed by the applicant are true and correct besides the same are the certified copies of the original statements of accounts of the borrowers maintained as per the Banker's Books of Evidence Act, the defendants in chorus would contend that the same is incorrect, not duly certified as per the Banker's Books of Evidence Act, unreliable hence inadmissible.

26.2: Three sets of statements of accounts are on record, as the applicant along with the OA filed one set of the statements of accounts of the 1st defendant for the period 01/04/1994 to 31/03/1997. Later, along with the proof affidavit filed one more set of statement of account of the 1stdefendantfor the same period. Both these statements of accounts are Photostat copies. While the all the sheets/pages of the statement of account filed along with the OA remain unattested, the last page 627 contain an endorsement stating

"we hereby certify that this is the true copy of the extract of the statement of account as per Banker's Book of Evidence Act."

For. Tamilnad Mercantile Bank Ltd. Manager. T. Nagar.Madras17.

26.3: However, every page of the statement of account filed along with the proof affidavit (marked as Ex.A-148) has been attested as true copy and the last page contained the following endorsement.

"we hereby certify that this is the true copy of the extract of the statement of account as per Banker's Book of Evidence Act."

For. Tamilnad Mercantile Bank Ltd. Manager. T. Nagar.Madras17.

26.4: Admittedly Ex A-148 is a photostat copy of a photostat copy of electronic document of statement of account of the 1stdefendant, filed along with the OA unaccompanied by the certificate in terms of section 65-B of Indian Evidence Act.

26.5: The third statement of account which was marked as Ex.A-149 has been filed by the applicant with necessary enclosures required under the Banker's Book of Evidence Act, pursuant to the order of this Tribunal dated 17.10.2018, thus, the same relates to the post OA period commencing from 31/03/1997 to 30/09/2018 and the same is accompanied by the certificate purportedly, in terms of section 65-B of Indian Evidence Act.

26.6: Now, coming to the legal perspective on the admissibility or otherwise ofEx.A-148 for want of the certification in terms of Section 65- B of Indian Evidence Act, it is to be stated that the plea of the defendants that for want of the certificate in terms of section 65-B of Indian Evidence Act, Ex. A-148 is inadmissible in evidence is concerned, it is to be stated that the same did not find favour with Hon'ble High Court of Chennai, as in re, ICICI bank Vs Subramaniam, supra, relied on by the Ld. Counsel for the applicant, Hon'ble High court, relying on the judgement of Hon'ble Supreme Court of India, in re, Tomaso Bruno and Ram Singh, held that

'provisions under Section 65A and 65B of Indian Evidence Act, are procedural provisions and can be relaxed by the court where ever interest of justiceso justifies'.

26.7. However, it maybe pertinent to refer herein, to Anwar Vs Bhasheer 2014(10) SCC p473, where in, Hon'ble Supreme Court of India, held that

"The evidence relating to electronic record, as noted herein before, being a special provision, the general law on secondary evidence under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generaliaspecialibus non derogant, special law will always prevail over the general law. It appears, the court omitted to take note of Sections 59 and 65A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Sections 65A and 65B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this court in Navjot Sandhu case (supra), does not lay down the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under Section 65B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible."

26.8: That apart, in the case on hand the borrowers have not raised any kind of objection as to the admissibility of Ex. A-148 either in their written statements or in their counter proof affidavits. In fact, the same was raised for the first time during the course of their final submissions.

26.9. The aforesaid objection of the barrowers, when tested on the touchstone of the law laid down in the following rulings of Hon'ble Supreme Court of India,

(i). RVE.Venhatachala Gounder Vs Arulmigu Visweswarasami& others, 2003(8) SCC752, wherein it was held that,

"Ordinarily an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to admissibility of documents in evidence may be classified into two classes:- (i) an objection that the document which is sought to be proved is itself inadmissible in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as 'an exhibit', an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken before the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The later proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the Court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the Court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the Court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both the parties. Out of the two types of objections, referred to hereinabove, in the later case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in superior Court

(ii). Sonu v. State of Haryana, 2017 SCC OnLine SC 765, wherein, it was held that,

" That an electronic record is not admissible unless it is accompanied by a certificate as contemplated under Section 65B (4) of the Indian Evidence Act is no more res integra. The question that falls for our consideration in this case is the permissibility of an objection regarding inadmissibility at this stage. Admittedly, no objection was taken when the CDRs were adduced in evidence before the Trial Court. It does not appear from the record that any such objection was taken even at the appellate stage before the High Court"

"We are satisfied that an objection that CDRs are unreliable due to violation of the procedure prescribed in Section 65 B (4) cannot be permitted to be raised at this stage as the objection relates to the mode or method of proof."

I am afraid the objection is unsustainable and untenable, hence the same is hereby rejected.

26.10: Be that as it may, it is trite to say that mere admission of a document does not dispense with the proof of the contents of the said document, and the contents have to be proved by the party relying on the document. Therefore, even if I accept the integrity of Ex. A-148, still the Tribunal will lookfor the proof of Ex. A-148 in order to rely on the same and it is for the applicant to prove the said document. The applicant in this case did not choose to file the affidavit of the official who is conversant or acquainted with Ex. A-148. Admittedly, Aw1 is an alien to Ex. A-148 statement of account. Ex. A-148 is a photo copy of a photo copy. No foundation was laid for not producing the primary evidence. No effort was made by the applicant to file certified copy of the true extract of Ex. A-148, even after the objection taken of course, belatedly by the borrowers.

26.11 As per Section 19(3) of RDB Act and Sub Rule 11 of Rule 12 of DRT Procedure Rules, which are as follows, it is also imperative for the applicant to comply the said provisions, lest they may be discarded from being considered;

Section 19(3) of RDB Act;

(3) Every application under sub-section (1) or sub-section (2) shall be in such form and accompanied by such documents or other evidence and by such fee as may be prescribed: Provided that the fee may be prescribed having regard to the amount of debt to be recovered: Provided further that nothing contained in this sub-section relating to fee shall apply to cases transferred to the Tribunal under sub-section (1) of section 31

[Explanation. - For the purposes of this section, documents include statement of account or,any entry in banker's book duly certified under the Bankers' Books Evidence Act, 1891.]

Sub Rule 11 of Rule 12 of DRT Procedure Rules.

"the provisions contained in section 4 of the Banker's Books Evidence Act, 1891 (18 of 1891) shall apply to a certified copy of an entry in a banker's book furnished along with the application filed under sub-section (1) of section 19 by the applicant".

26.12: A conjoint reading of sub clause 3 of section19 of RDB Act and sub rule 11 of Rule 12 of DRT Procedure Rules, make it clear that the documents accompanying the application filed under section 19(1) or (2) of RDB Act, shall be certified copies and the provisions contained in section 4 of Banker's Books Evidence Act, shall apply to such certified copy.

26.13: I shall, therefore, now refer to Section 2(8) of the Banker's Books Evidence Act, 1891, which defines certified copy and the same is as follows.

2 (8) 'certified copy' means when the books of a bank

(a) are maintained in written form, a copy of any entry in such books together with a certificate written at the foot of such copy that it is a true copy of such entry, that such entry is contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business and that such book is still in the custody of the bank, and

where the copy was obtained by a mechanical or other process which in itself ensured the accuracy of the copy, a further certificate to that effect, but where the book from which such copy was prepared has been destroyed in the usual course of the banks business after the date on which the copy had been so prepared, a further certificate to that effect, each such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title; and

(b) consist of printouts of data stored in a floppy, disc, tape or any other electromagnetic data storage device, a printout of such entry or a copy of such printout together with such statements certified in accordance with the provisions of section 2A.]

(c) a printout of any entry in the books of a bank stored in a micro film, magnetic tape or in any other form of mechanical or electronic data retrieval mechanism obtained by a mechanical or other process which in itself ensures the accuracy of such printout as a copy of such entry and such printout contains the certificate in accordance with the provisions of section 2A.]

2A. Conditions in the printout.

A printout of entry or a copy of printout referred to in subsection (8) of section 2 shall be accompanied by the following, namely

(a) a certificate to the effect that it is a printout of such entry or a copy of such printout by the principal accountant or branch manager; and

(b) a certificate by a person in charge of computer system containing a brief description of the computer system and the particulars of

(c) the safeguards adopted by the system to ensure that data is entered or any other operation performed only by authorised persons;

(d) the safeguards adopted to prevent and detect unauthorised change of data;

(e) the safeguards available to retrieve data that is lost due to systemic failure or any other reasons;

(f) the manner in which data is transferred from the system to removable media like floppies, discs, tapes or other electromagnetic data storage devices;

(g) the mode of verification in order to ensure that data has been accurately transferred to such removable media;

(h) the mode of identification of such data storage devices;

(i) the arrangements for the storage and custody of such storage devices;

(j) the safeguards to prevent and detect any tampering with the system; and

(k) any other factor which will vouch for the integrity and accuracy of the system.

(c) a further certificate from the person in charge of the computer system to the effect that to the best of his knowledge and belief, such computer system operated properly at the material time, he was provided with all the relevant data and the printout in question represents correctly, or is appropriately derived from, the relevant data.]

Section 4 of the Bankers Books Evidence Act. 1891, which deals with the mode of proof entries in Bankers Books Evidence Act, says

"Subject to the provisions of this Act, a certified copy of any entry in a banker's books shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise."

26.14: I have carefully tested Ex. A-148 statement of account under the above legal frame besides the rulings, supra, relied upon by the Ld. Counsels for both sides.

In re, Indian Bank Vs V.R. Venkataraman and others, relied upon by the Ld. Counsels for the borrowers, a similar question;

"whether the documents, which do not contain the endorsement as required under Section 2(8) of the Bankers' Books Evidence Act, can be treated as certified copy within the meaning of the said section?"

arose, and it was emphatically held that:

"the intention of the framers of the said Act is clear that whenever the document is treated as certified copy it shall contain the endorsement. Mere mention of true copy cannot lead to the conclusion that it is a certified copy. There is lot of significance in insisting upon the endorsement due to the reason that originals are not being produced into Court even for the purpose of comparison. The statute gives exemption under the Bankers' Books Evidence Act from production of the originals. It lays down a particular procedure to produce the copies, which can be treated as certified copies. Moreover, in the present case, the certified copy does not contain the seal and stamp of the bank. The statute has specified the nature of the certificate to be endorsed. It is not the intention of the legislature to treat it as directory. It is mandatory. It cannot be treated as certified copy, since endorsement mentioned by the statute is not made. It is a safeguard placed on the extracts for acting on them as evidence in truth."

Therefore, in the light of the above authoritative pronouncement, the Tribunal is of the considered view that Ex. A-148 statement of account cannot be treated as a certified copy within the meaning of section 2(8) of Bankers Books Evidence Act, hence it is not safe to place any reliance on Ex.A-148.

26.15: That apart, the mandatory requirement that every application under sub-section (1) or sub-section (2) of section 19 of RDB Act, shall be accompanied by statements of accounts duly certified under the Bankers' Books Evidence Act, therefore, has been breached by the applicant as only photocopy of the photocopy of the statements of account filed along with the proof affidavit and the original of the same never seen the light of the day. The applicant bank failed to clarify the discrepancy as regards the opening balance of the cash credit II account. Thus, even on merits the Tribunal is unconvinced on the proof of Ex. A-148.

26.16: However, at the same time I am of the view that denying the applicant the recovery of its legitimate dues from the defendants on this sole ground, especially when the amount lent by the applicant being public money and when the default in repayment of the credit facilities availed by the defendants 1 to 4 from the applicant bank is not in dispute, would tantamount to doing injustice to the applicant. The borrowers in their written statements have not denied execution of the loan documents.

26.17. That apart, one of the defenses put forth by the barrowers is partial discharge of debt, thus indicating that the dispute is only with regard to the quantum of the claim but not the claim itself.Before instituting the claim the applicant on 30.11.1996 under Ex-A-56 Legal notice demanded the borrowers to pay a sum of Rs.11,31,48,168.48 together with interest @ 24.5%per annum being the amount stated to be due as on the said date and the defendants 1 to 4. Despite receipt of the same the borrowers neither denied the correctness of the said claim nor discharged the liability. Even in the reply statement filed by the borrowers neither the quantum of the sum demand norits entitlement by the applicant has been disputed. Therefore, the barrowers by their acts, conduct and acquiescence are estopped under law from now denying their liability to the extent of Rs.11,31,48,168.48. I am therefore of the view that the borrowers shall be made liable to pay the sum ofRs.11,31,48,168.48, to the applicant.

26.17: I therefore, hereby hold that the applicant bank is entitled for a sum of Rs.11,31,48,168.48, together with interest at the rate specified under point no 5 hereunder. The point is answered accordingly.

27: Point No2.

Whether the applicant bank has failed in establishing its claim of mortgage charge over the property covered by the items nos.2 & 3 of application "A" schedule?

27.1: At the outset, Ld. Counsel for the applicant while refuting the contention that there was no valid mortgage over items2&3 of application "A" schedule property, referred to Exhibit A-5 Board Resolution of the 1stdefendant dated 30.03.1995 which is as follows:"FURTHER RESOLVED THAT Shri Pradeep Kothari, Director and Mr. M.C. Kothari, Managing Director be and are hereby authorized to Mortgage the immovable Property as required Bank" and also the statement contained in para 9 of the reply statement of the 1st defendant dated 20.04.2004that "As per clause 3 of conditions the company should create equitable mortgage over the landed properties of all the three projects. Release of securities will be considered stage by stage according to reduction in cash credit amount"and submitted that in furtherance thereof equitable mortgage over items 1, 2&3 of application "A" schedule (Item.1.Ramapuram)underEx.A87, (Item.2.Gandhi Nagar)Ex A82 and (Item.3.MelonyRoad)Ex A79 &A.81 has been created, hence the contra argument now put forth by the defendants does not hold any water. Ld. Counsel would further contend that when the intention of the parties concerned to create mortgage over the properties stated supra, is apparent and evident from the above-mentioned documents, the defendants are not justified in questioning the mortgage on flimsy grounds. Ld. Counsel would further submit that he custody of original documents of title of the mortgaged properties viz Ex. A.134, A140, and A-141, deposited with an intention to create equitable mortgage are with the bank is not disputed by any of the defendants so also the signatures on Ex.A79, Ex.A.81 and Ex.A82 Memorandum of Deposit of Title Deeds. The defendants have not stated any valid reason as to why the custody of the original documents was left with the applicant bank without questioning. According to the Ld. Counsel it is for the defendants to prove that in what other circumstances the custody of the original title deeds had been handed over to the applicant bank.

27.2: Ld. Counsel further submitted that as the mortgagors never disputed creation of equitable mortgage over any of the properties mentioned in application "A" schedule, it is now not open to the defendants to question the mortgage. According to Ld. Counsel EX. A-79, Ex. A-81, ExA-82 and Ex. A-87 clingingly establishes creation of equitable mortgage over the properties covered by items 1,2&3 of application A schedule.

27.3: Per contra, Ld. Counsels for the defendants in one voice have contended that pre-existence of a debt between the applicant and the borrowers which is one of the conditions for putting through the mortgage does not exist in this case as such the claim of mortgage by the applicant is unsustainable. According to the Ld. Counsels since it is evident from Ex A-3 that the loan was granted only on 16.6.1995, the pleading of the Bank that the equitable mortgage over item 2 of application A schedule has been created on 4.5.1994 is untenable. There was not even a proposal for granting any facility by 4.5.1994 from the 1st defendant. Ld. Counsels have emphatically contended that the applicant Bank has failed to establish that the subject debt existed as on 4.5.1994 either by documentary or oral evidence, hence the mortgage claim dated 4.5.1994 is unsustainable and untenable under law.

27.4: It is submitted Ex-A-135 power of Attorney did not empower its agent Mr. Murali the 38th defendant to mortgage the property situated at 2nd Main Road, Gandhi Nagar, Adyar, (Item 2 of application A schedule) in favour of the applicant, as such the said mortgage does not bind the principal. According to the Learned Counsels Ex.A-135 power of attorney was executed in favor of the 38th defendant by the 37th defendant Mrs. Kasthuri Bai, only for the purpose of development of the property of Sri Sai Estates with whom she hadearlier entered into development agreement; Therefore, the equitable mortgage of deposit of title deed under Ex A-84 in favour of the applicant who is a third party on the strength of Ex. A-135 is ultra vires, hence invalid and unenforceable.

27.5: Ld. Counsels further submitted that the dates of alleged deposit of title deed of the property mentioned as item 2 of "A" schedule are at variance, as according to the Ld. Counsels, in the Claim petition (OA) the date of mortgage of item 2 property has been mentioned as 09/03/1993 whereas in Ex.A-58 legal notice the date of mortgage has been mentioned as 4.5.1994 and in Ex.A59 legal notice the date of mortgage has been mentioned as 9.6.1993.

27.6: It is further submitted that the mortgage claimed in respect of the property covered by item no 3 of application "A" schedule said to have been created on the strength of Ex A-142 power of attorney is also invalid as Ex A-142 Power of Attorney dated 14.10.1994 said to have been executed by the defendants 39 and 40 in favour of 3rd defendant does not indicate that the property therein mentioned can be offered as security for any third-party loan. It is submitted that even though Ex. A2 sanction letter stipulated that the property at Door No.19, Melony Road, T.Nagar (Item 3 of application A schedule), should form part of the security no sanction and disbursement of loan as per Ex. A-2 has taken place. That apart, the documentary evidence filed and marked by the Applicant Bank does not indicate whether any loan documents were executed under first Sanction Letter (Ex. A-2) so as to constitute cause of action for the applicant to claim a charge on the property at Door No.19, Melony Road, T. Nagar, Chennai. It is further submitted that Ex A-3 dated 18.3.1995 also does not stipulate that the property at Door No.19, Melony road, T. Nagar, should be offered as Security. According to the Ld. Counsels it only narrates about the hypothecation of building to be constructed at Egmore, Adyar and T. Nagar. It is stated that even though the loan is sanctioned for the construction of the building, the sanction Letter does not specify the door number and other particulars of the properties. Therefore, there was a waiver of the condition of mortgaging the property at Door No.19, Melony Road, T. Nagar.

27.7: It is further submitted that Ex. A-142 Power of Attorney relied on by the Applicant Bank does not come to the rescue of the Applicant Bank to prove that the agent namely, Mr. Moolchand Kothari (the 3rd defendant) had the necessary authority to put through the mortgage as the same gas not authorized the 3rd defendant to mortgage the property at Melony Road, in favour of the applicant. Ld. Counsels have further submitted that Ex. A-81 is unreliable and inadmissible as the same is un dated. According to the Ld. Counsel, it does not say who received the title deeds on behalf of the Applicant Bank, it does not narrate the amount to be secured under this instrument, it does not say the name of the borrower for whose loan the title deeds were deposited for securing the loan. it does not even say the description of the property to be mortgaged. Lastly, it was submitted that none of the conditions envisaged in section 58(f) of Transfer of Property Act, were fulfilled in order to claim a valid mortgage.

27.8: In support of the aforementioned submissions Ld. Counsels have relied on the following rulings.

1.Saradindu Mukherjee vs Amiya Kumar Basu AIR 1977 Cal 343.

"It is well established that mere deposit of title deeds with the creditor by the debtor will not constitute an equitable mortgage unless it is proved that the said title deeds had been deposited with the intention of creating a mortgage."

K.J.Nathan Vs S.V.Maruty Reddy-Manu/SC/0235/1964.

"Under the Transfer of the 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 specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. Therefore, such a mortgage of property takes effect against a mortgage deed subsequently executed and registered in respect of the same property under Section 58(f) of the Transfer of Property Act. The three requisites of a mortgage by deposit of title deeds are, (i) debt,(ii)deposit of title deeds, and (iii) an intention than the deeds shall be security for the debt. Whether there is an intention that the deeds shall be security for the debt is aquestion of fact in each case".

Jethibai V Putlibai MANU/mh/0279/1912

"for that passage in Section 59 of the Transfer of Property Act lays particular stress on the intention of the depositor to create a security. So that even where there was a deposit and where there was a debt, although in the first instance there might still survive from the Courts of England a leaning towards drawing a presumption of the kind I have mentioned, that presumption might usually be displaced, and in any event, I think, it will be the duty of the Court to ascertain as far as possible what the intention accompanying the deposit really was.

Syed Abdul Khader Vs Rami Reddy AIR 1979 SC 553, 2. 12.

"The next limb of the submission was that if three co-principals jointly constituted an agent then unless contrary is indicated by the deed of the Power of Attorney, the necessary inference would be that the agent can act in respect of those affairs in which all the co-principles are jointly interested. In other words, it was said that such a Power of Attorney would clothe the agent with an authority to act in respect of joint affairs of the co-principals. We are unable to find any force in this argument, for what the Power of Attorney authorises depends on its terms and the purpose for which it is executed. It would, therefore, be necessary to refer to the Power of Attorney, Ext. P-1 and the supplementary deed, Ext. P-2. Ext. P-1 is dated 10th April 1949 and is styled as general Power of Attorney. The co-principals are: (1) plaintiff Syed Abdul Khader, (2) Kazdm Yar Jung, and (3) Syed Mustafa Hussain. The purpose for which the power was executed is set out in Ext. P-1 in the following words:...that in view of our private needs and as we are unable to conduct cases and answer them in time, we therefore appoint Copper Sattayya son of Coper Durgayya resident of Ghanpur, Medak Taluq as our general power of Attorney to act on our behalf and we empower the said person through this power of Attorney that the said Muktar can conduct the cases (parvi) of all sorts, question and answer, admit or deny, either orally or writing on our behalf in all departments, civil and criminal courts, in the High Court, in the judicial committee, in the Revenue Departments of the Districts, namely, in the offices of the IInd, IIIrd, and IstTaluqdars, the Tahsil Offices etc. ... and purchase or sell (sic) of lands and that he is authorised to appoint any pleader or special Muktar when occasioned (sic) and to stop or to take or file any copies in any suit or to file any suit or file any written statements with his own signature to fetch any loan for our business or lands or to pay the debts from out of the income of the estate or to purchase or sell the lands and to execute the sale deeds and get registered under his signature etc....The last sentence is that "all the acts of the said Muktar shall be deemed to be acts done and effected by us which we hereby accept and approve". Subsequently on 20th April 1949 a supplementary Power of Attorney in addition to Ext. P-1 was executed by the aforementioned three donors of Power in favour of defendant No. 34 in which it is specifically stated that they affirm earlier Power of Attorney dated 10th April 1949 and thereafter the relevant recital is as under: But by the said document, the powers of sale and registration were not confirmed (sic) on him and that therefore through this deed the same is hereby confirmed (sic) on him. It was urged that the Court should bear in mind the first principle that a Power of Attorney has to be strictly construed. Undoubtedly, where someone other than the person who has a right to act in respect of certain things has, under a contract of agency, the right to act on behalf of principal, the authority conferred by the written instrument has to be strictly construed. Ordinarily a Power of Attorney is construed strictly by Courts (vide Bryant, Powis and Bryant Ltd. v. La Banque du Peuple) [1893] A.C. 170 at 177.Adopting the principle of strict construction of a Power of Attorney, the first question that is required to be answered is whether the Power of Attorney, Ext. P-1 was meant to confer the authority on the agent to act only in respect of the joint affairs or joint property of the co-principals or it was in respect of the individual affairs and effects of each principal. In Ext. P-1 at three places the expression used is: "our Power of Attorney to act on our behalf and we empower the said person"; then again "on our behalf in all departments", and then lastly, "acts done and effected by the agent shall be deemed to be the acts done and effected by the principals." Mr. Gopalakrishnayya said that it would be extraordinary to hold that the expression "on our behalf" as disclosing a conjoint action on behalf of more than one person could ever be interpreted by any canon of construction as one on behalf of each individual. He said that apart from the strict construction the Court must put on a Power of Attorney, where the terms of the written contract are clear and unambiguous it is impermissible for the Court to take into consideration the other circumstance's to determine the intention of the parties. When a contract is reduced to writing, undoubtedly the Court must look at the terms of the contract and proceed on the assumption that the parties intended what they have said and if the terms are unambiguous the Court must give effect to the terms of the contract. However, it is well establish ed that in considering a contract it is legitimate to take into account the surrounding circumstance's for ascertaining the intention of the parties (vide Modi & Co. v. Union of India)

27.9: Thus, the crux of the contentions of the defendants on the plea relating to creation of mortgage of the items 2&3 of application "A" schedule, appear to be two-fold.

A. Existence of debt being one of the essential requisites for creation of mortgage by deposit of title deeds, since in the instant case no debt subsisted as on the dates on which the applicant claimed creation of equitable mortgage by deposit of title deeds of the property covered by item 3 of application A schedule, the said mortgage is invalid and unenforceable.

B. The mortgages said to have been created under Ex. A-135 power of attorney by D37 and under Ex. A-142 by the 3rd defendant being ultra vires, the said mortgages are invalid and unenforceable.

27.10: While there can be no dispute regarding the legal angle articulated by the Ld. Counsels for the defendants that, existence of debt is one of the essential requirements for creation of equitable mortgage by deposit of title deed in terms of section 58(f) of Transfer of Property Act, the other contention that no debt between the applicant and the 1st defendant existed as on 10.12.1994 (one of the dates of creation equitable mortgage of the property covered by item 3 pleaded by the applicant), or on the other dates pleaded by the applicant and for said reason the mortgage claim of the applicant on item 3 of application "A" schedule is invalid and unenforceable, in the considered view of this Tribunal, is untenable and unacceptable, for the reasons stated hereunder.

27.11: At the outset it is to be stated that the afore said pleas now raised did not find place in the written statements filed by any of the defendants. That apart, none of the mortgagors have disputed the mortgages claimed by the applicant under Ex. A-79 & A-81. Execution of exhibits A-79 & A-81 also is not in dispute. Hence it is not open to any of the defendants to now question the subject mortgages.

Be that as it may, even on merits the said pleas are bound to fail, in view of the following reasons.

27.12. A: Existence of Debt:

(i). (a):The 1st defendant formerly known as M/s. Suvarna Securities admittedly applied to the applicant under Ex. A-1 for credit facilities and the same were sanctioned under Ex. A-2 dated 2.12.1994. The very same M/s. Survarna Securities under Ex. A-19 agreement & Ex. A-20 POA dated 19.12.1994 once again reiterated availing of credit facilities from the applicant bank.

(b). Execution of Ex. A-6 demand promissory note for Rupees six crores and Ex A-67 demand promissory note for Rupees three crores by the 1st defendant on 16.06.1995 pursuant to the Ex. A.3 sanction letter dated18.3.1995, besides Ex A-79 dated 16.6.1995 and the undated Ex A-81 is not at all disputed by the 1st defendant.

(c).Therefore, in the above undisputed fact situation, when Ex.- 79 consent letter dated 16.06.1995 for mortgaging the property covered by item 3 of application "A" schedule and Ex A-81 Memorandum are perused, it would be as clear as a crystal that debt to the tune of Rs.9 crores between the applicant and the defendants 1 to 4 existed as on 16.06.1995.

(d). That apart, the 1st defendant during the cross examination of AW1, has elicited the date on which the 1st defendant availed cash credit facilities by questioning AW1 as follows:

Q. Whether the cash credit facilities were availed by the defendants on 16.6.1995?

A. It is true that cash credit facilities were availed by the defendants on 16.6.1995 as mentioned in OA.

Therefore, the contention that no debt existed as on the dates of creation of equitable mortgage is devoid of any force, hence liable to be rejected, accordingly the same is hereby rejected.

27.13. B: Mortgage Claim dated 10.12.1994 on item 3.

(a). The  1st defendant in its written statement in para 9 admitted that clause 3 of Ex. A-3sanction letter dated 18.03.1995 stipulated that "the company should create equitable mortgage over the landed properties of all the three projects. Release of securities will be considered stage by stage according to reduction in cash credit amount". Therefore, it is evident that the sanction of afore stated credit facilities preceded execution of Ex. A-79 and Ex.A-81. Here I prefer to rely on the ruling, in re, K.J.Nathan, supra, cited by the Ld. Counsels for the defendants, wherein it was held that, "Whether there is an intention that the deeds shall be security for the debt is a question of fact in each case".

(b). As already stated above, the fact that the mortgagors have never disputed the mortgages created on their respective properties through the irrespective agents firmly confirms that the intention of mortgagors was to create equitable mortgage by deposit of their title deeds in favour of the applicant.

(c). Therefore, when the intention on the part of the 3rd defendant/mortgagor to create equitable mortgage by deposit of title deed in terms of Ex. A-79& Ex. A-81 is overwhelmingly clear, mere mention of date of mortgage as 10.12.1994 does not invalidate the mortgage created under Ex.A81 pursuant to Ex.A-79.

(d) Aw1, in the proof affidavit has deposed that, "on 16.06.95, the 39th and 40thdefendants, represented by POA holder the 3rddefendant herein executed a consent letter to stand as guarantors and to create equitable mortgage over the property situate at door No 19, (old No7/8 & 7), Melony Road, T. Nagar in favour of the applicant which is marked as Exhibit A-79."

(e). There was no cross examination on this statement of AW1 by any of the 1stdefendant. On the other hand, the 1st defendant during the cross examination of AW1 has elicited the following answer from AW1. "It is not correct to suggest that cash credit II facility alone was secured by the mortgage of immovable properties and not cash credit I facility".

(f). Neither the 3rd defendant nor the 39th or 40th defendants disputed the above statement of Aw1

(g). Mere omission to state the date in Ex. A-81 by itself cannot invalidate the said mortgage especially when Ex. A-81 is read with Ex. A-3 sanction and Ex. A-79 letter of intention to create equitable mortgage, in pursuance of sanction are read holistically.

(h). The 1stdefendant despite being aware of Ex. A-102 public notice issued by the applicant, asserting mortgage charge over all the items of application A schedule remained mum, thus rendering the present plea, nothing but an afterthought.

Therefore, the atomistic view of the 1st defendant on the date of mortgage of the property covered under item 3, besides a mere solitary mention of mortgage date as 10.12.1994 cannot and shall not be allowed to over shadow the plethora of oral and documentary evidence under Ex.A-79 and A-81, besides the unequivocal admissions on the part of the defendants that support creation of a valid equitable mortgage over the property covered by item 3 of application A schedule.

28: C. Whether the mortgage covered by item 2 & 3 of application A schedule are in valid, being ultra vires, Ex. A-135 and Ex. A-142?

28.1: At the outset it is to be stated that there is any amount of fallacy in the argument that equitable mortgages covered by items 2&3 of application A schedule created by the 37th defendant on the strength Ex. A-135 power of attorney and by the 3rd defendant under Ex. A-142 Power of Attorney are invalid being, ultra vires, Ex. A-135 and Ex. A-142, as even assuming for a while that the agents under Ex. A135 and Ex. A142POA'shad lacked such authority, section196 of the Indian Contract Act 1872, lays down that "where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effect will follow as if they had been performed by his authority"."

28.2: Hon'ble Supreme Court of India, in Ramchandra Murarilal Bhattad Vs State of Maharashtra &Ors 2007 (2) SCC 588, held that,

"The agent, in fact, has no authority to do what he does at the time he does it. Subsequently, however, the principal, on whose behalf, though without whose authority, the agent has acted, accepts the agent's act, and adopts it, just as if there had been a prior authorization by the principal to do exactly what the agent has done."

28.3: In re Chandooru Punnayya (Dead) vs Sree Venugopala Rice Factory 43 Ind Cases 508, Hon'ble High Court of Madras, held that

"An agent's unauthorized act can be ratified by the principal under Section196 of the same Act. Under Section197, ratification may be express or implied from conduct."

28.4: In re, Peri Bhaskararao And Ors. vs Sathi Adilakshmi AIR 2006 AP 212, it was held that.

"ratification need not be by any express act or declaration and may be implied from conduct and it may be interred from mere acquiescence or silence or inaction on the part of such other party"

28.5: In so far as the case on hand is concerned the circumstances set out above such as acquiescence, very long and passive silence on the part of the principals on creation of equitable mortgage by deposit of their title deeds in favour of the applicant by their respective agents, bear sufficient testimony of their conduct of approval/ratification of the mortgage in terms of Section 196 of India Contract Act.

28.6: Be that as it may, Indisputably, Ex. A-135 and Ex. A-142 power of attorneys expressly empowerthe agents to mortgage the property mentioned therein, without any kind of restriction as the very clause 1 of both Ex. A-135 and Ex. A-142 POA's, says that;

"To deal with the property more fully described in the hereunder in any manner such as sale, mortgage and creation of charge over the said property"

28.7: Thus, the power conferred under Ex.A.135 &Ex. A-142 POA's to mortgage is unrestricted and omnibus. It is strange that the defendants with one breath contend that the intention of the principals was not to mortgage the properties for third party loans however with the same breath justify execution of sale deeds in favor of third parties and receipt of sale consideration from third parties under the very same POA's. A classic case of approbate and reprobate. The point is answered accordingly.

29: Against whom the applicant is entitled for a recovery certificate?

29.1: Having held that the applicant has established its claim, I shall now decide against whom and in what manner the applicant is entitled to recover the subject debt.

29.2:The due repayment of the credit facilities availed by the defendants 1 to 4, is secured by the corporate guarantee of the 5th defendant, the equitable mortgagee of the properties described in application A schedule besides by the personal guarantees of the defendants 2,3,4,37,39 & 40th as these defendants have not disputed execution of Ex.A-11, Ex.A-12, Ex.A-69, Ex.A-72, Ex.A-73, Ex.A-74, Ex.A78, Ex.A-79, Ex.A-80, Ex.A-82 and Ex.A-83. Since the default on the part of the borrowers has been established in view of execution of Ex.A-11, Ex.A-12, Ex.A-69, Ex.A-72, Ex.A-73, Ex.A-74, Ex.A-78, Ex.A-79, Ex.A-80, Ex.A-82 and Ex.A-83, by the defendants 3,4,37,39&40, the defendants 3,4,37,39&40 are also liable personally for the due discharge of the OA claim.

In so far as the defendants 3rd 4th 41st 49th to 53rd ate concerned, these defendants being the legal heirs of the deceased 2nd defendant who had personally guaranteed the due repayment of the credit facilities availed by the 1st defendant and passed away during the pendency of this OA, the 3rd 4th 41st 49th to 53rd defendants being his legal heirs are liable to the extent of the estate of the deceased 2nd defendant inherited if any by them. It is made clear that in so far, as the defendants 3 and 4 are concerned. this liability is in addition to their liability in terms of clause 29.2 supra.

29.3: In so far as the 5th defendant is concerned since its assets were already sold away by the Official Liquidator, the sale proceeds shall be distributed in the same manner provided in section 326 of the Companies Act 2013.

29.4: The flats purchased by the defendants 6 to 25 admittedly formed part of the property mortgaged in favor of the applicant by their respective vendors.

29.5. The 20th defendant sold away the flat purchased by him to the 61st defendant. The 21st defendant sold away the flat purchased by him to the 62nd defendant.

29.6: The 42nd Defendant who purchased 576. 13sq.ft each under two documents registered as Doc no.1897 of 1996 and 1920 of 1996 from the 3rd defendant, also passed away during the pendency of the claim. It is claimed that the defendants 57 and 58, have purchased Flat No.B in first Floor from Mrs. Avicote Arpita Anna Varghese through her Power of Attorney Mr.Sanjiv George Pallikal and the sale deed is registered as Doc No.336 of 2007.

29.7: The 43rd defendant sold away the flat purchased by him to the 64th defendant. The 47th defendant sold away the flat purchased by him to the 59th defendant.

29.8: The above sales took place while the mortgage charge over the said property has been in existence without obtaining no objection from the mortgagee/applicant.

29.9: This Tribunal, already held that the applicant bank has a valid charge over the entire property covered by application A schedule by virtue of the equitable mortgages by deposit of title deed created by the defendants 3 and 37, to serve the same as a security for the due discharge of the credit facilities availed by the defendants 1 to 4 from the applicant. Hence, purchase of the said property by any third parties from the mortgagors or from their alienees, will not extinguish the said mortgage charge of the applicant, when admittedly the borrowers whose repayment of the credit facilities is secured by the said property have defaulted in repayment. That apart, when it is also the case of the applicant that the defendants are bound by the equitable mortgage created by the mortgagors in favour of the applicant bank, it goes without saying that the right to redeem the said mortgage also stands transferred to these purchasers, as the right of redemption does not remain independent of the property itself. In short, such a right being based upon the principle that the purchaser steps into the shoes of his predecessor-in-title and has, therefore, the same rights which his predecessor-in-title had before the purchase.

29.10. Hon'ble Supreme Court of India, in its very recent judgement in Shankar Sakharam Kenjale (D) By Lrs... vs Narayan Krishna Gade (Civil Appeal No. 4594 OF 2010, dt. 17 April, 2020), held that;

"It is well-settled that the right of redemption under a mortgage deed can come to an end or be extinguished only by a process known to law, i.e., either by way of a contract between the parties to such effect, by a merger, or by a statutory provision that debars the mortgagor from redeeming the mortgage. In other words, a mortgagee who has entered into possession of the mortgaged property will have to give up such possession when a suit for redemption is filed, unless he is able to establish that the right of redemption has come to an end as per law. This emanates from the legal principle applicable to all mortgages - "Once a mortgage, always a mortgage".

29.11: Hon'ble Supreme Court of India, in C.V. Raghavachar v. Lakshminarasamma AIR 1981 SC 160, has reiterated this principle and observed:

"The High Court has held rightly that the prior mortgagee when he himself purchased the mortgaged property, became entitled as assignee of the equity of redemption to redeem the subsequent mortgages."

29.12: That apart, Section 91 in the Transfer of Property Act, says,

Persons who may sue for redemption. -Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely: -

(a) any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same;

(b) any surety for the payment of the mortgage-debt or any part thereof; or

(c) any creditor of the mortgagor who has in a suit for the administration of his estate obtained a decree for sale of the mortgaged property.]

29.13. Further, in terms of section 59A of Transfer of Property Act, all persons who derive title from the mortgagor are included in the term "mortgagor" and, therefore, entitled to redeem.

29.14. The right of redemption, thus can stand extinguished in terms of Section 60 of the Transfer of Property Act, which is as follows

"Section 60 of Transfer of Property Act. Right of mortgagor to redeem. -At any time after the principal money has become 1[due], the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee

(a) to deliver 2[to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee], (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished: Provided that the right conferred by this section has not been extinguished by act of the parties or by 3[decree] of a Court. The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. Redemption of portion of mortgaged property.- Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except 4[only] where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor."

29.15. Hon'ble Supreme Court of India, in Allokam Peddabbayya & Ors. v. Allahabad Bank &Ors. AIR 2006 AP 236, held categorically that,

"right to redemption exists only till the time sale of the mortgaged property has been confirmed. Once the sale is confirmed, the right to redeem is lost within the meaning of the proviso".

29.16: Hon'ble High Court of Madras High Court, in, A Gnanam vs Palaniappa& Co. And Ors. answered an interesting question of law, that is:

"Whether a mortgagor, who has been divested of his title to the mortgaged property by a stranger, still retains his right of redemption in respect of that property so as to be able to assert that right against the said stranger as also the mortgagee? in affirmation."

29.17: Therefore, undoubtedly the defendants 6 to 25 who have purchased the property pending discharge of mortgage debt by their vendor/mortgagor, irrespective of knowledge of existence of mortgage supra, are entitled to redeem the mortgage pending execution of registered sale deed by the applicant mortgagee. The applicant has not denied the plea of the defendants 6 to 25 that they were put in possession of the respective flats purchased by them by their vendor/mortgagor pursuant to the execution of the sale deeds in their favour. As per the statement of payments dated 31.01.1997 filed by the 19th defendant along with his counter proof affidavit which statement was not disputed by the applicant or by the other co-defendants, the defendants 5,7, 8, 9, 10, 11,12,13,14,16,20, 21 & 25 have completely paid the entire sale consideration and also the construction cost to the 1st defendant and the same was also confirmed by the  1st defendant in its reply statement. However, the statement supra, reveals that the defendants 6,15,17,18,54, 56, 22, 23 and 24have not paid the full construction cost to the 1st defendant.

29.18. It may be stated herein that the applicant bank in its documentation with the applicant has not made it mandatory for the flat purchasers to deposit sale consideration with the applicant or to obtain no objection for such purchase from the bank. It appears that for the first time under Ex. A-101 dated 20.6.1996, the applicant demanded the 1stdefendant to enter in to a tripartite agreement with flat purchasers and later the defendants 6 to 25 were demanded to redeposit the sale consideration amount with the 1st defendant under Ex. A-57 legal notice. Thus, it appears that the defendants 6 to 25 are the bona fide purchasers without prior notice of the encumbrance of the mortgage charge in favour of the applicant.

29.19: Be that as it may, when the 1st defendant who alone was under the contractual obligation to deposit the sale proceeds of the flats sold to the defendants 6 to 25 breached the said obligation, it would be unfair on the part of the applicant to demand these flat purchasers to redeposit the sale consideration amount with the 1st defendant or to enforce the mortgage charge against the defendants 6 to 25 in case of default. It is strange that even when the applicant bank became aware that the sale proceeds were not deposited by the 1stdefendant it remained mute without initiating action for breach of trust against the  1st defendant.

29.20: The home buyers herein, who have been locked up in this decade's old litigation the end of which one cannot even guess, and thus, put to mental agony and hardship all these years, in my considered view and in the interest of justice, equity, and good conscience needs some solace at least now. The defendants 6 to 25 have admittedly paid the entire sale consideration to their vendors and validly obtained registered sale deeds from the mortgagors, viz, the 3rd and the 37th defendants. The said sale consideration paid by these defendants represents the amount that these defendants are required to pay to the applicant towards their share for redemption of the mortgage debt, had these defendants were put on notice either by the applicant or by the 1st defendant at the time of purchase of flats. The defendants 6 to 25 therefore, deemed to have discharged their share of the mortgage debt as such it would be unfair to allow the applicant to enforce its mortgage charge against the flats purchasers who have paid the amount in full.

29.21: I therefore, hereby restrain the applicant bank permanently from enforcing its equitable mortgage charge against the flats purchased by the defendants 5,7, 8, 9, 10, 11,12,13,14,16,20,21 & 25 since these defendants are required to pay any amount to the 1st defendant.

29.22: However, in so far as the flats purchased by the defendants 6,15,17,18,54 & 56,22,23 and 24, are concerned since these defendants are liable to pay the amount as shown in the statement of payments. This Tribunal has held that the applicant has a contractual right to receive all the amounts due and payable to the 1stdefendant, therefore, it is hereby ordered that theafore stated restraint order shall be in force for a period of 45 days from the date of this order, enabling the defendants 6,15,17,18, 54 & 56, 22, 23 &24 to pay the applicant the entire amount shown as outstanding in the statement dated 31.01.1997 to gather with simple interest at 9% per annum on the outstanding amount from 01.02.1997 till the date of payment, in default, the restraint order against the defendants 6,15,17,18,54, 56,22,23&24 shall stand vacated without any further notice and the applicant bank is at liberty to enforce its mortgage charge over the flats purchased by the defendants 6,15,17,18,54,56,22,23&24 for realization of dues, as per law.

29.23: The applicant is here by further directed to issue no objection certificate to the defendants 5,7,8, 9,10,11,12,13,14,16,20,21 & 25, in respect of the flats purchased by them, within 45 days from the date of this order since these defendants have nothing further to pay and in so far as the flats purchased by the defendants 6,15,17,18,54 & 56, 22, 23 & 24, are concerned immediately on complying the condition of payment as above mentioned.

29.24: The 1st defendant has forwarded all the lease and Hire purchase agreements entered with the defendants 26 to 36 under Ex. A21(a)A.22b. A23b, A24b, A25b, A26b, A,27b, A28b, A.29b, A30b, A31b, A32b,A33b,A34b, A35b, A35b, and A36b, along with the demand promissory notes executed by defendants 26 to 36 to the applicant. Admittedly, the equipment was purchased with the funds provided by the applicant under cash credit-I. In terms of Ex. A-8 and Ex. A- 19 the applicant is entitled to proceed against the debts due to the 1st defendant. Ex. A-20 power of attorney also empowers the applicant bank to realize all the dues of M/s. Suvarna Securities now known as the 1st defendant. The applicant under Ex. A36 to Ex. A-45 followed by legal notice demanded the defendants 26 to 36 to pay the monthly rentals to the applicant, in vain. As the defendants 26 to 36 have not discharged their liability under the afore stated leases, as such applicant is entitled to realize the outstanding amount from the defendants 26 to 36 specified in application B schedule. The Tribunal therefore, directs the defendants 26 to 36 to pay the applicant the sum specified in the application B schedule together with simple interest at 18% on the said amount from 31.03.1997 till the date of payment within a period of 45 days from the date of this order, in default, the applicant is entitled to sell the B schedule mentioned property, as per law for realization of its dues.

29.25. It is hereby made it clear that on discharge of the dues by the defendants 26,27,28,29,30,31,32,33,34,35 & 36, in the manner stated above the 1st defendant shall forthwith return to these defendants, the original title deeds as well as the link documents if any deposited by these defendants with the 1st defendant pursuant to the hire purchase & lease agreements, supra.

29.26: The defendants 60, 61 and 62 have purchased the flats belonging to the defendants 25,20and 21 respectively. As per the statement of payments the defendants 25, 20, and 21 have paid entire sale consideration. The amended OA as well as the proof affidavit of Aw1 is silent on the applicants claim against the defendants 60 61 & 62 hence the applicant is not entitled for any relief against these defendants.

29.27: The 42nddefendant who purchased flat on 14.11.2005 from the 3rd defendant who is the POA holder of D39 & 40 died during the pendency of the OA. On 17.02.2007 his heirs sold away the said property to the defendants 57 & 58. The Legal heirs if any of the deceased 42 defendants are not brought on record. The amended OA as well as the proof affidavit of Aw1 is silent on the applicants claim against the deceased 42nddefendant or against defendants 57&58 hence the applicant is not entitled for any relief against these defendants.

29.28: The 43rd, defendant who purchased flat on 10.07.1997 from the 3rd defendant who is the POA holder of D39 & 40 settled the said property in favor of the 64th defendant on 25.19.2010. As per the statement of payments a sum of Rs. 54,700.00 is due and payable by the 47th defendant. The 47th defendant who purchased flat on 14.11.2005 from the 3rd defendant who is the POA holder of D39 & 40 sold away the property to the 59th defendant on 14.11.2005. Under the circumstances the 43rd defendant shall pay the applicant within 45 days from today the sum specified in the application B schedule together with simple interest at 9% on the said amount from 31.03.1997 till the date of payment, in default, the applicant is entitled to sell the flat of the 43rd defendant situate in B schedule mentioned property for realization of its dues.

30: Point.5

Whether the applicant bank is entitled for pendent-lite and future interest? If so, at what rate and on what amount?

30.1: In terms ofSection 19(20) of the RDB Act, the Tribunal is vested with the power to grant interest from the date on which the payment of the amount is found due upto the date of realization or actual payment, meaning thereby that the Tribunal has power to award pendent-lite and future interest as its discretion and thus interfere with the contractual rate of interest.

30.2: Hon'ble Supreme Court of India, in the matter between State Bank of India - Vs- Sarath Textiles, reported in II 2009 BC Pg.696, held that

"Sec.19(20) of the RDDB & FI Act confers discretion on the Tribunal to award interest on the applicant as it deems fit to meet the ends of justice."

30.3: Hon'ble Supreme Court of India, in the matter of Central Bank of India-vs-N.Raveendra reported in 2002 (1) SCC pg.367, relied upon by the defendants, held that

"Sec.34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties". Sec.19(20) of the RDDB & FI Act is akin to Sec.34 CPC."

30.3 The power granted to the Tribunal as above being discretionary, shall be exercised only when the facts and circumstances of a particular case warrant intervention. In so far as the case on hand is concerned, the applicant claimed pendent lite interest at 23.75% with quarterly rests from the date of filing the claim. While the applicant prayed for interest at contractual rate, the borrowers have pleaded that interest already collected was excessive and penal interest has been capitalized hence the applicant is not entitled for contractual rate of interest. This Tribunal, though disbelieved the statement of account filed by the applicant, accepted the amount claimed as due under Ex. A56 notice. The claim has been pending since more than two decades old for variety of reasons. The sum claimed by applicant in Ex. A-56 notice which included contractual rate has been awarded. Therefore, taking into consideration the afore mentioned facts and long pendency of the matter and the hardship the Tribunal, in the interests of justice hereby direct the defendants 1, 3, 4, 5, 37, 39, 40, to pay the applicant simple interest at 19% per annum onRs.11,31,48,168.48. from 01.12.1996 till 31.03.1997 and thereafter with simple interest at 20% per annum on Rs.11,31,48,168.48 from 01.04.1997 till payment of the entire amount

30.4 therefore, in the light of my discussion on the points above and on careful consideration of the case record , the submissions of the Ld. Counsels for both sides besides the case law, the Tribunal is satisfied that the applicant has established its claim to the extent indicated herein above, hence it is hereby ordered that ;

(a). The defendants 1,3,4, 5, 37, 39, 40, 49 to 53 to shall pay the applicant a sum of Rs.11,31,48,168.48p together with simple interest at 19% per annum on the said amount from 01.12.1996 till 31.03.1997 and thereafter with simple interest at 20% per annum on Rs.11,31,48,168.48 from 01.04.1997 till realization of the amount.

(b). It is hereby made clear that the liability of the defendants 49 to 53 is limited only to the extent of the estate of the 2nd defendant, if any inherited by the defendants49 to 53.

(c). The assets of the 5th defendant since sold away by the Official Liquidator, the sale proceeds shall be distributed in the manner provided in section 326 of the Companies Act 2013, if not done so far.

(d). The applicant shall have first charge on application 'A' schedule immovable properties and the applicant is entitled to sell both A &B schedule mentioned properties for realisation of its dues and if the sale proceeds are not sufficient to discharge the liability, the applicant is entitled to proceed personally against the defendants 3, 4, 37, 38, 39 & 40, for realisation of its dues.

(e). The applicant bank is hereby restrained permanently from enforcing its equitable mortgage charge against the flats purchased by the defendants 5, 7, 8, 9, 10, 11,12,13,14,16,20,21 & 25 situate in items 2 & 3 of application A schedule and in respect the flats purchased by the defendants 6,15,17,18,54 & 56,22, 23 and 24 for a period of 45 days from the date of this order, however on condition that the defendants 6,15,17,18, 54 & 56, 22, 23 & 24 shall pay the applicant the entire balance amount as shown in the statement of dues dated 31.01.1997, together with simple interest at 9% per annum on the outstanding amount from 01.02.1997 till the date of payment within 45 days from the date of this order, in default, the restraint order against the defendants 6,15,17,18,54, 56,22,23 & 24 shall stand vacated without any further notice and the applicant bank is at liberty to enforce its mortgage charge as per law over the flats purchased by the defendants 6,15,17,18,54,56,22,23&24 for realisation of its dues.

(f). The applicant is here by directed to issue no objection certificate to the defendants 5,7,8, 9,10,11,12,13,14,16,20,21 & 25 in respect of the flats purchased by them, within 45 days from the date of this order and to the defendants 6,15,17,18,54 & 56, 22, 23 & 24, immediately on complying the condition of payment as mentioned in clause (c) above. The statement of payments dated 31.01.1997 shall form part of this final order.

(g). The defendants 26,27,28,29,30,31,32,33,34,35 & 36 are hereby directed to pay the applicant within a period of 45 days from the date of this order the sum specified in application B schedule to gather with simple interest at 18% on the said amount from 31.03.1997 till the date of payment, in default, the applicant is entitled to sell the B schedule property as per law for realization of its dues.

(h). That on discharge of theduesby the defendants 26,27,28,29,30,31,32,33,34,35 & 36, in the manner stated above, the 1st defendant shall forthwith return to these defendants, the original title deeds as well as the link documents if any deposited by these defendants pursuant to the hire purchase & lease agreements, supra, with the 1st defendant.

(i). The applicant shall give due credit to the amounts if any received during the pendency of the claim and shall claim only the balance amount.

(j). The applicant bank is entitled for costs of this application and the same shall be recovered only from the defendants1, 3, 4, 37, 38, 39 & 40.

In the result, the OA is partly allowed and a recovery certificate in favor of the applicant is hereby ordered directing;

(i). The defendants 1,3,4, 5, 37,39, 40, 49 to 53 to pay the applicant a sum of Rs.11,31,48,168.48p together with simple interest at 19% per annum on the said amount from 01.12.1996 till 31.03.1997 and thereafter with simple interest at 20% per annum on Rs.11,31,48,168.48 from 01.04.1997 till realization of the amount.

(ii). It is hereby made clear that the liability of the defendants 49 to 53 is limited only to the extent of the estate of the 2nd defendant, inherited if any by the defendants49 to 53.

(iii). The assets of the 5th defendant since sold away by the Official Liquidator, the sale proceeds shall be distributed in the manner provided in section 326 of the Companies Act 2013 if not distributed so far.

(iv). The applicant shall have first charge on application 'A' schedule immovable properties and the applicant is entitled to sell both A & B schedule mentioned properties for realization of its dues and if the sale proceeds are not sufficient to discharge the liability, the applicant is entitled to proceed personally against the defendants 3,4 ,37,38,39&40 for realization of its dues.

(v). The applicant bank is hereby restrained permanently from enforcing its equitable mortgage charge against the flatssituate in items 2 & 3 of application A schedule purchased by the defendants 5,7, 8, 9, 10, 11,12,13,14,16,20,21 & 25andin respect the defendants 6,15,17,18,54 & 56,22,23 and 24 for a period of 45 days from the date of this order, however on condition of the defendants 6,15,17,18, 54 & 56, 22, 23 & 24 shall pay the applicant the entire balance sale consideration as shown in the statement dated 31.01.1997, to gather with simple interest at 9% per annum from 01.02.1997 till the date of payment within 45 days from the date of this order, in default, the restraint order against the defendants 6,15,17,18,54, 56,22,23 & 24 shall stand vacated without any further notice and the applicant bank is at liberty to enforce its mortgage charge over the flats purchased by the defendants 6,15,17,18,54,56,22,23&24 for realization of dues, as per law.

(vi).The applicant is here by directed to issue no objection certificate in respect of the flats purchased by the defendants 5,7,8, 9,10,11,12,13,14,16,20,21 & 25 , within 45 days from the date of this order and to the defendants 6,15,17,18,54 & 56, 22, 23 & 24, immediately on complying the condition of payment as mentioned in clause (iii) above. The statement of payments dated 31.01.1997 shall form part of this final order.

(vii).The defendants 26,27,28,29,30,31,32,33,34,35&36 shall pay the applicant the sum specified in application B schedule to gather with simple interest at 18% on the said amount from 31.03.1997 till the date of payment within a period of 45 days from the date of this order, in default, the applicant is entitled to sell the B schedule property for realization of its dues.

(viii). That on discharge of the dues by the defendants 26,27,28,29,30,31,32,33,34,35 & 36,in the manner stated above, the 1st defendant shall forthwith return to these defendants, the original title deeds as well as the link documents if any deposited by these defendants pursuant to the hire purchase & lease agreements, supra, with the 1st defendant.

(ix). The applicant shall give due credit to the amounts if any received during the pendency of the claim and shall claim only the balance amount.

(x). The applicant bank is entitled for costs of this application, and the same shall be payable only by the from the defendants1, 3, 4,37,38,39 & 40.

32 The applicant bank is directed to file costs memo within one week of the receipt of this order.

Issue recovery certificate in favor of the applicant bank in terms of this final order.

Communicate a copy of the order to the parties concerned in terms of Rule 16 read with Rule 2(c) of DRT (Procedure) Rules, 1993.

(Dictated to PS, transcript revised, corrected, signed and pronounced by mein virtual court on this 4th day of May,2020)