Telangana High Court
The Prudential Cooperative Bank Ltd., ... vs The A.P. Cooperative Tribunal, ... on 5 December, 2024
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITIONS No. 10029 AND 13025 OF 2008
AND
WRIT PETITION No. 9510 OF 2009
COMMON ORDER:
WRIT PETITIONS No. 10029 AND 13025 OF 2008 In Writ Petition No. 10029 of 2008, heard Sri M. Venkata Divakar, learned counsel for petitioner, learned Government Pleader for Cooperation on behalf of the Tribunal, Sri G. Rama Sharma, learned counsel for the 1st respondent, Sri R.V.Nagabhushanam Rao, learned counsel for the 4th respondent. In Writ Petition No. 13025 of 2008, heard Sri R.V. Nagabhushanam Rao, learned counsel for petitioner, learned Government Pleader for Cooperation on behalf of the 1st respondent and Sri M. Venkata Divakar, learned counsel for the 6th respondent.
2. Both these Writ Petitions are preferred against the Judgment in O.P. No. 1038 of 2000 dated 18.02.2008 on the file of the A.P. Cooperative Tribunal at Hyderabad. Hence, with the consent of learned counsel for both the parties, these Writ Petitions are disposed of by this common order.
3. Parties are referred to as arrayed in O.P. No.1038 of 2000. Petitioner is Bank. Respondent No.1 is borrower, 2 Respondents 2 to 7 are guarantors and Respondent No.8 is purchaser of the property in question.
4. Petitioner's case is that Respondent Nos. 1 to 7 are members of petitioner Bank. They availed Over Draft facility to an extent of Rs. 30 lacs for business purpose with agreed rate of interest at 21% p.a. flexible with quarterly rests and penal interest at 2% p.a. on the overdue amount. The said amount was released by the Bank on execution of necessary documents by Respondents 2 to 7 on 10.04.1995 who stood as guarantors and executed guarantee agreements. Respondents 2 to 6 created equitable mortgage on 10.04.1995 on the schedule property in favour of the Bank. Respondent No.1 having utilized the overdraft in full, committed default. The bank got issued legal notice dated 02.05.2000, but in vain. Hence, subject O.P. was filed for recovery of Rs. 94,94,428/- with interest at 22% per annum compounded with quarterly rests and for costs.
5. Respondents 1 to 3 filed common counter in O.P. mainly contending that the 1st respondent is a registered partnership firm under Partnership Act and not a member of petitioner-Bank, hence Section 37(1) of the AP Mutually Aided Cooperative Societies Act (for short, 'the Act') cannot be invoked. The OP is not maintainable due to inherent lack of jurisdiction 3 to entertain the same without exhausting the remedies available u/Sec. 37(1). The respondents did not agree for the rate of interests claimed by petitioner-Bank. They filed additional counter inter alia claiming that after filing OP, they deposited/credited amount to the loan account as below:
Amount. Date
i) Rs. 4,24,421.00-04.08.2000
ii) Rs. 75,00,000.00-28.12.2000
iii) Rs. 5,34,202.00-23.01.2001
Respondent Nos. 4 to 7 remained ex parte.
6. Respondent No. 8 filed counter contending that respondents 1 to 7 have not mortgaged the schedule property by way of deposit of title deeds. The guarantor agreement deed dated 10.04.1995 is neither acknowledgement of deposit of title deeds nor an agreement creating an equitable mortgage by depositing title deed within the meaning of the Transfer of Property Act. It is stated that the 8th respondent is in no way concerned with the loan. He purchased the schedule property by registered sale deeds bearing Document Nos. 873 and 875, dated 28.03.2000; Document Nos. 897 to 899, dated 30.03.2000; and Document Nos. 924 to 926, dated 31.03.2000 respectively. The 2nd respondent requested one of the Directors of the 8th respondent Firm that they required sale deeds for 4 some purpose and took the same. Later he informed the latter that sale deeds are filed in the OP. This respondent contends that there is no equitable mortgage in favour of petitioner Bank created by Respondent Nos. 1 to 7.
7. After considering the evidence on record, regarding maintainability of OP under Section 37 of the Act on the ground that the 1st respondent is not a member of petitioner-Bank, the Tribunal held that documents produced by petitioner clearly indicate that the 2nd respondent representing the 1st respondent paid the deposited share capital to the Bank. Further, RW-1 in his evidence nowhere deposed that the 1st respondent is not a member of petitioner bank. Hence, it was held by the tribunal that OP is maintainable. Since petitioner-Bank issued notice to respondents for settlement under Section 37 of the Act, the contention of respondents that petitioner has not exhausted remedies under Section 37(1) of the Act, has no legs to stand. While holding, the Tribunal referred to the decision of the High Court of Andhra Pradesh in Writ Petition No. 180 of 2000 dated 04.04.2001. Before the Tribunal, PW-1 while reiterating the pleadings of plaint, deposed that Respondent Nos. 2 to 6 have created equitable mortgage by depositing original title deeds dated 10.04.1995 and 11.04.1995 and Respondents 2 to 6 have 5 confirmed the equitable mortgage in favour of the bank. RWs 1 and 2 denied the mortgage. However, RW-1, in his cross- examination, stated that himself and other partners have signed Ex.A2 loan agreement and guarantors signed Exs. A3 to A8 in his presence. He deposed that he cannot say who handed over the title deeds in the bank. After analyzing the evidence on record, the Tribunal held that schedule property is mortgaged in favour of bank. It is also held that respondents, after institution of OP, paid the amounts as detailed above, which is evident from the ledger accounts of the Bank and also from the Bank Statements. Regarding rate of interest, the Tribunal, after referring to various pronouncements on this subject and also the willingness expressed by respondents that they would pay balance amount if the interest is scaled down to 6% p.a. from the date of filing the OP, upheld the interest @ 21%p.a. and penal interest @2% p.a. till filing of OP. However, it granted simple interest at 12% p.a. from the date of filing the OP till realization. The Tribunal has given credit to the amounts paid by the respondents after filing OP, as detailed above. It is also held that the 8th respondent is not personally liable to pay any amount for, the Tribunal held that if Respondents 1 to 7 failed to pay the loan amount, petitioner is at liberty to proceed 6 against the mortgaged property and granted six months' time for redemption.
WRIT PETITION No. 10029 of 2008:
8. Petitioner-Bank filed this Writ Petition. The main grounds argued in this Writ Petition are: (i) The Tribunal erred in holding that respondents paid Rs. 4,24,421/- on 04.08.2000;
Rs. 75,00,000/- on 28.12.2000 and Rs. 5,34,202/- on 23.01.2001; and (ii) The Tribunal erred in granting only 12% p.a. simple interest on the outstanding loan amount from the date of filing of OP till realization. However, in the prayer it is prayed as follows:
"It is therefore prayed that this Hon'ble Court may be pleased to issue appropriate Writ or Order or Orders, more particularly a Writ in the nature of Certiorari calling for the records relating to and connected with the Judgment dated 18.02.2008 made in OP No. 1038/2000 on the file of the 1st Respondent, and quash the same and pass such other suitable order or orders as this Hon'ble Court may deem fit and proper under the circumstances of the case."
If the Tribunal's order dated 18.02.2008 is quashed as it is, as prayed for, the Bank will be put to irreversible loss. This prayer appears to be not knitted properly. The Bank's grievance is regarding, giving credit to certain amounts mentioned above and the rate of interest awarded by the Tribunal from the date of filing O.P. till realization. 7
9. As per the loan agreement dated 10.04.1995 and the demand promissory note dated 31.03.1995, overdraft facility was provided to the 1st respondent at 21% p.a. flexible and penal interest at 2% p.a., in case of default. The Tribunal has rightly awarded the rates of interest on the outstanding amount till filing of OP. However, the Bank claimed interest at 12% p.a. compoundable from the date of filing of OP till realization. Order XXXIV Rule 11 of CPC says that it is not mandatory for the Court to award the contract rate of interest. Sub-clause (b) of the said Rule empowers the Court to grant subsequent reasonable rate of interest till the date of realization or actual payment. In a plethora of cases right from S.P. Majoo vs Ganga Dhar 1, the Courts awarded reasonable interest on the suit claim from the date of institution of suit in view of Order XXXIV Rule 11(b) CPC. The Tribunal, taking into consideration the fact that major portion of the amount i.e. out of Rs.94,94,428/-, Rs.84,58,623/- was paid and also in view of the provision of the Code referred to supra and the various pronouncements of the Courts including the Hon'ble Apex Court, had rightly awarded simple interest @ 12% p.a. from the date of filing of OP till realization.
1 AIR 1969 SC 600 8
10. In this writ petition, it is also contended that the Tribunal erred in giving credit to Rs. 84,58,623/- stated to have been paid by respondents to the Bank. The only witness examined on behalf of petitioner as PW-1, in his cross- examination, admitted that after filing this case, they received the credited amount, but there were no withdrawals. He also admitted that Rs. 75,00,000/- was paid through cheque bearing No. 983263 cleared on 20.12.2000 and crediting of other amounts mentioned above. That apart, Ex.B-1, true extract of the Statement of Account relating to the 1st respondent's loan account, clearly shows credit of Rs. 84,58,623/- as detailed above. In view of this oral and documentary evidence, the Tribunal has rightly come to the conclusion that out of the suit claim, Rs. 84,58,623/- i.e. Rs. 4,24,421/- on 04.08.2000, Rs. 75,00,000/- on 28.12.2000 and Rs. 5,34,202/- on 23.01.2001, was paid by respondents towards loan/overdraft. In view of the same, this Court finds to no reason to entertain this Writ Petition and the same is therefore, liable to be dismissed.
11. The Writ Petition is accordingly, dismissed. No costs.
9W.P. No. 13025 of 2008:
12. The unsuccessful 8th respondent M/s Millenium Hotels Pvt. Ltd., who alleged to have purchased the property which was claimed by petitioner- Bank as mortgaged property, filed this Writ Petition aggrieved by the finding of the Tribunal that property in question is mortgaged to the Bank as security to the overdraft facility availed by the 1st respondent.
13. Admittedly, the Tribunal in the result portion has granted no relief against the 8th respondent and it ordered that the 8th respondent is not personally liable to pay any amount. Though a specific contention was raised that there is no equitable mortgage much less letter dated 11.04.1995 (Ex. A-
17), petitioner Bank has not filed any rejoinder disputing the allegation nor rebutted the same in the affidavit of P.W.-1 filed in lieu of his chief examination. There is no mention of Ex.A-17 in the list of documents filed along with the O.P. Undisputedly, the evidence of PW-1 was closed on 22.06.2004. Two years thereafter, petitioner bank filed I.A. No. 622 of 2006 to receive the confirmation of deposit of title deeds dated 11.04.1995. The said Petition was allowed on 28.08.2006. Confirmation of deposit of title deeds dated 11.04.1995 alleged to be executed by Respondents 2 to 6 was marked as Ex. A-17. No plausible 10 explanation is forthcoming as to why the said document which is available with bank, if it is really executed, was not marked through PW-1 and as to why the Bank took more than two years to get the said document marked. Therefore, the Tribunal is wrong in placing reliance on Ex. A-17 to hold that there is an equitable mortgage of suit schedule properties.
14. The 8th respondent has categorically averred in his counter that it purchased the suit schedule properties vide Registered Sale Deeds Nos. 873 and 875 dated 28.03.2000; 897 to 899 dated 30.03.2000 and 924 to 926 dated 31.03.2000 respectively, for valid sale consideration. They were marked as Exs.A9 and A10. The Encumbrance certificate dated 06.04.1995 from 04.11.1991 to 05.04.1995 was marked as Ex. A10. These exhibits go to show that the 8th respondent purchased the suit schedule properties from Respondent Nos. 2 to 6. Further, when an overdraft facility for a huge amount of Rs. 30 lacs in 1995 which runs into crores now, was given to the 1st respondent, the bank ought to have got a registered Mortgage Deed, though not mandatory, if really the suit schedule properties are pledged. However, no such Mortgage Deed was marked as an exhibit. At least, the bank should have taken the original title deeds in token of Mortgage by Deposit of Title 11 Deeds. If really the Bank is in possession of original title deeds pertaining to suit schedule property, it would have filed them along with suit documents in 2000 itself along with OP. or at least, it would have got them marked through its only one witness PW-1, whose evidence was closed on 22.06.2004. But the Bank produced the same two years thereafter in 2006. The 8th respondent contends that the 2nd respondent took the sale deeds from one of their Directors fraudulently and when asked, replied that they were produced before the Tribunal in OP. The fact of non-production of sale deeds and Ex.A17 at the time of filing of OP along with suit documents and filing of sale two years after closure of petitioner's evidence, will lend support to the version of the 8th respondent that by playing fraud on one its Directors, the 2nd respondent took the sale deeds and got them produced in the OP.
15. In view of the above facts coupled with lack of documentary evidence such as Mortgage Deed, it is to be held that the Tribunal erred in holding that there is an equitable mortgage in favour of the Bank in respect of the suit schedule properties. For the above reasons, the finding of the Tribunal that there is an equitable mortgage in favour of the Bank in respect of the suit schedule property is set aside by holding that 12 suit schedule property is not pledged with the Bank by way of equitable mortgage for the overdraft facility availed by the 1st respondent.
16. The Writ Petition is accordingly, allowed. No costs. WRIT PETITION No. 9510 OF 2009
17. This Writ Petition is filed against the order dated 02.04.2009 in I.A.No. 816 of 2008 in O.P.No. 1038 of 2000 on the file of the A.P. Cooperative Tribunal at Hyderabad.
18. The subject Application was taken out by the 1st respondent in O.P. before the Tribunal to return title deeds and encumbrance certificate. The said Application was dismissed vide order impugned.
19. Heard Sri R.V. Nagabhushnam Rao, learned counsel for petitioner as well as Sri M. Venkata Divakar, learned counsel for the 2nd respondent.
20. For the reasons stated supra in Writ Petitions 10029 and 13025 of 2008, this Court is of the opinion that this Writ Petition deserves to be allowed.
21. In the result, the Writ Petition is allowed, setting aside the order impugned. Consequently, the 2nd respondent is directed to release title deeds and encumbrance certificate to petitioner.
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22. Consequently, miscellaneous Applications, if any shall stand closed.
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NAGESH BHEEMAPAKA, J 5th December 2024 ksld