Debt Recovery Appellate Tribunal - Madras
Bob Housing Finance Ltd. vs Saeed Ur Rahman on 11 April, 2007
Equivalent citations: IV(2007)BC47
ORDER
K. Gnanaprakasam, J. (Chairperson)
1. Aggrieved by the order dated 3.11.2006, passed in ASA-57/2005, by the DRT, Bangalore, this appeal has been filed.
I have heard the learned Advocates for the appellant and the respondent.
2. The issue raised in this appeal is whether the mortgage executed/created by a person, who has no title to the property, acquires title to the property subsequently, would validate the mortgage.
3. The learned Advocate for the appellant states that the loan was sanctioned on 24.2.1998, and mortgage was created on 26.3.1998. On the date of the mortgage, though there was no sale deed in favour of the respondent in respect of the mortgaged property, he had entered into an agreement with the real owner of the property to purchase the property and also purchased the property subsequently, and therefore, the mortgage executed by the defendant is valid and the said fact was not properly considered and appreciated by the Tribunal. The Tribunal is of the view that on the date of execution of the mortgage, the respondent was not the owner as he had no sale deed in his favour and mere agreement, to purchase the property by itself would not create any interest in the property, and held that there was no valid mortgage in favour of the appellant.
4. It is true that the respondent did not have title to the property on the date of mortgage, but he had acquired title subsequently, by getting the sale deed on 4.6.1998. That apart, the respondent was also put in possession of the property, on the date of the agreement itself and, therefore, the respondent was in lawful possession, which created a possessory title to the property. When his possession is lawful, the mortgagors, who acquire title subsequently would render the equitable mortgage valid on the from the date when acquired title to the property.
5. In the given circumstances, it may be useful to refer Section 43 of the Transfer of Property Act, 1882, which reads, "Where a person fraudulently or erroneously, represents that he is authorised to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option."
As such, if a transferor makes a transfer fraudulently or erroneously in respect of the immovable property of which he was not the owner on the date of the transfer, but acquires interest subsequently in such property, it would be to the benefit of the transferee, if he chooses to do so. As such, the mortgage executed by the respondent in favour of the appellant would become valid.
6. The appellant also derives support to say so, from the decision rendered in the case of Amulya Gopal Majumdar v. United Industrial Bank Ltd. and Ors. (DB), wherein a Division Bench of the Calcutta High Court has considered a similar issue and also Section 54 of the Transfer of Property Act, 1882, aid had observed that the "Agreement for sale, by itself does not create any interest in the property in favour of the mortgagor. That is what the law prescribes under Section 54, and it is well settled that the English equitable doctrine that a contract for sale of real property makes the purchaser owner in equity thereof has no application in India". But the Calcutta High Court distinguished the case in their hand by pointing out that the "mortgagor was in possession of the property agreed to be purchased prior to the creation of the equitable mortgage, and the mortgagor started running a factory with the machineries thereof. In the said circumstances, it was held that the "mortgagor was in lawful possession of the property agreed to be purchased and as such, a possessory title could very well in law be furnished as a security for the mortgage". By observing so, it was held that the, "sale in favour of the mortgagor was completed within a short time from the date of the transaction and, therefore, the mortgagor's subsequent acquisition of title would render the equitable mortgage preferred on and from the date of the mortgagor acquired title to the property". The facts in our case are similar to the Calcutta case, and hence the principles laid down are squarely applicable to our case.
7. The learned Advocate for the respondent has not placed material contrary to the decision rendered by the Calcutta High Court and in the said circumstances, have awe no option, but to accept the decision rendered by the Calcutta High Court. In the said view of the matter, I have to hold that the mortgage created by the respondent MI favour of the appellant is valid on and from the date on which the mortgagor squired title to the property i.e. on and from 4.6,1998, on which day he had the sale deed.
8. In view of the same, the order passed by the DRT to that extent is liable to be set aside and it is set aside.
9. In the result, the appeal is allowed to the extent indicated above, and other observations of the DRT, are hereby confirmed.