Bombay High Court
F.A. Construction vs Union Bank Of India (Earlier Known As ... on 11 July, 2022
Author: S.V.Gangapurwala
Bench: S.V. Gangapurwala, Madhav J. Jamdar
14352.21-wpl.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally
signed by
TRUSHA
TRUSHA TUSHAR
ORDINARY ORIGINAL CIVIL JURISDICTION
TUSHAR MOHITE
MOHITE Date:
2022.09.08
WRIT PETITION (L) NO.14352 OF 2021
15:45:00
+0530
M/s.F.A.Construction
a partnership firm having
its office at Plot No.112, 1st floor,
6th Road, T.P.S. III, Khar West,
Mumbai - 400 052. ..... Petitioner
Vs.
Union Bank of India
(earlier known as Andhra Bank)
having its branch at Raheja
Construction "A" 24th Road,
Opp. Telephone Exchange,
Khar West, Mumbai 400 052. ..... Respondent
Mr. Ankita Singhania a/w Ms.Purvi Doctor, Ms.Shweta R. Rathod i/b
M/s.Elixir Legal Services for the Petitioner
Mr.Atul Damle, Senior Advocate a/w Mr.Nainesh Amin i/b
M/s.N.N.Amin and Co. for the Respondent
CORAM: S.V. GANGAPURWALA &
MADHAV J. JAMDAR, JJ.
RESERVED ON: JULY 11, 2022
PRONOUNCED ON: AUGUST 25, 2022
JUDGEMENT :(PER : S.V.GANGAPURWALA, J.) 1 Rule.
Rule made returnable forthwith.
By consent of parties, Writ Petition is heard finally. Mohite 1/13
14352.21-wpl.docx 2 The petitioner seeks directions against the respondent bank to release the mortgage documents deposited in respect of the loan availed by the petitioner from Andhra Bank on the ground that the loan has been fully repaid.
3 The petitioner claims to have mortgaged the assets with Andhra Bank, Bandra West Branch as a security for the loan availed by it under the Stand-up India Scheme from respondent bank for an amount of Rs.98,00,000/- (Rupees Ninety Eight Lakhs Only). The petitioner had created mortgage by deposit of title deeds and Overdraft (OD) account was created for mortgage loan having OD Account No.113930100012303. It is the case of the petitioner that the petitioner repaid the outstanding loan amount towards full and final settlement. As the repayment of the loan was made, the petitioner addressed a letter dated August 29, 2020 for release of the mortgage documents of the property owned by M/s.Nircon Construction. The same was refused on the ground that the bank has a general lien and that the petitioner and their associate concerns are having account with respondent bank, Santacruz Branch and the said amount is to be repaid.
4 The learned counsel for the petitioner submits that the loan account for which the mortgage was created as a security, is fully Mohite 2/13 14352.21-wpl.docx paid and settled with the erstwhile Andhra Bank. The respondent did not have any right to withheld the documents for some other loan. The learned counsel submits that it is obvious on the part of the bank to contend that it has a general lien over the assets that came to its hand in the normal course of business for unpaid debts of any other account. The learned counsel, to buttress her submissions relies upon the judgment of the Division Bench of this court in case of Surendra s/o Laxman Nikose vs. Chief Manager & Authorised Officer, State Bank of India, Nagpur. 1 So also, another judgment of the Division Bench of this court in the case of Mr.Sunil s/o Ratnakar Gutte vs. Union Bank of India delivered at Nagpur dated June 13, 2022 in Writ Petition No.32 of 2022. The learned counsel submits that if the bank fails to return the documents even after paying the dues then the Writ Petition is maintainable. Reliance is placed on the judgment of the Apex Court in the case of Zonal Manager, Central Bank of India vs. Devi Ispat Limited and Others2. 5 Mr.Damle the learned Senior Advocate for the respondent Bank submits that the petitioner does not have locus standi to file the present petition inasmuch as the title deeds were deposited by M/s.Nircon Construction as a security for the credit facility granted to the petitioner by the respondent bank. M/s.Nircon Construction 1 2013(5) Mh.L.J. 283 2 (2010) 11 SCC 186 Mohite 3/13 14352.21-wpl.docx has not approached the court for release of their security. The title deeds held by the bank can be handed over to the owner / mortgagor at its instance. The petitioner does not have locus standi to file the present petition. The learned Senior Advocate submits that two original applications are already filed before DRT and are pending. It is submitted that the mortgagor, while entering into written contract has agreed to deposit the documents of title to the immovable property and are deposited with intent to secure the repayment to the bank of moneys that are now due or shall from time to time or at any time be due from M/s.F.A. Construction or me/us either solely or jointly, with any other person or persons to the bank whether on balance of account or by discount or otherwise. Relying upon the same, it is contended that the mortgagor has admitted that the security by way of mortgage by deposit of title deeds has been created for securing the due repayment of monies now due to the bank or shall from time to time or at any time be due from the Borrower or Mortgagor.
6 The present dispute is a dispute of contractual nature and as such the present Writ Petition under Article 226 of the Constitution of India is not maintainable. The Andhra Bank has amalgamated with the respondent Union Bank of India and all its assets and liabilities are taken over by respondent bank. The amalgamation of Mohite 4/13 14352.21-wpl.docx the petitioner bank with Andhra Bank is before the petitioner had repaid its dues. The learned Senior counsel further submits that partners of the petitioner and the mortgagor are family members and are working hand in glow with each other to defraud the respondent bank. The bank is legally entitled to retain the original title deeds relating to the mortgaged property for recovery of its dues until the entire dues are paid. The title deeds relating to mortgaged property deposited by Nircon Construction are 'goods' within the meaning of section 171 of the Contract Act and the respondent bank is entitled to claim general lien on the subject property for recovery of its dues in other loan account of the petitioner and Owner/Mortgagor, Nircon Construction. 7 The learned Senior Counsel relies upon the judgment of the Apex Court in the case of Syndicate Bank vs. Vijay Kumar and Others3.
8 We have considered the submissions canvassed by the learned counsel for the parties.
9 The substratum of the matter is whether the bank can exercise general lien over the title deeds deposited by the mortgagor as an 3 (1992) 2 SCC 330 Mohite 5/13 14352.21-wpl.docx equitable mortgage as security for purpose of repayment of dues of other loan account.
10 Reliance is placed upon section 171 of the Contract Act which reads thus:
171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers. -- Bankers, factors, wharfingers, attorneys of a High Court and policy - brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect."
11 According to Halsbury's Laws of England, Vol.20, 2nd Edn.p.552, para 695, lien in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied.
12 As per Chitty on Contract, Twenty-sixth Edition, Page 389, Paragraph 3032 the Banker's lien is explained as under:
"Extent of lien - By mercantile custom the banker has a general lien over all forms of commercial paper deposited by or on behalf of a customer in the ordinary course of banking Mohite 6/13 14352.21-wpl.docx business.
13 Bankers undoubtedly have a general lien on all securities deposited with them as bankers by a customer, unless there be an express contract, or circumstances that show an implied contract, inconsistent with lien.
14 A general lien is a valuable right of the banker judicially recognised and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business.
15 Lien contemplated under section 171 of the Contract Act relates to goods bailed to the bank. A banker's lien, when it is not excluded by special contract, express or implied, extends to all bills, cheques, and money entrusted or paid to him, and all securities deposited with him, in his character as a banker. Bankers lien is confined to securities and properties in the custody of the banker; and in respect of things that belong to the customer, and are held by the bank as security. Mohite 7/13
14352.21-wpl.docx 16 In the case of Syndicate Bank (Supra) relied by the learned Senior Advocate for the Respondents, the customer had deposited the FDRs with the bank as a security for the issuance of bank guarantee. It is submitted that the Respondents in the said case also issued two letters creating a general lien in favour of the bank over two FDRs. The Apex Court held that in view of the two letters executed by the Respondents therein he had created a general lien in favour of the bank over the two FDRs. Thus, the lien would not come to end. The Apex Court held that by mercantile system bank has a general lien over all forms of securities deposited by or on behalf of the customer including FDRs in the ordinary course of banking business in absence of agreement to the contrary. 17 The Division Bench of this court in the case of Mr. Sunil s/o Ratnakar Gutte (Supra) observed and held that once the entire loan amount was repaid, the bank is not entitled to retain the title documents. The bank could not have invoked section 171 of the Contract Act and plead right of general lien. 18 In the present case, the security was given to the bank by way of mortgage by deposit of title deeds to secure the loan advanced to the appellant. The transaction was that of a Mohite 8/13 14352.21-wpl.docx mortgage referable to section 58(f) of the Transfer of Property Act, 1882.
19 A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. 20 The requisites of a equitable mortgage are:
(i) debt, (ii) deposit of title deeds, and (iii) an intention that the deeds shall be security for the debt.
21 The debt may be existing debt or a future debt. Thus, any transfer or interest in a property to secure payment of money, advanced or to be advanced or an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability is a mortgage.
22 Section 60 of the Transfer of Property Act, 1882 provides that at any time after the money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee to Mohite 9/13 14352.21-wpl.docx deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property. This right of equity of redemption vests with the mortgagor under section 60 of the Transfer of Property Act.
23 In the instance case, on 31.03.2018, the mortgagor gave a letter. The excerpts of the letter are thus:
"To, The Branch Manager, Andhra Bank, Bandra-west, Mumbai.
Sub: Offer of Security of Commercial premises in the name of M/s.Nircon Construction, 205, Lunkad Skyvista, Survey No.230A/3/2, Viman Nagar, Lohegaon, Pune, for the Credit facility availed by M/s.F.A.Construction.
Respected Madam, Referring to the above, we hereby offer the Security of our office premises No.205, Lunkad Skyvista, Survey No.230A/3/2, Viman Nagar, Lohegaon, Pune for the WCTL limit of Rs.98.00 Lacs availed by M/s.F.A. Construction having address at 201-202, Prabhat Chamber, Plot no.92, S.V.Road, Khar-West, Mumbai- 400052.
The intangible mortgage of the above security can be done & Bank Charge be registered with the Builder / CERSAI / Sub Registrar."Mohite 10/13
14352.21-wpl.docx 24 The memorandum of deposit of title deeds specify the amount to be secured i.e. 98,00,000/-. The amount refers to the working capital loan advanced to the appellant for an amount of Rs.98,00,000/-. Memorandum refers to amount of Rs.98,00,000/- and further stipulates that documents of title to the immovable property are deposited with intent to secure repayment to the bank of moneys that are now due or shall from time to time or at any time be due from M/s. F.A. Construction or me/us either solely or jointly, with any other person or persons to the bank whether on balance of account or by discount or otherwise in respect of bill of exchange, promissory notes, cheques and other negotiable instruments or in any manner whatsoever and including interest, commission and other banking charges and any law costs in connection thereto.
25 The recitals specifically refer to the lien of Rs.98,00,000/- and whatever would be due then or from time to time or at any time. The memorandum of deposit of title deeds nor letter given by the mortgagor to the bank stipulates any other loan than the working capital term loan limit of Rs.98,00,000/-. 26 It is not disputed that the said account i.e. working Mohite 11/13 14352.21-wpl.docx capital term loan of Rs.98,00,000/- has been closed and no dues certificate has been issued by the bank. In that event, the mortgagor gets a right to redeem the same. Bank would not be entitled to retain the documents for recovery of other amounts i.e. the amount other than outstanding in the working capital term loan account of Rs.98,00,000/-.
27 In view of the provisions of section 60 of Transfer of Property Act, the mortgagor will have every right to redeem and there cannot be any clog on right of mortgagor to redeem. Even otherwise, the creditor can always approach the court for attachment of property or claim such other relief as is permissible under law.
28 In light of the above, we hold that the Respondent bank would not be entitled to retain the documents and the same are required to be handed over to the mortgagor. Respondent bank shall release the mortgage documents. 29 The Respondents shall return the documents within four weeks.
Mohite 12/13
14352.21-wpl.docx 30 Rule accordingly made absolute in above terms. 31 Writ Petition is disposed of. No costs.
(MADHAV J. JAMDAR, JJ.) (S.V. GANGAPURWALA, J.) Mohite 13/13