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d) We further agree undertake and confirm that we shall enter into pari-passu agreement with you defining the rights and obligations of the parties inter-se and that securities created-to be created by the company and the charge shall rank pari-passu for all purposes and to all intents and without preference or priority of one over the other,/others including therein, the specific provisions regarding custody of title deeds VRS,J&PKR,J of the securities etc, application and realization of sale proceeds of the securities etc, in such a form and such manner as may be mutually agreed upon. Upon the execution by us of such an agreement, the agreement will supercede this letter of confirmation. Until execution of such agreement this letter evidences a complete and binding agreement between us (your Bank and our Bank)

As such the matter has not been proceeded, further thereafter as above and there is no exchange of in- principle letters ceding pari-passu charge among the participating institutions followed by execution of pari-passu arrangement among the institutions. Modification of charge has to be filed only after execution of pari-passu agreement between participating institutions.
Hence, as there is no exchange of in-principle letters and pari-passu arrangement, your claim for pari- passu charge on the assets situated at Chilkamarry Vg., Farooqnagar Mandal, Mahaboobnagar Dist., cannot be considered."

25. What the parties to the writ petition refer to as charge, is actually the creation of a mortgage by deposit of title deeds by the 3rd respondent borrower in favour of the petitioner-corporation and J&K Bank (2nd respondent). Admittedly, a mortgage by deposit of title deeds was created by the 3rd respondent (borrower) in favour of the petitioner Corporation as well as the Jammu and Kashmir Bank (2nd respondent) way-back in the year 2006. An agreement, dated 24.11.2006, came into existence between the petitioner Corporation and the 2nd respondent bank with respect to the pari-passu agreement as between them. At that time, ING Vysya Bank was nowhere in the picture. Keeping these VRS,J&PKR,J admitted facts in mind, let us now look at the Transfer of Property Act, 1882.

53. While dealing with the inter-se rights of priorities between two sets of secured creditors under Section 529A of the Companies Act, the Supreme Court held in ICICI Bank Ltd., v. SIDCO Leathers Ltd.1 that under Section - 48 of the Transfer of Property Act, the claim of the first charge holder will prevail over the claim of the second charge holder. The Court went on to point out that such a valuable right, having regard to the legal position as obtaining in common law as also under the provisions of the Transfer of Property Act, could not be taken away even by the provisions of the Companies Act. The Court pointed out that the deprivation of a legal right existing in favour of a person cannot be presumed even while construing a statute. Therefore, the expression of a willingness, by their letter dated 26.07.2010 to cede a first pari-passu charge over the properties, will not automatically result in the creation . (2006) 10 SCC 452 VRS,J&PKR,J of the pari-passu charge for the 1st respondent along with the petitioner. Just as the petitioner has had a pari-passu agreement with the 2nd respondent bank, executed on 24.11.2006, there must have been an agreement constituting a special contract between the petitioner and the 1st respondent, for creating a first pari-passu charge in favour of the petitioner. Admittedly, no pari-passu agreement was entered into between the petitioner and the 1st respondent, as was done between the petitioner and the 2nd respondent bank. Therefore, the mere execution of a Memorandum of Entry by the borrower or the 2nd respondent in favour of the 1st respondent or a mere expression of no-objection by the petitioner vide their letter, dated 27.06.2010, is not sufficient to create a first pari-passu charge in favour of the 1st respondent. The registration of the charge with the Registrar of Companies under Section 125 of the Companies Act, 1956 is actually a formality that follows the creation of the first pari-passu charge. The filing of Form No.8 and the registration of a charge, is a procedural formality that follows the actual creation of a charge. The entry in the Register of Charges may evidence the creation of a charge. But, if on admitted facts there was merely a no-objection but not the actual creation of a first pari-passu charge in terms of any special contract, then the 1st respondent cannot rely upon the entry in the Register of Charges.