IMPORTANT POINT
When validity of mortgaged is questioned, the property documents deposited for creating the equitable mortgage cannot be returned until the validity of the maortgage is decided.

JUDGMENT

A.M. Khanwilkar, J.

Leave granted.

2. This appeal takes exception to the judgment and order dated 6.9.2019 passed by the High Court of Judicature at Madras (for short, "the High Court") in Writ Petition No. 11522/2019, whereby the High Court reversed the order dated 29.3.2019 passed by the Debts Recovery Appellate Tribunal (for short, "the DRAT") at Chennai in M.A. No. 90/2018 allowing the application filed by the respondent No. 1 - State Bank of India (for short, "the Bank") before the Debts Recovery Tribunal (for short, "the DRT") at Madurai being I.A. No. 995/2017 in O.A. No. 11/2008, directing return of original documents - Exhibits A110 to A114 deposited by the Bank before the DRT in O.A. No. 11/2008. In other words, the High Court affirmed the order of the DRT rejecting subject application.

3. Shorn of unnecessary factual matrix, suffice it to observe that the respondent No. 3 - M/s. Rukmini Mills Ltd. (for short, "the borrower") had availed of financial credit from the Bank, for which the respondent No. 2 - Associated Trading Corporation Pvt. Ltd. (for short, "the guarantor") had offered its immovable property by way of mortgage to the Bank. The borrower committed default, as a result of which the Bank declared it as a Non-Performing Asset (for short, "NPA") and then proceeded to file O.A. No. 11/2008 before the DRT at Madurai. The Bank also issued notice for taking symbolic possession of the secured assets, on 13.5.2008 and after considering the reply of the guarantor, took symbolic possession of the secured assets on 15.10.2008. The guarantor filed a petition being SA No. 225/2008 before the DRT at Madurai, challenging the possession notice dated 15.10.2008 issued by the Bank under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the 2002 Act"), which came to be rejected by the DRT on 10.2.2011. The guarantor then filed an appeal being AIR(SA) No. 222/2011 against this decision, which was dismissed on 8.2.2013 on the ground of non-payment of pre-deposit amount. The guarantor did not carry that matter any further.

4. The secured assets offered by the guarantor were eventually put up for public auction by the Bank for recovery of outstanding dues to the extent of Rs.350.12 lakhs. The appellant ultimately turned out to be the highest bidder in the e-auction conducted by the Bank on 28.2.2017. Sale certificate in respect of the secured assets purchased by the appellant in public auction conducted by the Bank, was issued on 29.4.2017. Before the auction was finalised in favour of the appellant, the Bank had already moved an application before the DRT being I.A. No. 995/2017 in O.A. No. 11/2008 for return of the original documents deposited with the DRT, as the Bank would be obliged to hand over the same to the auction purchaser upon issue of sale certificate. That application was rejected by the DRT on 9.11.2018, essentially on the ground that the issue raised by the guarantor that there was no valid mortgage in respect of the secured assets referred to as 'B' schedule properties and that equitable mortgage in respect of the said properties have been created by incompetent persons, was still to be examined by the DRT in the main proceedings being O.A. No. 11/2008. The DRT rejected the application for the following reasons:-

"4....... it was decided that the property absolutely belonged to them and that therefore, any mortgage created in respect of their property is illegal and void and that the petitioner bank has itself stated in para-5 & 6 of the counter proof affidavit that D-10 & D-11 have been added as parties to the OA, since they claim over a part of the 'B' schedule property mortgaged by D-4 company and that in order to avoid multiplicity of proceedings, D-8 to D-11 have been added as parties to the Original Application for better adjudication of respective claim over the mortgaged properties. The Ld. Counsel for R-10 further