The main legal point established is the principle of estoppel, where the APIIC and its successor were estopped from challenging the validity of the mortgage due to the government's permission and lack of challenge to the authority of the Director of Industries to issue the permission.

ORDER

1. These appeals are before this Bench because a two- judge Bench of this Court felt that there is no clear cut authority on the question as to whether a property can be equitably mortgaged by depositing documents which may not be title deeds or registered document of title. In view of the decision which we propose to take, it is not necessary to answer this question in the present cases.

2. Briefly stated, the facts necessary for the decision of these cases are that M/s United Auto Tractor Ltd (for short, the "Company") applied to the Government of Andhra Pradesh for allotment of land. The Government of Andhra Pradesh allotted 51 acres of land in the industrial Development Area, Nacharam, Andhra Pradesh to the Company, in terms of an order dated 18.7.1972. An agreement was entered into on 03.8.1972 between the Government of Andhra Pradesh and the Company regarding payment of the cost of the land. The sale deed was to be executed and registered in the name of the Company only on full payment. We are mainly concerned with clause 8(a) and 8(b) of the said agreement which read as follows :

"8(a) Without prejudice to the rights of the State Bank of India or any other financing agency approved by the Government as first mortgagees, Government have a second charge on the land, buildings, plant and machinery which shall be converted into a first charge when the obligation of the financing agencies are liquidated.

8(b) If the Financing Institutions were to advance more than 60% of the value of the land, building, machinery and structure, prior agreement of the Government will be required."

3. It is not disputed that in terms of the aforesaid agreement, the Company had paid 50% of the total cost of land and was put in possession thereof. The company sought permission of the Government of Andhra Pradesh to mortgage their land which permission was granted vide letter dated 03.8.1972 which reads as under :

"In the circumstances stated in your letter second cited, you are hereby permitted to mortgage the 51 acres of land allotted in the Nacharam Industrial Development Area to any Scheduled Bank to obtain financial assistance to your project.

The agreement executed by you is returned herewith duly signed"

4. On the basis of the aforesaid clauses of the agreement and the letter mentioned hereinabove, the company mortgaged the said land in favour of the appellant-Bank by depositing the letter of allotment and other documents showing its interest in the property.

5. The Government of Andhra Pradesh transferred all its industrial estates and development areas to M/s Andhra Pradesh Industrial Infrastructure Ltd. (for short, the "APIIC"). It would be pertinent to mention that after reorganization of the State of Andhra Pradesh, it is the Telangana Industrial Infrastructure Limited which is the successor of the APIIC.

6. It appears that the APIIC felt that the entire land measuring 51 acres was not being used by the company and therefore, the APIIC cancelled allotment of 25 acres of land and allotment of 26 acres remained in favour of the company. It would not be out of place to mention that though initially the company as well as the appellant - Bank objected to the resumption of 25 acres of land; these objections were never pursued and in fact, the Bank withdrew its writ petition in this regard.

7. The company was unable to pay of its dues to the Bank and the appellant Bank filed O.A. No.425 of 1995 against the company before the Debt Recovery Tribunal, Bangalore for recovery of Rs.2,57,10,393/- on 3.7.1995. The said application was allowed by order dated 18.10.1996 and recovery certificate was issued in favour of the appellant Bank for recovery of the aforesaid amount along with interest at the rate of 21.5% per annum from 3.7.1995 till date of payment at quarterly rest. Notice for sale of entire 51 acres of land by public auction was issued by the Recovery Officer of the Debt Recovery Tribunal. The APIIC filed an objection sometime in Ma