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2023 Supreme(Bom) 1729
IN THE HIGH COURT OF BOMBAY
G.S. Patel, Neela Gokhale, JJ.
Vidya Sahakari Bank Ltd - Appellant
Versus
State of Maharashtra - Respondent
Writ Petition No. 3149 of 2023, Interim Application No. 3944 of 2023
Decided On : 11-07-2023
S.S. Panchpor, Advocate, A.A. Purav, Advocate
IMPORTANT POINT
The registration of documents under the Registration Act cannot be withheld based solely on an FIR; proper legal procedures must be followed, and the police do not have the authority to obstruct registration without a court order.
Headnote:
MANDAMUS - REGISTRATION OF DOCUMENTS - Maharashtra Cooperative Societies Act, 1960; Maharashtra Protection of Interest of Depositors (In Financial Establishment) Act, 1999; Securitization And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002; Registration Act, 1908; Indian Penal Code, 1860 - The court found that the refusal to register documents by the authorities was based solely on a request from the Crime Branch without any legal basis under the MPID Act. The court emphasized that registration is compulsory under Section 17 of the Registration Act and that the mere filing of an FIR cannot indefinitely suspend this requirement. The court ruled that the bank's rights to enforce its security through registered mortgages must be upheld, and the impugned communications were quashed.
Fact of the Case:
Vidya Sahakari Bank Ltd sought a mandamus to quash communications from the police demanding a no objection certificate for registering transfer documents related to mortgage properties, claiming such a requirement was unfounded under the law.
Finding of the Court:
The court found that the police's directive to withhold registration was unsustainable as there was no notification under the MPID Act, and the registration of documents was compulsory under the Registration Act. The court ruled that the bank's rights to enforce its security were being improperly obstructed.
Issues: Whether the police authorities could lawfully prevent the registration of documents based solely on an FIR without any legal backing under the MPID Act or other laws.
Ratio Decidendi: The court held that the mere filing of an FIR does not justify the indefinite suspension of the registration of documents required under Section 17 of the Registration Act. The police do not have the authority to issue directions that interfere with the registration process without a court order.
Final Decision: The court made the rule absolute, quashing the impugned communications and directing the registration of the documents submitted by the bank.
JUDGMENT/ORDER
G.S.PATEL, J. - Rule. Rule returnable forthwith.
2. The Vidya Sahakari Bank Ltd ("Vidya Bank"), a cooperative bank registered under the Maharashtra Cooperative Societies Act, 1960 ("MCS Act"), approaches us for a mandamus to quash impugned communications of 23/7/2022 and 20/9/2022 addressed by the Senior Police Inspector to the Inspector General of Registration and the Sub-Registrar of Assurances. By the impugned communications, the authorities have demanded a no objection for registering certain transfer documents, and it is claimed that a no objection certificate is required under the provisions of the Maharashtra Protection of Interest of Depositors (In Financial Establishment) Act, 1999 ("MPID Act"). Until then, the bank is told, transfer documents that it needs to execute to recover its debts cannot be registered and will not be permitted to be registered. What was sought to be registered was a Sale Certificate issued by the Petitioner bank in part or whole satisfaction of its debt.
3. The approach is entirely incorrect and unsustainable in law. This is quite apart from the fact there is not even a notification under the MPID Act.
4. A few facts will suffice.
5. The Petitioner sanctioned a term loan facility of Rs.4.00 crores to SRK Global Tours Pvt Ltd ("SRK Global") on 6/2/2015. The loan was secured by a mortgage dtd. 13/2/2015. There was also another term loan of Rs.60.00 lakhs to Sairang Developers & Promoters Pvt Ltd ("Sairang Developers") and a Deed of Mortgage dtd. 30/5/2017. The borrower in the second case, Sairang Developers, also agreed to be a guarantor to the loan and facility sanctioned to SRK Global along with one KR Malik. Thus, there came to be executed a Mortgage Deed dtd. 13/2/2015. This is registered in the office of the Sub-Registrar, Mulshi. It created a valid mortgage over properties owned by Sairang Developers. A copy of that Mortgage Deed is annexed to the Petition.
6. Before sanctioning the term loan of Rs.60.00 lakhs to Sairang Developers, the Petitioner had also sanctioned term loans of Rs.2.00crores and a cash credit of Rs.1.50 crores under previous mortgages. Since the borrower repaid their term loan of Rs.2.00 crores, the cash credit limit was increased by Rs.25.00 lakhs and then further enhanced to Rs.50.00 lakhs with corresponding Mortgage Deeds, all registered with the Sub-Registrar, Taluka Haveli. These mortgages created a charge on commercial office premises at Plaza Premises CHSL, Shivajinagar, Pune. Then some of these properties were substituted with other properties at Village Maan, Taluka Mulshi and there were Deeds of registered mortgages. Further details are not necessary at this stage. It is sufficient to note that both borrowers defaulted. The Petitioner invoked its rights under the Securitization And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 (" SARFAESI Act "). A notice under Sec. 13(2) came to be issued on 19/1/2021. The bank then took symbolic possession of the properties on 5/9/2022. It also obtained a recovery certificate under Sec. 101 of the MCS Act. Following the procedure under Rule 107 of the MCS Rules, the bank attached the properties and took symbolic possession. Both borrowers and guarantors today owe the bank an amount of over Rs.3.5 crores plus ongoing interest.
7. It seems that in the meantime, the directors of the two borrower companies, including one KR Malik, have been confronted with criminal charges under the Indian Penal Code, 1860 (" IPC ") and charges under Ss. 3 and 4 of the MPID Act by the filing CR No. 145 of 2021. On account of this criminal complaint, the Senior Police Inspector of the Crime Branch Unit, Pimpri Chinchwad, Pune, wrote to the Inspector General of Registrar, Pune and Sub-Registrar of Assurances not to register any transactions or documents pertaining to the mortgage properties. The bank was also told that since the FIR was registered no transaction would be allowed pertaining to these prope
