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High Court Of Delhi
PUNJAB NATIONAL BANK - Appellant
Versus
PUNJAB NATIONAL BANK - Respondent
Decided On : 01/18/2000
Based on the provided legal document, the key points are as follows:
The case involves objections filed against the attachment of property in execution of a decree, where the objectors claim that the property has been previously sold and is exempt from attachment (!) .
The property in question was leased on a perpetual basis and the objectors allege that they entered into an agreement to purchase the property prior to the attachment, thus creating a right or interest in the property that should take precedence over the attachment (!) .
The decree holder contends that the judgment debtor created an equitable mortgage by deposit of title deed in favor of the bank before the objectors' agreement to sell, and that the mortgage was legally valid and prior in time (!) (!) .
The court notes that the suit for recovery of money was based on a loan agreement, but the evidence also established that an equitable mortgage was created by the judgment debtor in favor of the bank prior to the agreement with the objectors (!) (!) .
The court emphasizes that an equitable mortgage by deposit of title deed is akin to any other mortgage, conferring a transfer of interest in the property to the mortgagee, and that subsequent purchasers or interest holders cannot claim priority over such a mortgage if it was created earlier (!) .
The court dismisses the objections, confirming that the attachment of the property is valid because the equitable mortgage was created prior to the agreement to sell, and the objectors' rights do not supersede the bank’s mortgage interest (!) (!) .
It is also clarified that the exemption of the property from attachment under Section 60 of the Civil Procedure Code is not applicable to the objectors, as they are not the judgment debtors (!) .
The decision reinforces that the creation of an equitable mortgage by deposit of title deed is legally recognized and that such a mortgage takes precedence over subsequent agreements or claims, provided it was created prior to such claims (!) .
The court dismisses the execution appeal, affirming the validity of the attachment and the mortgage, and upholds the bank’s rights over the property (!) .
In summary, the key legal principle established is that an equitable mortgage created by deposit of title deed prior to any subsequent sale agreement or interest claim will prevail over such later interests, and the attachment of the property in execution proceedings remains valid.
( 1 ) AGAINST the attachment of property No. D-112, Malviya Nagar Extension, New Delhi in execution of the decree in Suit No-1179/83 - Punjab National Bank Vs. M/s. Orkids and Others, Smt. Bimla Devi, Sh. Vijay Gupta and Dr. Ajit Gupta have jointly filed these objections under Order XXI Rule 58 read with Section 151 Civil Procedure Code. In short it is alleged that on or about 9th May, 1989 the objectors were informed by their neighbours of the affixation of prohibitory order in the form prescribed under Order XXI Rule 54 Civil Procedure Code dated 30th March, 1989 issued by this Court, on the outer gate of property No. D-112, Malviya Nagar Extension. In terms of this order, said property has been attached. It is stated that the plot of land underneath the said property was demised on perpetual lease basis by Delhi Development Authority to Major H. S. Barar and a perpetual lease deed was executed on 19th December, 1972 and was registered with the office of Sub-Registrar as document No. 28) Additional Book No. 1, Vol. No-3044 at pages 97 to 102 on 2nd January, 1973. Under an agreement to sell executed in between Major H. S. Barar and the objectors on 12th August, 1986, perpetual lease hold rights in plot of land bearing No. D-112, Malviya Nagar Extension and ownership rights in the super structure constructed thereon, were agreed to be sold for a consideration of Rs. 6. 5 lacs and the objectors made payment of the entire sale consideration against a receipt to Major H. S. Barar on 12th August, 1986. Major H. S. Barar ceased to have any interest in the said property after 12th August, 1986 and it thus cannot be attached in execution of decree against Major H. S. Barar, judgment debtor No. 4. Even otherwise, as the said property was the only residential property owned by Major H. S. Barar, it is exempted from attachment under Section 60 Civil Procedure Code. It is prayed that at the order attaching the said property in execution proceedings may be withdrawn.
( 2 ) PUNJAB National Bank, decree holder/plaintiff contested the objections by filing reply. It is, inter-alia, alleged in the reply that Major H. S. Barar, judgment debtor No. 4 is the owner of property No. D-112, Malviya Nagar Extension and he had created equitable mortgage of the property in favour of decree holder to secure the credit facilities granted by the Bank to judgment debtors No. 1 to 3. As the judgment debtors failed to pay the amount due, the Bank filed Suit No. ll79/83 and a decree for recovery of Rs. 3,73,513. 00 together with costs and interest etc. was passed against the judgment debtors by this Court on 5th February, 1987. Judgment debtor No. 4 has colluded with the objectors and purportedly entered into an agreement to sell with them during the pendency of the said suit on 12th August, 1986. Sale deed in respect of the said property has not been executed by judgment debtor No. 4 in favour of the objectors till date and the objectors have no right, title or interest in the property.
( 3 ) IT was urged by Sh. A. K. Singla appearing for the objectors that Suit No. ll79/83 filed against the judgment debtors/defendants was for recovery of money and not under Order XXXIV Civil Procedure Code and the judgment passed on 5th February, 1987 against the judgment debtors was also for recovery of money. In support of the submission, he invited my attention to the plaint and also the judgment passed in the suit. According to the learned counsel, under the agreement to sell dated 12th August, 1986 interest was created in said property No. D-112, Malviya Nagar Extention in favour of the objectors much before the same was attached by this Court in execution of decree passed in the said suit. Thus, the present objections are maintainable and the order of attachment of the property deserves to be withdrawn. Reliance was placed on the decisions in. As a part of the said submission, it was further contended that equitable mortgage was not legally created by
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