2007 Supreme(Guj) 647

2008 (1) GCD 1 (Guj)
Hon’ble Mr. Justice D.A. Mehta
Shoklingam Kappuswami Mudliyar [Ahmedabad]
Versus
Indian Bank & Ors.
Special Civil Application No. 13347 of 2007
Decided on 16/10/2007

Point in Issue :
Whether in the case any security interest is created in favour of Bank in absence of original title-deeds?

Headnote:Head Note :

       Securitization and Reconstitution of Financial Assets and Enforcement of Security Interest Act, 2002 — Sections 2(zc), 2 (zf), 13, 13(1), 13(2), 14, and 17 — Absence of original title-deeds — Secured Assets and security interest — Creation of — Notice by Bank — Sustainability — Finding as to — The respondent Bank is not in possession of the original title-deeds — Bank is in possession of xerox copies of the deeds therefore, admittedly no charge was created on the property — Also specially because undisputedly the original title deed to the property has been parted with in favour of petitioner by respondent, the owner of the property — The respondent Bank therefore cannot maintain notice under Section 13(2) of the Act to the petitioner — Contention that petitioner having availed the remedy of filing a suit in this regard cannot be permitted to file petition before the Court and even otherwise it is open for the petitioner to avail of statutory remedy by way of appeal has no force and cannot be accepted — The contention would merit consideration only if respondent Bank is in a position prima facie to establish that it is in possession of a secured asset on basis of which Bank is entitled to invoke provisions of the Act — In the case no security interest is created in favour of Bank, therefore, it is not possible to accept the contention raised by respondent Bank — The constructive possession of the property is with respondent Bank but it shall not dispossess the petitioner unless it establishes any collusion between Respondent No. 3 and petitioner to defraud respondent Bank.

       Held :

       The only question that is to be raised and answered is: whether on basis of such xerox copy of the deed Respondent No. 1 Bank could have dealt with the property in any manner whatsoever on the ground that a right, title and interest in the property has been created in favour of Respondent No. 1 Bank. The answer has to be in the negative. More particularly, bearing in mind the undisputed fact that the original title-deed to the property has been parted with in favour of the petitioner by Respondent No. 3. The declaration given by Respondent No. 3 to Respondent No. 1 Bank may at the best give Respondent No. 1 Bank a right to initiate appropriate legal action against Respondent No. 3, but such a declaration cannot constitute any right, title and interest in favour of Respondent No. 1 Bank to the property in question. [Para 11]

       In absence of any security interest in favour of Respondent No. 1 Bank there can be no question of enforcement of any security interest in accordance with provisions of the Securitisation Act. In the circumstances, it is not possible to accept the contention that the petitioner must be relegated to avail of alternative remedy of appeal before the Tribunal under provisions of Section 17 of the Securitisation Act, when the said Act itself cannot be invoked by Respondent No. 1 Bank in the case of the petitioner. In so far as the remedy of filing of suit is concerned, it is an accepted fact that the suit stands withdrawn. [Para 14]

       It is an accepted position that constructive possession of the property in question has been taken by Respondent No. 1 Bank. In the circumstances, the constructive possession of Respondent No. 1 Bank shall continue without Respondent No. 1 Bank being permitted to dispossess the petitioner of the property in question, subject to Respondent No. 1 Bank being in a position to establish any collusion between Respondent No. 3 and the petitioner to defraud Respondent No. 1 Bank. [Para 16]

       Law Laid Down :

       In absence of any security interest created in favour of Bank provisions under the Act cannot be invoked.

       Case Law Analysis :

       C. Assiamma vs. State Bank of Mysore & Ors., AIR 1990 Ker 157 [Para 12].—Relied on

       Appearance :

       Mr. Ashish H. Shah, for the Petitioner No. 1.

       Notice Served by DS, for the Respondents No. 1-3.

       Mr. N.R. Parikh, for the Respondent No. 1.

       Mr. Dharmesh V. Shah, for the Respondent No. 1.

       Mr. H.R. Prajapati, for the Respondent No. 3.

       Conclusion :

       In absence of original title-deeds no security interest is created in favour of Bank — Bank therefore, cannot maintain impugned notice under Sec. 13(2) of the Act.

       Decided in Favour of :

       Petitioner

       Petition Allowed