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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VIKRAM NATH, A.J. SHASTRI, JJ.
State Bank Of India – Appellant
Versus
Radheshyam Spinning Mill Pvt. Ltd. – Respondent
Letters Patent Appeal No. 656 of 2019 In R/Special Civil Application No. 13890 of 2017 With Civil Application (For Stay) No. 1 of 2019
Decided On : 13-11-2019
Letters Patent Appeal – Commercial Branch of State Bank of India, Rajkot, has preferred this Letters Patent Appeal assailing the correctness of the judgment and order passed by the learned Single Judge in Special Civil Application whereby the said petition has been allowed and the Bank is directed to release the title deeds and also issue no dues certificate to the writ petitioners – Held, Immovable property with respect to which equitable mortgage has been created by deposit of title-deeds to secure the loan advanced to M/s Radheshyam Spinning Mills Pvt. Ltd. was jointly owned by respondent Nos. 2 and 3. Respondent No.3 admittedly had not stood Guarantor for the loan advanced to M/s Radheshyam Fibres Pvt. Ltd. nor was a Director in this Company. She had no concern at all with this Company. Only respondent No.2 was Guarantor for the loan advanced to M/s Radheshyam Fibres Pvt. Ltd. in whose general balance of account an amount was outstanding, however, no mortgage was created by respondent No.2. The property being jointly held, and respondent No.3 being not a Guarantor, no claim could be raised with respect to the property of respondent No.3 even if it is assumed for the sake of argument that under the general law, the Bank would have a general lien over the title-deeds deposited by respondent No.2 of the properties owned by him. Moreover, there was no equitable mortgage created by respondent No.2 by deposit of title-deeds with or without the consent of respondent No.3. Thus, the Bank was not right under any circumstances to hold on to the title-deeds even under the general law – Application disposed of .
Facts of the Case:
Commercial Branch of State Bank of India, Rajkot, has preferred this Letters Patent Appeal assailing the correctness of the judgment and order passed by the learned Single Judge in Special Civil Application whereby the said petition has been allowed and the Bank is directed to release the title deeds and also issue no dues certificate to the writ petitioners
Finding of the Court:
Immovable property with respect to which equitable mortgage has been created by deposit of title-deeds to secure the loan advanced to M/s Radheshyam Spinning Mills Pvt. Ltd. was jointly owned by respondent Nos. 2 and 3. Respondent No.3 admittedly had not stood Guarantor for the loan advanced to M/s Radheshyam Fibres Pvt. Ltd. nor was a Director in this Company. She had no concern at all with this Company. Only respondent No.2 was Guarantor for the loan advanced to M/s Radheshyam Fibres Pvt. Ltd. in whose general balance of account an amount was outstanding, however, no mortgage was created by respondent No.2. The property being jointly held, and respondent No.3 being not a Guarantor, no claim could be raised with respect to the property of respondent No.3 even if it is assumed for the sake of argument that under the general law, the Bank would have a general lien over the title-deeds deposited by respondent No.2 of the properties owned by him. Moreover, there was no equitable mortgage created by respondent No.2 by deposit of title-deeds with or without the consent of respondent No.3. Thus, the Bank was not right under any circumstances to hold on to the title-deeds even under the general law.
Result: Application disposed of
JUDGMENT :
VIKRAM NATH, J.
The Commercial Branch of State Bank of India, Rajkot, has preferred this Letters Patent Appeal assailing the correctness of the judgment and order dated 26.11.2018 passed by the learned Single Judge in Special Civil Application No.13890 of 2017 whereby the said petition has been allowed and the Bank is directed to release the title deeds and also issue no dues certificate to the writ petitioners (respondents herein). The operative portion of the judgment as contained in paragraphs 59 and 60 thereof is reproduced below:
60. The respondent Bank shall also take the necessary steps to release its charge from the record of the Registrar of Companies within a period of 30 days from the date of receipt of the writ of the order.”
2. M/s Radheshyam Spinning Mills Pvt. Ltd., a company incorporated under the provisions of the Companies Act, 1956 along with Shri Ramniklal Chakubhai Bhalara and Smt. Rasilaben Ramniklal Bhalara, who had created equitable mortgage of the immovable properties as guarantors in favour of the State Bank of India (Commercial Branch) in Rajkot, filed Special Civil Application No.13890 of 2017 praying for the following reliefs:-
(b) Your Lordships be pleased to issue a writ of mandamus, order or any appropriate direction to direct the Respondent to take all necessary steps to release its charge from the record of the Registrar of Companies within a fixed time frame of 30 days in interest of justice.
(c) Your Lordships be pleased to direct the respondent to handover the title deeds with respect to Sub Plot No.D/30.2, R.S. No.429, 432-434, 445 and 654p, Plot No.D/30p F.P. No.121p, T.P.S. 02 Sheet No.176 Indraprastha Nagar, Indraprastha Main Road, Rajkot to the petitioner or Cooperative Bank of Rajkot subject to final outcome of the petition pending admission, hearing and final disposal of this petition.
(d)Your Lordships be pleased to pass such other and further orders, which may be deemed fit in the interest of justice.”
3. According to the writ petitioners, they were not satisfied with the services provided by the State Bank of India and even the terms of the loan facilities were getting onerous, they decided to deal with the Cooperative Bank of Rajkot which agreed to provide them loan facilities. On 4.8.2016, the Co-operative Bank of Rajkot by way of RTGS, credited the entire outstanding amount of the writ petitioners in the account of the respondent State Bank of India (appellant herein) and thus completely satisfied the loan taken by M/s Radheshyam Spinning Mills Pvt. Ltd. from the State Bank of India, Commercial Branch, Rajkot. On 9.8.2016, the Co-operative Bank of Rajkot in writing requested the State Bank of India, Commercial Branch, Rajkot, to issue a no dues certificate and also to hand over the property files of the writ petitioners as it had taken over the loan account from the State Bank of India by clearing all the outstanding amount to it. On 20.8.2016, the State Bank of India, Commercial Branch, Rajkot, issued the no dues certificate to the writ petitioners. However, the State Bank of India, Commercial Branch, Rajkot, vide letter dated
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