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2023 Supreme(Ker) 553
IN THE HIGH COURT OF KERALA AT ERNAKULAM
GOPINATH P., J.
Shalini - Petitioner
Versus
Karuvannur Service Co operative Bank Ltd. - Respondent
W.P. (C) No. 40778 of 2022
Decided On : 06-02-2023
For the Petitioner: Abraham Mathan.
For the Respondent: V. Binoy Ram.
Once a loan secured by a mortgage is repaid in full, the bank has no right to retain documents related to the mortgaged property.
Headnote:Mortgage - Property Rights - Transfer of Property Act, 1882, Section 60 - The court discussed the right of a bank to retain title deeds of a property mortgaged as security for a loan. It referenced the judgment in Lonankutty Antony v. Joint Registrar of Co-operative Societies and held that the right of redemption is fundamental to the law of mortgage, and no right of lien can override this right. The court concluded that once the loan is repaid in full, the bank has no right to retain the documents related to the petitioner's property.
Fact of the Case:
The petitioner sought the return of documents relating to her property mortgaged with a bank as security for a loan extended to her friend. The bank refused, citing another defaulting loan by the friend.Finding of the Court:
The court found that once the loan was repaid in full, the bank had no right to retain the documents related to the petitioner's property.Issues:
Whether the bank had a right to retain title deeds after repayment of the loan.Ratio Decidendi:
The right of redemption is fundamental to mortgage law, and no lien can override this right.Final Decision:
The writ petition was allowed, and the respondent bank was directed to release the documents related to the petitioner's property.JUDGMENT :
Petitioner has approached this Court, being aggrieved by the fact that certain documents relating to the property mortgaged by the petitioner with the respondent bank, as security for a loan extended by the respondent bank to her friend (one Sobhana), has not been returned despite the fact that the said loan has been repaid in full.
2. Learned counsel appearing for the petitioner submits that the bank has no right to retain the title deeds of the property mortgaged, even after the loan is repaid in full. Learned counsel places reliance on the judgment of this Court in Lonankutty Antony v. Joint Registrar of Co-operative Societies, Ekm and Others, 2016 (2) KHC 505, to contend that retaining or withholding title deeds even after clearing of loan is per se illegal and arbitrary.
3. Learned counsel appearing for the respondent bank would submit that the aforesaid Sobhana has availed another loan from the respondent bank, which is in default and therefore, the property mortgaged by the petitioner is subject matter of a banker’s lien and therefore, the documents relating to the property belonging to the petitioner cannot be released. He confirms that the petitioner’s property has been mortgaged only for the purposes of securing repayment of the loan which has already been repaid.
4. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent bank, I am of the view that there is absolutely no merit in the contention now taken by the learned counsel appearing for the respondent bank that it is entitled to exercise the lien over the property of the petitioner. The right of redemption is a right fundamental to the law of mortgage. No right of lien can override this right. This is also the law laid down in Lonankutty Antony (supra). The petitioner is therefore right in contending that the loan, in respect of which the mortgage was created, is repaid in full, the bank has no right to retain the documents in respect of the petitioner’s property. Accordingly, the writ petition is allowed. The respondent bank is directed to release the documents of title in respect of the property mortgaged by the petitioner provided the loan in respect of which the property was mortgaged has been repaid in full.
