The main legal point established is that the issuance of a 'No Due Certificate' by the bank indicates the settlement of the loan and no dues payable, and the non-registration of a mortgage deed prevents the bank from exercising lien for a different loan.

JUDGMENT :

(T. Raja, J.)

(Prayer: Appeal under Clause 15 of the Letters Patent against the order dated 1.12.2021 passed in W.P.No.10970 of 2019.)

This writ appeal has been directed against the impugned order dated 1.12.2021 passed in W.P.No.10970 of 2019, by which the prayer of the writ petitioner/first respondent herein to direct the first appellant herein to return the original documents of title relating to the property, being the vacant commercial site measuring 15511.71 sq.ft. at S.Nos.261 and 262 in Vellegoudampalayam Village, Dharmapuri Taluk, was allowed.

2. Learned counsel appearing for the appellants assailing the impugned order argued that the writ petitioner/first respondent herein had approached the Agri Commercial Branch of State Bank of India and availed credit facilities by way of overdraft to the tune of Rs.5 crores in the year 2014 by mortgaging its property, being the vacant commercial site measuring 15511.71 sq.ft. at S.Nos.261 and 262 in Vellegoudampalayam Village, Dharmapuri Taluk, to the first appellant/bank as security. The aforesaid property was shown as additional security for the loan obtained by PKB Feed Mills Private Limited and, therefore, the original documents of title relating to the aforesaid property ought not to have been directed to be returned to the first respondent, as the appellant/bank will not have any security to recover the huge amount of Rs.293.01 crores due and payable by the first respondent and its group concerns as on 31.12.2021.

3. It is further submitted by learned counsel for the appellants that even in the letter dated 16.8.2017 issued by the first appellant/bank to PKP Feed Mills Private Limited it has been categorically stated that the after payment of the entire amount under one-time settlement, the release of any secured property can be sought only upon payment of 125% of the assessed marked value of the property concerned, but this vital aspect has been overlooked by the learned Single Judge.

4. The next submission of learned counsel for the appellants is that the learned Single Judge ought to have considered the crucial fact that the first respondent had promoted four companies, namely, PKP Feed Mills Private Limited; PKP Spintex Mills Private Limited; Sathya Granites; and, PKP Minerals Private Limited and extended equitable mortgage in terms of Section 58(f) of the Transfer of Property Act for the aforesaid companies and, therefore, even if the letter dated 16.8.2017 with regard to one-time settlement was issued in favour of the first respondent, the same cannot be acted upon as other group companies failed to discharge their respective loan liabilities. In other words, it is the submission of learned counsel for the appellants that the letter dated 16.8.2017 issued by the first appellant/bank to the first respondent should not be read in isolation, but in conjunction with other OTS letters given to the group companies.

5. In reply, supporting the impugned order, learned counsel appearing for the first respondent submitted that the first respondent, being the borrower, honoured the one-time settlement offered by the first appellant/bank and paid the entire amount, which has been duly acknowledged by the appellant bank by issuing a “No Due Certificate” dated 15.10.2018 and, therefore, the first appellant/bank cannot plead that the first respondent is not entitled to get back the original documents of title.

6. We find merit in the aforesaid submission made by learned counsel for the first respondent inasmuch as the appellant/bank has issued a No Due Certificate on 15.10.2018, which reads as under:

“This is to certify that the credit facilities sanctioned to M/s.Thilagavathi Traders by State Bank of India has been settled under compromise by payment of Rs.5.25 crs (being compromise amount). Hence, there are no dues payable by the Borrower/ Guarantors in respect of the loans sanctioned by the Bank to M/s.Thilagavathi Traders.”

The above certificate clearly shows that there are n