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IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BENCH
S.C. SHARMA, J.
Ashish Mittal - Petitioner
Versus
Bank of Baroda - Respondent
W.P. Nos. 2174, 2176 of 2016
Decided on : 02-08-2016
Mortgage - Lease Deed - Transfer of Property Act, 1882 - Section 58(f), Section 65A - The court discussed the validity of a lease deed executed by the mortgagor after creating a mortgage, and its binding effect on the mortgagee. The judgment in Vishal N. Kalsaria v. Bank of India & Ors. and the provisions of Section 65A of the Transfer of Property Act were considered to determine the validity of the lease deed. The court held that the lease deed executed by the mortgagor was not binding on the bank due to the existence of a clause in the loan agreement prohibiting the mortgagor from leasing the mortgaged property without the bank's permission.
Fact of the Case:
The petitioner, a resident of Ujjain, challenged the bank's action to take possession of a property leased by the guarantor. The petitioner argued that the lease deed was executed prior to the issuance of a demand notice and therefore, the petitioner cannot be evicted by the respondents.
Finding of the Court:
The court found that the lease deed executed by the guarantor after creating a mortgage was not binding on the bank due to the existence of a clause in the loan agreement prohibiting the mortgagor from leasing the mortgaged property without the bank's permission.
Issues: Validity of the lease deed executed by the mortgagor after creating a mortgage, and its binding effect on the mortgagee.
Ratio Decidendi: The court relied on the judgment in Vishal N. Kalsaria v. Bank of India & Ors. and the provisions of Section 65A of the Transfer of Property Act to determine the validity of the lease deed. It held that the lease deed executed by the mortgagor was not binding on the bank due to the existence of a clause in the loan agreement prohibiting the mortgagor from leasing the mortgaged property without the bank's permission.
Final Decision: The court dismissed the writ petition, concluding that the lease deed executed by the mortgagor was not binding on the bank, and the bank's action to take possession of the property was justified.
S.C. Sharma, J.
1. Regard being had to the similitude in the controversy involved in the present cases, the writ petitions were analogously heard and by a common order, they are being disposed of by this Court. Facts of Writ Petition No.2174/2016 are narrated hereunder.
2. The petitioner before this Court is aggrieved by the order dated 09.03.2016 (Annexure P/11) passed by the Tehsildar, Tehsil and District Ujjain in case No.107/B/121/15-16.
3. The petitioner’s contention is that he is a resident of Ujjain and is neither a borrower, nor a guarantor. He has further stated that he has never availed any financial assistance from Bank of Baroda. The petitioner has further stated that one Suresh Kumawat was the owner of the property i.e. house No.B-2/18, MIG, situated at Vasant Vihar, Scheme-1, Nanakheda and the property was leased out by Suresh Kumawat vide lease deed dated 02.05.2014 (Annexure P/1).
4. The petitioner has further stated that the respondent bank took symbolic possession of the mortgaged property and thereafter, the petitioner was shocked to receive a letter dated 12.11.2014, which was in respect of taking over the physical possession of the property. Thereafter, the petitioner immediately came before this Court by filing W.P.No.8419/2014 and this Court by order dated 20.11.2014 has granted an interim protection and thereafter, the petition was finally disposed of on 08.04.2015 with a direction to the learned District Magistrate to take decision in the matter. The petitioner further stated that he has approached the District Magistrate, however, an ex-parte order has been passed on 18.11.2015 by the learned Additional District Magistrate, Ujjain and the petitioner thereafter, filed an application for review on 01.12.2015.
5. The petitioner has further stated that on account of order passed by the Additional District Magistrate, Tehsildar has issued notice to the petitioner. The petitioner’s contention is that action of the respondents is violative of right guaranteed under Article 300-A of the Constitution of India and the petitioner has a right to enjoy the property in terms of lease deed (Annexure P/1) and the petitioner further stated that the lease deed has been executed prior to issuance of demand notice and therefore, as the lease is in existence, the petitioner cannot be evicted by the respondents.
6. The petitioner placed heavy reliance upon the judgment delivered by the Hon’ble Supreme Court in the case of Vishal N. Kalsaria v. Bank of India & Ors., reported in AIR 2010 SC 530.
7. On the other hand, learned counsel for the Bank of Baroda has argued before this Court that respondent No.5 Shri Suresh Kumawat, Son of Late Shri Rajmal Kumawat is the guarantor of M/s Venkateshwara & Co., a borrower firm and bank has to recover a sum of Rs. 3,29,00,000/- from the borrower. It has been further stated that respondent No.5 Shri Suresh Kumawat has mortgaged his property by deposit of title deed in respect of house No.B-2/18, MIG, Basant Vihar, Ujjain and the mortgaged deed was created by deposit of title deed as provided under Section 58(f) of the Transfer of Property Act, 1882. The respondent has further stated that the guarantor has created the mortgage in favour of the respondent. In furtherance of the declaration, notarization was done on 12.12.2012.
8. Attention of this Court has been drawn towards para 11 of the declaration of the guarantor and the same reads as under:
“Guarantor has undertaken inter alia not to lease out the said house during currency of the said loan without permission of the respondent bank.”
9. Learned counsel for the respondent/Bank of Baroda has placed reliance upon the judgment delivered by the Hon’ble Supreme Court in the case of Harshad Govardhan Sondagar v. International Assets Reconstruction Company Ltd. & Ors., reported in (2014) 6 SCC 1 and his contention is that the Hon’ble Supreme Court in the aforesaid case has certainly made observations for grant of protection to valid lease-deed
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