Equitable mortgage can exist without a formal deed if intention and conduct indicate binding security rights.

Order

Appeal No. 176 of 2008 is filed by the 7^th defendant in Original Application (O.A.) No. 280 of 1997 on the files of the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) who is aggrieved by the judgment and order dated 25.08.2008 allowing the O.A. and issuing a Recovery Certificate to realise the amount from out of the secured properties under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDDB & FI Act”, for short).

2. Appeal No. 123 of 2012 is filed by the very same Appellant challenging the order dated 27.04.2012 dismissing Securitisation Application (S.A.) No. 3 of 2012 on the files of the aforesaid D.R.T. filed under the provisions of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”, for short) by the Appellant.

3. The facts in brief can be encapsulated thus:

The first Respondent Mashreq Bank Ltd. is the Applicant in the aforesaid O.A. The first defendant (second Respondent in the appeals) is a company named Hydron Enviro System Ltd. presently under liquidation and represented by the Official Liquidator, High Court of Gujarat. The company was run by defendants Nos. 2 & 3 as its directors. The Applicant bank had advanced credit facilities to the company and various security documents including hypothecation of movables and an equitable mortgage of immovable properties were created to secure the debt. Defendants Nos. 2 and 3 had executed personal guarantees while defendants Nos. 4 to 6 pledged shares of Rushab Capital and Finance Services Ltd. with the intent to create collateral security. The third defendant (the fourth Respondent herein) Mr Nimesh B Shah, who is the director of the company created an equitable mortgage of his residential property namely 21, Ashvamegh Bungalows, Part III, Satellite, Ahmedabad (subject property). The borrowers defaulted on repayment of the debts. The company went into liquidation and ceased to function. An amount of ₹18,72,507/- in fixed deposit with the bank was appropriated towards the debt. The bank issued notices to the debtors. There was no response, and hence, the bank filed the O.A. for the realisation of the amount due. Geetaben N. Shah (Appellant herein) who is the wife of Nimesh B. Shah got herself impleaded as the seventh defendant claiming the exclusive right title and interest over the subject property and challenged the mortgage.

4. The third defendant had raised several contentions in the O.A. and sought to be exonerated from his liability as a guarantor because of gross misconduct and negligence on the part of the bank. He also contended that he had not created any equitable mortgage concerning the subject property.

5. The seventh defendant (Appellant) had after getting herself impleaded in the O.A. filed a written statement contending that she is neither a borrower nor a guarantor or a mortgagor. She claims to be the exclusive owner in possession of the subject property which is alleged to have been mortgaged by her husband, the third defendant. She claims that the entire consideration for purchasing the subject property was paid by her. Her husband’s name was entered as a co- owner only for administrative purposes by the society. It is contended that the third defendant has no right title or interest over the subject property and that her absolute title to the property has been upheld by the nominee court in Lavad Case No. 34 of 2007 under the Cooperative Societies Act. She, therefore, sought the dismissal of the O.A. concerning the subject property.

6. After considering the rival