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2025 Supreme(Online)(DRAT) 541
DEBT RECOVERY APPELLATE TRIBUNAL
ANIL KUMAR SRIVASTAVA, CJ
UCO Bank – Appellant
Versus
M/s. SSVG Engineering Projects Private Limited – Respondent
O.A. 2308 of 2017
For the Appellants/Petitioners: Ms. Rituparna Sanyal, Ms. Ashmita Lohia, Ms. Kaushiki Bandopadhyay
For the Respondents: Ms. Mekhala Kanji
The mortgage created by the subsequent lender is invalid if it is executed by a borrower who has no legal title due to prior gift deeds.
Headnote:(A) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Mortgage law - The appeal challenges the prior mortgage rights of State Bank of India dated to 2010 against those of UCO Bank dated to 2006; court confirmed the finding of the DRT that due to an earlier gift deed executed in 2004, the equitable mortgage created in favor of UCO Bank in 2006 held no validity. (Paras 1, 9, 12)
(B) The principle of prior mortgage rights - The court held that any subsequent mortgage created by a donor who had no legal title was invalid, thus upholding the DRT’s conclusion that prior mortgage rights were with SBI.
| Table of Content |
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| 1. judgment relates to the appeal against prior mortgage determination. (Para 1 , 3) |
| 2. arguments presented regarding the chronological order of mortgages. (Para 4 , 5 , 7) |
| 3. court's confirmation of earlier found legal rights based on submitted documents. (Para 6 , 9 , 10) |
| 4. invalidity of subsequent mortgage without legal title. (Para 12) |
| 5. appeal dismissed with no costs ordered. (Para 13) |
1. Instant appeal has arisen against judgment and order dated 29.7.2019, passed by Learned DRT-II, Hyderabad, in allowing O.A. 2308 of 2017 (Old O.A. No. 75 of 2012 of DRT-I, Hyderabad) (UCO Bank -vs- M/s. SSVG Engineering Projects Private Limited) deciding Defendant No. 7, State Bank of India’s prior mortgage right over the O.A. schedule properties.
2. Feeling aggrieved by the impugned judgment and order, Appellant preferred the appeal.
3. As per the pleadings, O.A. 2308 of 2017 was filed by the Appellant for recovery of Rs.7,42,27,221.00 against the Defendants No. 1 to 3 and to bring the mortgaged properties of the O.A. for sale and appropriate the proceeds towards the certificate debt.
4. Learned Counsel for Appellant would submit that the Respondents No. 2 and 3 availed credit facilities from the Appellant Bank against execution of various documents and creation of mortgage in the year 2006 while the mortgage created by Respondents No. 1 to 3 in favour of Respondent No. 7, State Bank of India, was in the year 2010, hence the charge over the secured assets accrued in favour of the Appellant Bank and not upon the Respondent No. 7, State Bank of India.
5. Per contra, Learned Counsel for Respondent No. 7, State Bank of India, would submit that there is no dispute that the mortgage was created in favour of Appellant Bank in the year 2006. But prior to 2006, in the year 2004, Respondent No. 2 had executed the deeds in favour of the Defendant No. 3. The said deeds, executed in the year 2004, were deposited with the Respondent No. 7, State Bank of India, in the year 2010, as security. Hence, Respondent No. 7, State Bank of India has prior mortgage rights over the O.A. schedule properties.
6. Learned DRT, after hearing Learned Counsel for the parties, recorded a categorical finding that the Applicant, UCO Bank, is the subsequent mortgagee of the O.A.
schedule properties.
7. The only contention raised by the Learned Counsel for Appellant Bank, UCO Bank, would be that the mortgage was created in favour of the Appellant Bank in the year 2006 which is much prior to the alleged mortgage created in favour of Respondent No. 7, State Bank of India, in the year 2010. It is further submitted that all the three ingredients for creation of equitable mortgage could not be fulfilled by the Respondents. As there is an earlier mortgage created in favour of the Appellant, Appellant has a prior charge over the secured assets.
8. Per contra, Learned Counsel for Respondent No. 7, State Bank of India, would submit that Defendants No. 2 and 3 have executed two sets of documents one is of 2004 and the other is of 2006. In the documents of 2004 wherein gift deed was executed by them which was not revoked till the date of creation of mortgage. Accordingly, when there was a gift deed executed by them, they had no right, title or interest over the secured assets and could not execute equitable mortgage in the year 2006 in favour of the Appellant.
9. Learned DRT recorded a finding that the Appellant Bank is a subsequent mortgagee of the O.A. schedule property. Accordingly, passed the impugned judgment holding that Respondent No. 7, State Bank of India, has prior mortgage right over the O.A. schedule property.
10. It is not in dispute that a gift deed was executed by Sri Gundluri Srinivas in favour of Smt. G. Bharati Devi on 9.9.2004 which was with respect to the O.A. schedule property. This gift deed is not under challenge or was not revoked till 2006 or 2010 when the alleged equitable mortgage was created in favour of the Appellant as well as Respondent No. 7, State B
