A bank cannot retain a title deed for a different transaction not covered by the mortgage, and a formal agreement is necessary for guarantees.

JUDGMENT

The petitioner, a public limited company has filed the captioned writ petition, seeking for a direction to respondents to return the original sale deed No.701/2014 of Koothattukulam Sub Registrar’s Office (SRO).

2. The short facts necessary for the disposal of this writ petition are as under:

The petitioner herein entered into a Limited Liability Partnership Agreement (LLP) with M/s.Seguro Foundation and Structures Pvt. Limited and was functioning under the name and style “Seguro - INKEL Consortium LLP”. The said LLP had obtained some credit facility from the 1st respondent herein for Rs.24 Crores, and the petitioner herein stood as guarantor, executing a corporate guarantee with the 1st respondent herein, mortgaging the properties covered by the sale deed No.701/2014 of Koothattukulam SRO. The guarantee executed by the petitioner is also produced along with this writ petition as Ext.P1, which would show that the petitioner stood as guarantor only as against the LLP referred to above. The 1st respondent herein filed O.A.No.158 of 2021 before the Debt Recovery Tribunal-I, Ernakulam (for short, ‘DRT’) against the LLP and the petitioner herein, since the LLP committed default in repayment, for realisation of Rs.2,70,65,555.78. It is stated that the petitioner remitted the entire amount demanded and obtained a clearance dated 11.08.2022 from the 1st respondent herein produced as Ext.P3. A perusal of Ext.P3 would show that the entire amount due to the 1st respondent was paid by the LLP and the account also stood closed.

3. In such circumstances, the petitioner submitted Ext.P4 before the 2nd respondent herein, pointing out the clearance at Ext.P3 and requesting the return of the corporate guarantee as well as the collateral security furnished by the petitioner as above. It also prayed for the issue of No Objection Certificate for production before the Registrar of Companies for releasing the charge created as above.

4. In the meantime, M/s.Seguro Foundations and Structures Pvt. Limited had availed credit facilities independently from the 1st respondent herein and insofar as the repayments were not regular, the 1st respondent bank instituted O.A.No.149 of 2021 before the DRT, arraying the petitioner as the 5th respondent herein. A perusal of Ext.P5 application filed as above by the 1st respondent herein would show that the petitioner is impleaded as the 5th defendant for the following reasons:

“The 5th defendant is the holding company of the 1st defendant or in other words the 1st defendant is a subsidiary of the 5th Defendant. The 5th defendant is also impleaded in the capacity of a guarantor eventhough the 5th defendant has not formally executed the agreement of guarantee but is impleaded in the OA as the 5th Defendant has by its conduct and representations caused the Applicant to extend the financial facilities to the 1st Defendant that it is guaranteeing the liability of the 1st Defendant for the financial facilities availed by the 1st Defendant and also have exercised control over maintaining and operating the account with the applicant and operated the account through the employees of 5th defendant acting on behalf of the Defendant No.1.”

The 1st respondent bank also filed IA No.2305 of 2022 before the DRT in O.A.149 of 2021, seeking attachment of the property of the petitioner herein. The DRT, by an order dated 13.04.2023, directed the petitioner to furnish security for Rs.49,78,38,866.21, failing which the petition schedule property would be attached. Since the afore order was issued ex parte, the petitioner filed an application to set aside the ex parte along with a separate application to recall the attachment order. Both the afore applications were allowed by Exts.P6 and P7, by setting aside the ex parte and also recalling the earlier direction to furnish security.

5. It is in the afore circumstances, that the petitioner has filed the captioned writ petition pointing out that the 1st respondent has illegally retained the