Back
2024 Supreme(Online)(MAD) 20913
HIGH COURT OF MADRAS
Honourable Mr Justice S.S. SUNDAR
T.SIVASUBRAMANIAN – Appellant
Versus
THE CHIEF MANAGER – Respondent
A mortgage's scope is limited to the secured debts outlined in the terms, and ancillary documents like letters of continuity cannot modify these terms or extend liability without proper registration.
Headnote:
Mortgage - Title Deeds - Transfer of Property Act - Section 58(f) - The court determined that the title deeds could not be retained by the bank beyond loan accounts specifically secured, despite a letter of continuity related to a separate loan, highlighting the importance of proper documentation in equitable mortgages.
Fact of the Case:
The petitioner filed a writ petition challenging the bank's refusal to return title deeds after settling various loans. The bank accepted a one-time settlement but retained one title deed citing a letter of continuity for a separate loan not part of the settlement.
Finding of the Court:
The court found that the properties were mortgaged solely for the 12 specified loan accounts and that the bank could not hold onto the title deeds unrelated to those loans, despite the letter of continuity.
Issues: Whether the bank was entitled to withhold title deeds after a settled one-time payment and the implications of a letter of continuity on mortgage security.
Ratio Decidendi: The court ruled that a mortgage by deposit of title deeds only secures the specific loan amounts outlined in the mortgage terms, and that a letter of continuity cannot extend the scope of the mortgage without proper registration.
Final Decision: The writ petition was allowed with directions to the bank to return the title deeds and pay costs to the petitioner.
ORDER
(Order of the Court was made by S.S.SUNDAR, J)
This writ petition is filed for issuance of writ of certiorarified mandamus to quash the letter dated 22.03.2024 issued by the respondent bank rejecting the request to release the title deeds of the properties which were offered as security in connection with the loans obtained by the petitioner from the respondent bank.
2. Brief facts necessary for the disposal of this writ petition are as follows:
(a) The petitioner availed various business loans from the respondent bank by mortgaging his immovable properties by deposit of title deeds (equitable mortgage). Since the loans advanced to the petitioner became NPA, the petitioner approached the respondent bank for one time settlement. It is admitted that the petitioner's offer of Rs.1.85 crores was accepted by the respondent bank to settle all the dues.
(b) Before the approval of one time settlement by the respondent bank, there was exchange of communications between the parties which would show that there is no dispute with regard to the settlement proposal. The bank has specifically referred to loan accounts and the total amount outstanding. It is admitted by the respondent bank that the settlement proposal is in respect of 12 loan accounts in the name of the petitioner, his wife and his son and that the OTS offer of Rs.1.85 crores was to discharge the said 12 loan accounts. Even for processing the OTS proposal, the respondent bank has collected a sum of Rs.27.75 lakhs as upfront amount.
(c) While accepting the OTS offer and demanding further payment, the Branch Manager was instructed to ensure closure of loan accounts immediately after receipt of the money. The respondent bank has agreed to release all the title deeds to the original owner of the properties after payment of the entire OTS amount along with interest, if any. As per the terms, the petitioner has paid the balance amount within the time and there is no dispute with regard to the same.
(d) It is to be noted that the respondent bank has also given 'No Dues Certificate' admitting and acknowledging that the petitioner is not liable to pay any more amount. However, after issuing the 'No Dues Certificate' in respect of the loans which are secured by the properties, the respondent released three title deeds after issuing 'Loan Closure Letters' for the 12 loan accounts, however, refused to return one title deed on the ground that the petitioner had executed a letter of continuity on 27.09.2013 for availing credit facility in favour of M/s.Raja Traders and therefore, the title deed pertaining the said property cannot be handed over to the petitioner as long as the outstanding dues from M/s.Raja Traders is fully settled. Challenging that communication dated
22.03.2024, the above writ petition is filed.
3. Learned counsel for the respondent bank, reiterating the averments in the counter-affidavit would submit that the respondent bank is not obligated to return the title deeds. He would submit that the respondent bank admitted the OTS sanction letter for all the loan accounts, however, the loan account of M/s.Raja Traders is not included in the one time settlement offer.
4. This may be a fact. However, this does not entitle the respondent bank to hold the title deeds of the properties which are secured only for the 12 loan accounts. From the records, it is evident that the properties of the petitioner were mortgaged only for the 12 specified loan accounts which were, of course, in the name of the petitioner, his wife and his son.
5. The second contention of the respondent bank, as stated in the counter-affidavit, is that the petitioner and his family members had agreed to settle the loan accounts in respect of the loan availed by the petitioner, M/s.Vijayaganapathy Fertilizers, RB Agro Associates and Mr.Karthikeyan and also in respect of another loan availed by petitioner, M/s.Vijayaganapathy, RB Agro Associates and Proprietor, Mr.S.Karthikeyan. To put it simple, the contention of the
