Back
2024 Supreme(Online)(TEL) 22831
HIGH COURT OF TELANGANA
NAGESH BHEEMAPAKA, J
M/s Millennium Motels Pvt. Ltd. – Appellant
Versus
The Andhra Pradesh Coopertive Tribunal – Respondent
WP/13025/2008
The court overturned the Tribunal's finding of an equitable mortgage due to lack of documentary evidence, while upholding the maintainability of the OP under Section 37(1) of the Act.
Headnote:(A) AP Mutually Aided Cooperative Societies Act - Section 37(1) - Writ petitions against the Tribunal's order regarding maintainability and interest rates on overdraft facility - The Tribunal held the OP maintainable as the borrower was a member of the Bank, and upheld interest rates as per the agreement. (Paras 7, 9, 15)
(B) Equitable Mortgage - The Tribunal found that the property was mortgaged to the Bank, but this was contested by the purchaser, leading to a finding that the Tribunal erred in its conclusion due to lack of documentary evidence. (Paras 12, 15)
Facts of the case:
Petitioner-Bank claimed recovery from the borrower and guarantors for an overdraft facility of Rs. 30 lacs, with disputes regarding membership and interest rates. (Paras 4, 8)
Findings of Court:
The Tribunal's findings on maintainability were upheld, but the finding of equitable mortgage was set aside due to insufficient evidence. (Paras 7, 15)
Issues: The main issues included the membership status of the borrower and the existence of an equitable mortgage. (Paras 5, 12)
Ratio Decidendi: The court ruled that the Tribunal's reliance on certain documents was misplaced, leading to the conclusion that there was no equitable mortgage. (Paras 15)
Result: Writ Petition No. 13025 of 2008 allowed; Writ Petition No. 10029 of 2008 dismissed. (Paras 11, 16)
COMMON ORDER:
WRIT PETITIONS No. 10029 AND 13025 OF 2008 In Writ Petition No. 10029 of 2008, heard Sri M. Venkata Divakar, learned counsel for petitioner, learned Government Pleader for Cooperation on behalf of the Tribunal, Sri G. Rama Sharma, learned counsel for the 1 st respondent, Sri R.V.Nagabhushanam Rao, learned counsel for the 4 th respondent. In Writ Petition No. 13025 of 2008, heard Sri R.V. Nagabhushanam Rao, learned counsel for petitioner, learned Government Pleader for Cooperation on behalf of the 1 st respondent and Sri M. Venkata Divakar, learned counsel for the 6 th respondent.
2. Both these Writ Petitions are preferred against the Judgment in O.P. No. 1038 of 2000 dated 18.02.2008 on the file of the A.P. Cooperative Tribunal at Hyderabad. Hence, with the consent of learned counsel for both the parties, these Writ Petitions are disposed of by this common order.
3. Parties are referred to as arrayed in O.P. No.1038 of 2000. Petitioner is Bank. Respondent No.1 is borrower, Respondents 2 to 7 are guarantors and Respondent No.8 is purchaser of the property in question.
4. Petitioner’s case is that Respondent Nos. 1 to 7 are members of petitioner Bank. They availed Over Draft facility to an extent of Rs. 30 lacs for business purpose with agreed rate of interest at 21% p.a. flexible with quarterly rests and penal interest at 2% p.a. on the overdue amount. The said amount was released by the Bank on execution of necessary documents by Respondents 2 to 7 on 10.04.1995 who stood as guarantors and executed guarantee agreements. Respondents 2 to 6 created equitable mortgage on 10.04.1995 on the schedule property in favour of the Bank. Respondent No.1 having utilized the overdraft in full, committed default. The bank got issued legal notice dated 02.05.2000, but in vain. Hence, subject O.P. was filed for recovery of Rs. 94,94,428/- with interest at 22% per annum compounded with quarterly rests and for costs.
5. Respondents 1 to 3 filed common counter in O.P. mainly contending that the 1 st respondent is a registered partnership firm under Partnership Act and not a member of petitioner-Bank, hence Section 37(1) of the AP Mutually Aided Cooperative Societies Act (for short, ‘the Act’) cannot be invoked. The OP is not maintainable due to inherent lack of jurisdiction to entertain the same without exhausting the remedies available u/Sec. 37(1). The respondents did not agree for the rate of interests claimed by petitioner-Bank. They filed additional counter inter alia claiming that after filing OP, they deposited/credited amount to the loan account as below: Amount . Date i) Rs. 4,24,421.00-04.08.2000 ii) Rs. 75,00,000.00-28.12.2000 iii) Rs. 5,34,202.00-23.01.2001 Respondent Nos. 4 to 7 remained ex parte.
6. Respondent No. 8 filed counter contending that respondents 1 to 7 have not mortgaged the schedule property by way of deposit of title deeds. The guarantor agreement deed dated 10.04.1995 is neither acknowledgement of deposit of title deeds nor an agreement creating an equitable mortgage by depositing title deed within the meaning of the Transfer of Property Act. It is stated that the 8 th respondent is in no way concerned with the loan. He purchased the schedule property by registered sale deeds bearing Document Nos. 873 and 875, dated 28.03.2000; Document Nos. 897 to 899, dated 30.03.2000; and Document Nos. 924 to 926, dated 31.03.2000 respectively. The 2 nd respondent requested one of the Directors of the 8 th respondent Firm that they required sale deeds for some purpose and took the same. Later he informed the latter that sale deeds are filed in the OP. This respondent contends that there is no equitable mortgage in favour of petitioner Bank created by Respondent Nos. 1 to 7.
7. After considering the evidence on record, regarding maintainability of OP under Section 37 of the Act on the ground that the 1 st respondent is not a member of petitioner-Bank, the Tribunal held that documents produced by petitioner clearly indi
