Case Note & Summary
The petitioners, Messrs Eminent Agencies and another, challenged an order dated 28 June 2013 passed by the Debts Recovery Appellate Tribunal (DRAT) in Miscellaneous Appeal No.184 of 2010, which dismissed their appeal against the order of the Debts Recovery Tribunal (DRT). The dispute arose from credit facilities granted by the Bank of Baroda (respondent no.1) to petitioner no.1 in 1999, secured by an equitable mortgage of three properties owned by guarantors. The petitioners defaulted, leading the bank to file an Original Application before the DRT. The DRT ruled in favor of the bank, and the DRAT upheld that decision. The petitioners then filed a writ petition under Article 226 of the Constitution of India. The main legal issue was whether the equitable mortgage created by deposit of title deeds was valid despite non-registration under Section 59 of the Transfer of Property Act, 1882. The petitioners argued that the mortgage required registration and was invalid without it. The bank contended that a mortgage by deposit of title deeds is an exception to registration requirements. The court analyzed the evidence, including the deposit of title deeds and the intent to create security, and held that the mortgage was valid. The court found no perversity in the DRAT's order and dismissed the writ petition, upholding the DRAT's decision.
Headnote
A) Property Law - Equitable Mortgage - Validity of Mortgage by Deposit of Title Deeds - Section 59, Transfer of Property Act, 1882 - The court considered whether an equitable mortgage created by deposit of title deeds requires registration under Section 59 of the Transfer of Property Act, 1882. Held that a mortgage by deposit of title deeds is an exception to the requirement of registration and is valid if there is a deposit of title deeds with an intent to create a security. The court upheld the DRAT's finding that the petitioners had deposited the title deeds with the bank, creating a valid equitable mortgage, and non-registration does not invalidate the mortgage. (Paras 1-14)
B) Debt Recovery - Appeal before DRAT - Dismissal of Appeal - The court examined whether the DRAT was justified in dismissing the appeal filed by the petitioners against the DRT's order. Held that the DRAT had correctly appreciated the evidence and law, and there was no perversity or illegality in the impugned order warranting interference under Article 226 of the Constitution of India. (Paras 1-14)
Issue of Consideration
Whether an equitable mortgage created by deposit of title deeds is valid despite non-registration under Section 59 of the Transfer of Property Act, 1882, and whether the Debts Recovery Appellate Tribunal (DRAT) was correct in dismissing the appeal against the order of the Debts Recovery Tribunal (DRT).
Final Decision
The High Court dismissed the writ petition, upholding the order of the DRAT and confirming the validity of the equitable mortgage created by deposit of title deeds.
Law Points
- Equitable mortgage
- deposit of title deeds
- Section 59 Transfer of Property Act
- 1882
- non-registration
- validity of mortgage
- Debts Recovery Tribunal
- DRAT
- writ jurisdiction under Article 226
Case Details
WRIT PETITION NO.1726 OF 2013
S. C. Dharmadhikari, J., B. P. Colabawalla, J.
Mr. Dinesh Purandare, Mr. Rafeeq Peer Mohideen, Mr. T. N. Tripathi, Ms. Sapna Rachure (for Petitioners), Mr. Anant B. Shinde (for Respondent No.1)
Messrs Eminent Agencies and Another
Bank of Baroda and Others
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging an order of the Debts Recovery Appellate Tribunal (DRAT) dismissing an appeal against the order of the Debts Recovery Tribunal (DRT) in a debt recovery matter.
Remedy Sought
The petitioners sought to quash and set aside the order dated 28 June 2013 passed by the DRAT in Miscellaneous Appeal No.184 of 2010, which dismissed their appeal against the DRT's order.
Filing Reason
The petitioners challenged the DRAT's order on the ground that the equitable mortgage created by deposit of title deeds was invalid for want of registration under Section 59 of the Transfer of Property Act, 1882.
Previous Decisions
The Debts Recovery Tribunal (DRT) had ruled in favor of the Bank of Baroda, and the DRAT dismissed the petitioners' appeal against that order.
Issues
Whether an equitable mortgage created by deposit of title deeds is valid despite non-registration under Section 59 of the Transfer of Property Act, 1882.
Whether the DRAT was correct in dismissing the appeal against the DRT's order.
Submissions/Arguments
The petitioners argued that the mortgage required registration under Section 59 of the Transfer of Property Act, 1882, and since it was not registered, it was invalid.
The respondent bank contended that a mortgage by deposit of title deeds is an exception to the requirement of registration and is valid if there is a deposit of title deeds with an intent to create a security.
Ratio Decidendi
A mortgage by deposit of title deeds is an exception to the requirement of registration under Section 59 of the Transfer of Property Act, 1882. The deposit of title deeds with an intent to create a security is sufficient to create a valid equitable mortgage, and non-registration does not invalidate the mortgage.
Judgment Excerpts
This Writ Petition under Article 226 of the Constitution of India challenges the order dated 28th June, 2013 passed by the Debts Recovery Appellate Tribunal (for short, the 'DRAT') in Miscellaneous Appeal No.184 of 2010.
The brief facts giving rise to the present controversy are that, Respondent No.1 – Bank granted various facilities to Petitioner No.1 in the year 1999.
In view of the fact that Petitioner No.1 failed to pay its dues, the Respondent Bank filed an Original Application before the Debts Recovery Tribunal.
Procedural History
The Bank of Baroda filed an Original Application before the Debts Recovery Tribunal (DRT) for recovery of dues. The DRT ruled in favor of the bank. The petitioners appealed to the Debts Recovery Appellate Tribunal (DRAT), which dismissed the appeal on 28 June 2013. The petitioners then filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court, which was dismissed on 17 October 2015.
Acts & Sections
- Transfer of Property Act, 1882: Section 59
- Constitution of India: Article 226
