On 23rd September 2020 the High Court Of Orissa in the case of Smt.Suprava Nayak V. HDFC Bank Ltd. & 04 others comprising of two-Judge Bench of Shri Justice S. K. Mishra & Shri Justice B. P. Routray held that if any accession is made to the mortgaged property after the date of the mortgage, the mortgagee is entitled to such accession as per Section 70 of the Transfer of Properties Act
Factual Background
The petitioner is a bona fide purchaser of a piece of land. She purchased the same from one Opp. Party, by executing a sale deed, in pursuance to the agreement for sale, between them. After purchasing the said land, she constructed a two-storied building thereon after mutating the land in her favour and taking necessary permission from the Bhubaneswar Development Authority. She gave the said house on rent. It is stated that the officials of HDFC Bank with local police personnel dispossessed the tenant from the said house basing on an order passed by the District Magistrate, Khorda under Section 14 of the Securitization and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 even without issuing any prior intimation to the petitioner. Subsequently, it was learned by her that the vendor of the said land had mortgaged the said case land as a “secured asset” by availing a loan from the opposite party-Bank, and therefore, the Bank has taken action for dispossessing the petitioner therefrom as per the provisions under the SARFAESI Act. The learned DRT, Cuttack in its judgment directed in favour of the petitioner and set aside the possession notice issued by the Bank with further direction to redeliver the possession of the property (secured asset) to the petitioner. The Bank, thereafter, approached the Debts Recovery Appellate Tribunal, Kolkata against the said order of the DRT, Cuttack. The Appellate Tribunal upon adjudication of the case, by its judgment, reversed the finding of the DRT, Cuttack, and directed in favour of the Bank by allowing the appeal and setting aside the order of the DRT, Cuttack impugned therein. Being aggrieved by the said order of the learned Appellate Tribunal, the petitioner has approached this Court by filing the present writ petition.
Submissions on behalf of the Appellant
It is the contention of the petitioner that the agreement for the sale of the secured asset was executed on 22.11.2006 between O.P. and the petitioner and pursuant to that agreement the sale deed was executed on 19.03.2010. Therefore, the mortgage having been created in favour of the Bank by her vendor after the execution of the agreement for sale is not valid in the eye of law. It is also the contention of the petitioner that, the Bank has failed to substantiate its case before the Tribunal to show the creation of a valid equitable mortgage in respect of the secured asset in its favour, which has been erroneously appreciated by the learned Appellate Tribunal reversing the finding of the DRT, Cuttack. It is further argued on behalf of the petitioner that the development which has undertaken on the case land by constructing a two-storied residential house thereon has not been properly appreciated by the Appellate Tribunal.
Submissions on behalf of the respondent
On the other hand, it is submitted by counsel on behalf of the Bank that, the opposite party has taken the loan by depositing the original title deed of the secured asset as collateral security and therefore, what is contended by the petitioner is not sustainable in the eye of law. It is further submitted that once the property is mortgaged with the Bank by depositing the original title deed with the Bank in the year 2007, the petitioner should not have purchased the said land in the year 2010 without verifying the original title deed with the O.P. had mortgaged that property with the Bank being its owner having valid title over the property, and execution of a subsequent sale deed by him in favor of the petitioner before satisfaction of the mortgage will never convey the title free from the charge. Further, it is not correct to say that no valid equitable mortgage was created in favour of the Bank and as the petitioner has no case in her favour, the Appellate Tribunal has rightly answered all the points, with proper reasoning, in favour of the Bank and against the petitioner in the impugned judgment by setting aside the order of the DRT, Cuttack, which requires no interference.
Court Analysis
A simple point involves in the present case is whether a valid equitable mortgage of the secured asset was created in favour of the bank prior to the execution of the sale deed by the O.P. in favour of the petitioner? In a case of an equitable mortgage, three things are to be seen, viz.
- there is a debt;
- there is a deposit of valid title deeds; and
- the intention that the deeds shall be the security for the debt.
The copy of the written statement by the petitioner reveals the written intention furnished by O.P. in the form of an affidavit and the declaration made by him to that effect, which was also fortified from the Annexure appended to the affidavit furnished by the Bank Authority before this Court. The debt taken by O.P. from the Bank is an undisputed fact Therefore, all the requirements for creating equitable mortgage being found satisfied, no fault is seen in the findings arrived at by the Appellate Tribunal that, an equitable mortgage was created by the vendor of the petitioner in favour of the Bank. Further, it is rightly held by the learned Appellate Tribunal in the impugned order that if any accession is made to the mortgaged property after the date of mortgage, the mortgagee is entitled to such accession as per Section 70 of the Transfer of Properties Act.
Judgment
Considering all such facts and circumstances of the case and in terms of the principles of law, the bench was of the view that findings arrived at by the learned Appellate Tribunal in the impugned order are just and proper and they do not see any cogent reason to interfere with the same. In view of the above, the writ petition was dismissed being devoid of any merit.
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