Maruti Suzuki India Limited vs Delhi Auto General Finance ...
2018 Latest Caselaw 2667 Del

$~22
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
                             Date of decision: 1st May, 2018
+               RFA 851/2015 & CM APPL. 23329/2017
       MARUTI SUZUKI INDIA LIMITED              ..... Appellant
                    Through: Mr. T. K. Ganju, Senior Advocate
                              (M.No.9811087440) with Mr. Manik
                              Ahluwalia, Adv. (M.No.9891517513)
                    versus

       DELHI AUTO GENERAL FINANCE
       PRIVATE LIMITED                          ..... Respondent
                     Through: Mr. Girdhar Gobind & Ms. Neetu
                              Singh, Advs. (M.No.9650172263)
       CORAM:
       JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)

1. The present appeal raises an important issue as to the applicability of Section 58(f) of the Transfer of Property Act, 1882 (hereinafter `TPA‟), to the territory of Delhi/New Delhi. The Trial Court has held that the said provision does not apply to Delhi and hence, unless a mortgage deed is registered, it cannot be considered as a valid mortgage. Thus the equitable mortgage of title deeds with the bank was not recognised by the Trial Court.

2. This appeal arises out of judgment and decree dated 7th August, 2015 passed by LD. ADJ, (Central) decreeing in the suit of the Respondent/Plaintiff (hereinafter, „Plaintiff‟) in the following terms:-

"(37) In view of my findings on the various issues, I hold that the plaintiff is entitled to the relief of Mandatory Injunction as asked for in the plaint and I direct the defendants to return the following sale deeds to the plaintiff within a period of Three (3) Months

from today:

(a) Sale deed executed on 21.06.1982 between S. Inderjeet Singh son of Dr. Thara Lal R/o D-12 Maharani Bagh, New Delhi and M/s. D.A.G.F. For land measuring 4 Bighas 18 Biswancees i.e. 3.068 acre, comprising Khasra Nos 519/M and 527/IM.

(b) Sale Deed executed on 15.09.1981 between Sh. Gulam Naqsh Band Son of Late Sh. H. Nabi Baksh R/o 16 Hailey Road, New Delhi and M/s. Delhi Auto & General Finance Pvt. Ltd. (DAGF) for land measuring 5 Bighas 6 Biswancees i.e. 15321.62 sq. yds. (i.e. 3.163 acres) comprising Khasra No. 19M plus 520M (519M-1 Bigha-1 & 520-4 Bigha 1 Biswa & 6 Biswancees)."

3. The Plaintiff filed the subject suit for permanent injunction, seeking directions to return sale deeds of its properties, dated 21st June, 1982 and 15th September, 1981. It is their plea that the said documents were given to the Appellant/ Defendant (hereinafter, „Defendant‟) by way of collateral security. The documents relate to the following two properties:

"(a) Sale deed executed on 21.06.1982 between S. Inderjeet Singh son of Dr. Thara Lal R/o D-12 Maharani Bagh, New Delhi and M/s. D.A.G.F. For land measuring 4 Bighas 18 Biswancees i.e. 3.068 acres, comprising Khasra Nos 519/M and 527/IM.

(b) Sale Deed executed on 15.09.1981 between Sh. Gulam Naqsh Band Son of Late Sh. H. Nabi Baksh R/o 16 Hailey Road, New Delhi and M/s. Delhi Auto & General Finance Pvt. Ltd. (DAGF) for land measuring 5 Bighas 6 Biswancees i.e. 15321.62 sq. yds. (i.e. 3.165 acres) comprising Khasra No. 19M plus 520M (519M- 1 Bigha-1 & 520-4 Bigha 1 Biswa & 6 Biswancees)."

4. It is the further case of the Plaintiff that the collateral security was

only for a period of six months and the Defendant was liable to return the said documents to the Plaintiff, upon expiry of six months. On the other hand, the Defendant pleaded in its written statement that the deposit of title deeds with it was for the purpose of security for payment due to any claims, damages, loss or compensation which may be claimed against the Defendant, arising out of loan transactions and financial dealings or arrangements entered into by the Plaintiff. The Plaintiff was an automobile dealer of the Defendant and it was due to issues, that had arisen in respect of certain transactions, that this mortgage was entered into. It is the plea of the Defendant that the property documents have been given as collateral security and the same constitute an equitable mortgage.

5. On 22nd March, 2004 the following issues were framed in the suit:-

"(1) Whether the plaint is signed and verified by a person competent in law to do so? (OPP) (2) Whether the suit is within time? (OPP) (3) Whether the property was not mortgaged, as alleged? (OPP) (4) Whether the plaintiff is entitled to recovery of documents, as prayed? (OPP) (5) Relief."

6. The Plaintiff examined Mr. Ujjwal Sagar Suri as PW1 and Mr. Yadhvender Sharma as PW2. One witness i.e. PW1 was examined partly but he did not thereafter submit himself for cross-examination. Evidence of PW2 was fully recorded. The Defendant did not examine any witnesses. After recordal of evidence, the trial court returned its findings on various issues.

7. Issue no.1 was decided in favour of the Plaintiff. Issue no.2 was not pressed. The main findings of the Trial Court are on issue no.3, wherein the

Trial Court has held that Section 58(f) of the TPA does not apply to the territory of Delhi and thus, in effect ruled that the concept of equitable mortgage itself would not apply.

8. It appears that the Trial Court committed an error while examining Section 58(f) of the TPA. The Defendant has pointed out that Section 58(f) of the TPA has been made applicable to Delhi. Mr. Ganju relies upon the extracts placed at pages 176 and 177 of the appeal paper book which show that this provision has been notified in the territory of Delhi and New Delhi. On the last date of hearing, it was submitted that this extract was from `Mulla on Transfer of Property‟, however today it is clarified that this extract is from AIR Commentaries on The TPA 6th (2001) Edition Vol.2.

9. Irrespective of the same, the Court has called for the official Gazette of India Publication, which shows that vide notification dated 13th November, 1962, the Central Government has extended the application of Section 58(f) of the TPA to the territories of Delhi and New Delhi. The notification has come into the effect from 1st December, 1962. The extract of the said notification is set out herein below:

"G.S.R. 1551.- In pursuance of sub-section (f) of section 58 of the Transfer of Property Act, 1882 (4 of 1882), the Central Government hereby specifies the town of Delhi and New Delhi in the Union territory of Delhi as towns in which the provisions of the said sub- section apply.

2. This notification shall come into force with effect from the 1st December, 1962.

[No. F. 3/10/61-(ii)- Judl.II.] P.N. Kaul, Dy. Secy."

10. Both counsels however agree that this notification or the extract from

the AIR Commentaries was not brought to the notice of the Trial Court when the impugned judgment was passed. A perusal of the Bare Act which is published by `Universals' on the TPA shows that it does not mention that the said provision has been notified for the territory of Delhi. Since the judgment of the Trial court is primarily passed on the assumption that Section 58(f) of the TPA was not notified for the territory of Delhi and New Delhi, there is a fundamental flaw in the judgment. The notification which has now been brought to the notice of the Court makes it adequately clear that Section 58(f) applies to Delhi.

11. Mr. Girdhar Gobind, learned counsel for the Plaintiff submits that the notification was not produced before the Trial court and hence the Trial Court could not have presumed that it applies to Delhi. He further submits that irrespective of the notification, the letter at page 132 of the appeal paper book dated 2nd September, 1996 clearly shows that title documents were given as collateral security only for a period of six months. Hence, it is submitted that on merits the Trial Court is right in returning the documents to the Plaintiff.

12. Mr. Ganju, on the other hand, submits that the board resolution dated 1st September, 1996 and the covering letter by which the documents were deposited with the Defendant were not limited in time in any manner. He further submits that there are other documents to show that there is no limitation of time including the charge which was registered with the Registrar of Companies. He also submits that the letter at page 132 dated 2nd September, 1996 is a disputed document and has not been proved on record.

13. This Court is not going into the documentary evidence or an appreciation of the same at this stage, since the Trial Court has primarily

proceeded on the basis that Section 58(f) of the TPA does not apply to the territory of Delhi. Since there is a specific notification extending the application of Section 58(f) of the TPA to Delhi, the Trial Court's judgment is not sustainable. The same is accordingly set aside. It is held that Section 58(f) of the TPA applies to Delhi.

14. The matter is remanded back to the Trial Court to proceed further and decide the suit on the basis that Section 58(f) of the TPA is applicable to Delhi. Issues no.3, 4 and 5 shall now be re-adjudicated by the Trial Court. The question whether or not there is in fact an equitable mortgage shall be examined and decided by the Trial Court. If parties wish to file any documents or other evidence in respect of their respective cases, they are permitted to do so, limited to Issue nos. 3, 4 and 5.

15. Mr. Gobind has expressed an apprehension that it has been 22 years since the documents have been deposited with the Defendant and hence with a view to ensure that the documents are in safe custody with the Defendant, he seeks inspection of the said documents. Mr. Ganju submits that the said documents are safely preserved by the Defendant and there is no objection to give inspection of the same. Accordingly, it is directed that the inspection of the title documents as narrated above shall be given to the counsel for the Plaintiff in the High Court premises on 14th May, 2018 at the convenience of the counsels for the parties.

16. The Trial court record be sent back for the suit to be decided as per the directions given herein above. This Court has not gone into or examined the merits of the issues except Section 58(f) of the TPA. The Trial court shall decide the matter without being influenced by the observations made herein except as to the applicability of Section 58(f) of the TPA.

17. List on 14th May, 2018 at 4.00 p.m. for counsels to report the compliance of the orders for inspection of title deeds.

18. The appeal and all pending applications are disposed of in the above terms with no order as to costs.

PRATHIBA M. SINGH JUDGE MAY 01, 2018 Rahul