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Madan Lal Sobti v/s Rajasthan State Industrial Development & Investment Corporation Ltd.



Company & Directors' Information:- RAJASTHAN INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65993RJ1946PTC000378

Company & Directors' Information:- INDUSTRIAL DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65990MH1941PTC003300

Company & Directors' Information:- K V DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65922MH1979PTC021155

Company & Directors' Information:- MADAN DEVELOPMENT PVT LTD [Strike Off] CIN = U45203WB1979PTC032311

Company & Directors' Information:- R N B J INVESTMENT AND DEVELOPMENT PVT LTD [Strike Off] CIN = U65990MH1982PTC028451

Company & Directors' Information:- RAJASTHAN INDUSTRIAL CORPORATION PRIVATE LIMITED [Strike Off] CIN = U99999RJ1949PTC000737

Company & Directors' Information:- S P INVESTMENT AND DEVELOPMENT COMPANY PVT LTD [Strike Off] CIN = U67121ML1988PTC003133

Company & Directors' Information:- RAJASTHAN INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1942PTC011099

    CM (M) No. 1128 of 2004

    Decided On, 07 November 2006

    At, High Court of Delhi


    For the Petitioner: Ratan Kumar Singh, Advocate. For the Respondent: Rohit Madan, Advocate.

Judgment Text

Sanjay Kishan Kaul, J.


1. The petitioner filed a suit for permanent and mandatory injunctions before the Civil Judge seeking a restraint order against the respondent, namely, Rajasthan State Industrial Development and Investment Corporation Limited from dealing with the suit property being Flat No. BB/3-C, DDA Flats, Munirka, New Delhi in any manner. The petitioner claimed to be the owner of the property. In the year 1996, the respondent Corporation sanctioned additional term loan of Rs. 64 lakh to one M/s. EON Polymers Ltd. (hereinafter to be referred to as, ‘the borrower’), which was disbursed to the borrower on 15.11.1996. The respondent Corporation had a first mortgage over the borrower’s immovable and movable properties apart from the personal guarantee of the promoters. The petitioner filed the suit aggrieved by a letter/order dated 1.11.2003 issued to the petitioner by the respondent Corporation under Section 29 of the State Financial Corporation Act, 1951 (hereinafter to be referred to as, ‘the SFC Act’). In terms of the said notice/order, the suit property was sought to be attached on the ground that the petitioner had mortgaged the said property with the respondent Corporation as collateral security.

2. It is important to note that the petitioner does not dispute his signatures on the documents and, in fact, states that the contract of mortgage was got signed by the petitioner on 10.3.1997 by misrepresenting and concealing material facts. The mortgage was created much after the date of sanction and disbursement of the loan in favour of the borrower without any further facility being advanced at that stage. The mortgage was, thus, alleged to be null and void for lack of consideration. The plaint alleged that the consideration to a contract can be passed only once and, thus, the additional guarantee cannot be legally claimed and enforced in law unless fresh consideration is given, which was not so in the present case. There was absence of any reciprocal promise. A further plea was raised that the mortgage was not a registered document and could not create rights and interests in favour of the respondent Corporation.

3. The petitioner along with the suit filed an application for interim relief under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908 (hereinafter to be referred to as, ‘the said Code’). The application was dismissed by the trial Court by an order dated 13.2.2004. The petitioner thereafter filed an appeal, which was dismissed by the impugned order dated 5.7.2004. The petitioner now seeks to challenge the said order by the present proceedings under Article 227 of the Constitution of India (hereinafter to be referred to as, ‘the Constitution’).

4. It is trite to say that this Court does not exercise jurisdiction under Article 227 of the Constitution as an appellate Court. In Mohd. Yunus v. Mohd Mustaqim & Ors., AIR 1984 SC 38, it has been observed that mere wrong decision without anything more is not enough to attract the jurisdiction of the High Courts under Article 227 of the Constitution of India, which jurisdiction is limited to seeing that an inferior Court or Tribunal functions within the limits of its authority and not to correct an error apparent on the face of the record much less an error of law. It is, thus, a patent or jurisdictional error, which is liable to be corrected.

5. It may be further noticed that the matter in controversy relates to only an interim order in respect of which the petitioner has already had two rounds of litigation and two adverse orders against him. The appellate Court considered the pleas of the petitioner and noticed that undisputedly the original title documents were deposited with the respondent Corporation. Since it was a mortgage by deposit of title documents, the same did not require registration.

6. The legal position was enunciated by the appellate Court by holding that the deposit of original documents constitute a security for recovery of money by the creditor and in view of the provisions of Section 59 of the Transfer of Property Act, 1882 (hereinafter to be referred to as, ‘the T.P. Act’) would not require registration. However, if the parties chose to reduce the contract into writing, the implication of law is that the document will be the sole evidence of its terms and such a document would require registration under Section 17 of the Registration Act, 1908 being a non-testamentary instrument creating an interest in the immovable property. Thus, in such a case, if the document is not registered, it cannot be used in evidence at all. In the given facts of the case, it was found that the document in question dated 10.3.1997 was a memorandum of entry for creation of equitable mortgage. It was only a memorandum about the transaction having taken place on that date and records that the petitioner had delivered and deposited the title deeds with the respondent Corporation with the intent to create security by way of equitable mortgage. It was held that this document was only a memorandum and not a contract to create mortgage as the mortgage had already been created by deposit of title deeds. This document was not in isolation, but there was another letter of the even date addressed by the petitioner to the respondent Corporation confirming having deposited the title deeds of the property in question for the term loan of Rs. 64 lakh to the borrower. The respondent Corporation even filed commun

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ications between the parties to show how the document was understood by both the parties. 7. Learned Counsel for the petitioner once again sought to re-agitate the issue by referring to the provisions of the T.P. Act. Section 58 of the T.P. Act defines ‘mortgage’ and enlists the different kinds of mortgages. Clause (f) of Section 58 of the T.P. Act defines a mortgage by deposit of title documents as under: '58. ‘Mortgage’, ‘mortgagor’, ‘mortgagee’, ‘mortgage-money’ and ‘mortgage-deed’ defines.' xxx <