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Punjab National Bank V/S Union Bank of India and Others.


Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- NATIONAL UNION CORPN PVT LTD [Strike Off] CIN = U51909WB1940PTC010240

Company & Directors' Information:- NATIONAL UNION LTD [Not available for efiling] CIN = U74999KL1951PLC000818

    Appeal Nos. 43 and 175 of 2010 and Misc. Appln. No. 933 of 2010

    Decided On, 03 December 2010

    At, Debt Recovery Appellate Tribunal At Delhi

    By, THE HONORABLE JUSTICE: J.M. MALIK (CHAIRPERSON)

   



Judgment Text


1. This order shall decide the above detailed two appeals which pertain to the same impugned orders. There is dispute about the sale proceeds of the mortgaged properly bearing No. M 84 D, Prem Nagar, Uttam Nagar, Delhi, which was mortgaged to three Banks namely Punjab National Bank of India and Allahabad Bank. All the three Banks claimed that original documents were deposited with the respective Banks. During the pendency of the case Pankaj Gulati, Auction purchaser and one Karam Singh who offered more price than the auction purchaser and whose offer was accepted by the learned Trial Court were impleaded as parties.

2. It may be mentioned here that since the auction purchaser has not filed any appeal against the impugned order, therefore his claim cannot be considered in these appeals.

3. In both the cases the following reliefs were claimed. Appeal filed by PNB, the following prayer was made:

(a) The Hon'ble Appellate Tribunal may be pleased to set aside the order dated 10.11.2009 passed by the DRT III, in SA No. 201/2009 and consequently set aside the order disposing of the SA.

(b) That the order pertaining to the sharing of the sale proceeds by the Appellant Bank with the Respondent Bank may be set aside and the charge of the Appellant Bank on the property in question may be declared as a first charge and the Appellant Bank may be allowed to appropriate the sale proceeds of the said property towards its dues outstanding in the loan account of Shri Puran Kumar Sehgal and others.

(c) That the costs of appeal may also be awarded in favour of the Appellant Bank and against the Respondent.

(d) Pass any such other orders/directions as this appellate Tribunal may deem fit and proper under the facts and circumstances of the case in favour the appellate Bank and against the Respondents.

No relief against or for the auction purchasers was claimed.

The Allahabad Bank claimed the following reliefs:

(a) Allow the appeal in favour of the Appellant Financial Institution and set aside the final order dated 10.11.2009 passed by the learned DRT III Delhi in SA No. 291/2009.

(b) Declare that the Appellant Bank has prior charge than the Respondent No. 1 Bank and hence any money, if liable to be paid to the Respondent No. 1 from the sale proceeds of property in question, can be done only after the entire outstanding of the Appellant Bank is discharged.

(c) Pass any other or further order(s) as may be found appropriate and necessary in the facts and circumstances of this case.

4. Counsel for the parties heard. The borrower Mr. Puran Kumar Sehgal and others mortgaged property No. M-84/D, Prem Nagar, Uttam Nagar, New Delhi-59 with the Punjab National Bank on "Fourth June, 2000" and obtained loan in the sum of Rs. 5 lacs. The original sale deed was deposited with the Punjab National Bank.

5. It also transpired that the said property was also mortgaged with Union of Bank of India on "23rd February, 2001". The said Bank also claimed that the original documents were deposited with them. The Bank claimed a sum of Rs. 17 lacs approximately.

6. Thereafter, the same property was mortgaged with Allahabad Bank on "Sixth June, 2003". Original documents were also deposited with Allahabad Bank. Allahabad Bank has obtained a civil decree for a sum of Rs. 7,45,809/- alongwith interest.

7. Vide first order dated 25th May, 2009 it was ordered by the Trial Court that the sale proceeds be divided between Punjab National Bank and Allahabad Bank.

8. On 10th November, 2009 the learned Trial Court vide another order has held that the sale proceeds will be divided amongst all the three Banks.

9. The present case is covered by Section 48 of the TP Act which is reproduced as follows:

48. Priority of rights created by transfer:

Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created.
This section reproduces the well-established equitable maxim qui prior est tempore potior estjure and lays down that the transferor cannot prejudice the rights of the transferee by any subsequent dealing with the property. In other words, if there are successive transfers of the same property, the later transfer is subject to the prior transfer. It follows that in the case of two successive mortgages, the later or puisne mortgage is subject to the prior mortgage. In the case Sh. Ishar Dass Malhotra v. Dhanwant Singh and Ors. : AIR 1985 Delhi 83 (DB), Their Lordships, HMJ Dalip K. Kapur and HMJ D.P. Wadhwa were pleased to hold:

8. It will thus be seen that a mortgage by deposit or title deeds is like any other mortgage and there is a transfer of interest in the property mortgaged to the mortgagee. The question, therefore, of the subsequent purchaser having bought the property subject to a mortgage by deposit of title deeds bona fide, with or without notice, is of no relevance. The subsequent purchaser cannot avoid the mortgage by leading evidence to show that he made all reasonable inquiries to find out if the property was subject to a mortgage by deposit of title deeds or not. Section 48 of the Transfer of Property Act does not admit of any such exception. According to this section, when a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created. Further proviso to Section 48 of the Registration Act enacts that mortgage by deposit of title deeds shall take effect as against any mortgage deed subsequently executed and registered relating to the same property. Thus, a subsequent sale cannot have priority over a mortgage by deposit of title deeds created before the sale. In my view, therefore, the Trial Court fell in an error in holding that Harjeet Singh Dhanjal the subsequent purchaser of the mortgaged property; was not liable on the ground that he took all reasonable care and acted in good faith.
10. In the State v. Rajah Ram Varu : AIR 1966 AP 233 (DB), it was held in para 20:

20. Thus, the foregoing discussion makes it clear that where a specific charge is created on immovable property, an equitable charge or a floating charge if any, created cannot have priority. Even if there be any other specific charge created on the same property, the specific charge which is the first in point of time taken priority over the second. In a case where buildings are constructed or machinery is fixed to the earth for its beneficial use after mortgaging the land, the buildings and the machinery or plant would constitute immovable property as an accession to the land, and form part of mortgagee's security. So that, the mortgagee can claim security not merely in respect of the land mortgaged but also the buildings and the machinery fixed to the earth subsequently.
11. There is dispute between the auction purchaser and subsequent buyer of the property as per order dated 10th November, 2009. Both of them have not challenged the orders passed by the learned Trial Court. Consequently the order dated 10.11.2009 shall prevail so far as the question of the sale proceeds is concerned. Counsel for the auction purchaser submits that he has filed an application challenging the order of the Court. This is not the proper way. He should have challenged the order by filing a separate app

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eal. His grievance cannot be redress in these appeals when no such relief is claimed by either of the Appellants. However the auction purchasers can challenge the said order as per law. 12. In view of the authorities discussed above, I hereby order that first mortgagee will have the preponderance over the rights of the second and third mortgagees. The rights of first mortgagee i.e. Punjab National Bank be satisfied being first in time and thereafter the debt of Union of Bank of India and lastly if there is any residue amount the debt of Allahabad Bank be satisfied. The mere fact that the few Banks have obtained the civil decrees does not go to affect the above said rights of the respective Banks. 13. Appeals stand disposed of. 14. Copies of this order be furnished to the parties as per law and one copy be sent to the learned DRT forthwith.
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