Maharashtra State Financial Corporation, Regional ..., Debts Recovery Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

OA/44/2013

Advocates

Judges

Acts

Article 63 of Schedule I of Limitation act
Section 58 (f) of Transfer of Property act
Section 58 (f)

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Smart Summary

Factual and Procedural Background

This Original Application No. 44/2013 was filed by the Maharashtra State Financial Corporation (MSFC) on 18 February 2013 seeking recovery of Rs.4,75,19,997.50 from the defendants. The documents relied upon by the applicant were executed on 31 March 1995. The applicant contended that the defendants had created a mortgage to secure loan facilities. The applicant relied on a document marked Exh. F (described as a copy of an equitable mortgage or a declaration) and a Memo of Entry recording deposit of title deeds and particulars of several properties and defendants as security for a sum of Rs.45 lakhs with interest at 20% per annum. On scrutiny, the Tribunal examined whether the applicant possessed a valid equitable mortgage and whether the claim was timely under Article 63 of Schedule I of the Limitation Act.

Legal Issues Presented

Whether the applicant has a valid equitable mortgage by deposit of title-deeds sufficient to invoke Article 63 of Schedule I of the Limitation Act.
If no valid mortgage exists, whether the Original Application is time-barred under the Limitation Act.

Arguments of the Parties

Applicant-Financial Institution's Arguments

The defendants created mortgages to secure loan facilities granted by the applicant.
The applicant relied on Article 63 of Schedule I of the Limitation Act to contend that the claim is within time.
The applicant sought issuance of summons and notice to the defendants and filed written notes marked Exh.09.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal examined the documents relied upon to establish an equitable mortgage. It noted that Section 58(f) of the Transfer of Property Act defines a mortgage by deposit of title-deeds as delivery of the documents of title to immovable property (the original title deeds) to a creditor or his agent with intent to create security. The Tribunal found that the Memo of Entry and schedules did not produce the original title documents said to have been deposited; only copies (e.g., Xerox copies) or declarations were on record. Exh. F was described as a declaration rather than original title deeds. Because the original title documents were not placed on record, the Tribunal concluded there was no valid mortgage by deposit of title-deeds in favour of the applicant. Consequently, the applicant could not avail itself of Article 63 of Schedule I of the Limitation Act.

Holding and Implications

HOLDING: The Original Application No. 44/2013 is time-barred and is dismissed.

Implications: The direct effect is dismissal of the applicant's recovery claim against the defendants for being time-barred due to absence of a valid mortgage by deposit of title-deeds. The opinion does not purport to set any new precedent.

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Maharashtra State Financial Corporation, Regional Office Nasik 1) M/s. Pramukh Dairy Private Ltd. Near Maruti Temple Shahada, Dist. Nandurbar; 2) Laxman s/o Hiralal Kadam, Near Maruti Temple, Shahada, Dist. Nandurbar.; 3) Kalpesh s/o Ambalal Patel; 4) Yogesh s/o Madhukar Sangpal; 5) Ajay s/o Sudhakar Katre; 6) Sham s/o Dinkar Jadhav; 7) Ashok s/o Sumanlal Sonar; 8) Mrs. Ushabai Laxman Kadam; 9) Mr. Sharad s/o Govind Bhavsar

( Pronounced in Open Court on 28-04-2016 )

1. This O.A. No. 44/2013 filed by the Maharashtra State Financial Corporation (MSFC) against the defendants for the recovery of Rs.4,75,19,997.50Ps.. In the said Original Application the defendants have executed documents on 31st March, 1995 and the Original Application is filed on 18th February, 2013.

2. The counsel for the applicant-FI made submissions on the point of limitation on behalf of the applicant-FI. The applicant submitted that the defendants have created mortgage to secure the loan facilities granted by the applicant Financial Institution. The counsel submit that based on Article 63 of Schedule I of Limitation act the claim of the Applicant is in time and prays for issuance of summon and notice of this Original Application to the defendants. The applicant Financial Institution has filed written notes marked Exh.09.

3. After hearing the counsel for the applicant-FI it has become necessary to see if the applicants are having a valid mortgage in their favour. On scrutiny of documents it is observed that the applicant-FI has filed Exh. F shown as a copy of equitable mortgage but it is a declaration by Shri sham Jadhav dated 31/03/1985 in respect of his property at village Mohide accompanied with Memorandum of Entry by (1) Shri Sham Dinkar Jadhav, (2) Shriashok Sumanlal Sona, (3) Shri Laxman Hiralal Kadam, (4) Mrs. Page - 4 Judgment, O.A.44/2013 sbj Contd. Ushabai Laxman Kadam and (5) Sharad Govind Bhavsar who is the defendant No.6, 7, 2, 8 and 9 in the instant case and the Director of the Defendant No.1 has made declaration that on 31-03-1995 handed over to and deposited with one Shri D.K. Sharma, Manager (Legal) of the applicant-FI that the tile deeds, evidences and writings in respect of premises bearing Plot of land bearing Gut No.496/2 admeasuring 8000 Sq.Mtrs. within the village limits of Mohide Tq. Shahada, Dist. Dhule owned by the defendant No.1. Shri Sham Dinkar Jadhav, defendant No.6 has also created charge by deposit of Title Deed on Plot of land bearing Gut No. 70/1/2, admg. 2 H at village Bamkhede (TS) Tal. Shahada, Dist. Dhule. The defendant No7 Mr. Ashok Sumanlal Sonal createdcharge by deposit of Title deed on Plot of land bearing Gut No.373/1 admg. 2 H 9 R at village Anarad (TS), Tal. Shahada, District Dhule. The defendant No.2 and 8 Mr. Laxman Hiralal Kadam and Mrs. Ushabai Laxman Kadam created charge by deposit of Title Deeds on residential Bunglow on Plots No.20 and 21 in Dindayal Co-Operative Housing Society each admeasuring 2000 Sq. Ft. situated at Shahada, District Dhule. The defendant No.9 Mr. Sharad Govind Bhavsar created charge by deposit of Title Deed on residential Bunglow at Plot No.5, admeasuring about 5000 Sq. ft. (S.No. 340/1, Gut No.566) situated at village Mohide (TS), Shahada, dist. Dhule. The defendant No.2 Mr. Laxman Hiralal Kadam also created charge on land Gut No.24, admeasuring about 1 H 48 R situated at village Savkheda, Tal. Shahada, District Dhule as collateral security. The defendants as recorded in the said Memo of Entry secured the sum of Rs.45 Lacs and interest thereon at the rate of 20% per annum with quarterly rests. Page - 5 Judgment, O.A.44/2013 sbj Contd.

4. On scrutiny of the document enumerated in the Schedules to Memo of Entry it is seen that the defendants have not deposited the original title though mentioned, documents of the properties over which the security interest was created by the defendants. In schedule I part A the Xerox copy of sale deed is deposited. To understand the creation of the equitable mortgage it is necessary to understand the ingredients of Section 58 (f) of Transfer of Property act which Provides for creation of equitable mortgage by deposit of document of tile to immovable property with an intent to create security thereon. The said Section 58 (f) of Transfer of Property act reads as under : Section 58 (f) : Mortgage by deposit of title-deeds. Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay and in any other town which the [State Government concerned] may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.

5. The document of title is the original title to the immovable property which conveys right, title and interest in the mortgage who can transfer such right, title and interest to the mortgage by deposit of title document. In the instant case the documents mentioned in Memo of Entry are not placed on record. Hence, there is no valid mortgage.

6. Memo of Entry recording the factum of deposit of certain documents with the applicant-FI securing any certain amount and contains declaration as to the title to the said properties but the documents mentioned Page - 6 Judgment, O.A.44/2013 sbj Contd. in the Memo of Entry by the applicant-FI are not placed on record and as such the applicant-FI is not having valid mortgage in its favour. The applicant-FI has failed to produce the proper and valid and original title document and as such there is no mortgage in favour of the applicant-FI. Accordingly, the applicant-FI cannot claim the benefit of Article 63 of Schedule-I of Limitation Act.

7. In view of the above, I pass the following order : ORDER

1. The O.A. No. 44/2013 is time barred and is dismissed

2. Consign the file in the record section of this Tribunal. Date : 28-04-2016. ( Ramesh Kumar Mahaliyan ) PRESIDING OFFICER, sbj/- Debts Recovery Tribunal, Aurangabad.

Maharashtra State Financial Corporation, Regional ...