IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 10TH JUNE 2010 / 20TH JYAISTHA 1932 WP(C).No. 1307 of 2010(K) ------------------------- PETITIONER: --------------- BIJU JACOB, AGED 40 YEARS, S/O.K.J.JACOB, MERRY LAND, C.M-III, CHERTHALA PO, ALAPPUZHA. BY ADV. MR. B.PRAMOD RESPONDENTS: --------------- 1. THE AUTHORIZED OFFICER, THE FEDERAL BANK LTD, REGIONAL OFFICE, MULLACKAL, ALAPPUZHA BRANCH. 2. FEDERAL BANK LTD, THUMPOLY BRANCH, ALAPPUZHA REPRESENTED BY ITS MANAGER. 3. FEDERAL BANK LTD,CHERTHALA BRANCH, ALAPPUZHA REPRESENTED BY ITS MANAGER. ADV. MR. MOHAN JACOB GEORGE MS. P.V.PARVATHI FOR R1,2&3 MS. REENA THOMAS FOR R1,2&3 MR. L.RAM MOHAN FOR R1,2&3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/06/2010, THE COURT ON 10/06/2010 DELIVERED THE FOLLOWING: P.R. RAMACHANDRA MENON J. ~~~~~~~~~~~~~~~~~~~~~~~ W.P. (C) No. 1307 of 2010 ~~~~~~~~~~~~~~~~~~~~~~~ Dated, this the 10th day of June, 2010 JUDGMENT The petitioner who is the borrower, had availed various loans from different branches of the respondent Bank i.e. 2nd respondent as well as 3rd respondent, at different point of time, after creating security interest over different extents of property. 2. The factual position reveals that, the petitioner had approached the 3rd respondent branch and secured a loan of Rs. 25 lakhs on 3.8.04, on the strength of 14.80 Ares of land creating security interest over the same (the actual extent of which however stands disputed by the petitioner). Subsequently, on 24.2.2006, another sum of Rs. 24 lakhs was borrowed from the very same branch, on the basis of security interest created over the very same property. Thereafter, the petitioner approached the second respondent branch and obtained a loan of Rs. 24,80,000/- on 11.8.2006 creating security interest over yet another property of 12.54 cents. The petitioner did not choose to repay the due amount on time, which made the respondent Bank to file Ext. R1(a) O.A. 204 of 2009 for realization of a total sum of Rs.91,03,596/- due under all the three loans, before the Debt Recovery Tribunal, Ernakulam, where the matter is still pending. W.P. (C) No. 1307 of 2010 : 2 : 3. Meanwhile, by virtue of the vested rights and liberties of the Bank to proceed against the properties over which security interest is created, further steps were taken under the SARFAESI Act, which in turn was sought to be challenged by the petitioner by filing S.A. No. 394 of 2009 as borne by Ext. R1(b). The Bank filed Ext. R1(c) written statement along with a copy of the criminal complaint stated as filed before the Judicial First Class Magistrate's Court, Cherthala [Ext. R1 (d)], stating that petitioner herein had pursued some dubious exercise for securing the loan, wrongly describing the extent of the property. A copy of the relevant F.I. R. registered by the Police has also been produced as Ext. R1 (e). 4. The case of the petitioner, as put forth by learned counsel, is that the allegations levelled against the petitioner are not correct or sustainable. According to the petitioner, the Bank is pursuing a hostile attitude towards the petitioner right from the beginning. Case of the Bank is that, the petitioner, just before securing the loan in the year 2004, fraudulently transferred a portion of the concerned property (about 6.07 Ares) to his wife, who had subsequently transferred the same to somebody else and the balance extent of the property was not sufficient enough to have sustained the loan amount. The learned counsel for the petitioner further submits that, the position was actually W.P. (C) No. 1307 of 2010 : 3 : brought to the notice of the Bank then and there and nothing was concealed and it was after verifying the worth of the security, that the Bank chose to extend another loan of Rs. 25 lakhs on the basis of very same security, nearly 2 years thereafter i.e. on 24.2.2006. It is further stated that, the criminal case registered against the petitioner has been sought to be set aside by filing Criminal M.C. before this Court under Section 482 of Cr.P.C. and the same is pending (Crl.M.C. 2639 of 2009). 5. The grievance now projected and pressed in this Writ Petition is that, the petitioner is ready and willing to clear the entire liability in respect of the transaction with the second respondent, to redeem the property therein, over which security interest has been created. But the request made by the petitioner has been simply ignored by the Bank, stating that the title deeds in respect of the said property will be handed over, only if the petitioner cleared the entire liability under the other loans as well, involving the 3rd respondent branch as well. The learned counsel submits that the stand taken by the Bank is not correct or sustainable., more so, being contrary to the rights and liberties of the mortgagors as contemplated under Section 61 of the Transfer of Properties Act, which hence is sought to be intercepted by this Court. W.P. (C) No. 1307 of 2010 : 4 : 6. The learned Standing Counsel appearing for the Bank submits that, this is a case involving serious offence punishable under the relevant provisions of law and that the petitioner, having chosen to defraud the Bank, giving false information about the extent of the property, it cannot be said that the petitioner has approached this Court with clean hands and hence the discretionary jurisdiction vested upon this Court is not liable to be entertained in favour of the petitioner. 7. The learned counsel for the Bank submits that the property was actually having an extent of 14.80 cents till 10.6.2004 i.e when the application for the loan was being processed by the 3rd respondent. But before sanctioning of the loan, nearly 6.07 cents were transferred by the petitioner to his wife on the very next day i.e. 11.6.2004, which in turn was transferred to somebody else, later. The mortgage was confirmed by the petitioner as per letter dated 4.8.2004 in respect of the entire extent of 14.80 Ares and the possession was also confirmed as above, on 25.2.2006 as well, which can only be considered as a conscious attempt to defraud the Bank, submits the learned counsel. 8. The learned standing counsel for the Bank further submits that, the value of the property offered as security before the 2nd respondent branch has been substantially diminished and that the Bank may have to proceed against the other property also, which has been W.P. (C) No. 1307 of 2010 : 5 : offered as security to the 3rd respondent branch. Eventhough the branches are different, the creditor being the same, the Bank is very much entitled to have the loan amount realized from all the properties concerned, by pursuing appropriate steps and as such, the Bank is justified in taking the stand insisting the petitioner to clear the entire liabilities to both the branches, for facilitating the release of title deeds. It is also stated that, the sale of the entire properties offered before 2nd respondent branch and 3rd respondent branch will not be enough to satisfy the entire outstanding liability, simultaneously pointing out that, even though the Bank has taken steps to attach some other property, it has now been revealed that there is already a mortgage in respect of the said property in favour of some other Bank/financial institution. 9. With regard to the legal position, particularly as to the rights and liberties of the mortgagor, it has been specifically dealt under Section 61 of The Transfer of Properties Act, which is extracted below: 61 Right to redeem separately or simultaneously - A mortgagor who has executed two or more mortgages in favour of the same mortgage shall, in the absence of a contract to the contrary, when the principal money of any two or more of the mortgages has become due, be entitled to redeem any one such mortgage separately, or any two or more of such mortgages together. By virtue of the above stipulation, any mortgagor like the petitioner is at W.P. (C) No. 1307 of 2010 : 6 : liberty to have the property redeemed, subject to his choice, as to which item has to be redeemed first. In the said circumstances, the petitioner contends that the petitioner is entitled to redeem the mortgage created in favour of the 2nd respondent branch, on satisfying the entire liability in respect of the concerned loan, which cannot be successfully resisted by the Bank insisting to redeem the other mortgages as well. Section 171 of the Contract Act mentioning the 'General Lien' of the Bankers also does not come to the rescue, to sustain the stand of the Bank; which reads as follows : 171. General lien of bankers, factors, wharfingers, attorneys and policy brokers -- Bankers, factors, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no others persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect. As such, the petitioner is very much entitled for a declaration that once the entire liability due to the 2nd respondent branch is cleared, the title deed pertaining to the concerned property is liable to be returned by the Bank. It is ordered accordingly. 10. The fact remains that there is a serious dispute with regard to the course and proceedings pursued by the petitioner for securing the loans from the 3rd respondent branch, on the strength of the W.P. (C) No. 1307 of 2010 : 7 : property offered as security there. True, cases are pending before the concerned Magistrate's Court and also before this Court in respect of the Crime registered by the Police against the petitioner. The proceedings filed from the part of the Bank as Ext. R1(a) O.A. and Ext. R1 (b) S.A. preferred by the petitioner are also pending before the DRT, Ernakulam, To put it short, the relative extent of the rights and liberties of the parties in respect of the transactions are still to be finalized. The mere fact that the title deeds of the property offered as security before the 2nd respondent branch are to be returned to the petitioner on redeeming the particular mortgage, does not prevent the Bank from approaching the DRT by filing appropriate petition for causing the property to be attached in respect of the other transaction/cause action relating to the 2nd respondent branch. The learned counsel for the petitioner submits that such a petition has already been filed before the DRT and the same is pending consideration. The respondent Bank is at liberty to move the DRT for urgent hearing and to have passed appropriate orders in the said I.A. so as to secure the rights and interests of the Bank, if so advised. 11. Considering the limited nature of the issue involved in this case, which has already been answered as above, the respondent Bank shall return the title deeds of the property in respect of which W.P. (C) No. 1307 of 2010 : 8 : security interest has been created with the second respondent branch, once the entire liability in respect of the loan transaction with the said branch is cleared by the petitioner. The transaction/conveyance if at all intended to be effected by the petitioner in respect of such property, will of course be subject to the orders if any, to be passed by the DRT, Ernakulam in connection with other/connected cause of action mentioned above. The Writ Petition is allowed as above. No cost. P. R. RAMACHANDRA MENON, JUDGE kmd