1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Chamber Summons No.821 of 2008 In Execution Application No.361 of 2004 In Case No.374 of 2004 The North Kanara G.S.B. Co.Op.Bank Ltd. ..Plaintiffs v/s. Sujith Raghunath Shetty & ors. .. Defendants And Mandvi Co-op Bank Ltd. .. Applicants Mr.B.G. Vaidya for Applicants. Mr.N.N. Bhadrashete for Plaintiffs. ------ CORAM : SMT.ROSHAN DALVI, J. DATED : 21 st July, 2008 P.C. : 1. The Disputants have obtained an Award in Arbitration Case No.ARB/NKGSB/374 / 04, which they seek to execute in the execution proceedings. This Chamber Summons is taken out by the Applicant for joining as Intervenor in the execution proceedings and for a declaration that they have prior claim over the Disputants- Bank on the ground that such original documents of the Opponents are mortgaged with their Bank. 2 2. The Applicants have produced, inter alia, the initial application of Opponent No.1 dated 14.4.2002 for a Term Loan facility of Rs.10 Lakhs, under which a security by way of hypothecation of furniture and fixture is created and a collateral security by way of an equitable mortgage of Flat No.1104, Dhruva Hiranandani Ashokvan, Borivali (East), Mumbai 400 066 is made. Opponent No.1 has also executed a letter with a Demand Promissory Note dated 23 rd April 2002 for Rs.10 Lakhs. That Promissory Note under the said letter was to be a continuing security and enforceable for all the monies which are due and which would become due on the Term Loan Account and any other account with interest at 16% per annum thereon. Opponent No.1 executed an Affidavit- cum- Power of Attorney also in respect of housing loan of Rs.10 Lakhs for purchase of Flat No.1104 at the above address. Opponent No.1 further executed a Letter of Intent on 22.4.2002 depositing the documents, inter alia, relating to the aforesaid flat with an intent to secure the dues of the Applicants- Bank. The Applicants- Bank have obtained three Recovery Certificates on 10.3.2006. 3 3. Both the Disputants- Bank and the Applicants- Bank have given certain loan to Opponent No.1. Both of them have obtained an Award/Recovery Certificate. Both claim to enforce the Award/Recovery Certificate by attachment and sale of the aforesaid Flat No.1104. 4. The initial attachment of the Disputants was levied on 30.9.2004 over the aforesaid flat. That was pending Case No.374/2004. That warrant of attachment was issued under Order 38 Rule 5 of the Code of Civil Procedure. 5. It appears that another Bank being Bharat Co- operative Bank also had an equitable mortgage of the said flat for certain loan mortgaged to Opponent No.1 by that Bank. The Bank recovered all its dues. It handed over the original Title Deeds to Opponent No.1. Those Title Deeds are stated to have been handed over by Opponent No.1 to the Applicants- Bank on 29.7.2005. There is no document produced by the Applicants- Bank to show any such handing over of the original Title Deeds in respect of the aforesaid flat to create the equitable mortgage. This was about 3 weeks after the Applicants- Bank obtained the Recovery Certificates. Despite the fact that they had obtained 4 the Recovery Certificate, the equitable mortgage is not shown. 6. In the meantime, the Disputants- Bank obtained the final Award in the aforesaid arbitration case on 9.5.2005. They obtained a first charge on certain other flats of Opponent No.1. The attachment, which was levied before the Award under the provisions of Order 38 Rule 5 of the CPC, has not been directed to be continued in execution. However, the Disputants are directed to recover the amount of the Award by selling two other flats which were duly mortgaged to them as also the aforesaid flat No.1104. 7. The final warrant of attachment has, however, been issued on 5.6.2006 in the aforesaid Arbitration Case No.374/2004. Under that warrant of attachment, the aforesaid flat is sought to be attached. 8. The Applicants- Bank obtained a letter of possession from Opponent No.1 on 28.5.2005, under which Opponent No.1 has handed over the aforesaid flat to the Applicants- Bank, including the keys for making the inventory and to seal it to take possession of the flat with his free will and consent. 5 9. It is the case of the Applicants- Bank that upon the Title Deeds being handed over by Bharat Co-operative Bank to Opponent No.1, they were in turn handed over to the Applicants and the Applicants- Bank agreed to pay the arrears of the Co-operative Society in which the flat was situated upon they being put in possession of the flat. 10. It is the case of the Applicants that consequent upon the said letter dated 28.5.2005, they came to be in possession and the flat was equitably mortgaged to them so that they have a prior charge over the attachment levied by the Disputants- Bank under the Award dated 9.5.2005. 11. It is seen that within a month of the passing of the Award the said transfer by equitable mortgage has been sought to be created. 12. The Applicants- Bank have not sued on the mortgagee. The Applicants- Bank have not obtained the decree of mortgage under Order 34 of the CPC. They are only stated to have been put in possession of the said flat under the letter dated 28.5.2005. The Applicants- 6 Bank, therefore, cannot apply for sale of the mortgaged property to satisfy their claim alone. Under Order 34 Rule 14 of the CPC even if the Applicants had obtained the decree for payment of money in satisfaction of the claim arising under the mortgage, they would not be entitled to bring the mortgaged property to sell otherwise than by instituting Suit for sale in enforcement of the mortgage. Mr.Vaidya on behalf of the Applicants- Bank contends that whether or not the Applicants- Bank can singly sell the aforesaid flat mortgaged to the Applicants in execution of the Recovery Certificates obtained by the Applicants- Bank is a question to be determined by this Court as the Executing Court under Section 47 of the CPC. Under that section, question arising between the parties to the Suit in which a decree was passed and relating to its execution would be determined by this Court. The question in this Chamber summons is not one arising between the parties to the Suit. It is a question of preference or rateable distribution between the two parties/decreeholders in two separate proceedings. 13. It is seen that the Applicants- Bank have not obtained a mortgage decree. It is also seen that the Disputants- Bank have not mortgaged in respect of the aforesaid 7 flat. The Applicants- Bank cannot claim to be secured creditors under the mortgage as they having not adopted due process of law. 14. The aforesaid flat is not mortgaged to the Disputants- Bank also. Merely being in possession of a flat cannot give priority in respect of the attachment and sale of the property in execution of an Award/Decree/Recovery Certificate. The Disputants- Bank have obtained the final warrant of attachment of the aforesaid flat on 5.6.2006 and have desired to proceed in execution of the Award obtained by them. That proceeding cannot be stayed. Only the relief of allowing the Applicants to join as party Intervenor in the execution proceedings can be allowed. No declaration that the Applicants- Bank have a prior claim over the Disputants- Bank can be made. Hence, the following order:- ORDER The Disputants- Bank shall be entitled to proceed in execution of the Award obtained by them on 9.5.2005 and the final warrant of attachment issued on 5.6.2006. The Disputants- Bank shall be 8 entitled to sell and dispose of Flat No.1104 in the aforesaid Society for recovery of their dues under the Award. The Applicants- Bank shall be entitled to join in the execution proceedings and be paid off from the sale- proceeds of the suit flat after the Award of the Disputants- Bank is satisfied. Both the Applicants and the Disputants- Bank shall be entitled to obtain purchasers for the suit flat. 15. The Chamber Summons is disposed of accordingly. (SMT.ROSHAN DALVI, J.)