1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.651 OF 2003 IN NOTICE OF MOTION NO.1063 OF 2002 IN SUIT NO.659 OF 2002 Housing Development Finance Corporation Ltd. ...Appellant vs. 1.Naterwala Dhun C. & Anr. ...Respondents --- Mr.Virag Tulzapurkar, Sr. Counsel, Mrs.Sowmya Srikrishnan i/b. Mr.Amit Pradhan i/b. M/s.Wadia Gandhy & Co., for Appellant. Mr.Arif Bookwala Sr.Counsel, with Mr.Kapil Moye, Mr.L.A.Ruben, Mr.Sujit S.Suryavanshi & Ms.Manisha Virkhare i/b. Vigil Juris, for Respondents. --- CORAM: D.K.DESHMUKH & A.A.SAYED, JJ. DATED: 17th January, 2009. 2 P.C.:- 1. By this appeal, the appellant challenges the order dated 12.8.2002 passed by the learned Single Judge of this Court on Notice of Motion no.1063 of 2001. That notice of motion was taken out by the present appellant. The appellant has filed a suit for recovery of loan which, according to the appellant, was advanced by it to the respondents. The appellant by that notice of motion was claiming appointment of receiver on two flats. For the convenience we refer one flat as “Om Rattan flat” and other as “Dial Mahal flat”. So far as Om Rattan flat is concerned, the appellant is not pressing for any relief against that flat. So far as Dial Mahal flat is concerned, the appellant-plaintiff has sought an order for appointment of Receiver or in the alternative for order of temporary injunction restraining the defendants-respondents from transferring, disposing of or alienating that flat. The learned Single Judge has held that the plaintiff is not entitled to the order of appointment of 3 Receiver on that flat. However, the learned Single Judge has granted temporary injunction in its favour. The case of the appellant-plaintiff is that the learned Single Judge has committed error in holding that there is no valid mortgage created of Dial Mahal flat in favour of the plaintiff. It is an admitted position that what was deposited by the defendants with the plaintiff is stock certificate and the agreement entered into by the defendants with the owner of the flat to sell the flat to the defendants. Admittedly, the share certificate which is a document evidencing the title has not been deposited. The learned Single Judge has held that mere deposit of stock certificate and the agreement for sale does not constitute valid mortgage. 2. The learned Counsel appearing for appellant submits that deposit of agreement to sale the flat with clear intention to create equitable mortgage in favour of the plaintiff constitute a valid mortgage. The learned Counsel submits that the loan was already granted. There was an application made on 30.10.1998 for splitting the loan that was already granted and 4 it was suggested that loan of Rs.50 lakhs was agreed on Dial Mahal flat and on the same date two documents viz. Stock certificate and agreement for sale were deposited. According to the learned Counsel, therefore, mortgage of the property was created on 30.10.1998, and according to him, the agreement was entered into between the parties on 12.11.1998 merely acknowledges that the mortgage has already been created. The learned Counsel, therefore, submits that the finding recorded by the learned Single Judge that there is no mortgage created pursuant to agreement dated 12.11.1998, is not correct. The learned Counsel relied on two judgments viz. one is of the learned Single of Madras High Court “M/s.Ride Master Rims Pvt.Ltd. Vs. ING Vysya Bank Ltd., AIR 2007 Madras 34” and the another is of the Division Bench of Calcutta High Court in the case “Amulya Gopal Majumdar Vs. United Industrial Bank Ltd. and others, AIR 1981 Calcutta 404” in support of his contention that deposit of agreement for sale of property creates valid equitable mortgage of the property. We have heard the learned Counsel appearing for Respondents who pointed out to us judgment of the 5 Supreme Court in the Case “Bank of India Vs. Abhay D. Narottam & others, (2005)11 Supreme Court Cases 520” to contend that agreement for sale is never a document of title and deposit of that document does not create any valid mortgage. 3. It is an admitted position that on 30.10.1998 when according to the plaintiff equitable mortgage of Dial Mahal flat was created in its favour, there was already a document of title viz. Share certificate in existence. That document was not deposited. What was deposited was the agreement to sale the flat and stock certificate. Once sale of the property takes place pursuant to the agreement to sale, the document of agreement to sale loses its significance and the stock certificate by no stretch of imagination can be termed as document of title. If one reads clause 3.1 of the agreement entered into between the parties dated 12.11.1998, the position becomes absolutely clear. Clause 3.1 reads as under:- “3.1. Security for the loan The loan together with interest, 6 further/additional interest in case of default, costs, charges, expenses and other monies payable by the borrower in respect thereof, shall be secured by mortgage of Flat No.62 on 6th floor in the building called Las-Palmas situate at 2nd Little Gibbs Road, Malabar Hill, Mumbai & also Mortgage of Flat at Dalamal Park, Cuffe Parade (hereinafter referred to as “the security”). However, HDFC shall have the right to decide, in its sole discretion the type of mortgage and any other or additional security HDFC may require and the Borrower shall be bound to execute the mortgage accordingly and furnish any such other or additional security as required by HDFC.” It is clear from this clause that this clause contains promise by the defendants to secure a loan by mortgaging Dial Mahal flat. Had there already been mortgage created then in the clause it would not have been stated that the loan shall be secured by mortgaging the flat. In our opinion, therefore, the learned Single Judge is correct in holding that the agreement dated 12.11.1998 is only an agreement to create mortgage and it cannot be termed as an agreement which acknowledges mortgage which has 7 already been created. Admittedly, there is no prayer in the suit for a decree for creation of mortgage. Perusal of the judgment of the Supreme Court in the case “Abhay D.Narottam” referred to above shows that the Supreme Court in clear terms, after referring to judgment of the Division Bench of Calcutta High Court which was relied on by the learned Counsel appearing for appellant, has held that an agreement to sell a flat cannot be the document of title or document evidencing the title. In our opinion, therefore, no fault can be found with the order of the learned Single Judge. Appeal has no substance. It is rejected. No order as to costs. (D.K.DESHMUKH, J.) (A.A.SAYED,J.) --- 8 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2410 OF 2003 IN APPEAL NO.651 OF 2003 Housing Development Finance Corporation Ltd. ...Appellant vs. 1.Naterwala Dhun C. & Anr. ...Respondents --- Mr.Virag Tulzapurkar, Sr. Counsel, Mrs.Sowmya Srikrishnan i/b. Mr.Amit Pradhan i/b. M/s.Wadia Gandhy & Co., for Appellant. Mr.Arif Bookwala Sr.Counsel, with Mr.Kapil Moye, Mr.L.A.Ruben, Mr.Sujit S.Suryavanshi & Ms.Manisha Virkhare i/b. Vigil Juris, for Respondents. --- CORAM: D.K.DESHMUKH & A.A.SAYED, JJ. DATED: 17th January, 2009. 9 P.C.:- In view of the order passed today i.e. 17.1.2009 in appeal no.651 of 2003, this notice of motion does not survive for consideration, hence, disposed of. (D.K.DESHMUKH, J.) (A.A.SAYED, J.)