ICICI HOME FINANCE COMPANY LIMITED vs MAHESH KUMAR MANU BHAI GADHIA on 28 December 2023

J U D G M E N T

1. The Original Application has been filed by the Applicant before the Ld. DRT-III, Mumbai on 23.01.2012 which stands transferred to this Tribunal on 06.12.2016 as per the Govt. Notification dated 26.09.2016 and registered as A No.1125 of 2016. The OA has been filed for recovery of Rs.47,94,892.83 (Rupees Forty Seven Lakhs Ninety Four Thousand Eight Hundred Ninety Two and paise Eighty Three only) as on 10.12.2011 with further interest @15.75% p.a. from 11.12.2011 till its realization.

2. Facts as succinctly set out in the OA are that the Defendants are sued as the Borrowers and Mortgagors of the Applicant. The Defendants approached the Applicant and applied for the grant of a loan against property sometime in 2003. The property proposed to be mortgaged by the Defendants was Flat No.34, 3rd Floor, “F” wing Aavishkar Pratap Nagar, Jogeshwari Vikroli Link Road, Jogeshwari (East), Mumbai-400060 area admeasuring 1000 sq. ft. (built-up). Pursuant to the same, the Applicant sanctioned a loan of Rs.26,29,814/- vide sanction letter dated 12.05.2003. As per the terms and conditions of the sanction letter, the said loan was repayable in 180 EMIs of Rs.26,674/- with interest @9.75% as on the date of sanction. Further, the Defendants executed a Loan Agreement dated 16.05.2006. The Defendants also executed a Declaration dated 16.05.2006.

3. It is further stated that the Defendants deposited the original title deeds of the property viz. Flat No.34, 3rd Floor, “F” Wing Aavishkar Pratap Nagar Jogeshwari, Vikroli Link Road, Jogeashwari (East), Mumbai-400060 admeasuring 1000 sq. ft. (built-up) with an intent to create security thereon for repayment of the facility availed by the

Defendants and further deposited the title documents with the Applicant.

4. It is further stated that the Defendants however, made payments only till November, 2008 thereafter, failed and neglected to make the payments. The Applicant issued a Loan Recall Notice dated 22.12.2006 to the Defendants and called upon them to make the payment of the outstanding dues but they failed to pay the dues. Hence, the present OA has been filed.

5. Notices were issued to the Defendants and they put their appearance through counsel and filed the WS however, since 24.10.2017, no one appeared on behalf of the Defendants.

6. In the written statement, the Defendants have raised the following objections that:

(i) The present OA is barred by limitation;

(ii) The Loan Agreement as well as Declaration dated 16.05.2006 whereby the mortgage was created in favour of the Applicant Bank, is neither stamped nor notarized;

(iii) The sanction letter was issued on May 12, 2003 but the loan was disbursed on 16.05.2006 after a lapse of three years. The said sanction was valid only for six months and the special rate of interest valid for 30 days from the date of sanction;

(iv) The Applicant has charged excessive amount by way of interest as the principal amount claimed by the Applicant is incorrect.

7. The Applicant has produced all the original documents and other relevant documents alongwith their CAOD filed through their Regional Debt Manager, Shri Shailesh Ghanekar.

8. The Defendants have also filed the CAOD however, no documentary evidence has been filed on their behalf.

9. I have heard the Ld. Counsel for the Applicant and perused the record.

10. Now hereinafter, I would like to decide the issue raised by the Defendants in their written statement.

(i) The first objection raised by the Defendants is that the present OA is barred by limitation. It is stated that the loan documents were executed on 16.05.2006 and these Defendants have not signed any letter of acknowledgment of debt and/or security documents thus, the present OA is beyond the period of three years hence, the same is deserves to be dismissed.

Record reveals that as per the Loan Agreement dated 16.05.2006 (Exhibit-15), the said loan was repayable in 180 Equated Monthly Instalments (15 years) commencing from 10.05.2006. The present OA has been filed by the Applicant on 23.01.2012. The Hon’ble Apex Court in Syn. Bank Vs. Channaveerappa Beleri reported in AIR 2006 SC 1874 held that where the amount is payable in instalments on default of every instalment the limitation accrued.

Even otherwise, the mortgage is created in the impugned account therefore, as per Article 62 of the Schedule to the Limitation Act, 1963, the limitation period is twelve years, from the date when the money sued for becomes due.

In view of the above, the present OA is within the period of limitation therefore, the objection raised by the Defendants is not sustainable hence, rejected.

(ii) The next objection raised by the Defendants is that the Loan Agreement as well as Declaration dated 16.05.2006 whereby the mortgage was created in favour of the Applicant Bank, is neither stamped nor notarized, thus, the same cannot be read into evidence. As a result no mortgage has been created as averred by the Applicant Bank.

The Defendants have not denied the availment of the loan facility and execution of the loaning and security documents. I have gone through the record, it reveals that the Loan Agreement (Exb.15) and Declaration (Exb.16), which are duly signed by the Defendants.

Further, the creation of the mortgage was done by way of deposit of the title deeds of the property in question therefore, since the title deeds deposited with an intent to provide security thus, the deposit of title deeds itself, based on its language, may be an evidence of the contract between the parties under section 58(f) of the Transfer of Property Act, 1882. Further, as per section 59 of the Transfer of Property, such a mortgage do not required to be effected by a registered instrument. The Hon’ble Apex Court in the matter of Rachpal Mahraj Vs. Bhagwandas Daruka and others, 1950 AIR 272 has held that: “...when the debtor deposits with the creditor the title deeds of his property with intent to create a security, the law implies a contract between the parties to create a mortgage, and no registered instrument is required under section 59 as in other forms of mortgage.”

(emphasis provided)

Similarly, the Hon’ble Supreme Court in the case of State of Haryana & Ors vs Navir Singh & Anr, Civil Appeal No.9030/2013 has held that- “.....In the face of it, we are of opinion that the charge of mortgage can be entered into revenue record in respect of mortgage by deposit of title-deeds and for that, instrument of mortgage is not necessary. Mortgage by deposit of title-deeds further does not require registration. Hence, the question of payment of registration fee and stamp duty does not arise. (emphasis provided)

Therefore, an equitable mortgage does not need to be affected by a registered instrument and also the issue of stamp duty is not relevant in the matter of deposit of title deeds. Therefore, the objection raised by the Defendants is not sustainable hence, declined.

(iii) The next objection raised by the Defendants is that the sanction letter was issued on May 12, 2003 but the loan was disbursed on 16.05.2006 after a lapse of three years. The said sanction was valid only for six months and the special rate of interest valid for 30 days from the date of sanction.

Admittedly, availing the loan facility, execution of loaning and security documents have not been denied by the Defendants. As per the Loan Agreement, the loan was repayable in 180 EMIs, and the date of first EMI was 10.05.2005 however, the Defendants made payments only till November, 2008 and thereafter, failed and neglected to make the payments.

It is also important to note that the loan was disbursed in the year 2006 but till the date of filing the WS on 29.04.2023, the Defendants did not raise any such issue before the Applicant Bank and on the other hand enjoyed the loan facilities granted by the Applicant Bank. Therefore, the objection of the Defendants is baseless hence, same is hereby rejected.

(iv) The next objection raised by the Defendants is that the Applicant has charged excessive amount by way of interest as the principal amount claimed by the Applicant is incorrect. It is stated that the loan agreement annexed by the Applicant is incomplete as Schedule “B” is missing because the Defendants had opted for floating rate of interest as per sanction letter, for which the terms and conditions are enumerated in Schedule “B”. It is also stated that the Applicant has failed and neglected to show that these Defendants had agreed to pay penal interest at 24% p.a..

Record reveals that as per the Loan Agreement dated 16.05.2006, the Defendants were agreed for rate of interest as “Adjustable Interest Rate as per Schedule B”.

According to the Defendants, the Schedule “B” is missing. However, on perusal of the Loan Agreement, I find that the Schedule “B” is duly attached with Loan Agreement. The sub-clause (E) in Clause D of the said Schedule “B”, provides the “interest” as under: “(E) Interest

(a) ICICI Bank Floating Reference Rate: 9.75% per annum (as on the date of execution of this Agreement).

(b) Adjustable Rate of interest: ICICI Bank Floating Reference Rate = 0.75% p.a. = 9% p.a.

(c) Pre-EMI Interest 9% per annum.

(d) Additional interest 24% per annum. Commitment Fees Nil % per annum

(f) Part Prepayment fees 0% per annum However, if the BORROWER makes full prepayment, within one year of Part Prepayment, the full prepayment fees shall applicable on amount prepared to foreclose the loan and on all amounts tendered by the BORROWER towards Prepayment of the LOAN during the last one year from the date of Final Prepayment.

(g) Part Prepayment Documentation Charges: Rs.__/-.” (emphasis supplied)

Therefore, on perusal of the above clause, I find no force in the objection raised by the Defendants hence, the same is hereby declined.

11. The witness of the Applicant has fully corroborated the averments made in the OA/TA, even otherwise the whole case of the Applicant is based on documents and the witness has duly proved all these documents as against the Defendants. In my view there is no question of disbelieving the evidence led by the Applicant and the Applicant has proved its case beyond reasonable doubt against the Defendants. The liability of both the Defendants is joint and several.

12. In the light of above discussions, the Original Application deserves to be allowed against the Defendants.

O R D E R

(i) The present O.A. is hereby allowed and Defendant No.1 & 2 are hereby directed to pay to the Applicant Bank, within a period of 60 days, a sum of Rs.47,94,892.83 (Rupees Forty Seven Lakhs Ninety Four Thousand Eight Hundred Ninety Two and paise Eighty Three only) as on 10.12.2011 with further interest @15.75% p.a. from 11.12.2011 till its realization.

(ii) Failing which the aforesaid amount shall be recovered from the sale of mortgaged property as well as other personal moveable and immoveable assets of the Defendants.

(iii) Defendants are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) Defendants shall also pay the cost and expenses of the OA/TA.

(v) Recovery Certificate be issued forthwith and be sent to the Recovery Officer of this Tribunal. Copy of this order be sent to the parties as per rules. File be consigned to record.

Place: Mumbai.

(Dr. Rekha G. Dhakar) Date: 28.12.2023

Presiding Officer,

DRT-1, Mumbai

SC/-