CORPORATE LAWS – BANKING LAWS – APEX COURT – DEPOSIT OF TITLE DEED REGISTRATION COMPULSORY ? – in Veeramachineni Gangadhara Rao v. The Andhra Bank Ltd. And Ors.1 the High Court took the view that the waiver of the rights made by the mortgagor amounts to a contract and unless the said document is registered the mortgage will not take effect. Accordingly, the mortgage 1 (1971) 1 SCC 874 3 was held to be invalid and consequently the sale proceedings including the sale certificate were set aside. = validity of the mortgage on the strength of which the loan was sanctioned and obtained was not raised at any point of time in any of the earlier proceedings. It was so raised for the first time before the High Court. The High Court, in our considered view, therefore, ought not to have gone into the said question at such a belated stage. – The auction purchaser is an innocent third party who, it is stated, has obtained a loan to pay the sale price and is presently servicing the said loan. It is also stated that the auction purchaser is in possession of the property since March 2016 and has spent considerable amount of money in renovating/repairing the premises in question. 7. For all the aforesaid reasons, we are of the view that the conclusion of the High Court is not tenable in law. We accordingly allow this appeal and set aside the order of the High Court.

 

1
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 17372 of 2017
[Arising out of Special Leave Petition
(Civil) No.32885 of 2016]
STATE BANK OF INDIA & ANR. …APPELLANTS
VERSUS
METTA CHANDRA SEKHAR RAO
& ORS. …RESPONDENTS
WITH
CIVIL APPEAL NO. 17374 of 2017
[Arising out of Special Leave Petition
(Civil) No.13173 of 2017]
JUDGMENT
RANJAN GOGOI, J.
CIVIL APPEAL @ SLP(C) NO.32885/2016
1. Leave granted.
2. We have heard the learned counsels for
the parties. We have perused the impugned
order of the High Court and have also
considered the facts of the case.
3. The challenge in this appeal is to an
order dated 24th August, 2016 passed by the
High Court of Judicature at Hyderabad for
the State of Telangana and the State of
2
Andhra Pradesh in Writ Petition (Civil)
No.12879 of 2016 by which the High Court
has set aside the sale proceedings held in
respect of the house property of the
respondent No.1 and the sale certificate
dated 15th March, 2016 issued in favour of
the auction purchaser.
4. The High Court took the view that
though the mortgage was created by deposit
of title deeds there was a letter of the
mortgagor to the appellant-State Bank of
India on 28th May, 2011 whereby the
mortgagor had waived his rights under
Section 61, 65A and 67A of the Transfer of
Property Act, 1882. Relying on a decision
of this Court in Veeramachineni Gangadhara
Rao v. The Andhra Bank Ltd. And Ors.1 the
High Court took the view that the waiver
of the rights made by the mortgagor
amounts to a contract and unless the said
document is registered the mortgage will
not take effect. Accordingly, the mortgage
1
(1971) 1 SCC 874
3
was held to be invalid and consequently
the sale proceedings including the sale
certificate were set aside.
5. Upon due consideration of the matter,
we arrive at the conclusion that the High
Court was not justified in passing the
impugned order and setting aside the sale
certificate.
6. The issue with regard to validity of
the mortgage on the strength of which the
loan was sanctioned and obtained was not
raised at any point of time in any of the
earlier proceedings. It was so raised for
the first time before the High Court. The
High Court, in our considered view,
therefore, ought not to have gone into the
said question at such a belated stage.
The fact that the mortgage was acted upon
by the parties to sanction and obtain the
loan is another fact that the High Court
had overlooked. The mortgage was also in
respect of certain other properties, the
sale of which has attained finality. This
4
is a vital aspect of the case that the
High Court ought to have taken into
account while passing the impugned order.
Above all, an independent Special Leave
Petition (Special Leave Petition (Civil)
No.13173 of 2017) has also been filed by
the auction purchaser who is also
aggrieved by the order of the High Court.
The auction purchaser is an innocent third
party who, it is stated, has obtained a
loan to pay the sale price and is
presently servicing the said loan. It is
also stated that the auction purchaser is
in possession of the property since March
2016 and has spent considerable amount of
money in renovating/repairing the premises
in question.
7. For all the aforesaid reasons, we are
of the view that the conclusion of the
High Court is not tenable in law. We
accordingly allow this appeal and set
aside the order of the High Court.
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CIVIL APPEAL @ SLP(C) NO.13173 OF 2017
8. Leave granted.
9. This appeal is disposed of in terms of
the order of this Court passed today in
Civil Appeal arising out of Special Leave
Petition (Civil) No.32885 of 2016.
………………..,J.
(RANJAN GOGOI)
………………..,J.
(NAVIN SINIHA)
NEW DELHI
OCTOBER 30, 2017