SHIVAM TRADING CO. Vs. ALLAHABAD BANK

JUDGEMENT

(1.) In the writ petition, the petitioners have prayed for a direction upon the Authorized Officer, Allahabad Bank, Zonal Office, the respondent no.2, to consider the representation dated 20th January, 2015 in accordance with the guidelines framed by the Reserve Bank of India. Prayer has also been made for declaring the property in question as not a "secured asset" as no security interest has been created in terms of the Securitisation and Reconstruction of Financial Assets and Investment of Security Interest Act, 2002 (for short '2002 Act'). Challenge is also to the notices issued by the said respondent no.2 under the 2002 Act.

(2.) Relying on the definition of "Security Agreement", "Secured Debt" and "Security Interest" under the 2002 Act, it is submitted on behalf of the petitioner that since interest was created by deposit of title deeds and since there was no registration, in view of the provisions contained in the Transfer of Property Act, 1882, the Registration Act, 1908 as well as under the 2002 Act, the respondent authorities cannot proceed under the 2002 Act. Moreover, in an unregistered mortgage by deposit of title deeds, the respondent authorities cannot proceed under the provisions of the 2002 Act. In support of his submission, learned advocate for the petitioners has relied on the judgments of the Supreme Court in Rachpal v. Bhagwandas, 1950 AIR(SC) 272, United Bank of India v. Lekharam S. & Co, 1965 AIR(SC) 1591, V.G. Rao v. Andhra Bank, 1971 AIR(SC) 1613, Standard Chartered Bank v. V. Noble Kumar, 2013 9 SCC 620 and State of Haryana v. Navir Singh, 2014 4 WBLR 561.

(3.) Learned advocate appearing on behalf of the respondents submits that it is evident that Parliament while enacting the 2002 Act had kept in mind the provisions contained in the Transfer of Property Act and the Registration Act. The definition of "Security Agreement" is wide enough to encompass not only an agreement or instrument but also any other document or arrangement, including creation of mortgage by deposit of title deed under which security interest is created in favour of the secured creditor. Submission is 'security interest', as defined in section 2 (zf) of the 2002 Act, also brings into its ambit the right, title and interest whatsoever in any kind of property in favour of the secured creditor including any mortgage, charge or hypothecation. Moreover, under the Transfer of Property Act, in Kolkata, a Presidency town, mortgage by deposit of title deeds requires no registration. The learned advocate for the respondents has relied on the judgment of the Hon'ble Supreme Court in Kehar Singh v. Delhi Administration, 1988 AIR(SC) 1883, particularly paragraph 227 thereof, in support of his submission.