{"id":129024,"date":"2004-09-15T00:00:00","date_gmt":"2004-09-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-br-manager-vs-the-meenachil-co-op-agrl-rural-on-15-september-2004"},"modified":"2018-10-09T09:37:26","modified_gmt":"2018-10-09T04:07:26","slug":"the-br-manager-vs-the-meenachil-co-op-agrl-rural-on-15-september-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-br-manager-vs-the-meenachil-co-op-agrl-rural-on-15-september-2004","title":{"rendered":"The Br. Manager vs The Meenachil Co.Op. Agrl. &amp; Rural on 15 September, 2004"},"content":{"rendered":"<div class=\"docsource_main\">Kerala High Court<\/div>\n<div class=\"doc_title\">The Br. Manager vs The Meenachil Co.Op. Agrl. &amp; Rural on 15 September, 2004<\/div>\n<pre>       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nOP No. 3787 of 1999(A)\n\n\n1. THE BR. MANAGER,ETATTUPETTA BR.KSFE\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. THE MEENACHIL CO.OP. AGRL. &amp; RURAL\n                       ...       Respondent\n\n                For Petitioner  :SRI.ANTONY DOMINIC\n\n                For Respondent  :GOVERNMENT PLEADER\nCoram\n\n Dated :     15\/09\/2004\n O R D E R\n<\/pre>\n<p>.PL 58<br \/>\n.TM 3<br \/>\n.BM 3<br \/>\n&#8230;&#8230;..L&#8230;.T&#8230;..T&#8230;&#8230;&#8230;&#8230;&#8230;T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;.J<br \/>\n          (M.RAMACHANDRAN, J)@@<br \/>\n         jAAAAAAAAAAAAAAAAAAA\n<\/p>\n<p>         &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;-@@<br \/>\n        j<\/p>\n<p>         O.P.NO.3787 OF 1999-A@@<br \/>\n        j<\/p>\n<p>         &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;-@@<br \/>\n        j<br \/>\n         Dated this the 15th day of September, 2004@@<br \/>\n        jAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA<br \/>\n         @@<br \/>\n        j<br \/>\n         JUDGMENT@@<br \/>\n        jEEEEEEEE<br \/>\n((HDR 0<br \/>\n\t[OP 3787\/1999]\n<\/p>\n<p>\t\t\t\t-:#:-\n<\/p>\n<p>))<br \/>\n.HE 1<br \/>\n.SP 2<br \/>\n.JY<\/p>\n<p>        \t\tBy order dated 28-12-1998 (Ext.P8), the  Joint<br \/>\n        Registrar  of  Co-operative  Societies,  Kottayam  (third<br \/>\n        respondent herein) had overruled the  objections  of  the<br \/>\n        petitioner  in  the  matter  of confirmation of sale of a<br \/>\n        landed property, admeasuring 2 acres and 98 cents of land<br \/>\n        with a building in  Sy.No.341\/4  of  Thalapalam  Village.<br \/>\n        This  was  purported  to  be  in exercise of powers under<br \/>\n        section  21(3)   of   the   Kerala   State   Co-operative<br \/>\n        Agricultural Development Banks Act, 1984 (Act 20 of 1984)<br \/>\n        [herein after  referred  to  as  Act  20  of  1984].  The@@<br \/>\n         AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA<br \/>\n        application  was   at   the   instance   of   the   first<br \/>\n        respondent&#8211;The  Meenachil Co-operative Agricultural and<br \/>\n        Rural Development  Bank  Ltd.    The  objector  was   the<br \/>\n        petitioner&#8211;Kerala  State  Financial Enterprises Limited,<br \/>\n        represented by its Branch Manager, who had a  claim  that<br \/>\n        the  property had been already mortgaged to them prior to<br \/>\n        the  encumbrance  created  in   favour   of   the   first<br \/>\n        respondent&#8211;Bank.   4th  Respondent  was the owner of the<br \/>\n        properties, at the time  when  the  properties  had  been<br \/>\n        mortgaged  in favour of the petitioner, in the year 1994,<br \/>\n        by deposit of title deeds, as security in respect of Kuri<br \/>\n        transactions.  Original Petition  has  been  filed  inter<br \/>\n        alia challenging the above order.\n<\/p>\n<p>        \t2.\tRespondents  4  and  5 had been subscribers to<br \/>\n        two Kuries  in  Chitty  No.2\/94  and  had  been  assigned<br \/>\n        Chittal Nos.30  and 25 respectively.  When the Kuries got<br \/>\n        prized, as required for the release of the prize  amount,<br \/>\n        an   equitable   mortgage  in  respect  of  the  property<br \/>\n        concerned had been created on 04-07-1994  and  the  title<br \/>\n        deeds  in  respect  of  the above land had been deposited<br \/>\n        with the petitioner-company.  This is no where disputed.\n<\/p>\n<p>        \t3.\tThere  was  default in the future remittances.<br \/>\n        The  dues  were  quantified  as   Rs.4,00,030\/-   as   on<br \/>\n        14-02-1997.    Being   a  notified  establishment,  under<br \/>\n        section 71 of the Revenue Recovery Act, a requisition had<br \/>\n        been  made  to  the  District  Collector,  Kottayam   for<br \/>\n        initiating action for recovering the amounts due from the<br \/>\n        said respondents.      The   petitioner   refers  to  the<br \/>\n        certificates  issued  by  the  District  Collector  dated<br \/>\n        22-02-1997 and  24-02-1997.    A  demand  notice prior to<br \/>\n        attachment had been duly  issued  on  12-03-1997  by  the<br \/>\n        Special  Deputy Tahsildar (RR), Ernakulam, and properties<br \/>\n        were attached on 27-01-1998.\n<\/p>\n<p>        \t4.\tIt is stated that while these  steps  were  in<br \/>\n        progress,  a  public  notice had come to the knowledge of<br \/>\n        the petitioner, published by the first  respondent&#8211;Bank.<br \/>\n        The  4th  respondent was therein shown as a defaulter and<br \/>\n        the   sale   notification    included    properties    as<br \/>\n        aforementioned, as  to  be  sold  on  11-02-1998.   It is<br \/>\n        further submitted that in spite of objections,  the  sale<br \/>\n        proceedings  were  carried  on  and  since  there were no<br \/>\n        bidders   forthcoming,   the   first    respondent&#8211;Bank<br \/>\n        themselves had purchased the properties in auction.  Such<br \/>\n        action  under  the  provisions of Act 20 of 1984 required<br \/>\n        confirmation by the notified authority.  Objections  were<br \/>\n        filed  before  the Joint Registrar, in the above context,<br \/>\n        by the Kerala State Financial Enterprises.   However,  he<br \/>\n        was not prepared to see eye to eye with the claims of the<br \/>\n        petitioner.   The  order  passed  was  to  the  following<br \/>\n        effect:\n<\/p>\n<p>&#8230;&#8230;&#8230;&#8230;&#8230;L..T&#8230;&#8230;&#8230;&#8230;&#8230;T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;J<br \/>\n.SP 1<\/p>\n<p>               &#8220;Whereas no application  with  deposit  has<br \/>\n               been  made under sub-section (1) of Section<br \/>\n               21 of the said Act  and  whereas  the  Sale<br \/>\n               Officer  has  duly applied to make an order<br \/>\n               confirming the sale, in exercise of  powers<br \/>\n               confirmed  to  me  under sub-section (3) of<br \/>\n               Section 21 of the said Act.  I am  inclined<br \/>\n               to  confirm the sale of property of 2 acres<br \/>\n               and 98 cents in Survey 341\/4  (Re-Sy.238\/3)<br \/>\n               of  Thalapalam  Village  which  was sold in<br \/>\n               public  auction  by   the   Sale   Officer,<br \/>\n               Meenachil   Co-operative  Agricultural  and<br \/>\n               Rural Development Bank, Pala on 11-02-1998,<br \/>\n               and the sale shall become absolute and  the<br \/>\n               property  shall be deemed to have vested in<br \/>\n               the purchasers,   viz.      the   Meenachil<br \/>\n               Cooperative  Agricultural  Development Bank<br \/>\n               Ltd.No.K.197, Pala from the date  and  time<br \/>\n               of sale.&#8221;\n<\/p>\n<p>&#8230;&#8230;..L&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.J<br \/>\n.SP 2<\/p>\n<p>        Want   of   deposit  of  the  amounts  specified  in  the<br \/>\n        proclamation of sale was thus pointed out as a reason for<br \/>\n        not acting upon the objections.\n<\/p>\n<p>        \t5.\tIn the  present  Original  Petition,  the<br \/>\n        above  order  is  challenged  as also all the proceedings<br \/>\n        leading thereto.  A declaration also has been sought  for<br \/>\n        to  the  effect  that  the  sale  conducted  ignoring the<br \/>\n        mortgage given in favour of the petitioner is illegal and<br \/>\n        void.\n<\/p>\n<p>        \t6.\tSri.Antony  Dominic,  on  behalf  of  the<br \/>\n        petitioner, submits that the  first  respondent&#8211;Bank  as<br \/>\n        also  the  Joint Registrar of Co-operative Societies (3rd<br \/>\n        respondent) were in error to overrule the  objections  of<br \/>\n        the  petitioner,  whereby  valid  and legal rights of the<br \/>\n        petitioner  have  been   practically   set   at   naught.<br \/>\n        According to him, even if the Bank was proceeding under a<br \/>\n        special   enactment,  rejection  of  the  claims  of  the<br \/>\n        petitioner  could  not  at  all  have   been   justified.<br \/>\n        Infirmities  touching  the  root  of  the transaction had<br \/>\n        weakened the claims of the Bank, to the advantage of  the<br \/>\n        petitioner.   The  executive  powers  of the Governmental<br \/>\n        authorities have been exercised without full  application<br \/>\n        of mind and overlooking the provisions of the statute and<br \/>\n        objections raised.\n<\/p>\n<p>        \t7.\tWhen the initial sale had been  notified,<br \/>\n        the  first respondent&#8211;Bank had divulged certain further<br \/>\n        details to the petitioner, so as to assert  the  position<br \/>\n        that always they were in the driver&#8217;s seat.  According to<br \/>\n        them,  Smt.Rosamma  George, Muthupunnackal, Plassanal had<br \/>\n        taken three loans from  the  first  respondent&#8211;Bank  as<br \/>\n        K.M.S.E3\/95-96   for   Rs.50,000\/-;   PLMS  E5\/95-96  for<br \/>\n        Rs.20,000\/- and RHE  88\/94-95  for  Rs.3,00,000\/-.    The<br \/>\n        properties, referred to in the notice, namely 2 acres and<br \/>\n        98  cents  in  her  name  and  possession,  were shown as<br \/>\n        security, and it was  only  after  executing  appropriate<br \/>\n        Gehans (Nos.G.54\/95, G.64\/95 and H.39\/95) that loans were<br \/>\n        sanctioned and  paid.    She  had  done so along with her<br \/>\n        husband Sri.M.K.George, who was the  transferor  and  the<br \/>\n        title was   impeccable.      Sri.M.K.George  is  the  4th<br \/>\n        respondent and Smt.Rosamma George (his wife) is  the  6th<br \/>\n        respondent herein.    It  has presently come up that some<br \/>\n        time  during  1995  Sri.George  had,  by   a   registered<br \/>\n        document,  transferred  the  properties  in favour of his<br \/>\n        wife, which facilitated her to subject the properties  to<br \/>\n        encumbrance for  money  received.    The  loans  had been<br \/>\n        received   and   the   default   compelled   the    first<br \/>\n        respondent-Bank to resort to coercive proceedings.  These<br \/>\n        were the basic facts, which have to be adverted to, while<br \/>\n        disposing of this Original Petition.\n<\/p>\n<p>        \t8.\tBy  the  counter  affidavit  filed by the<br \/>\n        first respondent&#8211;Bank, claims  that  they  had  entered<br \/>\n        into  financial  transactions with Rosamma George, in the<br \/>\n        normal course of business, and all precautionary measures<br \/>\n        had been taken and in view of the  insulating  provisions<br \/>\n        for  safeguarding  the transactions under Act 20 of 1984.<br \/>\n        Ext.P8 was impeccably valid, and the petitioner could not<br \/>\n        have agitated any legally sustainable claims.   Reference<br \/>\n        had  been  made by the learned counsel to Sections 10, 12<br \/>\n        and 21 of Act 20 of 1984.  Also, it  was  a  case,  where<br \/>\n        notices prescribed under section 12 of the Act in respect<br \/>\n        of the transactions had been duly served with the Village<br \/>\n        Officer,   Thalapalam   on   07-04-1995,  03-06-1995  and<br \/>\n        12-07-1995 [Exts.R1(a) to R1(c)].  Therefore, when  legal<br \/>\n        formalities, religiously had been complied with, and when<br \/>\n        there  was  default  on the side of the loanees, it would<br \/>\n        have been possible for them to put the properties on sale<br \/>\n        without intervention of the Court.  After the sale,  only<br \/>\n        on  deposit  of  the  amounts  due,  it  would  have been<br \/>\n        possible for an objector  to  get  the  sale  set  aside.<br \/>\n        Since   the   application   filed  before  the  competent<br \/>\n        authority was defective, no interference could have  been<br \/>\n        permissible.   It  had  been  pointed  out  that when the<br \/>\n        property was put to sale on 11-02-1998, Bank had bid  the<br \/>\n        property for an amount of Rs.4,35,000\/and such sale alone<br \/>\n        has been confirmed.\n<\/p>\n<p>        \t9.\tSri.Antony   Dominic   submits  that  the<br \/>\n        provisions of Act 20 of 1984 normally would have come  to<br \/>\n        secure  the  interest  of the institutions like the first<br \/>\n        respondent, but in the present case, the basic defects in<br \/>\n        the transactions exposed them to risks, as  the  property<br \/>\n        was already  under  equitable  mortgage  to  them.  At no<br \/>\n        point of  time,  Bank  had  any  valid  rights  over  the<br \/>\n        properties.   Appropriation  steps  by them as per Ext.P8<br \/>\n        were therefore  inconsequential  and  the  right  of  the<br \/>\n        petitioner was indefeasible.  We may examine the issue in<br \/>\n        the aforesaid background.\n<\/p>\n<p>        \t10.\tSince  reliance  has  been  placed by the<br \/>\n        Bank on Section 12(2) of the  Kerala  State  Co-operative<br \/>\n        Agricultural  Development  Banks Act, the provision could<br \/>\n        be extracted herein below:\n<\/p>\n<p>&#8230;&#8230;&#8230;&#8230;.L..T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T..J<br \/>\n.SP 1<br \/>\n             &#8220;(2)  Notwithstanding anything contained in any<br \/>\n             law for  the  time  being  in  force,  a  Gehan<br \/>\n             created  or  mortgage or hypothecation executed<br \/>\n             in favour of the Agricultural Development  Bank<br \/>\n             or  a  primary  bank shall take precedence over<br \/>\n             any attachment or equitable mortgage  over  the<br \/>\n             properties,   where,  after  publication  of  a<br \/>\n             notice in the prescribed  form,  the  claim  or<br \/>\n             interest  under  such  attachment  or equitable<br \/>\n             mortgage has not been  notified  to  such  bank<br \/>\n             within the time prescribed in the said notice.&#8221;\n<\/p>\n<p>&#8230;&#8230;..L&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.J<br \/>\n.SP 2<\/p>\n<p>        Thus, it is submitted  that  if  at  all  the  petitioner<br \/>\n        initially  had any claims, so long as they did not put up<br \/>\n        any such claims of  equitable  mortgage  to  them,  after<br \/>\n        Exts.R1(a)  to  R1(c),  the  legal  effect  was that such<br \/>\n        claims automatically became subordinate to  their  rights<br \/>\n        over the  property.    Therefore,  the  petitioner had no<br \/>\n        enforceable  legal   rights   and   any   claims   become<br \/>\n        subservient to the rights of the Bank.\n<\/p>\n<p>        \t11.\tAs defined under section 2(e) of the Act,<br \/>\n        a Gehan is a special charge on properties  in  favour  of<br \/>\n        the lending  Bank.    By a mere declaration in writing by<br \/>\n        the borrowers for securing payment of money  advanced  or<br \/>\n        to  be  advanced  by  way  of  loan, it will have all the<br \/>\n        characteristics of a valid mortgage.   Security  of  such<br \/>\n        loan is ensured by the Act.  A loan under section 9(3) of<br \/>\n        the  Act  is recoverable by the Bank concerned in case of<br \/>\n        default of payment in the same  manner  as  if  they  are<br \/>\n        arrears of public revenue due on land.  Charge on movable<br \/>\n        or  immovable  property is ensured by expressly reserving<br \/>\n        in  favour  of  the  Bank  a  right   of   sale   without<br \/>\n        intervention of  Court, in case of default.  (see Section<br \/>\n        10(1) of  the  Act).     It   is   also   provided   that<br \/>\n        notwithstanding  anything  contained  in the Registration<br \/>\n        Act, or any other law for the time  being  in  force,  it<br \/>\n        shall  not be necessary to register any Gehan or mortgage<br \/>\n        or hypothecation created or executed  in  favour  of  the<br \/>\n        Agricultural Development Bank or a primary bank, provided<br \/>\n        the Agricultural Development Bank or the primary bank, as<br \/>\n        the  case  may  be,  sends  a  copy of the declaration or<br \/>\n        instrument, whereby such documents, including  Gehan  had<br \/>\n        created  to the Registering Officer of the area concerned<br \/>\n        within stipulated  time.    The  Registering  Officer  is<br \/>\n        expected  to  file a copy thereof in Book No.1 kept under<br \/>\n        the Registration Act and thereupon it is deemed to create<br \/>\n        an interest in the property.  The Bank had complied  with<br \/>\n        these formalities.\n<\/p>\n<p>        \t12.\tThe  argument of the respondent therefore<br \/>\n        was that in view of section 12(2)  of  the  Act  and  the<br \/>\n        publication  of  notice,  the proceedings for sale became<br \/>\n        unimpeachable.  The further submission was that the  sale<br \/>\n        could  have  been annulled only as provided under section<br \/>\n        21 of the Act and since there was no deposit coming  from<br \/>\n        the  petitioner,  which  was  a  precondition,  no rights<br \/>\n        remained to be adjudicated.  Act 20 of 1984 was  intended<br \/>\n        to  facilitate  a  more efficient working of Co-operative<br \/>\n        Agricultural Development Banks  in  the  State,  and  the<br \/>\n        special  provisions  as  above were incorporated so as to<br \/>\n        ensure  that  the  transactions  entered  into   by   the<br \/>\n        institution  were fully protected and recovery steps were<br \/>\n        flawlessly efficient.\n<\/p>\n<p>        \t13.\tHowever,  on  an   examination   of   the<br \/>\n        attending    circumstances,   as   highlighted   by   the<br \/>\n        petitioner,  it  is  evident  that  notwithstanding   the<br \/>\n        watertight   provisions   in   the   Act,  certain  basic<br \/>\n        irregularities have effectively undermined the rights  of<br \/>\n        the  Bank  of  an  opportunity  to  assert  the rights as<br \/>\n        against the claims of the petitioner.  Even though in the<br \/>\n        counter  affidavit,  the  Bank  claimed  that  they  were<br \/>\n        convinced  that  the applicant for the loan had valid and<br \/>\n        marketable title  over  the  properties  proposed  to  be<br \/>\n        mortgaged,  and that the same is absolutely encumbered as<br \/>\n        on 15-03-1995 and that there was no third party  interest<br \/>\n        over  the  properties,  the facts appear to be otherwise.<br \/>\n        The dates of availing of  the  three  loans  respectively<br \/>\n        were  20th  of April 1995, 7th June 1995 and 15th of July<br \/>\n        1995.  But  well  before  that  the  4th  respondent  had<br \/>\n        encumbered  the  property  concerned  in  favour  of  the<br \/>\n        petitioner, in the year 1994.   The  title  deed  of  the<br \/>\n        properties,  as  could be seen from the counter affidavit<br \/>\n        filed by the Bank, is having registration No.74\/95 of the<br \/>\n        Sub Registrar&#8217;s Office, Erattupetta.  The loans had  been<br \/>\n        applied for by Smt.Rosamma George (6th respondent), after<br \/>\n        she got  the  rights  by the said transaction.  It is but<br \/>\n        evident   that   the   4th   respondent&#8211;husband    after<br \/>\n        encumbering the properties in favour of the petitioner in<br \/>\n        the year 1994 had transferred the properties in favour of<br \/>\n        his wife  in  the year 1995.  Such a transfer, during the<br \/>\n        subsistence of the encumbrance, could  not  have  validly<br \/>\n        conferred  any  rights  on  the  6th  respondent  to  the<br \/>\n        detriment of  the  petitioner.      Perhaps   the   first<br \/>\n        respondent&#8211;Bank  had  bona  fide  intended to enter into<br \/>\n        transactions, but a lacuna was in fact there.    The  6th<br \/>\n        respondent  presented the documents and applied for loan,<br \/>\n        misrepresenting the bank that she  was  having  ownership<br \/>\n        and  title  over  the  properties,  which  she  never had<br \/>\n        legally acquired.  Therefore, the contention of the  Bank<br \/>\n        that   there  was  proper  scrutiny  or  that  there  was<br \/>\n        marketable title enjoyed by the 6th respondent is without<br \/>\n        basis.  This erodes the substratum of their stand.\n<\/p>\n<p>        \t14.\tBecause, if that be the case, the notices<br \/>\n        sent to the Village Officer  [Exts.R1(a)  to  R1(c)],  as<br \/>\n        envisaged  by  section  12  of  Act  20  of 1984, did not<br \/>\n        thereby create any further rights than the bank  received<br \/>\n        from the mortgage arrangement.  The rights were defective<br \/>\n        and unenforceable.  The notices, though purported to have<br \/>\n        been  made under section 12(2) of the Act, were incapable<br \/>\n        of creating any right because  of  the  inherent  defect.<br \/>\n        Even though the petitioner had overlooked\/omitted to make<br \/>\n        an  objection  against  Exts.R1(a) to R1(c), that did not<br \/>\n        place them under any special disability,  since  the  6th<br \/>\n        respondent&#8217;s  surrender was in respect of properties over<br \/>\n        which she had no legal rights.    The  exhibits  produced<br \/>\n        indicated  that Rosamma George was party to a Gehan about<br \/>\n        which notice was published in the Village  Office.    The<br \/>\n        petitioner  had  no  relation or transaction with Rosamma<br \/>\n        George and were not expected to  be  alerted  because  of<br \/>\n        such notice, even though the property had been described.<br \/>\n        It  became  inconsequential  as  far  as the petitioner&#8217;s<br \/>\n        rights were concerned.  Resultantly,  situation  is  that<br \/>\n        the  bank  had  attempted  to enforce the Gehan which was<br \/>\n        unenforceable.  The  rituals  of  publication,  sale  and<br \/>\n        consequent  confirmation  was  not  sufficient  enough to<br \/>\n        clothe them with any specific advantage to the  detriment<br \/>\n        of the petitioner.\n<\/p>\n<p>        \t15.\tUnder   section  11  of  the  Act,  every<br \/>\n        persons who applies for a loan from a  primary  bank  was<br \/>\n        expected to make a declaration that the property on which<br \/>\n        Gehan  is  created as security in the loan transaction is<br \/>\n        free from encumbrances.  Section 11(3)  provides  that  a<br \/>\n        person  who makes a false declaration shall be punishable<br \/>\n        with imprisonment.    Also  it  is  not  as  if  such   a<br \/>\n        contingency  of  fraud  is  overlooked by Act 20 of 1984.<br \/>\n        Section  11(2)  of  the  Act  speaks   of   the   remedy.<br \/>\n        Notwithstanding  anything  contained  in  any law for the<br \/>\n        time being in force,  where  a  declaration  given  by  a<br \/>\n        loanee  is false or defective, the Bank will have a first<br \/>\n        charge on all other movable and immovable  properties  of<br \/>\n        the applicant, and all such properties shall be deemed to<br \/>\n        have   been   included   in   the   Gehan,   mortgage  or<br \/>\n        hypothecation created or executed  by  the  applicant  as<br \/>\n        security for  the  loan granted.  Theoretically, at least<br \/>\n        it may be possible for the Bank to  proceed  against  the<br \/>\n        4th respondent or the 6th respondent, at their option, in<br \/>\n        case they want to enforce their claims.\n<\/p>\n<p>        \t16.\tIt  is  beyond  dispute  that mortgage by<br \/>\n        deposit of title deeds is  a  valid  procedure,  accepted<br \/>\n        under  the  Transfer  of  Property  Act,  for creating an<br \/>\n        encumbrance.  Under section 58(a) of the Act, a  mortgage<br \/>\n        is a transfer of interest in specific immovable property.<br \/>\n        This  may  be  for the purpose of securing the payment of<br \/>\n        money advanced or to be advanced by way of a  loan.    It<br \/>\n        includes  an existing or future debt over the performance<br \/>\n        of an  engagement  which  may  give  right  to  pecuniary<br \/>\n        liability.   It is undisputable that in respect of a Kuri<br \/>\n        transaction the  petitioner  had  entered  into  such  an<br \/>\n        arrangement.  The law recognizes a mortgage by deposit of<br \/>\n        title deeds.    When a person delivers to the creditor or<br \/>\n        the agent, document of title to immovable  property  with<br \/>\n        intend to create a security thereon, the transaction is a<br \/>\n        mortgage by deposit of title deeds (Section 58 (f) of the<br \/>\n        Transfer of  Property Act).  The petitioner claims that a<br \/>\n        mortgage deed as envisaged under  section  2(17)  of  the<br \/>\n        Indian Stamps Act is in existence.  A mortgager therefore<br \/>\n        is  disabled  from  further encumbering the properties in<br \/>\n        any case without the junction of mortgagee.  It can  well<br \/>\n        be presumed that a liability is automatically attached to<br \/>\n        the property and it is a burden imposed upon the land and<br \/>\n        the interest in the land, by the owner of the land.\n<\/p>\n<p>        \t17.\tAdvertence   may  also  be  made  to  the<br \/>\n        dictionary meaning of the term  `mortgage&#8217;,  see  Black&#8217;s<br \/>\n        Law Dictionary,  7th  Edition,  by Bryan A.Garner.  It is<br \/>\n        described as a conveyance of title to  property  that  is<br \/>\n        given  as  security  for  the  payment  of  a debt or the<br \/>\n        performance of a duty and  that  will  become  void  upon<br \/>\n        payment or performance according to the stipulated terms.<br \/>\n        It  is  also  &#8220;a lien against property that is granted to<br \/>\n        secure an  obligation  (such  as  a  debt)  and  that  is<br \/>\n        extinguished  upon  payment  or  performance according to<br \/>\n        stipulated terms.    Thus,  the  mortgage  presupposes  a<br \/>\n        (notional) conveyance of title as such, though on limited<br \/>\n        terms  and  the  mortgager may continue the occupation of<br \/>\n        the property.\n<\/p>\n<p>        \t18.\tWhile    dealing    with    creation   of<br \/>\n        encumbrances, which did not amount to  sale,  as  pointed<br \/>\n        out  by  Leonard  A.Jones  in  &#8220;A  treatise on the Law or<br \/>\n        Mortgages&#8221;, the chief distinction between a mortgage  and<br \/>\n        a  pledge  is  that  by  a  mortgage the general title is<br \/>\n        transferred to the mortgagee, subject to be re-vested  by<br \/>\n        performance  of  the  condition;  while  by  a pledge the<br \/>\n        pledgor retains the general title in himself,  and  parts<br \/>\n        with the  possession  for  a  special  purpose.    It can<br \/>\n        therefore be stated that by  a  mortgage,  the  title  is<br \/>\n        presumed  as  transferred;  by  a  pledge, the possession<br \/>\n        alone is parted with.  Therefore, if this Court does  not<br \/>\n        step   in,   that  may  result  in  an  illegality  being<br \/>\n        perpetuated.\n<\/p>\n<p>        \t19.\tThe inescapable conclusion  is  that  the<br \/>\n        safeguards  taken  by  the  first respondent&#8211;Bank, while<br \/>\n        advancing the loan to the 4th and 6th  respondents,  were<br \/>\n        inadequate.   Their  bravado  by itself fails to bring in<br \/>\n        dividends, though in the first round they got a technical<br \/>\n        victory.   Though  there  was  appearance  on  behalf  of<br \/>\n        respondents 4 and 6, they had not chosen to divulge their<br \/>\n        stand vis-a-vis  the  transactions.    The  loan had been<br \/>\n        obtained by the  6th  respondent  for  investing  in  the<br \/>\n        property  itself, for a building, and it is not for me to<br \/>\n        fathom  the  reasons  which  prompted  them  on  such  an<br \/>\n        adventure.  A fraud apparently has to be ruled out, but I<br \/>\n        am not certain.\n<\/p>\n<p>        \t20.\tI find that while adjudicating the claims<br \/>\n        of  the  petitioner,  the  Joint  Registrar had not taken<br \/>\n        notice of all  legal  aspects,  which  should  have  come<br \/>\n        within the  scope  of  his  enquiry.    The  notification<br \/>\n        followed by auction and confirmation, as  could  be  seen<br \/>\n        from  Exts.P1,  P3  and  P8,  in so far as the properties<br \/>\n        mortgaged to the first respondent&#8211;Bank are  declared  as<br \/>\n        invalid and  irregular.  They have not legally interfered<br \/>\n        with or unsettled the rights of the petitioner.\n<\/p>\n<p>        \t21.\tA  contention  had  been  raised  by  the<br \/>\n        learned  counsel  for the first respondent&#8211;Bank that the<br \/>\n        Original  Petition  is  not   maintainable,   since   the<br \/>\n        petitioner&#8217;s  right would have been only an appeal to the<br \/>\n        Government under section  83(1)(j)  of  the  Co-operative<br \/>\n        Societies Act.  However, since the matter was pending for<br \/>\n        long,  at this point of time, I do not think it is proper<br \/>\n        for me to relegate the parties to  such  course,  as  the<br \/>\n        delay  may  adversely  affect the claims, obligations and<br \/>\n        rights of two institutions, as well as  private  parties.<br \/>\n        Therefore, I am not prepared to accept the objection.\n<\/p>\n<p>        \t22.\tDuring the pendency of these proceedings,<br \/>\n        by  Ext.R1(e)  the  Deputy  Collector  (RR)  had  put the<br \/>\n        properties  concerned   for   sale   on   29-04-2003   in<br \/>\n        continuation  of the proceedings initiated at the request<br \/>\n        of the petitioner.  It will be open for the petitioner to<br \/>\n        get on with Ext.R1(e) proceedings.  The first  respondent<br \/>\n        too  will  be  entitled  to  take  independent  steps for<br \/>\n        safeguarding their interests.\n<\/p>\n<p>        \t23.\tNotwithstanding this judgment, it will be<br \/>\n        open  to  the  parties  to negotiate among themselves and<br \/>\n        come to agreed settlements.  The properties appear to  be<br \/>\n        valuable, and the effort always should be to generate the<br \/>\n        maximum price, to benefit, if possible the 4th respondent<br \/>\n        also.   I  may  refer  to the observations of the Supreme<br \/>\n        Court  in  this  regard,   made   in   M\/s.S.J.S.Business@@<br \/>\n                                               EEEEEEEEEEEEEEEEEE<br \/>\n        Enterprises (P) Ltd.   v.  State of Bihar &amp; Ors.[2004 (5)@@<br \/>\n        EEEEEEEEEEEEEEEEEEEE       EEEEEEEEEEEEEEEEEEEE<br \/>\n        Supreme 485], which explicitly lays down the  principles,<br \/>\n        in paragraph 17, as following for guidance:\n<\/p>\n<p>&#8230;&#8230;&#8230;&#8230;&#8230;L&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T.J<br \/>\n.SP 1<\/p>\n<p>               \t&#8220;17.  We are of the view  that  the<br \/>\n               sale  effected in favour of respondent No.6<br \/>\n               cannot be sustained.  It is axiomatic  that<br \/>\n               the  statutory  powers  vested in the State<br \/>\n               Financial  Corporation  under   the   State<br \/>\n               Financial    Corporation   Act,   must   be<br \/>\n               exercised bona fide.  The presumption  that<br \/>\n               public   officials   will  discharge  their<br \/>\n               duties honestly and in accordance with  the<br \/>\n               law   may   be   rebutted  by  establishing<br \/>\n               circumstances which reasonably  probabalize<br \/>\n               the abuse  of that power.  In such event it<br \/>\n               is for the concerned officer to explain the<br \/>\n               circumstances which are set up against him.<br \/>\n               If  there  is   no   credible   explanation<br \/>\n               forthcoming  the  Court can assume that the<br \/>\n               impugned   action   was   improper    [See:\n<\/p>\n<p>               <a href=\"\/doc\/1677837\/\">M\/s.Pannalal Binjraj &amp;  Ors.   v.  Union of<br \/>\n               India &amp;  Ors.    AIR<\/a>  1957  SC  397,  409].\n<\/p>\n<p>               Doubtless  some  of the restrictions placed<br \/>\n               on State Financial Corporations  exercising<br \/>\n               their  powers under Section 29 of the State<br \/>\n               Financial Corporation Act, as prescribed in<br \/>\n               <a href=\"\/doc\/494062\/\">Mahesh Chandra  v.      Regional   Manager,<br \/>\n               U.P.Financial Corpn.<\/a>  1993 (2) SCC 279, are<br \/>\n               longer  in  place in view of the subsequent<br \/>\n               decision   in   Haryana   Financial   State<br \/>\n               Corporation v.      Jagdamba   Oils  Mills.\n<\/p>\n<p>               However, in  over-ruling  the  decision  in<br \/>\n               Mahesh Chandra, this Court has affirmed the<br \/>\n               view   taken   in   <a href=\"\/doc\/296632\/\">Chairman  and  Managing<br \/>\n               Director, SIPCOT,  Madras  v.     Contromix<br \/>\n               Pvt.Ltd.<\/a>  1995 (4) SCC 595 and said that in<br \/>\n               the  matter  of  sale under Section 29, the<br \/>\n               State Financial  Corporation  must  act  in<br \/>\n               accordance  with  the  statute and must not<br \/>\n               act unfairly i.e.  unreasonably.   If  they<br \/>\n               do their action can be called into question<br \/>\n               under Article 226.  Reasonableness is to be<br \/>\n               tested  against  the dominant consideration<br \/>\n               to secure the best price for  the  property<br \/>\n               to be  sold.    &#8220;This  can only be achieved<br \/>\n               when there is a  maximum  participation  in<br \/>\n               the  process  of  sale and everybody has an<br \/>\n               opportunity of making  an  offer.    Public<br \/>\n               auction  after  adequate  publicity ensures<br \/>\n               participation  of  every  person   who   is<br \/>\n               interesting (interested?) in purchasing the<br \/>\n               property  and  generally  secures  the best<br \/>\n               price.&#8221;\n<\/p>\n<p>&#8230;&#8230;..L&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.J<\/p>\n<p>.SP 2\n<\/p>\n<p>        \t24.\tThis  equally  will  be applicable to the<br \/>\n        petitioner, as any other statutory body, who comes within<br \/>\n        the purview of State under Article 12 of the Constitution<br \/>\n        of India.\n<\/p>\n<p>        \tThe Original Petition will  stand  allowed.    No<br \/>\n        order as to costs.\n<\/p>\n<p>.JN<br \/>\n        15th September, 2004.\n<\/p>\n<p>        \t\t\t           (M.RAMACHANDRAN, JUDGE)@@<br \/>\n           AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA<br \/>\n        mks\/<\/p>\n<p>((HDR 0<\/p>\n<p>))<br \/>\n.HE 2<br \/>\n.PA<br \/>\n&#8230;&#8230;&#8230;&#8230;&#8230;T&#8230;&#8230;.T&#8230;&#8230;.L&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;.T&#8230;&#8230;&#8230;&#8230;&#8230;.J&#8230;&#8230;&#8230;&#8230;.<br \/>\n.SP 1<\/p>\n<p>                                (M.RAMACHANDRAN,J)@@<br \/>\n                               jAAAAAAAAAAAAAAAAAA\n<\/p>\n<p>                               &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;<br \/>\n.JN<\/p>\n<p>                                    O.P.NO.3787 OF 1999-A@@<br \/>\n                               j\n<\/p>\n<p>                               &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;\n<\/p>\n<p>                               \t\tJ U D G M E N T@@<br \/>\n                                 AAAAAAAAAAAAAAA<\/p>\n<p>                               &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;\n<\/p>\n<pre>                                     Dated:     day of September, 2004\n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n                               \n\n        \n        \n        \n        \n        \n        \n        16 [OP 3787\/1999]\t- \n        \n        \n        \n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Kerala High Court The Br. Manager vs The Meenachil Co.Op. Agrl. &amp; Rural on 15 September, 2004 IN THE HIGH COURT OF KERALA AT ERNAKULAM OP No. 3787 of 1999(A) 1. THE BR. MANAGER,ETATTUPETTA BR.KSFE &#8230; Petitioner Vs 1. THE MEENACHIL CO.OP. AGRL. &amp; RURAL &#8230; Respondent For Petitioner :SRI.ANTONY DOMINIC For Respondent :GOVERNMENT PLEADER [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-129024","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Br. Manager vs The Meenachil Co.Op. 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