Bank of India Vs. Shivam Udyog  INSC 51 (13
R.M. (J) Sahai, R.M. (J) Majmudar S.B. (J)
1995 AIR 711 1995 SCC (2) 74 JT 1995 (1) 361 1995 SCALE (1)142
Judgment of the Court was delivered by R.M. SAHAI, J.- This appeal is directed
against judgment and order of the Allahabad High Court. The appellant, a Bank
constituted under the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 had filed a suit for recovery of Rs 8,86,864 together
with costs and interest against Respondents 1 to 5. It was contested by
Respondents 1 to 4. It proceeded ex parte against Respondent 5 who had
deposited the title deeds of his property over which equitable mortgage was
created for repayment of the dues.
house of Respondent 5 which was offered as security is situated at Ghaziabad. Therefore, the suit was filed at Ghaziabad. An application under Order 11 Rule
12 of the Code of Civil Procedure was filed by Respondents 1 to 2 for summoning
of departmental proceedings against the employees of the Bank as they had come
to know that departmental proceedings had been initiated against the official
for creation of the mortgage. The application was dismissed by the trial court
but the order was recalled on review as if no mortgage was created by Defendant
5 then the court at Ghaziabad shall have no jurisdiction to
proceed with the matter. It was held that enquiry/proceedings regarding the
equitable mortgage were the only material which could throw light over the
matter in dispute. It was observed that the defendants were entitled to claim
that no equitable mortgage was created and, therefore, the court had no
jurisdiction to proceed with the suit. In appeal the order was maintained.
suit being for enforcement of the security, it could be filed only where the
property is situated. In case the defendants desired to raise the question of
jurisdiction as the mortgage was fictitious, they could do so. But for that it
was not necessary to summon the disciplinary proceedings pending against the
Bank official even if one of the charges is that the security furnished by
Defendant 5 was fictitious. It could be established by leading evidence and
cross-examining the witnesses. In our opinion, the defendants have by this
method attempted to delay the proceedings. We do not propose to say any further
as any observation made by us may prejudice the case of parties.
3.In the result, this appeal succeeds and is allowed.
orders passed by the two courts below are set aside and the application filed
by the respondents to summon the enquiry proceedings is dismissed. The suit
shall now proceed with liberty to respondents to lead evidence that the
mortgage deed was fictitious.