Bank of India Vs. M/S Shivam Udyog & Ors
 INSC 46 (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
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.2,86,864/-
together with costs and interest against respondent Nos.1 to 5. It was
contested by respondent nos. 1 to 4. It proceeded ex-parte against respondent
no.5 who had deposited the title deeds of his property over which equitable
mortgage was created for repayment of the dues.
house of respondent no.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 362 respondent nos. 1 to 2 for
summoning of the 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.
application was dismissed by the Trial Court but the order was recalled
on-review as if no mortgage was created by defendant no.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 no. 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.
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 mort-
gage deed was fictitious.