State Bank Of India vs Metta Chandra Sekhar Rao And Ors

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. 5

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