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TMI Blog2009 (2) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... Giridharan, K. Moorthy, Sriram Panchu and T. Mohan for the Appellant. M. Ravindran and Mrs. K. Latha Parimala Vadhana for the Respondent. JUDGMENT D. Murugesan, J - As the issues raised for consideration in all the appeals are common, they are taken up together and disposed of by this order. For convenience, we refer to the facts as put forth by the appellants in O.S.A. Nos. 130 to 132 of 2008 in their Company Applications. 2. In a pending Company Petition No. 230 of 2004, the appellants in O.S.A. Nos. 130 to 132 of 2008 filed three Company Applications in C.A. Nos. 1191 to 1193 of 2007 seeking for return of the title deeds more fully described and pertaining to the scheduled properties owned by the appellants to an extent of 16.97 acres, 7.14 acres and 20.42 acres respectively in various Survey Numbers in Begapalli Village, Hosur Taluk, Dharmapuri District and lying within the limits of Begapalli Panchayat and Hosur Panchayat Union, which were pledged by one Mr. Jamsheed M. Panday, Chairman of Zen Global Finance Limited and who happened to be the friend of Mr. S.R. Eshwaran, the Director of the appellants-companies. 3. On 25-3-1998, by separate Board Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mohan, Advocate for the appellants in O.S.A. Nos. 130 to 132 of 2008, Mr. Arvind P. Datar, learned Senior Counsel for Mr. B.S. Jhothiraman, Advocate for the appellant in O.S.A. Nos. 343 to 345 of 2007, Mr. P. Giridharan, Advocate for Mr. K. Moorthy, Advocate for the appellant in O.S.A. Nos. 390 to 392 of 2007 and Mr. M. Ravindran, learned Additional Solicitor General of India assisted by Mrs. K. Latha Parimala Vadana, Assistant Official Liquidator for Provisional Liquidator. 7. At the outset, we would like to point out that the Committee constituted to manage the affairs of M/s. R.B.F. Nidhi Limited had been superseded, as it is under the control of the Provisional Liquidator of this Court. An objection was also raised by Mr. M. Ravindran, learned Additional Solicitor General of India that the Federation of Investors Association cannot be heard. Though O.S.A. Nos. 343 to 345 of 2007 cannot be prosecuted by the Committee which is not in existence as on today, as the very same common order is put in issue before this Court in the other appeals and they were parties to the applications before the Court below, and also for an effective adjudication of the issue, we are of the opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give the title deeds as collateral security for the existing loans. It is further argued that in any case, the title deeds were deposited in respect of the loans taken by Mr. Panday on 12-7-1995 and that too as "HML" and if at all the R.B.F. Nidhi Limited could retain the title deeds, it could be only for the loan covered under HML-736 together with interest and not for any other loans taken by the said Panday. It is finally argued that in any case the appellants are entitled to redeem the title deeds in view of the provisions of section 91 of the Transfer of Property Act. 10. A careful reading of the resolutions does not indicate that the title deeds could be given as collateral security only in respect of the loan availed by Mr. Panday in HML-736 on 12-7-1995. The report of the Official Liquidator filed during July, 2007 would show that the said Panday had availed several loans from M/s. R.B.F. Nidhi Limited only in the capacity of Chairman of M/s. Zen Global Finance Limited, thereby meaning that the loans were availed only for the benefit of the company and such loans cannot be considered to be the personal loans of Panday. Therefore, the contention of the learned Senio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator is not only contrary to the records but also not in the interest of the company facing liquidation. The trust and confidence embedded on him by this Court, while he was appointed as Provisional Liquidator, was not kept in his mind. For the said reason, the report of the Official Liquidator has to be ignored. 13. As far as the mortgage by deposit of title deeds is concerned, section 58( f ) of the Transfer of Property Act is referable and the said section reads as under: "58( f ) Mortgage by deposit of title-deeds. Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds." 14. Though there is no presumption of law that the mere deposit of title deeds by itself would constitute a mortgage, but the Court may presume under section 114 of the Evidence Act that under certain circumstances, loan and the deposit of title deeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest in specific immovable property for the purpose of securing payment of money either advanced or to be advanced by way of loan. The three requisites for such mortgage are ( i ) debt; ( ii ) deposit of title deed; and ( iii ) an intention that the deed shall be security for the debt. 17. In the judgment in K.J. Nathan v. S.V. Maruthi Reddy AIR 1965 SC 430, the Apex Court while considering the aspect of intention, had observed as follows: "10. ...Whether there is an intention that the deeds shall be security for the debt is a question of fact in each case. The said fact will have to be decided just like any other fact on presumptions and on oral, documentary or circumstantial evidence. There is no presumption of law that the mere deposit of title deeds constitutes a mortgage, for no such presumption has been laid down either in the Evidence Act or in the Transfer of Property Act. But a court may presume under section 114 of the Evidence Act that under certain circumstances a loan and a deposit of title deeds constitute a mortgage. But that is really an inference as to the existence of one fact from the existence of some other fact or facts. Nor the fact that at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the appellants-companies that Panday had contravened the authorisation cannot be put against M/s. R.B.F. Nidhi Limited. Such dispute could be resolved between the appellants and Panday. 20. There is one more aspect in this regard. As against the right of redemption of the appellants-companies, the right of M/s. R.B.F. Nidhi Limited to claim a general lien over the properties in respect of the other loans as well in terms of section 171 of the Contract Act should also be considered. Section 171 of the Contract Act reads as under: " General lien of bankers, factors, wharfingers, attorneys and policy brokers. Banks, factors, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain, as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect." 21. In Syndicate Bank v. Vijay Kumar AIR 1992 SC 1066, while considering the scope of general lien , the Apex Court quoted the Halsbury s Laws of England as follows: "Lien in its primary sense is a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be due from the customer by way of reduction of customer s debit balance. Such a lien is also applicable to negotiable instruments including FDRs which are remitted to the Bank by the customer for the purpose of collection. There is no gainsaying that such as lien extends to FDRs also which are deposited by the customer." (p. 1069) On the given facts of the case, we are of the considered opinion that M/s. R.B.F. Nidhi Limited is entitled to invoke the provisions of section 171 relating to general lien and the claim of the appellants-companies seeking for redemption in terms of section 91 of the Transfer of Property Act must yield to such right and consequently the right to claim redemption cannot be accepted. 23. For the foregoing reasons, the order of the learned Single Judge dated 26-10-2007 passed in Company Application Nos. 1191 to 1193 of 2007 in Company Petition No. 230 of 2004 in directing the return of the title deeds to the appellants in O.S.A. Nos. 130 to 132 of 2008 is set aside and consequently, the said appeals are dismissed. In view of the said finding, O.S.A. Nos. 390 to 392 of 2007 are allowed and for the same reason, O.S.A. Nos. 343 to 345 of 2007 are closed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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