Bank Can’t Refuse NOC For Release Of Mortgaged Property After Receiving Sale Consideration From Third Party
Case: Mahalaxmi Textiles A Proprietorship Firm Thorugh Its Prorprietor Bhartiben Maheshbhai Chevli VS Syndicate Bank Surat Main Branch
Coram: Justice Vaibhavi Nanavati
Case No.: C/SCA/18997/2019
Court Observation: “It is not open for the Bank to fasten indirect liability of the respondent No.2 – Vinayak Fabrics to the the respondent No.1 Bank in respect of loan advanced to M/s. Jay Ganesh Roadlines wherein respondent No.2 – Vinayak Fabrics is a guarantor. The respondent Bank is bound by the contractual agreement between the writ-applicant and the respondent Bank. It is not open for the Bank to assert that unless and until the total dues of the Bank which are due and payable by the alleged liability of M/s. Jay Ganesh Roadlines in favour of the respondent No.1 Bank are realized. The writ-applicant be denied the release of the title deed, no objection certificate/no due certificate with respect to the subject property,”
“To put it in other words, the deposit of title deeds,by which the mortgage was created by the writ-applicants, was for a specific purpose to cover an advance for a specific loan. When such is the situation, the borrower, having deposited the title deeds in order to secure a specific transaction, the Bank cannot take a stance that they could hold the title deeds for a balance due in a different loan amount, i.e. with respect of M/s. Radheshyam Fibres Private Limited, where the writ-applicant nos.2 and 3 may be guarantors. Further, the language of Section 171 of the Contract Act is explicit to the fact that the bankers are entitled to retain as a security for a ‘general balance account’.”
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Keywords
Bank Can’t Refuse NOC, Sale Consideration
