906-IAL-29766-21.

doc

Sharayu Khot.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO. 29766 OF 2021
IN
INTERIM APPLICATION (L) NO. 19370 OF 2021
IN
COMMERCIAL SUIT (L) NO. 19362 OF 2021

Mr. Chandrakant V. Shah …Applicant

(Original
Defendant No. 6)

In the matter between

Axis Finance Limited …Plaintiff

Versus

M/s. Soham Estates & Ors. …Defendants

----------
Mr. Dhurva Gandhi a/w Ms. Arundhati Korale i/by Solicis Lex for the
Applicant/Defendant No. 6.
Mr. Karl Tamboli, Mr. Nishit Dhruva, Mr. Prakash Shinde, Ms. Niyati
Merchant, Mr. Yash Dhruva, Mr Harsh Sheth i/by MDP and Partners
for the Plaintiff.
Ms. Pooja Gaikwad i/by Sanjay Chaturwedi Associates for the
Defendant No. 1
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CORAM : R.I. CHAGLA J.

DATE : 20 July 2022.

ORDER :

1. Heard learned Counsel for the parties.

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2. By this Interim Application, the Applicant is seeking

vacation of ad-interim order of this Court dated 26th October 2021

and subsequent order dated 9th December 2021.

3. Learned Counsel appearing for the Applicant has

submitted that the order dated 26th October 2021 was an order

passed in the absence of the Applicant/original Defendant No. 6. He

has submitted that the said order has not taken into consideration the

fact that the first loan sanctioned by the Plaintiff to the 1st Defendant

and pursuant which was secured by the first Deed of Mortgage dated

5th August, 2014 had been repaid. This Court was required to

consider the 2nd Deed of Mortgage/Agreement of Indenture dated

29th December 2016. He has submitted that in the mortgaged

property which is recital E, it is clearly provided that one of the

conditions precedent for the lender making available the facility to

the borrower for its project is that the borrower shall secure all its

obligations under the facility agreement inter alia by the mortgaged

property as detailed in Schedule I thereto in consideration of the

facility on and subject to the terms and conditions set out in the

Indenture and set out in the other finance documents in favour of the

security trustee. In the ranking of security clause in the Indenture of

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Mortgage Deed it is provided that the security created over the

mortgaged property as described in part A of Schedule 1 shall be first

ranking pari-passu security registered in favour of the security trustee

and the security created over the mortgaged property as described in

part B of Schedule 1 shall be a second ranking paripassu security

registered in favour of the security trustee until the full repayment of

the borrower’s obligations under the existing facility, after which the

security over the mortgaged property as described in part B of

schedule 1 shall be the first ranking paripassu charge in favour of the

security trustee.

4. The learned Counsel for the Applicant has submitted

that from a perusal of part A and part B, wherein the mortgaged

property has been set out, there is no mention of the subject flats as

part A consists of flats in tower 5 and though Part B mentions various

flats of tower 4 as mortgaged property, there is no mention of the

subject flats which have been purchased by the Applicant. He has

submitted that the subject flats not being part of the mortgaged

property, could not be subject to a No Loan Objection Certificate

(NOC) being granted by the Plaintiff and/or in absence of which, it

cannot be said that there is no valid transfer of title of the subject

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flats in favour of the Applicant / 6th Defendant.

5. Learned Counsel appearing for the Applicant has further

submitted that the Applicant had purchased the subject flats on 31st

May 2016. Thereafter NOC was granted on 6th October 2017 by the

Plaintiff, which was thereafter, recalled on 6th September 2019. It is

an admitted position that the first loan taken was repaid on 21st

August 2017. He has accordingly, submitted that such post facto NOC

was not required to be issued, when first loan was repaid on 21st

August 2017. Further, as aforementioned the 2nd loan facility

provided by the Plaintiff makes no mention of the subject flats as part

of mortgaged property. He has accordingly, submitted that the ad-

interim order which arrived at a prima facie finding that without

Plaintiff’s NOC, there could be no valid transfer of the subject four

flats could not have been arrived at in favour of the 6th Defendant.

He has accordingly, submitted that by granting prayer clause (I) of

the Interim Application, the Applicant has been restrained from in

any manner selling, alienating, encumbering or creating third party

rights in respect of the subject four flats, being Flat Nos. 104, 201,

301 and 2602 in Tower 4 of the suit project. Grave prejudice is

caused to the Applicant and accordingly the ad-interim order be

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accordingly, recalled.

6. Mr. Tamboly, learned Counsel appearing for the Plaintiff

has submitted that the Defendant No. 6 was served with the Interim

Application as well as the captioned Suit and notice was given to the

Defendant No. 6 of the Interim Application being moved by the

Plaintiff. It is recorded in the order dated 26th October 2021 that the

Defendants had been served. Some of the Defendants had entered

appearance through Advocate Mr. Sanjay Chaturvedi.

7. Mr. Tamboly has submitted that the 1st term loan of

Rs.60 Crores which was sanctioned on 28th July 2014 to the 1st

Defendant had been secured by Indenture of Mortgage dated 6th

August 2014. The 1st term loan was repaid on 21st August 2017.

Prior to the repayment of the 1st term loan, 2nd term loan of Rs.

25.00 Crores was granted by the Plaintiff to the 1st Defendant on

20th September 2016.

8. The 1st Defendant had sought no objection from the

Plaintiff for sale of certain flats. The project being developed by the

1st Defendant comprised of 5 Towers out of which 4 Towers were

part of phase 1 and 5th Tower was part of phase 2. This Court has in

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the ad-interim order dated 26th October 2021 noted that the 6th

Defendant is an outsider who claims to have purchased Flat Nos.

104, 201, 301 and 2602 in Tower 4.

9. It is the case of the Plaintiff that there have been

persistent defaults and irregularities on the part of the 1st Defendant.

The Plaintiff had accordingly, sought for an order in terms of prayer

(c) and (e) of the Interim Application. Prayer (I) was in respect of

subject four flats which the 6th Defendant claimed to have

purchased. This Court in the ad-interim order noted that the subject

four flats would require NOC to be granted by the Plaintiff and that

such post facto NOC had been granted on 6th October 2017 which

was thereafter recalled on 6th September 2019. It is an admitted

position that insofar as the 1st term loan granted on 28th July 2014,

the subject four flats of the Applicant/Defendant No. 6 was part of

the mortgaged property and this is apparent from the schedule to the

Deed of Mortgage.

10. In any view of the matter, it was necessary for

NOC to be issued as the 1st term loan was repaid only on 1st August

2017. It is in view of this position that this Court in the said ad-

interim order dated 26th October, 2021 observed that without the

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Plaintiff’s NOC, there could be no valid transfer of the subject four

flats in favour of the Defendant No.6. Further the post facto NOC

issued by the Plaintiff was conditional and required the sale proceeds

to be deposited in RERA Escrow Account. If this condition remained

unfulfilled, the NOC could not survive a breach of this condition.

Thus, this Court arrived at a prima facie finding that in breach of

condition of post facto NOC would materially affect any title that

could be said to have passed to the 6th Defendant. The

corresponding consequence is that these four flats would continue to

form part of the security available to the Plaintiff to secure

repayment of the entire loan, considering the term loan granted as

well as the interest on the term loan and accounting for payments

already made on the date of institution of the Suit stands at Rs.

13,23,92,937.16.

11. In view thereof, ad-interim order in terms of

prayer clause (I) was also granted by this Court in addition to prayer

clauses (c) and (d) of the Plaint. This was issued till 9th December

2021 and thereafter, further continued by the subsequent order dated

9th December 2021, till further orders.

12. Having considered the submissions, in my view

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recall of the ad-interim order dated 26th October 2021 and the

subsequent order dated 9th December 2021 which continued the ad-

interim order till further orders is uncalled for. It is an admitted

position that the subject four flats of the Applicant/Defendant No. 6

formed part of the mortgaged property with respect to the 1st term

loan of Rs. 60.00 Crores granted on 28th July 2014 by the Plaintiff to

the 1st Defendant. This position is clear from the schedule to

Indenture Mortgage dated 5th August 2014. It is further an admitted

position that 1st term loan was repaid only on 21st August 2017,

prior to which Applicant/Defendant No. 6 claimed to have purchased

the subject four flats on 31st May 2016.

13. Thus, in my view, this Court in the ad-interim

order dated 26th October 2021 had correctly arrived at a prima facie

finding that without the Plaintiff’s no objection certificate, there

could have been no valid transfer in favour of the 6th Defendant, as

the NOC was necessary to sell the subject four flats to the 6th

Defendant in the first place. In fact, admittedly, the post facto NOC

was issued by the Plaintiff on 6th October 2017 which was

conditional upon deposit of the sale proceeds in RERA Escrow

Account as observed by this Court in the said order. It is accordingly,

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held by this Court in the ad-interim order that in the event, the

condition of the deposit in RERA would remain unfulfilled, the NOC

could not survive a breach of the condition. Thus, a prima facie view

has been taken by this Court that this could would directly affect any

title that could be said to have passed to the 6th Defendant.

14. The submissions of the learned Counsel for the

Plaintiff is that the 2nd term loan and the Deed of Mortgage executed

to secure of the 2nd term loan facility granted by the Plaintiff had

not mentioned in the schedule of mortgaged property, the subject

four flats which Applicant/original Defendant No. 6 claims to have

purchased and thus prior NOC for sale of subject four flats was not

required, cannot be accepted. In fact, the sale of the subject four flats

was prior to repayment of the 1st NOC. The mortgaged property in

the 1st Deed of Mortgaged dated 5th August 2014 in respect of the

1st term loan facility clearly mentioned the subject four flats which

the Applicant/original Defendant No. 6 claims to have purchased.

Thus, prior to the purchase of the flats, the NOC was required to be

issued by the Plaintiff. Considering that post facto NOC was issued by

the Plaintiff conditional upon the deposit of the sale proceeds in

RERA Escrow Account which had remained unfulfilled, this Court

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had in my view correctly arrived at the prima facie that this would

directly affect any title that could be said to have passed to the 6th

Defendant.

15. In that view of the matter, I find no reason for

recall of the ad-interim order passed which grants prayer clauses (c)

and (d) as well as (I) of the Plaint and which has thereafter, been

continued by the subsequent order dated 9th December 2021. The

Defendant No. 6 in fact had been served which is recorded in the said

ad-interim order. Thus they were aware that the Interim Application

was being moved and by choosing not to appear, it does not lie in the

mouth of the Applicant/original Defendant No. 6 that the ad-interim

order has in any manner been passed without notice to the

Defendants. Accordingly, there is no merit in the Interim Application

and the leave sought for in the Interim Application is rejected.

16. The Interim Application is disposed of in the above

terms.

[R.I. CHAGLA J.]

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