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NON-REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 17372 of 2017 [Arising out of Special Leave Petition

(Civil) No.32885 of 2016] STATE BANK OF INDIA & ANR. ...APPELLANTS

VERSUS METTA CHANDRA SEKHAR RAO & ORS.       ...RESPONDENTS

WITH CIVIL APPEAL NO. 17374 of 2017

[Arising out of Special Leave Petition (Civil) No.13173 of 2017]

JUDGMENT

RANJAN GOGOI, J.   CIVIL APPEAL @ SLP(C) NO.32885/2016 1. Leave granted. 2. We have heard the learned counsels for the parties.  We have perused the impugned order  of  the  High  Court  and  have  also considered the facts of the case. 3. The challenge in this appeal is to an order dated 24th August, 2016 passed by the High Court of Judicature at Hyderabad for the State of Telangana and the State of

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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

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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

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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.

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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