Bank can’t refuse NOC and Title Deed once after clearing the Charge over Property through Sale Agreement with the Third-party: Gujarat HC [Read Order]

The Gujarat High Court has held that once the bank agrees to sell a property mortgaged with it by a loan defaulter and a third party pays full consideration through a sale agreement, then the Bank can’t refuse to release NOC and title deed.

The fact of the case respondent No. 2 had availed financial assistance from Respondent No. 1 Bank and while availing assistance, Respondent No. 2 had mortgaged the property in question in favour of the Bank. Failure to repay the loan led the Bank to classify the account of Respondent No. 2 as a Non-Performing Asset. The writ-applicant approached respondent No.1 bank to purchase the property in question for an amount of Rs.2.50 crores with the consent of respondent No.2.

Justice Vaibhavi Nanavati directed the Respondent bank, to release the charge over the property in question and hand over the original title documents of the property to the Applicant (purchaser) within two weeks.

It was observed that respondent No.1 bank had received the entire amount of Rs.2.50 crores from the purchaser through respondent No.2 and refused to issue the certificate for releasing the charge over the property and also did not hand over the original title documents of the property.

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 are due and payable by the alleged liability of M/s. Jay Ganesh Roadlines in favour of respondent No.1 Bank is realized.

As there was no charge on the immovable property in question in respect of the alleged liability in favour of respondent No.1 Bank, it was not open for respondent No.1 Bank to deny the contractual commitment of issuing no objection certificate/no due certificate and release of title deeds of the property.

The bench directed respondent No.1 bank to release the charge over the property and to hand over the original title documents of the property. The appeal was allowed in favour of the appellant.

To Read the full text of the Order CLICK HERE

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