LexMAHARAJI EDUCATIONAL TRUST versus HOUSING & URBAN DEVELOPMENT CORPORATION LTD. & ORS.
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A B [2017] 4 S .C.R. 790 MAHARAJI EDUCATIONAL TRUST v. HOUSING & URBAN DEVELOPMENT CORPORATION LTD. & ORS. (Civil Appeal Nos. 6463-65 of 2017) MAYOS,2017 [ARUN MISHRA AND S. ABDUL NAZEER, JJ.) Securitization and Reconstruction of Financial Assets and C Enforcement of Security Interest Act, 2002: s. 13(2) - Appellant-Educational Trust took loan of Rs. 75 crores from respondent No. 1 (HUDCO) - Properties Nos. 1 to 6 mortgaged - Recovery proceedings by HUDCO under 1993 Act - 21 acres out of the mortgaged property No. 6 was exchanged by D the Trust with Awas Parishad - Thereafter agreement to sell property No. 6 comprising of 63.45 acres (including the 21 acres obtained in exchange) by the Trust with a construction company - Part payment (Rs. 9 crores) obtained from the constniction company paid by the Tnist with HUDCO - In arbitration proceedings between the Trust and the construction company in respect of specific E p,erformance of the agreement, interim injunction was passed not to sell the property in question therein - Proceedings by HUDCO under SARFAESI Act - Dispute as regards the Property No. 6 (which included 21 acres exchanged land) between the Trust and the construction company, as to whether it could be sold under F SARFAESI Act for satisfying the dues of the Trust - Held: 21 acres out of the property No. 6 (which was obtained in exchange) was unencumbered - It cannot be treated as accession to property under mortgage within purview of s. 70 of Transfer of Property Act - Therefore HUDCO does not have first right to sell the 21 acres of G land- It has right qua the other mortgaged properties (i:e. properties Nos. 1 to 5 and 43 acres of property No. 6) to realize the dues at the first instance - The Trust is directed to settle the scheme for payment with HUDCO - On failure by the Trust to settle the scheme, it would be open to HUDCO to sell· approximately 43 acres of land (of the mortgaged property No. 6) - if proceeds from the sale thereof are H not sufficient to satisfy the dues, it can sell the property Nos. I to 5 790 ' ,- MAHARAJ! EDUCATIONAL TRUST v. HOUSING & URBAN 791 DEVELOPMENT CORPORATION LTD. or its part which may be necessary for realization of the outstanding A dues - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Transfer of Property Act, 1882 - s. 70. Transfer of Property Act, 1882: s. 70 - Doctrine of accession - Meaning and Scope of - Discussed. · B Words and Phrases: 'Accession' - Meaning of. in the context of Transfer of Property Act, 1882. Disposing of the appeals, the Court HELD: 1. The doctrine of accession is limited to cases where the security in existent and has not been destroyed altogether and the mortgagor thereafter acqu~res, while keeping c the security intact, a new right which is called accession. In the · instant case, the property which is 21 acres under mortgage, could D not have been transferred by the Educational Trust free from encumbrances to Avas Parishad at all. As the property was encumbered, the charge of HUDCO would remain on the existing property which was actually under the mortgage deed. Thus the property which has been taken by Avas Parishad from the Educational Trust could not be said to be unencumbered and was subject to mortgage and it was not legally permissible for Educational Trust to give it to Avas Parishad as unencumbered. property. [Para 29) [807-H; 808-A-B] E 2. Enlargement of estate is also an accession. Section 70 of F Transfer of Property Act, 1882 (TP Act) is not limited to physical accretions or additions. In case there is increase of interest, the same is also covered under purview of Section 70. In case mortgagor had only the leasehold rights and had acquired freehold rights during subsistence of the mortgage, the same has to be treated as an accession to the property. Addition of occupancy G rights or some other such rights with respect to the existing property should also be an accession to the mortgaged property. If the mortgagor discharges a prior encumbrance existing at the date of the mortgage, the increase in the value of the estate is for the benefit of the mortgagee. A clearance of the adjoining waste H 792 SUPREME COURT REPORTS [2017] 4 S.C.R. A land by the mortgagor is not an accession within the meaning of Section 70. The property 21 acres obtained in exchange by Educational Trust cannot be said to be accession within the p
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