Sale deed

Manoj (Querist) 17 August 2012 This query is : Resolved
“A” is a private ltd. Co.,owns a land. “A” avail loan of Rs. 100,00,000/- from Bank but does not register charge in favour of Bank. During the subsistence of loan “A” sells the property to “B”.

My query :

1. Is it a valid transfer in favour of “B” as the loan is still outstanding in respect of property in question.
2. In this case who will pay the loan that is still outstanding

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Adv.R.P.Chugh (Expert) 17 August 2012
If no registered mortgage deed is executed, then the interest in favour of bank does not take effect, and the subsequent buyer's right has a priority over the bank's rights. The bank can only claim it from the original owner of the property.

Guest (Expert) 17 August 2012
In my views your query is hypothetical, as no bank officer would be so idiot to shell out bank's huge money to the tune of Rs. one crore by risking his own service without getting the property hypothecated properly in favour of the bank.

However, if the position explained by you is correct and bank has been found to be doing business so foolishly, the position with respect to your queries would be as follows:

1) Tranfer would be valid.
2) Only A is liable to repay loan, not B.

ajay sethi (Expert) 17 August 2012
what were terms and conditons of loan ? the agreement signed by A must have contained a clause that no third party rights would be created pending repayment of loan . bank will move court for setting aside sale . liability for repayment is that of A

prabhakar singh (Expert) 19 August 2012
I find Mr.Dhingra;s guess right.Bank never lend such a huge amount unsecured.

However for facts in query the sale would be valid unless bank is able to prove that transaction is sham just to defeat it's right of recovery of loan.

Manoj (Querist) 24 August 2012
thanks to all experts

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