Central Bank of India approached the Bombay High Court seeking directions to change the reservation of mortgaged properties in Mumbai, only to have its plea dismissed as 'completely meritless' on two counts. The bank had discovered that the plots it sought to auction for loan recovery were reserved as recreation grounds (RGs) under the development plan, rendering them unsellable.
HC Dismisses Bank's Plea
Justices Bharti Dangre and Manjusha Deshpande observed in a June 10 order that the development plans cannot be changed at the whims of any party. 'Firstly, it is at the instance of the bank who is of the opinion that it is unable to sell the plot mortgaged with it, as it falls within the RG reservation,' the court noted. 'Secondly, development plans cannot be changed and modified at the whims and fancies of any particular party at any particular point of time.'
Details of the Case
The mortgaged area comprises plots cumulatively measuring 1,400 square meters in Chandivli, eastern suburbs of Mumbai, where the population density is high and open grounds are scarce. The bank had sanctioned a loan to a private company, which defaulted, and the plots were mortgaged as security. Central Bank of India initiated recovery proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) before the Debt Recovery Tribunal (DRT), Mumbai, and also moved the chief metropolitan magistrate to take physical possession of the lands. In 2018, after court approval, it took possession.
Auction Reveals Reservation
In September 2018, when the bank put the plots in the L ward up for auction, it learned of the development plan reservation and the consequential bar on sale. The bank then moved the Bombay High Court, seeking directions to drop the RG tag. No lawyer appeared for the bank. For the Brihanmumbai Municipal Corporation (BMC), counsel Dhruti Kapadia opposed the petition as untenable.
BMC's Argument
The BMC cited the law, stating that the Draft Development Plan 2034 was prepared after a rigorous process involving suggestions and objections from the public. Any modifications require a rigorous process under the Maharashtra Regional and Town Planning Act, only in exceptional circumstances. The petition was filed in 2019, and a BMC affidavit from 2019 by its executive engineer (Development Plan) opposing the petition was 'inadvertently' not filed, the HC noted.
Court's Observations
The High Court said the bank's only reason was its inability to sell the plots to recover its loan. 'In fact, the bank ought to have been careful before accepting the mortgage… and in ensuring that the property does not fall within any reservation zone, so that the bank could not be in a position to realise its amount if at all there was a failure on part of the borrower and the guarantors to discharge its obligation,' the court added.
