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2007 (8) TMI 449 - SC - Companies LawWhether in absence of any execution and registration of deed of sale by the Government of Andhra Pradesh or by APIIC in favour of the Company, any interest in the land has been and could be created? Whether the Company as well the Syndicate Bank obtained prior consent of the Government in the matter as was required under clause 8(b) of the agreement? Held that:- Questions require consideration by a Larger Bench so that an authoritative pronouncement can be made thereupon - no clear authority on the question as to whether in absence of any title deed in terms whereof the mortgagee obtained title by reason of a registered deed can be a subject-matter of mortgage. Section 58 of the Transfer of Property Act does not speak of mortgage of an owner’s interest. If any interest in property can be created by reason of a transaction or otherwise which does not require registration, in our opinion, it may not be necessary to have a full title before such a mortgage is created by deposit of title deeds. A person may acquire title to a property irrespective of the nature thereof by several modes, e.g., a lease of land which does not require registration; (ii) by partition of a joint family property by way of family settlement, which does not require registration. In a case of this nature where valuable right is created which may or may not confer an assignable right, the question requires clear determination having regard to the equitable principle in mind, and would have far reaching consequences, as a large number of banks and financial institution advance a huge amount only on the basis of allotment letters. If such allotment letters are to be totally ignored, the same may deter the banks in making advances which would in effect and substance create a state of instability.
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