The document discusses a legal case involving two mortgages on a property at 42, Chowringhee Road, where the defendant firm initially mortgaged the property to the National Bank of India but later obtained the title deeds to secure a second mortgage with Lloyds Bank. The court found that the National Bank had acted with gross negligence by returning the title deeds, thereby allowing the subsequent mortgagee, Lloyds Bank, to establish priority. Ultimately, the court ruled that Lloyds Bank holds priority over the National Bank under Section 78 of the Transfer of Property Act.

1. 1(c)2014 MD HAROON RASHEED, ADVOCATE
By,
MOHAMMED HAROON RASHEED
B.A.LL.B (Hons.), [BSW] & [LLM]
Advocate
Email ID: adv.mdharoon@gmail.com

2. Facts
 The defendant firm P.E. Guzdar & Co. mortgaged 42,
Chowringhee Road, Calcutta, to the National Bank of
India by delivery of the title deeds to secure an
overdraft in their current account with the bank.
 But later he asked the bank to give him back the title-
deed so that he may show it to intending purchaser.
2(c)2014 MD HAROON RASHEED, ADVOCATE

3.  He further said that only after selling the property he
can satisfy the debt of the bank.
 Believing on his words bank handed over the title-
deeds to him.
 Having regained possession of the title deeds, he
mortgaged the property in like manner to Lloyds Bank
to secure another loan.
3(c)2014 MD HAROON RASHEED, ADVOCATE

4. Issue
 The question is, which of the two mortgages in the
circumstances is entitled to priority?
4(c)2014 MD HAROON RASHEED, ADVOCATE

5. Analysis and law
 Transfer of Property Act (4 of 1882), Sections 48, 58,
59, 78, 79.
 Normally the intending purchaser goes to the creditor
having possession of title deeds , and confirm the title
by inspecting it.
 The bank is not supposed to handover the deed to
anyone till the time money is returned to the bank.
5(c)2014 MD HAROON RASHEED, ADVOCATE

6.  But the bank has committed gross-negligence by
returning the title-deed to the respondent.
 Thereby giving opportunity to induce another person
to advance money
6(c)2014 MD HAROON RASHEED, ADVOCATE

7. Judgment
 Therefore, the court held that under section 78 the
subsequent mortgagee i.e. Lloyds bank would get
priority over national bank.
7(c)2014 MD HAROON RASHEED, ADVOCATE

8. 8(c)2014 MD HAROON RASHEED, ADVOCATE