Before I put question to the forum let me first explain in brief the facts of the case. "X" is the Borrower who approached "A" the Bank for financial facilities. "X" created mortgage by deposit of title deeds with "A" to secure the loan. Subsequently, "A" approached "B" and "C" Bank to grant financial assistance. "B" and "C" Bank granted financial assistance subject to ceding of the pari passu charge by "A" Bank. Consequently, "A" Bank accepted pari passu charge of "B" and "C". "B" got the Deed of Mortgage Registered.
X committed default in payment of interest and repayment of the loan. A filed Original Application against X for recovery of its dues and enforcement of securities before DRT without joining "B" and "C" Bank as party to the Original Application. "A" did not make any reference that it has issued letter ceding pari passu charge in favour of "B" and "C". Subsequently, "B" filed Original Application against X for recovery of its dues and enforcement of securities before DRT. "B" made A and C as proforma Defendant to the Original Application. Since the summons could not be served upon "A", the name of "A" was deleted from the array of parties. Both the Original Application proceed in the same DRT. For whatsoever reasons, "B" did not produce the letter issued by "A" ceding pari passu charge in favour of "B". In the OA filed by "B" judgment was pronounced prior in point of time and consequently RC was also issued. Therefore, Recovery Proceedings started in "B" case. However, in the OA filed by "A" the judgment was pronounced almost after one year and therefore, RC also issued after one year.
However, "A" was prompt in attachment of the mortgaged assets in the RP commenced in their OA. Ultimately, the mortgaged property was sold in the RP of "A". Monies were lying for distribution. "B" filed intervening application for pro rata distribution. "A" raised the following objection for not allowing distribution to "B"
(1) Recovery Officer cannot go beyond RC.
(2) B was not a party to the OA filed by A
(3) Mortgage was only in favour of A
My question to the Forum is:
(1) Whether "A" can conveniently ignore the letter ceding pari passu charge in favour of "B" and "C"?
(2) Whether principles of estopple applies to "A" vis-a-vis the letter ceding pari passu charge?
(3) Whether "B" and "C" are entitled to ratable pro rata distribution out of the sale proceeds lying in DRT?
