# The Cosmos Co. Operative Bank Ltd. vs. Central Bank of India and Ors.

> SC judgment dated 2025-02-04. Citation: TCN-2025-SC-00052. This civil appeal arises from a judgment passed by the High Court of Judicature at Bombay, which…

- **Court:** SC
- **Order date:** 4 Feb 2025
- **Citation:** TCN-2025-SC-00052
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/the-cosmos-co-operative-bank-ltd-vs-central-bank-of-india-and-ors-7af28b7d

## Summary

### Background

This civil appeal arises from a judgment passed by the High Court of Judicature at Bombay, which upheld an order by the Debt Recovery Appellate Tribunal (DRAT). The DRAT had affirmed an order passed by the Debt Recovery Tribunal (DRT) regarding a loan dispute between Central Bank of India (respondent) and The Cosmos Co. Operative Bank Ltd. (appellant). The core issue revolves around which bank has the first charge over a flat that served as security for the loan, considering that the original borrowers defaulted on their payments.

## Facts

The original borrowers availed a loan facility from Central Bank of India (respondent no. 1), offering a flat as security based on an unregistered agreement of sale. The borrowers defaulted, leading Central Bank to initiate recovery proceedings before the DRT. The DRT initially ruled against the bank, stating that the bank failed to prove the mortgage. Central Bank appealed to the DRAT, which allowed the appeal. During the DRAT proceedings, The Cosmos Co. Operative Bank Ltd. (appellant) intervened, claiming a prior charge over the same property. The appellant bank had sanctioned a loan to the same borrowers, secured by the same flat, based on an unregistered agreement of sale and a share certificate of ownership. The High Court upheld the DRAT's decision, stating that

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## Issues and analysis

### Issue 1: Whether the High Court committed any …

**Ratio:** The principle that a later registered title prevails against an earlier unregistered

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**Reasoning:** The High Court failed to recognize the distinction between an equitable mortgage (Central

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**Interpretation:** The court interpreted Section 58 of the Transfer of Property Act, 1882,

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**Application:** The court applied the principle that a legal mortgage has priority over an

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## Parties

- **Judges:** J.B. PARD…; R. MAHA…
- **Appellants:** The Cosmos…
- **Respondents:** CENTRAL BANK OF…
- **Other parties:** Over Tu…

## Timeline

- **1989-10-31 — Mortgage with Central…**: The High Court recorded that the flat was mortgaged with the Central Bank of India on…
- **1994-01-01 — Court Receiver…**: The flat in question was in custodia legis of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 11 — Persons not entitled to make application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-11)

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