Monday, October 06, 2014


This story was told to me by Raku, an old friend of mine on one of those beery Sunday afternoons during my visit to Calcutta in the early 1980s. He was then a ‘junior’ to Mr Shashank Moitra, a famous advocate who was on the panel of several corporates. He also gave legal advice to banks, which mainly was examination of the title to immovable property offered as collateral security.

For the benefit of those who have heard the word ‘collateral’ only in the context of damage (Recall the expression ‘collateral damage’ popularized by 9/11), let me explain what constitutes collateral security. It stands for an asset which is not the primary security for a loan. It may belong to the person who applies for the loan (or a relative or a friend of his) and is mortgaged or otherwise charged to the bank as further security for the advance.

When a customer approaches a bank for a loan, he would be told that the loan would be granted if he could offer adequate collateral security. If he agrees, he has to procure a certificate from a lawyer that he has satisfactory title to the property. The bank would address a letter to the lawyer, hand it over to the applicant with a request to take it to him, along with the title deed and the several supporting documents – land tax receipts, building tax receipts, prior deeds, non-encumbrance certificates, location map, site-plan, and a host of others. The hopeful applicant would darken the doors of the banker again, armed with the report and ready to avail the loan.

Moitra used to provide this service to banks as a matter of routine. Being a busy lawyer, he would assign the work to Raku. After examining the documents, Raku would prepare the report, get it signed by Moitra and hand it over to the applicant. The Bank would rely on the report and proceed to give the loan.

The routine changed when the Manager of the bank was transferred. Vaidyanathan, the new incumbent, believed in the concept of abundant caution. He was not satisfied with the routine title-clear certificate of lawyers. ‘You can’t be too sure, you see,’ he would tell Raku. ‘The primary security can vanish any time. At the end of the day, this is the only security we can fall back upon. Therefore you need to be satisfied beyond doubt that the title is absolutely clear.’ Raku would be asked to track the prior transactions and confirm that the title was indeed clear.

Abdul Buhary who owned a tannery in Tangra was one of the first to approach Vaidyanathan for a loan. Anticipating the demand, he had the title deeds of the collateral security handy. Vaidyanathan addressed the usual letter to the lawyer seeking his legal opinion and handed it over to Buhary, ‘Take it to Moitra-moshai along with the title deed and the supporting documents and get me his report.’

In a week, the report was ready. Vaidyanathan had a look at it and shook his head, ‘This covers the period from 1947, but I need the lawyer to look at the prior documents and the legal opinion should cover earlier periods.’

Buhary went back to Raku who informed Moitra of the banker’s demand. He asked, ‘Why? A report covering thirty-five years should serve the purpose. I’ll speak to the manager.’

He put the pipe in his mouth and took a few puffs of the unlit tobacco. Putting a lighted match to the weed in the bowl of the pipe, took a hard puff. Relaxed, he let the smoke out through his nostrils and dialled the six-digit number.

Vaidyanathan lifted the telephone. After exchanging the usual pleasantries, Moitra went into the business.

‘Mr Vaidyanathan, this is about the title certificate of Buhary’s property.’

‘Yes, your certificate covers only the last thirty-five years, but for me to sanction the loan, it need to be sure.’

‘Mr Vaidyanathan, take my word: Mr Buhary has a clear and marketable title. If anyone else has any claim on it, he is supposed have raised it within thirty years. I have examined the documents for the last thirty-five years and there are no issues. You can proceed on the basis of my certificate…’

The banker interrupted the lawyer, ‘But one cannot be sure. Better safe than sorry, you see.’

A visibly annoyed Moitra chewed on the tip of his pipe and responded rather curtly, ‘Mr Vaidyanathan, it will take a while to explain, but I will walk you through the prior deeds chronologically.

‘You have my certificate which covers the period from 1947. This property is located in Calcutta, the capital city of the state of West Bengal, which was created when India gained freedom in 1947 and the country got partitioned. Till 1912, Calcutta was the capital of India, when the British moved the capital city to Delhi.

‘It was in 1772 that Calcutta became the capital of British India, and the first Governor General Warren Hastings moved all important offices from the then capital in Murshidabad about 60 miles away. Calcutta was captured in 1757 by Robert Clive when the British defeated Siraj-ud-daullah on the battle field of Plassey. Actually it was a re-capture because Siraj-ud-daullah, Nawab of Bengal, had attacked the city in 1756 and captured the fort.

‘Going back further, in August 1690, Job Charnok, an agent of the East India Company, chose this place for a British trade settlement. The site was carefully selected, being protected by the Hooghly River on the west, a creek to the north, and by salt lakes about two and a half miles to the east. There were three large villages along the east bank of the river Ganges, named, Sutanuti, Gobindapur and Kalikata. These three villages were bought by the British from the local land lords. The Mughals granted East India Company freedom of trade in return for a yearly payment of 3,000 rupees.

‘Now, East India Company was an agent of the Queen. As all of us know, the Queen of England was charmed by India and treasures it held which is why in 1492 the then reigning monarch, Isabella granted a sea captain named Christopher Columbus the privilege of seeking a new route to India. The good queen, being a pious woman and careful about titles, almost as much as the manager of Bharat Bank, took the precaution of securing the blessing of the Pope before she sold her jewels to fund Columbus' expedition. Now the Pope, as I'm sure you know, is the emissary of Jesus Christ, the Son of God. And God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that He also made the part of the world called Calcutta. I hope you are satisfied. Now, may Mr Buhary have the loan?’

Raku, being at the other end of the phone, could not hear the reply of the Manager after this edification. His greatest regret is that he was not at the Bank to see the face of the Manager.


Suvro Chatterjee said...

I wonder whether the applicant got the loan, too. Bank managers are not famous for being grateful upon being 'sufficiently' edified!

kochuthresiamma p .j said...

Absolutely hilarious!

Should put this in the in-house magazine of banks.

'Raku, being at the other end of the phone, could not hear the reply of the Manager after this edification'
What a pity! That'd have been the icing.

Jojo George Abraham said...

I am yet to stop laughing. Sir, I think it is a true story. My takeaway is the history of Kolkotta, a few things which I didnt know till I read this. Thank You2267

wannabewodehouse said...

Jojo, most of my posts are true stories. This one too is no different. (True, I might have taken some liberties with facts, masked the identities of the persons involved, exaggerated a bit and embellished the story for effect.) Incidentally, this is an old post tweaked a little and with some typos removed.