IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 235 of 1996()
1. CENTRAL BANK OF INDIA
... Petitioner
Vs
1. V.VASANTHA KUMARI
... Respondent
For Petitioner :SRI.M.P.R.NAIR
For Respondent :SRI.S.CHANDRASENAN
The Hon'ble MR. Justice THOTTATHIL B.RADHAKRISHNAN
The Hon'ble MR. Justice S.S.SATHEESACHANDRAN
Dated :16/07/2010
O R D E R
THOTTATHIL B.RADHAKRISHNAN
&
S.S.SATHEESACHANDRAN, JJ.
-------------------------------------------
A.S.Nos.235 & 245 OF 1996
-------------------------------------------
Dated this the 16th day of July, 2010
JUDGMENT
Thottathil B.Radhakrishnan, J.
1.These appeals arise from the decree in O.S.77/89 of the Sub
Court, Kottarakkara. That suit was filed by the Central Bank
of India which has filed A.S.235/96. The connected appeal
A.S.245/96 is filed by the third defendant, arrayed as
guarantor.
2.The plaintiff contended that it advanced a loan to the first
defendant for the purpose of purchasing a bus and that
defendants 1 and 2 created collateral security by deposit of
title deeds of an immovable property belonging to them and
that the third defendant, the brother of the first defendant,
was the guarantor.
AS.235/96 & 245/96
2
3.Defendants 1 and 2 filed a written statement taking the stand
that the first defendant wanted to buy a TATA Benz Bus and
the bank represented to them they could buy a ‘Ford’ vehicle
and that loan could be granted on personal security rather
than on any other collateral security. They contended that
they got a Ford vehicle which ultimately turned out to be not
worth. They pleaded that the alleged security documents
were not created and they had issued different signed blank
papers to the officers of the bank which have been utilised for
the purpose of filing the suit.
4.The third defendant, arrayed as guarantor, filed written
statement stating that he went along with his sister, the first
defendant as it was told to him that he has to sign certain
documents as a witness and he signed the documents under
that belief and he never intended to be a guarantor for the
transaction.
AS.235/96 & 245/96
3
5.The court below repelled the plea of the third defendant that
he is not the guarantor, however, found that the security
documents were not appropriately created and that there is
no equitable mortgage by deposit of title deeds. Resultantly,
the suit was decreed against defendants 1 to 3 and their
assets without giving any charge decree or for sale of the
plaint B schedule property, which, according to the bank, was
the subject matter of the mortgage.
6. In its appeal A.S.235/96, the bank challenges the decree to
the extent it refuses a decree for sale of the mortgage
properties. The third defendant has filed A.S.245/96 to the
extent the decree finds him also liable as a guarantor.
7.We may first deal with the third defendant’s appeal
A.S.245/96. Adverting to his written statement, it can be
seen that the plea raised by him was that his sister, the first
defendant, approached him and wanted him to accompany
AS.235/96 & 245/96
4
her to the bank to sign as a witness in certain documents and
that he signed the documents relied on by the plaintiff on the
belief that he is only a witness. The third defendant pleaded
that he had not offered himself as a guarantor. He, therefore,
contended that he is not liable for the plaint claim.
8.The first defendant, the sister of the third defendant, gave
evidence regarding the circumstance in which the third
defendant along with the second defendant executed the
document. DW1 had stated before the court below that she
wanted to purchase a TATA Benz bus and was prepared to
remit the price of the vehicle and offer immovable property
as security. She says that however, the Manager of the bank
told her to purchase a Ford bus. She, accordingly, says that
she agreed to the suggestion of the plaintiff’s Manager and
defendants 2 and 3 offered themselves as guarantors and it
was accordingly, that the documents were signed.
AS.235/96 & 245/96
5
9.The third defendant was examined as DW2. He gave
evidence that he had a conversion with the Manager
regarding the loan. He admitted that the terms of Ext.A3
were feasible and he signed Ext.A3 after having understood
that it is a guarantee form. Under such circumstances, the
court below found that defendants 2 and 3 had executed
Ext.A4 knowing that they were put as guarantors for the
repayment of the loan sanctioned by the plaintiff to the first
defendant.
10.We further notice that the third defendant is not an illiterate
person. He was an Engineer in the Cochin Shipyard. He had
stated in his cross examination that he would not sign
documents without reading and understanding its contents.
Though he had said before the court below that he had not
understood the purpose of the document when he signed it,
we are unable to appreciate that stand of the third defendant.
He, as already noted, had stated that there was a discussion
AS.235/96 & 245/96
6
between the parties and the Manager of the bank. We are,
therefore, inclined to take the view that the court below had
rightly appreciated the evidence and the decree passed
against the third defendant does not warrant interference.
11.Adverting to the appeal of the bank, A.S.235/96, it has to be
noted that the plea of defendants 1 and 2 in relation to the
creation of the equitable mortgage as collateral security was
that the first defendant was called upon to furnish personal
security and the defendants were compelled to sign certain
papers without revealing details of the documents.
According to defendants 1 and 2, they were unaware of the
fraud played by the plaintiff on them. They took the stand
that they have not executed any agreement and no guarantee
was furnished. The did not, however, deny the fact that they
have deposited the title deeds of the property in question
with the bank. Adverting to the documentary evidence, it can
be seen that the bank had produced the original of the
AS.235/96 & 245/96
7
documents standing in the name of defendants 1 and 2 before
the court below. The fact that they had deposited the
documents evidence the mortgage. There was also no
specific plea for defendants 1 and 2 in their written statement
that they have not created any mortgage by deposit of title
deeds. Therefore, the court below erred in refusing the
decree to be for sale of the suit properties to recover the
plaint claim and charged on the plaint B schedule property.
12.For the aforesaid reasons, A.S.235/96 is entitled to succeed
and A.S.245/96 is liable to be dismissed.
In the result,
(i) A.S.No.245/96 is dismissed.
(ii) A.S.No.235/96 is allowed modifying the decree
passed by the court below by allowing the plaintiff to
AS.235/96 & 245/96
8
recover the decree amount by sale of the plaint B schedule
property. The appellant will be entitled to costs of appeal
A.S.No.235/96 from defendants 1 and 2.
Sd/-
THOTTATHIL B.RADHAKRISHNAN,
Judge.
Sd/-
S.S.SATHEESACHANDRAN,
Judge.
kkb.16/07.