OF THE 'BANK SR.I_.,I'.SHAMSUNDER
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED TI-IIS THE ISTH DAY OF NOvEMEERI.';;Oi»Ofr':PM
PRESENT I
THE HON'BLE MR. JUS'I'IC§.'.--AJIT
THE HON'BLE MRS.
RFA.No.74S/2oo4i_CYI/W._595/2604.,
RFA.NO.746[2004
BETWEEN:
ING VYSYA I:'iAN.K'1~."I'D"*- . ' - I'
REGD BAN_RING"COMPAAP{_"' "
IIAvING'I'I'S' CORPORATE' 'OFFICE
AT NO.72, ST. £VI£IRKS'ROI¢\D'I*--.. ' -
BANGALORE.-- b60'OO~1 __ ..
REP BY ITS-POWER OE'ATI*ORNEY HOLDER
AND BRANCH~.MANAvGER. PRINCIPAL OFFICER
.. . APPELLANT
IIn.A[By.IAS'1*i.: FOR M/S KHETTY AND COMPANY)
AN]§:"~._
A VAISLIIENTERPRENEURS PVT LTD
I--> "
.. ' ' 20, ITI ANCILLARY
= ._INDUSTRIAL ESTATE
; BANGALORE -- 560 048
F REP BY ITS CHAIRMAN AND MANAGING
DIRECTOR, SRI.J.T PRAKASH
SRI.J T PRAKASH
ADULT, MANAGING DIRECTOR
VASU ENTERPRENEURS
PRIVATE LTD., B-20. ITI ANCILLARY
_ PRAKASH A
ADV.)
INDUSTRIAL ESTATE
BANGALORE W 560 048
... lRESPOND}jZNfE'S
{By Sri: R SHYAMA, ADV.)
THIS RFA ES FELED U/S. 96 OF CPC AGA_i:1\ISTV.TBLE
JUDGMENT AND DECREE DT..--12'.~1._O4 LBASSED' AN E'
O.S.NO.6134/95 ON THE FILE
CML JUDGE. BANGALORE, AG_A1NST_THAT BO.RT1ON ROLE V
THE FINDING THAT NO MORTGAGE WAS -CREATED BY
THE 2ND DEFENDANT __{2ND REiSPONDENT'*--HERf3IN] IN
RESPECT OF THE PITA1N'AIT.iSCHED§JI;E2~--1?ROPERTY.
RFA.N0.595[2004
BETWEEN:
VASU ENTE-RPRISF£:'..PVfI"'LTD. ' -
B-20, ITI AN(3--IALLERY ~ .!N'D__U'{~E~TRIAL
ESTATE, BA-N1GAVLO--RE--4B
REP BY ITS MANAGI'NG'DI'RECTOR
.. . APPELLANT
_ 1. '*THE._1v'vx<S9y'A BANK LTD
REGISTERED BANKING COMPANY
A' _HAv1NG ITS CORPORATE OFFICE
V 'AT No.72, STMARKS ROAD
'*~.B.ANGALORE~56O 001, BRANCH AT
EBRAI-IIM SAI-HB STREET
BANGALORBSGO 001
REP BY ITS BRANCH MANAGER
§xJ
SR1 J T PRAKASPI
EVI.AN.AG1.NG DIRIEZCTOR
VASU ENTERPRISES
B~2(), IT} ANCIALLERY
INDUSTRIAL ESTATE
BAN GALORE--56O O48
{RESPONDENTS 1 81 2 ARE SERVED)
THIS RFA IS FILED U/S
JUDGMENT' AND DEGREE _V 12. 1 .04' ON Tr~::<.*.2' F:.ND1INosV . i'
ON THE ISSUE Nos. 2, 5 fe' PASSED IN
O.S.NO.6}.34/95 ON FILE x\fII"*ADDL. CITY
CIVIL JUDGE, BANGA:3§oRE_,_ f{1,C.c'i¥1--Vei,';iN,io;.1_e, ANSWERING
ISSUE Nos. 2, A3 & 6'ApAif'ani< 't{:b'i'-'al'i'i:_m
Sahib Street Branch and ;__tender:ed:fiavibankers ellequel dated
25.8.1992 drawn on Midizmlibé:;i§Vj.,I{te'"--%§;;s;4s,V Coldharbour
lane, Carnberwel], 'London;"'Se E39' 29,000 U.S.
Dollars in along with his
covering the plaintiffs to
discountthe_'s_aild'f'veh.edele and authorising the bank to
keep the of the company as fixed
deposittfor _a period loflnine inonths. The defendant informed
the pbanlk tl"iat'"i.n futurel,M1'n case of need, they may also take
lloantonl deposit. The defendants assure the
plaini..i_fis that transaction is genuine and safe and the
Ciieque tenlci-ered by him was also genuine and was sure to
for which copies of the following" letters were
V' .___"prod%'ueed:
1) letter No.AY/2023/O91 dated 23.3.1992 of
Ayoola Cornmereial linterprises of Nigeria.
addressed to the first defendant.
ii] Letter dated 21.4.1992 of the first defendant.
addressed to the said Ayoola Commercial
enterprises.
iii) Proforma invoice dated 21.3.1992
defendant. addressed
Commercial Enterprises. l
iv) Letter giving descijip-tjilon the
equipment: agreed t.o''be: .
V) Letter No.A$f/'a_o2f::.!hl9lj': -.§16.6.1992 of
Ayo.o1a&lGQmrnercia:l addressed to the
l
_ -the second defendant made
a representatliorriv of the plaintiffibank that the
transa'cti1'o:n was"genni11e'a1id the pay order which was issued
was also""g:en_n'i1ie and sought for discount. of the said cheque
and{asA"th.e'*pllaintiff branch does not deal in Foreigii exchange
heat;-e_._, t'he*rna'nager of the plaintiff bank forwarded the said
if 'i;tstrt1rnei__1t'. to K.G.Road Branch which was dealing in foreign
ll l'e:A<c}.i_ali¥;ge along with the covering letter dated 28.7. .1992.
4. The said i11strument was discounted at the
K.G.Road Branch accordingly and forwarded a sum of
Rs.8,1l.928/~ being the exchange value of U.S.do11ars
29.000 to the plaintiff Branch on 29.7.1992. In the
meantime, the said instrument was sent to the Midiaijd
Group. London. but however. it received a 1ep1;i::':"."J'1-«gm
Midland Group, London. that it did not have a branc1v1:V'a:t0the' 9
address printed in the instrument.
5. Indeed it is to be 1iotice'd..:Vt.hast
instrument was sent by the *p_1a.int.iffa'ba9rik HD.3?IL0
Courier Service and the said iiistriirnent was lost. in transit.
During this period. the Vfirdsit de_fen--da1it__'t.hi*ough the second
defendant contacted the pA1.ain_ti.ff b1'anc'h'vto""oipeii an account
in the 11arne._o--f tde§er1'dai'it-'with a copy of resolution of
the board o£pdirectors'""odn 992 permitting the company
to open; an acco'un_t'andV'a11ow the operation of the account
defendant as Chairman and Managing
defendant--company. It is the case of the
p1ainii__ff said amount of Rs.8,11.928/~ was invested
AA tlirededfixed deposit amounting to Rs.1,i1,928/~.
0 p9.iQ0s.'2..39',OOO/~ and Rs.4.67,000/--. Indeed having regard t.o
overdraft I"aciIity provided by the plaintiff to the
:.VVd€f€i1d8.I"itS. a sum of Rs.4.67.000/~ was drawn and made
use of by the defendants. Since the pay" order which. was
discounted by the piaintiiff to faciIit:ate the defendants in
tiransacting their business with the Nigerian company and
ultimately found that. the said branch was not in existence,
hence. in the circumstances. they were compelled to reV'ei9se
the entries. It is the case of the plaintiff that t'ore'r-pgri V'
exchange of the plaintiff bank was una-ble--t'.o get
of the said discounted instrun1ent";in.sp"ite
correspondence with the wthe
plaintiff bank received .adVispe....t:rorn"'the l\/'Ii'dl'«f11f1dA,.EG2'ou;)
acivising that there was at the
address printed onvihe and that the
said transaction tihletiransaction is a part
of large f17[t§1L1(?l in USA. Canada, Europe,
for supply 'C11: goodsato that no goods should
=be shipped agaainsttsucvh documents as no payment is
received. 2
the case of the plaintiff is that as on the
lt*J_tyien' was filed, the outstanding balance of
V was to be paid on account of overdraft.
it"luv.a'?IThLrss;_.the°"present suit is filed for recovery of the said
_' an1ti'r;t:;' Incideratally. it is also stated that suitable action is
f'
'i:al+;.en as against. the courier service inasmuch as the courier %
-3-
service had informed that the said instrument was lost in
transit.
7. The deiendants entered appeaiance and
contested the proceedings. Indeed the defendants'vwo.1il~d
admit. to the extent that they had given the instrfinientt:
the pay order to be discounted. But howeveia..:the'=.n1'aiiiit
contention is that the amount was .defen'dants; it
on the overdraft facility as against fixeddeposit,'"Hence, _t§..hel
question of satisfying the suit clai';:n'w_ouldl arise? They
would also contend t.l1at't__h'e._ defendants not made use of
the aniot_111t._wt1icli.wast dis.co'u__n'ted. The sum and substance
of the detence is one of' the'----denia1 and they are not liable to
pay ainountnllinsofar as creation of the equitable
'deposit of the title deeds, they would take
Aspec.i'fic1 that the said title deeds were deposited
withthe p12ii.n.t'it"f bank for safe custody. Hence. it cannot be
it said t1r1at:«.t..'i'1e loan was availed by the defendants by creating
y.'2in"eqti--it..able mortgage by depositing the: title deeds. Thus,
.s would contiend that they are not liable to satisfy the suit
..l'claim. Indeed. they would claim that. the amotint, wllich in
fixed deposit: is their money inasmuch as the said money is
I3ot.hiI1g but the a.1'nou1'1tl which is realised by discounting the
instrurnent. On the basis of this spacious reading, the
learned trial judge has framed the following issues:
i] Whether the overdraft. facility reIe1'red.~«toj
plaint secured by creation of K
property described in theVplaiVnt scli'ed'tile?f"V V V
ii) Whether the plaintiff bank iSV.iliai)l'e,e
compound interest. at t11e'rate.Vclaim.edV in respected
of the overdraft lfaeiiities A'aVailedl..Vby;._V"ihVe "1131
defendant company'? V' l' l I' V
iii) Whether the '3i'ntere_:slt'Hcaie:tU.ati.on byvthevvbarik is
correct'? _ V V _ V V
iv] Whether "siiit fnialintainable as
v] -------- -=v\?\fh'et'h..eii::A:t.l1e"defendants are entitled for set-off as
V ._c-lavini%::d72 _ __
vi) VVW'lr1et'ner fth.e"plai::t'ift' is entitled to the recovery
the suit claim'?
'IVV'he llearnedv trial judge having regard to the
V':_Vevid'enee..V_let;~'inl"'by the plaintiffs as well as the defendants
..ciec'tin1er1tary, was of the view that the plaintiff
- is ei1t4itleC£Al'or decree in part inasrnnch as the decreed suit
for a_.Vst.11ii of Rs.4.34.000/- with agreed rate of interest at
c~__1§4...5%':p.a. compounded quarteriy from the date of such
.. utilisation. of the faci.Iity till realisation of the entire amount
" from the clefenclaiits jointly and severally. M
-13.
9. During the course of the trial, two witnesses
were examined on behalf of the bank i.e., PW1 the Chief
Manager and PW2 the Manager of the plaintiff bank. __.O1i
behalf of the defent:iant's._ the second defendant'
examined as l)Wl and on behalf of the plaintiff'
doeument,s relating to the transaction ,V'J€1'__C n1ai*l§e'd=aft. EXs.P--
1 to P-43 and on behalf of the defeii.da;.its~';E2{e..D~
were marked.
10. Learned eourisel _f0?1_' submits that
the appeal of the banli isconfined'-only"to "extent. denying
the relief of by selling the mortgaged
property. cloeumertts i.e., EX.P--37 the
commtifnieation "erleatinéV'alzrno1*tgage as well as Exs.P--23 to
g V his veontention that. the property in question
equitable mortgage by depositing the title
f deelda.
learned counsel for the defendant. would submit
defendants are not liable to satisfy the suit claim.
' would submit that the overdraft facility was given to the
Hdefendaiits in View of the fixed deposit. He st.ibn1i.t.s that the
said amount: belongs to the defendant. llenee, the question
-_.,,.-.«.« »..;.--_¢§..r¢.w-vr
of the defendants satisfying the suit claim would not a'r'i'se.
insofar as the deposit. of title deeds is Concerned,
submit with reference to Ex.D-1 that the
deposited with them for safe custody.'~iliiehcetl
communication cannot. be made
defendant had Created an equita._bileV_moi*.tgage.by._:AdVeposi'ts:of
title deeds. Having given__ our apmziloiis'eoi1siderati.on:§to the
above submissions, the arise for
consideration: " h l V J
i] was justified in
H for by the plaintiff to
M by bringing the mortgage
A l ' property.' é '
~ judgment and decree passed by the
V' dd 3-hlearned judge decreeing the suit as prayed
V ' fiifor eanjbe sustained
i2.".yV__A'1i'o sustain the judgment": and decree passed by
i!.ear"ned Trial Judge and also to examine whether the
..,.'p'lain}tifi" is entitled to recover the amount by bringing the
__'4n1oi'i:ga1ge property to sale the evidence of the plaintiff as well
the defendant. is required 10 be considered. /W
/
13. PVV..1 is the Chief Manager of the LB. Street
Branch of Vysya Bank. He was working as such from".
to 12.5.93. He would depose in his evidence thatgofi V'
second defendant had tendered foreigri' ~eurre_ncy4pay o1'de.r
for U.S. Dollars 29.000/-- drawn on°=Mia['1aadtiegfiiggv
London. He would also reite1"ai:e""-the
respondent requested them 'tithe for
collection to payee bank wide express
courier service agency th,e_ in Fixed
Deposit in their the perusal of
the evidence what has been
stated state that the first defendant
had asked t_he:jn 'discounted proceeds of the
instrument inua Fixed tjeposit for nine months. The KI}.
.Road'"brati'(:h'"'had gitfeinfthem inter branch transfer credit
advicge of / W and the said amount was kept in the
fixed the name of first defendant. Indeed the crux
f"--.«.._oi.T,the evidence of PW.1 is as to the overdraft facilities which
_znfailed by defendants 1 and 2.. In this regard he would
that on 24.8.92 he granted overdraft iimit of
_ ;Rs.3.00.000/~ secured by the fixed deposit receipts EXP22.
I:3X.P.23 is the application cum lien, 21 letter for the advance
of said deposit. It is signed by the second defendant. onfl
/
4----j:/
, hoxvefier, _ the saidl"'doc..u«111.ent
_ from their .' fiioreign
-separate fixed deposits.
behalf of the first defendant. and EX.P.24 is the copyhlloft the
board resolution of the first defendant conipanyw
-.
would state that the limit was enhanced to -"on
the security of two fixed deposit:'receipts.'--;
application cum lien letter for adVance'~againstjgsaid
PW.l would further depose
by Midland Group which is the"'controlIing otfic'e Midland
Bank. London. addressedytol' bank at KG.
Road. stating that Branch at the
address noticed: ' l
A is truelthat during the course of
evidence'-theyre was«.serilous"-obgection by the learned counsel
for the detendantp the said document. But
was marked inasmuch as the
the View that it was not the photocopy, but it is
an originall that as it may, the amount was remitted
exchange bank to the tune of
. R:s:8r,s1'_l,S3lV;?;8/- and the said amount was invested in three
He would also state that as against:
' 'thelsaid fixed deposit certain facilities were provided by them
it to the defendant and the defendant: has availed the same.
Pie would also depose that the amount was treated as non-
performing amount since the defendant. did not come
the 1ett~e1fdat'ed written
it/'
-14-
forward to pay the amount which was due towards the
overdraft account. PW.1 was oross~examined extensively,
but'. however we find from the evidence that noth---ing
detriment to t.he interest. of the plaintiff has been
fact a perusal of the evidence would disclose t,l'1atj'~«'rnostl.oii'
statements made by PW.1 in the oo:;irse"ol'l'1'ts evijden-i:e'hasVd7..
been Confirmed.
15. PW.2 was working Chief
Road branch of Vysya bank between': tl9"9__1-1994'."' would
once again reiterate that the b'aiik'ers was sent to
them for £:'o31a;§i;;:on"§anc1'-tije sarne"'was discounted and the
said amount_ them to the plaintiff branch.
He would refer to the yzivrllottrbs documents referable to the said
__nan1Aety.....F_1X,.P.28, the office copy of the letter
dated' 111$.' Vl'{):5'£t?."'addressed to the Midland Bank and EX.P.29
the ICttterlol'yj*l\/tijdland Bank informing them that there is no
N1idlan..d:'Ba.nxk addressed in the letter and the said pay order
'the il1Stl"L1l'1'1€l'1t is a counterfeit. inasmucli as EX.P.29
reiterate that it is a part. of a large scale fraud
m'ooinmit,t'ed on various branches in respect of the goods
supplied to Nigeria. I--le has also been Cross--examined.
/.
indeed a perusal of his evidence does not disclose that. once
_plaintifl' had not sanctioned the same.
again there is nothing; detrimental to the interest'::of.tl1e
plaintiff has been elicited.
16. This takes us to the:'ei}ide12Qe'--«rof-;
defendant' No.2 in the suit.
was placed by Ayoola Compai1_tf"'~ot' Nigeria of if
1000 telephone sets Valtled flUSfido1'lars:. Indeed
he would state that said bank in
India, Mohadevatptira 49. In fact he
would depose... to PW.l by an
aequainvtanee'~ with the plaintiff bank.
He would applied for certain loan to the
plaintiff but hbweifeirf the loan was not sanctioned.
The plaintiff also not allow him to draw the fixed deposit
ffi'an1oiint.E'*uflThVe'~.defendant would depose that he had obtained
overdfraftfffafeilpiity-l" from plaintiff bank and he had not
niortgagedanyfimitriovable property to the plaintiff. Indeed
he woteildlstate that he had applied for Working Capital, but
The bank had
---..fiobt}air1ed the signature in the form of working capital. He
":."\NOL11d also state that the bank had obtained signature from
another director one Prabhu V Prakash. At that point of
time the had not obtained
plaintiff
He wotild i"eiterat.e_tAha't
1 C.
.
46-
collateral seet.1rit.y from him. He would state that he had
given title deeds of t.he house to the plaintiff t.o keep in safe
custody and they were in safe Custody till the disposal of the
suit. in the ei’oss~examinatioh he would p1’e1et.ically..Vad_n’1i_t
the ease of t.he plaintiff to the extent that he
the pay order for a sum of 229,000/”~ US it
same was discounted and the p1’oeee_ds o.fstAhe7said lpay
were transmitted to the plaintiff.yloranehhland
fixed deposit at his request. an
attempt is made by entireHvn1ate1’ial
which was proeured of telephone
inst.1″uIn.ent,s V.s_e:izedv.y15y..__tl1-ebatik and the Value of the
same was more –. but however the evidence
would also dilselosedthat; the seized goods were kept in the
.a’prer’n”ise E’t’l*;at7″belongedto the first defendant. This is the oral
by both the plaintiff as well as the
defe»_1;dar1Vt.. _hi;deed to ascertain whether such a transaction
V’~ei1-1inat.ed _Abet.ween the plaintiffs and the defendants which is
,.,/ijt:t7e1’2ti3le to the d.iseour1ting of the pay order EX.P.i is a
I1’1§il,€l’lfll doetimem. Indeed in EX.P.l the seeond defendant
would state as under:
“We have enclosed herewith Demand Draft
No.12″/18487 dated 25.6.92 favottririg otirselves
c.l1*awn at. Midland Bank PLC. London, UK. We
-17-
hereby request you to kindly discount at par the
same and we hereby autliorize you to keep the__.
proceeds in our above coinpanys name as
deposit for nine months. Further in case oi’c..,-;;ee«d:’__’ ” A’
we may also take loan on that.” ._ ‘ ‘
17. E3X.P.2 is the letter v..iss1.1.ed ll.Statiori.V ll
Manager to the Chief Manager. ‘lBan1:”.’
indicating that the office non– * it
existence of the Midland not
take place. EX..P.3 is Chief Manager
addressed to the Manager “Courier Service.
expressinlgn the matter on top
priorityllhand the details of delivery.
EX.P:.4_ is }inoi’he1; “V-coiriiilniabhication issued by the KG road
-V V. the MAie§1’g;i§g~’;3ank at London as to the existence of
“Qold Harbour Lane. London. In fact this
indicate that the Couriers were given
lg_to that they were in respect of the details as to
“tifansaction which is more than three months and hence
At’nely”Arequest.ed the principal of Midland Bank to investigate
vaiicl let’. them know as to what has happeiled to the
i1″lS[1’tll’11€I1l. which was sent by them. The ii’1teri’1al
co1’1″esponder1c,e between the Midland Bank and the plaintiff M
/./
4
” –
4/,» ,. .. . . ., MHW.w»;a>,r~s%so:4xmy«2z?.aaea’;vm¢4.www4,.wN.
bank and the foreign exchange unit it would spell out that
the Midland Bank does not have a branch at the adtlzfess
given in the pay order. indeed it is not in dispute’th’a–t’:’th’e
defendants were in Correspondence with Ayoola’..’_Co:nrnVereial_’ ‘
Enterprises, Nigeria for supply-ref’
instruments. lndeed the evidence””w0u_ldxvdislcrloselyv
defendants stumbled upon Vlt.l_fie~…Vsaid”‘ tran_sae_tio.n””iron’: an ” V
internet. The subsequent correspond.e’nces”areA essentially
interse between the plaintiffs it would
disclose that they with the
N igerian _telep’hone’V’instrument Valued
at 29,0tiO to the question as to the
liability the suit Claim. Indeed in
this regard ..is*not in dispute that the defendants had
V. “–obtained’an”oyerdraitwfacility as against the fixed deposit. it
t_’1’_sl17_..0utV initially the limit was three lakhs. but
onau reqL1est:*,mJade by the defendants it has raised the limit
‘V._to Rs.6′.QO–.0OO/–. But. however. the defendants have availed
“t”only’.t:o the extent of Rs.4.34._0O0/~.
18. EX.P.23 is the application cum lien letter for
advance. against the self deposit. A perusal of EX.P.23 would
indicate that the defendants have confirmed that a sum of
Rs/i,67.000 and two more fixed deposits totaling toff-‘
-19-
Rs.8,00.000 and odd is placed by them with the bank for a
period of nine months in a fixed deposit and they \vou].~d—-.als0
coniirrn that the bank had agreed to grant. 3
3.00,000/~ as overdraft facility as against
deposit. Indeed EX.P.23 would i:ndicai_e
instance the defendants had agreeditytolll
13,00,000/– as overdraft. iacilitylaayagaihnst the ” V
Indeed para 9 of EX.P.2§ would..i.rldi.ca’t:e that” they defendants
have bound themselves ‘and. laridtundeyrtake to pay on
demand the sum’-of at 3% over
and above of 12% with a
rninirnum of l’i’s’% eompcund_ed quarterly for value received.
19.’ yllndeeld is in furtherance of EX.P.23
which is ..re1ataE:3leHto the extract from minutes of the meeting
directors of the first defendant company
A would read as under:
‘v’lResolved that an O~D limit of
l{s__.t5.00,000/– be availed with Vysya Bank Ltd,
mlbrahim Sabhi Street. Banga.1ore. on the security
of our fixed deposit of 1 £328.50 with them
for the working capital requirements of our
company. It. is f111’l,l”i€’.I.’ resolved that. the
Chairman of the company be empowered to Q
execute the loan documents.”
…….. Ni –
20. EX.P.25 is an another application cum lien “letter
for advance against the said deposit. seeking to raise the-.l’ilmit.
from ‘.3 lakhs to 24,34,000. Indeed para
reiterate that the defendants have borrowed t~l:”1is= a:rno’unt’–ar1d’
agreed and undertaken to pay a sun} of at
interest over and above the ‘Reserve ‘Bank o£7″£h’diav rate of
12% compoundable quarterly ioiifitraltile 1’eceijt/:ed:. Since the
bank was in a fix inasntuch asit ._dis’eounted a pay order
for which the amount was was not realized
and the said ;an’io:ui1t; having” been ‘–.di_sc.ounted and money
being t1*an’sferrjed kept in ifixedflé deposit in the name of
the defe’ndant’it: to correspond with the
defendantto’ dis’eharge the outstanding loan towards
overd5raftdA’facility””a.nd___ptl1e amounts borrowed on t.he fixed
deposit, ll
is a confirming letter issued by the
“t.,defendant’.;s. In fact, according to us this would clinch the
A perusal of the EX.P.2’7 would disclose that the
l defendant would state as follows:
” As per your request, we have already
secured the OD facility of ‘.4.5 lakhs that you
have extended to us by temporarily placing the
3
‘V.yre1_ie”f ‘_’i.f:”‘t’hey heed our request.
house documents of the undersigned in your
Custody.
The said pay order was issued t.o as’ ‘oy_’
M/s Ayooia Commercial E11i€i’p.I’iS€S of” ‘
with whom we had the arranzgernent;
1000 rmmbers of telephones att_h’e,rat.e 55*
29/– each. We had eon1e–aeross their name
directory of international – im-porters «. o durilftg
February, 1992.’ We _t:hC:1fi,VZ’Dui1t up” a
correspondence with course
they placed an the ,fit”eiephones.
PhotocoV’;§_ies::1iIof:y may have
been 0
_ ‘0#J*.ivevy:n3oV’f .non~rea1ization of the said
pay order. .,requested the parties to
direotiy-horedit Vu;e.;§:~no:znt of US $ 29,000 to
your acC’ou_:nt’ with Citi bank at New York to
a’p1%o’eee~d withdthedvdeai. it will be to our greatest
However,
t.he case, we herebv undertake to
e1ea1″_;o’i’f’ the overdraft; with interest within two
months. i.e.. by December, 1992. We request
00 Vou to grant us this time in View of our
difi’iCuit’.ies as we may have to dispose off the
materiais to alternative parties.”
22. In View of this oomrnLmieat’ion at %IX.P.2’7′
according t.o as which would act as 21 confimaing; letter of the 2
Baiigalore, by deposit of title deeds.
caveat inasmuch the
defendants admitting their claim we are of
the View that_i.t_’ is
not necessary for us to
correspondences.
correspondence
look into the other relatafolle
in View of the admission as *
interse between l’.~h”€f’ it
defendants and also the undisputed
ie, the pay order was present_edi..V_t.o plaiiitili’«:._l:)’an1t–§for
di.scounting we are of theview Vt.–hat”the.._elairn”o.ifthei§p1aintil’f
in this regard cannot be }
23. appeal as to the
relief as notwithstanding
the thatittiiey_Vilhad’-soiight for a relief to realise the
amount bypsale of the which was mortgaged to the
bar1l1ipll5yiAdepos’i’t.. title” deeds.
is the letter addressed to the plaintiff
Thdreeitals in the said letter would clearly indicate
that t.he’«dei’e11dants have deposited the title deeds relating to
A the’–..propei~ty bearing old No.12 {new No.17}, Lavelle road.
Indeed there is a small
equitable mortgage is ereated in
of
respect the said property at Lavelle Road till the
registration of an industrial shed is made in favour of the
defendants.
Indeed the learned trial Judge was of the view
fl
that the said document cannot be construed as a mo1’tg–age
deed inasmuch as it is on a plain paper and
registered. Indeed we are not inclined to ”
reasoning given by the learned tri-al”‘J–udge tljatlt’..c
EX.P.3’7 is not a document creating
by deposit. of title deeds. dt1″1~lflgl of
evidence it is clearly indicatied pAa1’e.lVar’iopt1sdtypes of
mortgages with the banlt’. elicited in the
cross exarninatiQri’o__f’ 15 of the
deposition it__. is “uuse’I!l’;_t;I to extract tjliiejsaidr eiridence.
llll itis’afiiernorandum of deposit of
title deedslllfdi’»_equitaljle ‘mortgage and the party
concerried such documents. We
,haVe for different type of mortgages.
d}*~Eguitable Adirioriggage can be executed on white
paper.or–,letterhead and other mortgages will be
I can produce the format of
Q A equ.ital;)l’e mortgage by deposit of title deeds”.
ll””ll’1Cri€:CCl valperusal of this evidence would clearly disclose that
” ,tiie_1’_e§ is no particular format for creating equitable mortgage
deposit of title deeds as such it can be on a letter head or
even on a plain paper. Indeed it would disclose that it is a
letter head of second defendam. lt is ft11’l.l}(“‘.E’ st1’eI’1gt.hened
by his admission in para 4 of the cross examination. Indeed
-24-
there is an admission in the cross examination of DW. liwho
is defendant. No.2 that he owns and acknowledges
inasmuch as it is typed on his letterhead, but ‘
tries to explain that it. cannot be:-termed V
equitable mortgage by deposit of t’.itl:e.pdeegd’sv.
is sought to be explained by the
cross examination we propose the portion
which would read as un::le1’l:’g l’
“I ;l1a’v;e:yl”deposited{: the following
title deeds to ‘-propeifty bearing old
road, Bangalore, till
the registratiton ..ofi..l_’our industrial shed with
intend to ad mortgage on the said
prope.rt.ie.s all moneys including
interest ‘that. be found due and payable on
V aiceount ofHthe'”‘said transactions. Descriptions
title deeds deposited: (1) Registered sale
16.3.1962 registered as No.38l9 in
opooi;é~lo.l, volume No.1 166 at pages 180 to 184
“[;_)’:. Registered release deed dated 20.3.1979
it registered as No.lO1 of 1979 80 at pages 186~
‘ l89,volun1e No.2004 ofbook 1.”
25. We are of the View that having regard t:o the fact
that there is no definite form as to how the equitable
2
niortgage is created by deposit of title deeds EX}-3.37 in the fl
+25.’
eireunistances will have to be acted upon and this has to be
construed as the doeunient creating equitable mortgage deed
by deposit of title deeds. To that extent we are of the View
that the learned trial Judge was not Correct in denyingqlithe
relief to the plaintiff to the extent. that. they _
outstanding amount due by bringing the prope*2’ty:t.o lnu
this regard EX.Dl is also required be..lool{ed.: it
is the letter issued by the defendan”t_vll\?o.2 tio”lV’tl1e4_lolaintiff
bank _ ” ..
26. This takes ,us to sit-l’-1e’*neXt._ question regarding
grant of int.erest;, this regard we are of the View
that theldefendantl theieireumstances is required to be
bailed’ —out in so ‘far as interest is concerned. It is to be
ll”noti’ee.dE5t,l1at..qthis ismnot a Case where the defendant has
L..boijrowed~thernoneys and he is trying to avoid the payments.
Indeed the:eorresponde1’1ee which has been referred in the
l’..,p1’eeedinVg_,A§’1~ paragraphs would Clearly indicate that the
“«i:”_deiferi’i_ia11t. owns his responsibility of discharging the loan,
bt§it., however has pleaded certain circun’1stan(:es beyond his
eoritrol inasmuch as he had undertaken to supply 1000
telephone iiistruinents to non–existent company and on the
basis of the same the pay order was discounted and the
money was deposited in the plaizltiil bank in three difierent
fixed deposits and it is also not in dispute that
borrowed money on the said fixed deposit. V’
sympathies with the plight of th~le”””lii
CiI’CU.1″11StaE}C€S we are of the View tht the”‘interest–.
awarded by the trial Court at therate oi” l{i.59{oVteorfapotlrrded
quarterly, is excessive._,. .lndeed.—-xite’L~are.,of xlifiiwfithat the
entire interest strueturextisl’ to’Vrbe’V’1r1odit”ied. We are
of the View that th’e.__plaiin”tiVlf for interest
at the rate transaction till the date
of filing 12% from the date of
filing ojlthe of -decree and at the rate of 6%
from thehdaite o’f”de:eree:.4t5ill_mre.alization. Hence the following
Olkdgéi. _V L’ . .
ORDER
RFA’V1″rii~j¢:r46/04 is allowed. The plaintiff appellant is
€1’1titl\Ef(l”‘€i'() recover the suit claim as decreed by bringing the
property to sale to realize the arnount. In so far as RFA
£3923’/O4 is eorleerned, we dismiss the appeal. The defendant
is entitled for sealillg down of interest in the following
I
rnanne1’:
The plaintiff is e1″1t.it,ied for iruerest at the 1″at.e of M,-._._5°/o
compounded quarteriy from the date 01′ transatttihyi
date of filing of the suit. The plaintiff is entitied
the rate of 12% simple interest. fr01″Vr.1-V
date of decree and 6% simple i11tere§:[;«VI’rC§_i,A1’1″ ihf3′.>L”.1E’v1A’t€:’.Qf
tilirealization. V ._
Both the appeais sta11dé<._.disposed*-.Qfaccgrdingly.
Parties are directed to bé_.:ir~._the_fr Qv§rn..c;osLt1s3,
JUDGE
saf-
JUDGE