In the High Court of Judicature at Madras
Dated 13.04.2007
Coram
The Honourable Mr.Justice S.R.SINGHARAVELU
Appeal Suit No.884 of 1994
The Lakshmi Vilas Bank Ltd.,
rep.by its Branch Manager,
Thirupur Kumaran Road,
Thirupur. ..Appellant
Vs
Auljothi Fibre Industries,
by its Sole Proprietor M.Shanmugham,
Alagumallai,
Palladam Taluk,
Thirupur. ..Respondents
Appeal Suit filed against the judgment and decree
dated 29.03.1994 passed in O.S.No.125 of 1991 on the file of
Subordinate Judge, Tirupur.
For Appellant : Mr.M.S.Sundararajuan
For Respondent : Mr.S.K.Rakunathan
JUDGMENT
This appeal arises against the judgment dated
29.03.1994 by the learned Subordinate Judge, Thiruppur, in
O.S.No.205 of 1990, in dismissing the money claim of the
plaintiff Bank made against the respondent / defendant, who,
according to the bank, has borrowed a sum of Rs.4,55,000/-
on 13.06.1986 on the necessary documents filed therefor.
Now, the plaint claim along with contractural interest comes
to Rs.9,09,932/-.
2. According to the appellant/plaintiff, the defendant
approached the plaintiff Bank for credit facilities for
construction of buildings and for purchase of machineries
for carrying on fibre industries at Alagumalai and a sum of
Rs.4,55,000/- was sanctioned and paid to the defendant by
way of term loan on 13.06.1986. In this connection,
according to the plaintiff, the defendant had executed a
promissory note Ex.A-1 for the said sum on the same date,
namely, 13.06.1986 agreeing to repay the same to the
plaintiff bank with interest at 13.5% per annum.
3. The plaintiff had also produced the letter of
hypothecation dated 13.06.1986 Ex.A-2, in which
hypothecation of machinery was also mentioned, as well as
the letter of Bank Manager under Ex.A-12 dated 14.06.1986.
In that letter, it was stated by the Bank Manager that even
on 13.06.1986, while the respondent/defendant had borrowed
the said amount, he has deposited the registration copy of
partition deed of his family in respect of 19.14 acres of
land and that was marked as Ex.A-5 dated 04.03.1970; along
with the said documents, it was said that the defendant had
entrusted the Certificate of Ownership and valuation report
of Village Administrative Officer of Alagumalai through Ex.A-
6 and kist receipts dated 01.02.1985 and 27.02.1985 as Exs.A-
7 and A-8 and also the encumbrance certificate from
01.01.1973 to 01.01.1985 through Ex.A-9 and that from
01.01.1984 to 18.12.1985 as Ex.A-10. These documents are
found in the list of documents in Ex.A-12 letter dated
14.06.1986 of plaintiff bank; as per which, the defendant
had deposited those documents even on 13.06.1986 with the
plaintiff bank in order to create an equitable mortgage in
its favour as security for the loan that was borrowed in
Ex.A-1 pronote by the defendant.
4. The Manager of the plaintiff, who was examined as
P.W.1, would also contend that Ex.A-18 is the revival letter
dated 25.11.1988 that came into existence within three years
from the date of borrowal and by virtue of such revival
letter, the suit is filed within the time.
5. The defendant in his written statement contended
that there was no intention to create an equitable mortgage
and at no point of time, he has placed the documents with
the Manager of the plaintiff bank in order to create an
equitable mortgage in their favour. He would further submit
that only a xerox copy of the partition deed dated
04.03.1970 has been taken from the defendant. But it is
very important to note that under what circumstances the
documents have been placed before the bank authority was not
adduced by the defendant. The further contention of
defendant would be that in the standard forms, his
signatures were taken by the Manager of the plaintiff bank
and as such, no amount was due from him as there was no
actual borrowal. This aspect has been so developed in the
course of evidence of the defendant.
6. The learned Judge, who tried the case, has found
Ex.A-18 revival letter as unbelievable and believed the
version of defendant that he had signed that document while
it was blank. He also believed the version of defendant
that in order to get a loan, the signatures were obtained.
But the defendant had not availed any other loan except the
suit loan. The learned Judge has also canvassed upon the
failure of plaintiff in mentioning the existence of Ex.A-18
revival letter in their notice issued under Ex.A-20.
Therefore, the learned Judge disbelieved Ex.A-18 and found
that the suit is barred by limitation.
7. It was further found by the trial court that as no
original/revival document was deposited as admitted by
P.W.1, the witness examined on the side of the bank, the
registration copy of the partition deed and its entrustment
may not go to create an equitable mortgage by deposit of
title deeds; this was found on the ground that registration
copy of the document may not show the title of the property.
8. The learned counsel Mr.Sundararajan appearing for
the appellant/plaintiff bank submitted two points. The first
point is that Ex.A-18 was properly executed by defendant on
25.11.1988, which will make the suit claim under pronote on
13.06.1986 was within time. If Ex.A-18 is found true that
the suit is within time, there is no dispute over that
aspect.
9. The learned counsel Mr.Ragunathan appearing for the
respondent/defendant submitted that Ex.A-18 was signed by
defendant but only when it was blank. It is unfortunate to
note that in none of the letters or replies issued by the
defendant, he had mentioned so. Even assuming that Ex.A-18
was not properly executed, there is three other letters
(Exs.A-15 to A-17) written by defendant; among which one is
three days ahead of Ex.A-18 and in those letters, the
defendant pleaded only for re-payment by instalments. This
will indicate the proper execution of Ex.A-18 and now the
defendant would only state against truth in order to avoid
the claim against him.
10. So far as the creation of equitable mortgage by
deposit of title deeds is concerned, it has been vividly
dealt with in Angu Pillai @ Narayani Achi ..vs.. Kasi
Viswanathan (86 L.W.94) by a Division Bench of this Court,
wherein it was found as follows:
“It has been pointed out by a Full Bench of the
Rangoon High Court in 1938 Rang.149 that in order to
create a valid mortgage, it is not necessary that
the whole, or even the most material of the
documents of title to the property should show a
complete or good title in the depositor, and it is
sufficient if the deeds deposited bona fide relate
to the property or are material evidence of title
or are shown to have been deposited with the
intention of creating a security thereon”.
11. In that case law, by considering the law in regard
to equitable mortgage, which is precisely the same in
England as it is in India, reliance was placed upon the
decision in Goodwin .vs. Waghorn (41 Rev.Rep.208), wherein a
purchaser who had paid his purchase money and had taken
possession of the land, did not obtain a conveyance and no
title deeds were delivered to him by the vendor. He only
deposited the document of contract with intent to create an
equitable mortgage. The question arose whether such a
document of contract was a document of title. The learned
Judge observed as follows:
“But if the deposit of the copies of court roll be
sufficient, I cannot see why an agreement should not
also be sufficient. The deposit of the copy of the
roll is held to create an equitable mortgage, because
it is the best evidence of title that the party has
the power of depositing; so the agreement for
purchase is the best evidence of title, until the
contract is completed and the title deeds are handed
over; and in this case there was a deposit of that
which was the best evidence….”
12. Similarly, in Dixon .vs. Mukhleston (VIII
L.R.Ch.Ap.cases 155), the question of priority between two
parties who claimed equitable mortgages arose for
consideration; where also it was held that the letter itself
would create equitable mortgage.
13. In Dohganna .vs. Jammanna (AIR(1931) Madras 613),
it was pointed out that in case of pattas in respect of a
land in Zamindari, if the land be at the disposal of the
landlord at the time of granting the patta, prima facie such
patta would not be a mere bill of rent but something more
in order to create an equitable mortgage by depositing of
the same. This was also followed in Official Assignee .vs.
Basudeva doss (AIR (1925) Madras 723.
14. The decision of the Rangoon High Court in
V.E.R.M.A.R.Chettiar Firm .vs. Ma Joo Teen (AIR (1933) Rang.
299) was overruled by a Full Bench of the Rangoon High Court
in Chidambaram Chettiar .vs. Aziz Meuh AIR(1938) Rang.149).
The Full Bench has reviewed the English and Indian
authorities and has pointed out that in order to create a
valid mortgage, it is not necessary that the whole, or even
the most material of the documents of title to the property
should be deposited; nor that the document deposited should
show a complete or good title in the depositor and it is
sufficient if the deeds deposited bona fide relate to the
property or are material evidence of title or are shown to
have been deposited with the intention of creating a
security thereon.
15. Even in a Division Bench of this Court in
M/s.Nataraja Nadar & Sons etc.& others ..vs.. State Bank of
India & others (1993-1-L.W 456), the question that was
considered was whether an equitable mortgage can be created
without depositing the original documents and also without
depositing all the relevant documents. In the said judgment
in para 26, by relying upon C.Assiamma .vs. State Bank of
Mysore (AIR 1990 Kerala 157), it was held that “by
‘documents of title’ we mean the legal instruments which
prove the right of a person in a particular property” and it
was held that the copy of documents can also be deposited in
creating equitable mortgage. In that case, reliance was
placed upon K.J.Nathan .vs. S.V.Maruthi Rao (AIR 1965 SC
430), wherein the following was observed:
“A Court will have to ascertain in each case whether
in substance there is a delivery of title deeds by the
debtor to the creditor. If the creditor was already
in possession of the title deeds it would be hyper-
technical to insist upon the formality of the creditor
delivering the title deeds to the debtor and the
debtor re-delivering them to the creditor. What would
be necessary in those circumstances is whether the
parties agreed to treat the documents in the
possession of the creditor or his agent as delivery to
him for the purpose of the transaction”.
So, it is clearly established by catena of case laws that
registration copy of document of title can as well be placed
for creation of equitable mortgage.
16. Therefore, it is futile on the part of the
defendant to contend that no equitable mortgage could be
created on filing copy of the partition deed.
17. The circumstance under which defendant says that
no borrowal at all was made in the Bank and that he has put
his signatures only in standard blank forms shows that there
was some other occasion when he happened to borrow from the
bank and at that occasion he has put all the signatures.
But no other loan was provided by the plaintiff bank and no
such loan was also availed on the side of the defendant.
D.W.1 himself has deposed that one Palanisamy was the then
Manager, with whom he has no aversion or affection. Thus,
there is no motive for the bank to create documents against
the defendant and the defendant did not make out a case or
circumstance indicating that due to that particular
circumstance, he was necessitated to put his signatures in
the blank forms. So, the way in which there is a total
denial of all signatures put by defendant would go to show
that his only aim is to get away from the clutches of the
claim; it is also to be mentioned that in all subsequent
letters of defendant he has sought only for repayment in
instalments. He has not setforth the case presently
projected in the reply notices issued by him. Therefore, I
come to a conclusion that this is an after thought by the
defendant and the suit claim has been rightly proved in view
of the decisions relied on supra and hence, the judgment and
decree of the trial court is liable to be set aside and the
suit is to be decreed.
17. Regarding interest, contractual rate of 13.5% was
agreed to be paid. Therefore, I have no other go except to
grant contractual interest at the rate of 13.5% per annum.
18. For the aforesaid reasons, the decree and judgment
rendered by the trial court is set aside and the appeal is
allowed and the suit is decreed with interest and costs as
prayed for in the suit. In this appeal, there will be no
order as to costs.
gl
To
1. The Subordinate Judge,
Thiruppur.
2. The Record Keeper,
V.R.Section,
High Court,
Madras.