Judgment :- This suit has been filed for recovery of a sum of Rs. 98, 23, 910.90 with further interest at 22% per annum on Rs.78, 99, 682.35, for selling the schedule mentioned property in the event of default, for a direction to the first defendant to pay the amount, so deficient if any, with further interest at 22% per annum and for costs. 2. The plaint averments are as follows : The first defendant approached the plaintiff for financial assistance upto Rs. 25.00 lakhs in order to process, store and export Marine products, some time in March and April 1993. He represented that a packing credit of Rs.25.00 lakhs could be sanctioned to him with which he would achieve a target of an export turn over of Rs. 300 lakhs per annum and in turn the plaintiff could charge apart from interest at 14% per annum on such credit, also service charges at 3% of the F.O.B. value of such exports. D1 further offered to keep all processed and finished stock at D1's cold storage fully hypothecated to the plaintiff, to secure repayment of the loan. It was contemplated that the plaintiff could negotiate the export documents, immediately on the opening of such letters of credit, realise the full value thereof, appropriate their service charges and accrued interest and any other expenditure incurred by the plaintiff with regard to such exports and also the amounts advanced to D1 till then and pay the balance to D1. Accordingly, an agreement between the plaintiff and D1 was entered into on 6-4-1993. D1 executed a hypothecation agreement on 6-4-1993, wherein D1 had represented that they were lessees of the cold storage belonging to New India Maritime Agency at Nima Complex, 26-32, G. A. Road, Madras-21. D1 also executed a promissory note on 6-4-1993 for Rs.25.00 lakhs. Upon execution of the abovesaid documents, Rs.10.00 lakhs were advanced by the plaintiff to D1 on 7-4-1993. Further advances were also made by the plaintiff to D1. D1 requested the plaintiff to sanction further advances to D1 to cover their operations at and from Mangalore storage also. Since D1 wanted more funds, the plaintiff insisted upon D1 furnishing some security of immovable property. Further advances were also made by the plaintiff to D1. D1 requested the plaintiff to sanction further advances to D1 to cover their operations at and from Mangalore storage also. Since D1 wanted more funds, the plaintiff insisted upon D1 furnishing some security of immovable property. The defendants 1 and 2 deposited the original title deeds relating to the immovable property described in the schedule, owned and possessed by D2, on whose written authority and on whose behalf, D1 deposited the title deeds with the plaintiff under covering letter dated 15-7-1993 with a view to create and equitable mortgage over such property. A memorandum of understanding was also entered into between the plaintiff and D1 on 21-7-1993. Thereafter, the plaintiff continued to make further advances to D1, at his request. In this process a total sum of Rs.1.17 crores was advanced by the plaintiff. Only a sum of Rs. 44, 39, 300/- was realised from the shipments effected by D1. There is a balance of Rs.72, 60, 700/- to be realised. From the statement it can be seen that there has been no export or realisation after 13-1-1994. In spite of repeated demands and reminders the defendants have not made any further payments. Since from 13-1-1994 there has been no export at all, the plaintiff is entitled to charge interest at 22% per annum on all outstandings, in terms of clause 8 of M. O. U. Interest works out to Rs.19, 38, 705.60. After giving credit to a sum of Rs.48034.05 realised by the plaintiff through sale of scrap, the interest outstanding would be Rs.18, 90, 671.55. The plaintiff was constrained to spend Rs.6, 38, 982.35 in respect of a container exported by D1, but returned due to rejection by the foreign buyer. Under this head, a sum of Rs.6, 72, 539.35 is due and payable by D1 which is inclusive of interest viz. Rs.33557/-. Thus a total sum of Rs.98, 23, 910.90 is due and payable by D1 to the plaintiff. D1 cleverly withheld one original bill of lading out of the three originals and made use of it by sending Abdul Rasheed directly to Singapore and getting the Cargo cleared with such bill, forging the signature of an officer of the plaintiff company and receiving the bill amount directly from the consignee without the knowledge of the plaintiff in violation of the Foreign Exchange Regulation Act. The plaintiff gave a written complaint to the Enforcement Directorate against D1 and Abdul Rasheed. The Enforcement Directorate initiated proceedings against these persons. D1 acknowledged his liability indicating Rs.70.00 lakhs as the extent of such liability vide his letter dated 7-6-1994. When the plaintiff confronted D1 with these instances of fraud, the first defendant issued a cheque for Rs.10.00 lakhs on 31-3-1994 with promise to clear the entire liability soon. The said cheque was returned by his Bank for want of funds. In spite of notice of demand dated 25-5-1994, the defendants have not cared to settle the account. Since the 2nd defendant's immovable property has been offered as security for the transaction, she is made a party to the suit. Hence the suit. 3. In the written statement filed by the first defendant and adopted by the second defendant, it is alleged that D2 has been unnecessarily dragged to court without any justification whatsoever. D2 is not a party to the suit. It is only the plaintiff who approached the first defendant and requested him to process and pack fresh marine products for export, which is clear from the agreement dated 6-4-1993. D1 has been acting as per the terms of the said agreement. The plaintiff committed breach and acted contrary to the terms of the agreement. The signature of D1 was taken in various documents and papers in blank. D1 has signed promissory notes, papers and other documents based on good faith. D1 had no bargaining power. As per the agreement, the plaintiff alone is the shipper and exporter. D1 is only a processor. The plaintiff is wholly responsible for negotiations with foreign buyers, to receive payments and maintain the accounts properly. D1 has given the processed and packed fresh marine products to the plaintiff for export and the total export value was to the tune of 2, 07, 649.15 US DOLLARS. No. Particulars are given regarding the further advance. As directed by the plaintiff, D1 signed the deed of hypothecation. The first defendant has signed all the papers and complied with all the formalities as dictated by the plaintiff in good faith. The plaintiff did not furnish any statement of account of their dealings to D1. D1 never requested for more advances. It was only the unilateral and arbitrary decision on the part of the officials of the plaintiff. The first defendant has signed all the papers and complied with all the formalities as dictated by the plaintiff in good faith. The plaintiff did not furnish any statement of account of their dealings to D1. D1 never requested for more advances. It was only the unilateral and arbitrary decision on the part of the officials of the plaintiff. In fact the Central Bureau of Investigation have filed a case against the officials of the plaintiff who are guilty of various charges. The plaintiff never furnished the accounts of all the exports and realisations made by them. The officials of the plaintiff increased the limits for their own purposes. The plaintiff's officials informed this defendant to deposit the title deeds of the immovable properties, belonging to D2. The covering letter dated 15-7-1993 is a document got prepared by the plaintiff. The alleged M.O.U. was got prepared and typed by the officials of the plaintiff in their letterhead and D1 was called upon to sign the same. As requested by the plaintiff, D2, the wife of D1, had deposited the title deeds. The title in the goods have passed on to the plaintiff as the plaintiff is a shipper and exporter. The shipments were effected only by the plaintiff. D1 has processed and packed sea food and handed over the same to the plaintiff and the plaintiff has made those 11 shipments. The plaintiff ought to have given credit to 2, 07, 649.15 US Dollars to the account of D1 then and there. The allegation that the export realisation was only Rs.44, 39, 300/- is false. The plaintiff's claim for interest at 22% p.a. is untenable. In fact the plaintiff promised that crab can be exported but did not act as promised and thereby the first defendant has been put to loss. The entire calculation in annexure A is wrong and the claim is false. If the foreign buyer has rejected anything, it is purely a matter between the plaintiff and the foreign buyer and D1 is not at all concerned with that. The said container was exported by the plaintiff. The plaintiff alone is responsible. It is learnt that the container was unloaded at Colombo and was sent to Dubai belatedly and the foreign buyer has rejected. The plaintiff should have insured and made insurance claim. The allegation that the defendants played fraud on the plaintiff is per se defamatory. The said container was exported by the plaintiff. The plaintiff alone is responsible. It is learnt that the container was unloaded at Colombo and was sent to Dubai belatedly and the foreign buyer has rejected. The plaintiff should have insured and made insurance claim. The allegation that the defendants played fraud on the plaintiff is per se defamatory. The defendants reserve their right to proceed against the plaintiff and its officials for defamation. There is absolutely no fraud on the part of the defendants. All the documents and other matters in relation to the shipments and exports are all negotiated only in the name of the plaintiff and so they are solely responsible for delivery and receipt of the sale proceeds. D1 had handed over all the documents to the plaintiff for export of the goods. The plaintiff without verifying the document would not have shipped the cargo and would not have exported the goods. D1 has not violated the provisions of the Foreign Exchange Regulation Act. The complaint given against D1 and others to the Enforcement Directorate is frivolous and nothing but an abuse of the process of law. The plaintiff has abused their official power which has caused huge loss and hardships to the first defendant. They have acted in bad faith. D1 reserves his right to proceed against the plaintiff and their officials for damages, and also to claim damages to the tune of Rs.2.00 crores from them. The first defendant is neither an exporter nor a shipper. D1 has not received any payment from the Singapore buyer. D1 never acknowledged the liability as alleged by the plaintiff. It is only the officials of the plaintiff who requested the first defendant to give a cheque for Rs.10.00 lakhs stating that if such a cheque is given it will be easy for them to show in their accounts as on 31-3-1994, to the high officials. D1 at the time of giving the said cheque made it very clear to the officials of the plaintiff that the cheque was given only for accounting purpose and not to be presented for encashment. But they have presented the cheque and got back the same as dishonoured. D1 has not committed any fraud. It is only the officials of the plaintiff who misled the first defendant. The plaintiff harassed D1 by filing a complaint under Sec. 138 of the Negotiable Instruments Act. But they have presented the cheque and got back the same as dishonoured. D1 has not committed any fraud. It is only the officials of the plaintiff who misled the first defendant. The plaintiff harassed D1 by filing a complaint under Sec. 138 of the Negotiable Instruments Act. D1 filed an application for discharge and the learned VII M. M., Madras was pleased to discharge the first defendant. Even though D1 has filed Caveat petition both in the City Civil Court and in the High Court as early as 1994, the plaintiff has filed the above suit only in 1995. Hence the suit may be dismissed with exemplary costs. 4. The second defendant filed an additional written statement contending that there is no valid equitable mortgage in the eye of law. Her signature was taken in a power of Attorney dated 14-7-1993 by her husband. In that power of attorney, she has not given any power to the first defendant to mortgage her property. At the instance of the officials of the plaintiff, an affidavit dated 14-7-1993 was got prepared and her signature was obtained. She had no bargaining power. D1 has not been given any right to further delegate the power given to him under the said affidavit. The letter dated 15-7-1993 does not contain D1's signature. It is seen that some body had signed on behalf of D1. Since the said letter has not been signed by D1, the plaintiff cannot claim that the document creates any mortgage either in law or on facts. The said letter dated 15-7-1993 is also not a registered one. The plaintiff cannot proceed against the property of D2. Hence the suit may be dismissed with costs. 5. On the above pleadings, the following issues were framed : 1) Whether the second defendant is a necessary party to the suit? 2) Whether the plaintiff has committed any breach disentitling him to the suit claim? 3) Whether the 1st defendant is liable to pay the plaintiff the sum claimed in the suit? 4) whether the plaintiff is entitled to a mortgage decree as prayed for? 5) whether the defendants are liable to pay the suit claim to the plaintiff? 6) To what relief? 6. 3) Whether the 1st defendant is liable to pay the plaintiff the sum claimed in the suit? 4) whether the plaintiff is entitled to a mortgage decree as prayed for? 5) whether the defendants are liable to pay the suit claim to the plaintiff? 6) To what relief? 6. ISSUES 1 TO 6 :- The plaintiff has filed the suit for recovery of a sum of Rs.98, 23, 910.90 with further interest on the principal of Rs.78, 99, 682.35 with a direction to the defendants to pay the same within a stipulated time and if not paid in time to proceed with the properties to realise the amount. 7. Mr. V. Suresh, Deputy General manager in the plaintiff company was examined as P. W. 1. Ex. P1 is the agreement between the parties dated 6-4-1993. Ex.P2 is the hypothecation agreement. The promissory note dated 6-4-1993 is marked as Ex. P3. Ex. P4 is the letter requesting for advance. The additional agreement is marked as Ex. P5 dated 21-7-1993. Ex. P6 is the General Power of Attorney given by D2. The affidavit given by D2 is marked as Ex. P7. Ex P8 is the original sale deed dated 27-12-1991 while Ex.P9 is the original corporation receipt dated 9-12-1993 deposited with the plaintiff. Ex. P10 is another original corporation receipt. The encumbrance certificates deposited with them are marked as Exs. P11 and P12. The original patta is marked as Ex. P13. Ex. P14 is the demolition plan with approval of the corporation. Ex. P15 is the construction plan with the approval. Exs. P16 and P17 are the planning permit issued by the corporation. Ex. P18 is the original valuation report. Ex. P19 series is the bank certificate regarding payment by cheques by the plaintiff to D1. Ex. P20 is the receipt dated 27-7-1993 issued by D1 for having received Rs.10 lakhs by way of D.D. Exs. P21 to P22 are the invoices regarding the twelve exports made by D1, . Ex. P33 is the extract from the shipment register. Ex. P34 is the letter regarding authorisation for receiving the original documents. Ex. P35 is the letter in which the defendant confirms that he has sold the goods. Ex. P36 is the letter showing that the first defendant has forwarded a D.D. for a value of Singapore Dollar 5000/- as part value of the goods. Ex. Ex. P34 is the letter regarding authorisation for receiving the original documents. Ex. P35 is the letter in which the defendant confirms that he has sold the goods. Ex. P36 is the letter showing that the first defendant has forwarded a D.D. for a value of Singapore Dollar 5000/- as part value of the goods. Ex. P37 is the copy of their office letter returning the D.D. Ex. P38 is the communication from D1 to International Clearing and Shipping Agency. The letter from the plaintiff to D1 is marked as Ex. P39 A is the notice by the plaintiff. Ex. P40 is the endorsement from the representative of the defendant for having received the notice, under Ex. P39-A. Ex. P41 is another letter. Ex. P42 contains enclosures showing that the representative of the first defendant visited Singapore, cleared the Cargo and received the value of the goods directly. Exs. P43 and P44 are the communications from the plaintiff to the defendant informing them of the events. Ex. D1 is the letter of the plaintiff dated 14-10-1993 addressed to the International Shipping and Clearing Agency. Ex. D2 is the copy of the letter written by the defendant to the plaintiff dated 7-6-1994. 8. The Manager Finance and Accounts in the plaintiff company by name Mr. D. Venugopal was examined as P. W. 2. He would depose that the particulars found in Ex. P33 extract of the shipment register are true and correct. The particulars furnished in Annexure 'B' to the plaint are also true and correct. Ex. P45 is the letter dated 28-10-1994 under which they have sent a cheque for Rs.2.50 lakhs to the shipping agent. Ex. P46 is the letter dated 30-12-1994 from the Pollution Control Board giving them directions about the disposal of the stock. Ex. P47 is the receipt for their payment to Export Inspection Agency for inspecting the goods before burial. The receipt to the same agency for further payment is marked as Ex. P48. Exs. P49 to P51 are the vouchers for payment for transportation of the goods to the burial ground. Ex. P52 is the letter dated 3-2-1995 to the Corporation of Madras. The xerox copy of the voucher for payment to M/s Rangarajan and Co. for excavation of the stock is marked as Ex. P53. Exs. P48. Exs. P49 to P51 are the vouchers for payment for transportation of the goods to the burial ground. Ex. P52 is the letter dated 3-2-1995 to the Corporation of Madras. The xerox copy of the voucher for payment to M/s Rangarajan and Co. for excavation of the stock is marked as Ex. P53. Exs. P54 to P59 are the bank advices debiting for the transit interest charged on them for this transaction. Exs. P60 to P68 are the bank realisation certificates for nine exports. Exs. P69 and P70 are the receipts issued by the Chennai Port Trust towards demurrage. 9. The first defendant examined himself as D. W. 1. A copy of the letter dated 15-11-1993 sent by the MMTC Singapore Branch to the first defendant is marked as Ex. D3. Ex. P71 is the letter dated 25-5-1994. Ex. P72 is the reply dated 7-6-1994 sent by D1. Ex. D4 is the notice dated 2-7-2001 issued by the counsel for D1 to the plaintiff's counsel for production of certain documents. Ex. D5 is the xerox copy of the stock statement sent by D1 to the plaintiff. Ex. D6 is the letter written by D1 to the plaintiff on 14-7-1993. The signature of D1 found in xerox copy of the Memorandum of Understanding is marked as Ex. D7. Ex. D8 is the letter from D1 dated 26-4-1995 to the plaintiff seeking financial assistance for starting petro products. Ex. D9 is the letter dated 24-11-1993 written by D1 to the plaintiff and it contains the signature of D1. Ex. D10 is the letter dated 23-2-1994 written by D1 to the plaintiff promising to pay the amount due by him on instalment basis. Ex. D11 is the order dated 14-11-2000 issued by the Enforcement Directorate levying penalty on D1. 10. Ms. Hameeda Bibi was examined as D. W. 2. She would depose that she never executed any mortgage in favour of the plaintiff. Neither herself nor her husband handed over the title deeds pertaining to the property to the plaintiff at any point of time. There is no signature of her husband in Ex. P4. Except her husband, there is no right of any other person to give the said property as security. Her husband never furnished her property as security to the plaintiff on the basis of the power that she gave to him. 11. There is no signature of her husband in Ex. P4. Except her husband, there is no right of any other person to give the said property as security. Her husband never furnished her property as security to the plaintiff on the basis of the power that she gave to him. 11. Arguing for the plaintiff, the learned counsel would submit that the plaintiff has made a claim for recovery of the amounts, advanced to the first defendant, with further interest for his business in processing sea food; that under the agreement viz. Ex. P1 executed on 6-4-1993 and under Ex. 11. Arguing for the plaintiff, the learned counsel would submit that the plaintiff has made a claim for recovery of the amounts, advanced to the first defendant, with further interest for his business in processing sea food; that under the agreement viz. Ex. P1 executed on 6-4-1993 and under Ex. P5 M.O.U., (Memorandum of Understanding) which arose on 21-7-1993 between the plaintiff and the first defendant, the plaintiff advanced to the first defendant Rs.1, 17, 00, 000/- as packing credit; that the first defendant had agreed to effect the export of Marine products in the name of the plaintiff; so that the plaintiff could recover their advances from such export realisations; that the plaintiff realised only Rs.44, 39, 300/- from the exports made by the first defendant through the plaintiff and thus the principal sum of Rs.72, 60, 700/- fell due by the first defendant as on 12-1-1994 and the interest thereon is worked out at Rs.18, 90, 671.55 and thus as on 31-3-1995, the plaintiff is entitled to recover a sum of Rs.91, 51, 371.55 from the first defendant and apart from that the plaintiff claims Rs.6, 72, 539.35 being the amount spent by the plaintiff on behalf of the first defendant in disposing of the rejected consignment exported by the first defendant and the interest thereon and thus the plaintiff is entitled to a sum of Rs.98, 23, 910.90; that the plaintiff is also entitled to further interest at 22% per annum as per the agreement entered into between the parties; that the plaintiff is also entitled for a mortgage decree for the said sum against the suit property belonging to the second defendant, who is the wife of the first defendant; that the defendants have originally filed a written statement and subsequently the second defendant filed an additional written statement; that the defendants in both the written statements have stated that they have no bargaining power and had denied their liability; that a perusal of the additional written statement filed by the second defendant would clearly reveal the inconsistent stand taken by her from the first written statement; that a perusal of the annexure to the written statement would indicate the receipt of Rs.1.17 crores by the first defendant; that the defendants have admitted that they have exported 11 shipments and a small consignment of crabs; that regarding two other containers, for which the first defendant had directly received money from the foreign buyer, they have denied the same; that the second defendant has stated that there was no valid equitable mortgage over the suit property; that the plaintiff has examined its Deputy General manager as P. W. 1, who has categorically deposed as to all the details made in the plaint; that he has spoken about Exs. P21 to P32 invoices regarding the 12 exports made by the first defendant; that Ex. P33 is the extract from the shipment register regarding 12 exports; that out of the 12 invoices realisation has been made only for 9 invoices and in respect of the balance of 3 shipments, the plaintiff did not realise the value of the exports; that P. W. 1 has categorically given the details and reasons for non realisation against 3 invoices ; that the plaintiff has filed all the documentary evidence; that it is pertinent to note that the defendants themselves have admitted in the written statement that one consignment was rejected by the foreign buyer; that as per clause 3 (b) of Ex. P1 agreement, the first defendant is solely liable to compensate the plaintiff for the losses financial or otherwise, which would arise out of the default in payment or rejection by the foreign buyer; that from Ex. P38 a communication from the first defendant to the International Clearing and Shipping Agency, it would be very clear that the first defendant was aware of the returned Cargo; that in Ex. P39 the defendant has offered Rs.1.50 lakhs to the agency for the returned Cargo, but has not paid; that Ex. P39 is the letter from the plaintiff to the first defendant stating that since he has not paid the money to the agency, the plaintiff has paid the same to the agency, but Ex. P39 has been returned from the third defendant which is evident from that after the payment to the agency, the goods were cleared as per the advice of the health authority and the perished goods were disposed of and in respect of which the plaintiff has given notice to the first defendant under Ex. P39-A; that under Ex. P39 has been returned from the third defendant which is evident from that after the payment to the agency, the goods were cleared as per the advice of the health authority and the perished goods were disposed of and in respect of which the plaintiff has given notice to the first defendant under Ex. P39-A; that under Ex. P40, an endorsement of the defendants' representative has been made; that the first defendant has also been informed that all the expenses and losses incurred in the disposal of the returned goods should be borne by the first defendant; that the plaintiff has also filed annexure B showing all the expenditures incurred in the retrieval and disposal of the returned Cargo; that with regard to the two items, the first defendant received the payment directly from the foreign buyer and the plaintiff did not receive any sum towards those two exports; that P. W. 1 has categorically deposed that in one export, the defendant after effecting the shipment on D. A. basis, had requested the plaintiff for authorisation for receiving the original documents at the destination with an assurance to sell the goods at the destination and remit the value in foreign exchange through regular channel; that pursuant to Ex. P34 letter in the above regard, the plaintiff authorised release of documents to the authorised representatives of the first defendant; that Ex. P35 is the letter sent by the defendant confirming that he has sold the goods ; that the first defendant has forwarded a D.D. for a value of Singapore Dollar 5000/- as part value of the goods under Ex. P36; that this amount was not received through regular banking channel and hence the same was returned; under Ex. P37; that the defendant having made yet another export did not forward original documents for negotiating with the bank with complete sets ; that the plaintiff also informed the defendant about the other discrepancies in the original documents returning all the originals submitted by the defendants along with Ex. P41; that the first defendant using the third bill of lading directly cleared the Cargo at the destination and the plaintiff did not realise the amount; that a perusal of Ex. P41; that the first defendant using the third bill of lading directly cleared the Cargo at the destination and the plaintiff did not realise the amount; that a perusal of Ex. P42 would reveal the clearance of the goods by the representative of the first defendant at Singapore; and thus out of the 12 exports, the realisations were made by the plaintiff only against 9 and no realisation was made by the plaintiff against the three invoices, marked as Exs. P25, P27 and P31; that it is pertinent to note that the first defendant has admitted the receipt of Rs.1.17 crores; that the statement given by D. W. 1 that goods worth Rs.68.00 lakhs were exported in the name of the plaintiff was not correct; that in the written statement the defendants have admitted the 11 exports and a further export one small consignment; that the value of the 12 consignments are found under 12 invoices under which goods were exported which are marked as Exs. P21 to P32; that the plaintiff has submitted a tabular form showing the value of the invoices in U.S. Dollars and its rupee equivalent and it shows the total appropriation from each export value; that the said appropriations comprised of service charges at 3% export related expenditure and accrued interest on the packing credit; that the details of such appropriation are found in the extract of the shipment register maintained by the plaintiff, which is marked as Ex. P33; that after such appropriation, the resultant figure is rounded off and small surplus was credited to the party's personal account and the actual net realisation from the exports were adjusted towards the packing credit advance; that out of the 12 consignments exported, 11 were shipped and one by air; that the realisations were made only against 9 consignments viz. P33; that after such appropriation, the resultant figure is rounded off and small surplus was credited to the party's personal account and the actual net realisation from the exports were adjusted towards the packing credit advance; that out of the 12 consignments exported, 11 were shipped and one by air; that the realisations were made only against 9 consignments viz. 8 shipped and one air lifted; that the total sum adjusted out of 9 consignments was only Rs.44, 39, 300/- and the same was adjusted against the total packing credit advance of Rs.1.17 crores and the balance of the principal sum due by the first defendant to the plaintiff was Rs.72, 60, 700/- and the further accrued interest as on 31-3-1995 was Rs.19, 38, 705.60; that after adjusting Rs.48, 034.05 realised by airlifting a small consignment of crabs, the interest arrears worked out to Rs.18, 90, 671.55 and thus the plaintiff is entitled to a sum of Rs.98, 23, 910.90. Advancing further his arguments, the learned counsel would submit that the defendants originally filed their first written statement which was verified and signed by both the defendants wherein they have not denied the equitable mortgage, but on the contrary they have admitted the execution of the same; that in para 10 of the first written statement, they have categorically stated that on the request by the plaintiff, the second defendant, wife of the first defendant has deposited the title deeds; that in the additional written statement filed by the second defendant, as an afterthought she has stated that her signatures were obtained in Ex. P7 affidavit and she signed on the dotted lines; that Ex. P7 did not contain any dotted lines; that it was attested by a Notary Public; that she has raised a legal contention that equitable mortgage is not legally valid since the covering letter was signed by Abdul Rasheed, the Chief Executive of the first defendant; that when the factum of deposit is admitted covering letter under Ex. P4 makes no difference; that it cannot be denied that only at the instance of Ex. D1, the title deeds were deposited with the plaintiff; that in Ex. P4 makes no difference; that it cannot be denied that only at the instance of Ex. D1, the title deeds were deposited with the plaintiff; that in Ex. P5 M.O.U., the first defendant has well admitted the deposit of title deeds; that moreover in the counter affidavit filed in O. A. 597 and 598/95, the defendants have repeatedly admitted the existence of the equitable mortgage; that the first defendant has sworn to an affidavit on behalf of his wife, the second defendant; that it is also clearly stated in para 1 of the said counter-affidavit and that under such circumstances, the contention of the defendant's side that there was no valid equitable mortgage created in favour of the plaintiff has got to be rejected and thus the plaintiff has proved its claim apart from the creation of the equitable mortgage by the defendants; that the plaintiff has also claimed interest as per the agreement between the parties and hence the suit has got to be decreed as prayed for with costs. 12. Vehemently opposing all the above contentions of the plaintiff's side, the learned Senior Counsel Mr. T. V. Ramanujam would submit that the plaintiff is not entitled for either a money decree or a mortgage decree as prayed for; that there was no equitable mortgage in the eye of law; that the plaintiff has specifically pleaded that the defendants 1 and 2 deposited the original title deeds relating to the immovable property described in the schedule annexed to the plaint, owned and possessed by the second defendant; on whose written authority and on whose behalf the first defendant deposited the title deeds with the plaintiff under his covering letter dated 15-7-1993 with a view to create an equitable mortgage over the suit property for the advances made by the plaintiff to the first defendant; that the plaintiff has also further pleaded that after the execution of the Memorandum of Understanding and equitable mortgage, the plaintiff continued to make further advances to the first defendant; that in support of the case, the only document relied on by the plaintiff is Ex. P4 dated 15-7-1993; that though it is stated in the plaint that the said covering letter was of the first defendant, P. W. 1 has admitted that Ex. P4 dated 15-7-1993; that though it is stated in the plaint that the said covering letter was of the first defendant, P. W. 1 has admitted that Ex. P4 did not contain the signature of the first defendant and even in the cause of action paragraph also, it is stated that the defendants 1 and 2 have deposited the title deeds with a view to create a mortgage, but there was no reference about Ex. P4 in the cause of action paragraph; that it is pertinent to note that nowhere in the plaint it is stated that there was deposit of title deeds with intention to create and equitable mortgage for due repayment; that at the time of filing of the written statement, the first defendant was facing various proceedings and was summoned by the authorities under the Foreign Exchange Regulation Act and thus he was in a confused state of mind; that he has clearly stated that he had no bargaining power and that he had to sign on dotted lines; that the statement by the first defendant stating that Ex. P4 covering letter was a document got prepared by the plaintiff in which the plaintiff's officials made the first defendant to sign and he had no other option except to sign on the dotted lines cannot be said to be an admission made by the first defendant, as contended by the plaintiff's side because construing the same as an admission would be erroneous, but the letter dated 15-7-1993 was not signed by the first defendant; that the first defendant has proceeded on a wrong basis as if he signed Ex. P4; that if what was stated in paragraph 9 of the written statement was said to be construed as an admission by the defendants, that admission made erroneously based on mistake of facts could be well explained; that the first defendant has well explained the same in his evidence by stating that Ex. P4; that if what was stated in paragraph 9 of the written statement was said to be construed as an admission by the defendants, that admission made erroneously based on mistake of facts could be well explained; that the first defendant has well explained the same in his evidence by stating that Ex. P4 has not been signed by him; that the statement made in paragraph 10 of the written statement that as requested by the plaintiff, the second defendant, who is the wife of the first defendant has deposited the title deeds is said to be construed as an admission by the first defendant; that now it is admitted in evidence that the second defendant never deposited the title deeds and thus what is stated in para 10 of the written statement was factually incorrect and hence it cannot be construed as an admission; that apart from that mere pleading which was based on mistake of fact cannot also be construed as an admission in law and it has got to be corroborated; that P. W. 1 examined on the side of the plaintiff has stated that Ex. P4 is the letter requesting for such advances; that the first defendant has deposited the original title deeds of the house property owned by his wife, the second defendant; that he has produced a power of attorney executed by his wife, the second defendant in his favour and also an affidavit; that Ex. P6 is the general power of attorney and Ex. P7 is an affidavit; that P. W. 1 has further added that in Ex. P7, the second defendant has specifically mentioned to mortgage with MMTC Ltd., the plaintiff; that the title deeds have been marked through the said witness under Exs. P8 to P18; that in the chief examination it has been stated by P. W. 1 that the title deeds were deposited with intention to create a security; that the date of deposit of the title deeds is not mentioned and no particulars have been given in that regard; that admittedly under Ex. P6 no authority has been given by the second defendant to the first defendant to create any mortgage and hence now what is said to be relied upon is an affidavit under Ex. P6 no authority has been given by the second defendant to the first defendant to create any mortgage and hence now what is said to be relied upon is an affidavit under Ex. P7 under which it is stated that the second defendant has given an authority to D1 to create a mortgage; that PW?1 has categorically admitted that he had personal knowledge about the said transaction for the period August, 1993 to December, 1994; but when a question was put to him regarding Ex. P6, PW?1 has denied the suggestion that the second defendant has not given power to D1 for mortgage under Ex. P6; that a suggestion has also been put to PW?1 that there was no equitable mortgage made by D2; that from the evidence of PW?1 it would be clear that he had no personal knowledge about the deposit of title deeds sought to be relied on by the plaintiff under Ex. P4 dated 15-7-1993; that PW?1 has categorically admitted during the cross-examination that only after verifying the documents he signed in Ex. P5; that D2 is the owner of the house property which was given as collateral security to their company; that Ex. P4 was signed for the proprietor Fine Food Packers by Mr. Abdul Rasheed, who used to correspond with the plaintiff on behalf of the first defendant; that prior to the execution of Ex. P5, the documents in respect of the collateral security were handed over by the first defendant in their office; that the address of the first defendant given in Ex. P1 varies from the address found in Ex. P5; that neither in Ex. P4 nor in Ex. P5 the description of the collateral security is given. Relying on Sec. 58(f) of the Transfer of Property Act, the learned counsel for the defendant would further add that there was absolutely no evidence to show that the title deeds were deposited by the first defendant with intention to create a security; that mere handing over the title deeds would not amount to creating equitable mortgage; that even if it is stated that the title deeds were handed over, there was absolutely no proof; that the plaintiff was relying upon Ex. P4 to prove the alleged equitable mortgage; that Ex. P4 is admittedly not signed by the first defendant; that it is said to have been signed by Mr. P4 to prove the alleged equitable mortgage; that Ex. P4 is admittedly not signed by the first defendant; that it is said to have been signed by Mr. Abdul Rasheed, but the second defendant has not given any authority to him to create a mortgage; and hence the only document relied on by the plaintiff to prove the mortgage is Ex. P4 which is not signed by D1 and hence even assuming without admitting that it is legal, it did not create an equitable mortgage in the eye of law; that Ex. P4 is not a record of past transaction and it purports to contain a bargain; that the plaintiff has relied upon Ex. P4 as the deed creating mortgage and if so it require registration, but there was no whisper of deposit of title deeds with intention to create security either in the plaint or in the evidence and there is no acceptable pleading or evidence to prove the alleged equitable mortgage. In support of his above contention that no valid equitable mortgage has been created the learned Senior Counsel relied on the decisions reported in 1929 AIR(PC) 141 and 1931 AIR(Calcutta) 223 ; that in view of the aforestated decisions, Exs. P4, P5 and P7 would require registration if they are relied on by the plaintiff as documents creating a mortgage; that Sec. 17(i)(b) of the Registration Act was very clear on this aspect; and thus there was no proof of equitable mortgage and there was no equitable mortgage either in fact or in law and thus in order to satisfy that there was an equitable mortgage, there is absolutely no pleading or proof on the side of the plaintiff, but on the other hand DW-1 has gone into the box and has deposed that he has not deposited the title deeds; that he has explained the purported admissions in the written statement by clearly stating that he was under the wrong impression that Ex. P4 contained his signature; that an erroneous admission could always be explained; that the owner of the property viz. P4 contained his signature; that an erroneous admission could always be explained; that the owner of the property viz. D. W. 2 has deposed that she has not given any authority to her husband to mortgage the property; that she has clearly stated that neither she nor her husband deposited the title deeds; that the answer given by the second defendant during her cross-examination that the title deeds of her property were in the office of the first defendant and she did not know what her husband was doing will not in any way help the case of the plaintiff; that the burden of proof is on the plaintiff to show that there was deposit of title deeds by a debtor with intent to create security; that it was for the plaintiff to establish the ingredients that are necessary to create an equitable mortgage within the meaning of Sec. 58(f) of the Transfer of Property Act; that the entire written statement and counter-statement filed by the defendants if read as a whole, they will clearly show that there was no admission at all; that even assuming without admitting that those pleadings could be construed as admission, they were erroneous; that under Ex. P7, the first defendant has not been given any power to delegate as it is unilateral; that the first defendant is not an authority to Ex. P7; that it is nowhere stated that Ex. P7 has been accepted by the first defendant; that it is in evidence that it is only Mr. Abdul Rasheed who took the affidavit; that Ex. P7 is not a valid document in law and thus the property of the second defendant cannot be proceeded against for the alleged conduct of D1; that admittedly Mr. Rasheed had no right to deposit the title deeds and hence the alleged deposit of title deeds by Rasheed would not create an equitable mortgage; that too regarding the property of D2, who is admittedly not a debtor, but a stranger and thus from the facts and circumstances of the case and the available materials, it would be more clear that there was no equitable mortgage and hence the plaintiff is not entitled to seek for any mortgage decree. Arguing further, the learned counsel would submit that it was only the plaintiff who persuaded the first defendant to become their customer; that according to clause 8 in Ex. Arguing further, the learned counsel would submit that it was only the plaintiff who persuaded the first defendant to become their customer; that according to clause 8 in Ex. P1 agreement, if the first defendant could not reach the target, he must pay the enhanced interest and the said penal clause is not enforceable in law; that by not reaching the target what was the damage that the plaintiff will be put to was neither pleaded nor proved; that it is pertinent to note that clause 8 is only in the nature of damage; that the plaintiff has neither pleaded nor proved the actual damage and thus the claim for enhanced interest is not enforceable; that the first defendant had no bargaining power and he had to sign on dotted lines; that the contract is in the format given by the plaintiff; that unless and until the first defendant signed in the format, he would not be given the facility and thus there was no consensus ad idem; that in the instant case it was the plaintiff who requested the first defendant to export sea foods; that as per the documents, it was only the MMIC Ltd. who is the shipper-cum-exporter; that it was only the plaintiff who could get the money; and the first defendant can only be expected to co-operate and help the plaintiff in the said process; that it is stated that the plaintiff has advanced a total amount of Rs. 1.17 crores to the first defendant for 12 exports, 11 by shipment and one by air; that for the 11 shipments, the relevant exhibits are Exs.P21 to P31; that regarding one export by air, it is marked as Ex. P32; that out of the 11 shipments, admittedly the plaintiff received the payments for 8 shipments through bank; that the invoices are marked as Ex. P21 to P26, P29 and P31; that there is an area of dispute regarding the invoices under Exs.P25, P27 and P30; that insofar as the goods covered under Ex. P25 are concerned, they were of the value of US Dollars 12080.25 equivalent to Rs. P21 to P26, P29 and P31; that there is an area of dispute regarding the invoices under Exs.P25, P27 and P30; that insofar as the goods covered under Ex. P25 are concerned, they were of the value of US Dollars 12080.25 equivalent to Rs. 3, 79, 561.45; that admittedly the sea foods covered by this invoice had been handed over by the first defendant for export; that it is admitted that these goods have been exported by ship and the plaintiff arranged for the export of those goods; that the ship sailed up to Colombo; that then the complaint was that the container in which the sea foods were packed and exported was mal-functioning and because of that the goods were returned and hence the question would be as to who is responsible for the loss; that if the goods got spoiled due to mal-functioning of the container which has been arranged by the shipping and clearing agency, it has been arranged by the shipping and clearing agency who is answerable; that it is the duty of the plaintiff to proceed only against the shipping agency; that in fact the plaintiff has made a claim for Rs. 5, 18, 250.10 with the shipping and clearing agency as could be seen from Ex. D1; that it is the duty of the plaintiff to have pursued the claim and ought to have recovered the said sum from the shipping and clearing agency, but it is stated by the plaintiff that they have not pursued the claim with the shipping and clearing agency and that they have given up the same; that they have brought back the goods and that they have spent money for bringing back the sea foods and for disposing of the goods and that the first defendant should repay the value of the goods covered by Ex. P25 invoice and also pay all the charges and also pay all the expenses met by the plaintiff for disposing of those goods which are perishable in nature and got perished; that the plaintiff who has made a claim against the shipping and clearing agency should have pursued the claim and recovered the said amount and instead of doing so, the plaintiff has made unlawful claim from the defendants; that the plaintiff has relied upon Ex. P39 to show that the plaintiff gave up their claim against the shipping and clearing agency as instructed by the first defendant; that it is the evidence of PW-2 that the first defendant orally instructed them not to proceed with the case as against the International Shipping and Clearing Agency; that a perusal of Ex. P38 would clearly reveal that the first defendant has not agreed to pay any loss, but he has only stated that he would bear Rs.1.50 lakhs and this letter was taken by the plaintiff from the first defendant; that there was no proof that Ex. P38 has been served on the first defendant but returned; and it has not been addressed to the correct address of the first defendant; that the plaintiff has relied upon Exs. P40 and P41; that insofar as the claim in Annexure-B of the plaint is concerned, the first defendant is not liable to answer the same; that the plaintiff should not be allowed to take advantage of their own wrong; that they should have pursued the claim against the shipping and clearing agency; that the first defendant is not liable to pay Rs.6, 72, 539.35 as claimed in Annexure?B or any interest thereon; that there was no acceptable evidence to show that the first defendant agreed to take back the goods and also bear the loss; that the first defendant cannot be made to suffer for the fault committed by the shipping and clearing agency and as an exporter, the plaintiff ought to have taken action against the shipping and clearing agency and ought to have collected the amounts from them; that coming to the next invoice under Ex. P27, the value of the goods covered by this invoice was US Dollars 20407.50 equivalent to Rs.6, 32, 633/-; that admittedly these goods have been exported to Singapore; that MMTC have got branch in Singapore; that the plaintiff themselves made arrangements and sent Mr. Rasheed to Singapore to collect those monies; that as instructed by the plaintiff Mr. Rasheed who collected about 5000/- Singapore dollars has given the same to the plaintiff; that the plaintiff has conveniently twisted the facts and lodged a complaint before the Enforcement Directorate under Foreign Exchange Regulation Act; that Ex. Rasheed to Singapore to collect those monies; that as instructed by the plaintiff Mr. Rasheed who collected about 5000/- Singapore dollars has given the same to the plaintiff; that the plaintiff has conveniently twisted the facts and lodged a complaint before the Enforcement Directorate under Foreign Exchange Regulation Act; that Ex. P27 is on D. A. basis and the money would be paid only after taking over of delivery and selling the goods; that the plaintiff had committed the breach and thus by its own conduct, the plaintiff has spoiled the whole issue and the foreign buyer had taken note of the same and for this, the first defendant cannot be made responsible; that insofar as Ex. P30 invoice is concerned, the goods worth US Dollars 10850/- equivalent to Rs. 3, 37, 969/- were exported by the plaintiff to Singapore; that this was also sent on D. A. basis; that MMTC sent Mr. Rasheed to collect money from Singapore; that it is contended by the plaintiff's side that Rasheed who collected the money has not paid to the plaintiff; that if Rasheed had not paid the monies to the plaintiff, the plaintiff should have proceeded only against Mr. Rasheed and Mr. Rasheed should have been made a party to the suit and thus the claim made under Ex. P30 invoice is not binding on the first defendant and the suit is liable to be dismissed; that insofar as the 8 invoices for export of sea foods by sea and another invoice by air are concerned, the plaintiff has recovered the amounts; that the statement of accounts given in Annexure 'A' is thoroughly incorrect; that if the amounts covered under Exs. P25, P27 and P30 had been given credit to in 1997 itself, there would not have been any claim for interest and the principal in that regard; and thus the entire claim under Annexure 'A' is wrong and the plaintiff is not entitled for the claim under Annexure 'B' also since they have not pursued the claim; that the first defendant has given stocks worth Rs.63 lakhs as security to the plaintiff; that the plaintiff did not release those stocks and because of the same, the stocks got perished and the first defendant has sustained huge loss; that the plaintiff cannot take advantage of their own wrong; that the value of the stocks has got to be adjusted towards the suit claim in which event no amount is due from the first defendant; that the plaintiff's remedy is only to sue for account and adjust all payments; that the stocks were surrendered to the plaintiff because the plaintiff has been keeping the key of the stock godown; that it is in the nature of a pledge; that the plaintiff is answerable for the value of the goods kept in stock admittedly worth Rs.59, 41, 700/-; that the stock completely got spoiled because of the non-co-operative attitude of the plaintiff and this has got to be adjusted equitably and as such the suit claim is not at all maintainable and the suit is liable to be dismissed. 13. As seen from the rival pleadings and submissions, the facts admitted by both the parties can be stated as follows : The plaintiff M. M. T. C. a Government of India undertaking are dealing in export of marine products. The first defendant is the sole proprietor of Fine Food Packers having its business in sea food exports. The second defendant is the wife of the first defendant. The first defendant for the development of his business approached the plaintiff for financial assistance up to Rs.25.00 lakhs in order to process, store and export marine products. On 6-4-1993 the first defendant entered into Ex. P1 agreement with the plaintiff; under which the plaintiff agreed to give such facility for Rs.25.00 lakhs. On the said date the first defendant has also executed Ex. P2 hypothecation agreement and Ex. P3 promissory note for Rs.25.00 lakhs. The first defendant made 12 exports out of which 11 were shipped and one airlifted. P1 agreement with the plaintiff; under which the plaintiff agreed to give such facility for Rs.25.00 lakhs. On the said date the first defendant has also executed Ex. P2 hypothecation agreement and Ex. P3 promissory note for Rs.25.00 lakhs. The first defendant made 12 exports out of which 11 were shipped and one airlifted. The total value of the exports was Rs.68.00 lakhs. 14. It is the specific case of the plaintiff that in pursuance of an agreement under Ex. P1 dated 6-4-1993 and Memorandum of Understanding under Ex. P5 dated 21-7-1993, the plaintiff advanced to the first defendant Rs.1.17 crores as packing credit for his business in processing sea food. Not only in the Annexure to the written statement, but also in his evidence the first defendant has categorically admitted that he received the said advance of Rs.1.17 crores. From the evidence of the first defendant it would be clear that he made shipments worth of Rs.68.00 lakhs only though he received the advance of Rs.1.17 crores from the plaintiff. This would indicate that he has acted contrary to the terms of the agreements entered into with the plaintiff and assurance given by him. The first defendant has not come forward with any acceptable or convincing explanation why and under what circumstances he has made shipments to the extent of Rs.68 lakhs only, though the plaintiff had advanced to the extent of Rs.1.17 crores in pursuance of the agreements entered into. The further contention of the plaintiff's side is that out of the shipments worth Rs.68.00 lakhs, only a sum of Rs.44.39 lakhs were realised and the balance could not be realised by the plaintiff either because the goods were returned or because the first defendant realised the sums. 15. It is an admitted position that 12 exports were made by the first defendant, 11 by ship and 1 by air; and that out of the 11 shipments the plaintiff has received payments only for 8 shipments through Bank. The invoices for the 11 shipments are marked as Exs. P21 to P31 while the invoice for 1 cargo by air is marked as Ex. P32. Hence the area of controversy is regarding the amounts found in the invoices under Exs. P25, P27 and P30. Insofar as the invoice exhibited as Ex. P25 is concerned, it is shown as the fifth item in the Annexure to the written statement. P21 to P31 while the invoice for 1 cargo by air is marked as Ex. P32. Hence the area of controversy is regarding the amounts found in the invoices under Exs. P25, P27 and P30. Insofar as the invoice exhibited as Ex. P25 is concerned, it is shown as the fifth item in the Annexure to the written statement. It is contended by the plaintiff's side that the said consignment was rejected by the foreign buyer and according to clause 3 (b) of Ex. P1 agreement, the first defendant is liable to compensate the plaintiff for the losses that have arisen in default in payment or rejection by the foreign buyer. This contention is opposed to by the defendants by stating that the first defendant was not concerned with the so-called rejection by the foreign buyer; that it was exported by the plaintiff and hence the plaintiff alone was responsible and since the container was unloaded at Colombo and was sent to Dubai belatedly, the foreign buyer rejected the same and under such circumstances, the plaintiff was responsible for the said loss; that having committed the delay and fault, the plaintiff cannot throw the liability on the first defendant. Clauses 3(b) of Ex. P1 agreement reads as follows : "3(b) The consequences of any default in payment by the foreign buyer or rejection of the cargo owing to any reason would be entirely borne by the First party. The First party would be liable to compensate the Second party for any losses, financial or otherwise, which may arise out of such default in payment or rejection by the foreign buyer. Similarly, overdue interest or any other charges levied by the second party's bankers due to non-receipt or delay in receipt of payment would be to the account of the First party." A very reading of the above clause would clearly indicate that if there was any loss occasioned by the rejection of the cargo by the foreign buyer or any default in payment the same has to be borne only by the first defendant and he is liable to compensate the plaintiff. The plaintiff has relied on Ex. P38 a communication from the first defendant to the International Clearing and Shipping Agency wherein the first defendant offered Rs. The plaintiff has relied on Ex. P38 a communication from the first defendant to the International Clearing and Shipping Agency wherein the first defendant offered Rs. 1.50 lakhs to the Agency for the returned cargo and contended that the first defendant has not paid accordingly and under such circumstances, the plaintiff was insisted to pay the said agency; that only after notice to the first defendant under Ex. P39-A the payments were made to the agency; that the goods were cleared as per the advise of the Health Authority; that the perished goods were disposed of only after obtaining an endorsement from the representative of the first defendant under Ex.P40 and thus the first defendant is liable to make good not only the loss of the cargo, but also the expenditure incurred by the plaintiff in retrieving and disposing of the rejected cargo as found under Annexure 'B'. According to the defendants, this claim is unsustainable since the sea foods covered under Ex. P25 invoice was handed over for export to the plaintiff and the plaintiff arranged for the export of the same by ship; that the ship sailed up to Colombo and that the container in which the sea foods were packed and exported was mal-functioning and because of that goods were returned and since the goods got spoiled due to mal-functioning of the container, which was arranged by the shipping and clearing agency, it was only the shipping and clearing agency so answerable and not the first defendant; that the plaintiff has also proceeded against the shipping agency and made a claim of Rs.5, 18, 250.10 as seen from Ex. D1; that the plaintiff instead of pursuing the claim has made an attempt to recover the same from the first defendant; and that it is highly surprising that the plaintiff has brought back the goods by spending money and they have further spent money for disposing of the same and for all these things, the first defendant cannot be made responsible. From the available evidence, it would be very clear that the cargo covered under Ex. P25 invoice for US Dollars 12080.25 equivalent to Rs. 3, 79, 561.45 Indian Rupees was exported to Dubai and on the way when the ship reached Colombo due to mal-functioning of the container the delay was caused and the same was returned by the foreign buyer. A perusal of Ex. P25 invoice for US Dollars 12080.25 equivalent to Rs. 3, 79, 561.45 Indian Rupees was exported to Dubai and on the way when the ship reached Colombo due to mal-functioning of the container the delay was caused and the same was returned by the foreign buyer. A perusal of Ex. P38 letter would show that the first defendant was well aware of the same and he has further stated that he was ready to offer. Rs. 1.50 lakhs to make good all the losses incurred by the International Clearing and Shipping Agency, but he has not done so. Admittedly and as seen from Ex. D1 dated 14-10-1993, the plaintiff has made a claim for Rs. 5, 18, 250.10 against the shipping and clearing agency. Though the plaintiff thought it fit to make a claim against the shipping and clearing agent, for the reasons best known to them they have not pursued the same. It cannot be disputed that only on the verification and satisfaction of the plaintiff, the goods should have been exported under Ex. P25 to Dubai. It is also admitted that there was mal-functioning in the container and was not in a freezing condition as necessary. It is not the case of the plaintiff that the goods were returned by the foreign buyer because of any carelessness or negligence on the part of the first defendant, but the foreign buyer did not clear the goods on the ground that the goods were in a damaged condition due to the delay caused by the mal-functioning of the container and under such circumstances, the person answerable was the shipping and clearing agent. The plaintiff having knowledge about the same has made a claim as found under Ex. D1 dated 14-10-93 for a sum of Rs. 5, 18, 250.10. At that juncture the plaintiff had two remedies open, one to proceed against the shipping and clearing agent and the other against the first defendant. The plaintiff who elected to proceed against the shipping and clearing agent made a claim as found under Ex. D1. The plaintiff instead of pursuing the said claim as per Ex. D1 against the shipping and clearing agent has dropped the same and has now made the claim against the first defendant. The plaintiff who elected to proceed against the shipping and clearing agent made a claim as found under Ex. D1. The plaintiff instead of pursuing the said claim as per Ex. D1 against the shipping and clearing agent has dropped the same and has now made the claim against the first defendant. The reason adduced by the plaintiff that it was the first defendant who orally requested the plaintiff for dropping the claim against the shipping and clearing agent is neither convincing nor acceptable. The contention putforth by the plaintiff's side relying upon Ex. P38 that the first defendant has offered to pay Rs. 1.50 lakhs to the shipping and clearing agent and it would indicate that he was responsible and liable to answer the plaintiff's claim cannot be countenanced for the simple reason that the first defendant under Ex. P38 has agreed to pay Rs. 1.50 lakhs as a conditional offer. There is no material to show that the shipping and clearing agency has agreed to the said offer. At this juncture, it would be relevant to point out that when a claim was made by the plaintiff against the International Shipping and Clearing Agency at Madras, on 14-10-93 under Ex. D1, the plaintiff has stated as follows : "With reference to above, we were informed by our processors, M/s. Fine Food Packers that the container which carried the subject material was rejected by our buyers due to its mal-functioning during voyage. Hence as carrier agents we are lodging our claim for Rs. 5, 18, 250.10 with you for the losses incurred by us. We are enclosing a statement showing details of the claim amount. You are requested to settle the above claim at the earliest." The claim made by the plaintiff against the clearing and shipping agent under Ex. D1 would clearly indicate that the said claim of Rs. 5, 18, 250.10 represented the losses incurred by the plaintiff towards the freight charges, customs duty, C and F charges, loading charges, storage charges, service charges and interest charges. As rightly pointed out by the learned counsel for the defendants, the plaintiff who has not pursued the claim against the shipping and clearing agency could have even made the shipping and clearing agency as a party to the proceedings to answer the said claim, but have not done so. Having failed to pursue the claim found under Ex. As rightly pointed out by the learned counsel for the defendants, the plaintiff who has not pursued the claim against the shipping and clearing agency could have even made the shipping and clearing agency as a party to the proceedings to answer the said claim, but have not done so. Having failed to pursue the claim found under Ex. D1 and dropped the same for the reasons best known to the plaintiff, now the plaintiff cannot be permitted to take shelter under Clause 3(b) of Ex. P1 agreement to state that the first defendant is liable to compensate the plaintiff for any losses occasioned by the rejection of the cargo by the foreign buyer. In the instant case the return of the cargo covered under Ex. P25 invoice was due to the delay occasioned by the mal-functioning of the container which was beyond the control of either parties. Under that situation, the person answerable was the shipping and clearing agency against whom the plaintiff has made a claim under Ex. D1. Hence the plaintiff who has already chosen to recover the said loss of Rs. 5, 18, 250.10 from the shipping and clearing agency cannot now be permitted to putforth another claim against the first defendant. The contention of the plaintiff's side under the aforestated circumstances that only the first defendant is liable under Clause 3(b) of Ex. P1 agreement and in view of the reasons stated by P.W. 2, the claim against the shipping and clearing agency was not pursued cannot be accepted. The further contention of the plaintiff that the first defendant himself offered under Ex. P38 to pay Rs. 1.50 lakhs to the shipping and clearing agency cannot be taken as the reason for the plaintiff to drop the action against the shipping and clearing agency, since the cargo covered under Ex. P25 invoice was returned due to the delay caused by the mal-functioning of the container, and all the other consequences have followed. Under such circumstances, the contention of the plaintiff's side that the matter was very urgent due to the increase in demurrage in the Port Trust and pressure from the Pollution Control Board and on such emergency the plaintiff was constrained to get back the goods from the shipping agent and on making payment and debited the same to the first defendant's account has to be rejected as one without force. It is true that the plaintiff has relied on Exs. P69 and P70 showing the payment of demurrage to the Port Trust and has relied on Ex. P46 a letter from the Pollution Control Board and Exs. P47 to P53 various expenses incurred by the plaintiff in that regard. There is no evidence to show that Ex. P39 notice was served on the first defendant nor had he any knowledge of the contents therein. The plaintiff who has made a claim under Ex. D1 against the International Shipping and Clearing Agency on 14-10-1993, instead of pursuing the same has come forward to settle the dues at Rs. 2.50 lakhs under Ex. P39 on 28-10-1994. This would clearly indicate that the plaintiff has not properly settled the claim with the International Clearing and Shipping Agency, but on the contrary has paid Rs. 2.50 lakhs and has made a demand on the first defendant and thus from the available evidence without any hesitation it has to be held that the first defendant is not liable to pay Rs. 6, 72, 539.35 as claimed in Annexure 'B' or any interest thereon. 16. Insofar as the cargo covered by the invoice under Ex. P27 is concerned, the available evidence would clearly show that the first defendant after effecting the shipment on D.A. basis, under Ex. P34 has made a request to the plaintiff for authorisation for receiving the original documents at the destination with an assurance to sell the goods and remit the value in foreign exchange through the regular channel. On the said request by the first defendant, the plaintiff authorised the release of the documents to the authorised representative of the first defendant. On clearance of the goods, the cargo was sold at the destination. The first defendant has also confirmed the same under Ex. P35. Under Ex. P35 he has also promised to repatriate the proceeds of sale at the destination to the plaintiff. But on the contrary he has forwarded a Demand Draft for a value of 5000 Singapore Dollars along with a letter under Ex. P36. The plaintiff has not accepted the same since it was not received through the regular banking channel. The communication addressed to the first defendant returning the said D.D. was received by the representative of the first defendant. P36. The plaintiff has not accepted the same since it was not received through the regular banking channel. The communication addressed to the first defendant returning the said D.D. was received by the representative of the first defendant. All these above facts, in view of the available evidence, cannot be disputed by the first defendant. Insofar as the cargo covered under Ex. P27 is concerned, neither the plaintiff realised any amount nor the first defendant has made any payment in that regard. 17. Yet another claim under controversy is in respect of the cargo covered under Ex. P30 invoice. The first defendant who exported the cargo as per the said invoice did not forward all the original documents to the plaintiff for negotiating with the bank. Along with a communication under Ex. P41 dated 27-1-1994 informing that as against the three original bills of lading, the third original bill of lading was not submitted, and about the other discrepancies on the original documents also, the plaintiff has returned all the original documents given by the first defendant. Instead of complying with the demand made under Ex. P41, the first defendant to the surprise of the plaintiff using the third bill of lading directly cleared the cargo at the destination and received the value of the goods directly. The foreign buyer Kuhong Enterprise Pvt. Ltd. has sent a communication to the plaintiff under Ex. P42 dated 6-6-1994 stating that the representative of the first defendant visited Singapore and cleared the cargo and receive the value of the goods directly. A perusal of Ex. P42 would reveal that it contained all the necessary enclosures, showing that the said Abdul Rasheed who visited Singapore cleared the cargo and received the value of the goods directly. On coming to know about the same, the plaintiff sent two communications under Ex. P43 and P44 to the first defendant informing the same. All the above would clearly indicate that the plaintiff has not realised the value of the exports in the said invoice under Ex. P30, but on the contrary the first defendant has deliberately realised the amounts by directly clearing the cargo at the destination through his agent. It is a matter of surprise that the first defendant who has done all these things has now come forward with a defence to state that Mr. P30, but on the contrary the first defendant has deliberately realised the amounts by directly clearing the cargo at the destination through his agent. It is a matter of surprise that the first defendant who has done all these things has now come forward with a defence to state that Mr. Rasheed has acted as to agent of the plaintiff and if Rasheed has not made the payments collected by him at Singapore, the plaintiff should have only proceeded against him or should have made him as party to the suit. It is not in dispute that Mr. Rasheed was the Manager under the first defendant during the relevant time. It is further pertinent to note that all the original documents pertaining to the invoice under Ex. P30 were returned by the plaintiff only to the first defendant. Without the knowledge of the first defendant and without the original documents which were returned to the first defendant, his agent Rasheed could not have cleared the cargo at Singapore and received the money. The first defendant has written a letter on 23-2-1994 under Ex. D10 promising to pay to the plaintiff the amounts due by him on instalment basis and also the amount that he would realise by further exports. Hence all the contentions putforth by the defendants' side in respect of Exs. P27 and P30 have got to be rejected as devoid of any merit whatsoever. 18. The plaintiff has sought for a mortgage decree specifically alleging that the first defendant in respect of the advances made by the plaintiff to his business has offered the immovable property of his wife viz., the second defendant herein as security and has created an equitable mortgage. Both the counsel have made elaborate submissions in that regard. Hence a question would arise whether an equitable mortgage by deposit of title deeds was created. Both the counsel have made elaborate submissions in that regard. Hence a question would arise whether an equitable mortgage by deposit of title deeds was created. What is mortgage by deposit of title deeds is defined under Sec. 58(f) of the Transfer of Property Act, as follows : "Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay, and in any other town which the State Government concerned may by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent, documents of title to immoveable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds." It is called in English law an equitable mortgage. Lord Cairns defined the same as, "It is well established rule of equity that a deposit of a document of title without more, without writing, without word of mouth, will create Equity a charge upon the property referred to." In order to prove the existence of an equitable mortgage, the following requisites are necessary :- (1) a debt; (2) a deposit of title deeds, and (3) an intention that the deeds shall be security for the debt. The debt may be an existing debt or a future debt. Insofar as the deposit of title deeds is concerned, physical delivery of document is not the only mode of deposit and even the constructive delivery has been held sufficient. It is sufficient if the deeds deposited bona fide relate to the property or are any material evidence of title and are shown to have been deposited with an intention to create a security thereon. The essence of the whole transaction of equitable mortgage by deposit of title deeds is the intention that the title deeds shall be the security for the debt. Whether the said requisite intention is available in a given case is a question of fact and has to be ascertained after considering the oral, documentary and circumstantial evidence. It is true the mere fact of deposit does not raise the presumption that such an intention existed. Such an intention cannot be presumed from the possession since the mere possession of the deeds is not enough without evidence as to the manner in which the possession originated, so that an agreement may be inferred. It is true the mere fact of deposit does not raise the presumption that such an intention existed. Such an intention cannot be presumed from the possession since the mere possession of the deeds is not enough without evidence as to the manner in which the possession originated, so that an agreement may be inferred. Even the mere possession of the deeds by the creditor coupled with the existence of a debt need not necessarily lead to the presumption of a mortgage. The mere fact that the documents were coming from the custody of the plaintiff is not by itself sufficient to prove an intent to create a security. But in a given case unless and until the defendants satisfactorily explain how the documents came to the plaintiff's custody, the said fact would be significant and have a great bearing. 19. The plaintiff has specifically averred in the plaint that the defendants 1 and 2 deposited the original title deeds relating to the immovable property described in the schedule owned and possessed by the second defendant, on whose written authority and on whose behalf the first defendant deposited the title deeds with the plaintiff under his covering letter dated 15-7-1993 with a view to create an equitable mortgage over such property for the advances to the first defendant by the plaintiff. Ex. P5 Memorandum of Understanding was also entered into between the plaintiff and the first defendant on 21-7-1993. The first and the second defendants originally filed a written statement on 25-9-1996 wherein they have stated in para 9 as follows : "The plaintiff's officials informed this defendant to deposit the title deeds of the immoveable properties belonging to the second defendant, wife of the first defendant, and it was accordingly done. The second defendant was also made to sign which she signed. The covering letter said to the dated 15-7-1993 is again a document got prepared by the plaintiff in which the plaintiff's officials made the first defendant to sign and he had no other option except to sign on the dotted lines." They have further stated in para 10 of the first written statement that "as requested by the plaintiff, the second defendant, the wife of the first defendant has deposited the title deeds." Under Ex. P5 M.O.U., dated 21-7-93, the first defendant has admitted the deposit of title deeds. In Clause (iii) of para 8 of Ex. P5 M.O.U., dated 21-7-93, the first defendant has admitted the deposit of title deeds. In Clause (iii) of para 8 of Ex. P5 it is stated as follows : "At the request of M/s. FEP, the MMTC will provide financial assistance up to a limit of Rs. 30 lakhs in stages by way of packing credit against collateral security of a house property at Madras, the original title deeds of which are deposited with MMTC. M/s. FFP agree further to keep the property free from all charges/encumbrances and MMTC will hold first charge on the property till the dues of MMTC under this MOU are realized in full." 20. During the pendency of the instant suit, the plaintiff filed an application in O.A. 597/95 seeking for grant of temporary injunction restraining the respondents therein from alienating and encumbering the property, wherein both the defendants have filed common counter-affidavit specifically stating that, "the allegation that we are heavily indebted to several other creditors is specifically denied. The plaintiff has got security by way of equitable mortgage. The allegation that the value of the mortgaged property will be less than Rs. 10 lakhs is false. Its value is more than Rs. 50 lakhs now. It is a well furnished modern house . . . . . . . I humbly submit that the original title deeds in respect of the mortgaged properties are with the plaintiff. The allegation that we have somehow procured duplicate copies of such title deeds and are now attempting to further encumber and if possible alienate such property and thus defraud the applicant and also the other creditors are all absolutely false . . . . . . . I humbly submit that we have no intention to alienate mortgage property. We undertake not to alienate the same." All the above would indicate that the defendants have categorically admitted the creation and existence of a mortgage by deposit of title deeds over the second defendant's property. Advancing his arguments for the defendants, the learned Senior Counsel with vigour and vehemence would submit that all the above cannot be used against the defendants as admission, since they are erroneous and mistakenly given; that the first written statement was filed on the wrong basis as if the first defendant has sent Ex. Advancing his arguments for the defendants, the learned Senior Counsel with vigour and vehemence would submit that all the above cannot be used against the defendants as admission, since they are erroneous and mistakenly given; that the first written statement was filed on the wrong basis as if the first defendant has sent Ex. P4 letter dated 15-7-1993, but it is not signed by the first defendant; that a perusal of the same would clearly show that it was signed by Mr. Rasheed who was neither authorised nor empowered by the second defendant to execute any mortgage; that Ex. P6 power of attorney did not give the first defendant any authority and even Ex. P-7 affidavit much relied on by the plaintiff's side has not given any power to the first defendant to delegate his authority to anybody and hence there was no valid mortgage by deposit of title deeds in the eye of law and for the suit claim the property of a stranger viz. the second defendant cannot be proceeded against. The contention of the learned Senior Counsel that the admissions made by the defendants in the first written statement were erroneous or mistaken cannot be countenanced for a moment. It remains to be stated that the second defendant who is the owner of the property has not only stated in the written statement, but has also filed an affidavit in the said application stating that a mortgage in respect of her property was created in favour of the plaintiff and the same would be sufficient to meet the claim of the plaintiff, if necessary. She has categorically deposed as D.W. 2 that she has signed in Ex. P7 affidavit, wherein she has given power to her husband the first defendant herein to execute the mortgage and furnish the property as security for the loans advanced by the plaintiff. She has also admitted that all her title deeds in respect of her property were in her husband's office. The second defendant has executed a power of attorney in favour of her husband on 27-12-1991. She has also admitted that all her title deeds in respect of her property were in her husband's office. The second defendant has executed a power of attorney in favour of her husband on 27-12-1991. She has also executed the affidavit on 14-7-1993 wherein she has clearly stated that due to inadvertent omission, the power to the agent to raise a loan by mortgage or pledging of the said property has not been incorporated in the general power of attorney and that in addition to the power already granted, she has authorised her husband to pledge the house property with MMTC Limited, Madras and raise loan for business in the interest of their family. It is significant to note that Ex. P4 letter accompanied by all the documents was given to the plaintiff on the next day viz. 15-7-1993. It is not in dispute that on the said date Mr. Rasheed was the Manage of the said concern. The said letter was given in the letter-road of the proprietary concern of the first defendant viz. Fine Food Packers and Mr. Rasheed has also signed for the Fine Food Packers. It is true that Ex. P4 is not signed by the first defendant. But taking into consideration the contents in Ex. P7 and the affidavit, Ex. P4 letter, admissions and averments in the written statement filed by the defendants and the counter-affidavit filed in OA No. 597/95, all would clearly show that the first defendant who was authorised by the second defendant to execute a mortgage in favour of the plaintiff MMTC has sent all the documents through his Manager and thus the plaintiff has obtained the custody of the documents. No doubt all the above would go to show that the plaintiff has come to the custody of the title deeds pertaining to the immovable property of the second defendant by way of deposit of title deeds made by the first defendant through his Manager accompanied by Ex. P4 letter and in respect of the existing loan and the loan to be raised in future by the first defendant for his business. The requisites viz. the debt, the deposit of title deeds and the intention to create an equitable mortgage are all present in the instant case. The plaintiff has specifically pleaded and adduced evidence to prove all the above. The requisites viz. the debt, the deposit of title deeds and the intention to create an equitable mortgage are all present in the instant case. The plaintiff has specifically pleaded and adduced evidence to prove all the above. The explanation tendered by the defendants as to how the plaintiff came into possession of the original documents pertaining to the immovable property of the second defendant, that he was not in station during which his Manager Rasheed came to his house, obtained second defendant's signature in Ex. P7 affidavit and has also handed over the documents to the plaintiff has to be rejected as a tissue of falsehood. Without his knowledge, Ex. P6 power of attorney and Ex. P7 affidavit executed by his wife and Ex. P4 letter with which all the documents were enclosed and given to the plaintiff could not have taken place at all. The first defendant has gone to the extent of stating that he had not executed Ex. P5 Memorandum of Understanding on 21-7-93 in pursuance of his discussion with the plaintiff for increasing the limit, but his Manager Rasheed obtained his signature in Ex. P5 telling him that it was a copy of Ex. P1 agreement. All the above are the expressions of falsehood by the first defendant in order to defeat the equitable mortgage if possible. 21. Taking into consideration the oral and documentary evidence and the facts and circumstances of this case, the court has to necessarily hold that the first defendant has created an equitable mortgage by deposit of title deeds on the immovable property of his wife, the second defendant in respect of the amounts advanced by the plaintiff; that the second defendant is the necessary party to the suit, since the plaintiff has claimed a mortgage decree against the immovable property of the second defendant for the loans advanced to him and that the first defendant has not shown any breach by the plaintiff disentitling the plaintiff to putforth this civil action for recovery of the dues. It has also to be held that the plaintiff is not entitled to the claim made under Annexure 'B' to the plaint. 22. Coming to the question of liability of the first defendant, out of Rs. 1.17 crores of the amounts, admittedly advanced to him by the plaintiff, the plaintiff has given credit to Rs. It has also to be held that the plaintiff is not entitled to the claim made under Annexure 'B' to the plaint. 22. Coming to the question of liability of the first defendant, out of Rs. 1.17 crores of the amounts, admittedly advanced to him by the plaintiff, the plaintiff has given credit to Rs. 44, 39, 300/- which was realised out of the 8 shipments. Thus the plaintiffs has claimed Rs. 72, 60, 700/- as balance of principal. Insofar as the three shipments covered under Exs. P25, P27 and P30 invoices are concerned, it has been held above that the plaintiff is not entitled to anything under Ex. P25 invoice and hence the claim made in respect of the shipment under Ex. P25 invoice and the claim found in Annexure 'B' have to be rejected. Insofar as the cargo covered under Exs. P27 and P30 invoices and one consignment under Ex. P31 invoice are concerned, the plaintiff is entitled to the sums found therein. Therefore out of the principal sum of Rs. 72, 60, 700/-, the plaintiff is entitled to recover the balance of Rs.68, 81, 138.55 only, but not the value of the cargo found under Ex. P25 invoice viz. Rs.3, 79, 561.45 (U. S. Dollars 12080.25). Insofar as the interest prior to 13-1-94 is concerned, the plaintiff has claimed interest only at the rate of 14% per annum and has made the necessary deductions from the export realisations periodically and has arrived at the figure of Rs. 44, 39, 300/- as the net realisation after deducting such interest and hence the plaintiff is entitled to claim interest only from 13-1-1994 when from there was no export at all. The plaintiff is entitled to charge interest only at the rate of 22% per annum as agreed under clause (8) of Ex. P5 Memorandum of Understanding from 13-1-1994 till realisation. All the above issues are answered accordingly. 23. In the result, the plaintiff is given a decree for a sum of Rs. 68, 81, 138.55 with interest at 22% per annum from 13-1-1994 till realisation and also with proportionate costs. The plaintiff is also given a mortgage decree as prayed for. Time for payment is three months. In other respect, suit is dismissed. Order accordingly.