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2013 DIGILAW 445 (AP)

Sita Bai v. South Indian Bank Ltd.

2013-06-18

L.NARASIMHA REDDY, S.V.BHATT

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JUDGMENT L. Narasimha Reddy, J. Defendant No.10 in O.S.No.269 of 1986, on the file of V-Additional Judge, City Civil Court, Hyderabad, is the appellant. For the sake of convenience, the parties are referred to as arrayed in the suit. The plaintiff filed the suit against defendants 1 to 10 for recovery of a sum of Rs.5,34,877-74 Ps with future interest at 17.5% per annum. The plaintiff is a bank. It was alleged that the plaintiff created the facility of overdraft limit of Rs.20,000/-, bills purchase facility of Rs.1,50,000/-, CCKL limit of Rs.1,50,000/- on 20.03.1981 in favour of defendant No.1, a pharmaceutical company, and it also advanced a sum of Rs.50,000/- and Rs.80,000/-under promissory notes dated 07.01.1981 and 11.01.1980 respectively. Defendants 2 to 4 are the partners of the firm and defendants 6 to 9 stood as guarantors for repayment of various loan amounts. So far as defendant No.10 was concerned, it was pleaded that she has executed a mortgage note on 12.04.1978 covering all the transactions referred to above and for the purpose of creation of mortgage, she has deposited the title deeds in respect of the property i.e., mulgi bearing No.21-2-2, Pattargatty, Hyderabad. The plaintiff pleaded that in spite of repeated notices, defendants did not pay the amounts. Defendants 1 to 9 in the suit remained ex parte. The suit was contested by defendant No.10 alone. She pleaded that she was not aware of any loan transactions between the plaintiff and defendant No.1 and that she never created any mortgage. It was also stated that the so called mortgage note is a fabricated and forged one and that she has no connection whatever with the monetary transactions between the plaintiff and defendant No.1. Through its judgment dated 16.06.1996, trial Court decreed the suit. Hence, this appeal. Sri K.Gopala Krishna Murthy, learned counsel for appellant, submits that even according to the averments in the plaint, the loan transaction between the plaintiff and defendant No.1 was in the year 1981, whereas the so called mortgage note is of the year 1978. He submits that defendant No.1 colluded with the plaintiff in bringing about the so called mortgage note and the suit was filed. Learned counsel contends that the collusion between the plaintiff and defendant No.1 is evident from the fact that defendant Nos.1 to 9 remained ex parte and the burden to oppose the suit fell upon defendant No.10 alone. He submits that defendant No.1 colluded with the plaintiff in bringing about the so called mortgage note and the suit was filed. Learned counsel contends that the collusion between the plaintiff and defendant No.1 is evident from the fact that defendant Nos.1 to 9 remained ex parte and the burden to oppose the suit fell upon defendant No.10 alone. Though Sri A.Krishna Murthy filed vakalat for the plaintiff, there is no representation for it at the time of hearing. The suit filed by the plaintiff was one for recovery of a sum of Rs.5,34,877/-with interest. As observed earlier, the suit was contested by defendant No.10 alone. The trial Court framed the following issues for consideration: 1. Whether the plaintiff is entitled for the suit amount of Rs.5,34,877-74 Ps with interest at 17.5% as prayed for? 2. Whether this Court has no jurisdiction to entertain this suit? 3. To what relief? On behalf of plaintiff, PWs.1 to 3 were examined. However, the evidence of PWs.1 and 2 was eschewed from consideration. The reasons therefor are not evident. Ultimately, it is only the evidence of PW.3 that remains on record. Exs.A-1 to A-60 were filed. Important among them are Ex.A32, the list of title deeds said to have been submitted by defendant No.10 for creation of sale deed, sale deed dated 08.09.1965 marked as Ex.A33 and the promissory notes under which the amounts were borrowed on 20.03.1981, marked as Exs.A-1 to A-5. The son of defendant No.10 deposed as DW.1. He filed Exs.B-1 to B-7. The trial Court decreed the suit by recording a finding that the existence of mortgage against defendant No.10 is proved. The points that arise for consideration before us are: a) Whether any valid mortgage is created under Ex.A.32 in relation to the property held by defendant No.10? and b) Whether the plaintiff established existence of any mortgage in favour of defendant No.10 vis-à-vis the transactions between him and defendant No.1? The first point framed by us is in a way a mixed question of fact and law. First, the scope of a mortgage as defined under Section 58 of the Transfer of Property Act (for short ‘the Act’) needs to be understood. Section 58 reads as under: 58. The first point framed by us is in a way a mixed question of fact and law. First, the scope of a mortgage as defined under Section 58 of the Transfer of Property Act (for short ‘the Act’) needs to be understood. Section 58 reads as under: 58. "Mortgage"," mortgagor"," mortgagee"," mortgage- money" and" mortgage- deed" defined.- (a) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage- money, and the instrument (if any) by which the transfer is effected is called a mortgage- deed”. From a perusal of the first part of the Section, it is evident that a mortgage can be in relation to money advanced or to be advanced, by was of loan. However, what becomes important is that it must be in relation to “payment of money”. Such payment can be of the any which is already advanced, or is agreed to be advanced; by way of loan. Either way, it must be of a clear and definite amount. Unless the amount is stipulated, there cannot exist any valid mortgage. Though there can be a mortgage in respect of the money which is agreed to be advanced, the parties will be aware as to what is the amount that is agreed to be advanced. Section 58 of the Act does not enable a party to create a mortgage, which resembles a blank cheque. Further, the existence of an ascertained and agreed amount becomes relevant in the context of pursuing further remedies, or demarcating the rights of the parties. For example, if the mortgage was created in respect of a loan of Rs.10,000/-, the same cannot be pressed into service for recovery of a higher amount. Reverting to the facts of the case, in Para-6 of the plaint, the plaintiff has furnished the details of the amounts said to have been advanced to defendant No.1 either under overdraft facility or under the promissory notes etc. All of them are said to have taken place in the year 1981. Reverting to the facts of the case, in Para-6 of the plaint, the plaintiff has furnished the details of the amounts said to have been advanced to defendant No.1 either under overdraft facility or under the promissory notes etc. All of them are said to have taken place in the year 1981. However, the mortgage note relied upon in para-8 of the plaint and the one filed into Court is dated 12.04.1978. It is beneficial to extract the contents thereof. “Herewith I append a list of documents of title to my immovable properties which documents of title I have delivered over to you today with intent to create security thereon in favour of the bank for all dues to the bank in respect of FSL, Overdraft, Key Loan, CCKL, Open Loan, BP, Dc, Bank guarantee and all other facilities which the bank has allowed or may hereafter allow in the account of M/s Raj Pharma Surgical Dressing Company, 1.8.668, Azamabad, Hyderabad-20, at any or all the branches of the bank.” An attempt was made to provide a link to this with the loans through EX.A37 dated 11.01.1980, which reads thus: “I hereby request you to allow M/s Raj Pharma Surgical dressing Co., Azamabad, Hyderabad to avail the fully secured loan facility of Rs.80,000/-now sanctioned to them on the security of my properties the title deeds of which I have handed over to you on 12.04.1978 with intent to create security thereon. I hereby agree that they shall execute fresh documents in this connection and request you to allow/continue the facilities and you will have continuous security for all facilities enjoyed by them now or hereafter. This letter may be taken as my application to continue the facilities already allowed to M/s Raj Pharma Surgical Dressing Co., and enjoyed by them.” It is pertinent to note that even by that time, the loan was not advanced. When there is no reference to any amount in Ex.A32, the question of there being even a future mortgage for that does not arise. Further, it was only on 20.03.1981 that defendant No.1 and its partners submitted an application under Ex.A-22 with a request to open an account to avail cash credit facility. That being the case, the existence of mortgage in the year 1982, in relation to the transaction, does not arise. Further, it was only on 20.03.1981 that defendant No.1 and its partners submitted an application under Ex.A-22 with a request to open an account to avail cash credit facility. That being the case, the existence of mortgage in the year 1982, in relation to the transaction, does not arise. Once this legal position is clear and the facts are fitted into, an inescapable conclusion is that there is no valid mortgage. In a way the second point is substantially answered with the discussion in relation to the first point. The evidence of PWs.1 and 2 was eschewed. PW.3 hardly has thrown out any light as to the existence of mortgage. The evidence on record discloses that for each of the overdraft facility, goods in trade were hypothecated. No reference was made to the so called mortgage in any of those documents. The trial Court was mostly carried away by the fact that defendant No.10 did not enter into the witness box and one person examined as P.W.1. That hardly makes any reference. The burden squarely rested heavily on the plaintiff to prove the existence of a mortgage and they have miserably failed in this front. The appeal is accordingly allowed and the decree passed by the trial Court is set aside. It is, however, left open to the plaintiff to proceed against defendants 1 to 9 for recovery of the amount. Miscellaneous petitions filed in this appeal shall also stand disposed of. There shall be no order as to costs.