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Judgment
AR. Lakshmanan, J.—The 4th defendant in O.S. No. 14 of 1982 on the file of Sub Court, Vridhachalam, is the appellant in the present
appeal. The 1st respondent-Bank filed the suit against the appellant and respondents 2 to 4 for recovery of a sum of Rs. 69,083.52 together with
subsequent interest and for costs. According to the 1st respondent, respondents 2 to 4 herein approached the bank for loan facilities to be granted
to them under two classifications styled as ""Cash Credit Facility"" and ""Over Draft Facility on Trade Bills"", for the purpose of expanding and
developing their business. The appellant herein, who was the 4th defendant in the suit, has expressed his willingness to stand as guarantor for the
facilities granted and to be granted by way of enhancement. Accordingly the plaintiff initially granted the maximum limit of Rs. 10,000 on 2.3.1979
on the Loan Classification ""Cash Credit Facility"" and a maximum limit of Rs. 25,000 on 2.3.1979 in ""Over Draft on Trade Bills"". Respondents 2 to
4 have executed necessary promissory notes and other documents in favour of the Bank as required under the Rules. Respondents 2 to 4 have
also agreed to hypothecate their goods and whole of their stocks in Trade and Merchandise stocked in their premises at Karur which relates to the
loan sanctioned and paid to them under Cash Credit classification. The deed of hypothecation dated 2.3.1979 has been filed as Document No. 3
in the suit. The 4th defendant (appellant herein) has also executed the Memorandum of Deposit of Title Deed which has been marked as Ex.A-8 in
the suit. Under the said document, the 4th defendant, the appellant herein, has given his property situated in S. No. 314/1A house site as a security
for the due repayment of the loan sanctioned to the defendants 2 to 4. Therefore, the defendants 2 to 4 have also executed additional guarantee for
the additional amounts sanctioned and received by them. According to the plaintiff-Bank, the 4th defendant is also liable to the plaintiff for the loan
dealings of other defendants, in respect of the facilities granted and also enhanced from time to time and in consideration of the loans granted to
them. The 4th defendant with intention to create an equitable mortgage on his immovable property mentioned in the schedule to the said document
and by way of collateral security, deposited his title deeds relating to the property mentioned in Ex. A-8 on 1.3.1979 with the plaintiff at Karur. It
is the further case of the plaintiff-Bank that the 4th defendant has also left a Memorandum of Deposit of Title Deeds dated 6.3.1979 signed by him.
The said Memorandum has been marked as Ex.A-8 in this proceedings. Since the defendants have not paid the amount due to the plaintiff in spite
of repeated demands, the plaintiff has filed the above suit for recovery of the money due to them from the defendants 1 to 4. Respondents 2 to 4
who are defendants 1 to 3 have not filed any written statement and contested the proceedings. The 4th defendant, the appellant herein, alone has
filed a written statement. According to the 4th defendant, he never expressed his willingness to stand as a guarantor for defendant 1 to 3 and he
was asked to sign some documents only as an attestor for the documents executed by defendants 1 to 3 and that the officials of the plaintiff-Bank
took the signatures of the 4th defendant in several forms blank papers stating that he is signing only as attestor to the documents. It is also his case
that the Bank Officials took his signature in number of blank papers and forms without disclosing the real nature and contents of the documents.
According to him, he did not mortgage his properties by deposit of title deeds and even assuming without admitting that there is a mortgage in
favour of the plaintiff-Bank, the said mortgage is not valid since a copy of the document alone has been filed with the Bank and not the original. On
behalf of [the plaintiff-Bank, Exs.A-1 to A-19 were marked and on behalf of defendants side, Exs.B-1 to B-3 were marked. The plaintiff-Bank
examined its Manager and the 4th defendant has examined himself as D.W.1. The lower court on the above pleadings framed the following seven
issues:
Whether the suit is bad for misjoinder of cause of action?
Whether the suit as framed is not maintainable?
Whether this Court has no jurisdiction?
Whether the defendants 1 to 3 stood as guarantors?
Whether 4th defendant created equitable mortgage?
Whether the plaintiff is entitled to the interest claimed?
To what relief ?
Since the decree is challenged only by the 4th defendant are not adverting to the other documents filed by the plaintiff-Bank to prove their claim.
Therefore, we confined ourselves to the evidence adduced by D.W.1 and two crucial documents viz., Exs.A-8 and A-18. The learned
Subordinate Judge, on a careful consideration of the entire materials placed before him and on an appraisal of the evidence tendered both oral and
documentary, has decreed the suit as prayed for with costs. Mr. R. Aravindan, learned Counsel appearing for the appellant herein, would reiterate
the contentions raised by the 4th defendant in the written statement. According to the learned Counsel, the 4th defendant did not create any
mortgage in favour of the plaintiff-Bank and even assuming without admitting that the mortgage is created, the said mortgage is not valid since the
original document has not been deposited with the Bank. He would further contend that the court below has failed to note that even the original
partition document is only produced by the 4th defendant and that would not show that the plaintiff''s case of deposit of title deeds, by the 4th
defendant is not correct and therefore, the court below should have on the entire evidence, held that the plaintiff was not entitled to any decree
against the 4th defendant. We are unable to agree with the contention put forward by the learned Counsel for the appellant herein. As rightly
pointed out by the learned Subordinate Judge, the appellant herein has executed Ex.A-8 clearly expressing his intention to create an equitable
mortgage in favour of the plaintiff-Bank for the due repayment of the amounts advanced to the other defendants. Ex.A-8 has been signed by the
4th defendant on 6.3.1979. In the description of property, the 4th defendant has clearly mentioned the nature of title deeds as security and the
survey number of the property and the area, extent etc. In page 2 of the Memorandum of Deposit of Title deeds, the appellant has duly signed the
said document. This apart, the appellant has also executed Ex.A-18 clearly willing to offer his property as security for the amount to be advanced
to the respondents 2 to 4 herein. The said document has been written by the 4th defendant himself in his own hand writing and is also duly signed
by him. Therefore we are unable to accept the case of the appellant herein that he was asked to sign some documents only as an attestor of the
documents executed by the defendants 1 to 3 and that he signed only as an attestor to the document. In fact, the appellant herein, has admitted his
signature in all the documents filed by the plaintiff, in his evidence as D.W.1. In our opinion, the 4th defendant has hot discharged his burden to
prove that he has attested the documents only as an attestor. He has also admitted in his evidence that he did not take any steps to read the
documents before affixing his signature. It is seen from his evidence that he is working as a Vakil Clerk for more than 25 years and he would not
sign any document without reading the contents of the same. He has further admitted in his evidence that when he affixed his signature, the 2nd
defendant, 3rd defendant, Bank Manager, Accountant and other staff of the Bank were present. He has also categorically admitted that even after
the issue of notice and filing of the suit, he did not approach the second and third defendants about the matter in dispute. Therefore, we are unable
to accept the oral evidence of the appellant herein as D.W.1 that he has signed only as an attestor which in our opinion, is only an after-thought and
has been invented only for the purpose of this case. The execution of Ex.A-18, which is a consent letter written by the appellant herein to the
plaintiff-Bank, has also been admitted by the appellant herein in his evidence. As pointed out earlier, the appellant has agreed to create an equitable
mortgage under Ex.A-18 in favour of the 1st respondent-Bank further Ex.A-18 was sent by the appellant under a Registered post from his native
place to Kallakurchi to the 1st respondent-Bank. The contention now raised by the appellant that he did not post the said letter, cannot also be
accepted.
We are also unable to countenance the contention of the learned Counsel for the appellant that the mortgage created by the appellant only with a
copy of the document is not valid, in view of the number of pronouncements of our High Court and also of the Andhra Pradesh High Court. An
identical question came up for consideration before a Division Bench of our High Court reported in M.A. V.R. Nataraja Nadar and Sons v. State
Bank of India (1993) 1 L. W. 456, in which one of us, is a party (Abdul Hadi, J). The Division Bench on a consideration of the entire law on the
subject and in the light of the pronouncements of the Supreme Court and of this Court and other High Courts, held that in order to create a valid
mortgage, it is not necessary that the original documents of title to the property should be deposited. The Division Bench has also followed some of
the earlier judgments of our High Court reported in The Official Assignee of Madras v. Basudeva Doss Badrinarayan Doss AIR 1925 Mad. 723,
Angu Pilial v. Kasi Viswanathan Chettiar (1993) 1 M.L.J. 334: 86 L.W. 94, which in turn followed a Full Bench decision of the Rangoon High
Court in Chidambaram Chettiar v. Aziz AIR 1938 Rangoon 139. The Full Bench has reviewed the English and Indian authorities and has pointed
out that in order to create a valid mortgage, it is not necessary that the whole, or even the most material of the documents of title to the property
should be deposited that the documents deposited should show a complete or good title in the depositors and it is sufficient if the deeds deposited
bona fide relate to the property or are material evidence of title and shown to have been deposited with the intention of creating security thereon.
It is also relevant at this stage to notice a decision of the Lahore High Court reported Jessis Moyle Stewart v. Bankof Upper India AIR 1916
Lah. 39, in which the said High Court held that ""title include copies, where the originals are not forthcoming."" Surendra Mohan Rai Choudhury Vs.
Mohendra Nath Banerjee and Others, , is also an authority for the same proposition wherein a similar view was expressed by the Calcutta High
Court. A Division Bench of the Calcutta High Court in a later decision made an observation that it is sufficient if the deeds deposited bona fide
relating to the property are material evidence of title and are shown to have been deposited with the intention of creating a charge. It is to be
noticed that in the Calcutta case, besides the certificate of probate, only a certified copy of the redemption certificate was produced as the court
held that deposit of certified copy of redemption certificate taken along with the probate clearly indicates an intention to create a security on the
probate.
Our Supreme Court had occasion to consider the question of creation of equitable mortgage in K.J. Nathan Vs. S.V. Maruty Reddy and
Others, . After referring to the observation in V.E.R.M.A.R. Chettiyar Firm v. MaJoo Teen, ILR (1993) Rangoon. 239: AIR 1933 Rangoon 299,
to the effect that what the terms ""documents of title"" and ""title deeds"" denote is that such a document or documents as show a prima facie or
apparent title in the depositor or some interests therein. Quoted with approval the following passage from the judgment K.J. Nathan Vs. S.V.
Maruty Reddy and Others, :
If the form of the documents of title that have been delivered to the creditor is such that from the deposit of such documents alone the court would
be entitled to conclude that the documents were deposited with the intention of creating a security for the repayment of debt, prima facie a
mortgage by deposit of title deed would be proved although of course, such an inference would not be irrebuttable and would not be drawn if the
weight of the evidence as a whole told against it.
Thus, a court will have to see and ascertain in each case whether in substance there is a delivery of title deeds by the debtor to the creditor. In
the instant case, the appellant has in fact deposited with the Bank the title deed with intention to create a mortgage in favour of the Bank for the due
repayment of the amounts advanced to the other defendants. The above referred to Division Bench of our High Court in Angu Pillai v. Kasi
Viswanathan Chettiar (1993) 1 M.L.J. 334 : 86 L.W. 94, has also held that it is sufficient if the deeds deposited bona fide relate to the property or
are material evidence of title or are shown to have been deposited with the intention of creating security thereon, to constitute an equitable
mortgage by the appellant in favour of the Bank in respect of his right in the property which has been mortgaged to the Bank. As seen above, the
intention of the appellant to create an equitable mortgage in respect of the property was confirmed by the appellant in Ex. A-18 consent letter in
clear and unambiguous terms. In our considered view, this is sufficient to constitute an equitable mortgage by the appellant in favour of the Bank in
respect of his rights over the property in question.
The learned Counsel for the appellant Mr. R. Aravindan, cited a decision in Kanigalla Prakasa Rao Vs. Nanduri Ramakrishna Rao and Others,
, to contend that by producing true copy, a valid equitable mortgage cannot be created. Two contentions were raised before the Andhra Pradesh
High Court by the counsel appearing for the plaintiff- appellant therein: (1) there cannot be a valid equitable mortgage in favour of the Bank over
the property subject matter of Ex.A-2 (sale deed) without delivering to the Bank the original title deed; (2) it was an act of gross neglect on the
part of the Bank to have accepted the delivery of a registration extract of a sale deed without insisting on the delivery of the original of the sale
deed. The Division Bench turned down the plea of the learned Counsel for the appellant in that case. In that case, the deposit of an extract from
the registration of the sale deed in favour of the borrower was held sufficient to create a valid mortgage. The court rejected the argument that a
valid mortgage (by deposit of title deeds) can never be created without delivering the original title deeds. In support of its decision, the Court also
relied on Jessis Moyle Stewart v. Bank of Upper India AIR 1916 Lah. 39, where only attested copies of title deeds had been deposited and
Gurudas Mal v. Punjab Sindh Bank Limited AIR 1993 Lah. 972, where a copy of an award evidencing title had been deposited the original having
been filed in a court.
Much closer to the decision the above said case is the remark made by Pepys, M.R. in Goodwin v. Waghorn, (1835) 41 R.R. 208, that the
deposit of a copy of a court roll (official record) would suffice to create an equitable mortgage. It should, however, be noted that in England, and
equitable mortgage can be created without deposit of title deeds, but in such cases, the charges must be registered under the Land Charges Act,
1925, In view of the provisions of Section 58(f) of the Transfer of Property Act, deposit of documents of title, is however, essential in India to
create what is frequently referred to as an equitable mortgage. The issue that, therefore, arises in cases like the present is whether the term
document"" of title would only apply to a document by which the mortgagor derives title to the property to be mortgaged, or whether it would also
apply to any document which provides some, if not conclusive, evidence that the mortgagor has title to the property. In our view, it is beyond
doubt that the term lends itself to the interpretation that it includes the latter category of documents.
In matters like this, the intention of the parties alone is the prime factor to be considered. The appellant has clearly expressed his intention to
create an equitable mortgage in favour of the 1st respondent-Bank under Ex.A-18. We also find that the conduct of the appellant leaves no doubt
that he intended to create an equitable mortgage in favour of the Bank in order to enable the other defendants to avail the credit facilities from the
Bank. The trial court has dealt with the oral and documentary evidence in full and we agree with the conclusion reached by the trial court on this
aspect.
The appeal, therefore, fails and the same is dismissed with costs of the 1st respondent-Bank.