Indersain vs Mohammed Raza Gowher and Another

Rajamannar, C.J.—This is an appeal by the plaintiff in O. S. No. 1593 of 1955 on the file of the City Civil Court, Madras, against the

decree and judgment of the learned Third Assistant Judge in so far as they are against him. The suit was for the recovery of the principal and

interest due in respect of a promissory note executed by the defendants on 4th July 1951 for a sum of Rs. 8000. The plaintiff alleged that nothing

had been paid either towards principal or interest and a total sum of Rs. 10,160 was due for principal and interest on the date of suit. The plaintiff

further alleged that by way of security for the moneys so advanced the defendants deposited the title deeds of the properties mentioned in the plaint

schedule with the plaintiff, authorising him to hold the said documents which had been previously given to him in pursuance of a simple mortgage for

Rs. 15,000, executed by the defendants in his favour, and therefore a mortgage by deposit of title deeds was created in favour of the plaintiff. The

prayer was for a mortgage decree, and in the alternative for an ordinary money decree. The defence was that the suit promissory note was not

executed for any cash consideration, but it was executed only as security for the payment of money that may be found due on account of the

purchase in auction of certain sports goods which had been pledged with the plaintiff. An auction admittedly was held of the goods as pre-arranged

for Rs. 5500 but the defendant found that the goods had been damaged and unserviceable and therefore did not take delivery of the said goods.

The suit promissory note was not therefore supported by consideration. The defendants also pleaded that there was no valid mortgage by deposit

of title deeds because the letter dated 5th July 1951 on which the plaintiff relied in support of his claim, required registration, and not having been

registered was not admissible in evidence. The learned Judge found that the suit promissory note was not executed for cash consideration but it

was executed as security for the payment of the amount that would be found due in respect of the auction purchase of the sports goods by the

defendants, and as the amount of the bid at the auction was only Rs. 5500 the promissory note was supported only to the extent of Rs. 5500. He

also held that the letter dated 5th July 1951 required to be registered and not having been registered, there was no valid equitable mortgage. In the

result the learned Judge passed a decree in favour of the plaintiff for a sum of Rs. 5500 with proportionate costs and interest at six percent per

annum from the date of delivery of the goods, namely, 25th July 1951, and dismissed the rest of the plaintiff''s claim. He however declared that the

properties mentioned in the plaint shall be a charge for the amount decreed, a direction which it is difficult to follow, having regard to the finding

that the non-registration of the letter would deprive the plaintiff of a mortgage decree.

Learned counsel for the plaintiff-respondent contended that the learned Judge should have passed a decree for the entire amount claimed by

him. The onus no doubt is on the defendants, as the execution of the promissory note was admitted to prove that it was not supported by

consideration. But in our opinion the defendants have adduced sufficient circumstantial evidence to shift the onus on to the plaintiff to prove that

cash consideration passed. The plaintiff has not filed his accounts which would have conclusively established his case, if true, that Rs. 8000 had

been paid in cash to the defendants. The promissory note is dated 5th July 1951. The auction was held in the same month and Ex. A. 3 is the

delivery note for the goods which were purchased by the first defendant at the auction, for a sum of Rs. 5500. The plaintiff in his evidence admitted

that the highest bid was for Rs. 5500, but according to him, this money was paid to the auctioneers. If this be true, there should be indubitable

evidence to prove all the material facts. The auctioneers should have been summoned to produce the receipt of the money from the defendants,

and the plaintiff should have produced the receipt which presumably he must have given to the auctioneers having received Rs. 5500. On 11th

January, 1952 the defendants through their advocate addressed a letter to the plaintiff in which they clearly set up the case which has been set up

by them in the present suit, namely, that no amount was received in cash as consideration for the execution of the suit promissory note. The first

defendant has also given evidence in support of his case. He deposed that he never paid Rs. 5500 to the auctioneers and he also mentioned the

circumstances in which the promissory note came to be executed. We accept this evidence. On the evidence the learned trial Judge came to the

correct finding, namely, that the suit promissory note is supported by consideration only to the extent of Rs. 5500.

The next contention pressed upon us by learned counsel for the plaintiff was that a mortgage decree should have been passed because there

was a valid equitable mortgage which had been created over the suit properties. The letter Ex. A. 2 dated 5th July 1951 did not require registration

because it recites that documents had already been deposited. No doubt if document had been deposited before the execution of that letter, that is,

the documents had been handed over to the plaintiff as security for the suit loan and the letter only recorded a past transaction, then there was no

necessity for registration. This however is not what happened. The documents, that is, the title deeds, were with the plaintiff long before the suit

transaction. As Ex. A.2 itself recites, they were handed over to the plaintiff after registration of a simple mortgage of the properties in favour of the

plaintiff himself. That was on 16th May 1951. It is not suggested that the documents so delivered in pursuance of the simple mortgage were

returned to the defendants and again redeposited with the plaintiff. There was therefore no past transaction of actual deposit of title deeds before

the execution of the letter in question. therefore Ex. A-2 is the only evidence of the mortgage and the only document by which the mortgage was

created. Hence it had to be registered, and not having been registered, it cannot be admitted in evidence to prove a valid equitable mortgage by

deposit of title deeds. The learned Judge was right in his finding that the non-registration of the letter Ex. A.2 would deprive the plaintiff of his claim

for a mortgage decree.

Curiously the learned Judge in spite of the finding that the plaintiff was not entitled to a mortgage decree, nevertheless declared that the

properties mentioned in the plaint shall be a charge for the amount decreed in favour of the plaintiff. This direction is certainly unwarranted; but we

cannot set it aside because the defendants have not filed an appeal from that portion of the decree and judgment relating to the charge. The appeal

fails and is dismissed from costs.

Appeal dismissed.