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Judgment
A.V. Chandrashekara, J.—1. Heard the learned counsel appearing for both the parties. The matter is set down for final hearing.
The present appeal is already admitted by framing substantial question of law on 06.09.2006. Concurrent finding is called in question by filing an appeal in RSA No. 1364/2006.
The appellant herein is the 1st defendant in O.S. No. 1/1993 which was pending on the file of Prl. Civil Judge (Jr.Dn.), Harihar. Respondents 1 & 2 herein are the plaintiffs and Respondent Nos. 3 and 4 are defendant Nos. 3 and 4 in the said suit. They are referred to as plaintiffs and defendants as per their ranking given in the Trial Court.
The plaintiffs chose to file a suit for declaration of title to the effect that they are the absolute owners in possession of the suit schedule property bearing No. 1031/2 measuring East to West : 20 feet and North to South 50 Feet and consequential relief of injunction against alienation of property in any manner.
According to the plaintiffs, the suit schedule property is a vacant site measuring East to West : 20 feet and North to South 50 Feet and the same belonged to one Sangana Basappa and that they have purchased the same from the 3rd defendant Hanumanthaiah for a sum of Rs. 3500/- in the year 1992 by means of sale deed and katha has been changed to their names. They are stated to be in lawful possession and enjoyment of the said property by paying taxes to the Panchayat in question. Defendant No. 2 is a Mill engaged in manufacturing industry run under the name and style of "M/s. Siddeshwara Poha Industries" by its proprietor Sri. B. Manjunath who is the brother of Mr. Hanumanthaiah, defendant No. 3. They are stated to be doing the said business in poha. Defendant No. 2 represented by Sri. Manjunath as the brother of 3rd defendant is stated to have obtained financial assistance from Defendant No. 1 to run the Mill after mortgaging his own property situated at Indiranagar, Malebennur, Harihar Taluk. The plaintiffs have stated that Defendant No. 2 had mortgaged Poha industry to Defendant No. 1 and this schedule property had not been mortgaged to the 1st defendant. Hence, property cannot be brought for sale in regard to the dues to be paid by Defendant Nos. 2 and 3. Cause of action is stated to have arisen on 13.03.1992 when the plaintiffs brought the suit schedule property for auction and subsequently on 20.12.1992 when the 1st defendant published notification for sale of suit schedule property.
The 1st defendant has filed his detailed written statement denying all the averments. According to the 1st defendant, the suit schedule property is stated to have been mortgaged in its favour by means of deposit of title deeds and thus the original sale deed is deposited with the 1st defendant at Chitradurga which is the notified area. It is perfect mortgage and that very suit of the plaintiff is not maintainable and barred by the time is the averment. Thus, the 1st defendant has requested this court to dismiss the suit. Ultimately, the following issues were came to be framed on 31.08.1999.
"1. whether plaintiff proves that he has acquired the right of ownership over the suit schedule property by registered sale deed dated 13.03.1992?
If so, whether plaintiff further proves that he is in peaceful possession and enjoyment of suit schedule property as on the date of filing the suit?
Whether plaintiff further proves that defendants are interfering in the right of plaintiff to use and enjoy the suit schedule property by threat of paper publication dtd. 20.12.92 for its illegal and unauthorised sale?
Whether defendant No. 1 proves that the suit schedule property was mortgaged in its favour by defendant No. 3 on 07.02.1990 as security of loan to defendant No. 27?
Whether defendant No. 1 proves that suit is barred by law of limitation?
What decree or order?"
The 1st plaintiff is examined as PW-1 and Bharmappa is examined as PW-2 and have got marked the documents at Ex. Ps-1 to 6. One Sri. Suresh is examined as DW-1 and has got marked five exhibits on his behalf. Ultimately, suit came to be decreed on 27.02.2002 answering issue Nos. 1 to 3 in the affirmative and 4 and 5 in negative.
Against said judgment and decree, appellant had filed an appeal under Section 96 CPC before the Civil Judge (Sr.Dn), Harihar in R.A. No. 262/2002. Said appeal is dismissed after contest by formulating the points for consideration as found in paragraph 13 at page 8 of the judgment. It is these concurrent findings which are called in question on various grounds as set out in the appeal memorandum.
This Court has admitted the present appeal to consider the following substantial questions of law framed on 06.09.2006.
(1) "Whether the Courts below were justified in holding that defendant No. 1 had failed to prove that the suit schedule property was mortgaged by defendant No. 3 in favour of defendant No. 1 as security of loan to defendant No. 2?
(2) Whether the Courts below were justified in holding that a mortgage by deposit of title deeds would require reconsideration?"
Heard the learned counsel appearing for the parties. Instead of the word ''registration'', the word ''reconsideration'' is typed in substantial question of law No. 2 and it is to be read as ''registration''. Accordingly, the word ''reconsideration'' is deleted and in its place, the word ''registration'' is substituted.
Mr. Suresh who is examined as D.W.1 has deposed that on the basis of authorisation given to him by Sri Lokeshappa, Branch Manager of KSFC, Davanagere, he is competent to depose. It is marked as Ex. D-2. Therefore his locus- standi to be examined as witness on behalf of first defendant cannot be called in question. He has specifically deposed that original sale deed executed in favour of Sri Hanumanthaiah and his brother Sri Manjunath in respect of suit schedule property is deposited with the first defendant - Corporation at Chitradurga a notified area. First defendant being lawful custodian of the said document and being mortgagee, is entitled to produce the same and is produced by first defendant. Apart from this, Sri Hanumanthaiah - defendant No. 3 and his brother Sri Manjunath, Proprietor of second defendant have sworn to on oath by means of an affidavit dated 21.10.1991 about loan of Rs. 3 lakhs being availed on 07.02.1990 and the document being deposited with the Corporation as per Ex. D-5. Ex. D-4 is the special Power of Attorney executed by Sri Hanumnthaiah and Sri Manjunath, in favour of KSFC to deal with the suit schedule property in case of default committed by them.
What is held by the trial Court as well the first appellate Court is that deposit of the original title deed should have been registered and therefore, there is no registration in the eye of law. Whether such a finding given by the trial Court which is affirmed by the first appellate Court in this regard is justified will have to be looked into.
A Division Bench of this Court in the case of SMT. KORI GOWRAMMA v. VYSYA BANK AND OTHERS reported in , ILR 2000 KAR 1962 has specifically held that deposit of title deeds in the notified town as per clause (f) of Section 68 of the Transfer of Property Act, 1882 would be a mortgage for all practical purposes and it does not require registration. Relying upon the decision of the Privy Council reported in IMPERIAL BANK v. U. RAI G.T. & CO. reported in , 1923 PC 211 it is reiterated that a person purchasing the property of which title deeds are already deposited, is expected to make a bonafide enquiry before venturing into purchase the property. Paragraph 9 of the said decision is relevant and is extracted below:
"9. In the case of IMPERIAL BANK v. U.RAI G.T. AND CO. (, 1923 PC 211), it has been held that abstention from enquiry for title deeds in a place where one knows that mortgages by deposit of title deeds are legal and usual amounts to notice of mortgage under Section 3 of the T.P. Act."
Similar view is taken by the High Court of Calcutta in the case of KSHETRA NATH v. HARASUKDAS reported in , AIR 1927 CALCUTTA 538.
In the present case, third defendant being the brother of Sri Manjunath was expected to disclose the defects in the property at the time when sale was made in favour of plaintiffs and plaintiffs should have demanded the third defendant and his brother to produce documents of title. Admittedly, plaintiffs had failed to do so. Hence, it was incumbent upon the purchasers to have insisted defendant No. 3 and his brother to produce the title deeds or atleast make bonafide enquires about the same. Nothing is placed on record by the plaintiffs to substantiate for having made such bonafide enquiries before purchasing the suit schedule property.
Section 55 of the Transfer of Property Act, 1882 speaks of the rights and liabilities of buyer and seller. As per Section 55(1) of Transfer of Property Act, the seller is bound to disclose to the buyer the material defect in the property and bound to produce to the buyer on his request for examining all documents of title relating to the property which are in seller''s position or power and also answer to the best of his information all relevant questions put to him by the buyer in respect of the property or the title thereto.
Third defendant has remained ex-parte. Nothing is placed on record to substantiate that plaintiffs had made bonafide enquiries in regard to title deeds in question before venturing to purchase the same. Admittedly, first defendant is a statutory body created under the State Financial Act, 1951 and deposit of the original sale deed marked as Ex. D-1 does not require registration.
Both the Courts have adopted wrong approach to the real state of affairs. Law in regard to deposit of title deeds has been virtually ignored by both the Courts. Thus, judgments of the trial Court as well as the first appellate Court are perverse and illegal and accordingly, liable to be set aside by holding substantial questions of law Nos. 1 and 2 in the negative. Accordingly, I pass the following:
ORDER
"(1) Appeal filed under Section 100 CPC is allowed in its entirety.
(2) The judgment passed by Civil Judge (Jr.Dn), Harihar in O.S. No. 1/1993 dated 27.02.2002 and affirmed in R.A. No. 262/2002 by the Civil Judge (Sr. Dn), Harihar dated 03.02.2006 are set aside.
(3) Consequently, suit in O.S. No. 1/1993 stands dismissed.
(4) Appeal is allowed with costs throughout."