K.M. Chokkalingam Chettiar vs At. Ar. Athappa Chettiar

This appeal arises out of a suit filed by the plaintiff as assignee of a deed of mortgage Ex. A dated the 14th June, 1913 executed by the 1st

defendant in favour of the 2nd defendant, his son-in-law. The assignment by the 2nd defendant to the plaintiff is Ex. B dated the 20th July, 1914.

The 2nd defendant at the time of the execution of Ex. B also executed a security bond Ex. E indemnifying the plaintiff. The 2nd defendant

according to the plaint made several payments which are set out in the plaint, amounting in all to Rs. 12,301-0-3 and the present suit is filed for the

recovery of the balance of Rs. 6,529-4-6 with costs and further interest. The mortgage deed recites the consideration and also states that two

items of property were mortgaged. One is a house in Devakottai and the other is a house in Erode. The house in Erode was purchased under a

sale deed Ex. I on the 13th June, 1913 for Rs. 200 and this was included in the deed of mortgage. The property purchased under Ex. I was

afterwards reconveyed to the vendor under Ex. II, and Ex. II recites that the Rs. 200 for which it was reconveyed should be paid to the mortgagee

thereby making it clear that on the date of the reconveyance the property was treated as subject to the mortgage. Two defences were raised for

purposes of this appeal. It is said that Item I, which was the property purchased in Erode, was purchased not bona fide with the object of

acquiring the property but was ostensibly purchased for the purpose of giving jurisdiction to the Erode Registrar to register the document, that no

property was intended to be passed and that the transaction was intended for the purpose of effecting a fraud on registration. The other defence is

that there was no consideration for the mortgage document itself as it was executed to prevent the 2nd defendant from ill-treating or discarding his

wife, the daughter of the 1st defendant. The Subordinate Judge found both these points in favour of the defendant and dismissed the suit. We shall

first deal with the question of consideration. So far as the evidence of consideration goes we have the fact that not only the document recites the

consideration but it also appears that there was a transfer to the plaintiff on the footing that it was a mortgage on which the money mentioned under

it was due. There is no evidence worth the name that the plaintiff did not pay consideration for the transfer, nor is it shown that the plaintiff has any

connection with the 1st and 2nd defendant so as to suggest that the transfer to him was only nominal. He is only a Koil Pangali, that is a person

connected with the temple. He is not a near relation nor is he a partner of the 2nd defendant. It is not suggested nor is there any evidence to show

that the 2nd defendant did not pay the part payment mentioned in the plaint and which is also supported by evidence. One important point worth

noticing is the conduct of the 1st defendant. It is proved by the evidence that the plaintiff gave the 1st defendant notices claiming the amount due

under the mortgage and these are filed as Exs. C, C-l, E., E-l, E-2 and E-3 and D. As regards two of these notices at least there is the postal

acknowledgment signed by the 1st defendant and there is no doubt that he had received the notices of claim. One of these notices sent through a

vakil threatens a suit in default of payment and one would ordinarily expect that if the present case that there was no consideration for this

transaction is true the 1st defendant would have sent a reply notice repudiating the claim stating that nothing was due on the mortgage. He however

kept quiet. So far as the 2nd defendant is concerned he is said to have become an insolvent and gone to Karaikal. Then we have the fact that

subsequent to this mortgage the property is transferred by the 1st defendant''s wife to the daughter of the 2nd defendant; and a plea was raised that

the property did not belong to the 1st defendant but it was the property of his wife. We need not consider the truth of that plea here as we think it

is clear that the 1st defendant is estopped from pleading that he had no title to the property which he has expressly mortgaged on the

representation that it belonged to him. We will say nothing more about this plea because possibly there may be litigation between the 2nd

defendant''s daughter and the mortgagee. Having regard to the conduct of the 1st defendant we think that there is no reason to discredit the

evidence of the plaintiff and his witness and to accept the statement of the 1st defendant that there was no consideration for this document. We are

not satisfied with the reasons given by the Subordinate Judge for holding that this document was executed without consideration. The fact that the

1st defendant did not repudiate the notices of claim for payment of the mortgage amount and the fact that the 2nd defendant was making part

payments towards the mortgage amount clearly discount the evidence of the 1st defendant that no consideration passed.

The next question for consideration is as regards the validity of the registration. The case for the respondent is that there was no intention to

purchase the property, that no consideration was paid for it and that the whole transaction was a device to get Ex. A executed and registered at

Erode. There is no doubt that the parties wanted to get the document registered at Erode. But the question is whether in effecting that intention they

really did anything which would invalidate the document. It will be a broad proposition unsupported by any authority to say that where a person

bona fide buys property for the purpose of facilitating registration of a transaction and also bona fide includes it in a sale or mortgage, he commits a

fraud on registration, which would render the whole transaction invalid. In such a case nobody is cheated. There is the intention to buy the

property. The title of the property is in the person who conveys it, or mortgages it. Under the Registration Act a copy of the registered document is

sent to the other district where the other property is situated and the mere fact that a man wants to facilitate a transaction should not in our opinion

render the transaction invalid if there is no other objection to the transaction. In cases where a non-existing property is mentioned or in cases where

property which is existing but which does not belong to the mortgagor or vendor is mentioned or in cases where the parties enter into a nominal

transaction without any intention of title passing and yet the sale is registered, in such cases it may be said that there is a fraud with the object of

defeating the provisions of the Registration Act. Here both the parties were aware of what was going on and nobody is cheated by it. Having

regard to the evidence we are not justified in holding that there was no intention to purchase the property and include it under the mortgage. The

fact that in our opinion weighs against the theory of any intention to defraud is that the reconveyance is about a year after the purchase and the

reconveyance expressly states that the Rs. 200 which is the consideration for the reconveyance is to go in discharge of the mortgage debt. When

we look at the case from the point of view of the recitals in the document it is difficult to hold that there was no intention to include the property

under the mortgage security. Where a person includes the property in the mortgage security and asks the transferee to pay the Rs. 200 in discharge

of the mortgage debt his intention is clear that the property should be included in the mortgage. Against this what have we got? We have only the

statement of the 1st defendant and the statement of the vendor, who has himself transferred the property to some third person. There is nothing

against his interest now because even if his evidence is disbelieved, he still remains the owner of the property competent to transfer it. We cannot

say that the evidence of this D. W. 1 is entitled to any credit having regard to the recitals in the document. In the view we take of the case, we think

it is unnecessary to consider the cases quoted by Mr. Bhashyam Aiyangar for the respondent. We think that the plaintiff has proved his case. We

reverse the decree of the Subordinate Judge with costs here and the Court below. There will be the usual mortgage decree to the plaintiff for the

amount claimed with interest from the date of plaint till the date of realisation.

Time for redemption is six months from this day.