Narayanasami and Co. vs Syndicate Bank, Trichy

K. Sampath, J.—The third defendant in O.S.No.2/85 on the file of the Subordinate Judge''s Court, Thanjavur, is the appellant in the second

appeal. The first respondent herein filed the suit against the appellant and 12 others for recovery of money due on a mortgage created by deposit

of title deeds.

The case of the plaintiff was as follows:

One Krishna Konar, as the sole proprietor of M/s Kannan Ghee Stores, having business at No.229, Big Bazaar, Trichy-8, borrowed a sum of

Rs.40,000/- on 3-9-1985 for his business from the plaintiff bank at Trichy. He executed an agreement on 3-9-1985 in favour of the plaintiff bank

incorporating the terms and conditions of the advance, rate of interest, repayment schedule, etc. He also executed a deed of hypothecation in

favour of the plaintiff bank on the same date hypothecating the stock in trade of his business as set out in Schedule A. As per the terms of the

agreement, the loan amount was repayable in monthly instalments of Rs.1000/- commencing from 3-10-1985 together with interest at 16.5% to be

compounded quarterly. He also agreed to pay over due interest. The second defendant in the suit, one of the sons of the borrower, agreed to be

the surety for the loan amount of his father Krishna Konar. The borrower Krishna Konar deposited documents of title relating to his immovable

properties as set out in B Schedule with intent to create a charge over them in favour of the plaintiff for the loan advanced to him on 3-9-1985. It

was a mortgage by deposit of title deeds falling u/s 58 of the Transfer of Property Act. The plaintiff bank became entitled to recover the balance

due on the loan on charge of the movables hypothecated to the bank as set out in Schedule A and the immovable properties offered as security to

the bank as found in Schedule B. Krishna Konar died on 6-4-1988 leaving behind defendants 1 to 6 as his legal heris. Defendants 7 to 13 being

subsequent purchasers with full knowledge of the mortgage of Schedule B properties in favour of the plaintiff, were made parties. Defendants 1 to

6 had also acknowledged the suit debt in writing on 7.5.1988 within three years from the date of borrowing. Letters of acknowledgement had also

been executed. Suit came to be filed for a preliminary decree, failing which to pass a final decree.

It is enough if we notice the case of the 13th defendant, the present appellant alone.

The deceased had dealings with the 13th defendant. He failed to pay the arrears necessitating the filing of suit O.S.No.85/86 before the Sub

Court, Karur, for recovery of amount due. The appellant also filed a petition for attachment in I.A.No.342/86, which was made absolute on 21-7-

1987. The suit was decreed on 21-7-1987 granting five months time for payment of the decree amount. Since there was no payment of the decree

amount, E.P. was filed and the property as put up for sale. The E.P. Was transmitted to Sub Court, Trichy, and again to Thanjavur Sub Court,

since the properties were situate within the jurisdiction of Thanjavur Sub Court. After obtaining permission from Court, the appellant purchased the

B Schedule properties on 15-6-1992. The sale was confirmed on 26-8-1992. The appellant was a bona fide purchaser of the suit properties for

value. Pursuant to the Court auction sale, suit properties were also transferred in its name and they had taken possession. The appellant had

derived right, title and interest of the suit properties through Court of law and the present plaintiff had no right to have a decree over the suit

properties. The averment that the deceased intended to create a charge over the suit properties by way of deposit of title deeds would not give any

right to the present plaintiff over the suit properties. No notice had been issued to the appellant prior to the present suit. The averment that the

appellant was a subsequent purchaser was not correct.

The trial Court framed the necessary issues, accepted the case of the plaintiff and decreed the suit. The appellant filed appeal in A.S.No.121/99

before the Principal District Court, Thanjavur. The learned Principal District Judge by judgment and decree dated 31-3-2000 dismissed the

appeal. It is as against that, the preset second appeal has been filed.

Notice of motion was ordered on 14-9-2000 and after service on the contesting respondent, the matter was posted and arguments heard.

Mr. S.V. Jayaraman, learned Senior Counsel for the appellant, submitted that the Courts below were not justified in holding that the evidence let

in by the plaintiff bank established a mortgage created by deposit of title deeds. According to the learned Senior Counsel, the list of documents

annexed to the plaint does not give the date of the mortgage as 3-9-1985 and the very averments in the plaint would clearly show that there was

really no mortgage created by deposit of title deeds. The learned Senior Counsel drew pointed attention to paragraph 7 of the plaint and

contended that the plaint did not disclose that a mortgage had been created on 3-9-1985 by deposit of title deeds.

On the basis of the arguments by the learned Senior Counsel, the following substantial question of law arises for decision in the second appeal:

Whether the Courts below were right in law and justified in holding that the evidence let in established the mortgage by deposit of title deeds?

I have gone through the judgments of the Courts below. According to the learned Senior Counsel, in the plaint, the plaintiff had specifically

mentioned in paragraphs 7 and 8 that the deceased Krishna Konar had deposited his title deeds on 3-9-1985 and later executed the letter of

deposit of title deeds, which means that the letter of deposit of title deeds was not executed on 3.9.1985.

A reading of the plaint does not in any way support the contention raised by the learned Senior Counsel. There is nothing to warrant the

conclusion that the deposit was not made on 3-9-1985. Paragraph 7 of the plaint runs as follows:

The borrower Krishna Konar deposited documents of title relating to the immovable properties described in the Schedule B with intent to create a

charge over them in favour of the plaintiff for the loan advanced to him on 3-9-1985. It is a mortgage by deposit of title deeds falling u/s 58(f) of

the Transfer of Property Act, particulars of which are given below.

In the particulars, the date of mortgage is given as 3.9.1985. In paragraph 8 of the plaint, it is stated as follows:

The documents of title deposited deposited by the borrower Krishna Konar and the memorandum executed by him later confirming the deposit of

title deeds, are filed herewith as documents Nos.7 to 24.

There is no doubt that the deposit of title deeds by Krishna Konar was only with intent to create mortgage in favour of the plaintiff bank. The mere

fact that the said Krishna Konar did not mention anything about the deposit of title deeds in the suit filed by the appellant before the Subordinate

Judge''s Court, Karur, would not mean that no such deposit was created. As rightly pointed out by the courts below and in particular, the lower

Appellate court that the plaintiff bank is a Nationalised Bank and used to sanction loan after following a procedure is not disputed on the side of

the defendants and the deposit of title deeds on the date of loan itself is proved that the plaintiff bank had sanctioned the loan in favour of Krishna

Konar after getting proper security from him.

The Courts below chose to accept the evidence adduced on the side of the plaintiff and in my view, no exception can be taken to the

conclusion reached by the Courts below. Consequently, the substantial question of law framed for decision in the second appeal is answered

against the appellant. The second appeal fails and the same is dismissed. There will be no order as to costs. The connected miscellaneous petitions

C.M.P.Nos.13237 and 17839 of 2000 are also dismissed.