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Judgment
A.C. Arumugaperumal Adityan, J.—Both the appeals have been preferred against the decree and judgment in O.S. No. 229 of 1987 on the
file of the Court of Subordinate Judge, Karur. The 1st defendant in O.S. No. 229 of 1987 has preferred A.S. No. 542 of 1995 and the 2nd
defendant in O.S. No. 229 of 1987 has preferred A.S. No. 541 of 1995. The plaintiff has filed the Cross-Objection No. 147 of 1996 against the
findings of the learned trial Judge regarding the rejection of the claim of Rs. 8,999/- from out of the suit claim of Rs. 99,604/- and also for the cost
of Rs. 9532/75.
2.The averments in the plaint in O.S. No. 229 of 1986 sans irrelevant particulars are as follows:
The plaintiff-bank is a body corporate established under the State Bank of India Act 1955 having other branches including ''Siruthozhil Branch at
Karur''. The plaintiff -bank is exempted from the operations of Tamil Nadu Act 4/1938, Act 38/1972, Act 40/1979, Act 13/80, and Act 50/1982.
The first defendant is a Road Transport Operator, who approached the plaintiff-bank, Siruthozhil Branch at Karur, for the purpose of purchasing a
Leyland Chase of a lorry on 13.09.1983. The second defendant stood as a guarantor for loan availed by the first defendant. The second defendant
was directed to create an equitable mortgage relating to the plaint schedule property as a collateral security for the realization of the loan amount
from the first defendant. Accordingly, the 2nd defendant had deposited her title deeds relating to the plaint schedule properties with an intention to
create an equitable mortgage in favour of the plaintiff-bank for the suit amount borrowed by the first defendant, on 3.11.1983. The first defendant
had executed an agreement for medium term loan in favour of the plaintiff-bank for a sum of Rs. 1,87,000/- agreeing to repay the same in 55
monthly installments, the first installment being commenced from 3rd January-1984 and agreed to repay the said loan with interest at the rate of 4%
below the State Bank of India Advance Rate with a minimum of 12.5% per annum as per the Rules of the plaintiff-bank. After availing the loan, the
first defendant had purchased the vehicle TNX. No. 9777 Ashok Leyland Lorry. As per the terms of the agreement dated 3.11.1983 the said
lorry becomes secured property in favour of the plaintiff-bank. The plaintiff-bank has got a right of hire purchaser to seize the vehicle in question
and dispose of the same and credit the proceeds in the loan account of 1st defendant. The plaintiff -Bank also sanctioned a sum of Rs. 1,87,000/-
towards term loan in favour of the first defendant on 3.11.1983. The second defendant had also created an equitable mortgage for the suit loan
availed by the first defendant from the plaintiff. The defendants are jointly and severally liable to pay the suit loan since the defendants have
defaulted in repayment of the loan amount, the plaintiff seized the vehicle in question on 25.07.1987, and also called for sale tenders for purchasing
the vehicle in question by intending purchasers. The defendants were delaying to proceed the sale of the seized vehicle in question by falsely
mentioning the value of the said seized vehicle as Rs. 2 lakhs. The highest bidder as per the sale tender called for by the plaintiff-bank Siruthozhil
Branch, Karur, was only Rs. 1,11,001/-. The plaintiff had arranged to sell the vehicle for Rs. 1,11,001/- on 19.10.1987 and has given credit to the
loan amount of the first defendant. The defendants are liable to pay a sum of Rs. 99,604/- being the amount due as on 27.10.1987 under the Loan
Account No. MTL.391. On 9.10.1986 both the defendants have acknowledged their liability in writing and signed and also passed a revival letter
dated 9.10.1986 in favour of the plaintiff-bank. Hence, the suit.
The first defendant in his written statement would contend that the second defendant had not created any equitable mortgage by depositing title
deeds. No mortgage was created on 03.11.1983 as alleged in the plaint. The first defendant had applied for a loan for the purpose of purchasing a
lorry bearing Registration No. TNX 9777. Thus, this defendant had paid several installments under the suit loan. The plaintiff has failed to furnish
the copy of the accounts for the suit loan to the first defendant. There was no hire purchase agreement between the plaintiff and the first defendant.
The transation was only in the nature of hypothecation of the concerned lorry. There was no hire purchase agreement entered into between the
plaintiff and the first defendant. The recitals in the agreement executed by this defendant in favour of the plaintiff will clearly indicate that it was only
an hypothecation agreement and not an hire purchase agreement. The endorsement of the hire purchase in the R.C.Book will not create a hire
purchase agreement in favour of the plaintiff. Even in the sanction order it has been specifically mentioned that it was only an hypothecation
agreement. The vehicle in question involved in an accident and was sent to R.G.Engineering, Erode Road, Karur, for carrying out the repairs. Only
at that time the plaintiff had seized the vehicle. The said seizure itself is totally illegal. No notice terminating the alleged hire purchase agreement was
given to the first defendant. In the absence of such a notice the seizure itself is an invalid one. The plaintiff sent a letter dated 18.09.1987 as a reply
to three previous letters sent by the first defendant. The lorry was worth not less than Rs. 2 lakhs. The vehicle was not sold to the highest tenderer.
Hence, the alleged sale of the lorry is not valid. The period of tender also expired even as early as in July 1987 itself. In the publication notice the
last date of tender was mentioned as on 10.07.1987 and that the tenders would be opened within 10 days from 10.07.1987 ie. by 20.07.1987.
But the tenders were opened only on 19.10.1987 ie, three months after the expiry of the time stipulated under the notice. The plaintiff ought to
have given another notice before effecting the alleged sale. Even in the alleged notice dated 19.10.1987, the plaintiff has not even mentioned the
date of the alleged sale of the lorry. No notice was given to the first defendant about the proposed sale of the lorry by the plaintiff. The plaintiff has
not taken care about the value of the Tharpolin, Tools etc of the lorry at the time of sale. The first defendant had sustained loss at the rate of Rs.
12,000/- per month from June 1987 due to the wrongful seizure of the lorry by the plaintiff. The plaintiff has no cause of action to file the suit. The
suit as framed is not maintainable. Hence, the suit is liable to be dismissed.
The second defendant in her written statement would contend that the second defendant has not deposited her deeds in respect of the plaint
schedule property. The second defendant was asked to sign in several places by the Officials of the plaintiff-bank in the forms and she had no
intention to create any mortgage in respect of the plaint schedule property in favour of the plaintiff for the loan availed by the first defendant.
Regarding the sale of the lorry this defendant was not given any prior notice. After the sale of the lorry this defendant got discharged from her
liability. Without the consent of the second defendant, the plaintiff had wrongfully parted with the lorry. This defendant is not liable to pay any
amount to the plaintiff-bank much less to the suit amount. Hence, the suit is liable to be dismissed with costs.
On the above pleadings the learned trial Judge has framed four issues for trial. On behalf of the plaintiff, Field Officer of the plaintiff-bank was
examined as P.W.1 and Ex.A.1 to Ex.A.29 were marked. The first defendant has examined himself as D.W.1 and the second defendant was
examined as D.W.2 and Ex.B.1 to Ex.B.14 were marked on the side of the defendants. After considering the oral and documentary evidence
meticulously, the learned trial Judge has decreed the suit less Rs. 8,999/- without costs and allowed three months time for the defendants to repay
the decree amount. Aggrieved by the findings of the learned Trial Judge, the first defendant has preferred A.S. No. 542 of 1995 and the second
defendant has preferred A.S. No. 541 of 1995 before this Court.
The points for determination in these appeals are as follows:-
1) Whether the seizure of the lorry TNX.9777 by the plaintiff-bank without notice to the first defendant is valid?
2) Whether the second defendant has created any equitable mortgage in respect of the suit loan borrowed by the first defendant from the plaintiff?
3) Whether the plaintiff is entitled to any relief for the disallowed amount of Rs. 8,999/- and cost of Rs. 9,532/75 as claimed in his Cross-
Objection No. 147 of 1996?
4) Whether the decree and judgment of the learned trial Judge in O.S. No. 229 of 1987 on the file of the Court of Subordinate Judge, Karur, is
liable to be set aside for the reasons stated in the memorandum of appeal?
Point No. 1: Heard the learned Counsel appearing for the appellant in both the appeals. According to the learned Counsel for the appellant, the
first defendant has not created any hire purchase agreement in respect of the loan borrowed from the plaintiff-bank and that before seizure of the
lorry bearing Registration No. TNX 9777 for the purchase of which the suit loan was borrowed by the first defendant, no notice was issued to the
first defendant, which will vitiate the entire sale of the lorry by the plaintiff. But a perusal of Clasue 10 to Ex.A.3-agreement for medium term loan
will go to show that the plaintiff is at liberty to seize the vehicle without notice to the borrower and also empowered to recover, receive, appoint
receivers or remove and/or sell by public auction or private contract for the realization of the loan amount borrowed by the first defendant. After
signing Ex.A.3-agreement it is not open for the first defendant to contend that without notice the plaintiff is not entitled to seize the vehicle.
7(a) The next limb of argument advanced by the learned Counsel appearing for the appellants is that the vehicle viz. lorry bearing Registration No.
TNX 9777 was sold for a meagre amount of Rs. 1,11,001/- against the value of Rs. 2 lakhs stated under Ex.B.10-policy. But on the side of the
plaintiff under Ex.A.18 six tender forms have been produced besides publication Notice issued under Ex.A.17 in a vernacular daily for the auction.
Out of these tenders under Ex.A.18 the highest tender being Rs. 1,20,000/- by Sri Geetha Lorry Service, Karur. The plaintiff in their plaint have
not assigned any reason for rejecting the highest tender price of Rs. 1,20,000/- offered by Sri Geetha Lorry Services, Karur, and for accepting the
lower tender of Rs. 1,11,001/- by one Muthukrishnan of A.K.C Colony, Karur. Even though in the memorandum of Cross-Objection the plaintiff
has given the reason for not accepting the tender of Rs. 1,20,000/- as the said tenderer has failed to pay Earnest Money Deposit, nowhere in the
plaint the plaintiff has stated any reason for rejecting the highest tender of Rs. 1,20,000/-. That is why the learned trial Judge has reduced the sum
of Rs. 8,999/- from the suit amount of Rs. 99,604/- and decreed the suit for the balance amount of Rs. 90,605/-. So, after the issuance of public
notice under Ex.A.17 and also under the terms of agreement under Ex.A.3, it is not open to the appellant to contend that the public sale conducted
by the plaintiff in respect of lorry bearing Registration No. TNX 9777 is vitiated, on the ground of want of notice, cannot hold any water. Point
No. 1 is answered accordingly.
Point No. 2: The second defendant has executed Ex.A.4-agreement and also handed over Ex.A.5-sale deed in respect of the plaint schedule
property as a security for the loan borrowed by the first defendant from the plaintiff. The second defendant has also executed Ex.A.6 dated
4.11.1983, a letter creating equitable mortgage for the loan availed by the first defendant from the plaintiff. Under such circumstance, it is not open
to the second defendant to contend that he has not created any equitable mortgage in respect of the plaint schedule property for the loan availed by
the first defendant from the plaintiff. Point No. 2 is answered accordingly.
Point No. 3: The plaintiff has filed Cross-Objection No. 147 of 1996 in A.S. No. 541 of 1995 contending that the learned trial Judge ought to
have decreed the suit as prayed for and the rejection of Rs. 8,999/- from the suit claimed on the ground that highest tender amount of Rs.
1,20,000/- was not accepted by the plaintiff and only in the grounds of Cross-Objection the plaintiff would state that since the tenderer for Rs.
1,20,000/- has failed to pay the earnest money his tender was rejected and the next tender of Rs. 1,11,001/- was accepted by the plaintiff. But
nowhere in the plaint the plaintiff has stated that the highest tender amount of Rs. 1,20,000/- was rejected for the non-payment of earnest money.
Under such circumstance, the learned trial Judge has come to the conclusion that the plaintiff ought to have accepted highest tender of Rs.
1,20,000/- and to compensate the same the learned trial Judge has deducted the difference of Rs. 8,999/- from the suit claim. Further, there is no
material placed before the Trial Court to show that the earnest money was not deposited for the highest tender amount of Rs. 1,20,000/-. The
other claim of Rs. 9,532/75 towards costs under the Cross-Objection cannot also be entertained because, the learned trial Judge thought it fit to
disallow the costs for the suit to the plaintiff. The awarding of costs is a discretionary relief which cannot be considered in this Cross-Objection
without any specific ground. Hence, I hold on Point No. 3 that the Cross-Objection preferred by the plaintiff in respect of the disallowed amount
of Rs. 8,999/- and costs of Rs. 9532.75 cannot be sustainable. Point No. 3 is answered accordingly.
Point No. 4:-In view of my discussions and findings in the earlier paragraphs under Point Nos. 1 to 3, I hold on Point No. 4 that the appellants
in both the appeals as well as the plaintiff in Cross-Objection are not entitled to any relief under the appeal as well as under the Cross-Objection
respectively. I do not find any reason to interfere with the findings of the learned trial Judge in O.S. No. 229 of 1987 on the file of the Court of
Subordinate Judge, Karur,, since it does not suffer from any illegality or infirmity.
In fine, A.S. Nos. 541 & 542 of 1995 are dismissed confirming the decree and judgment in O.S. No. 229 of 1987 on the file of the Court of
Subordinate Judge, Karur. The Cross-Objection No. 147 of 1996 in A.S. No. 541 of 1995 is also dismissed. No costs. Time for payment one
month from this date. Connected Miscellaneous Petitions are closed.