Skip to content


Ahmedabad People's Co-operative Bank Ltd. Vs. Pradip (06.11.1958 - BOMHC) - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtMumbai High Court
Decided On
Case NumberAppeal No. 75 of 1955
Judge
Reported inAIR1959Bom482; (1959)61BOMLR612; ILR1959Bom1112
ActsHindu Law; Bombay Co-operative Societies Act, 1925; Transfer of Property Act, 1882 - Sections 58
AppellantAhmedabad People's Co-operative Bank Ltd.
RespondentPradip
Appellant AdvocateS.M. Shah and ;B.G. Thakore, Advs.
Respondent AdvocateA.H. Mehta and ;M.P. Sethna, Advs.
Excerpt:
.....credit arrangement was extended, the mortgage continued to operate on the property, ;that when the deed of mortgage was executed for a consideration which was to be advanced in future, the mortgage became effective and enforceable against the totality of the interest of the joint family of which the defendant was the sole surviving co-parcener and the birth of the plaintiff subsequently did not affect the enforceability of that mortgage against that interest, and;that, therefore, the award obtained by the bank against the defendant was binding upon the plaintiff's share in the property mortgaged. ;raghunath bhagat v. amir bakhsh (1923) i.l.r. 1 pat. 281 and tatia v. babaji (1896) i.l.r. 22 bom. 176, referred to. - - he then held that the antecedent debt which was outstanding on 4th..........binding upon the plaintiff's share in the properties mortgaged; (2) for a declaration that a sale-deed dated 20th october 1949 executed by the first defendant in favour of the 2nd defendant conveying the property described in sub-paragraph (1) of paragraph 16 of the plaint is not binding upon the plaintiff, the same being without consideration and brought about by undue influence; (3) that an agreement entered into by the first defendant on 23rd january 1950 with the 3rd defendant for sale of the properties described in paragraph 16 of the plaint is without consideration and without legal necessity; (4) for partition and separate possession of his share in the properties described in paragraph 16 of the plaint and (5) for an injunction restraining the 4th defendant from executing the.....
Judgment:

Shah, J.

1. The plaintiff who is a minor sued through his next friend for (1) declaration that the mortgage of the properties described in sub-paragraphs (a) and (b) of paragraph 16 of the plaint executed by the first defendant in favour of the 4th defendant and an award in favour of 4th defendant by the Registrar under the Bombay Co-operative Societies Act are not binding upon the plaintiff's share in the properties mortgaged; (2) for a declaration that a sale-deed dated 20th October 1949 executed by the first defendant in favour of the 2nd defendant conveying the property described in sub-paragraph (1) of paragraph 16 of the plaint is not binding upon the plaintiff, the same being without consideration and brought about by undue influence; (3) that an agreement entered into by the first defendant on 23rd January 1950 with the 3rd defendant for sale of the properties described in paragraph 16 of the plaint is without consideration and without legal necessity; (4) for partition and separate possession of his share in the properties described in paragraph 16 of the plaint and (5) for an injunction restraining the 4th defendant from executing the award obtained under the Bombay Co-operative Societies Act against the first defendant. The learned trial Judge decreed the plaintiff's suit. Against that decree the fourth defendant alone has appealed to this Court.

2. In order to appreciate the claim made by the plaintiff certain material facts may be set out. The plaintiff is the son of the 1st defendant. Defendant No. 5 is the mother of the plaintiff and defendants Nos. 6 to 8 are his sisters. On the 4th of June 1947 the first defendant was the sole coparcener in that family. The plaintiff was born on 23rd April 1948 and it is conceded that he was not conceived on or before 4th June 1947. On 23rd May 1947 the first defendant applied to the fourth defendant which is a Co-operative Bank, for a loan of Rs. 8,800 on the security of his property and on 4th June 1947 a mortgage-deed, which is called a deed of equitable mortgage, was executed by the first defendant in favour of the fourth defendant. By the preamble of the deed it was recited that the first defendant had mortgaged to the fourth defendant two houses belonging to him on the terms and conditions set out therein. By the first paragraph it was recited that the first defendant had opened a cash credit loan account with the fourth defendant for developing his 'radio business'. The limit up to which the first defendant could withdraw was fixed at Rs. 8,800, and one year's interest and as security for repayment of the said amount and interest thereon, the first defendant executed a deed of equitable mortgage in favour of the fourth defendant. By the second paragraph a covenant of tile in the property mortgaged was guaranteed and it was stipulated that the mortgage documents were to remain in the possession of the fourth defendant till the amount of Rs. 8,800 together with interest due thereon was repaid to the fourth defendant. It was recited in sub-paragraph (1) that the loan was sanctioned on 22nd May 1948 to be advanced according to the rules and regulations of the bank and the same was advanced to the first defendant on the date of the execution of the mortgage. By the 2nd sub-paragraph the first defendant covenanted to repay to the fourth defendant covenanted to repay to the fourth defendant on or before 3rd June 1948 the amount received by him or whatever amount he might withdraw from the cash credit loan account sanctioned by the bank together with interest and other incidental expenses. By the fifth sub-paragraph the first defendant agreed to repay the cash credit loan together with interest and other expenses within the period stipulated or within any other period fixed according to the rules and regulations of the Bank. By the sixth sub-paragraph it was provided that in the event of the first defendant failing to repay the loan with interest within the time stipulated, the fourth defendant will be entitled to recover the same with interest thereon by sale of the property.

3. The loan was sanctioned to be advanced by the fourth defendant to the first defendant on 22nd May 1947, and on 4th June 1947 the first defendant executed the deed of mortgage thereby creating an encumbrance for repayment of Rs. 8,800 and interest on the property described therein in favour of the fourth defendant. It appears that by the 3rd of June 1948 the amount advanced to the first defendant was not repaid and the first defendant submitted an application Exhibit 71 dated 4th May 1948 reciting therein that the period of the loan was expiring on the 4th of June 1948 and praying for extension of the Cash Credit Loan arrangement for a further period of twelve months.

4. On the 4th of June 1948 the amount due at the foot of the Cash Credit Loan Account stood a Rs. 2,552. On that date pursuant to the application Exhibit 71 the Cash Credit arrangement was extended for one year. Between 21st of June and 2nd July the first defendant made various repayments and on the 30th of June 1948 the balance due was Rs. 2-9-0 only. Thereafter the account continued and the first defendant again withdraw large sums of money. On 3rd of June 1949 the balance due stood at Rs. 8,591-13-9. On that date another application Exhibit 72 was submitted by the 1st defendant for extension of the Cash Credit arrangement for one year more and the extension was granted by the fourth defendant. Pursuant to this arrangement, again the first defendant operated upon the account and on the 3rd of June 1950 Rs. 8,894-8-3 remained due at the foot of the account. No further extension was thereafter asked for but the first defendant remained indebted in that account till the year 1952 when proceedings were taken against him before the Registrar of Co-operative Societies and an award under the Bombay Co-operative Societies Act was obtained by the fourth defendant.

By the award the first defendant was directed to pay the amount due at the foot of the account out of the mortgaged property and personally. The fourth defendant then filed Darkhast No. 280 of 1952 in the Court of the Third Joint Civil Judge (Junior Division), Ahmedabad, for execution of the award. It appears that in the meanwhile the first defendant had transferred city survey No. 2281, one of the two properties mortgaged by him to the fourth defendant, under a sale-deed dated 20th October 1949 for Rs. 10,000 to the second defendant. This sale-deed was registered on the 24th of October 1949. The first defendant also agreed to sell both the houses on 23rd January 1950 to the third defendant. The plaintiff, who is a minor son of the first defendant, thereafter filed Civil Suit No. 236 of 1952 in the Court of the Joint Civil Judge, Senior Division, at Ahmedabad for the reliefs which we have set out earlier. The suit was resisted by defendants 2, 3 and 4, but in this appeal we are concerned with the contentions raised by the fourth defendant only.

5. The fourth defendant contended inter alia that the mortgage was binding upon the plaintiff because he was not born on the date of the mortgage that the first defendant on that date being the sole surviving co-parcener and was entitled to deal with the property as absolute owner thereof, that in any event the alienation was binding upon the plaintiff as it was supported by legal necessity of the family, that is, for the business carried on by the first defendant, and that the plaintiff could not resist execution of the award obtained by the fourth defendant and that the plaintiff has no cause of action against the fourth defendant.

6. The learned trial Judge decreed the plaintiff's suit and declared that the plaintiff had 1/3rd share in the suit properties described in paragraphs 16(a) and 16(b) of the plaint and further declared that the award obtained by the fourth defendant against the first defendant was not binding upon the plaintiff's share in the suit property. He also declared that the sale-deed dated the 20th October 1949 in favour of the 2nd defendant was not binding on the plaintiff's share if the plaintiff paid Rs. 1,666-10-8 to the 2nd defendant. The learned trial Judge also granted an injunction restraining the fourth defendant from executing the award against the plaintiff's share in the suit properties, and directed that the plaintiff do recover possession of his one-third share in the suit properties. Against that decree the fourth defendant has appealed to this Court.

7. In holding that the plaintiff was not bound by the mortgage created by the first defendant in favour of the 4th defendant, the learned trial Judge held that the encumbrance created by the mortgage-deed dated 4th June 1947 was only in respect of the advances to be made during the course of one year from that date, and that encumbrance could not be enforced by the bank to recover advances made after the expiry of one year from the date of the mortgage, and that in the absence of a renewal of the account, the bank could not make any fresh advances after 3rd June 1948. He was also inclined to take the view that each agreement for renewal of the cash credit account created a fresh mortgage by 'constructive deposit of title-deeds' and the constructive deposit of title-deeds under Exhibits 71 and 72 after the plaintiff was born, in law amounted to the creation of fresh mortgages in favour of the fourth defendant on the respective dates of those two documents, and consequently on the 4th of June 1948, the 1st defendant must be deemed to have created a fresh mortgage in favour of the Bank for securing re-payment of Rs. 8,526-4-9 and future advances to be made within the course of the next one year subject to the maximum limit under the original mortgage deed and on the 3rd of June 1949 the first defendant must be deemed to have created a fresh mortgage for securing repayment of an antecedent debt of Rs. 8,591-13-9 and for future advances to be made during the course of that year. He then held that the antecedent debt which was outstanding on 4th June 1949 was satisfied by repayments made by the 1st defendant during the course of the year and the entire balance outstanding against the 1st defendant on 3rd June 1950 consisted of items withdrawn during the course of the year and thereafter as the account was not renewed the award obtained by the fourth defendant must be held enforceable against the interest of the first defendant alone in the property mortgaged and not against the interest of the plaintiff.

8. We are unable to agree with the view taken by the learned trial Judge. It is undisputed that on the 4th of June 1947 the plaintiff was not born and the first defendant as the sole surviving co-parcener of the Joint Hindu Family was competent to dispose of the property vested in him even for purposes not supported by legal necessity. On the date a mortgage deed was executed by the first defendant in favour of the 4th defendant in which it was expressly recited that Rs. 8,800 were borrowed by him and as security for repayment thereof, the two houses in suit were mortgaged. Evidently the mortgage-deed was for consideration. It is true that the amount of Rs. 8,800 was not in fact paid immediately to the 1st defendant but was credited to the first defendant in a separate Cash Credit account. It appears from Exhibit 60 which is a statement of account, that on 4th June 1947 Rs. 8,800 were credited to the first defendant's account and Rs. 645 were advanced to the 1st defendant on the date of the execution of the mortgage. But on that account we are unable to hold that the mortgage for the full amount of Rs. 8,800 was not binding upon the first defendant. In substance there was a dual arrangement. For securing repayment of Rs. 8,800 the first defendant on 4th June 1947 mortgaged the properties belonging to him to the 4th defendant and thereafter under another arrangement he left the amount with the 4th defendant to be called for as and when required. This second arrangement was called the Cash Credit Loan Account. The learned trial Judge's observation, that the security created on 4th June 1947 was only in respect of the advances to be made during the course of one year, does not find any support from the covenant contained in the mortgage deed. The deed merely provided that the first defendant shall repay the amount of Rs. 8,800 within one year, and there was no covenant in the deed whereby the security was to enure only in respect of advances made during the course of one year. There is no covenant again in the deed which supports the view of the learned Judge that the 4th defendant could not make any fresh advances after the 3rd of June 1948. It is true that according to Mr. Setalwad, the Manager of the 4th defendant Bank, Cash Credit arrangement was good for one year and after the expiry of one year, the Bank would not have advanced any amount unless the arrangement was renewed but that evidence in our judgment does not justify the inference that the encumbrance created by the mortgaged deed was restricted to amounts advanced during the course of one year or that the Bank was prohibited from making any fresh advances after 3rd June 1948. it is true that before the date of the application Exhibit 71, the plaintiff was born and acquired an interest in the joint family property by his birth; but if the future advances were to be made in consideration of an agreement to make advances to the first defendant as and when required subject to the maximum limit of Rs. 8,800 and the first defendant executed a deed of mortgage at a time when the plaintiff was not in existence, the mortgage in our judgment must be regarded as binding upon the first defendant; and the plaintiff, not being in existence at the date of the mortgage cannot challenge the same. The application Exhibit 71 whereby the Cash Credit Loan arrangement was extended for a period of one year does not in our judgment affected the liability which was undertaken by the deed of mortgage. We are unable to hold that the law recognises a 'constructive deposit of title-deeds' as creating a mortgage. Normally a mortgage of immovable property is effected by an instrument duly executed and registered. Even if an equitable mortgage is intended to be created, there must be a deposit of title-deeds of properties to be mortgaged with intent to mortgage the same as security for repayment of the loan advanced or to be advanced. In the absence of anything to show that the security under the original deed of mortgage created by the Deed Exhibit 70, was extinguished, there is, in our judgment, no support for this theory of a fresh mortgage coming into existence by the application of Exhibit 71 dated 4th June 1948 and of another mortgage by a subsequent application Exhibit 72 on the 4th of June 1949.

9. Even if the mortgage-deed and the Cash Credit account be regarded as parts of the same transaction, in our judgment, the mortgage-deed executed by the first defendant on the 4th of June 1947 must still be regarded as binding upon the plaintiff. The first defendant had by the deed undertaken liability to repay within one year, the loan of Rs. 8,800 advanced to him. That covenant does not warrant the assumption made by the learned trial Judge that on the expiration of the year the mortgage became unenforceable. The extension of the Cash Credit arrangement beyond the period of one year initially contemplated also has not the effect of extinguishing the original encumbrance or substituting it by a fresh encumbrance. It must, in our judgment, be held that the mortgage continued to operate on the properties, renewal of the agreement under which the cash credit arrangement was extended by applications under Exhibit 71 and Exhibit 72 notwithstanding.

10. Section 58 of the Transfer of Property Act which defines a mortgage states:--

'A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt or the performance of an engagement which may give rise to a pecuniary liability.'

From the plaint words of the statute for transfer of an interest in immoveable property to secure repayment of money, there need not be a present advance at the date of the execution of the deed. Even an agreement to advance money in future will support a mortgage. As has been held in Raghunath Bhagat v. Amir Bakhsh, ILR Pat 281: AIR 1922 Pat 299, a mortgage is perfected by registration and unless the bond provides to the contrary it takes effect from the date of registration and not from the date when the consideration money is paid. In that case the consideration money was to be paid in pursuance of an arrangement between the parties after the date of execution of the deed of mortgage. Before receiving the consideration agreed to be paid the mortgagor transferred the property by a sale-deed to a third person and there was a contest between the mortgage & the purchaser. The Patna High Court held that the mortgage document became effective from the date of the execution and the transfer to the third person was subject to the mortgage. In so holding Mr. Justice P. R. Das relied upon the observations made by this Court in Tatia v. Babaji, ILR Bom 176 where Chief Justice Farran observed:--

'I am not, however ...... prepared to assent to the train of thought which puts conveyance of lands perfected by possession and registration, where the consideration expressed in the conveyance to have been paid has not been paid in fact, in the same category as contracts void for want of consideration. The radical distinction between a perfected conveyance and a contract does not seem to me to have been sufficiently borne in mind throughout the judgment.'

When the deed of mortgage was executed for a consideration of Rs. 8,800 which was to be advanced in future, the mortgage became effective and enforceable against the totality of the interest of the joint family of which the first defendant was the sole co-parcener and the birth of the plaintiff subsequently did not affect the enforceability of that mortgage against that interest.

11. Even on the view taken by the learned trial Judge, which, we may observe, we are not prepared to accept his conclusion cannot be accepted. Assuming for the sake of argument that in the month of June 1949 there was, what he calls a 'constructive deposit of title deeds', which ave rise to a new mortgage for a sum of Rs. 8,526-4-9 in favour of the 4th defendant, which the learned trial Judge concedes was an antecedent debt for which the 1st defendant was liable we are unable to appreciate why the 4th defendant is not entitled to enforce that mortgage against the interest of the plaintiff in the joint family property for satisfication of that debt. A Hindu son is under a pious obligation to pay the debts of his father which are not Avyavaharika, and an alienation by a Hindu father for payment of antecedent debts which are not Avyavaharika, is binding upon the sons, who are members of the joint Hindu family with the father. If, on the 4th of June 1949, even assuming the theory, which has been evolved by the learned trial Judge be correct there came into existence a fresh mortgage to secure re-payment of an antecedent debt of Rs. 8,591-13-0, that mortgage, in our judgment, was enforceable against the interest of the joint family in the property mortgaged and the circumstance that the mortgage amount was credited into an account operated upon by the first defendant, and payments were made in that account and withdrawals were made from that account did not, affect the enforceability of the mortgage for the amount due at the foot of the account. We are, therefore, of the view that even on the view which appealed to the learned trial Judge his conclusion cannot be supported.

12. The plaintiff had attempted to make out a case that the debts incurred by the first defendant were tainted with immorality. The learned trial Judge negatived that contention and no arguments have been advanced before us in support of that contention. On the view taken by us the decree passed by the trial Court against the fourth defendant must be set aside. The 2nd defendant against whom a decree has been passed by the trial Court has not appealed to this Court and we are unable to alter that decree.

13. On the view taken by us the second sentence of the decretal order will be deleted and will be substituted by the following order:--

'It is further declared that the award decree obtained by the 4th defendant against the 1st defendant under the Co-operative Societies Act is binding upon the plaintiff's one-third share in the suit properties.'

The last sentence in the first paragraph of the decretal order will also be deleted. The second paragraph of the decretal order will be modified by adding after the words 'it is ordered' the words 'subject to the directions contained in paragraph (1) of the decretal order'. The order regarding the costs passed by the learned trial Judge will be deleted. The plaintiff's suit against the 4th defendant will be dismissed with costs payable to the 4th defendant will be entitled to its costs in this appeal from the plaintiffs.

14. Order accordingly.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //