P.S. Narayana, J.
1. Facts in brief: The unsuccessful plaintiff in O.S. No. 36/88 on the file of II-Additional District Judge, East Godavari District, Rajahmundry is the appellant. The defendants therein are the respondents in this appeal.
The suit was originally instituted as O.S. No. 158/84 on the file of Sub-Court, Rajahmundry and the same was transferred and re-numbered as O.S. No. 36/88 on the file of II-Additional District Judge, East Godavari District, Rajahmundry. The appellant-plaintiff died during the pendency of the appeal and appellant No. 2 was brought on record as the legal representative of the sole appellant by order dt.3-11-2003 in C.M.P. No. 26023/2003. The appellant-plaintiff filed the suit against the respondents-defendants for recovery of Rs. 1,98,215-25 ps., with subsequent interest on the strength of equitable mortgage. The borrowing of the amounts on the strength of promissory note and also creation of the mortgage by deposit of title deeds had been pleaded by appellant - plaintiff. Incidentally, the stand was taken that 1st respondent - 1st defendant borrowed the amount for the purpose and on behalf of the joint family for family business. The 1st respondent - 1st defendant had taken a stand that he borrowed those amounts in individual capacity and also further had taken a stand that the plaintiff just requested the 1st defendant to produce the solvency and thus the title deeds were produced and never there was any intention to create mortgage by deposit of title deeds and further stand had been taken that even otherwise the 1st defendant would be entitled to only 1/6th share in the plaint schedule property. In the light of the respective stands taken by the parties, the learned II-Additional District Judge, East Godavari District, Rajahmundry having settled the issues, recorded the evidence of P.W.1, P.W.2, P.W.3 and also D.W.1, marked Ex.A-1 to Ex.A-18 and Ex.B-1 to Ex.B-15 and came to the conclusion that the appellant - plaintiff miserably failed in proving the mortgage by deposit of title deeds and ultimately dismissed the suit directing the parties to bear their own costs. Aggrieved by the same, the unsuccessful plaintiff preferred the present appeal and since the plaintiff died, at present the legal representative-2nd appellant is prosecuting the appeal.
Pleadings of the parties:
2. Averments made in the plaint: The plaintiff made the following averments in the plaint:
The first defendant is the father and 2 and 3 defendants are his sons. Defendants 1 to 3 constitute an undivided Hindu Joint Family. The defendants' family is a business family since the time of their forefathers. The first defendant is the joint family manager and 2 and 3 defendants are the male members in the family. The first defendant for the purpose of the business that he was carrying on borrowed the following amounts from the plaintiff:
4-11-1970 - Rs. 15,000/-3-02-1971 - Rs. 5,000/-21-2-1971 - Rs. 5,000/-The said borrowing is made for the purpose of convenience family business that the first defendant was carrying on by then, by himself and also on behalf of the joint family. Hence, 2 and 3 defendants who are his undivided sons and for whose benefit also the joint family business is being run are also added as parties to the suit. After the borrowing is made, the first defendant deposited the title deeds relating to the properties belonging to the joint family with the plaintiff at Rajahmundry and later executed a memorandum also evidencing the deposit of title deeds. Thus, it is submitted that the defendants have created by way of an equitable mortgage on the suit hypotheca on the debts borrowed by the first defendant under the three promissory notes.
The defendants, thus created an equitable mortgage in favour of the plaintiff in respect of the schedule property. The registration extract of the title deed is filed along with this suit and the original title deed has been filed in E.P. No. 41/78 in O.S. No. 123/75 on the file of this Court wherein the plaintiff has claimed the priority for her debt under this mortgage over the Decree Holders debt in the said suit and in that connection along with the affidavit, the original title deed has been deposited. That is now in the High Court, as the self-same defendant went to the High Court in appeal. The defendant lost the appeal and the record is not yet received by this Court. As soon as it is received, the original title deed will be filed in the suit.
The first defendant paid the following amounts on the promissory notes:
(a) Under the promissory note dt.4-11-1970, an amount of Rs. 2,000/- is paid on 8-1-73. Further payment of Rs. 1,000/- is made on 30-4-73 and another amount of Rs. 1,000/- is paid on 26-9-75 and the three payments are endorsed on the back of the promissory note dt.4-11-1970.
(b) Under the promissory note dt.3-2-71 an amount of Rs. 200/- is paid on 1 -2-74 by the first defendant and the said fact has been endorsed on the back of the promissory note dt.3-2-71.
(c) Under the promissory note dt.21-2-71 an amount of Rs. 150/- is paid on 1-2-74 and another amount of Rs. 2,000/- is paid on 6-9-75 and both the payments are endorsed on the back of the promissory note dt.21-2-71.
The amounts due under the promissory notes remained unpaid in spite of repeated demands by the plaintiff and her men. The plaintiff got issued a registered notice through her lawyer to the first defendant calling upon him to pay the amounts due under the mortgage on 16-4-75 and the said notice is returned stating that he has left without instructions. Then, plaintiff got issued another notice on 21-4-79 calling upon the defendants to pay the amounts due under the mortgage. The defendants received the notice and kept quiet. The plaintiff got issued a telegraphic notice demanding the debt in May, 1984 for which there is no reply. Inspite of all this, the amounts due under the mortgage remained unpaid. The respondents are not entitled to the benefit of Act IV of 1938 or Act 7 of 1977.
The rate of interest stipulated in the three promissory notes is Rs. 1.50 ps., per cent per mensem compound with yearly rests. The debt is a commercial transaction and the first defendant being the joint family manager has borrowed the amounts under the three promissory notes for the purpose of joint family business that he was carrying on. Hence, the plaintiff has a right to claim interest at the contract rate of Rs. 1.50 per cent per mensem compound with yearly rests and interest is claimed as such. Particulars of mortgage:(a) Name of the mortgage : Plaintiff(b) Name of the mortgagors : Defendants(c) Sum secured : Rs. 25,000/-with interest at 18% compoundwith yearly rests, subsequent interestat the same rate and costs.(d) Rate of interest : 18% compound with yearly rests.(e) Mortgage Hypotheca : plaint schedule property(f) Mode of payment : on demand(g) Amountdue : Rs. 1,98,215-25ps.(h) Date of deposit oftitle deeds : Prior to 24-2-1971.
3. Averments made in the written statement filed by the defendants: It was pleaded in the written statement as hereunder:
The 1st defendant submits that he carried on business in individual capacity and for his benefit and for the said purpose, the 1st defendant borrowed Rs. 15,000/- on 4-11-1970; Rs. 5,000/- on 3-2-71 and Rs. 5,000/- on 21-2-71 and the business carried on by him does not belong to the joint family nor the business is for the benefit of joint family. The borrowings were made by the 1st defendant in his individual capacity but not as Manager of the joint family of defendants and therefore the several allegations made contra in para 4 of the plaint are not true and correct and the plaintiff is put to strict proof of the same.
Defendants 2 and 3 are not the executants of the suit promissory notes and they were not executed by the 1st defendant either as Manager of the joint family or on behalf of the defendants 2 and 3. Consequently, the suit debts are not binding on defendants 2 and 3. Therefore the defendants 2 and 3 are not proper and necessary parties to the suit as falsely averred in para 4 of the plaint.
The first defendant submits that when he approached the plaintiff for a loan, the plaintiff requested the 1st defendant to produce his solvency and thereupon the 1st defendant produced the title deeds during the last week of October, 1970 and thus the 1st defendant delivered the title deeds to the plaintiff for the purpose of ascertaining the solvency of the 1st defendant.
At that time, the plaintiff asked the 1st defendant whether there were any encumbrances on the share of his property i.e., his share in the plaint schedule property. Then the plaintiff asked the 1st defendant to sign on a blank paper to enable her to obtain encumbrance certificate from the sub-registrar's office or verify the same from the Sub-Registrar's Office. Thus the 1st defendant delivered the title deeds and signed blank paper without any writing thereon during the last week of October, 1970.
The 1st defendant submits that the plaint schedule property is the self-acquired property of 1st defendant's father. The 1st defendant's mother Ramachandra Bai Jawar is alive, she is entitled to half-share in the plaint schedule property under the Hindu Succession Act, 1956. The remaining half-share of the plaint schedule property constitutes the joint family property of defendants 1 to 3 in which the 1st defendant entitled only 1/3rd share under Hindu Law. Thus, the 1st defendant has got only 1/6th share in the plaint schedule property and he has no right, title or interest on the remaining 5/6th share and he cannot validly create and encumbrance or transfer the interest of his mother and sons under law and consequently plaintiff is not entitled to proceed against 5/6th share in the plaint schedule property under law.
This defendant submits that as stated supra that he has not deposited the title deeds with intention to create an equitable mortgage nor executed the memorandum of deposit of title deeds on 24-2-71 as falsely alleged. The 1st defendant submits that as stated supra he delivered only signed blank paper without date during the last week of October, 1970 and therefore there is no valid equitable mortgage by deposit of title deeds as falsely contended in para 4 of the plaint. Therefore the allegation in para 4 of the plaint that 'after the borrowing is made, the 1st defendant deposited the title deeds relating to the properties of joint family with the plaintiff at Rajahmundry and later executed a memorandum also evidencing the deposit of title deeds, is not true and correct and plaintiff is put to strict proof of the same.
In the light of the above facts, the 1st defendant submits that there is no valid equitable mortgage in favour of the plaintiff and consequently the allegation in para 5 of the plaint that 'the defendants thus created an equitable mortgage in favour of the plaintiff in respect of the schedule property' is false and incorrect and the plaintiff is put to strict proof of the same.
In the light of the above fact the 1st defendant submits that there is no valid equitable mortgage in favour of plaintiff and consequently the allegation in para 5 of the plaint that 'the defendant thus created an equitable mortgage in favour of the plaintiff in respect of the schedule property' is false and incorrect and the plaintiff is put to strict proof of the same. Therefore there is no equitable mortgage in the eye of law and plaintiff cannot enforce the same under law.
Allegations in para 5 of the plaint are absolutely incorrect and the plaintiff is put to strict proof of the several allegations made in para 5 of the plaint and they are hereby denied.
Averments made in para 6 are true.
Averments made in para 7 of the plaint are not true and correct. The allegation that the 1st defendant did not receive the notice dated 16-4-75 and the said notice is returned stating that he left without instructions is not his and that the endorsements must have been manipulated by the plaintiff. It is true that the 1st defendant received the notice dt.21-4-79 and the Telegraphic notice in May, 1984. As the debts are barred by time, the 1st defendant thought that it is unnecessary to send any reply and hence did not send any reply.
Defendants are agriculturists and they are entitled to the benefit of Act 4 of 1938 and the allegations made contra in para 7 of the plaint are untrue and incorrect. The defendants own lands in Jodhpur District, Rajasthan and therefore defendants are entitled to the benefits of Act 4 of 1938.
Allegations made in para 8 of the plaint are not true and correct and the plaintiff is put to strict proof of the same. The rate of interest claimed at 18% p.a. with yearly rests is usurious, penal and excessive and in any view of the matter, it has to be scaled down either under the provisions of Act 4 of 1938 or Usurious Loans Act.
Though the borrowing is for the purpose of business of the 1st defendant and as the business ended in loss, it cannot be said that the 1st defendant borrowed as Manager under the 3 promissory notes for the purpose of joint family business as falsely contended in para 8 of the plaint and therefore plaintiff is not entitled to claim compound interest at 18% p.a. with yearly rests. The plaintiff is not entitled to claim subsequent interest at 18% p.a., with yearly rests as claimed in para 9 (c) of the plaint.
Plaintiff has no cause of action to file the suit and the cause of action alleged in para 10 of the plaint is not true and correct and the suit is not maintainable and the plaintiff is put to strict proof of the same.
The calculation made in para 11 of the plaint is not true and correct. The payments made are open payments and the said payments shall be adjusted towards principal and the appropriation made in para 11 of the plaint is incorrect and consequently the plaintiff is not entitled to appropriate the payments towards interest.
The suit is barred by time.
The acknowledgements of payments made by the 1st defendant on the reverse of the promissory notes do not extend time and the suit filed beyond the time are barred by limitation.
Further there is no conscious acknowledgement of mortgage but the acknowledgements are only on the promissory notes and as the suit is not within 12 years from the date of alleged deposit, even if it were true and the acknowledgement made on the reverse of the promissory notes without any endorsements on the memorandum which was alleged to have been executed by the 1st defendant does not save limitation. Hence, the suit is not in time.
In any view of the matter, plaintiff cannot enforce the mortgage over and above 1/6th share of the 1st defendant over the plaint schedule property.
4. Averments made in the Additional written statement filed by the defendants:
It was pleaded in the additional written statement that without prejudice to the rights and other contentions raised in the original written statement on the principle of 'dandput', plaintiff is not entitled to recover interest over and above the principal sum of Rs. 25,000/-and consequently the rest of the suit claim has to be dismissed with costs.
5. Averments made in the rejoinder filed by the plaintiff: It was averred in the rejoinder filed by the plaintiff as hereunder:
The stand taken by the defendants in the additional written statement is misconceived and mis-reading of the Judgment in question of the Supreme Court reported in : 3SCR689 . The rule of Dandupat is not applicable to the facts of this case. The debt in question in this case is purely for the purpose of business carrying on by the defendants. The rule of Dandupat is primarily applicable to agricultural debts and agricultural borrowings. Rule of Dandupat originally amended after Act IV of 1938 for giving relief to indebted agriculturists. Therefore the plaintiff respectfully submits that trying to apply the rule of Dandupat to this debt in question is absolutely misconceived and only a misreading of the Judgment in question reported in : 3SCR689 . For these reasons the Hon'ble Court need not take into consideration the averments in the written statement and the suit is liable to be decreed with costs as prayed for in the plaint.
6. It is needless to say that the said rejoinder was filed in the light of the plea taken on rule of 'Dandupat'.
7. Issues and Additional Issues settled by the trial Court:
(1) Whether the borrowings made by the 1St defendant are for the benefit of the joint family and binds D-2 and D-3 or were they made in the individual capacity of the 1st defendant?
(2) Whether there is valid equitable mortgage by deposit of title deeds as pleaded by the plaintiff? If so, to what extent9
(3) Whether the defendants are agriculturists, entitled to the benefits of Act IV of 1938?
(4) Whether the interest claimed is usurious, penal and excessive, if so, is it not liable to be scaled down under the provisions of the Usurious Loans Act?
(5) Whether the appropriation pleaded in the plaint is true, valid in law?
(6) Whether there is valid acknowledgement of debt as pleaded in the plaint, if so, whether the suit is not in time?
(7) Whether the suit is barred by time?
(8) Whether the defendants 2 and 3 are proper and necessary parties to the suit?
(9) To what relief? Additional Issue:Whether the principle of 'Dandupat' applies to the facts of the case? If so, whether plaintiff is not entitled to the suit amount?
8. Oral and documentary evidence available on record:
Witnesses examined on behalf of plaintiff:P.W. 1 : Yalamarthi JayalakshmiP.W. 2 : Mylavarapu NarasimhamurthyP.W. 3 : Y. Balakrishna RaoWitnesses examined on behalf of defendants:D.W. 1 : Devilal Janwar (1st defendant)Documents marked on behalf of plaintiff:Ex.A-1 dt.4-11-70 : Promissory note for Rs. 15,000/- executed by D.1 infavour of the plaintiff with endorsements.Ex.A-2, 8-1-73 : Endorsement on Ex.A-1 for Rs. 2,000/- by D.1.Ex.A-3, 30-4-73 : Endorsement on Ex.A-1 for Rs. 2,000/- by D.1.Ex.A-4, 26-9-75 : Endorsement on Ex.A-1 for Rs. 1,000/- by D1.Ex.A-5 21-2-71 : Promissory note for Rs. 5,000/- executedby D.1 in favour of plaintiff.Ex.A-6, 1-2-74 : Endorsement on Ex.A-5 for Rs. 150/- by D1.Ex.A-7, 6-9-75 : Endorsement on Ex.A-5 for Rs. 2,000/- by D.1.Ex.A-8, 3-2-71 : Promissory note for Rs. 5,000/- executed by D.1 infavour of the plaintiff.Ex.A-9, 1 -2-74 : Endorsement on Ex.A-3 for Rs. 200/- by D1.Ex.A-10, 20-1-40 : Registered sale deed for Rs. 11,400/- executed byK. Mahanthi and others in favour of Sait Brijlal(father of D.1)Ex.A-11, 21-4-79 : Copy of the registered notice issued on behalf ofthe plaintiff to D.1.Ex.A-12, 21-4-79 : Postal Registered Cover and acknowledgementaddressed to D.1. (Returned cover)Ex.A-13, 16-4-75 : Office copy of the registered notice issued on behalfof the plaintiff to D.1.Ex.A-14, 24-4-79 : Postal acknowledgement of the D.1.Ex.A-15, 24-4-85 : Certified copy of the Telegram notice issued byplaintiff to D.1.Ex.A-16 : Receipt for issuing telegram notice.Ex.A-17, 24-2-71 : Memorandum of title deeds deposited by the1st defendant in favour of the plaintiff.Ex.A-18, 24-10-83 : Copy of the order of the High Court in C.R.P.No. 3880/80 against the order in E.A. No. 155/79in E.P. No. 41/78 in O.S. No. 123/75 on the fileof Sub-Court, Rajahmundry.Documents marked on behalf of the defendants: Ex.B-1, 25-7-64 : Death extract of B. Dhamvar issued by theRajahmundry Municipality.Ex.B-2, 4-1 -85 : Income Tax assessment notice.Ex.B-3, 27-7-77 : Assessment order for the year 1976-77 issuedby the Income Tax Officer, Rajahmundry.Ex.B-4,18-8-82 : Income Tax assessment order for the year 1980-83issued by the I.T.O. to D.1.Ex.B-5, 27-10-84 : Photostat copy of the letter issued by theIncome Tax Officer, Rajahmundry to D.1.Ex.B-6, 1-8-63 : Receipt for Rs. 313.45 ps., being advance paymentof tax by D.1.Ex.B-7, 6-12-83 : Receipt for Rs. 313.45 ps. being advancementpayment of tax by D.1.Ex.B-8, 16-4-88 : Receipt for Rs. 100/- issued by the Deputy CommercialTax officer, Rajahmundry, to M/s. Lakshminaraya & Co.,Rajahmundry.Ex.B-9, 7-7-87 : Receipt for Rs. 680/- issued by the Deputy CommercialTax officer, Rajahmundry, to M/s. Lakshminaraya & Co.,Rajahmundry.Ex.B-10, 30-9-83 : Income Tax assessment order for the year 1981-82 forthe Income Tax assessee Smt. Ramachandrabai,Proprietor M/s. Balaji Trading Co.Ex.B-11, 27-3-78 : Certified copy of E.P. No. 41/78 in O.S. No. 123/75on the file of Sub-Court, Rajahmundry.Ex.B-12 : Ryotwari Pass Book in the name of d.1.Ex.B-13 : True translation of the pass book of Ex.B-12.Ex.B-14, 15-11-90: Tax receipt issued for the land in favour ofDevilal.Ex.B-15, 15-11-90: True translation of the tax receipt Ex.A-14.
9. Findings recorded by the trial Court:
While answering issue No. 2, the evidence of P.W.1 and D.W.1 and also the documents Ex.A-1, Ex.A-2, Ex.A-3, Ex.A-4, Ex.A-5, Ex.A-6, Ex.A-7, Ex.A-8, Ex.A-10, Ex.A-11, Ex.A-12, Ex.A-15, Ex.A-16, Ex.A-17, the evidence of D.W.1 and further the evidence of P.W.2 and P.W.3 had been appreciated and reasons in detail had been recorded at paras 8 to 14 and ultimately came to the conclusion that the plaintiff miserably failed to establish that the 1st defendant deposited his title deeds - Ex.A-10 with an intention to create equitable mortgage. The learned II-Additional District Judge, East Godavari District, at Rajahmundry while answering issues 1 and 2 recorded certain reasons at paras 15 and 16 and came to the conclusion that it cannot be said that the 1st defendant was carrying on business individually and not on behalf of joint family and as the defendants 2 and 3 were also members of joint family consisting of themselves and their father (the 1st defendant) by the date of suit debts, they are also liable to pay the suit debts and they are also necessary and proper parties to the suit. While answering issue No. 3 at para 17, the trial Court held that the defendants are not entitled to the benefits of Act IV of 1938. While answering issue No. 4 at paras 18, 19 and 20 the trial Court held that this issue to be answered in favour of the plaintiff and against the defendants. While answering issue No. 5 reasons had been recorded at paras 21 and 22 and came to the conclusion that in view of the absence of understanding, the contention of the 1St defendant that the appropriation of payments should be adjusted towards principal cannot be accepted. While answering issues 6 and 7 reasons had been recorded at paras 23 and 24 and ultimately the suit was dismissed.
10. Contentions advanced by Sri S. Srinivas Reddy: Sri S. Srinivas Reddy, the learned Counsel representing the appellant would maintain that the decisions which had been cited before the trial Court had not been appreciated in proper perspective. The learned Counsel also would maintain that even according to D.W.1, the title deeds were deposited and hence the mere non-mentioning of the date of deposit may not be relevant in the facts and circumstances of the case. The learned Counsel also would maintain that the trial Court totally erred in placing a needless emphasis on the date of deposit of title deeds which is not at all relevant in view of the admission made by D.W.1 relating to the deposit of title deeds. The Counsel also had taken this Court through the evidence of P.W.2 and P.W.3 in elaboration and would maintain that the mere fact that P.W.1 could not give certain details may not seriously alter the situation in the light of the stand taken in the written statement and also the evidence of D.W.1 coupled with the evidence of P.W.1, P.W.2 and P.W.3 as well. The Counsel also would maintain that the finding of the trial Court that plaintiff miserably failed to establish that the 1st defendant deposited his title deeds with an intention to create an equitable mortgage by way of security for the promissory note debts cannot be a sustainable finding since voluminous oral and documentary evidence is available on record. Further, the learned Counsel would maintain that the trial Court also erred in coming to the conclusion that the payments under Ex.A-2 to Ex.A-4, Ex.A-6, Ex.A-7 and Ex.A-9 do not save limitation. The Counsel also would maintain that the trial Court totally erred in coming to the conclusion that the suit is barred by limitation. The learned Counsel pointed out to the relevant findings recorded by the trial Court and would comment that in the facts and circumstances of the case especially in the light of the clear evidence of P.W.2 and also the further evidence of P.W.3, since the creation of deposit of mortgage by title deeds had been clearly established, the suit should have been decreed as prayed for instead of dismissing the same. The learned Counsel also placed strong reliance on several decisions.
11. Contentions of Sri T.S. Anand: Sri T.S. Anand, the learned Counsel representing the respondents-defendants would maintain that in the light of the facts and circumstances and also the evidence available on record, the findings recorded by the trial Court cannot be found fault. The learned Counsel also explained the ingredients to be satisfied in case of the creation of mortgage by deposit of title deeds and would maintain that none of the ingredients had been satisfied in the present case. The Counsel also would maintain that in the facts and circumstances of the case, the mortgage by deposit of title deeds would require registration and hence the same is inadmissible in evidence for want of registration. Even otherwise, the learned Counsel would maintain that the burden is on the plaintiff to establish the same and when the plaintiff as P.W.1 was unable to depose relating to the details or particulars of this alleged mortgage, it cannot be said that just by virtue of the other evidence available on record, the evidence of P.W.2 and P.W.3, it can be held that the said mortgage by deposit of title deeds had been duly proved. The learned Counsel also while further elaborating his submissions had taken this Court through the respective pleadings of the parties, the evidence available on record and would maintain that in the facts and circumstances of the case, since the trial Court recorded the findings on appreciation of oral and documentary evidence on record in proper perspective, the appeal being devoid of merit, the same is liable to be dismissed. The Counsel also placed strong reliance on certain decisions to substantiate his submissions.
12. In the light of the submissions made by the Counsel on record, the following points arise for consideration in this appeal:
(1) Whether the findings recorded by the trial Court relating to the creation of mortgage by deposit of title deeds to be confirmed or to be disturbed in the facts and circumstances of the case?
(2) Whether the findings recorded by the trial Court relating to the borrowing for the benefit of the joint family to be confirmed or to be disturbed in the facts and circumstances of the case?
(3) Whether the other findings recorded on the issues and the additional issue formulated by the trial Court to be confirmed or to be disturbed in the facts and circumstances of the case?
(4) To what relief the parties would be entitled to?
13. Points 1 to 3: For the purpose of convenience these points be discussed together. Further the parties hereinafter would be referred to as plaintiff and defendants as shown in O.S. No. 36/88 on the file of II-Additional District Judge, East Godavari District at Rajahmundry.
14. The respective pleadings of the parties and the evidence available on record and the findings recorded by the trial Court in brief already had been referred to above. Though elaborate submissions had been made by the Counsel on record on several aspects and several findings recorded by the trial Court, the principal question which had been argued is relating to the findings recorded by the trial Court regarding the creation of mortgage by deposit of title deeds. Mortgage by deposit of title deeds defined under Section 58(f) of the Transfer of Property Act specifies as hereunder:
Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and Bombay, and in any other town which the State Government concerned may, by notification in the official Gazette, specify in his behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds.
15. P.W.1 - the plaintiff deposed that defendants 2 and 3 are the sons of the 1st defendant and the 1st defendant borrowed sums on three different promotes for Rs. 15,000/-, Rs. 5,000/- and Rs. 5,000/-respectively about 20 years ago agreeing to repay the same with compound interest at 18% per annum and now she has to recover about a sum nearly Rs. 2,00,000/-. This witness also deposed that the 1st defendant borrowed money from her about 20 years ago. On 4-11-1970 the 1st defendant borrowed a sum of Rs. 15,000/- agreeing to repay the same with compound interest at 18% p.a. with yearly rests and executed Ex.A-1. He borrowed the said sum for the purpose of cloth business and the cloth business was run by D.1 and his sons and his father Brij Lal. The pronote is Ex.A-1. Under Ex.A-1 - pronote, three payments were made on 8-1-73, 30-4-73 and 26-9-75 at Rs. 2,000/-, Rs. 1,000/- and Rs. 1,000/-respectively. Those payments were endorsed on the back of Ex.A-1 - pronote and D.1 signed under each endorsement. These endorsements are Ex.A-2 to Ex.A-4. The scribe of Ex.A-1 - pronote and Ex.A-2 to Ex.A-4 - endorsements is one Mylavarapu Narasimhamurthy. The 1st defendant again borrowed a sum of Rs. 5,000/- on 21-2-71 with the above stipulations as in Ex.A-1 and executed Ex.A-5 - pronote. This amount was also borrowed for the cloth business. On 1-2-74 D-1 paid Rs. 150/- and on 6-9-75 Rs. 2,000/- and made endorsements on Ex.A-5. D.1 signed on the endorsements and they are Ex.A-6 and Ex.A-7. Ex.A-5 -pronote and Ex.A-6 and Ex.A-7 -endorsements were scribed by Mylavarapu Narasimhamurthy. When the amount was lent under Ex.A-1 - pronote, one Boda Suryaprakasarao and the scribe Mylavarapu Narasimhamurthy were present and signed as witnesses. When Ex.A-5 - pronote was executed and money was taken, one Yalamarthy Satyanarayamurty and Madduri Satyanarayana were present and they signed as witnesses. On 3-2-71 the 1st defendant borrowed another sum of Rs. 5,000/- and executed a pronote of even date with the same stipulations as in the previous pronotes. This pronote is Ex.A-8. The attestors for this pronote are Yalamarthy Satyanarayanam and Madduri Satyanarayana. The same scribe who scribed Ex.A-1 to Ex.A-7 also scribed this Ex.A-8 -pronote. On 1-2-74 the 1st defendant made payment of Rs. 200/- and endorsed on the back of Ex.A-8. This payment endorsement is Ex.A-9. The scribe is same Mylavarapu Narasimhamurthy. D.1 subscribed his signature underneath the endorsement. This amount was also borrowed for the purpose of cloth business. As far as these aspects are concerned, there appears to be no serious controversy between the parties relating to the execution of the promissory notes and the payments made by virtue of the endorsements. P.W.1 also further deposed that as a security for the amounts borrowed by him, D.1 gave her a registered sale deed - Ex.A-10, dt.20-1-1940 executed in favour of D.1's father Brij Lal. This witness also deposed that subsequently what happened, she does not remember. This witness also deposed that it is false to state that they obtained signatures on white papers. She also deposed that her husband attended to all those transactions and she does not remember the details. She filed Ex.A-10 title deed into Court in pursuance of notice issued to her by Kancherla Mohanarao in a suit filed by them against D.1 for recovery of some debt. This witness also deposed that D-1 was also indebted to one Jupudi Venkateswara Rao to a tune of Rs. 2,00,000/- and also indebted to a tune of Rs. 2,00,000/- to one Kancherla Mohanarao. P.W.1 also learnt that D-1 was indebted to a tune of Rs. 10,00,000/- to others. This witness also deposed that it is not correct to state that the cloth business is an exclusive business of D-1, but it is a family business. This witness also further deposed about the office copy of the notice -Ex.A-11, the return cover - Ex.A-12, further yet another office copy of notice - Ex.A-13, acknowledgement - Ex.A-14, a telegraphic notice issued to D-1 and the certified copy of the same is Ex.A-15 and the receipt of Ex.A-15 is Ex.A-16. Ex.A-17 is the memorandum of title deeds deposited by the 1st defendant in favour of plaintiff, dt.24-2-71, Ex.A-8 is the copy of the order of the High Court in C.R.P. No. 3880/80 against the order in E.A. No. 155/79 in E.P. No. 41/78 in O.S. No. 123/75. It is needless to say that elaborate submissions were made in relation to Ex.A-10 in general and Ex.A-17 in particular. Ex.A-10 being the registered sale deed dt.20-1-1940 and Ex.A-17 being the memorandum of title deeds said to have been deposited by the 1st defendant in favour of the plaintiff. In cross-examination, this witness deposed that she did not go through Ex.A-1, Ex.A-5 and Ex.A-8 before filing the suit. Firstly the 1st defendant - Devilal approached her husband's elder brother and her father-in-law for advancement of money, but she does not personally aware of D-1 approaching them for money. This witness also deposed that it is not true to say that D-1 had delivered the title deed to her husband's elder brother and father-in-law in that connection. He delivered the title deeds after execution of a pronote for Rs. 15,000/- i.e., Ex.A-1. The title deeds were delivered to her father-in-law and her husband's elder brother and also to her husband. She knows the defendant delivering the title deeds on the same day when they were delivered. Her husband, his elder brother and her father-in-law gave instructions to her Advocate to prepare the plaint. She had not given instructions to her Advocate. This witness also deposed that her husband died in 1977. D-1's father came down to Rajahmundry about 40 years ago. She knows the plaint schedule property but she cannot give the boundaries. She can give the location. Several questions were posed in relation to the promissory notes, the nature of the family and the jointness of the family of the defendants and this witness deposed in detail relating to all the documents relied upon by her. In cross-examination, no doubt, this witness deposed that she had no documentary proof to show that D-1, his father and D-1's sons are doing business jointly. Her husband had attended to the suit transaction, but she cannot give any reason for not mentioning this fact of her husband attending the suit transaction on her behalf either in the plaint or in the registered notice. This witness also deposed that she does not admit the suggestion that D-2 -Lakshminarayana, the eldest son of D-1 -Devilal is having his own individual business and he is an Income Tax Assessee and so also the 3rd defendant - Gopal, the 2nd son of D-1 is having his own Shares business at Hyderabad. This witness also deposed that the memorandum was executed 10 days after the execution of pronote. This execution of memorandum was after the execution of 3rd pronote. This witness in the first instant said that the memorandum was executed after the execution of pronote for Rs. 15,000/- (Ex.A-1) and immediately corrected herself and deposed that the memorandum was executed after the 3rd pronote. She also deposed that she can identify the memorandum if the document is shown to her. She does not remember the contents of the memorandum as 20 years had elapsed. She is not aware of the memorandum transaction and its contents. It is not true to say that because this memorandum is fabricated subsequently she is not aware of the memorandum and its contents. Her husband's elder brother and her husband's younger brother and one Mylavarapu Narasimha Murthy attended to this memorandum transaction. This witness also deposed that it is true that Ex.A-17 -memorandum does not contain any endorsement with regard to any of the defendants acknowledging the debt and promising to pay at future date. As the defendants have been promising her to pay and as her children are too young, she could not file the suit within 12 years. The specific question put to this witness also had been answered. This witness also deposed that Ex.A-17 memorandum was drafted in the morning time but she does not remember the exact time. Ex.A-17 was also attested then. Yalamarthi Satyanandam, Maddula Satyanarayana and Boda Suryaprakasarao and Mylavarapu Narasimhamurthy attested it. Her husband read over the contents of Ex.A-17 but she does not remember them. She does not remember if any documents were referred to while drafting Ex.A-17 -memorandum. First a draft was prepared for Ex.A-17. She does not remember if any adhesive stamps were affixed on Ex.A-17 -memorandum. This witness also deposed that she does not remember whether Ex.A-17 - memorandum has been fabricated on a paper containing the signature of D-1. At the request of the counsel for plaintiff, the demeanor of the witness and health condition of the witness also had been noted.
16. P.W.2 - Mylavarapu Narasimha Murthy deposed in detail relating to all the transactions and also specifically deposed about the memorandum - Ex.A-17 which was marked subject to objection. This witness explained relating to the memorandum in detail. In the cross-examination, this witness deposed that he worked for about 50 years as Advocate's clerk. He cannot give the date, day, month, year or time of execution of Ex.A-17. No rough draft was prepared. Some title deeds were referred to while drafting Ex.A-17, but he cannot say how many documents were looked into. He also remember the presence of P.W.1's father-in-law Sriramamurthy, P.W.1's husband and her husband's brother Balakrishna at the time of Ex.A-17. The language used in Ex.A-17 is that of P.W.2. no doubt, this witness denied certain suggestions. This witness also deposed that the title deed - Ex.A-10 was given to him soonafter Ex.A-1 - pronote was executed. It was in the year 1971 of 1972. He cannot give the exact date or day. As he did not feel it necessary to write the date of deposit of title deed Ex.A-10, he did not mention it in Ex.A-17 specifically. No doubt, this witness denied his interestedness in the family of the plaintiff and this witness also deposed that he is the scribe of all the payment endorsements made on the reverse of Ex.A-1, Ex.A-5 and Ex.A-8 i.e., Ex.A-2 to Ex.A-4, Ex.A-6, Ex.A-7 and Ex.A-9.
17. P.W.3 is the elder brother of the husband of P.W.1. This witness also deposed several facts relating to the transaction in question inclusive of Ex.A-17. This witness deposed that the husband of the plaintiff and D-1 were close friends. This witness also deposed that P.W.2 used to work as Pleader's Clerk. This witness also deposed that the family of P.W.2 is acquainted to them since last 40 years. It is a fact that by the date of Ex.A-1 - pronote, D-1's father Brijlal was no more. It s true that by the date of Ex.A-1 - pronote transaction, D2 and D3 were minors. He does not remember the exact day, date, month or year of executing the memorandum with regard to the deposit of the title deeds, but it was executed two or three days after the payments were made. The memorandum was executed after completion of the payment of Rs. 25,000/-. The date of delivery of title deeds is not mentioned in Ex.A-17 -memorandum. He cannot say whether this Ex.A-17 memorandum was executed in the morning time or in the afternoon or in the night. The title deeds pertain to their residential house but he cannot give the year of the title deeds. He remembers that the property was purchased by Brijlal in a Court auction. This witness also deposed that he cannot say with whose pen the 1st defendant signed in memorandum. This question was put this witness without showing the document. He cannot now say whether the 1st defendant has put the day, date, month or year underneath his signature. No draft for the memorandum was prepared in the first instance. He had not attested in memorandum as attestors. He does not know whether anybody attested the memorandum. Unless he peruses the memorandum, he cannot give out the details. He cannot say whether the plaintiff is willing to produce her income tax accounts in this regard to show about the suit transaction. Several of the suggestions put to this witness had been denied.
18. As against this evidence, the evidence of D.W.1 is available, who deposed in detail relating to delivery of title deeds to plaintiff only to ascertain the solvency. The title deed is Ex.A-10. This witness explained relating to the monetary transactions and also the other proceedings. This witness also deposed relating to Ex.B-1 to Ex.B-15. Several questions were put to this witness relating to the nature of the family and also jointness of the family and the other aspects. The stand taken by this witness in his evidence is that he never intended to create mortgage by deposit of title deeds at any point of time and this was taken only by way of verification of solvency and not beyond thereto.
19. On the aspect of Ex.A-17, if the evidence of P.W.1, P.W.2 and P.W.3 if carefully examined, different conflicting and contradictory versions had been given. The relevant portions of evidence of these witnesses already had been specified supra. Though the fact that the title deed -Ex.A-10 was delivered is not in serious controversy, the question to be decided would be under what circumstances the delivery was made - as explained by D.W.1 or whether such delivery of the title deeds was made with an intention to create mortgage by deposit of the title deeds. In the light of the contradictory versions of P.W.1, P.W.2 and P.W.3 in regard to Ex.A-17, findings in detail had been recorded by the trial Court and ultimately the trial Court disbelieved the stand taken by P.W.1 that the mortgage had been created in her favour by deposit of title deeds.
20. In United Bank of India v. Lekharam S. and Co. : AIR1965SC1591 the Apex Court at paras 7 and 8 observed as hereunder:
A mortgage by deposit of title deeds is a form of mortgage recognised by Section 58(f) of the Transfer of Property Act which provides that it may be effected in, certain towns (including Calcutta) where a person 'delivers to a creditor or his agent documents of title to immovable property with intent to create a security thereon'. In other words, when the debtor deposits with the creditor title deeds of his property with an intent to create a security the law implies a contract between the parties to create a mortgage and no registered instrument is required under Section 59 as in other classes of mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the, money which he has lent. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in such a case the document which constitutes the bargain regarding securing require registration under Section 17 of the Indian Registration Act, 1908, as a non-testamentary instrument creating an interest in immoveable property, where the value of such property is one hundred rupees and upwards. If a document of this character is not registered it cannot be used in the evidence at all and the transaction itself cannot be proved by oral evidence either. In the case of Kedarnath Dutt v. Shamllal Khettry 11 Beng LR (OC) 405, Couch, C.J. stated as follows:
The rule with regard to writings is that oral proof cannot be substituted for the written evidence of any contract which the parties have put into writing. And the reason is that the writing is tacitly considered by the parties themselves as the only repository and the appropriate evidence of their agreement. If this memorandum was of such a nature that it could be treated as the contract for the mortgage and what the parties considered to be the only repository and appropriate evidence of their agreement, it would be the instrument by which the equitable mortgage was created, and would come within Section 17 of the Registration Act.In a later case, in Pranjivandas Mehta v. Chan Ma Phee 43 Ind App 122 : AIR 1916 PC 115, the Judicial Committee observed as follows:
The law upon the subject is beyond any doubt: (1) Where titles are handed over with nothing said except that they are to be security, the law supposes that the scope of the security is the scope of the title. (2) Where, however, titles are handed over accompanied by a bargain, that bargain must rule. (3) Lastly, when the bargain is a written bargain, it, and it alone, must determine what is the scope and extent of security.
In the words of Lord Cairns in the leading case of Shaw v. Foster (1872) 5 HL 321, 341, although it is a well established rule of equity that a deposit of a document of title without more, without writing or without word of mouth, will create, in equity a charge upon the property referred to I apprehend that that general rule will not apply when you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document and any implication that might be raised, supposing there was no document, is put out of the and reduced to silence by the documents by which alone you must be governed.
In Sundarachariar v. Narayan Ayyar 58 Ind App 68 : , the plaintiff had verbally agreed at Madras to make a further advance to the defendants, making Rs. 60,000 in all upon the deposit of certain documents of title. The defendants' agent signed and handed to the plaintiff a memorandum stating 'as agreed upon in person I have delivered to you the undermentioned documents as security' - a list of the documents following, also a promissory note for Rs. 60,000. After examination of the documents the agreed amount was handed over to the plaintiff. It was held by the Judicial Committee that the memorandum was not a document which required registration, even if the agreed advance was conditional upon it being given; and that, there being no written agreement, the memorandum as well as oral evidence, was admissible in evidence to prove the intent to create a security by deposit of the documents named. The same view was expressed by this Court in Rachpal Mahraj v. Bhagwandas : 1SCR548 , in which it was pointed out that the question whether a memorandum of deposit of title deeds is compulsorily registrable under Section 17 of the Indian Registration Act, 1908 depends on whether the parties intended to reduce their bargain regarding the deposit to the form of a document. If so, the document required registration. If, on the other hand, its proper construction and the surrounding circumstances lead to the conclusion that the parties did not intend to do so, there being no express bargain, the document being merely evidential did not require registration. In that case, accounts were taken relating to the appellant's dealings with the respondents on a certain date and the appellant gave certain title deeds to the respondents for being held as security for the amounts then found due and which may become due, and on the same day the appellant gave a memorandum to the respondents in the form of a letter addressed to the respondents which stated as follows:
We write to put on record that to secure the repayment of the money already due to you from us on account of the business transactions between yourselves and ourselves and the money that may hereafter become due on account of such transactions we have this day deposited with you the following title deeds in Calcutta at your place of business at No. 7 Sambhu Mullick Lane, relating to our properties at Samastipur with intent to create an equitable mortgage on the said properties to secure all moneys including interest that may be found due and payable by us to you on account of the said transactions....It was held by this Court that the parties did not intend to create a charge by the execution of the document, but merely to record a transaction which had already been concluded and under which rights and liabilities had already been created and the document did not require registration.
Applying the principle to the present case, we consider that the letter at Ex. 7 (a) was not meant to be an integral part of the transaction between the parties. The letter does not mention what was the principal amount borrowed or to be borrowed. Neither does it refer to rate of interest for the loan. It is important to notice that the letter does not mention details of title deeds which are to be deposited with the plaintiff-bank. We are, therefore, of the opinion that the view of the High Court with regard to the construction of Ex. 7 (a) is erroneous and the document was not intended to be an integral part of the transaction and did not, by itself, operate to create an interest in the immovable property. It follows, therefore, that the document- Ex. 7(a) - did not require registration under Section 17 of the Indian Registration Act.
In K.J. Nathan v. Maruthi Rao : 6SCR727 the Apex Court at para 19 observed as hereunder:
The foregoing discussion may be summarized thus: tinder the Transfer of Property Act a mortgage by deposit of title deeds is one of the forms of mortgages where-under there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. Therefore, such a mortgage of property takes effect against a mortgage deed subsequently executed and registered in respect of the same property. The three requisites for such a mortality are, (1) debt, (ii) deposit of title-deeds; and (iii) an intention that the deeds shall be security for the debt. Whether there is an intention that the deeds shall be security for the debt is a question of fact in each case. The said fact will have to be decided just like any other fact on presumptions and on oral, documentary or circumstantial evidence. There is no presumption of law that the mere deposit of title-deeds constitutes a mortgage, for no such presumption has been laid down either in the Evidence Act or in the Transfer of property Act. But a court may presume under Section 114 of the Evidence Act that under certain circumstances a loan and a deposit of title-deeds constitute a mortgage. But that is really an inference as to the existence of one fact from the existence of some other fact or facts. Nor the fact that at the time the title-deeds were deposited there was, an intention to execute a mortgage deed in itself negatives, or is inconsistent with the intention to create a mortgage by deposit of title-deeds to be in force till the mortgage deed was executed. The decision of English courts making a distinction between the debt preceding the deposit and that following it can at best to only a guide; but the said distinction itself cannot be considered to be a rule of law for application under all circumstances. Physical delivery of documents by the debtor to the creditor is not the only mode of deposit. There may be a constructive deposit. A court will have to ascertain in each case whether in substance there is a delivery of title-deeds by the debtor to the creditor. If the creditor was already in possession of the title-deeds, it would be hypertension to insist upon the formality of the creditor delivering the title-deeds to the debtor and the debtor redelivering them to the creditor. What would be necessary in those circumstances is whether the parties agreed to treat the documents in the possession of the creditor or his agent as delivery to him for the purpose of the transaction.
In V.G. Rao v. Andhra Bank : AIR1971SC1613 the Apex Court at paras 17 and 19 observed as hereunder:
From the recitals of Exh. A-6, it is seen that that memorandum in question was intended to 'put on record' the terms already agreed upon. That being the case, the document cannot be considered as a contract entered into between the parties. If the parties intended that it should embody the contract between them, it would have been necessary to register the same under Section 17 of the Registration Act, 1908. As observed by this Court in Rachpal Maharaj v. Bhagwandas : 1SCR548 that 'when a debtor deposits with the creditor title deeds of his property with intent to create a security, the law implies a contract between the parties to create a mortgage and no registered instrument is required under Section 59 as in other forms of mortgage. But if the parties choose to reduce the contract to writing, the implication is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. As the deposit alone is not intended to create the charge and the document, which constitutes the bargain regarding the security, is also necessary and operates to create the charge in conjunction with the deposit, it requires registration under Section 17 of the Indian Registration Act, 1908, as a non-testamentary instrument, creating an interest in immovable property, where the value of such property is one hundred rupees and upwards. 'Therefore the crucial question is: Did the parties intend to reduce their bargain regarding the deposit of the title deeds to the form of a document? If so, the document requires registration. If on the other hand, its proper construction and the surrounding circumstances lead to the conclusion that the parties did not intend to do so, then, there being no express bargain, the contract to create the mortgage arises by implication of the law from the deposit itself with the requisite intention, and the document being merely evidential does not require registration.
Exhibit A-6 is not registered. If that document is considered as a contract of mortgage between the Bank and the depositors, the same having not been registered, it is inadmissible in evidence. If on the other hand that document is considered as a mere memorandum evidencing the deposit of title deeds in pursuance of an earlier contract then the correctness of the recitals therein can be gone into without being inhibited by Sections 91 and 92 of the Evidence Act. Whichever view is taken the plaintiff's case must fail. On an overall consideration of the evidence and the probabilities of the case, we are satisfied that Exts. A-7 and A-8 were not deposited with the Bank to secure the debts due from defendant No. 1 to the Bank.
In Rangabati v. United Bank of India : AIR1961Pat158 the Division Bench of Patna High Court at paras 22, 23, 24 and 25 observed as hereunder:
Besides the general defences applicable to all actions in torts, such as, limitation, consent, accord and satisfaction, previous Judgment etc., the three special defences available in an action for defamation, under the common law, are (1) justification (or truth), or (2) privilege, absolute or qualified, and, (3) fair comment. In England there is a statutory defence in actions for libel against newspapers viz., apology.
We are here concerned with the first two defences, that is, Justification and privilege.
The defence of justification is the plea of truth of the words or statements published by the defendant. The form of the plea is that 'the words complained of are true in substance and in fact'. Truth is a defence in a Civil action, 'For the law will not permit a man to recover damages in respect of the an injury to a character which he either does not or ought not to In possess.' No action, therefore, will lie of for the publication of a defamatory as statement if the defendant pleads and proves that is true.
This is so even though the defendant is proved to have been actuated by malicious and improper motives. In a civil action the defendant has to plead and prove the truth of the defamatory words, and not merely his belief in their truth, though honest. Therefore, if the words, or the statements, complained of, are true, he escapes liability, however improper his motives may have been. If, however, the word or statement turns out not to be true, he is liable, however honestly and carefully he may have acted and however inevitable his mistake, the liability is almost absolute.
'Privilege' is used here in the sense of an excuse or immunity conferred by law on statements or communications made on certain occasions called 'privileged occasions'. A privileged statement, therefore, is one which is made in such circumstances as to be exempt from the rule that a man attacks the reputation of another at his peril, that is, at his own risk. In other words privilege includes those exceptional cases in which it is not enough, in order to create liability, to prove that the defendant has published a false and defamatory statement. The defendant being privileged, is not responsible for this alone; he is either wholly free from responsibility or is liable only on proof that he was animated by a malicious motive, and not by any genuine intention to use his privilege for the purpose of for which the law gave it to him.
B.R. Das v. A.K. Dutta : AIR1974Cal319 the Division Bench Calcutta High Court at para 12 observed hereunden:
Mr. Mitter did not dispute the said contention as raised therein. But he submits that the contention of Mr. Sen that the intention is a question of law is not correct. It is always a question of fact. In support of his contention he referred to the very decision referred to by Mr. Sen, which is (supra). It has been laid down by their Lordships therein that 'whether there is an intention that the deed shall be security for the debt is a question of fact in each case. The said fact will have to be decided just like any other fact on presumption and on oral, documentary or circumstantial evidence.' We agree with Mr. Mitter that the question of intention has got to be considered on the materials on record and the question of inference as to law does not arise in this case. Mr. Sen unfortunately missed to note that, the above observation of their Lordships was in the case which he himself cited. Be that as it may, the said contention of Mr. Sen also fails.
In Saradindu v. Amiya Kumar : AIR1977Cal343 the Division Bench of Calcutta High Court at para 7 observed as hereunder:
The plaintiff appellant has pleaded in paragraph 3 of the plaint that the registered deed of lease Ext. 3 dated 2nd March. 1946, was deposited with the plaintiff by the defendant No. 1 to secure the repayment of a loan made by the defendant for a sum of Rs. 3,650 from the plaintiff under a promissory note dated 28-3-56. It has further been pleaded that the said deposit was made also with an intent to create an equitable mortgage in favour of the plaintiff by the defendant No. 1 in respect of moneys that were advanced or will be advanced by the plaintiff to the defendant. It appears from Ext. 1, that is, letter written by Amiya Kumar Basu the defendant to the plaintiff on 28-3-56, that he deposited the original lease deed with the plaintiff at 3/1, Bankshall Street as security against the pro-note dated 28-3-56. This along with the pleading in paragraph 3 of the plaint clearly establishes that this title deed had been deposited in order to create a mortgage in respect of the loan of Rs. 3,650. The plaintiff has pleaded that the title deeds have been kept in deposit with him with an intention of securing other loans that were advanced subsequently. The plaintiff has further stated that this loan of Rs. 3,650 has been included in the loan of Rs. 14,200 evidenced by a hundi executed by the defendant, This hundi has not been marked as an exhibit and as such the plaintiff cannot prove that this loan of Rs. 14,200/- has been included in the loan of Rs. 3,650. Moreover, the said loan of Rs. 14,200 was advanced on 16-12-57 as stated in the plaint and this suit was filed on 14th January, 1961. Now the question is whether this loan does constitute a mortgage as the title deeds came out of the custody of the plaintiff. I have already mentioned that the lease deed Ext. 3 was deposited by the defendant with the plaintiff on 28-3-56 as security against the pro-note dated 28-3-56. This is evident from the letter Ext. 1 written by the defendant to the plaintiff while depositing the title deed. There is nothing in writing to show that the lease deed was deposited with the plaintiff in order to secure all advances made subsequently. It is well established that mere deposit of title deeds with the creditor by the debtor will not constitute an equitable mortgage unless it is proved that the said title deeds had been deposited with the intention of creating a mortgage. It appears from Ext. 4(1) a letter, written by Shri Makhan Lal Bondopadhyay, an employee of the plaintiff to the defendant on 9th June, 1956 that the lease deed was taken from the defendant promising to return the same to him within a day or two. This clearly shows that the document which was kept as security in respect of the loan of Rs. 3,650/- was returned to the defendant. The court below is therefore perfectly justified in holding that the loan was repaid and the property was released from mortgage before 9-6-56. Moreover, P. W. 1. Makhan Lal Bondopadhyay admitted in cross-examination that the mortgage was created on 28-3-56 and on that day the document was made over. He also stated that the letter Ext. 1 was written by Shri Amiya Kumar Basu and the mortgage was created. He further admitted that there was no paper to show that the mortgage was created as security for future loans. He also admitted that the lease deed was taken by him from the defendant from his house at 34a, Sardar Sankar Road. The plaintiff who was examined on commission stated that on the date on which the letter of deposit was given, the mortgage was created. D.W.1, Balai Chandra Das stated that on 28-3-56 a mortgage was executed by transfer of title deeds. He also stated that the lease deed was taken back on the date on which the loan was repaid. He further stated that the defendant made over the deeds to the employee of the plaintiff on taking receipt on 9-6-56. Thus considering these evidences we have no hesitation to hold that the lease deed was not deposited with the plaintiff with an intention to create security in respect of all loans that will be advanced subsequent to 28-3-56. We also hold that the plaintiff failed to prove by any cogent evidence that the defendant had kept the said title deeds with the plaintiff with an intention of creating a security in respect of the property on which the lease deed was taken by the plaintiff. It is pertinent to refer in this connection the decision reported in (1896) 23 Ind App 106 (PC), Miller v. Babu Madho Das where it has been observed by their Lordships of the Privy Council that in a suit against an insolvent and the official assignee for sale of mortgaged property, the onus is on the plaintiff to prove that the title deeds in his possession after the insolvency was deposited with him as security before the adjudication of insolvency. In K.J. Nathan v. S.V. Maruthi Rao it has been held that in order to constitute a mortgage there are three requisites which are to be satisfied viz. (i) debt, (ii) deposit of title deed, and (iii) an intention that the deeds shall be security for the debt. Whether there is an intention that the deed shall be security for the debt is a question of fact which will have to be decided like any other fact on presumptions and on oral, documentary or circumstantial evidence. In a Bench decision of this Court, Bejoy Ranjan Das v. Ajit Kumar Datta the above decision of the Supreme Court was followed and it was held that the question whether the deed was kept with the intention of creating the security for the debt has got to be decided on the materials on record. We, therefore, hold that the plaintiff failed to prove that the loan of Rs. 14,200 was secured by keeping the title deeds and as such there was no mortgage in favour of the plaintiff. The suit being filed beyond the period prescribed is barred by limitation under Article 57 of the Indian Limitation Act (old) with respect to the claim for Rs. 14,200/-.
Further strong reliance was placed on the decision of this Court in State Bank of India v. Seenath X-Ray and ECG Clinic 2008 (3) ALT 134 wherein the learned Judge at paras 17 and 24 observed as hereunder:
It is significant to note that in the first legal notice Ex. A15, there is absolutely no reference to creation of equitable mortgage, though the said notice was issued to 8th defendant also. In Ex. A15, it is stated that defendants 7 and 8 are the guarantors for due payment of the 'outstanding loan amount. If really 8th defendant created equitable mortgage by depositing his title deeds, there is absolutely no reason as to why the same is not mentioned in Ex. A15 and why claim is not based thereon. It is only in the notice Ex. AI6 dated 18-12-1991 that a reference was made to mortgage by 8th defendant.
In the present case, there is no evidence to show that 8th defendant handed over his title deed Ex. A29 to the concerned official of the plaintiff bank at the time of sanction of loan by way of security and with an intention to create equitable mortgage thereby. P.W.1 admittedly had no personal knowledge of transaction as he joined the plaintiff bank much later in 2001 after filing of the suit. The concerned official of the bank who was responsible for the sanction of the loan and who is said to have received title deed is not examined to show that 8th defendant in fact personally handed over the title deed expressing his intention to create mortgage by deposit. There is nothing on record to show that 8th defendant went to the bank on 31-3-1984 along with 2nd defendant. According to defendants, 8th defendant gave title deed to 2nd defendant to enable him to furnish the same to the plaintiff bank as desired by them for the purpose of verifying the solvency of 8th defendant, who figured as a guarantor. The said plea is plausible considering the fact that 8th defendant in fact stood as guarantor and there is no document executed by him expressing his intention of creating a mortgage by deposit of title deed. In fact, the evidence of DWs. 1 and 2 to the effect that 8th defendant gave the title deed to the 2nd defendant and that 2nd defendant furnished the same to the bank is not refuted by the plaintiff, as no evidence in rebuttal is adduced. The evidence on record would only show that the 2nd defendant furnished the title deed to the bank. The 2nd defendant cannot offer to create a mortgage in respect of the property belonging to 8th defendant. The intention with which the document is furnished is the essence of the transaction. The expression of such intention on the part of 8th defendant is not discernible from the evidence on record. The single circumstance heavily relied upon by the plaintiff that the document was allowed to remain with the plaintiff by 8th defendant without taking return of the same does not necessarily lead to any interference that the document was deposited with an intention to create a mortgage. Even in the written statement, the defendants have pleaded that they have been making repeated requests for return of the document, but the plaintiff failed to do so. DWs. 1 and 2 gave evidence in support of the said plea and their evidence remains un-contraverted, as none connected with the suit transaction is examined by the plaintiff. The fact that the document was allowed to remain with the plaintiff bank all these years by itself cannot be taken as proof of creation of equitable mortgage, in the absence of any evidence supporting the said transaction. Under those circumstances, it must be held that the plaintiff has miserably failed to establish that a transaction of creation of equitable mortgage by deposit of title deed by 8th defendant has in fact taken place. It follows that in the absence of any such mortgage, the suit filed in 1996 beyond the period of three years from the date the last part payment was made or the date of acknowledgment for the last payment, is clearly barred by limitation.
21. No doubt, Sri S. Srinivas Reddy, the learned Counsel representing the appellant distinguished the said decision on the ground that in the present case there was never a demand for return of the title deeds whereas in the said decision, certain admissions were made and in the light of the facts and circumstances the said decision had been rendered and hence on facts, the same is distinguishable. It is true that the facts are slightly different. However, the trial Court clearly recorded the findings pointing out to several discrepancies in the evidence of P.W.1, P.W.2 and P.W.3 as well in relation to Ex.A-17. It is no doubt true that except the evidence of D.W.1, there is no other evidence available on record. It is needless to say that when the plaintiff approached the Court to enforce the mortgage by deposit of title deeds, the burden is on her to establish the same and inasmuch as, P.W.1 was unable to give any of the details whatsoever in relation thereto and also in the light of the discrepant versions of P.W.2 and P.W.3 as well in relation thereto, the same was disbelieved. There is no serious controversy between the parties relating to the borrowings under the promissory notes and the endorsements made. It is unfortunate that within time, the rest of the amount due under the said promissory notes had not been enforced. For reasons best known, the plaintiff had slept over the rights for sufficiently a long time and now made an attempt to enforce the same by putting forth a plea that on the strength of the mortgage created by deposit of title deeds, she is entitled to a decree. The trial Court recorded appropriate findings and came to the conclusion that if it is to be held that by virtue of Ex.A-17, no such mortgage by deposit of title deeds as such had been created, then the suit is barred by limitation. This finding recorded by the trial Court also cannot be found fault in the light of the facts and circumstances of this case. Apart from this aspect of the matter, the trial Court on appreciation of evidence available on record, came to the conclusion that the stand taken by the 1st defendant that the debts were not contracted for the purpose of joint family, cannot be believed. This Court is satisfied that the said finding also needs no disturbance in the hands of this Court. It is also needless to say that D.W.1 deposed in detail in relation to Ex.B-1 - Death extract of Dhamvar issued by the Rajahmundry Municipality, dt.25-7-64, Ex.B-2 - Income Tax Assessment notice, Ex.B-3 -Assessment order for the year 1976-77 issued by the Income Tax Officer, Rajahmundry, Ex.B-4 - Income Tax Assessment order for the year 1980-81 issued by the I.T.O. to D-1, Ex.B-5 -Photostat copy of the letter issued by the I.T.O., Rajahmundry to D-1, Ex.B-6 - Receipt dt.1-8-63, Ex.B-7 - Receipt dt.6-12-83, Ex.B-8 - Receipt dt.16-4-88, Ex.B-9 -Receipt dt.7-7-87, Ex.B-10 - Income Tax Assessment Order dt.30-9-83, Ex.B-11 -Certified copy of E.P. No. 41/78 in O.S. No. 123/75 on the file of Sub-Court, Rajahmundry, Ex.B-12 - Ryothwari Pass Book in the name of D-1, Ex.B-13 - True Translation of the pass book of Ex.B-12, Ex.B-14 - Tax receipt, Ex.B-15 - true translation of Ex.B-14.
22. Relating to the applicability of the benefits of Act IV of 1938, plea of agriculturist, findings had been recorded and the same also had been negatived. Incidentally, an attempt was made to show that the principle of Danduputh to be made applicable and further stand had been taken that even if it is to be enforced, it can be enforced only as against his share and not beyond thereto. These findings further need not be discussed in elaboration for the reason that this Court is not inclined to disturb the findings recorded by the trial Court relating to the creation of mortgage by deposit of title deeds in the light of Ex.A-17 and Ex.A-10. Accordingly, the findings recorded by the trial Court need no disturbance at the hands of this Court and the said findings are hereby confirmed.
23. Point No. 4: In the light of the findings recorded above, it is needless to say that this appeal being devoid of merit, the same shall stand dismissed. But however, in the peculiar facts and circumstances, the parties to bear their own costs.