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The Punjab National Bank Ltd. Vs. Harasaran Dass and Sons and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtDelhi High Court
Decided On
Case NumberSuit No. 440/1968
Judge
Reported inAIR1973Delhi258
ActsCode of Civil Procedure (CPC), 1908 - Sections 17
AppellantThe Punjab National Bank Ltd.
RespondentHarasaran Dass and Sons and ors.
Appellant Advocate I.C. Jain, Adv
Respondent Advocate S.D. Kumar, Adv.
Cases ReferredIn Laxmi Kumar Srinivas Das v. Krishnaram Baldev Bank
Excerpt:
property - jurisdiction - section 17 and order 1 rule 3 of code of civil procedure, 1908 - suit filed for grant of preliminary decree for recovery of some amount - defendants raised objections regarding jurisdiction of court to try suit - on combined reading of documents submitted it appeared that substance of two deeds was to pledge property of defendant for debt due from defendant to plaintiff - provisions of order 1 rule 3 and section 17 applicable to case - court has jurisdiction to try suit. - - 1. it is a well-settled principle of law that what is not denied specifically is deemed to have been admitted......situated in meerut and moradabad districts in u. p. this court has not jurisdiction to try the suit. defendants examined shri dharan dev, d. w. 1 who stated that loni is in u. p. although he was cross-examined on other aspects, on question was put is the cross-examination to challenge the veracity of his statement to challenge the veracity of his statement that loni is in u. p. p. w. 1, shri behari lal mahajan manager of the plaintiff bank has alleged that few of the property which are mortgaged with the bank are situated in delhi and two are situated on the border of u. p. and delhi but he could not say whether the said properties are situated within the province of delhi or u. p. in view of the categorical statement of d. w. 1 that loni is in u. p. and the plaintiff having not.....
Judgment:

1. This order was dispose of the following preliminary

(1) Whether this court has not jurisdiction to entertain and try this suit?

(2) whether the plaintiff has not locus standi to continue the suit?

Before dealing with the said issues it would be appropriate to give a few relevant facts.

2. Defendant No. 1 is a registered firm carrying on the defendant of cotton yarn at Noradabad and defendants 2 to 6 are its partners. The plaintiff bank allowed cash credit facilities to defendant No. 1 who availed of the said facilities from time to time. The case of the plaintiff is that demand drafts issued by defendant No.1 which were accompanied with goods receipts issued by defendants 7 to 9 and invoiced drawn by defendants No. 1 on different person including co-operative societies, were presented by the plaintiff but the same were dishonoured by the respective drawees, and on this account a sum of Rs. 2,54,053.47 became due to the plaintiff from defendant No.1

3. The case of the plaintiff further is that on the 6th October 1965, the plaintiff at the request of the defendants Nos. 1 to 9 granted four months' time commencing from 7th October 1965, to defendant No.1 for making payment of the aforesaid amount in four installments enumerated in para 9 of the plaint in consideration of guarantors, defendants 7 to 9 having undertaken liability to reimburse the plaintiff as guarantors and mortgaging their properties with the Bank as security for the payment of the amount due from defendant No.1 as per guarantee deed dated the 6th October, 1965, executed by the defendants 7 and 8 in favor of the plaintiff. It is also alleged by the plaintiff and by guarantee deed dated the 6th October, 1965, defendants 7 and 8 agreed to created equitable mortgage of their properties mentioned in para 11 (6) of the plaint by deposit of title deeds with intention to create security in favor of the plaintiff and the mortgage was created by deposit of titles by defendant No.7 on 13th October, 1965, by defendant a No. 8 on the 4th July, 1966, and by defendant No. 10 on 13th October, 1965, and that defendants 7 and 8 jointly and severally are liable under the said deed. It is also alleged by the plaintiff that by guarantee deed dated 6th October, 1965, executed by defendant No. 9 as guarantor for defendant No. 1 in favor of the plaintiff, the said defendant No.9 agreed to create equitable mortgage on its properties described in para 11 (6) of the plaint by deposit of title-deed in respect thereof to create security in favor of the plaintiff. It is further sated that the plaintiff acting on the guarantees of the defendants 7, 8, and 9 contained in the aforesaid deeds of guarantee and agreement of defendants 1 and 7 to 10 to create equitable mortgage of their properties in favor of the plaintiff. allowed four months' time to defendant No.1 to make the payment of the amount due. The plaintiff further avers that by memorandum of confirmation mentioned in para 12 of the plaint, defendants 1 to 10 confirmed the deposit of title deeds of the property enumerated in para 11 (6) of the plaint in favor of the plaintiff.

4. The present suit has been filed for grant of a preliminary decree for the recovery of Rs. 121195.91 with a prayer than in case the defendant make default in paying the decretal amount, the plaintiff shall be entitled to apply for final decree directing that the mortgage properties of the defendants or a sufficient part there of be sold, and the sale proceeds be applied in payment of the decretal amount as according to its averments the above-stated amount remains unpaid despite repeated demands.

5. Defendants 1 to 6 did not file written-statement despite time begin allowed by the Court. Consequently, V. D. Misra, J., on 25th May, 1970, passed an order that they shall not be granted any further opportunity to put on their written-statement.

6. For the purpose of deciding the above-stating two issue, various contentions raised by defendants 7 to 10 need not be recapitulated. However only those averments which pertain to the aforesaid two issue shall be recorded. Defendant No. 7 in preliminary objection No. 1, in its written-statements, has averred that the plaintiff has not locus standi to continue the suit as its undertaking including all the assets, stands transferred to Punjab National Bank, another body corporate, by virtue of provisions of Section 4 of the Banking companies (Acquisition and Transfer of Undertaking) Act, 1969 (hereinafter to be called 'the Act'). The said defendant, however did not dispute the jurisdiction of this Court to try the suit. However defendant No. 8 in its written-statement in para 1 of its preliminary objections has averred that this Court has no territorial jurisdiction to entertain and try the suit claim of the plaintiff in respect of go-down building on plot No. 8112 at Loni, District Merut, U. P. alleging that the suit of the plaintiff is for sale of properties stated to have been mortgaged with it and some of the said allegedly mortgaged in its favor by defendant No.1 defendant Nos. 8 and 9, are situated in Moradabad and Meerut Districts of U. P. outside the local or territorial jurisdiction of this Court and that all the said allegedly mortgaged properties cannot be described as a single entity. The said defendant also took the objection to the locus standi of the plaintiff to continue the suit because of its undertaking having been taken over by Punjab National Bank under the Act.

7. The aforesaid two objections taken by defendant No.8 have also been taken by defendant No.9 and defendant No. 10. Accordingly on the pleadings of parties, amongst others, the two issues, referred to earlier, were framed which were ordered to be treated as preliminary issues. Issue No.1:

8. This issue was framed on the objection of the defendant that since some of the mortgaged properties were situated in Meerut and Moradabad Districts in U. P. this court has not jurisdiction to try the suit. Defendants examined Shri Dharan Dev, D. W. 1 who stated that Loni is in U. P. Although he was cross-examined on other aspects, on question was put is the cross-examination to challenge the veracity of his statement to challenge the veracity of his statement that Loni is in U. P. P. W. 1, Shri Behari Lal Mahajan manager of the plaintiff bank has alleged that few of the property which are mortgaged with the Bank are situated in Delhi and two are situated on the border of U. P. and Delhi but he could not say whether the said properties are situated within the province of Delhi or U. P. In view of the categorical statement of D. W. 1

that Loni is in U. P. and the plaintiff having not disputed the said statement, it has to be held that the properties situated in Loni, U. P. are admittedly not within the jurisdiction of this Court. Statement of P. W. 1 is not of any assistance as he had stated that two of the properties are of U. P. Delhi border and he could not say whether the said properties were within the province of Delhi or outside it.

9. Clause (c) of Section 16, Civil P. C prescribes that subject to the pecuniary or other limitations prescribed by any law, suit for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property shall be instituted in the Court within the local limits of whose jurisdiction the property it situate. According to the provisions of this section , thereforee, the suit for foreclosure or sale of a mortgage property situated outside the jurisdiction of this Court, shall not be triable by it. However, in Section 17, Civil P. C., the legislature has made appropriate provisions for instituting suits for obtaining relief respecting immovable property situate within the jurisdiction of different Court. Section 17, Civil P. C. prescribes that where a suit is to obtain relief respecting, or compensation for wrong to, immovable property situate within the jurisdiction of different Courts, the suit may be instituted in the any Court within the local limits of whose jurisdiction any portion of the property is situate provided that, in respect of the value of the subject-matter of the suit, the entire claims cognizable by such Court. That being so, in case the plaintiff has got a single cause of action in respect of properties in question, the plaintiff shall be within its right to take advantage of the provisions of Section 17 of the Civil P. C. in filing the present suit in this Court notwithstanding the fact that a part of the mortgaged property is situated in Loni, District Meerut, U. P. It has been firmly established in a chain of decisions that on a single cause of action regarding a number of properties situated within the jurisdiction of different courts, the plaintiff can file a suit in one of the appropriate Courts where one of the properties is situated provided the entire claim is cognizable by that Court in respect of the value of the subject-matter of the suit.

10. In Prem Kumar v. Dharam Pal 1972 Raj Lr 25 : AIR 1972 Del for declaration that properties in dispute constituted Joint Hindu Family properties and also for delivery of possession of the properties which had been alienated by defendants and a further injunction was ought restraining the defendants from alienating the remaining properties. It may be mentioned here that most of the properties in that case were situated in Hissar District of Haryana State. The defendants objected to these jurisdiction of the Court. Dealing with the contention, B. C. Misra, J., observed that if the plaintiffs had got a single cause of action in respect of a number of properties, they were fully entitled to take advantage of the provisions of Section 17 of Civil P. C. in filing the suit in Delhi regardless of the fact that the properties in dispute were mostly situated in Hissar District of Haryana State as one property said to be a coparcenary property, was situated in Kuanwali, Delhi.

11. The case of the plaintiff is that the sum of Rs. 2,54,053.47 was due to it from defendants 1 to 6. The said defendants were allowed time to pay the said amount by Installments on their request in consideration of guarantors, defendants 7 to 10, having undertaken liability to reimburse the Bank and mortgaging their property with the Bank as security for payment of the amount due to defendant No. 1 Rule 3 of the Order 1, Civil P. C. provides that all persons may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against such persons, any common question of law or fact would arise.

12. Now, as already stated above, the averment of the plaintiff is that it allowed time to defendants 1 to 6 for payment of the sum of RS. 2,54,053.47 in consideration of the guarantors, defendants 7 to 10, having undertaken liability to reimburse the plaintiff as guarantors and in lieu of their guarantee mortgaged their properties with the plaintiff as security for payment of the amount due from defendant No. 1 if it is so, I am of the opinion, it is competent for the plaintiff to file the present suit in this Court as the basis for the cause of action is the undertaking of liability by defendants 7 to 10 to reimburse the plaintiff as guarantors and for having mortgaged their property with the plaintiff as security for payment of the amount due form defendant No. 1.

13. In Basanta Priya Dei v. Ramakrishna Das, : AIR1960Ori159 . it was observed :

'Reading Section 17 and Order 1, Rule 3 of the Code together, it appears to me that the real test in a case of this nature is whether any common question of law or fact would arise if separate suits were brought. In the present case, in view of the facts and circumstances, as pleaded in the plaint, prima facie it appears that if two suits were filed one at Kendrapara and one at Cuttack. then such parallel proceedings in two Courts, would have led to an embarrassing position, namely, that both the Courts would have to go into a common question of law and fact which would have arisen in both the Courts and ultimately there was likelihood of two conflicting orders being passed by two courts free to take contrary views independently of each other. In intention of the legislature is certainly to avoid such a position. That apart, this certainly would result in multiplicity of proceedings. The only bar to such jointer is that the Court has to see that there is no multifariousness. when there is misguide of parties and cause of action, which certainly would cause embarrassment and the trial of the action would be prejudiced ......... In the suit, as framed, it appears that there would arise a common question in law and fact, and would incidentally affect the properties which happen to be situated both within Cuttack and Kendrapara jurisdiction.'

14. In para 9 of the plaint the plaintiff has alleged that on the 6th October, 1965, at the request of defendants, the plaintiff granted time to defendant No. 1 for payment of the amount of Rs. 2,54,053.47 in consideration of the guarantors, defendants 7 to 10, undertaking liability to reimburse the plaintiff as guarantors and mortgaging their properties with the bank as security for the payment of the amount due from defendant No. 1 as per guarantee deeds executed by defendants 7 to 10 in favor of the plaintiff and agreeing to crate equitable mortgage on properties described in para 11 (6) of the pliant by deposit of title deeds an having created mortgage by deposit of title deeds. In repel to this averment of the plaintiff, defendant No. 8 para 9 of the written-statement has alleged, 'It is denied that on 6-10-1965 the answering defendant signed an agreement whereby it undertook to guarantee the liability of defendant No. 1 for Rs. 1,25,000/- and interest thereon. Alternatively, it is averred that the consideration thereforee was unlawful, being opposed to public policy'. While defendant No. 9 in para 9 of its written statement has stated, 'While it is not disputed that on 6th October, 1965, the answering defendant signed an agreement whereby it undertook to guarantee the liability of defendant No. 1 for the first Rs. 35, 533.00 and interest thereon out of total liability of the said defendant for Rs. 2,54,053.47 and interest thereon, it is averred that the agreement was got signed by the answering defendant under coercion and the consideration thereforee was unlawful, being opposed to public policy'. In this respect the case of defendant No. 10 as revealed in para 9 of his written-statement, is as follows, 'while it is not disputed that on 6-10-1965, the answering defendant for and on behalf of defendant No.7 signed an agreement whereby defendant No.7 undertook to guarantee the liability of defendant No.1 for the first Rs. 21,25,000/- and interest thereforee out of the total liability of the said defendant for Rs. 2,54,053.47 and interest therein, it is averred that the Agreement was got singed under coercion and that the consideration thereforee was unlawful, being opposed to public policy'.

15. From the extract from written statements filed by defendants 7 to 10, reproduced about, it is evident that they do not dispute the fact that they undertook to guarantee the liability of the defendant No.1 but all that they allege is that the agreement was got singed form them under coercion. They have not controverter the further allegation of the plaintiff that in pursuance of their respective agreements, they deposited the title deeds of their properties and thereby created mortgage on the properties undertaking to reimburse the plaintiff in respect of its claim against defendant No.1. It is a well-settled principle of law that what is not denied specifically is deemed to have been admitted. In my opinion, thereforee, even it the plaintiff was to bring separate suits against the defendants for foreclosure in respect of their properties which they mortgaged with the plaintiff bank to reimburse the bank in respect of it claim against defendant No.1 common question of law and fact would arise and in case separate suits were filed, the possibility of conflicting orders being passed by the Court in respect of the same averments cannot be ruled out.

16. From a perusal of para 11 of the plaint, it is evident that defendants 1 to 6 created mortgage in favor of the plaintiff on 24th March, 1966, defendant No.7 created mortgaged in favor of the plaintiff on 13th October, 1965, and defendants 8 to 10 created mortgage in favor of the plaintiff on 4th July, 1966, 5th October, 1965, and 13th October 1965. Respectively as defendants 7 to 10 had undertaken liability to be reimburses the plaintiff as guarantors as per guarantee deed dated 6th October, 1965, as is to be found in para of the plaint. The question thereforee, would be whether the defendants could be joined in this suit because a right to relief in respect of or arising out of the same act or transaction or series of acts or transaction exists. In other words, whether the mortgages created on different properties would constitute the same act to whether they constitute separate and different series of acts. If the mortgages created on different dates constitute a single cause of action arising from the same act or transaction or series of acts or transactions, the plaintiff is entitled to join the defendants in the present suit because if separate suits were brought against them, common question of law and fact would arise, namely, whether defendants 7 to 10 had undertaking the liability to reimburse the plaintiff as guarantors and mortgaged their properties with the plaintiff as security for payment of the amount due form defendant No.1.

17. In Laxmibai v. Madhankar Vinayak Kulkarni Air 1968 Mys 82, it was observed,

'................... the correct rule of law in my view is that where there is a single cause of action to recover properties situate within the jurisdiction of different Court's a suit can be filed in any one of the court within the jurisdiction of which any one of the suit property is situate.'

18. In Laxmi Kumar Srinivas Das v. Krishnaram Baldev Bank, Lashkar AIR 1954 MP 156, the respondent bank filed suit against the appellant and his minor son Krishna Kumar on the basis of three mortgage deeds dated 22-3-1948 and 13-4-1948, alleged to have been executed by Laxmi Kumar in favor of the bank. One of the contentions of the petitioner was that the three mortgage deeds concerned separate properties in different districts and that the Gwalior Court had no jurisdiction to taken cognizance of the suit and that a consolidated suit was not permitted by law. In that case each mortgage deed referred to other mortgage-deed and from the recitation in each deed it appeared that there was connecting link between the three deeds which signified that the three mortgaged deeds though written separately, were in fact part and parcel of a single mortgage contract entered into by the parties. further, the substance of the contract was the pledge of the whole property of the firms for debt and in view of it, it was held that Section 17, Civil P. C. applied to the fact of that case, and, only on that basis , the Gwalior Court was deemed to have jurisdiction.

19. Exhibit P/5 is a deed of agreement which was executed at Delhi on the 6th October 1965, between defendant No.1 consisting as borrowers (2) Rajasthan Golden Transport Company Private Ltd., and the Gills Goods Carriers (P) Ltd., defendant 7 and 8 respectively, second party called the Transport Companies and the plaintiff Bank as the third party whereby the parties entered into the agreement stating the certain demand drafts supported by truck receipts issued by the Transport Companies, i.e. the second party and also by India Goods Transport Co., at the request of the borrowers were discounted by the Bank and the same were received bank unpaid; that the amount outstanding on the basis of those demand drafts against of the borrowers is Rs. 2,54,053.47 less amount of transport receipts of Rs. 35553/- issued by Montogomery Co-operative Goods Transport Society for which a separate agreement had been executed on that day, besides interest at the rate of 10 per cent. per annum, was due to the bank and because the borrowers were not in a position to meet demand of the bank for the with and had requested the bank to give four month's time for making the payment by Installments as detailed in the agreement; that the bank have in agreed to given time to the borrowers on the Transport companies undertaking liability to reimburse the bank as guarantors and also mortgaging their properties with the bank as security'; that the transport companies having agreed to create equitable mortgage by deposit of their title deeds with intent to create mortgage in favor of the bank for Rs.1,25,000/- and to given time to the borrowers for repayment, the bank gave time to the borrowers to make payment of the aforesaid amount by Installments and in case the borrowers made default, the transport Companies jointly or severally undertook to pay to amount of the indebtedness of the borrowers to the bank forthwith with interest on demand by the bank.

20. Exhibit P/6 is an agreement executed at Delhi on 6th October, 1965, between defendant No.1 and its partner, defendants 2 to 6 as borrowers; Montogomery co-operative Goods Transport Society, defendant No.9, the second party and the agreement whereby time was allowed to the borrowers to make payment of the amount due to the bank in Installments as mentioned in the said agreement, on defendant No. 9's agreeing to create equitable mortgage of the properties by deposit of their title deeds with intent to create mortgage in favor of the bank for Rs.35533/- (less amount of Transport Receipts, i.e., Rs.218520/47) issued by gills Goods Carrier (P) Ltd., defendant No. 8, and Rajasthan Golden Transport Co. (P) Ltd., defendant No.7 and India Goods Transport company for which a separate agreement had been executed on that day and defendant No. 9 undertook to pay the amount in case of default committed by defendant No.1.

21. It would, thereforee, be seen that is a connecting link between the two deeds, Exhibits P/5 and P/6 which signifies that although the deeds were written separately, the same were in fact part and parcel of a single transaction entered into by the parties at Delhi and in pursuance of the said transport the title deeds were also deposited in Delhi, there by given rise to a single cause of action to the plaintiff in case the defendant No.1 made default in payment of the amount.

22. Exhibits P/7, P/8, P/9, P10 and P/3 are the letters whereby the defendant deposited the title deeds of their properties. Though the said letters are of different dates but the deposit of the title deeds was in pursuance of the two agreements Exhibits P/5 and P/6.

23. From a combined reading of the aforesaid document , it is apparent that the substance of the two deeds, Exs, P/5 and P/6, was with a view to pledge the property of the defendant for the debt due from defendant No.1 to the plaintiff. That being so, I am of the opinion that the provisions of Rule 3 of Order 1 and Section 17, Civil P. C. are applicable to the instant case.

24. For the reasons stated above issue No.1 is decided against the defendant and in favor of the plaintiff and it is held that this court had jurisdiction to try and entertain the present suit.

Issue No.2.

25. This issue has been decided by orders of this Court passed on 23rd December, 1970, on I. A. No. 1702 of 1970. The issue stands accordingly decided in favor of the plaintiff.

26. Order accordingly.


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