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C. Krishnaveni Ammal and anr. Vs. P.S. Subrahmanyam Chetty and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported inAIR1938Mad547
AppellantC. Krishnaveni Ammal and anr.
RespondentP.S. Subrahmanyam Chetty and ors.
Cases ReferredHakim Lai v. Ram Lal
Excerpt:
- .....ex. a, for rs. 1900 in favour of the plaintiffs, and he is alleged also to have deposited the title deeds of 16 audiappa chetty street, item 1 in the plaint schedule, as security. ex. b dated 2nd august 1930 is the collateral security document and its admissibility is one of the main questions in issue. on 22nd august 1931, sadasiva (for himself and as manager and guardian of his minor nephew defendant 3) and his son, defendant 1, mortgaged two other family properties, viz. 41 guruvappa chetty street and 105 egmore high road, to defendant 6 for rs. 2000 by deed. on 19th april 1932, sadasiva and defendant 1 executed two mortgage deeds in favour of plaintiff: (1) ex. c over item 1 for rs. 2000, including rs. 1900 due on ex. a., (2) ex. d over item 4 (the ponneri property) for rs......
Judgment:

Wadsworth, J.

1. Plaintiff sues on a series of mortgages. The following geneological tree will help to make the facts clear:

MUNISWAMI CHETTY

|

________________________________

| |

Sadasiva Gangadhara (died)

(Died 1934) Visalakshi D. 4

| |

| Thayumanaya D. 3.

| (died after suit)

__________________________

| |

Subramaniam Somasundaram

D. 1. (Insolvent) D 2.

2. Defendant 5 is the Official Assignee representing defendant 1. Defendant 6 is another mortgagee. He has died and his executor is defendant 7. Thus the Official Assignee, and defendant 2 now represent Sadasiva's branch and defendant 4 represents Gangadhar's branch. Sadasiva and Gangadhara had a rice mill at Ponneri and a provision business in Madras. On 2nd August 1930, Sadasiva executed a promissory note, Ex. A, for Rs. 1900 in favour of the plaintiffs, and he is alleged also to have deposited the title deeds of 16 Audiappa Chetty Street, item 1 in the plaint schedule, as security. Ex. B dated 2nd August 1930 is the collateral security document and its admissibility is one of the main questions in issue. On 22nd August 1931, Sadasiva (for himself and as manager and guardian of his minor nephew defendant 3) and his son, defendant 1, mortgaged two other family properties, viz. 41 Guruvappa Chetty Street and 105 Egmore High Road, to defendant 6 for Rs. 2000 by deed. On 19th April 1932, Sadasiva and defendant 1 executed two mortgage deeds in favour of plaintiff: (1) Ex. C over item 1 for Rs. 2000, including Rs. 1900 due on Ex. A., (2) Ex. D over item 4 (the Ponneri property) for Rs. 500.

3. On 24th March 1931, a partition suit, C.S. No 471 of 1931, was filed in which it was held that there was a separation between Gangadhara's branch and Sadasiva's branch in October 1930. Plaintiffs here were not parties to that suit. The result of this suit was to allot to defendant 3's (Gangadhara's) branch not only the properties covered by Exs. B, C, and E but also the properties covered by defendant 6's mortgage. The Ponneri property covered by Ex. D was allotted to Sadasiva's branch. In 1934 defendant 6 filed a suit on his mortgage claiming substituted security over the properties allotted to Sadasiva. The present plaintiffs were not parties to that suit, which resulted in a decree by virtue of which defendant 6 purchased those properties except for the Ponneri property item 4, which was sold to a stranger subject to plaintiff's mortgage Ex. D.

4. The first question to be decided in the present suit relates to the validity of the plaintiff's equitable mortgage for Rs. 1900 dated 2nd August 1930. This depends largely on the admissibility of Ex. B, with reference to the provisions of Ss. 17 and 49, Registration Act, and Section 91, Evidence Act. I have had occasion to discuss the case law on the subject in a very recent judgment (C.S. No. 394 of 1933) and I do not think it necessary to do more than restate my conclusions. It is settled law that where a deposit of title deeds as collateral security for a loan is evidenced by a writing which is not intended to be itself the embodiment of the contract, but is a mere memorandum of a previously completed 'transaction, that writing is not an instrument affecting immovable property and |need not be registered. I have held in the lease just referred to that in deciding whether the writing is such a memorandum of a completed transaction or the embodiment of the actual contract, the use of the past or present tense in reference to the deposit may be an indication of the intention of the parties but cannot of itself be the sole criterion of the nature of the document. The important point to consider is whether having regard to the recitals of the document and the evidence, circumstantial or otherwise, of the manner of its execution, it can be stated that the document was regarded by the parties as the embodiment of the bargain or as a mere memorandum of a completed oral contract which had an existence independent of the memorandum. If the former, it is inadmissible if not registered. If the latter, it does not require registration as it is not an instrument affecting immovable property.

5. Applying these principles to the present case, one is confronted with some confusion of the evidence, due partly to the reluctance of counsel on both sides to press for greater precision when the legal result of such precision might be adverse to the party who applied the pressure. The actual recitals of the document are not very decisive. It is described as a 'collateral security letter,' and it begins by reciting the names and addresses of the lenders and the name, father's name, religion, occupation, and address of the borrower. It continues as follows:

On this date I have executed a promissory note in your favour and received Rs. 1900. I have deposited with you as security the title deeds of the premises No. 16 Audiyappa Chetty Street belonging to me. At the time when I pay4he said promissory note I shall receive back this letter and also the title deeds. To this effect is the collateral letter given with my consent.

6. Then follow the signatures of the borrower and the attestor and a list of eight documents. It will be noted that this document does not recite the date of the deposit and does not give the rate of interest. It is not therefore a complete record of the contract.

7. The evidence of plaintiff 2 and of the attestor makes it clear that the title deeds were handed over at least five or six days before the date of Exs. A and B, that the terms of the loan were agreed on and the money drawn from the fund some days before the title deeds were handed over and that when the title deeds were handed over it was understood that plaintiff 2 was to have them scrutinized by a document writer. Plaintiff 2 says that the document writer approved the title some five or six days before the date of Exs. A and Rule There is no evidence contra. It is reasonable to infer from these circumstances that after this individual had approved of the title, the deeds remained with plaintiff 2 as security for a loan which he had already agreed to advance subject to a satisfactory title. If this is the fact, then there would be a completed mortgage agreement anterior by some days to the writing of Ex. B, and the consequence is that Ex. B is admissible in evidence though unregistered. I find that the mortgage for Rs. 1900 dated 2nd August 1930 is valid.

8. The next question is whether it was binding on the joint family of Sadasiva and Gangadhara which existed at the time of its execution. Here again the evidence is not very detailed. Ex. A does not state1 the purpose of the loan. Plaintiff 2 states that Sadasiva and Gangadhara were members of a joint family and were running two businesses, one a shop at Madras, the other a mill at Ponneri, managing them, by turns. He also states that Sadasiva signed as the manager of the joint family and that the borrowing was for the paddy business paddy being purchased and milled at Ponneri and the rice sold at Madras shop. He says that he did not take Gangadhara's signature because the latter was at Ponneri and he did not think it necessary. P.W. 4, the attestor, says that these two businesses were owned by the family from the time of Munisami, the father of the two brothers. It appears that in the partition suit Sadasiva asserted that the Madras shop belonged to his brother-in-law and the Ponneri property belonged to a stranger; but on the materials before me it seems unlikely that this assertion was true. In the absence of any other evidence I must hold that the mortgage of 2nd August 1930 was raised for the purpose of family business by the manager of the joint family and was binding on the family.

9. It follows that Ex. 0, the mortgage for Rs. 2000 executed on 19th April 1932 after the separation, is binding on the joint family property to the extent of Rs. 1900; It has not been shown how the plaintiff's mortgage right has become extinguished and Issue 3 is found in favour of the plaintiffs. As to the equities between plaintiffs and defendants 6 and 7, it seems to me clear that plaintiffs are entitled to substituted security to the extent of Rs. 100 with interest over the share of Sadasiva's branch and defendants 6 and 7 are entitled to substituted security to the extent of Rs. 2000 with interest, both these rights being subject to the plaintiff's mortgage Ex. D for Rs. 500 over item 4. As between the two substituted security rights, no question of priority arises, for Section 48, T.P. Act, applies only to successive mortgages on the same property. It has been held in Hakim Lai v. Ram Lal (1907) 6 C.L.J. 46 that the rights in the substituted security of two rival claimants should be proportionate to the value of the original security as it stood on the date of partition. If this rule be applied, the plaintiffs would be entitled to one twentieth of the value of item 1 as it stood at the time of partition and defendants 6 and 7 so the whole of the value as on the date of partition of the two items mortgaged to them provided that if the whole of the property available as substituted security's insufficient to meet both claims, they will be reduced pro rata.

10. The decree will provide as follows: item 1 will be sold to discharge Rs. 1900 of the amount due under Ex. C with interest thereon from 19th April 1932 at A annas per cent, per mensem till the date fixed for payment, viz. three months hence und proportionate costs and subsequent interest at 6 per cent, on the aggregate amount till realization. Item 4 will be sold to realize the amount due on the mortgage Ex. D with interest at the contract rate till the date fixed for payment, viz. three months hence, and proportionate costs and subsequent interest at 6 per cent, on the aggregate amount till realization. Items 2 and 3 will be sold and any balance left over from the sale of item 4 will be utilized to discharge the amount found to be due to plaintiffs and defendants 6 and 7 by reason of their claims to substituted security calculated in the manner set forth in the previous paragraph with interest at the contract rate to the data fixed for payment, viz. three months hence, and proportionate costs of subsequent interest at 6 per cent, till realization. Defendant 7 as the purchaser of the equity of redemption in these two items will be entitled to avert the sale by paying the amount found due on those items to the plaintiffs.


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