Skip to content


Modern Housing Construction and Properties Limited, by Director Vs. the Alagappa Textiles (Cochin) Ltd. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1972)2MLJ319
AppellantModern Housing Construction and Properties Limited, by Director
RespondentThe Alagappa Textiles (Cochin) Ltd.
Cases ReferredK.J. Nathan v. C.S.T. Murthi Rao
Excerpt:
- .....account of dr. alagappa chettiar, the plaintiff constructed inter aha, the buildings namely (1) guest house in gangadhareswarar koil street, purasawalkam, madras and (2) a group of buildings known as 'alagappa nagar buildings' in alagappa nagar, madras. these constructions were completed in 1948 and, in respect of the former constructions, dr. alagappa chettiar owed the plaintiffs a sum of rs. 72,899-14-3 and in respect of the latter, a sum of rs. 81,519-5-7- the total amount comes to rs. 1,54,419-3-10. the plaintiffs further case is that dr. alagappa chettiar was the promoter of the third defendant company and he was a director and chairman of the board of directors, its managing agents being messrs. ramlal and company, limited, of which, he was also the managing director. head also.....
Judgment:

K. Veeraswami, C.J.

1. The plaintiff is the appellant. The suit is to recover Rs. 90 750 with interest and, in default of payment, for the sale of the properties described in the plaint schedule, and, if the sale proceeds are not sufficient, for a personal decree against defendants 1 and 2 for the balance of the amount due. The first defendant and the second defendant are the wife and daughter of late Dr. R.M. Alagappa Chettiar and the third defendant is a company incorporated in the Kerala State. The ease of the plaintiff is that in the course of the business of the plaintiff, and at the order and account of Dr. Alagappa Chettiar, the plaintiff constructed inter aha, the buildings namely (1) Guest House in Gangadhareswarar Koil Street, Purasawalkam, Madras and (2) a group of buildings known as 'Alagappa Nagar buildings' in Alagappa Nagar, Madras. These constructions were completed in 1948 and, in respect of the former constructions, Dr. Alagappa Chettiar owed the plaintiffs a sum of Rs. 72,899-14-3 and in respect of the latter, a sum of Rs. 81,519-5-7- The total amount comes to Rs. 1,54,419-3-10. The plaintiffs further case is that Dr. Alagappa Chettiar was the promoter of the third defendant company and he was a Director and Chairman of the Board of Directors, its Managing Agents being Messrs. Ramlal and Company, Limited, of which, he was also the Managing Director. Head also promoted another limited liability company under the name of 'Alagappa Estates Limited' of which Sri K.P.M. Ramanathan was the Director. One Rm. Kasi Viswanatha Chettiar, the brother-in-law of Dr. Alagappa Chettiar, was indebted to the plaintiff in the sum of Rs. 1,92 500, and the Alagappa Estates, referred to above, had guaranteed the due payment thereof to the plaintiff. The two sums of Rs. 72.899-14-3 and Rs. 81,519-5-7 which Dr. Alagappa Chettiar owed personally to the plaintiff and the sum of Rs. 1,92,500 payable by Kasi Viswanatha Chettiar and guaranteed by Alagappa Estates Limited, remained Outstanding in September, 1950. At the instance of the plaintiff, on 2nd September, 1950, the Alagappa Estates, Limited. Dr. Alagappa Chettiar and the third defendant deposited with the plaintiff, by way of a pledge, the shares they respectively held in the plaintiff's company (Limited) namely 208 preference shares for the face value of Rs. 20,800 held by Alagappa Estates Limited, along with 4,490 ordinary shares at the face value of Rs. 44,900 held by Dr. Alagappa Chettiar in his personal name, 38 ordinary shares of the face value of Rs. 3,80,000 held by the third defendant as security for due repayment of the aforesaid three sums and interest thereon. The plaintiff's further case is that Dr. Alagappa Chettiar also deposited on 2nd September, 1950 the title deeds of the guest house property with intent to create a charge in favour of the plaintiff for all the said sums due to the plaintiff. The payments were received by the plaintiff from time to time, in respect of the above three liabilities, and, by February, 1954, the balance due under the three sums were (1) guest house account Rs. 31,602, (2) Alagappa Nagar buildings account Rs. 52,436 and (3) Kasi Viswanatha Chettiar's account Rs. 27,855. Further construction was, done by the plaintiff at the instance of Dr. Alagappa Chettiar, and, two further sums of Rs. 14,781 and Rs. 9,758 were also due to the plaintiff. The result was that on 21st February, 1954 the total amounts due in respect of the first three accounts and the further two items, amounted to Rs. 1,36,432. On 21st February, 1954 Dr. Alagappa Chettiar executed a promissory note for the total sum of Rs. 1,36,432 promising to pay the sum with interest at 6 per cent, per annum and, on the same day, he passed a letter to the plaintiff agreeing that the title deeds of his property already deposited with the plaintiff will remain as collateral security for the amount due under the promissory note until it is fully discharged. All amounts due on Kasi Viswanatha Chettiar's account, Karaikudi works account and Algappa Estates account were realised by the plaintiff, and, on 15th February, 1957, only Alagappa buildings account and the guest house account were outstanding. On the former account Rs. 54,023-14-0 was due, and on the latter account Rs. 22,938-6-3 was due. The total of these two accounts comes to Rs. 76,962-4-3 and for these amounts, Dr. Alagappa Chettiar executed a fresh promissory note in favour of the plaintiff on 15th February, 1957 promising to repay the sum with interest at 6 per cent, as before. On the same day, he gave a letter to the plaintiff agreeing that the title deeds of the guest house property already deposited will remain with the plaintiff as collateral security. Meanwhile, Alagappa Chettiar had executed a sale deed on 28th September, 1951 conveying to the third defendant Alagappa Textiles (Cochin) Limited, the guest house property. Alagappa Chettiar died on 5th April, 1957 leaving the first defendant and the second defendant as his sole heirs and legal representatives. The present suit is filed on 10th February, 1960 for realising the amount due under the promissory note, the last of which was on 15th February, 1957, which was a renewal of the prior promissory note, dated 21st February, 1954, and, in default of payment, the plaintiff also prayed for a decree for the sale proceeds of the properties alleged to have been given to them by way of security under the accompanying letter.

2. The defendants 1 and 2 filed a written statement contending that the suit was not maintainable, that there is no cause of action against them and that they are not in possession of any of the assets of the late Dr. Alagappa Chettiar. They further contended that the suit being on a mortgage, and if the suit failed, the relief based on personal liability could not be granted and therefore no decree could be passed against the assets of Dr. Alagappa Chettiar in their hands.

3. The third defendant, purchaser of the guest-house, contended that Exhibit P-3, memorandum given to the plaintiff on 2nd September, 1950 and the two subsequent memoranda Exhibit P-7 and P-42, dated 21st February, 1954 and 15th February, 1957, respectively, not having been registered, no valid mortgage had been created in favour of the plaintiff. A further defence put forward, namely, that this defendant has discharged in full his obligations to the plaintiff company as undertaken by him under the sale deed on 28th September, 1951 and accepted by the plaintiff company, and as such, the plaintiffs had no cause of action against them. The trial Judge dismissed the suit against the third defendant and passed a decree against the assets of Dr. Alagappa Chettiar, if any, in the hands of defendants land 2.

4. The plaintiff has filed the above appeal and the contention of the learned Counsel for the appellant is that an equitable mortgage by deposit of title deeds of the guest-house property has been created in favour of the plaintiff on 2nd September, 1950 under Exhibit P-3 letter executed by Dr. Alagappa Chettiar, the Alagappa Estates, Limited and the managing agents of the third defendant, a decree ought to have been passed against the third defendant also. The learned Counsel for the appellant contends that the deposit of title deeds of the property relating to the guest-house by letter, dated 2nd September, 1950 and the letters Exhibits P-7, dated 21st February, 1954 and Exhibit P-42, dated 15th February, 1957 stating that the title deeds already deposited may be treated as collateral security, although unregistered, are sufficient in law to create a valid charge by deposit of title deeds enforceable at law.

5. It may be seen that the guest house which was Originally owned by Dr. Alagappa Chettiar, was sold to the third defendant on 28th September, 1951 under Exhibit B-2 and the building built over the said property is specifically referred to in the said deed. If the plaintiff had enforced the letter, dated 2nd September, 1950, Exhibit P-3 different considerations would have arisen. But the present suit is filed on foot of the last of the promissory notes, namely, 15th February, 1957, and the letter Exhibit P-42, dated 15th February, 1957. The allegation in paragraph 18 of the plaint makes it clear that what is sought to be enforced is the promissory note, dated 15th February, 1957 and the letter Exhibit P-42 executed on the same date.

6. The learned Counsel for the appellant contends that Exhibits P-3, P-7 and P-42 do not require registration, that they are only memoranda recording the transactions already arrived at. Learned Counsel's contention is that the real test to be applied in finding out whether the memorandum requires registration or not is to find out what exactly is the bargain between the parties - if the memorandum is the bargain between the parties or, is it merely evidentiary of the deposit of title deeds already made. If the memorandum represents the bargain between the parties or, is it merely evidentiary of the deposit of title deeds already made. If the memorandum represents the bargain between the parties, the memorandum requires registration, otherwise not. In this connection learned Counsel referred to the following decisions : Pranjivandas Jagjivandas Mehta v. Chan Ma Phee 31 M.L.J. 155 : 43 I.A. 122 : I.L.R. 43 Cal. 895, Subramonian and Anr. v. Lakshman and Ors. 44 M.L.J. 602 : 50 I.A. 77 : I.L.R. 50 Cal. 338, Obla Sandarachdri v. Narayana Iyer 60 M.L.J. 506 : 58 I.A. 68 : I.L.R. 54 Mad. 257, Harisankar v. Kedarnath (1939) 2 M.L.J. 522 : 66 I.A. 184, Rachapal Mahrai v. Bhagwandas Daruka and Ors. : [1950]1SCR548 K.J. Nathan v. C.S.T. Murthi Rao (1964) 2 M.L.J. 162. We agree with the learned Counsel that the real test to find out whether a Memorandum requires registration or not, is to ascertain whether the memorandum represents the bargain between the parties. The relevant portion of Exhibit P-3 runs as follows:

Besides, I, Dr. R.M. Alagappa Chettiar hand over to you my title deeds relating to the guest house by way of further security in respect of the aforesaid liability.

7. The relevant portions of Exhibit P-7 and P-42 are as follows:

I hereby agree that the title-deed of the guest house property already deposited with the company will remain with them as collateral security for the above promissory note until it is fully discharged.

8. The language of the aforesaid document leaves no doubt in our minds that the memoranda, Exhibits P-7 and P-42 require registration.

9. There is, however, a shorter method of disposing of the above appeal. Dr. Alagappa Chettiar sold the guest-house on. 28th September, 1951, under Exhibit, B-2. The present suit is not filed to enforce the letter, dated 2nd September, 1950 executed by (1) Dr. Alagappa Chettiar, (2) Alagappa Estates, Limited and (3) Ramlal and Company Limited, managing agents of the third defendant. If the suit had been instituted on foot of the letter, dated 2nd September, 1950 different considerations would have arisen. But the present suit having been filed OIL 10th February, 1960 on foot of the promissory note and letter, dated 15th February, 1957 (Exhibit P-41 and P-42) on which late Dr. Alagappa Chettiar had lost his title to the property and the said promissory note and the letters namely, Exhibit P-41 and P-42 not having been signed by the third defendant, the plaintiff cannot have any relief against the third defendant in the suit. On this short ground, the plaintiff's suit against the third defendant could be dismissed. Viewing, from any angle, the plaintiff's suit against the third defendant fails, and has to be dismissed.

10. Mr. M.S. Venkatarama Iyer, appearing for the respondents, contended that if the payments subsequent to the execution of the agreement Exhibit D-1 on 8th March, 1951 are taken into account, the third defendant has discharged in full the obligation to the plaintiff company as undertaken by it under the sale deed, dated 28th. September, 1951, Exhibit D-2; and, in this connection, we refer to the annexure to Exhibit P-52, a letter executed on behalf of the third defendant to the plaintiff. The plaintiff sent a reply, dated 3rd April, 1928, admitting the receipt of the amount covered by items, 2, 3 and 4 of the statement of account enclosed along with Exhibit P-52. But. the plaintiff stated that all the payments received from the late Dr. Alagappa Chettiar, either directly or indirectly have been credited to the various heads of accounts as per his instructions only and that Dr. Alagappa Chettiar had executed the promissory note on 15th February, 1957 for the balance of the amount due, namely, Rs. 76,962-4-3. There is thus no substance in the contention that the entire amount payable by Dr. Alagappa Chettiar has been paid in full. The present suit is filed only for recovery of the abovesaid amount of Rs. 76,962-4-3 remaining due to the plaintiff. In the result, the appeal fails and is dismissed with costs.


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