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Ebrahim Hazi Ismail (Since Deceased, Represented by Bai Fatma Bai) and ors. Vs. Official Trustee and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1937Cal741
AppellantEbrahim Hazi Ismail (Since Deceased, Represented by Bai Fatma Bai) and ors.
RespondentOfficial Trustee and anr.
Cases ReferredS.K.A.R.S.T. Chettyar Firm v. A.L.A.B. Chettyar Firm
Excerpt:
- .....haji ismail, defendant 1, on 20th march 1922. it appears that madan gopal instituted a suit, being title suit no. 69 of 1923, to enforce his mortgage against mehenti impleading the present defendant 3 and defendant 1. defendant 3 filed a written statement pleading that madan gopal's equitable mortgage was not a fact. defendant 1 also filed a written statement challenging the existence and validity of the equitable mortgage. while the suit was pending, on 2nd november 1927 ismail defendant 1 purchased the right of madan gopal on the equitable mortgage and got himself substituted as plaintiff. thereafter there was a compromise between ismail on the one hand and the mortgagor mehenti on the other. on 25th august 1929 the compromise petition was filed, and on the following day the court made.....
Judgment:

S.K. Ghose, J.

1. This is an appeal by the heirs of defendant 1. The facts which have given rise to this litigation may be shortly stated as follows: P.S. Mehenti, who is defendant 2, took lease of Khandra Colliery which is the mortgaged property in suit on 2nd September 1919. On 16th March 1920 he gave an equitable mortgage for a sum of Rs. 1,25,000 to one Nursinsahay Madan Gopal. On 22nd September 1921 Mehenti executed a deed of mortgage for a sum of Rs. 65,000 in favour of Kharsedji Lirnji, defendant 3. The latter executed a deed of conveyance in favour of the plaintiff Rustomji Pestonji on 22nd January 1932: vide Ex. 1. Mehenti executed another mortgage for a sum of Rs. 29,250 in favour of Ebrahim Haji Ismail, defendant 1, on 20th March 1922. It appears that Madan Gopal instituted a suit, being Title Suit No. 69 of 1923, to enforce his mortgage against Mehenti impleading the present defendant 3 and defendant 1. Defendant 3 filed a written statement pleading that Madan Gopal's equitable mortgage was not a fact. Defendant 1 also filed a written statement challenging the existence and validity of the equitable mortgage. While the suit was pending, on 2nd November 1927 Ismail defendant 1 purchased the right of Madan Gopal on the equitable mortgage and got himself substituted as plaintiff. Thereafter there was a compromise between Ismail on the one hand and the mortgagor Mehenti on the other. On 25th August 1929 the compromise petition was filed, and on the following day the Court made an order as follows:

The plaintiff and defendant 2 (Mehenti) had filed a petition of compromise. The suit be decreed in terms of compromise against defendant 2 and dismissed against the other defendants.

2. The present plaintiff has now brought the suit to enforce his mortgage and further to get a declaration that his rights are not subject to the alleged equitable mortgage which was the subject matter of Suit No. 69 of 1923. The suit is contested by Ismail, defendant 1. His main defence is that plaintiff's mortgage is subject to the aforesaid equitable mortgage. The learned Subordinate Judge has held in favour of the plaintiff and decreed the suit. Hence this appeal by the heirs of defendant 1 who has since died. It may be stated here that the plaintiff has also since died and the Official Trustee of Bengal, as trustee to the estate of the deceased, has been substituted in his place. In the trial Court a question was raised as to the factum of the equitable mortgage. Mr. Gupta for the appellant has pointed out that the equitable mortgage is expressly mentioned in the plaintiff's own title deeds, namely the mortgage bond Ex. 8 and the conveyance Ex. 1. Mr. S.M. Bose, appearing for the respondent in this Court, has conceded that he cannot dispute the factum of the equitable mortgage and that it may be taken that the parties themselves thought that a valid equitable mortgage was created by Mehenti in favour of Madan Gopal. The real question between the parties is whether the so called equitable mortgage is valid in law. The learned Subordinate Judge has taken the view that it was invalid by reason of the fact that it was really created by a letter of which Ex. 17 is a copy, and that letter was not registered. Mr. Gupta for the appellant has contended that the learned Subordinate Judge should not have allowed this question to be raised because it was not raised in the pleadings. There was however an issue, namely Issue 5:

Were the alleged equitable mortgages dated 16th March 1920 and 11th February 1921 valid and legal and are the said mortgages enforceable in law?

3. The second mortgage above named is not in question now. Order No. 54 dated 12th July 1935 in the order-sheet shows that defendant 1 attempted to have this issue struck out, but he failed. Ex. 4 is a certified copy of the written statement filed in Suit No. 69 of 1923 on behalf of the mortgagor Mehenti, Para. 1 of the written statement runs as follows:

This defendant admits the correctness of the statements made in paras. 1, 2 and 3 of the plaint, but states that on 3rd March 1920 and on 16th March 1920 letters were passed between this defendant and the plaintiff evidencing the contract under which the deposits of shares and title deeds of Kandra property were made on the said 3rd March 1920 and on 16th March 1920. This defendant submits that the said letters should be produced by the plaintiff and this defendant relies upon the terms of the said letters when produced.

4. This, it appears, put the plaintiff in this suit upon an enquiry and he gave notice to defendant 1 to produce the letter. On 9th July 1935, in the course of the hearing, the defendant filed a petition stating that he had no such letter. The evidence shows that on 3rd July 1935 the plaintiff made an attempt to search the record of Suit No. 69 of 1923 in the Burdwan record room. The result is disclosed in the evidence of Nathuni, witness No. 5 for the plaintiff. He states that the document was not found in the record, having been returned to the pleader of defendant 1. This witness was an officer of Madan Gopal at the time of Suit No. 69 of 1923 and it was he who filed the plaint. He deposes that on that occasion typed copies of the letter in question were prepared for the use of the pleader and he retained one of those copies which is Ex. 17. He swears that except that the signature was not copied, this copy Ex. 17 is a true copy of the letter of 16th March written by P.S. Mehenti. On the other side there is the only evidence of one Taraporwala. The learned Subordinate Judge has discussed the deposition of these two witnesses and he has held that Nathuni should be believed and that Taraporwala should not be believed. Having perused their evidence we are in entice agreement with the trial Court. It is no doubt true that Mehenti is now siding with the plaintiff while Taraporwala is siding with defendant 1. But the remarkable fact is that neither Mehenti who was present in Court, nor Gokul Das, one of the partners of the firm of Madan Gopal who is said to have taken delivery of the title-deeds, has been examined. There is no reason to doubt the evidence of Nathuni which is to the effect that a letter was addressed by the mortgagor at the time of the so-called equitable mortgage and Ex. 17 is a true copy of that letter.

5. Then comes the question whether the mortgage was invalid by reason of the fact that the letter was not registered. The law on the subject has been explained in various cases amongst from the leading case of Kedar Nath Dutt v. Sham Lal Khettry (1873) 20 WR 150 to Bundara Chariar v. Narayan Ayyar . Ordinarily a mortgage by deposit of title deeds would be an oral transaction. But, as a matter of practice, it is not unusual for the deposit to be accompanied by a memorandum in writing: Miller v. Babu Madho Das (1896) 19 All 76. If there is such a writing, the question is whether it creates the mortgage or whether the mortgage is complete without the writing, the writing being merely the statement of facts which would evidence the mortgage. If the writing creates the mortgage, it must be registered. Every thing depends upon the memorandum in writing which in each case has got to be construed and it has been pointed out that the distinction may be very fine. It has also been pointed out that where the writing explains the reason why the deeds are deposited, and there is nothing but the writing to connect the deposit with the deed, the writing must be registered; Swami Chetty v. Ethirajulu Naidu AIR 1917 Mad 773. The case law on the subject has grouped round the following cases which had been cited at the Bar: Kedar Nath Dutt v. Sham Lal Khettry (1873) 20 WR 150, Bhairab Chandra Bose v. Anath Nath De AIR 1920 Cal 312, Bundara Chariar v. Narayan Ayyar and Bhairab Chandra Bose v. Anath Nath De AIR 1920 Cal 312. Sometimes, stress has been laid on the fact that the memorandum was written subsequent to the deposit of the title deeds. In Kedar Nath Dutt v. Sham Lal Khettry (1873) 20 WR 150, cited above, there was evidence that the transaction was completed in the morning and the document was executed in the evening. The document started with the words 'for the repayment of the loan of Rs. 1,200 and interest thereon, etc' but it did not contain the terms of the transaction. It was held that registration was not necessary. In the case in Subramanian v. Lutchman AIR 1923 P C 50 the document contained the words 'We hand you herewith title deeds, etc. This please hold as security, etc. Please also hold this as further security.' Their Lordships held that the memorandum was the bargain between the parties and so required registration. In the case in Bundara Chariar v. Narayan Ayyar it was held that the document in question was merely a list of the title deeds and did not indicate the terms of the agreement or the nature of the matter. So the document did not require registration. In Bhairab Chandra Bose v. Anath Nath De AIR 1920 Cal 312 the document recites:

I hereby put on record that the title deeds re: my premises already deposited with you shall be as colleteral security.

6. It was held that the letter constituted a mortgage contract and so it was inadmissible for want of registration. Now in the present case the document (vide Ex. 17) runs as follows:

Calcutta,

The 16th March, 1920.

Messrs. Nursing Sahai Madangopal,

No. 12 Portuguese Church Street, Calcutta.

Dear Sirs,

As collateral security for the due repayment of the loan of Rs. 1,25,000 (one lac twenty-five thousand rupees) which you have this day lent and advanced to me on my Hundi of to-day's date (payable 90 days hence without grace) on Babu Hari Mohan Gangooly and accepted by him for Rs. 1,25,000 (one lac twenty-five thousand) with interest and costs as between attorney and client, I herewith deposit with you my principal title-deed relating to my Khandra Colliery property in District Burdwan described in Son. A hereunder written. I hereby also undertake to deposit with you in Calcutta the other title-deeds relating to the said Khandra Colliery property, a list of which is given in Sch. B hereunder written, and if any of the said last mentioned title-deeds happen to be not with me I will procure them if possible or else account for them.

I further place on record that interest will run on the amount of the said Hundi at the rate of Rs. 3,000 (three thousand rupees) per month from and after the expiry of 90 days from the date until realization.

Yours faithfully,

(______)

Schedules.

7. The evidence of Nathuni, which there is no reason to disbelieve, is to the effect that the letter was written by Mehenti and addressed to Madan-Gopal. He states:

The letter was written acknowledging that a loan of Rs. 1,26,000 was taken by P.S. Mehenti from Nursing Sahai Madangopal and as security for the debt title deeds of Khandra Colliery was deposited with Nursingh Sahai. This letter was of 16th March 1920.

8. It is clear that the letter embodies the terms of the loan and that it is contemporaneous with the transaction; it accompanied the delivery of title deeds and also informed the party that further title deeds were to follow. It also contained a calculation of the amount of interest. We agree with the trial Court in holding that the document created the mortgage and therefore should have been registered. As it was not registered, the mortgage is not valid in law. On this finding no other question really arises, but as the other question which has been called a question of res judicata has been debated in the trial Court as also in this Court, we proceed to dispose of it. The relevant issue is issue 9 which runs as follows:

Has defendant 1 (Ebrahim Haji Ismail) any right as mortgagee still subsisting by his alleged purchase after the compromise decree in Suit No. 69 of 1923?

9. The question is whether after the aforesaid compromise defendant 1 can seek protection under his prior mortgage in the present mortgage suit and use it as a shield against the plaintiff. In the trial Court the defence contended that the decree of dismissal in Suit No. 69 of 1923 was a decision under Order 9, Civil P.C. The plaintiff contended that it was a decision under Order 17, Rule 3. The learned Subordinate Judge decided in favour of the plaintiff's contention. In this Court Mr. Gupta for the appellant has conceded that since the decree of dismissal stands unchallenged, it makes no difference whether that decree was made under Order 9 or under Order 17. The question is, what is the effect of the decree of dismissal? The order has been quoted above. The relevant portion is that the suit 'be decreed in terms of compromise against defendant 2 and dismissed as against the rest'. In the trial Court as also in this Court the defence has relied on the authority in the case in S.K.A.R.S.T. Chettyar Firm v. A.L.A.B. Chettyar Firm AIR 1931 Rang 105. It was pointed out that in that case the puisne mortgagee did not put in appearance, no defence was raised by him impeaching the validity of the prior mortgage and so no issue was raised. In the present case issues were raised in the Title Suit No. 69 of 1923. The relevant issues are, issue 5 to the effect:

Whether the equitable mortgage with respect to the Khandra Colliery is valid, bona fide and operative one? And is it enforceable? and issue 11 to the effect:

Whether the plaintiff is entitled to enforce his rights under the equitable mortgage in respect to the balance due after instituting Suit No. 2789 of 1921 in the High Court and obtaining decree therein?

10. Thereafter certain steps were taken. The order sheet (vide Ex. 21) shows that the plaintiff Madan Gopal applied to examine the attorney. The evidence is that the letter (vide Ex. 17) was issued from the office of the attorney P.N. Sen. This application was however refused. Madan Gopal did nothing more in that direction, but he proceeded to get rid of his mortgage by assigning it to Ismail, defendant 1. Ismail then got himself substituted as plaintiff and proceeded to compromise with the mortgagor. Before that, the mortgagee had filed a written statement [vide Ex. 4 (a)] challenging the procedure adopted by Ismail. However, they compromised as a result of which Mehenti gave a complete go-by to his previous allegation. The allegations in defence raised by Limji however stood though he did not appear at the final hearing after the compromise. The order was to the effect that the suit was dismissed as against those respondents who had not entered into the compromise. Mr. Gupta has contended that this should mean that these defendants were dismissed from the suit. That however is not the wording of the order which was actually made nor could such an order be consistent with the provisions of the Code. Mr. S.M. Bose has rightly pointed out that if the intention was to withdraw the suit as against the non-compromising defendants, the plaintiff could not bring a fresh suit without the previous permission of the Court. As the matter stands now, it would not be possible for Ismail to bring another suit against Limji or his representative-in-interest raising the same point which was in issue in Suit No. 69 of 1923. It seems to us therefore that the compromise decree in Suit No. 69 of 1923 is no bar to the plaintiff's obtaining a declaration that his mortgage is not subject to the equitable mortgage of defendant 1. On the contrary the result of Suit No. 69 helps the plaintiff to obtain such a declaration. The suit has therefore been rightly decreed. The appeal therefore fails and it is dismissed with costs.


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