Karnataka High Court
Syndicate Bank vs M. Sivarudrappa (Deceased) By L.Rs on 29 January, 2003
Equivalent citations: AIR2003KANT210, II(2003)BC211, [2004]118COMPCAS390(KAR), 2003(2)KARLJ226, AIR 2003 KARNATAKA 210, 2003 AIR - KANT. H. C. R. 922, (2003) 2 KANT LJ 226, (2003) 2 BANKCAS 211, (2003) 2 KCCR 1201, (2003) 3 CIVILCOURTC 81, (2003) 2 ICC 891, (2004) 118 COMCAS 390, (2003) 5 ALLINDCAS 77 (KAR)
JUDGMENT Chandrashekaraiah, J.
1. This appeal is by the plaintiff challenging the judgment and decree of the Trial Court, passed in O.S. No. 1996 of 1985 insofar as it relates to dismissal of the suit as against the defendant 2.
2. The parties in this appeal are referred to as arrayed before the Trial Court.
3. The plaintiff filed the suit for recovery of money contending that the defendants personally, jointly and severally are liable to pay a sum of Rs. 1,28,114.40 ps. together with cost and interest thereon at the rate of 19.5% p.a. compounded quarterly on the principal of Rs. 1,37,006.95 ps. and for a final decree for sale of the mortgaged immovable property mentioned in the schedule, in the event if any default is committed. The Trial Court decreed the suit as against the defendants 1 and 3 jointly and severally and dismissed the suit as against the 2nd defendant. The case of the plaintiff is that the plaintiff is a banking company and has advanced a loan of Rs. 1,00,000/- on the request of the 1st defendant. The further case of the plaintiff is that the 2nd and the 3rd defendants are the sureties. It is further stated that the 2nd defendant has created a mortgage in respect of the property bearing Corporation No. 40 and old No. 70 situated at Ratna Vilas Road, Basavanagudi, Bangalore - 560 004 in respect of the loan advanced to defendant 1- The defendants 1 and 3 did not appear and therefore they were placed ex parte before the Trial Court. The 2nd defendant, during the pendency of the suit died leaving behind his wife and son as his legal representatives even before filing the written statement.
4. The plaintiff-Bank issued a legal notice calling upon the defendants to pay the amount borrowed by the 1st defendant. Defendant 2, when he was alive replied the said notice denying his liability on the ground that he has not created any equitable mortgage in favour of the Bank as a security for the loan borrowed by the 1st defendant. On the basis of the pleadings of the parties, the Trial Court has framed the following issues:
1. Whether the plaintiff proves that defendant 1 has borrowed a sum of Rs. 1,00,000/- and executed the documents?
2. Whether the plaintiff proves that 2nd and 3rd defendants are sureties and 2nd defendant has mortgaged the property by deposit of title deed on 10-6-1982?
3. Whether the plaintiff proves that defendants jointly and severally liable for sum of Rs. 1,28,114-40 ps?
4. Whether the plaintiff proves that 1st and 3rd defendants have acknowledged the liability on 23-11-1984?
5. Whether the plaintiff is entitled for sale of mortgaged property?
6. What decree or order?
Issue 1 has been answered in the affirmative by the Trial Court. On issue 2, the Trial Court held that the plaintiff had not proved that the 2nd defendant was a surety for the loan and has also held that the plaintiff failed to prove that the 2nd defendant mortgaged the suit schedule property. This finding on issue 2 has been questioned by the plaintiff-Bank in this appeal.
5. The only point that arise for consideration in this appeal is that whether the plaintiff has proved the mortgage said to have been created by the 2nd defendant by depositing his title deeds as a security for the money borrowed by the 1st defendant.
6. The case of the plaintiff is that the 2nd defendant on 10-6-1982 had filed the list of documents to the plaintiff-Bank offering the suit schedule property as a security for the loan borrowed by the 1st defendant along with other documents. This list has been marked as Ex. P. 8. One of the documents which relates to the title deed is certified copy of the sale deed dated 22-4-1936 executed by one Sri Ramaswamy for himself and as guardian of his minor son Sri Chandrashekaraiah, in favour of M. Shivarudrappa. Thereafter, according to the plaintiff-Bank a memorandum of deposit of title deeds dated 14-6-1982 has been executed by Shivarudrappa and got it registered on the same date i.e., 14-6-1982. This deed of memorandum is marked as Ex. P. 9. The case of the 2nd defendant is total denial of equitable mortgage by deposit of title deeds and the execution of the memorandum of the deposit of title deeds. The Trial Court, on appreciation of evidence has held that the plaintiff has not proved the execution of Ex. P. 9 and consequently dismissed the suit as against defendant 2.
7. Sri B.R. Ashwatharam, learned Counsel appearing for the Bank submitted that the Manager of the Bank who has been examined as P.W. 1 has stated that the Bank has advanced a loan on the application filed by defendant 1 and also has stated that the fact that defendant 2 has created an equitable mortgage by depositing of title deeds. On this evidence, since there is no contest by defendants 1 and 3 the Trial Court decreed the suit as against defendants 1 and 3. As stated earlier, the case of the 2nd defendant is the total denial of creation of equitable mortgage and execution of memorandum of title deeds. In Exs. P. 8 and P. 9 and rectification deed, Ex. P. 10, the name of the 2nd defendant is typed as "M. Shivarudrappa". But from the signature of the 2nd dejendant on Exs. P. 8, P. 9 and P. 10, it is found the letter 'h' is missing between the letters 's' and 'i'. From the acknowledgement which is marked as Ex. P. 14, it is seen that the letter 'h' is there in between the letters 's' and 'i'. In view of this discrepancy found and also in the absence of producing any positive evidence by the Bank in proof of the equitable mortgage by the 2nd defendant in favour of the Bank, the Trial Court has held that the Bank has failed to prove the mortgage and accordingly dismissed the suit insofar as the 2nd defendant is concerned.
8. Sri B.R. Ashwatharam, learned Counsel appearing for the plaintiff submitted that the suit of the Bank is on an equitable mortgage and therefore, there is no reason for the Trial Court to dismiss the suit when the Bank has accepted the title deeds produced by the 2nd defendant on 10-6-1982 as per Ex. P. 8. It is further submitted that the Ex. P. 9 is only a memorandum of deposit of title deeds and the suit is not based on the said memorandum of title deeds and therefore, on the basis of Ex. P. 8, the Trial Court ought to have decreed the suit as against defendant 2 also. In order to consider this contention, it is just and necessary to refer to the averments made by the plaintiff in the plaint. In the middle of para 5, it is stated as follows:
"The plaintiff-Bank with abundant caution requested the second defendant to reduce the terms and conditions of the said mortgage dated 10-6-1982 into writing on the requisite stamp paper and get the same registered in favour of the plaintiff-Bank, since some of the documents deposited were only certified copies".
Ex. P. 8 is the list of documents said to have been produced by defendant 2 to the Bank, offering the suit schedule property as a security for the loan advanced to defendant 1. From this list, it is seen that the 2nd defendant has produced certified copy of the sale deed dated 22-4-1936 executed by one Sri Ramaswamy and another in favour of M. Shivarudrappa. The certified copy of the sale deed dated 22-4-1936 has not been produced in the suit. From the averments of the plaint extracted, it is seen that even though the list of documents dated 10-6-1982 i.e., Ex. P. 8 said to have been filed before the Bank, the Bank has not accepted the list of documents produced, referred to in Ex. P. 8 till the terms and conditions reduced into writing of stamp paper and to get the same registered in favour of the plaintiff-Bank i.e., to say the transaction of mortgage has been completed, not by filing the list of documents as per Ex. P. 8, but by executing the memorandum of title deeds as per Ex. P. 9. Further, in para 13 of the plaint, it is stated as follows:
"The cause of action for the suit arose on 10-6-1982 (Tenth day of June, one thousand nine hundred and eighty-two) when the mortgage by deposit of title deeds was created by the 2nd defendant on 14-6-1982".
From this, it is seen that the mortgage by depositing the title deeds was created by the 2nd defendant on 14-6-1982 i.e., on executing the memorandum of deposit of title deeds, Ex. P. 9. If that is so, there is no substance in the contention of the learned Counsel for the plaintiff that the suit is not based on the basis of the deposit of title deeds dated 14-6-1982.
9. No doubt, under Section 58(f) of the Transfer of Property Act, a person may create an equitable mortgage by delivering the title deeds to a creditor or to his agent in respect of the documents of title to immovable property with an intent to create a security thereon. In the instant case, even according to the Bank, the 2nd defendant has delivered the certified copy of the sale deed on 10-6-1982. From the plaint averment as stated earlier, the list of documents was not accepted by the Bank as the sale deed is only a certified copy and therefore insisted upon defendant 2 to execute a memorandum of title deeds and to get the same registered. If that is so, transaction of mortgage has been completed only on execution of deposit of title deeds and got the same registered. When such being the case, when the defendant 2 specifically denied the very execution of the document and the signature found on Exs. P. 8 and P. 9 the burden is on the Bank to, prove the execution of Exs. P. 8 and P. 9. Ex. P. 9 is a registered deed attested by two witnesses. If it is a registered deed attested by two witnesses and the attestors are available to give evidence, the Bank was at liberty to examine any one of the attesting witnesses to prove the signature of M. Shivarudrappa. Section 68 of the Indian Evidence Act reads as follows:
"68. Proof of execution of document required by law to be attested.--If a document is required by law to be attested, it shall not be used as evidence until one attesting witness at least has been called for the purpose of proving its execution, if there be an attesting witness alive, and subject to the process of the Court and capable of giving evidence".
If a document is required to be attested, it shall not be used as evidence until one attesting witness at least has been called for the purpose of proving its execution if there being an attesting witness alive and capable of giving the evidence. Section 59 of the Transfer of Property Act reads as follows:
"59. Mortgage when to be by assurance.--Where the principal money secured is one hundred rupees or upwards, a mortgage [other than a mortgage by deposit of title deeds] can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses.
When the principal money secured is less than one hundred rupees, a mortgage may be effected either by [a registered instrument] signed and attested as aforesaid or [except in the case of a simple mortgage] by delivery of the property".
No doubt, the deposit of title deeds need not be in writing. The deed of mortgage other than the mortgage of deposit of title deeds is required to be attested by two witnesses. In the instant case, as the mortgage is by depositing of title deeds under Section 58(f), there is no need to execute any document in order to create a charge in respect of an immovable property, as delivery of the title deeds itself is sufficient to create a charge in respect of an immovable property for the money borrowed. But, in the instant case, the list of documents referred to in Ex. P. 8, said to have been delivered by the 2nd defendant to the Bank was not accepted by the Bank, since the title deed delivered is only a certified copy and not the original. As delivery of certified copy since has not been accepted by the Bank, the memorandum of deposit of title deed was got executed and registered. As the memorandum of title deed is a registered document and when that document has been specifically denied by the 2nd defendant in his reply notice and in the written statement filed by the L.Rs of the 2nd defendant, the plaintiff-Bank ought to have examined one of the attesting witnesses to the said deed. In the instant case, no attesting witness has been examined in order to prove the execution of the document by the 2nd defendant. Further, the signature found on Exs. P. 8 and P. 9 is disputed and as there is discrepancy in the spelling of the name of Shivarudrappa as observed earlier, the Bank ought to have examined one of the attestors of the document. The Bank Manager who has been examined as P.W. 1 has not stated anywhere in his evidence that the 2nd defendant has signed Exs. P. 8 and P. 9 in his presence. If that is so, in the absence of any such positive evidence adduced by the plaintiff to prove the documents, Ex. P, 9, I am of the view that the Trial Court is justified in dismissing the suit insofar as the 2nd defendant is concerned.
10. Though the matter was heard on 28th and 29th no one represented the 2nd defendant in this appeal. The respondents 1 and 3 were placed ex parte before the Trial Court itself. If that is so, it is not a case where the cost is to be awarded. In the result, I pass the following order:
(a) Appeal is dismissed.
(b) No cost.