Madras High Court
K.A.Nair vs Chandra Jewellers on 31 July, 2012
Author: P.R.Shivakumar
Bench: P.R.Shivakumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 31.07.2012 CORAM THE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR C.S.No.582 of 2002 K.A.Nair, Managing Partner, Chandra Finances, 97, Egmore High Road, Egmore Chennai-600 008 .. Plaintiff Vs. 1.Chandra Jewellers a partnership firm reptd. By its Managing Partner V.P.Subash Chandran having office at No.97, Egmore High Road Egmore, Chennai-600 008 2.Mr.V.P.Subash Chandran 3.Mr.V.P.Ramachandran 4.Mr.V.P.Jayanarayanan .. Defendants Plaint filed under Order XXXVII Rule 1 of O.S.Raules and Order XXXIV Rules 4 and 5 of CPC for a judgment and decree against the defendants a) directing the defendants to pay the plaintiff the sum of Rs.33,13,799.85 together with interest @ 24% p.a. Or such further interest as may accrue thereon between the filing of the plaint and date of payment and also costs of the suit on some date to be notified by the Hon'ble court, and in default that the said properties described in the schedules to the plaint may be sold and the proceeds (after defraying threat expenses of the sale) applied in and towards the payment of the amount of the said principal, interest and costs; b) that if such proceeds shall not be sufficient for the payment in full of such amount the defendants may be ordered to pay to the plaintiff the amount of the deficiency with interest thereon at the rate of 24% p.a. until realisation and c) granting such other orders as this Hon'ble Court may deem fit and proper in the circumstances of the case. For Plaintiff : Mr.P.B.Ramanujam For Defendant : Mr.V.Raghavachari ----- JUDGMENT
The Civil Suit has been filed under Order XXXVII Rule 1 of O.S.Raules and Order XXXIV Rules 4 and 5 of CPC for recovery of a sum of Rs.33,13,799.85P together with interest based on seven promissory notes and a equitable mortgage allegedly created in respect of the properties described in the plaint schedules. The plaint allegations in brief, are, as follows:-
i) The first defendant is a firm of which defendants 2 to 4 are partners. They borrowed a total sum of Rs.14,00,000/- on different dates and executed promissory notes agreeing to pay on demand the amount covered by the promissory notes with an interest at the rate of 24% per annum. The date, amount and other particulars of the promissory notes are as follows:
Sl.No. Date Amount Rate of interest 1. 12.8.96 Rs.1,00,000/- 24% per annum 2. 15.10.96 Rs.1,70,000/- -do- 3. 4.11.96 Rs.1,00,000/- -do- 4. 11.11.96 Rs.1,00,000/- -do- 5. 24.12.96 Rs.1,30,000/- -do- 6. 17.01.97 Rs.1,00,000/- -do- 7. 14.3.97 Rs.7,00,000/- -do-
The second defendant is the brother of the third defendant. Both of them on 1.4.1997 deposited title deeds relating to the properties set out in the schedule 1 and 2 by way of security for the repayment of the said loan with the intention of creating an equitable mortgage over their properties, for the repayment of the amount due under the above said promissory notes. The defendants, despite repeated demands, have failed to clear the debts. Hence the plaintiff caused a notice to be issued to the defendants 1 to 4 on 4.2.2002 calling upon them to repay the entire amount due under the promissory notes as well as the equitable mortgage. Though the defendants received the said notice, they did not make payment as demanded in the notice, nor did they send any reply. Left with no other option except to file the suit for recovery of the amount due from the defendants, which according to the calculation of the plaintiff comes to Rs.33,13,799.85P as on the date of the suit, which amount, the defendants are jointly and severally liable to pay, the plaintiff has filed the suit. Hence the plaintiff prays for a judgment and decree against the defendants on the equitable mortgage directing the defendants to pay the plaintiff a sum of Rs.33,13,799.85P together with a further interest at the rate of 24% per annum from the date of plaint till the date of repayment and also the cost of the suit on or before a date to be fixed by this court. In case such sale proceeds being insufficient for the repayment of the debt in full a personal decree against the defendants for the balance amount with an interest at the rate of 24% per annum till realisation should be granted.
2. The averments found in the Written statement of defendants 2 to 4, who are the partners of the firm Chandra Jewellers shown as the first defendant, is as follows:
i) The suit filed by the plaintiff is false, frivolous, vexatious and not maintainable either in law or on facts. All the plaint allegations except the averments admitted by the defendants are denied and the same should be proved by the plaintiff. The address of the plaintiff given in the plaint as if he is residing at No.97, Egmore High Road, Egmore, Chennai-8 is not correct. He is a permanent resident of Pallassena, Palakad District, Kerala State. The office of Chandra Finances alone is situated at No.97, Egmore High Road, Egmore, Chennai. The second defendant is only a partner of the firm Chandra Jewellers (first defendant) and is not the Managing Director. Mr.V.P.Ramachandran, the third defendant alone is the Managing Director of the first defendant firm and he is in-charge of the day-to-day affairs of the firm.
ii) On 18.7.96, defendants 2 and 4 and the plaintiff entered into a deed of partnership for doing the business of financing under the name and style of "Chandra Finances" and got the firm registered. Plaintiff, second defendant and fourth defendant had to contribute 50%, 25% and 25% respectively to make out the capital of the firm and their share of profit and loss shall be in the same ratio. At no point of time there was any loan transaction between the plaintiff and the defendants. The plaintiff having entered into a partnership with the defendants 2 and 4 was exercising all the rights as a partner of Chandra Finances. Partnership of Chandra Jewellers and Chandra Finances are mostly common. As such the plaintiff had access to the books of accounts and various records of both the firms. Plaintiff had not advanced any amount for the jewellery business. The jewellery business was in existence from 1993 and it was in an affluent stage and there was no necessity for making any borrowal. Plaintiff stealthily removed some of the records including the sale deeds, unfilled signed papers and a few promissory notes from the office of Chandra Finances. The case of the plaintiff creating an equitable mortgage by deposit of title deeds, is also false. The so called letter for deposit of title deeds does not contain the signature on the fist two pages. Moreover, the said document has been addressed to Chandra Finances and not in favour of the plaintiff. Defendants 2 and 4 are partners of Chandra Finances, a registered partnership firm. Some of the partners cannot execute a document in favour of the firm creating loan transaction and it is also not the case of the plaintiff. Signatures found in page 3 of the document are also suspicious and the document itself containing three pages is an incomplete document, which would indicate concoction of the same for the purpose of the case. On receipt of the suit notice dated 4.2.2002, which apparently contained false averments, the defendants contacted the plaintiff and demanded production of the records relating to Chandra Finances. As the plaintiff did not despatch the records as demanded by the defendants, they believed that the notice dated 4.2.2002 was only an empty threat and after getting legal opinion, they chose to ignore the notice. Even assuming that the suit pro-notes are true, the suit is hopelessly barred by limitation.
iii) The plaintiff had demanded the defendants to secure materials including jewels, carpets, rare paintings, costly gems etc. to be despatched to United States of America, while the plaintiff was in good terms with the defendants and the second defendant under a bonafide impression, purchased them for the plaintiff. But the plaintiff later on stealthily removed those materials out of India without securing the permission of Government of India or the Reserve Bank of India. By the illegal activities of the plaintiff for which the second defendant was unwittingly used as a pawn, the defendants were shocked and thereafter they became cautious and refused to assist the plaintiff in this regard in any manner. Further, before such a snapping of the conduct, the second defendant had travelled extensively for securing the goods for the plaintiff and his daughter Meenakshi Kutty Kumar @ Mini and the goods thus secured by the second defendant for the plaintiff and his daughter includes a Kashmir blue sapphire stone, one pair of Emerald-pear shaped stones, an old Burmese Ruby Necklace, Sapphire Padmaracha (Ceylon), one pair of blue sapphire stone, loose gems, diamond bangles, paintings and a old Kasumala of 22 Ct. gold weighing 284.120 gms, all totally costing Rs.177.50 Lakhs. The Kashmir blue sapphire stone, which was handed over to the plaintiff at Madras had been taken to his native place Palakkad and subsequently it was stealthily removed to America and the defendants were given to understand that the said Kashmir blue sapphire stone purchased for Rs.60.00 Lakhs was sold in United States of America for Rs.2.5 Crores. As the plaintiff was smuggling the goods purchased by the second defendant for him, the second defendant refused to assist the plaintiff after coming to know the illegal activities of the plaintiff. The plaintiff seems to have entered into a partnership only with the defendants 2 and 4 and used the partnership firm Chandra Finances as a conduit for channelizing his funds for the purchase of rare gems, paintings etc. On verification it was also found that the plaintiff was an Inspector of Police removed from service. Because of the refusal on the part of the second defendant to secure materials for the illegal business of the plaintiff, purely as an attempt to blackmail, the plaintiff has chosen to institute the present suit for recovery of money.
iv) The plaintiff and the second defendant had also started a partnership business in the name and style of Navaratna Jewellers at Thrissur, Kerala State on 16.4.2001. A property for the same was purchased for Rs.42.00 Lakhs and a further investment of Rs.50.00 Lakhs was made. In the said partnership business, the plaintiff has 90% share, but the second defendant got only 10%. The second defendant had to do all ground work for purchase of gold studded jewellery on credit basis from various suppliers and the second defendant being an expert in gems, also used to advise the customers. Since the second defendant expressed his unwillingness to cooperate with the plaintiff for the purchase of rare gems and paintings to be taken to United States of America from India, the plaintiff became rude towards the second defendant and the second defendant was being threatened. The said fact that they were doing partnership business in the name of Navaratna Jewellers at Thrissur, Kerala State has been suppressed by the plaintiffs. When difference of opinion surfaced because of the refusal on the part of the second defendant to help the plaintiff in his shadow deals, the plaintiff threatened to close down the jewellery shop in Thrissur to cause extreme embarrassment to the second defendant, who had secured all the gold jewellery for the said shop on credit basis. Because of the refusal on the part of the plaintiff to invest in the business thereafter the said business was ultimately closed and the partnership was dissolved on 16.11.2001. In this regard, the second defendant was not adequately compensated for the efforts taken by him for supporting the said business in Thrissur and for his contribution as an expert in the field of gems and jewellery. The second defendant demanded his due share from the plaintiff for the work done by him. Plaintiff refused to do so and on the other hand, has chosen to file the present suit as sheer abuse of process of law. The defendants are taking separate action for malicious prosecution and for creating records. When the principal amount itself is denied, it is preposterous to claim interest at the rate of 24% per annum. Hence the suit may be dismissed with cost.
3. Based on the above said pleadings, the following issues have been framed.
" 1. Whether the suit Pro-notes is true, valid and binding on the parties?
2. Whether the suit is barred by limitation?
3. Whether the equitable mortgage by deposit of title deeds is true and valid?
4. Whether the plaintiff is entitled to recover the suit claim from the defendants? And
5. To what relief are the parties entitled?"
4. The plaintiff was examined as the sole witness (PW.1) and twenty documents were marked as Exs.P1 to P20 on his side. The second defendant alone has been examined as DW.1 and thirteen documents were marked as Exs.D1 to D13 on the side of the defendants.
5. The arguments advanced by Mr.P.B.Ramanujam, learned counsel for the plaintiff and by Mr.V.Raghavachari, learned counsel for the defendant were heard. The pleading and evidence, both oral and documentary were considered in the light of the submissions made by the respective counsel in their arguments.
Issue Nos.1 and 36. The plaintiff as an individual has filed the present suit for the recovery of money allegedly due on seven promissory notes, which amounts are claimed to be secured by creation of equitable mortgage by deposit of title deeds relating to immovable properties, which are set out in plaint schedules 1 and 2. According to the plaintiff, the defendants 2 to 4, who are partners in the first defendant firm Chandra Jewellers, borrowed the amounts covered by the suit promissory notes on various dates for the jewellery business. The plaintiff has not disclosed the nature of association he had with Chandra Jewellers, the first defendant firm and Chandra Finances, a firm, of which the plaintiff and defendants 2 to 4 were partners. The defendants 2 to 4, who are collectively sued in the name of the first defendant firm have come forward with a defence plea that no amount was borrowed at any point of time for the business of the said firm from the plaintiff and the suit promissory notes were not executed in favour of the plaintiff as claimed by him. The further contention of the defendants is that using the close association of the plaintiff with Chandra Finances, a partnership firm of which he was a partner and with Chandra Jewellery, a firm having almost the same persons as partners, the plaintiff removed certain documents from the office of Chandra Finances and signed blank papers, concocted the suit documents and filed the present suit as an abuse of process of court. When the defendant's case is total denial of the loan dealings alleged by the plaintiff, it is for the plaintiff to prove the allegations regarding the borrowal made by the partners of the Chandra Jewellers from the plaintiff and execution of the the suit promissory notes.
7. The plaintiff, who figured as the sole witness on his side as PW.1, has deposed that defendants 2 and 3, for their jewellery business in the name of first defendant firm borrowed the amounts covered by the suit promissory notes, seven in number, and executed them promising to repay the said amount with interest at the rate of 24% per annum; that the defendants 2 and 3 with a view to create a security for the repayment of the said loan covered by the suit promissory notes deposited their title deeds regarding their immovable properties set out in plaint schedule 1 and 2; that even after a demand was made, the defendants failed to pay the amount either towards repayment of the principal amount of the loan or towards interest. The seven promissory notes relied on by the plaintiff have been produced as Exs.P1 to P7. The date, amount and other particulars of the promissory notes are as follows:
Sl.No. Date Amount Rate of interest
1. 12.8.96 Rs.1,00,000/- 24% per annum
2. 15.10.96 Rs.1,70,000/- -do-
3. 4.11.96 Rs.1,00,000/- -do-
4. 11.11.96 Rs.1,00,000/- -do-
5. 24.12.96 Rs.1,30,000/- -do-
6. 17.01.97 Rs.1,00,000/- -do-
7. 14.3.97 Rs.7,00,000/- -do-
The title deeds pertaining to the immovable properties described in plaint schedule 1 and 2, which according to the plaintiff, were deposited with the plaintiff by defendants 2 and 3 with an intention of creating a security for the repayment of the loan covered by Ex.P1 to P7 have been produced and marked as Ex.P8 to Ex.P17. Ex.P8 and Ex.P13 are the title deeds of the second and third defendants relating to the properties described in plaint schedules 1 and 2 respectively. The other documents are copies of the permanent land register extract, property tax notice and encumbrance certificates. According to the plaintiff, those documents were deposited under a letter dated 1.4.1997 marked as Ex.P18. Though the plaintiff would have instituted the suit without disclosing the fact that he was a partner in the firm Chandra Finances, which came into existence in 1996, he has admitted in his evidence that he was a partner in the said partnership firm Chandra Finances. But at the same time, he would claim to have contributed the entire capital for the business of such partnership firm Chandra Finances. No more details regarding his association with the first defendant firm have been given or stated by the plaintiff in the plaint or in his evidence in chief examination.
8. During cross-examination, the plaintiff (PW.1) has admitted the fact that he was also a partner in Chandra Jewellers. PW.1 in his evidence in cross-examination has admitted that he was a partner along with second and fourth defendants; that he did not remember the date of joining in Chandra Jewellers as a partner and that he understood that it was a registered partnership. From the said answers, it is quite obvious that he has admitted that he was also a partner of the first defendant firm Chandra Jewellers. According to the plaintiff's case, defendants 2 to 4, who are partners of Chandra Jewellers, borrowed the suit amounts from the plaintiff for the jewellery business and executed the suit promissory notes in favour of the plaintiff. Promissory note dated 12.8.1996 allegedly executed by the defendants 2 to 4 on behalf of the first defendant firm in favour of the plaintiff is Ex.P1. The said document admittedly contains the signatures of the defendants 2 to 4, who were the partners in Chandra Jewellers. The second defendant, who deposed as DW.1, has admitted that Ex.P1 contains his signature as well as the signatures of the other partners of the first defendant firm, namely defendants 3 and 4. Similarly, all other promissory notes, namely the promissory notes dated 15.10.96, 4.11.96, 11.11.96, 24.12.96, 17.1.97 and 14.3.97 contain the signatures of those three persons (defendants 2 to 4), which were said to have been made on behalf of the first defendant firm Chandra Jewellers. All the promissory notes have been stated to have been executed in favour of the plaintiff with an explanatory note that he was the Managing Partner of the Chandra Finances. Though the signatures found in those promissory notes are admitted to be that of the defendants 2 to 4, they have not admitted the execution of Exs.P1 to P7-promissory notes in favour of the plaintiff. They have contended that some documents containing the signatures, namely unfilled signed papers and a few promissory notes were removed stealthily by the plaintiff from the office of Chandra Finances of which the defendants 2 to 4 and the plaintiff were partners. It is not the case of the plaintiff that the promissory notes executed in favour of the erstwhile firm Chandra Finances were assigned in his favour on his retirement from the said partnership.
9. The suit has also not been filed in the name of Chandra Finances. The cause title shows the plaintiff K.A.Nair, as an individual to be the plaintiff with an explanatory note that he was the Managing Partner of Chandra Finances. Hence the suit is not one filed by the partners of Chandra Finances in the name of the firm. It is a suit filed by an individual K.A.Nair against another firm Chandra Jewellers and its partners. Two of the defendants were also partners in Chandra Finances. Though the suit came to be filed in the name of the plaintiff as an individual with an explanatory note that he was the Managing Partner of Chandra Finances, in the docket sheet, the cause title has been wrongly noted as M/s.Chandra Finances represented by its Managing Partner K.A.Nair. Therefore, it is quite obvious that the plaintiff is not certain as to the capacity in which he has filed the suit, either as an individual or as a Managing Partner representing the partnership firm. However, the pleadings made in the plaint and the evidence of PW.1 would go to show that he, as an individual, lent the money to the defendants and that the suit is filed as an individual. In this regard, as rightly contended by the learned counsel for the defendants, it is highly improbable that the defendants, who are also partners along with the plaintiff in the firm Chandra Finances, to have borrowed money from the plaintiff and executed such promissory notes, seven in number. Learned counsel for the defendants has also pointed out a fact that the plaintiff would not have chosen to lend huge amounts when the amount payable under the earlier promissory notes were not discharged and no amount was paid even towards interest for those debts. The said contention of the learned counsel for the defendants is also sound and the same cannot be rejected as untenable, especially in the light of the discrepancies found in the evidence of PW.1.
10. The plaintiff himself figured as the sole witness on his side. During cross examination, the plaintiff has given an answer that he was also a partner of Chandra Jewellers. It is also his evidence in cross examination that he had also signed in Ex.P1-promissory note. But, it is obvious and pertinent to note that the plaintiff is not a signatory to Ex.P1-promissory note. Again PW.1 in his cross examination is not able to state with certainty as to who are the other signatories to Ex.P1. He would admit that he could not identify the signatures of the promissors in Ex.P1-promissory note. Similarly, he has also admitted that he was not familiar with the signatures found in Exs.P2 to P7 - Promissory Notes. When such is the tenor of the evidence of PW.1, can we take his plea of borrowals by the defendants by the execution of the promissory notes marked as Exs.P1 to P7 to have been probable? Definitely the answer shall be in the negative. Again when questioned as to whether the same was shown in the income tax returns, PW.1 has given evasive answers. It is the evidence of PW.1 that he has brought money from United States of America, which had been deposited in Corporation Bank and the amounts paid under Exs.P1 to P7 were drawn from his account maintained with Corporation Bank on the dates of the promissory notes. But the plaintiff was not in a position to produce the statement of accounts or the account book to prove the said fact. At one place, the plaintiff (PW.1) has stated that he was one of the partners in Chandra Jewellers and at another place he has stated that he did not remember whether he was a partner in Chandra Jewellers. Regarding his association with the other partnership firm, namely Chandra Finances, he would admit that he was a partner in the said firm and including him and the second defendant there were three partners. But curiously, he has stated that he did not remember the name of the third partner. It is also his evidence that he did not remember the registered address of the partnership firm of which he was a partner. However he has stated that he had got the consent of the other partners before instituting the suit. He has admitted that Subash Chandran, the second defendant did not ask the plaintiff to file the suit against him. When confronted with a question as to whether the 2nd defendant filed a written statement stating that he had not borrowed any money from the plaintiff, PW.1 pleaded ignorance. It is also an admission made by PW.1 that he did not make any demand for repayment of the loan covered by the promissory notes marked as Exs.P1 to P7 between 1999-2000; that even in the correspondence between the plaintiff and the second defendant, there was no reference to the promissory notes and that no payment was made. If the said testimony of PW.1 is considered in proper perspective, the inescapable conclusion that can be arrived at is that the plaintiff has not proved either execution of Exs.P1 to P7 promissory notes or passing of consideration for the same. We have to see whether there is any admission on the part of the defendants regarding execution of the promissory notes and the borrowals as claimed by the plaintiff.
11. Of course it is true that DW.1 has admitted that the signatures found in Exs.P1 to P7 are that of the defendants 2 to 4. But such an admission of the signatures alone shall not amount to an admission of the execution of the documents, namely Exs.P1 to P7 Promissory Notes or the passing of consideration thereon. On the other hand, the defendants have taken clear stand that the plaintiff was a partner in Chandra Finances of which the defendants 2 to 4 were also partners; that the partnership of Chandra Jewellers and Chandra Finances were mostly common and because of the same, the plaintiff did have access to the books of accounts and various records of both the firms which were run in the same premises and that taking advantage of the same, the plaintiff had stealthily removed various documents including sale deeds and unfilled signed stamp papers and a few promissory notes from the office of the firm Chandra Finances and with the help of the same, the suit has been filed. The said averment has been confirmed by DW.1 in his testimony. Besides the testimony of DW.1, which is in conformity with the above said defence plea taken by the defendants, the plaintiff has also admitted the fact that he was a partner in Chandra Jewellers of which the second defendant also was a partner. The fact that the third partner was the fourth defendant seems to have been suppressed by the plaintiff even while he deposed as PW.1, as he has stated that he did not know who was the third partner. PW.1's further statement in his evidence that he got the consent of the other partners before instituting the suit will also probablise the defendants' case that the documents that were available in the office of Chandra Finances were stealthily removed by the plaintiff and the same have been used as suit promissory notes for the purpose of filing the suit against the defendants.
12. The defendants have alleged a motive for the plaintiff to foist a case against the defendants. According to the defendants, the plaintiff was illegally taking jewels with precious stones without the permission of the Government of India or the Reserve Bank of India out of India to the United States of America; that in fact he was smuggling those articles collected and procured by the second defendant on the request of the plaintiff; that when the second defendant came to know the illegal activities of the plaintiff, he stopped doing the purchase for the plaintiff and that the same was one of the reasons for the plaintiff to come forward with the suit with intent to threaten the defendants and coerce the second defendant to help him in his illegal activities. It is also the case of the defendants that the second defendant had been taken as a partner with the plaintiff for a jewellery business started in Thrissur, Kerala by the plaintiff to avail the services of the second defendant in procuring the gold jewelleries and rendering advice to the customers on precious stones, as he was an expert in gems; that the plaintiff closed the said jewellery without even making payment for the jewelleries procured by the second defendant for the said partnership firm on credit and thereby put the second defendant in an embarrassment in order to coerce him to come to terms with the plaintiff and help him for procuring the antiques, jewels and precious stones for being exported to the United States of America; that the said tactics did not work, since the second defendant refused to do so and that the same was also the reason for concocting the documents and filing the present suit.
13. In support of the above said averment, evidence has been led through second defendant. In addition there are also admissions on the part of the plaintiff who deposed as PW.1. He has admitted that his daughter was taking care of his gold export to the United States of America and he did not obtain any permission from the appropriate authority for export of gold from India. Ex.D1 is a letter written by the plaintiff's daughter from the United States of America. Ex.D2 is also admitted to contain the signature of the daughter of the plaintiff. Ex.D3 is a letter written by the plaintiff from the United States of America to the second defendant and it contains the signature of the plaintiff. Ex.D4 is a document written by the daughter of the plaintiff. Ex.D5 is the e-mail message sent to the second defendant from the e-mail address of the plaintiff. Ex.D6 is the copy of e-mail dated 15.03.1999 sent by the second defendnat to plaintiff. Ex.D7 is the reply dated 19.03.1999 sent by e-mail by the plaintiff in reply to Ex.D6. Ex.D8 series are the copies of the report sent to the second defendant by the plaintiff after checking the gems purchased by the plaintiff's daughter in the United States of America. All the above said documents Ex.D1 to Ex.D8 were admitted by the plaintiff while deposing as PW.1 and they were marked as exhibits based on such admission. Ex.D12 is a true copy of one of the colour stone origin report dated 21.10.1997, which is found in Ex.D8 series. Exs.D9 and D10 are the letters dated 28.1.1998 and 3.2.1998 respectively addressed by the plaintiff to the Manager of Corporation Bank, Kannambra and the Manager, Corporation Bank, Whites Road, Madras respectively. By Ex.D9-letter, the plaintiff has requested his account in Corporation Bank, Kannambra to be transferred to his another account bearing Account No.77 maintained at Corporation Bank, Whites Road Branch, Madras. Ex.D10 is the copy of similar letter written to the Manager, Corporation Bank, Whites Road, Madras. In Ex.D10, the plaintiff has written that he was a partner of the partnership firm Chandra Jewel & Gems Exports along with Subash Chandran, the second defendant and others and that he would be signing along with the second defendant Subash Chandran in the necessary papers for getting a loan of Rs.3.00 Lakhs. The letter given by the Manager, Corporation Bank, Whites Road on 13.2.1998 regarding the bank balance of Chandra Jewel and Gems Export has been marked as Ex.D11. All those documents will go to show that the plaintiff was associated with the defendant in jewellery business and the plaintiff was a partner of Chandra Finances; that both Chandra Finances and Chandra Jewellers were functioning in one and the same building at No.97, Egmore High Road, Egmore, Chennai and that the plaintiff had easy access to the records of both the firms. Ex.D13 is another copy of a letter dated 05.09.1999 with a copy of the pay order dated 11.1.1999 found in Ex.D2.The above said documents coupled with the admissions made by PW.1 and also the testimony of DW.1 will show that the plaintiff was doing the business of exporting gold and precious stones from India to the United States of America without proper license and permission; that for the said business, he used the services of the second defendant, who was an expert in gems and that the second defendant who got suspicion abut the legality of such experts, stopped helping the plaintiff in procuring antiques and precious stones. It is also obvious from the evidence that the plaintiff closed the jewellery business carried on in the name of Navaratna Jewellers in Thrissur, Kerala State. But no document for settlement of accounts has been produced. Though there is admission that the defendant No.2 was helping in procuring the precious stones and other antiques for the plaintiff, he was not paid his due commission. The contention of the defendants that for the jewelleries procured by the second defendant for the above said Navaratna Jewellers on credit basis, the plaintiff has not paid the amount. The plaintiff has not chosen to produce the account books to show that the entire account between the plaintiff and the second defendant in respect of Navaratna Jewellers was settled and closed. In the light of the above said facts and circumstances of the case, this court has to accept the contention of the defendants that the motive alleged by the defendants against the plaintiff for concocting documents and filing the suit with the aim of harassing the defendants, especially the second defendant and make him to come to terms with the plaintiff is more probable.
14. For all the reasons stated above, this court comes to the conclusion that the plaintiff has not proved the suit promissory notes Exs.P1 to P7 to be the promissory notes executed by the defendants 2 to 4 on behalf of the first defendant firm in favour of the plaintiff and were supported by consideration and that on the other hand, on preponderance of probabilities, the case of the defendants in this regard has to be accepted. Hence this court holds that the suit promissory notes are not proved to be valid and binding on the defendants.
Issue No.2
15. The first of the suit promissory notes (Ex.P1) bears the date 12.8.1996 and the last of the promissory notes (Ex.P7) bears the date 14.3.1997. The other promissory notes, namely Exs.P2 to P6, bear the dates in between the above said two dates. The learned counsel for the defendants argued that since even the last of such promissory notes bears the date 14.3.1997, the suit based on the promissory notes should be held to have been barred by limitation, as the suit was not filed within three years from the date of Ex.P7.
16. Per contra, the learned counsel for the plaintiff has drawn the attention of the court to the alleged creation of equitable mortgage by deposit of title deeds relating to the properties mentioned in plaint schedules 1 and 2 and contended that since the equitable mortgage was created by defendants 2 and 3 on 1.4.1997, the limitation should be counted from 1.4.1997 and that hence the suit on equitable mortgage filed within 12 years is well within the period of limitation. However, the learned counsel for the defendants would contend that Ex.P18-letter produced to show that there was creation of equitable mortgage and for the purpose of showing that the suit is not barred by limitation, is not a genuine document; that the same was created and concocted by the plaintiff with the help of the records stealthily removed from the office of the Chandra Finances by the plaintiff herein including the sale deeds, unfilled signed papers and a few promissory notes and that hence this court has to come to a conclusion that even if the promissory notes are found to be true, the suit for recovery of the amount based on the alleged transaction evidenced by promissory notes under Exs.P1 to P7 stand barred by limitation as the suit was not filed within three years from the date of borrowal and execution of the promissory notes. The learned counsel for the defendants also drew the attention of the court to the effect that Ex.P18, which is sought to be projected as an acknowledgment and also a document evidencing creation of an equitable mortgage by deposit of title deeds was created is an incomplete document and also created with the help of the signed papers removed by the plaintiff from the office of the Chandra Finances, which shall be evident from the fact that the first two sheets of Ex.P18 do not contain any signature. It has also been brought to the notice of the court that though the signatures of D2 and D3 are found in the third sheet of Ex.P18 bearing page No.3, it does not show the completion of the document. PW.1 himself admits that signatures of the parties are not found in pages 1 and 2 of the letter depositing title deeds marked as Ex.P18. PW.1 has also admitted that the last page of Ex.P18, namely page No.3 is inconclusive. In paragraph 4 of the plaint, the plaintiff has averred that the second defendant Subash Chandran and the third defendant V.P.Ramachandran had created equitable mortgage over their properties belonging to them as security for repayment of the amount due under the suit promissory notes. In fact Ex.P8 is a sale deed dated 13.3.1995 under which the property described in schedule 1 of the plaint had been purchased by him. Ex.P13 is the sale deed dated 13.3.1995 under which the property described in plaint schedule 2 had been purchased by the third defendant Ramachandran. The plaintiff tried to show that both of them executed Ex.P18-memorandum of deposit of title deeds relating to their properties with intent to create a security for the repayment of the amount due under Exs.P1 to P7-promissory notes. But curiously, during cross-examination, PW.1 has stated that only the properties of the second defendant Subash Chandran were given as security and the third defendant Ramachandran did not give any of his property as security, but still his name was included in Ex.P18. Ex.P18 contains details of properties of the second defendant and the third defendant in two schedules. A perusal of Ex.P18 will show that the same could have been created with the help of one of the blank signed papers. In the normal practice in case of deposit of title deeds creating equitable mortgage, only the debt particulars and the documents relating to the immovable properties with intent to create a security will be furnished. The description of property regarding which equitable mortgage is created shall not be found in such memorandum of deposit of title deeds. Otherwise it will amount to a mortgage requiring registration. In any event, in the memorandum of deposit of title deeds, it is obligatory to give the list of documents deposited with the intention of creating a security for the loan. Ex.P18 does not contain any such list of documents. It simply states that V.P.Subash Chandran (2nd defendant) and V.P.Ramachandran (3rd defendant) had deposited title deeds on the date of execution of the said document relating to their property at No.97, Egmore High Road, Egmore, Chennai-8 so as to create equitable mortgage to secure the loan availed from M/s.Chandra Finances by M/s.Chandra Jewellers amounting to Rs.14,00,000/-. It does not even refer to the suit promissory notes and the other details. It is also pertinent to note that the document is not dated either at page 1 or at any other page. The opening recital simply states that D2 and D3 "deposit the title deeds today". The document at the beginning or at the end does not bear the date and place of execution. There is also absence of date written below the signatures of the signatories found in sheet 3. The said document cannot be projected as one executed on 01.04.1997 . Therefore, this court accepts the contention of the learned counsel for the defendants that Ex.P18 is not proved to be a genuine document and the plaintiff has not proved that the defendants 2 and 3 have deposited their title deeds relating to their immovable properties with intent to create security for the repayment of the loan due under the suit promissory notes and thus created an equitable mortgage over the properties described in plaint schedules 1 and 2. On the other hand, the contentions of the defendants that Ex.P18 is a fabricated one is more probable and the same has got to be accepted.
17. For all the reasons stated above, this court comes to the conclusion that the plaintiff has failed to prove his case of creation of an equitable mortgage by deposit of title deeds. For the said reason, this court also comes to the conclusion that the plaintiff's case that there was acknowledgment of debt and creation of equitable mortgage on 01.04.1997 from which date the limitation started afresh, cannot be accepted and the same is bound to be discountenanced. The suit having not been filed within three years from the date of the promissory notes, has been hopelessly barred by limitation.
Issue Nos.4 and 518. In view of the findings rendered on issue Nos.1 to 3 holding that the suit promissory notes are not true and are not binding on the defendants, that the creation of equitable mortgage by deposit of title deeds pleaded by the plaintiff has not been proved and that the suit is barred by limitation, this court answers issue Nos.4 and 5 against the plaintiff and holds that the plaintiff is not entitled to recover any amount from the defendants and the the plaintiff's suit is liable to be dismissed with cost.
19. In the result, the civil suit is dismissed with cost.
asr