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Showing contexts for: equitable mortgage in Shri Nithya Kalyani Chit vs Government Of Tamil Nadu on 3 August, 2010Matching Fragments
3. Case of the Appellant is that the 3rd Respondent defaulted from 27th instalment due on 10.12.1988. The Appellant filed a case under Section 64 of the Chit Funds Act for recovery of the amount. The 2nd Respondent Deputy Registrar of Chits dismissed the Claim Application No.110/1992 finding that under Section 65(1)(b) the claim ought to have been filed within three years from the date on which the act or omission with reference to which the dispute arose. The 2nd Respondent took the view that the 3rd Respondent has committed default in paying 27th instalment on 10.12.1988 and the claim Petition filed on 24.8.1992 is beyond the period of three years and dismissed the Claim Petition on the ground that the Claim Petition is barred by limitation. Aggrieved by the dismissal of the Claim Petition, the Appellant filed Appeal before the Government under Section 70 of the Chit Funds Act. In the Appeal, the Appellant had taken plea that the Deputy registrar of Chits has failed to see that the original title deeds were deposited by the 3rd Respondent with intention to create equitable mortgage and therefore the claim was well within time. Upon consideration of the case with the connected records, the Government referred to the Circular sent by the Inspector General of Registration in his Letter No.58290/H1/92 dated 23.10.1992 sent to all the Deputy Registrars that the stamp duty has to be collected for documents created by way of deposit of title deeds, Government took the view that since stamp duty was not paid it was not necessary for the Deputy registrar to take into account of the limitation period of 12 years prescribed for equitable mortgage while disposing of the case under the provisions of Chit Funds Act. Finding that the case under Appeal has been filed beyond three years period, the Government dismissed the Appeal. Being aggrieved by the dismissal of the Appeal, the Appellant filed Writ Petition W.P.No.13925 of 1994.
4. Pointing out that the subscriber failed to pay the dues to the Appellant - Foreman from 27th instalment fell due on 10.12.1988 and therefore the claim filed on 24.8.1992 is beyond the statutory period of three years the learned single Judge dismissed the Writ Petition. Challenging the dismissal of the Writ Petition, the Appellant has filed this Appeal.
5. Learned counsel for the Appellant contended that by deposit of title deeds for the due repayment of the loan, it is an equitable mortgage within the meaning of Section 58(f) of the Transfer of Property Act and therefore the transaction will fall only under Explanation (i) to Section 64(1) of the Act for which limitation is prescribed in Section 65(1)(b) of the Act. It was further submitted that since the transaction was equitable mortgage, Article 62 of the Limitation Act will apply, which stipulates limitation of 12 years and therefore the claim application filed on 24.8.1992 is well within the limitation. Placing reliance upon SHRIRAM CHITS AND INVESTMENTS (P) LTD. VS M.KRISHNAN reported in 1999 (1) CTC 238, it was further contended that the limitation would start only from the date of termination of the chit and not from the date of defaulted instalments and therefore the claim application filed on 24.8.1992 is well within the time.
6. We have heard Mr.Dhandapani, Special Government Pleader appearing for Respondents No.1 and 2.
7. Before the 2nd Respondent as well as the Government, the Appellant mainly raised the plea that the 3rd Respondent has deposited title deeds for due repayment of the loan with an intention to create equitable mortgage within the meaning of Section 58(f) of the Transfer of Property Act. The contention of the Appellant is that Section 58 of Transfer of Property Act authorises equitable mortgage by way of deposit of title deeds and therefore the transaction would fall only under Section 65(2) of Chit Funds Act, whereby the transaction shall be regulated by the provisions of the Limitation Act and the limitation for equitable mortgage is 12 years. Further contention of the Appellant that the transaction would fall under Explanation (i) to Section 64(1) of the Chit Funds Act for which limitation is prescribed in Section 65(1)(b) of the Act and that the Deputy Registrar should have taken into account the relevant period of 12 years cannot be countenanced.
8. By perusal of the records, it is seen that the Inspector General of Registration in his letter No.58290/H1/92 dated 23.10.1992 had sent communication to all the Deputy Registrars that the stamp duty has to be collected for documents created by way of deposit of title deeds produced as evidence for Chit Arbitration case. By perusal of the order of the Government in G.O.(D) No.231 Commercial Taxes and Religious Endowments Department dated 9.6.1994, in the instant case, the 2nd Respondent has directed the Appellant to pay the stamp duty and penalty for equitable mortgage created by way of collateral security. Merely because of the direction to pay stamp duty and penalty for equitable mortgage, the transaction would not fall under Section 65(2) and the contention of the Appellant that the transaction was an equitable mortgage was rightly rejected by the respondents 1 and 2.