MALATHY v. WEST COAST FINANCIAL ENTERPRISES & Ors.

Judgment

3. WEST COAST FINANCIAL ENTERPRISES, REPRESENTED BY ITS MAMAGING PARTNER, V & s BUILDING, ERNAKULAM. V.K. THANKAPPAN, PALAPARAMBIL HOUSE, THRIKKANARVATTOM DESOM, ERNAKULAM VILLAGE, KANAYANNUR TALUK, PACHALAM, KOCHI. P.M. SUBRAMANIAN, PURAVARICKAL, CHENGAMANAD VILLAGE, POIKKATTUSSERY KARA, ALUVA. BY ADV. SRI.H.SIVARAMAN BY ADV. SRI.MATHEW CHERIAN THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 05/07/2012 THE COURT ON 17-07-2012, DELIVERED THE FOLLOWING: A.S.NO.189/2001 ORDER ON C.M.P.NO.1333/2001 IN A.S.NO.189/2001 -------------- DISMISSED 17/7/2012 Sd/- HARUN-UL-RASHID, JUDGE. HARUN-UL-RASHID,J. ----------------------------- A.S.NO.189 OF 2001 & I.A.NOS.1476 & 1506 OF 2012 ----------------------------- DATED THIS THE 17TH DAY OF JULY, 2012 JUDGMENT

Additional 4th defendant is the appellant. She is the sole legal heir of the deceased lst defendant. The appeal is directed against the judgment and decree in O.S.No.340/1994 on the file of the Additional Sub Court, North Paravur. The suit filed for realisation of money was decreed. The plaintiff is given a decree to realise a sum of `43,515/- with future interest at the rate of 6% per annum from the date of the suit till realisation with costs from defendants 2 and 3 and their assets and from the assets of the lst defendant, which is in the hands of the 4thdefendant, and by the sale of the plaint A and B schedule properties. The parties are hereinafter referred to as the plaintiff and defendants as arrayed in the suit.

2. Plaintiff is West Coast Financial Enterprises - a registered partnership firm. Plaintiff had granted a loan of `30,000/- to the defendants 1 to 3. Defendants 1 to 3 had executed a promissory note on A.S.No.189/2001 -2- 30/6/1982 promising to repay the said amount with interest. The lst defendant deposited with the plaintiff's office in Ernakulam the title deeds of her property described as A schedule as security with an intention to create an equitable mortgage. By way of security for the loan the 2nd defendant has hypothecated the movables described as B schedule. It is averred in the plaint that the defendants had paid only `14,700/- upto 23/9/1992 and had failed to pay the balance amount.

3. The lst defendant died during the pendency of the suit. The Additional 4th defendant(appellant) was impleaded as the sole legal heir of the deceased lst respondent. The 2nd defendant remained ex parte. The 3rd defendant did not file any written statement. Additional 4th defendant alone filed written statement, in which she denied the loan transaction and the execution of promissory note. She also contended that the suit is barred by limitation. Plaintiff adduced oral and documentary evidence. PW1 was examined and Exts.A1 to A5 were marked on the side of A.S.No.189/2001 -3- the plaintiff. Defendant did not adduce any evidence either oral or documentary.

4. The suit was resisted by the additional 4th respondent mainly contending that it is barred by limitation and that the lst defendant had deposited only the registration copy of the title deed and therefore no equitable mortgage had been created. Plaintiff adduced oral and documentary evidence in support of their case that defendants 1 to 3 had executed promissory note on 30/6/1982, borrowed a sum of `30,000/- and deposited title deed with an intention to create an equitable mortgage over the same. Ext.A1 is the promissory note dated 30/6/82. Ext.A2 is the document No.1383/78 of the Sub Registry, Angamaly. Exts.A4 and A5 are the encumbrance certificate and liability certificate respectively. Plaint A schedule is the property offered as security. PW1 testified before the court below that the lst defendant had deposited certified copy of the title deed and filed an affidavit swearing that the original title deed of the property is irrecoverably lost. A.S.No.189/2001 -4-

5. Ext.A1 promissory note is dated 30/6/82. The suit was filed in the year 1994. The court below rejected the plea of limitation and held that the suit is based on the equitable mortgage created and therefore, the plaintiff will get 12 years' time to file the suit. The suit was filed within 12 years from the date when the money sued for become due and therefore, the suit is found to be filed within time. The other contention raised by the learned counsel for the appellant is that the lst defendant had deposited only the registration copy of her title deed whereby no equitable mortgage has been created. According to the learned counsel, the contention of the plaintiff is that the lst defendant had deposited her title deed so as to create an equitable mortgage is not satisfactorily proved. The learned counsel submits that Ext.A2 document is only registration copy of the title deed. According to the counsel, by the non-production of the affidavit of the lst defendant solemnly affirming that the original title deed is lost, the plaintiff failed to prove that the lst defendant deposited the A.S.No.189/2001 -5- certified copy of the title deed with an intention to create an equitable mortgage.

6. During the course of final hearing, the appellant produced Annexure-A1 certified copy of the final order dated 15/10/2007 in O.A.No.511/1998 passed by the Debts Recovery Tribunal, Ernakulam along with the I.A.No.1506/2012 filed for accepting the same as additional evidence. Annexure-A1 was produced in order to prove that the original document was available at the time of availing loan in 1982. The appellant also filed I.A.No.1476/2012 praying to call for the original of Ext.A2 from the Debts Recovery Tribunal, Ernakulam. As I have already noticed, the appellant did not enter the box and adduce any evidence. The order in O.A. No.511/98 was passed in 2007. The appellant is the 6th respondent in the O.A. There is no justifiable reason for not producing the order within a reasonable time. The order was produced after a period of 4 ½ years. I do not find any justifiable reason to accept Annexure-A1 order A.S.No.189/2001 -6- O.A.No.511/1998 as additional evidence in the appeal. Both the applications are without any merit and accordingly they are dismissed.

7. The only point that arises for consideration is whether there was an equitable mortgage in respective of the plaint A schedule property in favour of the plaintiff and whether the plaintiff is entitled to a decree for realisation of the amount by sale of the plaint A schedule property. It is contended that no valid equitable mortgage is created in favour of the plaintiff, since the original title deed in respect of the plaint A schedule is not deposited with the plaintiff and only a registration copy of the title deed is deposited, which is insufficient to create an equitable mortgage under law. Even though Section 58(1) of the Transfer of Property Act contemplates deposit of the original title deeds for creation of equitable mortgage, when the original document is lost or not forthcoming, equitable mortgage can be created by depositing certified copy of the document. A.S.No.189/2001 -7-

8. The learned counsel for the appellant placing reliance on the decisions reported in Syndicate Bank v. Modern Tile and Clay Works (1980 KLT 550) and C.Assiamma V. State Bank of Mysore (AIR 1990 KER 157) contended that a copy of the deed of transfer is not ordinarily a document of title for the purposes of an equitable mortgage and that it is only evidence of title. In the said decisions this Court observed that copy of the deed of transfer is not ordinarily a document of title for the purposes of an equitable mortgage, that it is only evidence of title and that it is the original deed of transfer that is the document of title. This Court also held that in the absence of the original deed of transfer the next best evidence of the owner's title to the property is a certified copy of that document, that a certified copy in such cases may with sufficient safeguards be received as a document of title, that the essential pre-requisite for the use of a certified copy as a document of title is the loss of the original deed and that unless and until it is made out that the original is lost, a certified copy of a A.S.No.189/2001 -8- document cannot be considered to be a document of title for the purpose of Section 58(f) of the Transfer of Property Act. The Apex Court in the decision reported in Syndicate Bank v. Estate Officer and Manager, A.P.I.I.C. Ltd. (2008 SCJ (1) 495) held that the essence of the whole transaction of equitable mortgage by deposit of title deeds is the intention that the title deeds shall be the security for the debt, that the said requisite intention is available in a given case is a question of fact and has to be ascertained after considering the oral, documentary and circumstantial evidence, that the mere fact of deposit does not raise the presumption that such an intention existed and that such an intention cannot be presumed from the possession, since the mere possession of the deeds is not enough without evidence as to the manner in which the possession originated so that an agreement may be inferred. The Apex Court further held that unless and until the defendants satisfactorily explain how the documents came to the plaintiff's custody, the said fact would be significant and have a great A.S.No.189/2001 -9- bearing. The learned counsel also cited the decision reported in K.J.Nathan v. S.V. Murthi Rao (AIR 1965 SC 430) in which the Apex Court held that the court will have to ascertain in each case whether in substance there is delivery of title deeds by the debtor to the creditor and that if the creditor was already in possession of the title deeds, it would be hypertension to insist upon the formality of the creditor delivering the title deeds to the debtor and the debtor redelivering them to the creditor. Learned counsel also relied on the decisions reported in Popular Bank Ltd. v. The United Coir Factories and others (1961 KLT 367), Velayudhan v. Velayudhan (2001 (1) KLT 392) and Madappillihers v. Ullattil Agencies (2006 (4) KLT 196).

9. In this case the 2nd defendant remained ex parte and the 3rd respondent has not filed any written statement. The lst defendant died during the pendency of the suit. The only defendant who contested the suit is the legal heir of the deceased lst defendant. She failed to adduce oral or documentary evidence. A.S.No.189/2001 -10- She did not care to adduce even formal evidence denying the case set up by the plaintiff by subjecting her to examination. The suit was not filed purely based on a promissory note. The suit was filed based on an equitable mortgage. The court below, after examining the contentions in detail, held that an equitable mortgage can be created by deposit of certified copies of documents and that the deposit of the original title deed is insisted only as a rule of prudence and caution and not as a legal requirement for the purpose of validly creating an equitable mortgage. The court below observed that the certified copy of a document can be used for creating an equitable mortgage, if the original is irrecoverably lost. The learned Judge relied on the oral evidence of PW1, who testified before the court that the original title deed is lost and therefore the lst defendant had filed an affidavit to that effect. The learned Judge also considered the contention of the appellant that the mortgage is liable to be registered. The court below observed that it is true that an A.S.No.189/2001 -11- unregistered mortgage is not enforceable in law and that if a memorandum of title deed is prepared contemporaneously or prior to the deposit of title deeds, it will require registration. The learned Judge found that so far as the present case is concerned, there is no memorandum of title deed and that there is delivery of the title deed. In such circumstances, the court below held that the delivery of the title deed alone is sufficient to create an equitable mortgage as per Section 58(f) of the Transfer of Property Act and that there is no necessity to execute any registered document. The court below on facts found that no memorandum or other document is created in this case to prove the equitable mortgage and there is only the deposit of title deeds. The court below relied on the evidence adduced by the plaintiff and held that Ext.A1 is a genuine document. The court below noticed that neither the 4th defendant nor any other defendants have adduced any evidence. In such circumstances a decree for realisation of money was passed by the court below. In the facts and circumstances of the case and A.S.No.189/2001 -12- in the light of the various decisions referred above, I agree with the findings of the court below. I find that the appeal is devoid of any merit. In the result, the appeal fails and accordingly dismissed. No order as to costs. kcv. Sd/- HARUN-UL-RASHID, JUDGE.