E P GEORGE Vs. BANK OF INDIA

JUDGEMENT

(1.) This appeal is preferred by the defendants in O.S.No. 225/85 on the file of the Additional Subordinate Judge's Court, Ernakulam. The plaintiff in this case is the Bank of India. The suit was filed for realisation of amounts due from the defendants. The prayer in the suit was to grant and declare that the defendants pay to the plaintiff bank jointly and severally a sum of Rs. 1,53,654.09 ps. together with furture interest on the sum at 17.5 per cent per annum, from the date of the suit till the date of realisation and also to grant an order of attachment of immovable property having an extent of 10 cents in Sy. No. 711/6-7 of Cheranelloor Village belonging to the 2nd defendant which was offered as a collateral security by way of equitable mortgage for repayment of the loan in favour of the plaintiff and also for other consequential reliefs.

(2.) Many contentions were raised by the defendants in the suit including the question of limitation. The Court below found that the suit was not barred by limitation. It also took into consideration the fact that mortgage by deposit of title deeds have been created and so, there is no question of limitation. In the memorandum of appeal, many grounds were raised. But, at the time of argument, learned counsel Sri. Kochunni Nair for the appellant, contended that he is confinding his argument with regard to two contentions. The learned counsel fairly admitted that these contentions have not been taken before the lower Court. But, since they are questions of law, they can be urged before this Court. The contention centres round the acceptability of mortgage by deposit of title deeds or equitable mortgage. According to him, on a reading of Ext. A13 there can be no mortgage by deposit of title deeds because at the time when the mortgage was made, the second defendant was not a debtor and only when the title deeds are deposited by the debtor that a mortgage can be created. He contended that second defendant executed only Ext. A12 guarantee. The guarantor becomes liable only when there is a default committed by the principal debtor and hence, there is no liability when the mortgage was created. The second contention is that, even if Ext. A13 actually created a mortgage by deposit of title deeds, since it is not registered, there was no valid mortgage. The learned counsel relied on the decisions of the Honourable Supreme Court reported in United Bank of India v. Lekharam Sonaram and Co., AIR 1965 SC 1591, K. J. Nathan v. S. V. Maruthi Rao, AIR 1965 SC 430, and Hubert Peyoli v. Santhavilasath Kesavan Sivadasan, (1998) 2 Ker LT 125 : (AIR 1998 Kerala 344).

(3.) Sri Devan Ramachandran, appearing for the respondent contended that the appellant cannot raise this contention at the appellate stage. According to him, the contentions have no basis. He contended that at the time when the mortgage was created, the second defendant was a debtor in the sense she had executed Ext. A12 guarantee. He contended that for creating a mortgage even a contingent liability is enough. He further contended that Ext. A13 does not create a mortgage by deposit of title deeds.