ALLAHABAD BANK Vs. LEY BROS

JUDGEMENT

(1.) In this appeal filed by the plaintiff Bank, a very short question arises for consideration. The issue turns upon the question whether Exts.A7 and A8 documents create equitable mortgage or they are only documents, evidencing deposit of title deeds made earlier. If it is found that by Exts.A7 and A8, an equitable mortgage is created, then, necessarily, those documents will have to be registered. It is admitted case that Exts.A7 and A8 are not registered documents. Therefore, in case it is found that an equitable mortgage is created by those documents, then, the judgment and decree of the Court below are only to be upheld.

(2.) The first defendant is a proprietary concern of the second defendant. The said concern availed a cash credit facility of Rs. I lakh, which was later enhanced to Rs. 1,50,000/-, after executing necessary documents like letter of hypothecation, hypothecating all the stock-in-trade of the first defendant. Defendants 3 and 4 stood as guarantors and they are said to have created an equitable mortgage over the plaint schedule properties. Since the amount was not paid, the suit was laid.

(3.) The defendants resisted the suit on several grounds, which are not very relevant except one of them in the present context. The defendants contended that there was no valid mortgage. The Court below raised necessary issues for consideration and found that money was due to the plaintiff from the defendants. But, holding that there was no valid equitable mortgage created in favour of the bank, the Court below declined a mortgage decree to the bank. It is the said portion of the decree, that is assailed in this appeal.