HUBERT PEYOLI Vs. SANTHAVILASATHU KESAVAN SIVADASAN

JUDGEMENT

(1.) This appeal is directed against the judgment and decree delivered by the additional Sub Judge, Quilon in O.S. No. 286/82. The plaintiff is the appellant and the defendants are the respondents in this appeal. The plaintiff filed the suit for recovery of money on the following grounds : On 17-11-1971 the defendants/respondents received a sum of Rs. 15,000/- from the plaintiff/appellant agreeing to pay the same on demand with interest at 12% per annum and executed a promissory note. As a further security for the same amount, they executed a memo of deposit of title deed relating to the plaint schedule property. The defendants made the payment of Rs. 900/- only in six instalments. Thereafter no amount was paid. As on 18-2-75 the date of the termination of the chities between the defendants and the plaintiff, an amount of Rs. 10,250/- was due to the plaintiff for which with interest the suit was filed. The plaintiff never agreed that the loan amount can be repaid by remitting the chity instalments. The above contentions of the plaintiff were resisted by the defendants on the ground that the suit is barred by limitation. The plaintiff represented that as soon as the 3rd instalment is paid after subscribing 10 numbers of chities having a value of Rs. 5,000/- each, a loan of Rs. 25,000/- will be paid to the first defendant and the loan amount will be adjusted in the chity instalments paid. Believing the above representation of the plaintiff, he subscribed 10 numbers of the chitty. But, when the loan was 'demanded after remitting the three instalments, the plaintiff failed to advance the loan. After the chity instalments were remitted the plaintiff advanced the loan of Rs. 15,000/- only to the first defendant . As additional security for the amount a promissory note was executed. Thereafter, the first defendant remitted the chitty instalments in all the 10 numbers of the chity after 15 instalments. The defendants settled the transaction by remitting Rs. 15,000/- including 'Veetha Palisa'. The entire transaction among them was settled. As a security for realisation of the loan amount, in case the chity instalments are defaulted, the defendants deposited the title deeds relating to their property. The documents were not returned after settling the transaction. It was agreed that the balance loan of Rs. 10,000/- will be advanced soon and the plaintiff also failed to advance that amount. Chity instalments were not remitted further because the plaintiff concern was closed. The plaintiff is bound to pay interest for the chity instalments of Rs. 15,000/- deposited by the defendants. Hence the suit is liable to be dismissed.

(2.) On both the sides, evidence were let in. The trial court on examining the evidence dismissed the suit. The above judgment and decree are being challenged in this appeal. The question that was urged before me for consideration is whether Ext. A2 dated 17-11-71 create separate mortgage to secure the loan advanced under Ext. A1 promissory note, the same dated. If so, whether A2 requires registration. The learned counsel appearing for the appellant submitted that the appellant was a foreman of a chitty transaction, in which the first defendant/first respondent joined as a subscriber in 10 numbers of chitties each valued at Rs. 5,000/-. On payment of three instalments in all the 10 chitties a sum of Rs. 15,000/- was advanced to the respondent for which Ext. A1 promissory note was executed on 17-11-71. As an additional security, on the same date of Ext. A1, Ext. A2 memorandum was executed by the first respondent/defendant in favour of the appellant. Thus, Ext. A2 is not creating a mortgage and therefore it needs no registration. Hence, the dismissal of the suit by the Trial Court on that main ground cannot be sustained and that has to be reversed.

(3.) As against the above submission of the learned counsel for the appellant, it was the contention of the learned counsel for the respondents that a mere reading of Ext. A2 would evince that the intentions of the parties were to create a separate mortgage in order to secure the loan amount advanced under Ext. A1. In other words, it is a separate transaction of mortgage and therefore it requires registration. In case Ext. A2 is not a mortgage and it is only an additional security for the loan advanced in Ext. A1 as urged by the other side, the appellant ought to have come with the suit for recovery of the money within the period of limitation (namely three years from the date of Ext. A1). The above conduct in not filing the suit within the time prescribed would further signify the intention of the parties that Ext. A2 is nothing but a mortgage. It is also the submission of the learned counsel for the respondent that it was agreed by both the parties that on payment of three instalments in all the 10 chities an amount of Rs. 25,000/- had to be advanced by the appellant to the respondent. But, however instead of Rs. 25,000/- the appellant advanced only Rs. 15,000/- for which alone Ext. A1 promissory note was executed. And Ext. A2 only as a separate transaction to secure the amount advanced under Ext. A1 was executed by the first respondent and therefore it necessarily requires registration. In the absence of the registration of Ext. A2, it loses its legal effect of a mortgage enforceable in law. Both the learned counsel also placed before me the following number of judg-ments of this Court as well as the Apex Court. On account of the above divergent sub-missions of both the sides in respect of Ext. A2, now let me discuss the position of law on this aspect mainly on the basis of the settled principle laid down by the Apex Court, by this Court as well as by the High Court of Madras. Section 58(f) of the Transfer of Property Act reads as follows :-