LAKSHMI AMMAL Vs. CATHOLIC SYRIAN BANK LTD

JUDGEMENT

(1.) The third defendant in O.S No.590 of 1993 on the file of the I Additional Sub Court, Madurai is the appellant in this second appeal while Catholic Syrian Bank Ltd., is the plaintiff in the suit. The case of the plaintiff is that the first defendant Prakash Wines represented by its Proprietor Suresh Babu applied for loan to the plaintiff bank. The plaintiff bank agreed to grant over draft account facility to the limit of one lakh. The first defendant executed a hypothecation deed hypothecating the goods in favour of the plaintiff bank on the same date. The second defendant A.P.Arunachalam stood as the guarantor for the transaction. Ex.A1 dated 22.07.1989 pro note was executed in favour of the second defendant A.P.Arunasalam who in turn made it over by making an endorsement in favour of the bank. A.P.Arunachalam had already availed loan from the bank and he had mortgaged the suit property in favour of the bank. He had also deposited the original title deeds with the bank. The second defendant executed Ex.A7 22.07.1989 in favour of the bank stating that the title deeds deposited in respect of the account of Aruna Wines may be taken as deposited for the equitable mortgage for the said transaction also. The second defendant executed a renewal letter on 28.01.1992 vide Ex.A10. Since the suit account remained unsettled, the bank issued Ex.A8 notice dated 02.09.1992. Ex.A9 reply was received on 07.09.1992. Since the demand set out in the notice was not complied with, the respondent bank filed O.S No.590 of 1993 for directing the defendants (borrower and guarantor) to pay the principal sum of Rs. 1,48,868.30/- with interest and in the event of failure to do so, the court was requested to pass the preliminary decree for sale of the mortgaged property. But then, it turned out that the appellant Lakshmi Ammal had exchanged the mortgaged property vide Ex.B3 dated 04.12.1991. Therefore, the appellant was impleaded by filing I.A No.22 of 1996 as the third defendant vide order dated 08.01.1996. The principal borrower as well as the guarantor namely, Prakash Wines and A.P.Arunachalam remained exparte. The appellant filed written statement raising very many legal grounds. Based on the same, the trial court framed the necessary issues. One of the issues framed by the trial court was whether the suit was liable to be dismissed for breach of Section 67 A of the Transfer of Property Act, 1882. The bank official was examined as PW. 1 and Exs.A1 to Al 1 were marked. On the side of the defendant, a witness was examined. Exs.B1 to B4 were also marked.

(2.) The learned Trial Judge noted that A.P.Arunachalam had executed two deeds of mortgage in favour of the plaintiff bank. Section 67 A of the Transfer of Property Act, 1882 mandates that if a mortgagee holds two or more mortgages executed by the same mortgagor in the absence of a contract to the contrary, he is obliged to sue on all the mortgages in respect of which the mortgage-money has become due. The trial court noted that apart from the present suit, namely, O.S No.590 of 1993, the bank had also filed O.S No.784 of 1993. In the said O.S No.784 of 1993, A.P.Arunachalam figured as the proprietor of Aruna Wines as the first defendant. The trial court came to the conclusion that filing of two separate suits even though the mortgaged property as well as the mortgagor were one was improper and dismissed the suit by judgment and decree dated 01.03.2004.

(3.) Aggrieved by the same, the plaintiff bank filed A.S No. 177 of 2004 before the Principal District Judge, Madurai. The first appellate court came to the conclusion that failure to follow the procedure contemplated under Section 67 A of the Transfer of Property Act, 1882 cannot result in the penal consequence as envisaged by the trial court. In that view of the matter, the judgment and decree passed by the trial court was set aside and by judgment and decree dated 03.01.2005, the appeal was allowed and preliminary decree was passed as prayed for. Questioning the same, this second appeal came to be filed. The second appeal was admitted on the following substantial questions of law.