PADMAVATHAMMA Vs. B PARTHASARATHI

JUDGEMENT

(1.) This appeal is fi led by D-12 to D-15 who are the legal representatives of the 5th defendant in O-S. No. 32/70 on the file of the Addl, Subordinate Judge, Ananthapur, questioning the decree and judgment dated 19-12-1983 decreeing the suit filed by the plaintiff who is the first respondent herein for recovery of the suit amount on the basis of equitable mortgage.

(2.) The first respondent who is the plaintiff filed the suit originally against D-l to D-6 for recovery of the suit amount on the basis of equitable mortgage crea ted by the 1 st defendant by deposit of title deeds in his favour. Defendants 1 to 4 were members of Hindu joint family and D-1 was the manager of such joint family and they were engaged in doing joint family business. D-1 borrowed an amount of Rs. 12,000/- from the plaintiff on two occasions and executed Ex.A-1 pronote in his favour. On the same day he created equitable mortgage in his favour for the amount borrowed by depositing Exs.A-3 to A-6 title deeds with the intention of creating equitable mortgage and on the same day in the evening he executed Ex.A-2 memorandum in token of his having created the equitable mortgage. Subsequently the defendants 1 to 4 did not discharge the debt. D-1 and D-2 were adjudged as insolvents in I.P. No. 2/61 and D-3 was also adjudged as insolvent in I.P. No. 26/62 on 23-03-1963 and their properties were vested in the Official Receiver who is the sixth defendant in the suit. Subsequently it was learnt that the Official Receiver sold away the mortgaged properties in the administration of the estate of the insolvents, and in the auction held by him on 25-08-1962, D-5 who is the relative of the defendants 1 to 4 was declared as the highest bidder and the sale was knocked down in his favour. Such sale effected in favour of the D-5 by the Official Receiver is subject to the mortgage in favour of the plaintiff as he is a secured creditor. The suit is therefore filed for the relief of mortgage decree for the suit amount against the defendants 1 to 4 as well as the D-5 who died during the pendency of the suit. The other defendants were brought on record as legal representatives.

(3.) The contesting defendants mainly the 5th defendant who had purchased the mortgaged properties from the Official Receiver contested the suit contending that the alleged pronote as well as the mortgage said to have been effected in favour of the plaintiff by the first defendant are not true and the plaintiff is not entitled to recover any amount on the basis of such alleged transactions and that the memorandum of mortgage by deposit of title deeds said to have been executed by the first defendant in favour of the plaintiff ii inadmissible in law for want of registration and cannot be used for any purpose and the suit is also not maintainable without obtaining the leave of the Insolvency Court as the mortgaged properties were already sold by the Official Receiver in public auction to the 5th defendant. The 5th defendant further contended that he is a bona fide purchaser of the properties in public auction without notice of the earlier mortgage alleged to have been created in favour of the plaintiff and that the suit is therefore liable to be dismissed.