AKASH KNITTERS Vs. MANOHAR LAL

JUDGEMENT

(1.) M/s. Akash Knitters (for short the firm) had filed a suit for recovery of Rs. 16,750/- by sale of the mortgaged property. It was also prayed that in case the decree was not satisfied by sale proceeds of the security then the balance be ordered to be recovered from the other properties and the person of the defendant mortgagor. According to the allegations in the plaint, the firm is registered under the Indian Partnership Act. Vide registered mortgage-deed dated 27th December, 1972 the defendant had mortgaged the house in dispute with possession with the firm for a consideration of Rs. 16,000/-. The defendant, however, remained in possession of the mortgage security as a tenant and executed a rent note in favour of the plaintiff. The rate of rent agreed upon was Rs. 50/- p.m. The firm claimed a decree for Rs. 16,000/- plus Rs. 750/- as interest at the rate of 7-1/2% per annum. In the alternative, Rs. 375/- were claimed as rent upto the date of the filing of the suit in lieu of interest.

(2.) The defendant contested the suit and pleaded that the mortgage was without consideration. In fact, he was a cloth merchant at Batala and had business dealings with the firm which also dealt in cloth. Sometimes he used to take cloth from the firm on credit. Therefore, the plaintiff-firm asked him to give collateral security so that the amount due to them was secured. Thus the mortgage deed was executed merely as a collateral security and was a fictitious paper transaction. About the rent note also it was pleaded that it was fictitious paper transaction. According to the defendant, the plaintiff was not entitled to any interest as in the mortgage deed there was no stipulation about it. The other allegations of the plaint were also denied.

(3.) Upon the allegations of the parties the learned trial Court framed the following issues :-