P T KRISHNASWAMI AYYANGAR Vs. CHEVULA KAMALAMMA

JUDGEMENT

(1.) Chevula Venkatasubbaya Chetti, now deceased, was the owner of two houses in Madras. For the sake of brevity they may be referred to as Nos. 60 and 68 respectively, and their owner as the testator. On 2nd June 1919, the testator executed a promissory note for Rs. 12,000 bearing interest at 9 per cent. per annum in favour of one Rangayya Chetti and deposited with him the title deeds of No. 60 as security. At the same time the testator executed a document headed "Collateral Security Bond", which recorded the fact of the deposit of the title deeds as collateral security in respect of the promissory note and then proceeded as follows : I shall therefore pay you the principal and interest accruing due on the said promissory note from this date in full, and redeem the said title deeds. To this effect is the collateral security bond executed by me with consent. This document was never registered. The testator died in the year 1920 having by his will appointed four executors of whom respondents 1 and 2 and one Chevula Subramanyam Chetti appear to be alone surviving. It should be mentioned that the will contained an express provision that the two houses should not be sold. Rangayya Chetti died in the year 1921, and on 13 October, 1930, his junior widow Gouriamma who was his sole legal personal representative instituted the present proceedings for the purpose of enforcing the equitable mortgage purporting to have been created in favour of Rangayya by the deposit of the title deeds of No. 60.

(2.) The first three defendants to the suit were the surviving executors of the testator. Defendant 4 was the present appellant. The reason for adding him as a party was this. On 26 June 1924, the first three defendants and on 24 November of the same year the first two defendants as executors of the testator had executed mortgages in favour of the appellant of both the houses to secure various sums of money that they had borrowed from him or that he had paid at their request. He was, therefore, assuming these mortgages to have been valid, a necessary party to the proceedings. The relief that Gouriamma asked for by her plaint was the usual relief sought in a suit by a mortgagee to enforce his security. The first two defendants (being the present respondents 1 and 2) by their written statement impeached the validity of the equitable mortgage in suit on the ground that it was created by the collateral security bond and that the document had never been registered. Defendant 3, Subramahmanyam neither filed a written statement nor took part in any of the subsequent proceedings in the suit. The appellant by his written statement put the plaintiff to proof of the equitable mortgage but did not in terms impeach its validity. In due course issues were directed to be tried of which the only ones now material were to the following effect : 2. Is the mortgage sued upon invalid ? (5) Are the mortgages in favour of defendant 4 binding on the estate of the testator? (6) What is the amount due upon those mortgages ? On 6 September 1932, the case came on for trial before Beasley C. J. After a consideration of the relevant authorities he came to the conclusion that the collateral security bond did not require registration and that a valid equitable mortgage upon No. 60 had been created by the deposit of the title deeds. He accordingly pronounced the usual mortgage decree in favour of the plaintiff. The appellant did not at the trial adduce any evidence to prove his mortgages. The learned Chief Justice in those circumstances made no findings upon issues 5 or 6. The decree merely provided that the appellant should be at liberty to enforce his claim as a second mortgagee of the suit property by a separate suit. With this decision upholding the validity of the plaintiff's mortgage defendants 1 and 2 appeared to be content. The appellant, however, took the matter to the appellate side of the High Court where it came on for hearing on 11 May 1933, before Ramesam and Cornish JJ. Those learned Judges took the view that unless the appellant's mortgages were valid and there was something remaining due upon them the appellant had no right to be heard on the appeal. They accordingly remanded the case to the Judge sitting on the original side to submit his findings upon issues 5 and 6. They ordered however that the costs entailed by the additional hearing, that is to say, the hearing fee and the fee payable to counsel should be paid by the appellant in any event.

(3.) The trial of these two issues took place before Anantakrishna Ayyar J. in August 1933, and on 25 of that month he gave judgment recording his findings upon them. It is unnecessary to deal with them in any detail. It is sufficient to say that on issue 6 he found that, assuming the appellant's mortgages to be valid, there was a substantial sum due to him thereunder which would be properly payable out of the testator's estate. He made no finding upon issue 5 which raised a question of law rather than one of fact. It was the question whether in view of the provisions of S. 307, Succession Act, the executors had power to mortgage the houses of their testator. He thought that this question could not properly be answered until the question of the validity of the plaintiff's own mortgage had been settled.