S K RAGHAVENDRA RAO Vs. VENKATASAMI NAICKAN

JUDGEMENT

(1.) This appeal arises out of a suit on a mortgage bond dated 17 October 1908, executed by one Venkatasami Naidu. Defendant 2 is the father of the executant. Defendants 3 and 4 are the assignees of a mortgage decree obtained against the suit lands. Defendants 5 and 6 are subsequent mortgagees. Defendants 7 and 10 are purchasers of portions of the mortgage property. Defendants 8 and 9 are purchasers in Court auction of portions of mortgage property in execution of a decree on a prior mortgage. The mortgagor became an insolvent and his property became vested in the Official Receiver who is defendant 1. Defendant 1. pleaded that the mortgagor was not the managing member of the family at the time of the alleged execution of the suit bond. He put the plaintiff to proof of the execution of the mortgage bond and of its consideration. He also alleged that there were misunderstandings between the mortgagor and his father and that they were executing fictitious documents in favour of relations with a view to precipitate a partition in the family. He relied on some other circumstance for showing that the suit document was a nominal one. Defendant 2 contended that the suit document was not binding on him. Defendant 7 raised certain contentions which it is unnecessary to state. The Subordinate Judge granted a decree against defendant 1's share only. The Official Receiver files this appeal and he repeats his contention in the Court below that the suit document was nominal.

(2.) Defendant 1 became an insolvent some time in August 1914. He had previously executed two mortgages in favour of his wife's brothers. The were dated 15 February 1913 and 27th February 1913. Soon after the mortgagor was declared insolvent, the Official Receiver took steps to have these mortgages declared void against the creditors under Section 36, Insolvency Act, and they were declared void. The present plaintiff 1 is the brother of the father-in-law of the mortgagor. He died before the case came on for trial and his nephews were brought on the record as his legal representatives. These happen to be the two mortgagees whose mortgages were declared void in the insolvency proceedings. It is contended for the appellant that as his mortgages in favour of the brothers-in-law were found to be collusive documents it is likely that the suit document also was a collusive and nominal document. But it seems to me that the suit mortgage was executed in circumstances quite different from those of the other two mortgages. They were executed in 1913 when the mortgagor was getting heavily involved and as a matter of fact he was declared insolvent soon after.

(3.) The suit mortgage bond was executed six years before the insolvency. It does not follow from the fact that the man was getting involved in 1913 and was executing nominal documents, that the document of 1908 should also be regarded as nominal. The suit mortgage is in favour of the uncle-in-law of the mortgagor, a rather remote relation. The other two mortgages were in favour of his brothers-in-law, very close relations. It is next urged that when in the insolvency proceedings the present mortgage bond was summoned for it was produced by defendant 2 before the Official Receiver. Assuming that it was produced by defendant 2, it does not follow that the document was always in the custody of defendant 2 and it had never been with the mortgagee. It is true that, if the mortgagee had never had possession of the suit document, it suggests that it is a nominal transaction. But of this suggestion there is really no evidence. The document was actually produced before the Official Receiver by D.W. 4, son of defendant 7, and he says that defendant 2 gave it to him. I doubt if this oral evidence ought to be believed. D.W. 3 says that there was a partition between the mortgagor and his father in 1909 and that at the time of the partition the suit mortgage bond was with defendant 2 and that it was taken from him. Ex. 4 is the partition deed. There is a clause in it providing that besides the debts referred to in the schedule all other debts should be discharged by the persons who contracted the debts. Now, this is sought to be construed as a statement that all debts other than those mentioned in the schedule are nominal and nominal endorsements of payments should be obtained on the bonds and the bonds handed ever to the other party. I do not see any justification for this construction of Ex. 4. This contention therefore that the suit document was regarded as a nominal document at the time of the partition fails.