Jacob Thomas v. P.A. KuriaKose and Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE SHIRCY V.** **THURSDAY,THE 21ST DAY OF FEBRUARY 2019 / 2ND PHALGUNA, 1940** ## **RFA.No. 140 of 2013** **AGAINST THE JUDGMENT IN OS 143/2011 of PRINCIPAL SUB COURT,KOTTAYAM DATED 07-08-2012** ## **APPELLANT/PLAINTIFF:** **JACOB THOMAS, AGED 49, S/O. LATE ISAAC THOMAS, ULLATTIL HOUSE, NEAR UNION CLUB, UNION CLUB ROAD, KOTTAYAM VILLAGE,KOTTAYAM DISTRICT.** **BY ADVS. SMT.RANI DIOTHIMA.P. SRI.MATHEW KORAH** ## **RESPONDENT/DEFENDANTS:** **1 P.A.KURIAKOSE, AGED ABOUT 70 YEARS, S/O. MANI KURUVILLA, PARAPPOTTU HOUSE, AMAYANNOOR P.O., KOTTAYAM 686 025 2 BINU P.KURIAKOSE AGED ABOUT 40 YEARS S/O.P.A.KURIAKOSE PARAPPOTTU HOUSE, AMAYANNOOR P.O., KOTTAYAM 686 025 3 SHINU P.KURIAKOSE, AGED ABOUT 38 YEARS SO.P.A.KURIAKOSE, PARAPPOTTU HOUSE, AMAYANNOOR P.O., KOTTAYAM 686 025** **BY ADVS. R.UDAYA JYOTHI DR.V.N.SANKARJEE SMT.K.S.SANDHYA SRI.K.ANTONY JOSEPH SRI.V.N.MADHUSUDANAN** ## **OTHER PRESENT:** ## **ADV.SMT.SUSHEELA** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 21.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** RFA.No. 140 of 2013 2 ## **JUDGMENT** The plaintiff in O.S.No.143/2011 on the file of the Principal Sub Court, Kottayam is the appellant. He filed the suit for realization of an amount of Rs.83,000/- with interest at the rate of 12% per annum. The total claim was for an amount of Rs.2,33,639/-. The suit was dismissed by a judgment and decree dated 7.8.2012. Challenging the said judgment and decree this appeal has been preferred by the plaintiff/appellant against the defendants/respondents. 2. The facts relevant for disposal of this appeal are as follows: The first defendant is the father of the defendants 2 and 3. They together borrowed a sum of Rs.1 lakh from the plaintiff on executing a Promissory Note on 22.7.2002 agreeing to repay the amount on demand. On the very same day, the title deeds of their property were also handed over to the plaintiff as security. In total an amount of Rs.17,000/- was repaid. The payments were on different dates and the last payment was on 10.3.2003. Thereafter, a cheque was issued on 6.2.2008 for the balance amount. Though the cheque was presented for encashment it was dishonored. Thereafter, a case filed before the Judicial First Class Magistrate, Kottayam but that ended up in acquittal. After deducting the payment of Rs.17,000/- an amount of Rs.83,000/- was due with interest from the defendants. Claiming RFA.No. 140 of 2013 3 the said amount the case was filed by the plaintiff. 3. The main contention raised by the defendants is that the plaint claim is barred by limitation. They have denied entire the transaction with the plaintiff including the execution of the Promissory note. They have also contended that the title deeds have not been deposited with the plaintiff as alleged. 4. Before the court below, the plaintiff was examined as PW1. Exts.A1 to A8 were also marked on the side of the plaintiff. The third defendant was examined as DW1 and Ext.B1 was marked on his side. The court below after evaluating the evidence concluded that the plaintiff is not entitled to get the amount claimed and on the said finding dismissed the suit. Feeling aggrieved by the dismissal of the suit by the learned trial judge the plaintiff has come up with this appeal. 5. Heard Smt. Rani Diothima the learned Counsel for the plaintiff and Smt.Susheela, the learned Counsel for the defendants/respondents. 6. The plaint claim is for a total sum of Rs.2,33,639/- with future interest. The plaintiff's definite case is that after executing Ext.A1 promissory note a sum of Rs.1 lakh was received by the defendants and on the very same day the title deeds pertaining to RFA.No. 140 of 2013 4 their property were also entrusted to the plaintiff and Ext.A6 letter was issued evidencing handing over of the title deeds. According to PW1, after receipt of Rs.1 lakhs, repayment was effected by them on various dates and in total, a sum of Rs.17,000/- had been paid and the last payment was on 10.3.2003. So when the debt outstanding was Rs.83,000/- a cheque was issued on 6.2.2008. Ext.A3 is the copy of the cheque. But when the cheque was presented for encashment it was returned due to insufficiency of funds. Though, the plaintiff approached the Judicial First Class Magistrate Court by filing a petition under Section 138 of the Negotiable Instruments Act, the case against the accused/defendants ended in an acquittal. Now the question to be looked into is whether an interference to the impugned judgment and decree is warranted and whether the plaintiff is entitled to get a decree for the suit amount. 7. According to the learned counsel for the plaintiff that on the very same day of execution of Ext.A1 promissory note, the defendants have entrusted their title deeds, and a receipt was issued by the plaintiff for the same and thus a mortgage had been created. It is also pointed out by the learned counsel that though two title deeds were entrusted as evident by Ext.A6, one document was returned to the defendants on their request and Ext.A7 letter was issued on 10.2.2003 RFA.No. 140 of 2013 5 by the second defendant evidencing receipt of the title deed. It is pertinent to note that in Ext.A7 notice, it has been specifically mentioned by the second defendant that he had received back one title deed out of the two entrusted to the plaintiff in order to mortgage the same before South Indian Bank, Kanjirappilly branch to avail a loan of Rs.2 lakhs so as to settle the debt of Rs.83,000/- and interest due to the plaintiff. This letter is dated 10.2.2003. It is discernible by Exts.A6 and A7 that the title deeds of the properties of the defendants were handed over to the plaintiff as security for the loan amount received by them from the plaintiff as early as on 22.7.2002. 8. The court below found that though an equitable mortgage had been created by executing Ext.A6 it was not registered, as per the provisions of the Registration Act and hence relying on the decision in _**Hubert Peyoli v. S.Kesavan Sivadasan [AIR 1998 KER 344]**_ concluded that as Ext.A6 is not a registered document no credibility can be given to the document and no mortgage was created. The suit was dismissed also on the finding that the suit is barred by limitation as there was no demand within the period of three years. 9. The learned counsel for the appellant/plaintiff has vehemently argued before me that mortgage by deposit of title deed was created RFA.No. 140 of 2013 6 by the defendants by executing Ext.A6 document. Ext.A6 was executed only as a security for the amount advanced and it was only a receipt evidencing handing over of the title deed to the plaintiff and hence registration of the document is absolutely unnecessary. Therefore, the finding of the court below is absolutely erroneous and illegal. For evaluation of the nature of the document under consideration it is apposite to deal with the relevant sections of the Transfer of Property Act. 58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage money” and “mortgage-deed” defined – (a) A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed. (b) ******* (c) ******** (d) ******** (e) ******** f) Mortgage by deposit of title-deeds - Where a person in any of the following towns, namely the towns of Calcutta, Madras [and Bombay] and in any other town which [the State Government concerned] may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to RFA.No. 140 of 2013 7 immoveable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds. 59. Mortgage when to be by assurance - Where the principal money secured is one hundred rupees or upwards, a mortgage [other than a mortgage by deposit of title deeds] can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses; Where the principal money secured is less than one hundred rupees, a mortgage may be effected either by [a registered instrument] signed and attested as aforesaid or (except in the case of a simple mortgage) by delivery of the property. 10. According to the learned counsel for the plaintiff as Ext.A6 is only a receipt evidencing deposit of title deeds as security for the loan availed by the defendants it does not require registration. In order to fortify her argument she relies on the decision of a Division Bench of this Court in **South Indian Bank Ltd v. K.P.Ramachandran and Another (2017 (2) KLT 705)** whereby it was held that a memorandum or letter merely acknowledging the deposit of title deed, by itself, does not create a mortgage that requires compulsory registration of the document. But, if a memorandum evidencing the terms and conditions with regard to the deposit in the form of a document is made, then a registration under Section 17(1)(c) of the Registration Act is required. Section 17(1)(c) of the Registration Act reads as: RFA.No. 140 of 2013 8 “17(1)(c):- non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest.” ## In paragraph No.9 of the South Indian Bank's case (supra) it was held as follows; “9. In our opinion, there is no warrant for such a conclusion. A memorandum or letter merely acknowledging the deposit of title deed, by itself, does not create a mortgage. If any terms and conditions relating to the mortgage are incorporated therein, then the position would be different. If the document merely refers to the handing over of the title deeds or acknowledges that title deeds are deposited with the creditor, without inclusion of any further term or condition, it is not a document that requires registration. The mortgage is created by the mere handing over of the title deeds as security. No registered instrument is necessary for the said purpose. However, if a memorandum evidencing the terms and conditions with regard to deposit is executed, then it shall require registration in terms of S.17(1)(c) of the Registration Act. In other words, it is not the time of execution of the memorandum/letter of acknowledgment that is decisive but whether the memorandum or the letter incorporates any term or condition, is the benchmark. If the memorandum is prepared merely to confirm/acknowledge the deposit of title deeds, registration is not required irrespective of the point of time at which it is executed. However, if the memorandum creates rights and liabilities, the same requires registration. The legal position has been laid down by the Apex Court in State of Haryana and Others v. State of Punjab and Others (supra) thus: “.... The essence of a mortgage by deposit of title deeds is the handing over, by a borrower to the creditor, the title deeds of immovable property with the intention that those documents shall constitute security, enabling the creditor to recover the money lent. RFA.No. 140 of 2013 9 After the deposit of the title deeds the creditor and borrower may record the transaction in a memorandum but such a memorandum would not be an instrument of mortgage. A memorandum reducing other terms and conditions with regard to the deposit in the form of a document, however, shall require registration under S.17(1)(c) of the Registration Act, but in a case in which such a document does not incorporate any term and condition, it is merely evidential and does not require registration.” 11. Therefore , if a document is created incorporating the terms and conditions with regard to the deposit of the title deed in the form of a document by the defendants then it needs registration under Section 17(1)(c) of the Registration Act. When a mortgage is created by the mere handing over of the title deeds as security, registration of the instrument is not necessary. 12. It is pertinent to note that the Division Bench in South Indian Bank's case _**(**_ **supra)** observed that _**Hubert Peyoli's case**_ does not lay down the correct law and that a document which acknowledges the factum of handing over of title deeds for the creation of mortgage does not require registration. 13. As Ext A6 was only a receipt evidencing the deposit of the title deeds and as no terms and conditions with respect to the transaction between the parties were mentioned in the document, the decision in _**South Indian Bank's case (supra)**_ is squarely applicable in this case. RFA.No. 140 of 2013 10 14. Now the point to be decided is regarding the question of limitation. According to the learned counsel for the defendants as the payment of the amount was on 22.7.2002, the suit filed in the year 2011 was hopelessly barred by limitation. In fact, after receipt of the amount of Rs.1 lakhs on 22.7.2002 repayment had been effected by the defendants on various dates and the last repayment was on 10.3.2003 and in continuation of the transaction a cheque was issued on 6.2.2008. The cheque dated 6.2.2008 when presented for enhancement was dishonored and a compliant was preferred on 3.4.2008 against the 1[st] defendant and he was prosecuted under Section 138 of the Negotiable Instruments Act. Of- course he was acquitted. Thereafter, also demands were made on various dates by issuing notices as evident by Ext A4 the postal acknowledgment to the notice issued to the 1[st] defendant. A5 series and Ext.A5 (a) are the notices returned unaccepted on 20.8.2010 by the defendants 2 and 3 and then plaintiff preferred the suit on 10.3.2011. What could be gathered from the materials on record was that the transaction was kept alive and the title deed of one item of property offered as security for the loan availed, still remains with the plaintiff. The defendants' case that the Ext.A2 was entrusted to the brother of the plaintiff and he got possession of it on death of his brother was not RFA.No. 140 of 2013 11 proved by the defendants and therefore the finding of the court below that the case of the defendants' was more probable, is difficult to accept in the facts of the case narrated above. The amount borrowed was on 22/07/2002. Last payment was on 10.3.2003. But as the Mortgage by deposit of title deeds was created on the very same day the relevant Article under the Limitation Act is Article 62. Then the period of limitation is 12 years and not three years as pointed out by the learned counsel for the respondents. Article 62 of the Limitation Act reads thus: “62.To enforce payment of money Twelve years When the money sued secured by a mortgage or for becomes due otherwise charged upon immovable property 15. Since the suit was filed within the period of 12 years of refusal to pay the balance amount, no doubt the plaint claim is not barred by limitation. 16. In view of the above, I find that the finding rendered by the court below that the suit is only to be dismissed is absolutely wrong and erroneous and therefore liable to be set aside. In the result, the judgment and decree under challenge are set aside and the appeal is allowed directing the respondents to pay the amount of Rs.2,33,639/-, with interest at the rate of 12% per RFA.No. 140 of 2013 12 annum with quarterly rests on the principal amount of Rs.83,000/- till the date of the suit (14.3.2011) and thereafter only at the rate of 6% per annum (from the date of the suit) till realization on the principal amount of Rs.83,000/-. The parties shall bear their respective costs. smm Sd/SHIRCY V JUDGE