KOTLA VENKATASWAMY Vs. CHINTA RAMAMURTHY

JUDGEMENT

(1.) The plaintiff, who appeals, sued to enforce a mortgage bond for Rs. 1,000 purporting to have been executed on behalf of a company calling itself the South Indian Agricultural and Industrial Improvement Co, Ltd., to one Venkamma, who assigned her interest to the plaintiff. The company subsequently went into voluntary liquidation and the mortgaged property was sold and eventually purchased by defendant; 4. The mortgage deed was signed by the Working Director and by the Secretary to the company (defendants 1 and 2). The plaint avers that the debt was regularly contracted in accordance with the powers and authority possessed by the said director and secretary under the articles of the said company and the special resolutions passed from time to time.

(2.) Defendant 4 in his written statement says that he does not admit that the document was executed by and on behalf of the company, defendants 1 and 2 not being competent to contract loans, much less to charge the property of the company. Objection is taken to the form of this statement, the contention being that it is not enough to say that a fact is not admitted in order to put the plaintiff to the proof of it and an English case Rutter V/s. Tregent (1879) 12 Ch.D. 758 is cited. But I have not been shown what are the terms of the rule which was in question in that case, and it is clear that Order 8, Rule 5, Civil P.C., provides for the traversal of a statement in the plaint in this form. There is a decision to this effect in Rajagopalachariar V/s. Bhashyachariar 1924 Mad. 838.

(3.) The main point in dispute is whether the mortgage bond was validly executed so as to make the company liable. Both the Courts below have answered this in the negative. It has been sought to raise two further questions here assuming that it was not so valid. It is said in the first place that the company subsequently ratified the instrument and secondly, that if the money was applied to the company's purposes the creditor would have an equitable charge for the debt upon the company's property. Neither of these two matters was made the subject of an issue at the trial. The additional Subordinate Judge, as he says at the end of para. 9 of his judgment, thought; that he was concerned only with the validity and the binding nature of the mortgage deed, and although some traces of these alternative positions are to be found in the plaint, it is clear that no issues were sought in regard to them. Whether or not the subsequent action of the company amounted to ratification is clearly a question of fact. It is also a question of fact whether defendant took a sale of the property in such circumstances as would qualify the plaintiff to take advantage as against him of any equitable charge which might exist over it. Since no satisfactory explanation is forthcoming for the failure to bring these questions to trial, I do not feel justified in entertaining them in second appeal. Art. 15, of the Company's Articles of Association provides as follows: All deeds, hundies, cheques, certificates and other instruments hall be signed by the Managing director, the Secretary and the working Director on behalf of the Company, and shall be considered valid.