KARUR VYSYA BANK LTD Vs. MUNIAMMAL DECEASED
LAWS(DR)-2005-5-6
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on May 17,2005

Appellant
VERSUS
Respondents

JUDGEMENT

K.Gnanaprakasam, - (1.) AGGRIEVED by the order dated 25.5.2000, passed by the DRT, Chennai, the Karur Vysya Bank Ltd., has preferred this appeal. The appellant Bank filed the application against the defendants for recovery of a sum of Rs. 56,45,146.06p. with future interest @ 24.75% p.a. with quarterly rests and for costs. The application against defendants 1 to 3 was decreed as prayed for and dismissed as against the defendants 4 and 5. As against the same, Bank has preferred this appeal.
(2.) The appellant's case is that the 1st defendant Company represented by its Managing Director the 2nd defendant availed loan on various dates from 6.7.1988, that in respect of the cash credit open loan facility, the 1st defendant executed Demand Promissory Note on 22.7.1988 and also executed a letter of hypothecation of bills. That in respect of ad hoc supply bills purchase facility, the 1st defendant executed a promissory note for which the 3rd defendant, who is the wife of the 2nd defendant, in her capacity as a guarantor executed a letter of guarantee. It is the case of the plaintiff that the defendants have also executed a letter of confirmation of deposit of title deeds in respect of Item 2 of the 'A' Schedule property with an intention to create equitable mortgage for the loan availed by the defendants 1 to 3. Defendants 4 and 5 also created additional charge on 7.4.1989. The defendants have not paid the amount due and hence the suit. The 5th defendant who is the 2nd respondent in this appeal, filed written statement, wherein she has stated that at the time of marriage of her daughter, she and her mother the deceased 4th defendant, approached one Mr. Vincent for arranging loan and he took the defendants to one Dr. K. Ramamoorthy and his wife Mrs. Tara Ramamoorthy, who are the defendants 2 and 3, and informed them that they know the Manager of the Karur Vysya Bank, T. Nagar Branch, and promised to arrange for the loan, for which they should pledge the title deeds with the Bank. Believing their words, the defendants 4 and 5 parted with the title deeds with Dr. Ramamoorthy and his wife and they obtained the signatures of the 5th defendant and the thumb impression of her mother in several blank papers by which they have created the alleged mortgage in favour of the applicant Bank and the defendants have no intention to create equitable mortgage for the loan availed by the defendants 1 to 3. It is also the case of the respondents that the defendants 1 to 3 have played a fraud upon them and made them to part with the title deeds and in fact they have no intention to create any mortgage for the loan availed by the defendants 1 to 3. The document said to have been executed by these respondents were exhibited as Exh. A-28 dated 4.1.1992 and Exh. A-29 dated 6.1.1992. Heard the learned Advocate for the appellant and respondent.
(3.) THE point for consideration is whether Order passed by DRT against defendants 4 and 5 is liable to be set aside. THE DRT had considered the documents Ex. A-28 and Ex. A-29 along with other documents and found that the appellant Bank has not produced any document to show that these defendants have created any additional charge on 7.4.1989 and also executed confirmation of deposit of title deeds as stated in the plaint. That in the proof affidavit also the appellant Bank in Para 12 has stated that on 6.1.1992, the defendants 4 and 5 jointly executed a letter of confirmation of deposit of title deeds and thus they have created equitable mortgage in respect of Item-2 of 'A' Schedule property as further security to reduce the shortfall in the existing security and defendants 4 and 5 have also confirmed the outstanding by defendants 1 to 3. But, nowhere, it is stated that the defendants 4 and 5 have deposited the title deeds on 4.1.1992. Ex. A-28 dated 4.1.1992 said to have been executed by the defendants 4 and 5, was deeply considered by the DRT and that the contents was also extracted in Para 7 of the order and it observed except the signature, date and thumb impression of the defendants 4 and 5, other things are typed matters. It would also appear as if defendants 4 and 5 have voluntarily approached the applicant Bank and offered their property as security for the loan of defendants 1 to 3 and in fact they did not do so. Ex. A-29 is the confirmation of deposit of title deeds dated 6.1.1992 in which it is stated that these defendants have also deposited the title deeds on 4.1.1992. Except the date, the rest of the matters were printed and typed. In fact, DRT on verification of these documents had observed that the appellant Bank has not produced the extract from register or register for deposit of title deeds or attendance to prove as to whether the defendants 4 and 5 were present before the appellant Bank and deposited the title deeds either on 7.4.1989 or on 4.1.1992. DRT had further directed the appellant Bank to produce the documents show that the defendants have created additional charge on 7.4.1989, but the appellant Bank could not comply with the same. That only in the said circumstances, the DRT has drawn adverse inference against the appellant Bank that there is no material to hold that defendants 4 and 5 have deposited the title deeds on 4.1.1992 with the appellant Bank. That apart, the appellant Bank have issued a notice to the defendants 1 to 3, but it has not chosen to issue notice to the defendants 4 and 5 on 27.8.1991 and 12.3.1992. THE appellant Bank has also not given any explanation as to why they have not issued notice to the defendants 4 and 5 in Exhs. A-24 and A-25 notice dated 27.8.1991 and 12.3.1992. No doubt they issued Advocate notice to the defendants 4 and 5 under Exh. A-30 dated 30.4.1992 mentioning their documents and the suit filed on 25.6.1992, but nowhere it is stated in Ex. A-28 that they have deposited the title deeds on 4.1.1992, whereas in Ex. A-29, the date 4.1.1992 is written in ball pen. Admittedly, the loans were availed by the defendants 1 and 2 in the year 1989 on executing the necessary documents and it is not the case of the appellant Bank that the defendants 4 and 5 stood as guarantors at the time of sanctioning the loan for the defendant No. 1 Company. THEse are all the facts, which weigh against the appellant Bank and also persuaded the DRT to come to the conclusion that the defendants have no intention to create an equitable mortgage and the mere fact that they have signed in Exhs. A-28 and A-29, cannot be treated as documents for having deposited their title deeds. As there is no intention on the part of the defendants 4 and 5 to create an equitable mortgage, it is for the appellant Bank to prove that the defendants 4 and 5 have executed an equitable mortgage.;


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