Monoj Kumar Mukherjee, J. - (1.) This appeal is at the instance of the defendants and it arises out of a suit for redemption of mortgage and of charge, rendition of accounts, recovery of money over paid and for other consequential reliefs. The case of the plaintiff is as under. The plaintiff was incorporated as a private limited company on March 15, 1951 for exhibition of Cinematographic Films with three directors on Board, namely, Ranatsen Ghose, Birendra Mohan Bhar and Dhanaballav Pal. The plaintiff, therefore, purchased three vacant plots of land at Khardah in the District of 24-Paraganas at a price of Rs. 23,500 with a view to construction a Cinema House thereon and starting a cinema exhibition business of its own under the name and style of "Sandhya Cinema Corporation." Thereafter the plaintiff mortgaged the said land to Smt. Ramarani Pal, wife of its director Dhanaballav Pal, for Rs. 10,000 and at the relevant time the mortgage money along with interest thereon amounted to Rs. 12,700. The plaintiff got a plan for the proposed Cinema House sanctioned by the Titagarh Municipality and started foundation work but for paucity of funds the construction had to be stopped. It was, therefore, decided to raise loan from the market to carry on the construction of the Cinema House and also to pay off Smt. Ramarani Pal. For that purpose, in or about the month of September or October 1955, the plaintiff approached the defendants, who are money lenders by profession, for loan. They agreed to lend and advance Rs. 12,700 at an interest of 8% per annum to the plaintiff to enable it to liquidate the mortgage debt of Smt. Pal on condition that the plaintiff would execute a fresh mortgage in respect of the said plots of land in favour of the defendants as security for the loan. According to the plaintiff, Rama Sankar Singh, the defendant No. 1 at the material time was carrying on business in of purchasing old buildings, structures and selling second-hand building materials collected from them after demolition and at his instance all the four defendants made a further demand that the loan would be advanced only if the contract for construction of the Cinema House was made with them. The defendants further gave out that keeping a profit of 20 % the cost of construction of the entire Cinema House would be Rs. 67,300 with second-hand building materials and they proposed that the said cost would be treated as loan to be offered by the defendants jointly and included in the deed of mortgage of the land so that the cost of construction could be realised with interest of 8%. Due to its financial constraint and helpless condition the directors of the plaintiff agreed to place the contract with the defendants. The defendants then through their Attorney got a deed of mortgage drafted with the condition that the defendants would advance Rs. 80,000 as loan at an interest of 8% per annum to the plaintiff out of which Rs. 12,700 should be paid on the date of execution of the deed to Smt. Pal to redeem the mortgage and Rs. 67,300 would remain with the defendants to construct the Cinema House for the plaintiff as per plan sanctioned. At the time the directors of the plaintiff were negotiating with the defendants for the loan, one of them, namely, Dhanaballav Pal expressed his inability to agree to the terms of the defendants and resigned on October 16, 1955. Taking advantage of the predicament in which the other two directors, namely, Ranatsen Ghose and Birendra Mohan Bhar were placed the defendants got it stipulated in the mortgage deed that the interest on Rs. 80,000 would run from 20.10.1955, the date of execution of the mortgage deed and the plaintiff would have to repay the mortgage amount of Rs. 80,000 with interest within two years though the defendants paid only Rs. 12,700 on 20.10.1955 to liquidate the mortgage debt of the plaintiff to Smt. Pal while the remaining sum of Rs. 67,000 remained with the defendants which was supposed to have been spent in the construction of the Cinema House till 1960 when the construction was completed. According to the plaintiff the defendants thus tried to make a fraudulent gain of Rs. 26,920 as interest for five years on Rs. 67,300. The further case of the plaintiff is that the defendants also represented to them that they were advised by their lawyer to have a separate deed in the nature of partnership executed between the parties. The defendants represented that in case the plaintiff was not agreeable to the same they would not make any advance whatsoever. The plaintiff being in financial difficulty and being unable to continue with the construction of the Cinema House was forced to agree to the aforesaid condition. A deed of partnership was then drafted without approval of the plaintiff and without supplying any copy to it. According to the plaintiff the deed was executed by way of an additional security so that the defendants could have absolute control to realise their dues with interest and with that ulterior object in view, the execution of both the deeds, namely, that of mortgage and partnership was rushed through by the defendants and the signatures of the two directors of the plaintiff were taken without permitting them to know the contents thereof. Narrating its case further the plaintiff averred in the plaint that on October 20, 1955 the deed of mortgage was executed by the plaintiff in favour of the defendants far a loan of Rs. 80,000 coupled with interest 8% per annum. Out of that a sum of Rs. 67,300 was retained by the defendants to be utilised by them for the purpose of construction of the Cinema House for the plaintiff. A purported deed of partnership was executed providing or the first charge over the Cinema House to be constructed, for the further advances to be made by the defendants, inter alia, for the electric installation, and for the supply of machineries, tools, equipments, furniture and other items of goods necessary for running of the Cinema House. Thus though a deed of partnership was executed no partnership was in fact constituted and the partners did not even intend to act, upon the alleged deed of partnership or to act as partners of the alleged partnership firm. In fact, according to the plaintiff, the partnership was never given effect to or acted upon. The defendants also got a power of attorney executed by one of the directors of the plaintiff without disclosing the contents thereof and got the same registered. The plaintiff contends that a bare perusal of the deed of partnership would indicate that it does nut relate to a lawful partnership but is intended to provide security to the defendants or expenses over and above a sum of Rs. 67,300, that was to be incurred by the defendants in connection with the construction of the Cinema House. To prove that the deed of partnership was contrary to law the plaintiff referred to certain terms thereof in the plaint. The plaintiff contends that apart from being contrary to law the deed of partnership is vitiated by fraud and undue influence. According to the plaintiff after the execution of those documents the defendants took possession of the plots of land belonging to the plaintiff and started construction of the Cinema House and since then is in possession thereof in wrongful exclusion of the plaintiff and its directors. The plaintiff states that the defendants incurred expenses only to the extent of about Rs. 1,37,300 for the construction of the Cinema House and installation of machineries, etc. and since the said sum includes the sum of Rs. 67,300 the defendants can claim a charge over the Cinema House to the extent of Rs. 70,000 only. The plaintiff avers that the Cinema House, after it was constructed became the property of the plaintiff and the defendants are only mortgagees in possession and charge-holders. The plaintiff claims that it asked the defendants to render accounts of the money realised and or that matter profits made from the running of the Cinema -House but they failed and neglected to comply with the said demand. The plaintiff came to know that between April, 1964 and March, 1969 the defendants realised a sum of Rs. 13,98,553.69 p. from the said Cinema House but it was not aware of the amount realised from the defendants from 16th December, 1960, on which date the Cinema House started running, till March 31, 1964. The plaintiff asserts that upon proper accounts being taken of the realisations made by the defendants it would appear that the alleged due of the defendants had been paid oft long ago. By filing the suit the plaintiff, therefore, claimed accounts and prayed for redemption of the mortgage and the charge. As the defendants are in possession of the property the plaintiff prayed for recovery of peaceful possession of the Cinema House together with all equipment's, machinery's, furniture's and fittings thereof. The details of the property mortgaged and property charged have been given in the schedule of the plaint.
(2.) In their written statement the defendants, besides raising preliminary objections as to the maintainability of the suit, denied that they were money lenders by profession and contended that the plaintiff approached them for financial assistance and to be partners in the cinema business. For that purpose the plaintiff first requested them to free the land from the mortgage by paying off the dues or Smt. Romarani Pal as the plaintiff had no money. The plaintiff also requested the defendants to construct the Cinema House on the said land on the understanding that the plaintiff and the defendants would be partners and would share the profits and losses of the cinema business. According to the defendants, it was the plaintiff who approached the defendants and agreed that the defendants would advance of sum of Rs. 67,300 as loan for construction of the Cinema House and also requested them to make further advances to complete the construction of the Cinema House together with electrical fittings, tools, machineries, etc., and the plaintiff agreed to repay the same on certain terms on the understanding that the defendants would be the partners of the business and would enjoy profits and losses thereof. On that clear understanding the defendants agreed to advance on the mortgage and to make further advances. The defendants assert that it is done to the labour and finance of the defendants that the Cinema House has' been built and the cinema show business is being carried on. According to the defendants the plaintiff did not advance any money in constructing or running the cinema business except the land which is valued at Rs. 10,000. The defendants deny that they intended to keep 20% profits out of construction of the Cinema House and contend that the plaintiff is liable to repay the money advanced by the defendants and for the monies so advanced by the defendants, the property was charged. Regarding the payment of sum of Rs. 80,000 the defendants case is that out of the said sum, Rs. 12,700 was given to Ramarani Pal in repayment of her dues and the remaining sum of Rs. 67,300 which was given by the defendants to the plaintiff was again handed over by the plaintiff try the defendants for the purpose of constructing the Cinema House. The further case of the defendants is that in accordance with the deed of partnership and the deed of mortgage they constructed the Cinema House which was completed in or about 1957. They invested a huge sum of money for completing the construction and for doing other things, namely, electrical fittings, machineries, tools, furniture, etc. According to the defendant they are carrying on the cinema business since December 1960 in accordance with the deed of partnership. They emphatically deny that the plaintiff is the owner of the Cinema House and also deny that they are mortgagees or holders of the charge. The defendants assert that they are the partners of a lawfully constituted partnership firm and they are entitled to carry oh the business in terms thereof. Consequently, they submit that the plaintiff is not entitled to any of the reliefs sought for in the plaint.
(3.) In the context of the respective cases of the parties the learned Judge confined his attention mainly to the two deeds executed by the parties on October 20, 1955 and held that while one of them was clearly of mortgage, the other though instituted as one of partnership was not in fact such a deed and it was never acted upon as such. In drawing this conclusion the learned Judge was influenced by the various terms of the deed of partnership and according to the learned Judge, the document was executed for creating a charge. On such conclusion the learned Judge held that the same operated as a clog on the equity of redemption of the mortgage which was created by the other deed executed on the same date. Mr. Bhabra, the learned Advocate appearing for the appellants assailed the above finding of the learned Judge and contended that the various terms of the deed of partnership referred to by the learned Judge in arriving at his, conclusion did not militate against the theory of partnership. While on this point Mr. Bhabra contended that the other documents exhibited during trial clearly indicated that the directors o; the plaintiff company deliberated upon and decided to enter into a partnership with the defendants and thereafter executed the deed of partnership for running the cinema business in terms thereof. Mr. Bhabra next contended that the materials on record clearly established that the cinema business was being carried on in terms of the partnership deed. According to Mr. Bhabra the deed of mortgage which was executed by the plaintiffs in favour of the defendants became ineffective and ceased to be a valid document consequent upon the execution of the partnership deed having regard to the fact that the properties secured under the mortgage, namely, the three plots in question became the properties of the partnership firm constituted by the deed of partnership. In other words, Mr. Bhabra's contention was that as soon as the mortgaged property became the property of the partnership firm the plaintiff became divested of the mortgaged property; and consequently its right of redemption under section 60 of the Contract Act became extinguished by his own act, namely, execution of the deed of partnership. Mr. Dutt, the learned Advocate appearing for the plaintiffs/ respondents on the other hand contended that the execution of the deeds of ' mortgage and of the partnership was part of the same transaction and was thus indicative of the fact that the partnership document was executed for the purpose of creating a charge on the property and that was evident also from the various recitals in the deed of partnership. According to Mr. Dutt a plain reading of the deed of partnership would unmistakably show that it did not comply with the requirements of the Partnership Act; and on the contrary, Mr. Dutt argued, there could not be any manner of doubt that the terms of the purported partnership deed put fetters on the equity of redemption.;