1. Mortgage enforcement suit — Dispute over consideration — Allegation of coercion and undue influence to stifle prosecution for defalcation. (Para 1 , 3 )
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1927 Supreme(SC) 97
Privy Council
Sir John Wallis, Sinha, Atkinson, Justice Viscount Sumner, JJ.
Seth Maganmal and another -Appellant
Versus
Darbarilal Chowdhry -Resopndent
Privy Council Appeal No. 58 of 1924
Decided On : 06-12-1927
Advocates Appeared:
T.L. Wilson and Co., Downer and Johnson, B. Dube, J. M. Parikh, L. DeGruyther
T.L. Wilson and Co., Downer and Johnson, B. Dube, J. M. Parikh, L. DeGruyther
A mortgage is void for want of consideration if the primary account books are suppressed and evidence suggests that entries in the fair cash book were fictitious and the document was executed under coercion or undue influence.
Headnote:(A) Mortgage - Consideration - Onus of proof - Where a defendant admits the execution of a mortgage but denies the receipt of consideration, the onus of proving this defense lies heavily on the defendant, particularly when the defense is inconsistent with written admissions.
(B) Evidence - Account Books - The rough cash book (Katchi Rokad) is the primary record of day-to-day transactions; the non-production of such books, coupled with suspicious entries in the fair cash book (Pakki Rokad), justifies an adverse inference that the primary records were intentionally suppressed because their production would have been detrimental to the party relying on them.
(C) Evidence - Witness - The failure to call a key witness who was available and could have provided a first-hand account of the transactions may be interpreted as an intentional omission to avoid cross-examination.
(D) Evidence - Corroboration - Fictitious entries in account books can be established through independent and disinterested witnesses who prove that transactions recorded in the books did not occur in their own records.
Facts of the case:
A suit was filed to enforce a mortgage executed for a sum of money. The plaintiffs alleged the sum was borrowed in cash from a branch shop. The defendant admitted executing the mortgage but denied receiving the consideration, claiming that the mortgage and related acknowledgments were signed under coercion and undue influence to prevent the prosecution of a relative, who was the managing partner of the shop, for alleged defalcations. The plaintiffs relied on entries in a fair cash book and an acknowledgment book to prove the debt.
Findings of Court:
The court found that the managing partner was not present in the town on the dates the loans were allegedly advanced. It was further observed that the rough cash books were not produced despite repeated requests, and the fair cash book contained entries in the managing partner's handwriting only for the disputed dates. Independent witnesses confirmed that other entries in the same books were bogus, supporting the defendant's claim of defalcations.
Issues: The main issues were whether the defendant had actually borrowed the sum of money for which the mortgage was executed and whether the mortgage was void for want of consideration and execution under undue influence and coercion.
Ratio Decidendi: The suppression of the rough cash book, the proven absence of the person allegedly advancing the loans, and the failure to produce the principal manager as a witness collectively supported the conclusion that the entries in the fair cash book were fictitious. Consequently, the mortgage was held to be void for want of consideration and executed under coercion.
Result: Appeal dismissed.
Legal Category Hierarchy
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civil law
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property law
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mortgage
- consideration and validity
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mortgage
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law of contract
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vitiating factors
- coercion and undue influence
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vitiating factors
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property law
-
practice and procedure
-
evidence
- burden of proof
- adverse inference
-
evidence
Table of Contents
2. Plaintiffs claim mortgage was for cash loans; defendant contends it was executed under coercion and undue influence to prevent prosecution of a relative. (Para 3 )
Lord Sinha:-
This is an appeal from a judgment and decree of the Court of the Judicial Commissioner of the Central Provinces, which reversed a judgment and decree of the Subordinate Judge of Damoh in a suit which was filed on the 11th December 1916, in order to enforce a mortgage executed by the defendant on the 5th March 1913.
The case has been tried under peculiarly unsatisfactory circumstances. The plaint was registered on the 2nd January 1917. No written statement was filed, but only oral statements of the pleaders on both sides recorded, and issues were framed on these. The evidence was heard from time to time and at long intervals, and appears to have taken altogether a period of nearly three years. Judgment was pronounced by a Subordinate Judge who had not hoard any of the witnesses except two, and even of these one had been partly examined by his pre-decessor-in-office. The result is that in a case which entirely depends upon questions of fact, neither of the Courts dealing with the case had the benefit of seeing the witnesses and had to appreciate the evidence recorded by another Judge. Under these circumstances their Lordships are unable to attach the same importance as they otherwise would, to the findings of fact of the trial Court, and it is necessary that they should feel convinced that the judgment of the Judicial Commissioner under appeal is wrong before they can advise that it should be set aside.
The plaintiffs alleged that the defendant executed the mortgage in question after having received the sum of Rs. 7,000 in cash, and they prayed for the usual mortgage decree.
The defendant admitted the execution of the mortgage but denied that he had received the consideration alleged and also that he owed any money to or had received any money from the plaintiffs.
It is obvious that the onus of proving this defence lay on him, and lay heavily, seeing that it is inconsistent with his own admissions in writing hereafter referred to. It is necessary to scrutinize the defence story in detail and to see whether it is corroborated in every material part in such a way as to neutralize the effect of these admissions. For that purpose, such of the main facts as are not in dispute may be stated as follows:
The plaintiffs have their principal shop at Damoh, which is called "badi dukan." Rai Seth Sukhdeo was its munim. The plaintiffs had also a branch shop in the Mawganj quarter of that town, doing only grain business. It was usually called the "adat shop." In that shop the defendant's brother Gajadhar was the managing partner without any share in the capital. In the paki rokad (fair cash book) of the adat shop there are three debit entries in the handwriting of Gajadhar showing that the following sums had been advanced to the defendant on the dates mentioned against them:
(1) Rs. 2,600, dated 13th February, 1913.
(2) Rs. 3,400, dated 12th February, 1913.
(3) Rs. 1,000, dated 17th February, 1913.
Total Rs. 7,000
The sarkat or acknowledgment book of that shop contains acknowledgments of the defendant in his own handwriting purporting to have been written on these dates and admitting these loans.
The plaintiffs alleged that the defendant had borrowed from their badi dukan Rs. 7,000, and given the mortgage in suit in order to satisfy the debts due by him to the adat shop as evidenced by the above documents. What the defendant had to say with reference to these facts will be apparent from the following statement made for him by his pleader on the 5th December 1917: A few days before the execution of the bond in suit, Gajadhar had gone to Jubbulpore in connexion with the defendant's marriage. During his absence Rai Sahib Seth Sukhdeo found some money short in the adat shop and wired to Gajadhar to come back. When Gajadhar came he was threatened by Rai Sahib Sukhdeo with prosecution and arrest for the alleged defalcation. As Rai Sahib Suhkdeo holds the position of an Honorary Magistrate and is an influential man, and as Gajadhar was the only per
