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Andhra Pradesh High Court
Judges : A.RAGHUVIR, P.RAMACHANDRA RAJU
Boda Narayana Murthy and Sons - Appellant
Versus
Valluri Venkata Suguna - Respondent
Decided On : 02-21-77
EQUITABLE MORTGAGE - PARTNERSHIP PROPERTY - PROPERTY MORTGAGED - SHARE OF MORTGAGOR - INTERPRETATION OF TRANSFER OF PROPERTY ACT, SECTION 8 - LEGAL INCIDENTS OF TRANSFER - MORTGAGE BY DEPOSIT OF TITLE DEED - EXTENT OF MORTGAGE - INTERPRETATION OF SECTION 14 OF THE INDIAN PARTNERSHIP ACT - PROPERTY OF A FIRM.
Fact of the Case:
Plaintiff filed a suit to recover a sum of money with interest from the date of suit, on the foot of an equitable mortgage by deposit of title deed made by one late. N. V. Narshimham, father of defendants 1 and 2. The suit property was purchased by five persons, including the mortgagor, under Ex. A-9 dated 23-1-1945. Subsequently, a cinema house, called Minerva Takies was built on the site purchased under Ex A-9 by the time equitable mortgage was created which is evidenced by the Memorandum, Ex. A-10 dated 19-1-1970. The defendants contended that the suit is not maintainable as the plaintiff-partnership firm was not registered and the partner who filed this suit was not authorised to do so; the borrowing said to have been made by N. V. Narasimham. father of defendants 1 and 2 and creation of the mortgage are not admitted and the plaintiff is put to strict proof of the same; the interest claimed is excessive; the hypotheca was a partnership property of a firm, consisting of partners, N. V. Narasimham, father of defendants 1 and 2, defendants 3, 5, 7 and 8 and another called A. Visveswara Rao, and therefore, the mortgage created by the father of defendants 1 and 2, as a security for his personal debt is not valid; and Defendants 4 and 6 have no interest in the hypotheca.
Finding of the Court:
1. The property mortgaged was not the partnership property. 2. The property that can be said to have been mortgaged by deposit of the title deed, Ex. A-9, is the property purchased under that sale deed as well as the cinema house called Minerva Talkies which was subsequently built. 3. The share of N. V. Narasimham, the mortgagor in the property in question is 5/15th and not 5/14th.
Issues: 1. Whether the property mortgaged was partnership property? 2. What is the property that can be said to have been mortgaged by deposit of the title deed, Ex. A-9? 3. If the mortgaged property was not partnership property and it was the property owned by co-owners, what is the share of N. V. Narasimham, the mortgagor in it?
Ratio Decidendi: 1. The property purchased under Ex. A-9 is a site of an extent of 2868 square yards with an up-stair building and some houses bearing door numbers 17/180 and 17/181. Admittedly the cinema house called Minerva Talkies was built subsequently. There is also no evidence to show that any partnership funds were utilised for constructing the same. Therefore, the question for consideration is whether the hypotheca for which the mortgage was created became the property of the partnership? 2. Section 14 of the Indian Partnership Act mentions that the property of a firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise, by or for the firm in the course of the business of the firm and includes also the good will of the business. Therefore, for a property to become the property of a firm it must have been brought into the stock of the firm by the partners originally when the firm was formed or subsequently acquired by purchase or otherwise in the course of its business. In the present case there is no evidence adduced to show what are the properties that were brought into the stock of the firm when it was originally formed or what are the properties that were subsequently purchased or acquired by the firm in the course of its business. 3. The title deed deposited relates to land only, if at the time the deposit was made there were any structures on it, equitable mortgage would be created both with regard to the land as well as the structures thereon.
Final Decision: Appeal allowed. Preliminary decree for mortgage as prayed for over 5/15th share of the property mentioned in the plaint Schedule. Plaintiff is entitled to recover costs throughout from defendants 1 and 2. Defendants 3 to 8 to bear their respective costs both in the appeal and in the suit. Time for redemption-six months.
( 1 ) PLAINTIFF in the suit is appellant in the appeal. It is a firm represented by one of the petitioners. The suit is laid to recover a sum of Rs. 52,087. 47 with interest form the date of suit, on the foot of an equitable mortgage by deposit of title deed made by one late. N. V. Narshimham, father of defendants 1 and 2. Only one title deed was deposited and it is Ex. A-9 dated 23-1-1945 under which the site, an up-stair building and some structures standing thereon, were conveyed in favour of five persons, namely father of defendants 1 and 2, 3rd defendant, Nidamarthi Suraiah Venkata Krishna Murthy and one Nidamarthi Satyanarayana Murthy. Subsequently, a cinema house, called Minerva Takies was built on the site purchased under Ex A-9 by the time equitable mortgage was created which is evidenced by the Memorandum, Ex. A-10 dated 19-1-1970. According to Ex. A-10 the deposit was made on 18-1-1970.
( 2 ) AFTER obtaining Ex. A-9, one of the five purchasers viz. , Venkatakrishna Murthy by Ex. A-23 dated 22-3-1945 relinquished his share by mentioning it as 1/8th in favour of the remaining four vendees under Ex. !-9. Subsequently some others also became entitled to a share in the property relating to Ex. A-9. All of them re made parties to the suit and they are defendants 3 to 8.
( 3 ) THE first defendant filed a written statement which has been adopted by defendants 2 and 8. The third defendant filed a separate written statement which has been adopted by defendants 5, 6 and 7. The contentions raised by the defendants in defending the suit are as follows:---- 1. The suit is not maintainable as the plaintiff-partnership firm was not registered and the partner who filed this suit was not authorised to do so; 2. The borrowing said to have been made by N. V. Narasimham. father of defendants 1 and 2 and creation of the mortgage are not admitted and the plaintiff is put to strict proof of the same; 3. The interest claimed is excessive; 4. The hypotheca was a partnership property of a firm, consisting of partners, N. V. Narasimham, father of defendants 1 and 2, defendants 3, 5, 7 and 8 and another called A. Visveswara Rao, and therefore, the mortgage created by the father of defendants 1 and 2, as a security for his personal debt is not valid; and 5. Defendants 4 and 6 have no interest in the hypotheca.
( 4 ) THE lower Court found all the points in favour of the plaintiff, except for the finding that the hypotheca was partnership property and, therefore, the mortgage created by the father of defendants 1 and 2 is not a valid one. Accordingly, the lower court granted a simple money decree for the suit amount to be realised form the assets of N. V. Narasimham, the debtor, in the hands of defendants 1 and 2.
( 5 ) THERE is also a finding given by the lower court that 5/14th is the share of the mortgagor in the mortgaged property, even assuming that it is not partnership property and remained joint property between the co-owners. But, according to the case of the plaintiff his share was 5/28th.
( 6 ) SRI J. V. Suryanarayana Rao, learned counsel for the respondents has also raised a new point in his arguments, which was not raised in the lower court by arguing that what can be said to have been hypothecated by depositing Ex. A-9 title deed is only the property purchased under that sale deed as the cinema house called Minerva Talkies which was subsequently built cannot be said to have been hypothecated by means of depositing Ex. A-9 only.
( 7 ) THEREFORE, the points that arise for our consideration in the appeal are: 1. Whether the property mortgaged was partnership property? 2. What is the property that can be said to have been mortgaged by deposit of the title deed, Ex. A-9? 3. If the mortgaged property was not partnership property and it was the property owned by co-owners, what is the share of N. V. Narasimham, the mortgagor in it?
( 8 ) POINT No. 1: A reading of Ex. A-9 shows that the five persons mentioned therein as v
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