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IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
D.V.S.S. SOMAYAJULU, J.
Andhra Bank, A Govt. of India - Appellants
Versus
Dega Venkatasubaiah and Ors. - Respondent
A.S. No. 1574 of 1998
Decided On : 27-04-2018
Civil Law – Civil Suit – bank – Suit for recovery of amount – Mortgage – Plaintiff-bank filed a mortgage suit against defendants 1 to 6 for recovery of amount from defendants 1 to 6 and also for a preliminary decree for recovery of the sum due seeking liberty to file a final decree petition for the sale of mortgaged property etc – Case of the plaintiff-bank before the lower Court is that defendants 1 & 2 are arrack contractors. At their request, the plaintiff-bank provided a bank guarantee to the Excise Department– Defendants 3 to 6 are the guarantors for defendants 1 & 2. According to plaintiff-bank, they have also deposited their title deeds with an intention to create a mortgage. As per the pleadings, the first mortgage created which was extended and last mortgage extension – Case of the plaintiff-bank is that based on the demand of the Excise Department, they had to pay money and so the suit is filed for recovery of the sum paid to the Excise Department on behalf of the defendants 1 & 2 – They sought a decree against all the defendants – Held, Liability cannot be fastened by the borrowers/guarantors merely on the basis of entries in certified copy of the account – Evidence to support entries is not filed. Further, in the absence of any proof to show the amount demanded by the Excise Department and also the payment of the demanded amount by bank, pursuant to said demand, this Court holds that the entries in Ex. A.19 are not sufficient to fasten liability on the respondents/defendants –Neither payment of loan amount, nor deposit of title deeds with an intention to create mortgage are proved in this case – This Court holds that findings of the lower Court that there is no valid mortgage created is correct – Court notices that both on basis of carbon copies of documents and with an uncertified copy of an account, no liability can be fastened on defendants plus the oral evidence is also not supporting the appellants case – Lower Court also came to conclusion that discrepancies in evidence about the contents of the so-called documents evidencing deposit of title deeds and failure to prove the actual payment of the money to the Excise Department are correct – On two issues of the liability and on the security created to secure that liability, this Court also is concentrating on these two issues – Appellant/plaintiff-bank did not prove due execution of documents evidencing the deposit of title deeds or the liability incurred – Neither actual loan amount paid or the alleged security created are proved – Therefore lower Court and holds that the suit is rightly dismissed and no merits in appeal – Appeal is dismissed.(Paras 17, 18 and 19)
D.V.S.S. SOMAYAJULU, J.
1. This appeal is filed by the plaintiff-bank against the judgment and decree dated 18-09-1997 passed in O.S. No. 76 of 1991 by the Subordinate Judge, Kovur, Nellore District. For the sake of convenience, the parties are referred to as the 'plaintiff-bank' and 'defendants' only.
2. Initially, the plaintiff-bank filed a mortgage suit against the defendants 1 to 6 for recovery of a sum of Rs. 96,166.37 paise from defendants 1 to 6 and also for a preliminary decree for recovery of the sum due seeking liberty to file a final decree petition for the sale of mortgaged property etc. The case of the plaintiff-bank before the lower Court is that defendants 1 & 2 are arrack contractors. At their request, the plaintiff-bank provided a bank guarantee to the Excise Department on 01.10.1986 for a sum of Rs. 1,09,355.52 paise. The defendants 3 to 6 are the guarantors for defendants 1 & 2. According to the plaintiff-bank, they have also deposited their title deeds with an intention to create a mortgage. As per the pleadings, the first mortgage created on 23.09.1985 which was extended on 08.05.1986 and the last mortgage extension was on 11.05.1987. The case of the plaintiff-bank is that based on the demand of the Excise Department, they had to pay the money and so the suit is filed for recovery of the sum paid to the Excise Department on behalf of the defendants 1 & 2. They sought a decree against all the defendants.
3. The defendants entered appearance and contested the suit. The 1st defendant filed a written statement stating that the initial guarantee of 01.10.1986 is agreed but they strongly denied that 5th defendant stood as guarantor and executed a counter guarantee also. The transaction of 1986-87 was specifically denied. This defendant took the plea that taking advantage of an earlier deposit of title deeds, the plaintiff bank created the documents for the so-called extension of the mortgage. The amount due was also denied.
4. The 2nd defendant filed a written statement with similar averments and denied the amounts demanded. He also denied the interest claim. The amount demanded has been strongly refuted by 2nd defendant.
5. The 5th defendant filed a separate written statement denying the mortgage particularly the last mortgage that is purportedly created. He strongly pleaded that his consent was never taken for the extension of the mortgage and that he never stood as guarantor for the suit loan. He states that he demanded the return of the title deeds also by the letter dated 23.03.1987.
6. The 6th defendant filed a separate written statement denying the transaction, denying the deposit of title deeds etc.
7. Basing on these pleadings, the following 14 issues were settled by the lower Court.
(i) Whether D5 stood as guarantor for D1 and D2 and deposited his title deeds with an intention to create equitable mortgage over the schedule mentioned properties and executed the counter guarantee in favour of the plaintiff on 1-10-86 and the plaintiff forged the signature of the D5 to claim security over the schedule mentioned property?
(ii) Whether the defendants are liable to pay a sum of Rs. 96,166.37 ps. as per the statement of account, but only liable to pay Rs. 17,520/- as on 1.10.87?
(iii) Whether the plaintiff suppressed the amounts taken and adjusted from the personal account of the 1st defendant?
(iv) Whether there is no joint privity of contract between the D1, D2 and the plaintiff?
(v) Whether the plaintiff is entitled to include Rs. 6,735/- for which the plaintiff/bank furnished bank guarantee to the D2, in the account of 1st defendant?
(vi) Whether D2 is not liable to pay interest as per the statement of account?
(vii) Whether the counter guarantee executed by the defendants is invalid and does not bind D2?
(viii) Whether the plaintiff is entitled to adjust the Kalpatharu deposit of D2 towards the suit claim and whether such adjustment is invalid?
(ix) Whether the suit is bad for misjoinder of parties and causes
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