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2025 Supreme(Ker) 3242

IN THE HIGH COURT OF KERALA AT ERNAKULAM
EASWARAN S., J.
N.K. Ramachandran S/o Kunjappan – Appellant 
Versus
T.B. Sunil Kumar S/o Bhaskaran Pilla – Respondent
RSA Nos. 980, 1097, 1100, 1188 of 2013
Decided On : 19-12-2025

Advocates Appeared:
For the Appellant : P. Thomas Geeverghese
For the Respondents: T. Krishnanunni, K.C. Kiran, Jamsheed Hafiz, G. Sreekumar Chelur, Thareeq Anwar K.

A mortgage exists despite subsequent transfers by the mortgagor, and the creditor-debtor relationship in chitty transactions is affirmed, allowing the mortgagee to recover against subsequent assignees.

Headnote:(A) Chit Funds Act, 1982 - Section 64 - Transfer of Property Act, 1882 - Sections 3 and 58 - Property Recovery and Injunction - The court reaffirmed the concept that a mortgage exists regardless of subsequent transfers by the mortgagor, establishing a creditor-debtor relationship in chitty transactions. The court found that documents executed by the mortgagor constituted a simple mortgage, thus enabling the mortgagee to recover the mortgage money regardless of any subsequent assignments. (Paras 9, 14, 28, 30)

Facts of the case:
The plaintiff sought recovery of real property sold following a chitty auction. The defendants contended that the plaintiff lacked title due to prior transfers. The court examined the nature of transactions under the Chit Funds Act and the validity of the plaintiff’s claims of ownership against the defendants’ assertions.

Findings of Court:
The court concluded that the plaintiff had a valid title due to executed mortgage documents, confirming that the rights conferred through auction and delivery of the property were legally binding. The appeals were dismissed with costs to the respondents.

Issues: The primary issues included the legality of the chithy transaction documents as mortgages, the applicability of the Chit Funds Act, and the requirement for subsequent assignees in the legal proceedings.

Ratio Decidendi: The court reasoned that the executed documents triggered a debtor-creditor relationship, clarifying that a mortgage exists despite subsequent transfers by the mortgagor. The Chit Funds Act did not apply retroactively, affirming the validity of the plaintiff's rights to recover possession.

Result: Appeals dismissed.

Table of Content
1. ownership and possession history of the property. (Para 1 , 2)
2. arguments for and against the validity of agreements. (Para 5 , 6)
3. nature of obligations of the parties under chitty agreements. (Para 7)
4. applicability of chit funds act 1982. (Para 18 , 19 , 20)
5. subsequent assignments in mortgage agreements. (Para 22 , 23)
6. legal frameworks for suits involving mortgages. (Para 24 , 25 , 26)
7. executable decree status for the plaint schedule property. (Para 30)
8. final judgment and order dismissing the appeals. (Para 32)

JUDGMENT :

EASWARAN S., J.

1. These four appeals raise a common question and hence being considered together and are disposed of by this common judgment.

2. The appellants are the defendants in a suit for recovery of possession and a permanent prohibitory injunction. The plaint schedule property was purchased by the plaintiff by virtue of sale deed No.2819/1998 of SRO Puthencurz. Originally the property belonging to one Karuthedathu Yohannan, who had mortgaged the property for receiving a chitty amount from Thrissivaperoor Social Welfare Centre Kuri Unit, hereinafter called as the chitty company. In 1987, the company filed a suit and obtained a decree charged on the plaint schedule property. E.P No.271/1989 was filed before the Sub Court, Paravur, in which the schedule property was auctioned and the chitty company purchased the plaint schedule property and the sale was confirmed on 07.11.1990. Thereafter, the company obtained delivery of the property in a fresh proceeding as E.P No.63/1991. Subsequently, the plaint schedule property was sold to the plaintiff by the chitty company. Later, when defendants 1 and 2 tried to trespass into the property, plaintiff filed O.S No.298/1999 seeking injunction restraining the defendants from trespassing into the plaint schedule property. Finding that the plaintiff was divested of the possession of the suit property, the said suit was withdrawn with liberty to file a fresh suit and hence the present suit.

2.1 The defendants entered appearance and contested the suit by contending that the plaintiff had no right title and interest over the plaint schedule property. It was contended that the property originally belong to Yohannan, who had sold the property to one Suseela. In the year 1989, Suseela executed a sale deed in respect of the property in favour of defendants 1 and 2. The 1st defendant, in the year 1999 had executed a document in favour of the 2nd defendant and the 2nd defendant consequently sold the property to the 3rd defendant in the year 2005. The plaintiff contended that the subsequent documents are no longer valid in the eye of law. The defendants however raised the plea that as on the date of execution of the sale deed by the company in the favour of the plaintiff, the right title and interest over the property was already divested in favour of Suseela and in the absence of Suseela in the party array, the decree obtained by the chitty company is not executable. It was further contended that going by the nature of the document executed by Yohannan in favour of the chitty company, the right to enforce the security arose only on the default of the chitty amount and not from the date of execution of the deed. The fact that OS No.298/1999 was withdrawn would itself show that there is a cloud in the title of the plaintiff and in the absence of any prayer for declaration of title, the suit is not maintainable. On behalf of the plaintiff, Exts.A1 to A25 documents were produced and PW1 and PW2 were examined. On behalf of defendants, Exts.B1 to B21 documents were produced and DW1 to DW3 were examined. Exts.C1 and C2 are the reports of the Advocate Commissioner and Exts.C1(a) and C2(a) are the rough sketch and survey plan filed by the Advocate Commissioner. The trial court on appreciation of the oral and documentary evidence came to the conclusion that in the light of Exts.A4, A5 and A6 documents, a clear case of mortgage is made out and therefore the ch

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