The main legal point established in the judgment is the fabrication of the lease agreement and related documents, leading to the dismissal of the suit.

S. VIMALA, J.

1. The unsuccessful Plaintiff is the Appellant. The Plaintiff filed the suit for,

a) recovery of a sum of Rs.18,61,105/-with 15% subsequent interest from the date of Suit till realisation and for other relief from the Defendants based on a lease agreement dated 15.10.1997; and

b) Personal and Mortgage decree against the fourth Defendant and also for a direction to direct the fourth Defendant to pay a sum of Rs.18,61,105/-with 15% subsequent interest, failing which, to order sale of the mortgaged property.

2. The brief facts:-

The plaintiff's Company is incorporated under the Companies Act and carrying on business of hire purchase and leasing with registered Office at Puducherry and administrative Office at Madurai.

2.1. The first Defendant is a Partnership Firm of which D2 and D3 are its partners.

2.2. At the request of the Defendants, the Plaintiff entered into lease and hire purchase agreement in respect of lease and hire purchase of machineries. The first Defendant committed default in the payment of rental and hire amount. Therefore, the Plaintiff repossessed the machineries on 01.07.1997 and kept it in the premises of the first Defendant. Towards payment of arrears of rent and hire purchase of amount, the first Defendant sold the land and building in favour of the Plaintiff under three sale deeds dated 3.7.1997, 4.7.1997 and 11.7.1997. Thus, the Plaintiff became the owner of the property bearing Door No.3/150, Sukumanickenpatti Village in Pazhani Taluk. Thus, the lease and hire purchase account stood settled.

2.3. Subsequently, Defendants 2 and 3 requested for lease of machineries and accordingly, lease agreement came into existence on 15.10.1997. The agreed rent was Rs.2,89,792/- per month for the next 27 months (Rs.2,89,792/- X 27 = Rs.78,24,384/-). The Defendants were given licence to use the premises so long as the lease arrangement continues. In case of default in the payment of rent, 27% of additional lease charges (Rs.78,244/-) would be payable by the Defendants. The first Defendant paid Rs.45,000/- on 31.12.1997 and failed to pay the remaining amount. Default in payment of rent for three consecutive months would ipso facto terminate the lease arrangement. In pursuance of that right, the Plaintiff took possession of the machineries on 31.03.1998.

2.4. The fourth Defendant is the guarantor, the deed of guarantee having been executed on 15.10.1997. The fourth Defendant also deposited title deeds of the immovable property with an intention to create equitable mortgage. Memorandum to that effect was executed on 16.10.1997.

2.5. The Plaintiff could not file the lease agreement dated 15.10.1997 as it was required to be produced before the Auditors for the finalisation of accounts. Plaintiff was planning to produce it during the evidence. The sale consideration was adjusted only towards part of the liability. Hence, the Suit.

3. The case of the Defendants (D1 to D3):

The second Defendant-Balasundaram, Thangavelu, Selvam and Geethalakshmi were partners of the first Defendant's Firm. They availed financial assistance under the hire purchase scheme from the Plaintiff for Rs.5,00,000/-, Rs.10,00,000/-and Rs.20,00,000/- in or about 1996 for the purchase of raw materials and machineries. In respect of that transaction, the immovable properties of the fourth Defendant and third parties were given as security by way of equitable mortgage by deposit of title deeds. Subsequent to the retirement of Thangavelu, Selvam and Geethalakshmi, the third Defendant joined in the partnership in or about 1996 – 1997. Under the hire purchase scheme, D1 to D3 had to pay a sum of Rs.1,40,000/- per month for 36 months (Rs.50,40,000/-). D1 to D3 were able to pay the dues only for three months. Therefore, the Plaintiff terminated the hire purchase scheme and repossessed hypothecated machines. Towards payment of arrears of rent and hire purchase amount, the first Defendant sold the land and building in favour of the Plai