K.K. Sasidharan, J.

The civil suit filed by the respondent, praying for a mortgage decree was decreed by the learned single Judge with interest at the rate of 36% per annum. Feeling aggrieved by the judgment and decree, dated 1 April 2010 in C.S.No.701 of 2005, the defendant is before us.

Background Facts:

2. The respondent laid the suit against the appellant on the ground that he borrowed a sum of Rs.10 lakhs after executing 4 Promissory Notes. Subsequently also, the appellant borrowed money on various occasions. However, there was no follow up action to discharge the loan. The cheques issued by the appellant was dishonoured and the same resulted in initiating proceedings under Section 138 of the Negotiable Instruments Act. The respondent filed the suit on the strength of the agreement, dated 24 June 2000.

3. The suit was contested by the appellant by filing written statement. The appellant disputed the mortgage, stated to have been executed by him. The appellant contended that for the very same amount, the respondent filed C.C.No.7806 of 2001 before the V Metropolitan Magistrate, Egmore, Chennai and as such, he is not entitled to file a civil suit for recovery of money.

4. The learned single Judge decreed the suit on the strength of the document dated 24.06.2000 marked as Ex.P1. According to the learned Judge, Ex.P1 was executed by the appellant voluntarily and as such, the respondent is entitled to a mortgage decree.

Submissions by Appellant:

5. The learned counsel for the appellant contended that the respondent compelled the appellant to execute Ex.P1. It was not a document evidencing mortgage. Ex.P1 was only a Memorandum of Settlement. Therefore, it cannot be said that there was a valid mortgage. The learned counsel further contended that even if Ex.P1 is considered as a Mortgage Deed, still, the respondent is not entitled to interest at the rate of 36%. According to the learned counsel, Ex.P1 does not contain any direction for payment of interest. This aspect was not considered by the learned single Judge and as such, the decree is liable to be set aside.

6. None appeared on behalf of the respondent.

Point for consideration

7 (i) Whether there was a valid mortgage created by the appellant in favour of the respondent to give him cause of action for filing a suit for the grant of a mortgage decree?

(ii) Whether the interest awarded by the Trial Court is correct? Discussion

8. The respondent filed the civil suit in C.S.No.701 of 2005 on the strength of Ex.P1. Ex.P1 proceeds as if there was a settlement in the presence of the villagers and the appellant voluntarily executed the document. The evidence of the appellant as D.W.1 was taken note of by the learned single Judge to arrive at a finding that the appellant voluntarily executed a mortgage, as per Ex.P1 and as such, he is bound by the said document.

9. Since the suit is on the strength of a mortgage deed, it is necessary to consider whether Ex.P1 was executed as a mortgage or it was only an admission of liability.

9(a) The plaint averments if taken as a whole would not prove that there was a mortgage executed by the appellant for a sum of Rs.11 lakhs. The plaint proceeds as if there were several financial transactions between the respondent and the appellant covered by cheques, promissory notes and mortgage. The plaint averments are self-contradictory, vague and does not make out a clear case of mortgage. Even according to the respondent, documents were given only as security, meaning thereby, there was no mortgage with respect to the agreement dated 24 June 2000. We are not concerned with other transactions and mortgages, if any. Since the respondent has taken up a specific contention that a mortgage was created on 24 June 2000, pursuant to the agreement in Ex.P1, the other mortgages or the related transactions are irrelevant for deciding the lis. Except the agreement dated 24 June 2000, which is in the nature of an undertaking to pay the amount, there is nothing on record