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IN THE HIGH COURT OF MADRAS AT MADURAI BENCH
N. SATHISH KUMAR, J.
Ananthakrishnan – Appellant
Versus
K.G. Rangasamy and Others – Respondents
S.A. (MD) No. 1273 of 2011, M.P. (MD) No. 1 of 2014, C.M.P. (MD) No. 9812 of 2019
Decided On : 19-12-2019
Evidence Act, 1872 - Section 3 - Indian Evidence Act, 1872 - Section 76 - Registration of Births and Deaths Act, 1969 - Section 17 - Indian Contract Act, 1872 - Section 11 - Negotiable Instruments Act - Whether plaintiffs are entitled for relief as prayed for – Dishonor of cheque - Equitable mortgage - Plaintiffs are sister concern first plaintiff is main firm - Plaintiffs 2 and 3 are sister concern - Defendants 1 to 3 for their family business and for welfare of minor borrowed a sum and executed a cheque and also demand promote - On behalf of minor/third defendant promote was signed by his mother as natural guardian - Besides they also borrowed amount and executed promotes towards security of above amount - They also deposited title deeds in favor of plaintiffs and created equitable mortgage in respect of Door - They have also executed separate affidavits confirming deposit of title deeds - As per accounts maintained by plaintiffs amounts are still due - During second week of March defendants 1 to 3 with a view to defraud plaintiffs without disclosing about equitable mortgage in favor of plaintiffs have sold property to fourth defendant - Sale is not binding upon plaintiffs – Hence suit has been filed to pass a preliminary decree for recovery of money to tune and for fixing time for payment failing which pass a final decree on mortgaged property to bring it for sale to satisfy decree – Held, Absolutely there is no dispute with regard to those facts - What is sought to be projected in this case is Exs.A.19 and A.20 final decree proceedings relating to title of property - But as already discussed Exs.A.19 and A.20 were in fact obtained by plaintiffs own lawyer and not by defendants - As per Xerox copy of title deed itself it is to be noted that it is well settled that when document is registered document Xerox copy is not admissible as secondary evidence - So only certified copy of a registered copy is to be admitted as secondary evidence in absence of original deed - This has been held – Thus Xerox copy of document is inadmissible in law and claiming right on the basis of such Xerox copy is also impermissible in law - Knowing very well that the property was already mortgaged with State Bank of India and creating an equitable mortgage with Xerox such equitable mortgage cannot be valid in eye of law - When original is already available and certified copies also could be easily obtained there was no reason as to why such document was not necessitated by plaintiffs - This is also one of reasons to doubt entire transaction – Hence this Court on proper appreciation of entire evidence available on record is of view that so called equitable mortgage is a fabricated one and unenforceable in law and conduct of defendants 1 to 3 remaining ex-parte and taking note of relationship of parties possibility of collusion between plaintiffs and defendants 1 to 3 being same community and fourth defendant namely appellant herein is a third party bona-fide purchaser also cannot be ruled out - Petitions are closed
Certainly. Based on the provided legal document, the key points are as follows:
The case involves a dispute over the creation and validity of an equitable mortgage, with specific focus on whether the documents relied upon are legally admissible and authentic (!) (!) .
The plaintiffs claim that they have created an equitable mortgage by depositing title deeds and executing affidavits, which they assert were properly executed and supported by consideration (!) (!) .
The defendants challenge the validity of the mortgage, alleging that the documents were fabricated, created in collusion, or obtained fraudulently, especially emphasizing that the original title deeds were in the possession of the bank at the relevant time (!) (!) .
The minors involved in the transaction (second and third defendants) were not legally capable of executing binding contracts at the relevant time, rendering any such documents void or unenforceable (!) (!) .
The admissibility of xerox copies of registered documents as secondary evidence is contested, with the argument that only certified copies of the original registered documents are legally valid for establishing title or security (!) (!) (!) .
The evidence regarding the age of the minors, including birth certificates and school records, confirms that they were minors at the time of execution, thus invalidating their alleged signatures and the documents purportedly signed by them (!) (!) .
The conduct of the parties, including the defendants' ex-parte status and the proximity of relationships, raises suspicion of collusion, which impacts the credibility of the documents and the transactions (!) (!) .
The courts below have taken differing stances: the Trial Court dismissed the suit on the grounds that xerox copies are inadmissible and the mortgage was not valid; the first appellate court, however, found the documents to be valid and decreed the suit, leading to the current second appeal (!) (!) .
The legal and evidentiary principles indicate that when original documents are in possession of a third party (such as a bank), xerox copies cannot be considered sufficient proof of title or security unless supported by certified copies, which were not produced in this case (!) (!) (!) .
The overall assessment suggests that the alleged equitable mortgage was created with fabricated or collusively obtained documents, rendering it invalid and unenforceable, especially given the minors' incapacity and the inadmissibility of the xerox copies used as evidence (!) (!) .
The court emphasizes the importance of proper appreciation of evidence, including the necessity of examining the authenticity of documents and the capacity of parties at the time of execution, to determine the validity of the mortgage (!) (!) .
The final decision is to set aside the decree of the first appellate court and to pass a personal decree only against the first defendant, as the other defendants were minors and their contracts are void, with the overall conclusion that the equitable mortgage was fabricated and unenforceable (!) (!) .
Please let me know if you need further analysis or specific legal advice based on these key points.
JUDGMENT :
N. SATHISH KUMAR, J.
1. Aggrieved over the finding of the first Appellate Court allowing the appeal and decreeing the suit on the basis of the equitable mortgage said to have been created by the defendants 1 to 3, the present Second Appeal came to be filed by the fourth defendant in O.S. No. 60 of 2000.
2. For the sake of convenience, the parties are referred to herein, as per their rank before the Trial Court.
3. The brief facts leading to the filing of the suit are as follows:
4. The defendants 1 to 3 remained ex-parte before the Trial Court. The fourth defendant, the subsequent purchaser of the property, filed a written statement stating that the suit property was originally mortgaged with the State Bank of India. The loan amount has been discharged and the property has been purchased by the fourth defendant after verifying the encumbrances and subsequently, he got back all the original documents of the property. It is his contention that the second defendant's date of birth is 02.11.1982 as per the school records. At the time of purchase by the fourth defendant, since the second and third defendants were minors, out of sale consideration, Rs. 50,000/- each had to be deposited in favour of the minors. The property was purchased in two sale deeds on 15.03.2000 and 16.03.2000 respectively. The consideration of the sale deed dated 15.03.2000 was Rs. 4,25,000/- and for the sale deed dated 16.03.2000, the consideration was Rs. 4,00,000/- out of which, in each of the sale deed, a sum of Rs. 50,000/- was deposited in favour of the minors separately and the rest of the consideration was received by the first defendant. The first defendant discharged the State Bank loan. It is his contention that the first defendant is very close relative of the first plaintiff's partner Thiru. K.G. Rangasamy. The said K.G. Rangasamy's wife is the first defendant's father-in-law's own sister. Therefore, the defendants 1 to 3 are colluding with the plaintiffs, with ulterior motive, after creating documents, with a view to harass the fourth defendant. It is also stated that the accounts maintained by the plaintiffs are denied and the alleged deposit of title deeds in favour of the plaintiffs is also denied. Admittedly, the original title deed, during the relevant time, was in the custody of the State Bank of India and hence, there could not be any deposit of title deeds and creation of equitable mortgage under law. The second and third defendants were minors at the relevant point of time. They could not legally deposit the title deeds and create equitable mortgage. The affidavits of defendants 1 to 3 are also procur
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