Advocates:
Advocate Appeared:
For the Appellant : Mr. H.Arumugam, Mr.B.Jameel Arasu.
For the Respondent: Mr. R.Sundar, Ms.J.Maria Roseline

Case Summary

• Parties and Suit Details: Appeal (A.S. (MD) No. 78 of 2013) by K. Rangan (6th defendant/appellant, purchaser of suit property) against judgment/decree dated 12.12.2012 in O.S. No. 51 of 2009 by I Additional District Judge (PCR)(FAC), Tiruchirappalli. Suit filed by respondents 1 and 2 (plaintiffs) for preliminary mortgage decree declaring amount due under equitable mortgage, directing payment, and sale of property in default. (!) [21001426960001]
• Plaintiffs' Case: Deceased Muthuramalinga Rathinavelu Chettiar and his son (4th defendant, M. Natarajan) borrowed Rs. 6,50,000/- on 18.04.2005 via promissory note (Ex. A1) at 24% p.a. interest, attested by defendants 2 and 3 (other sons). On 20.04.2005, deceased deposited title deed (Ex. A3, dated 26.07.1970), EB receipt, and property tax receipt, executing memorandum of deposit (Ex. A2) to create equitable mortgage. Legal heirs sold property to appellant on 07.11.2008 (Ex. A20) for Rs. 9,25,000/-, retaining Rs. 2,00,000/- pending production of "missing" title documents. Sale during pendency of I.P. No. 4 of 2005 filed by another creditor (Chitraleka), which was dismissed as not pressed post-sale.[21001426960002][21001426960003]
• Appellant's Defense: Bona fide purchaser for value; vendors stated title documents missing, so believed them and retained Rs. 2,00,000/-. Alleged collusion between plaintiffs and vendors; suit transaction collusive to defeat insolvency; Ex. A2 requires registration and is inadmissible; suit barred by limitation without valid mortgage.[21001426960004][21001426960006]
• Vendors' Defense (Defendants 1-4): Denied suit transactions entirely; did not testify despite participating in trial.[21001426960004][21001426960007][21001426960011]
• Trial Court Decree: Preliminary decree for Rs. 11,17,675/- plus 12% p.a. interest from plaint date till realization, enforcing mortgage.[21001426960005]
• Issues for Determination: (a) Whether plaintiffs proved mortgage by deposit of title deeds on suit property; (b) Whether Ex. A2 memorandum requires registration.[21001426960010] (!)

Findings on Mortgage Creation

• Promissory Note Valid: Plaintiffs proved borrowing via Ex. A1 (18.04.2005), attested by defendants 2 and 3; adverse inference against vendors for not testifying.[21001426960011]
• Equitable Mortgage Established: Deposit of title deeds (Ex. A3/A4) on 20.04.2005 secured antecedent loan from 18.04.2005; Ex. A2 is mere record/evidential memorandum of prior deposit transaction, not operative document creating mortgage, hence no registration required. Language in Ex. A2 indicates past tense deposit ("handing over" already occurred).[21001426960011][21001426960012][21001426960013] (!) (!)
• Appellant Not Bona Fide Purchaser: Knew of vendors' insolvency (I.P. No. 4/2005 pendency during sale); failed due diligence—no insistence on original titles, no newspaper publication for missing documents, no notices to I.P. parties; glibly accepted vendors' story.[21001426960014]
• Collusion Allegations Rejected: No evidence to impeach suit transaction as collusive despite timing with I.P.; plaintiffs entitled to enforce mortgage.[21001426960009][21001426960014]

Outcome

• Appeal Partly Allowed: Mortgage decree upheld; appellant free to sue vendors for decretal amount (deducting retained Rs. 2,00,000/- plus 12% interest); 12% interest rate considered excessive (implicitly suggesting moderation per legal principles on pendente lite/realization interest).[21001426960014][21001426960015][21001426960016]
• No Costs: Connected miscellaneous petition closed.[21001426960016]