The main legal point established in the judgment is the interpretation and application of the requisites for a valid mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act, 1882.

JUDGMENT :

Prayer : Appeal Suit filed under Section 96 r/w Order 41 R 1 and 2 of Civil Procedure Code against the judgment and decree, dated 30.08.2011 in O.S.No.3 of 2010 on the file of the learned I Additional District Judge, Salem.

A. The Appeal Suit :

This Appeal Suit is filed against the judgment and decree, dated 30.08.2011 in O.S.No.3 of 2010 passed by the learned I Additional District Judge, Salem, in and by which, the suit filed by the plaintiff was decreed directing the defendants to pay into the Court a sum of Rs.12,38,161.75 ps with interest on principal sum of Rs.4,00,000/- at the rate of 6% per annum from the date of plaint till the date of realisation and in default of payment, the plaintiff can apply for sale of the mortgaged property and that the money be realised by the same.

B. The Plaint :

2. The case of the plaintiff is that the defendants 1 and 2 borrowed a sum of Rs.1,00,000/- from the plaintiff on 15.06.1999 for their urgent business expenses and executed a promissory note in favour of the plaintiff agreeing to repay the same with interest at the rate of 24% per annum. Again on 20.09.1999, the defendants 1 and 2 had further borrowed another sum of Rs.3,00,000/- for their urgent business expenses and executed yet another promissory note promising to repay the same with interest at the rate of 24% per annum. Thereafter, on 29.09.1999, with an intention of creating a mortgage by deposit of title deeds, the defendants 1 and 2 handed over the original title deed, dated 01.08.1975 of the suit schedule property and a photo copy of the registered partition release deed, dated 09.03.1995 executed in favour of the first defendant by his sisters and both the defendants 1 and 2 also executed a memorandum of deposit of title deeds. On default of payment, the plaintiff issued a legal notice on 30.08.2001. A reply was issued on behalf of the second defendant on 13.09.2001 stating that he was negotiating with the plaintiff for settlement, but, thereafter, the defendants 1 and 2 vanished away from Salem and evaded the payment. The first defendant also executed a settlement deed in favour of the second defendant, the third defendant, who is another son of the first defendant and the fourth defendant, his daughter, on 17.09.2008 which is not binding on the plaintiff. Therefore, the suit on mortgage was filed for a preliminary decree for a sum of Rs.11,32,750/- with subsequent interest on the principle amount of Rs.4,00,000/-.

C. The Written Statement :

3. The first defendant filed a written statement which is adopted by the other defendants, in and by which, they resisted the suit by stating that they never borrowed any amount from the plaintiff. The defendants 1 and 2 did not hand over the original partition deed, dated 01.08.1975 or the xerox copy of the release deed. The first defendant gets title to the property only by the original release deed, dated 09.03.1995 and in the absence of the title deed being deposited, there cannot be any valid mortgage. The plaintiff and the first defendant are both friends. One of the friends of the first defendant, one Sundaresan, gave order to the plaintiff for manufacture of silver ornaments, who seems to have defaulted in payment to the plaintiff. With an intention to collect the arrears of the said Sundaresan from the first defendant, the plaintiff created and fabricated the promissory notes and the memorandum of deposit of title deeds. Therefore, there is no liability on the part of the defendants and the suit is vexatious suit.

D. The Issues :

4. On the strength of the said pleadings, the Trial Court framed the following five issues:-

(i) Whether the defendants 1 and 2 borrowed Rs.1,00,000/- and Rs.3,00,000/- from plaintiff on 15.06.1999 and 20.09.1999 respectively and executed pronotes in favour of the plaintiff?

(ii) Whether the defendants created an equitable mortgage of the suit property by deposit of title deed on 29.09.1999?

(iii) Whether the settlement of the 1st defendant made in fa