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SUPREME COURT OF INDIA
A.B. GOVARDHAN – Appellant
Versus
P. RAGOTHAMAN – Respondent
C.A. No.-009975-009976 - 2024
Based on the provided legal document, here are the key points:
The agreement between the parties constituted a mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act. The court found that the Division Bench erred in concluding otherwise (!) (!) .
The Single Judge correctly appreciated that the respondent had created a mortgage through the deposit of title deeds, and there was no redemption of this mortgage. The agreement and evidence supported the conclusion that a mortgage was created (!) (!) .
The Agreement in question was not merely a record of a transaction but evidenced an intention to create a security interest, i.e., a mortgage, which was supported by the deposit of title deeds. The Agreement did not extinguish rights or liabilities but recorded the security arrangement (!) (!) .
The Division Bench erroneously concluded that the Agreement did not establish a mortgage, failing to consider the law regarding mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act. The Agreement and related evidence confirmed the existence of a mortgage (!) (!) .
The respondent’s claim of coercion or threat during execution of the Agreement was not substantiated by evidence, and the respondent's failure to take timely legal action to challenge the Agreement indicated acceptance of its validity (!) .
The court emphasized the importance of proper legal representation, noting that the appellant was not properly represented in the appeal, which led to procedural irregularities. The appellant’s absence was due to lack of notice and authorization, not a waiver of rights (!) (!) .
The court restored the judgment of the Single Judge, affirming the existence of a mortgage, and modified the interest rate from 36% to 12% per annum, applicable from the date of the Agreement until realization (!) (!) .
The court also noted that the appellant had fulfilled certain obligations, such as payments made in relation to mortgages and the return of original deeds, indicating partial compliance with the security arrangements (!) .
The court found that the Agreement, coupled with the conduct of the parties and the evidence, demonstrated the creation of a mortgage, and the claim that the security was redeemed was factually incorrect (!) (!) .
The appeals were allowed, the impugned orders were set aside, and the original judgment was restored with modifications. Costs were imposed on the appellant for procedural delays and misadventures, with directions for their deposit (!) (!) .
The court emphasized the importance of substantive justice and adopted a liberal approach in condoning delays, ensuring that procedural issues did not obstruct the substantive rights of the parties (!) (!) .
Overall, the court reaffirmed that the deposit of title deeds, when accompanied by an intention to create security, constitutes a valid mortgage under the law, and such transactions do not require registration unless explicitly documented as creating rights or liabilities (!) (!) .
These points encapsulate the core legal findings and reasoning of the judgment without referencing specific case law, focusing instead on the principles and facts as presented.
J U D G M E N T
AHSANUDDIN AMANULLAH, J.
Heard Mr. Narendra Kumar, learned counsel for the appellant and Mr. V. Prabhakar, learned Senior counsel for the respondent.
2. Leave granted. The pending applications shall be dealt with in the final pages of this judgment.
3. The present appeals germinate from the:
3.1. Final Judgment and Order dated 22.02.2017 (hereinafter referred to as the “First Impugned Order”)1 passed by a Division Bench of the 1 2017 SCC OnLine Mad 11918 | (2017) 3 CTC 777 | (2017) 3 Mad LJ 522 | (2017) 4 LW 421.
High Court of Judicature at Madras (hereinafter referred to as the “High Court”) in Original Side Appeal2 No.189 of 2011, whereby the appeal filed by the respondent was allowed and Judgment dated 01.04.2010 passed by a Single Judge of the High Court in Civil Suit No.701 of 2005 (hereinafter referred to as the “suit”) was set aside.
3.2. Order dated 12.07.2018 (hereinafter referred to as the “Second Impugned Order”) passed by the same Division Bench, whereby Civil Miscellaneous Petition3 No.10107 of 2017 in OSA No.189 of 2011 filed by the appellant seeking to “set aside” the First Impugned Order and restore the main appeal for fresh hearing, was dismissed. BRIEF FACTS:
4. The respondent (defendant in the suit) and his wife are engaged in business of building materials. As per the appellant (plaintiff in the suit), the respondent approached him in February, 1995 seeking a loan for his business. The appellant advanced a loan of Rs.10,00,000/- (Rupees Ten Lakhs) to the respondent on the security of his properties.
5. Since the respondent could not pay Stamp Duty on the Mortgage Deed, it was agreed between the parties that the said sum be split into
2 Hereinafter abbreviated to “OSA”. 3 Hereinafter abbreviated to “CMP”.
two registered mortgages and the balance in four promissory notes.
Accordingly, the respondent executed the following:
i) Mortgage Deed dated 16.03.1995 for Rs.1,00,000/- (Rupees One Lakh) agreeing to repay the same together with interest at 36% per annum4;
ii) Mortgage Deed dated 17.04.1995 for Rs.50,000/- (Rupees Fifty Thousand) agreeing to repay the same together with interest at 36% p.a., and;
iii) Four promissory notes for the balance amount of Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand).
6. Besides the two mortgages supra, the respondent borrowed the remaining Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand) in four promissory notes on different dates. Since there was default in payment of interest, the appellant demanded repayment of the amount due under the four promissory notes. The respondent thereupon, in various panchayats, promised to repay the amounts. Ultimately, in the panchayat dated 24.06.2000, the respondent produced title document of his property as security towards debt under the four promissory notes, which has been noted in the Agreement dated 24.06.2000 (hereinafter referred to as the “Agreement”). This Agreement, in essence, is the root of the instant lis.
4 Hereinafter abbreviated to “p.a.”.
7. The Agreement notes that the respondent owed a total amount of Rs.11,00,000/- (Rupees Eleven Lakhs) to the appellant and in settlement thereof, the respondent handed over the title deeds pertaining to the property situated at No.33, Avvai Thirunagar, Chennai - 600111, admeasuring 1300 square feet of land together with 700 square feet building (hereinafter referred to as the “schedule property”), which was valued at Rs.9,00,000/- (Rupees Nine Lakhs). Per the Agreement, the respondent agreed to register the Sale Deed as and when demanded. Further, for re-paying the balance sum of Rs.2,00,000/- (Rupees Two Lakhs), it was agreed that the respondent will redeem the mortgaged property from the appellant and re-mortgage it elsewhere.
8. After the Agreement was entered into between the parties, the promissory notes were returned which were torn-out in the panchayat. Thereafter, the respondent neither executed a Sale Deed nor paid the balance sum of Rs.2,00,000/- (Rupees Two Lakhs). As a result,
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