First Appeal No. 631 of 1997. Case: Allahabad Bank Vs Ms. Shivganga Tube Well and others. High Court of Bombay (India)
| Case Number | First Appeal No. 631 of 1997 |
| Counsel | For Appellant: S. V. Adwant, Adv. and For Respondents: P. V. Mandlik, Senior Advocate |
| Judges | M. T. Joshi, J. |
| Issue | Registration Act (16 of 1908) - Section 17; Transfer of Property Act (4 of 1882) - Sections 58(f), 96; Limitation Act (36 of 1963) - Article 62; Contract Act (9 of 1872) - Section 128 |
| Citation | AIR 2014 BOM 100 |
| Judgement Date | April 09, 2014 |
| Court | High Court of Bombay (India) |
Judgment:
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This first appeal is admitted on 12th March, 1998. Heard learned counsel appearing for the respective parties.
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Appellant - Bank's suit for recovery of an amount of Rs. 27,76,137/- and for preliminary decree for sale of the mortgaged property for recovery of the said amount was decreed against the borrower - original defendant No.1, but was dismissed against the guarantors i.e. defendants No. 2 to 6. Hence, this first appeal against the guarantors.
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The case of the appellant/plaintiff, in short, is as under:-
That, the original defendant No. 1 has availed a loan of Rs. 10 (ten) lacs on 12.02.1988 and 10.03.1988 for the purposes of purchase of a truck with borewell Rig, Machine, Screw Compressor, Drilling Rig, etc. The original defendant No. 1 - the borrower hypothecated the said machinery and its accessories with the plaintiff Bank. At the same time, the defendant Nos. 2 to 6 i.e. present respondent Nos. 2 to 6 agreed to stand as continuing guarantors for the original defendant No. 1 in repayment of the loan amount as agreed between the appellant Bank and the defendant No.1. They agreed to mortgage their respective immovable property, situated in Nizamabad in Andhra Pradesh State. They agreed to accept all the terms and conditions of the sanction of the loan amount. Thereafter, the amount was sanctioned and disbursed to the defendant No. 1. They accordingly delivered their title-deeds at Himayatnagar Branch of the plaintiff/appellant Bank on 29.04.1988. Thus, equitable mortgage by depositing the title-deed is created by these respondents. The defendant No. 3 i.e. the respondent No. 3 has further executed agreement to mortgage his plots, situated at Shivajinagar, Nizamabad, as detailed in the plaint and accordingly, those title-deeds were deposited on 29.04.1988 at Himayatnagar branch of appellant Bank. All the defendants on 28.04.1988 attended the Himayatnagar branch of appellant Bank and on 29.04.1988, deposited the title-deeds of their respective immovable properties, as detailed in the plaint. They had agreed by executing affidavits regarding the confirmation of the mortgage by deposit of title-deeds and had further agreed that the revival of the loan, if any by the borrower i.e. defendant No. 1 shall bind the mortgagor. However, as the defendant No. 1 failed to repay the loan amount as agreed from time to time, he has executed balance confirmation letters between 1989 and 1992, as detailed in the plaint and thus extended the time for payment of the borrowed amount together with interest accrued. However, due to the persistent default, the amount staggered to Rs. 27,76,137/-. In the circumstances, the suit, as detailed supra, came to be filed on 22.07.1994.
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The defendant No. 1 i.e. the borrower, though served with the summons, failed to appear before the trial Court and thereafter to file written statement. The case, therefore, proceeded without his written statement. Defendant Nos. 2 to 4 i.e. present respondent Nos. 2 to 4 filed their common written statement at Exhibit-33. They denied all the pleadings of the appellant Bank. Further, the plea of territorial jurisdiction to entertain the suit was taken as the mortgaged property are situated at Nizamabad in Andhra Pradesh. The original contract between the appellant Bank and the defendant No.1/ defendant No. 1 (sic) was denied. They denied that these defendants had approached the plaintiff in connection with any such loan transaction. The execution of any document by them or deposit of title-deeds towards creation of mortgage was denied. Further, any balance confirmation letter from the defendant No. 1 was denied. Alternatively, it was submitted that from time to time, these respondents/defendants had brought to the notice of the Manager of the plaintiff Bank about the activities of the defendant No. 1. However, the Branch Manager of the plaintiff Bank failed to take any proper steps or attach the hypothecated property and therefore, it was claimed that these defendants/respondents No. 2 to 4 are not required to pay any amount.
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On the basis of these pleadings, the learned trial Court framed the issues at Exhibit-35. It held that the appellant failed to prove execution of guarantee-deed by the res-pondent Nos. 2 to 6. It further came to the conclusion that the plaintiff was able to prove that the respondent Nos. 2 to 4/defendant Nos. 2 to 4 had executed agreement of mortgage while defendant No. 6 i.e. present respondent No. 6 had executed actual mortgage-deed. However, it was found that the respondent Nos. 2 to 6 i.e. original defendant Nos. 2 to 6 have never executed the mortgage and therefore, their property is not liable to be sold for recovery of the money. As regards the extension of limitation by executing a balance confirmation letter by the defendant No.1/ respondent No.1, it was held that the said extension would not bind the present respondent Nos. 2 to 6. In the circumstances, the suit as against the respondent Nos. 2 to 6 came to be dismissed.
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Mr. S.V. Adwant, learned counsel for the appellant/Bank submitted before me that the learned Civil Judge, Senior Division failed to distinguish between the "transfer of interest by executing a mortgage-deed" and "a mortgage by deposit of title-deeds only". Further, the documents executed by the defendants would show that they had agreed that the balance confirmation by the principal borrower shall bind them. Thus, the liability of the defendants No. 2 to 6 is co-extensive to that of the borrower and hence, it was submitted that the suit was within limitation.
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On the other hand, Mr. P.V. Mandlik, learned Senior Counsel appearing for the res-pondent Nos. 2 to 6, submitted that there is no document on record to show that it was a continuing guarantee. The documents were only regarding agreement by mortgage by res-pondent Nos. 2 to 4. There is no registration of the mortgage, nor any stamp fees as per the provisions of Bombay Stamp Act was paid. He further took a plea of territorial jurisdiction. He further submitted that since there is no mortgage, the guarantors' liability would not be extended by personal acknowledgement, if any by the borrower during the subsistence of the contract of repayment of loan. He submits that the period of recovery of the loan amount was only of three years. The loan transaction was entered...
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