When court can decide objection under O 21 R 97 of CPC without framing issue?

Now coming to the argument with regard to framing of

the issues and to decide the objection petition after following the

procedure as that of trial, it may be observed that the appellant

being the decree holder, obviously on the strength of decree, was

enforcing the execution of the decree, whereupon the objection

petition was filed by respondent No.1. It was only respondent

No.1, who could raise objection with regard to framing of the

issues or for leading evidence, however he did not claim any such

issue and remained satisfied after tendering some documents on

the file. The parties were very clear in their claims and stands, set

up by them. In the instant case, when the appellant had

undergone long process and consumed much time in reaching the

culmination of the trial should not again be put to trial by framing

the issues when the parties were clear in the objections and the

Court, on the objections and the documents placed on record by

the parties, could decide the case without framing of the issues.

Punjab-Haryana High Court

State Bank Of Patiala vs Shri Jagdish Singh Khehar And ... on 6 March, 2013

Having remained unsuccessful before both the Courts,

the State Bank of Patiala, decree holder-appellant (hereinafter

referred as 'the appellant') has filed this execution second appeal.

The time lag in the matter under consideration is

enormous. In the year 1984, M/s Shree Ganesh Sales, of which

Himesh Sablok-respondent No.3 and Surinder Behal-respondent

No.4 were partners, was granted cash credit facility to the tune of

Rs.50,000/-. The allegations are that the said Himesh Sablok had

hypothecated the property i.e. H.No.730, Sector 8-B, Chandigarh

with the appellant as a credit security by depositing title deeds to

obtain the said facility. Having failed to pay the loan amount, a 

civil suit No.161 was filed on 26.10.1987 for recovery of

Rs.61,894-05 paise, under Order 34 read with Order 7 Rule 1

CPC. In the said suit, the defendants i.e. M/s Shree Ganesh

Sales, Himesh Sablok and Surinder Behl were proceeded against

exparte., whereas Sudhir Mahajan-respondent No.5 had

contested the suit. The said suit resulted into a preliminary decree

on 19.04.1989 for recovery of Rs.61,894.05 paise along with

interest at the rate of 15½ % per annum since the date of filing of

the suit till realization. It was further ordered that on failure to pay

the said amount within three months, the property so

hypothecated i.e. H.No.730, Sector 8-B, Chandigarh, would be

sold and still in the case of deficiency in recovery, the appellant

would be at liberty to recover the amount from respondent Nos. 2

to 5 personally. The aforesaid preliminary decree dated

19.04.1989, ultimately merged into final decree dated 02.05.1996.

After the appellant filed the execution petition, the

Court issued notice and thereafter, the aforesaid property was

ordered to be attached.

During the execution proceedings, respondent No.1-

objector being vendee through a registered sale deed dated

11.11.1994 from Mohinder Parkash Sablok, filed the objection

petition on the grounds that H.No.730, Sector 8-B, Chandigarh

was owned by Sh. Sukh Raj Sablok along with his wife Smt.

Kaushalya Devi, who had another property at Solan, known as

Mahinder Bhawan, Rajgarh Road, Solan. By virtue of a registered

family settlement dated 09.02.1986, the house in question had

fallen to the share of Mohinder Parkash Sablok, who had sold the ESA No. 39 of 2010 (O&M) 3

same to the respondent No.1 without disclosing the alleged

mortgage decree in favour of the the bank, therefore, he was

bonafide purchaser for consideration without notice. It was further

submitted that no title deed, alleged to be deposited by Himesh

Sablok, is available on the judicial file. As such, the Court passing

the decree was not competent to pass the decree for recovery by

way of sale of the mortgaged property. Since composite decree

was passed on 19.04.1989, therefore, final decree could not be

passed. The decree having been passed on 19.04.1989, the

execution filed in the year 2004, was barred by time. The exparte

decree having been passed and sale having not been challenged,

the house in question could not be attached and sold in order to

execute the said decree.

Reply to the objection petition was filed, wherein it was

submitted that the said house was mortgaged with the bank by

depositing the title deed by the owners on 21.05.1985, therefore,

any sale subsequent thereto could not confer any right, title or

interest of the purchaser-objector. The house in question was the

ownership of Smt. Kaushalya Devi, Mahinder Parkash and

Himesh Raj by way of a conveyance deed dated 26.10.1962.

Consequently, Himesh Raj himself being a co-sharer and

authorized by Smt. Kaushalya Devi and Mahinder Parkash, had

mortgaged the said premises with the appellant-bank as creditor's

security for discharging the loan. It was further submitted that the

Civil Court could not go beyond the decree, therefore, there was

no impediment for recovering the decretal amount by way of sale

of the house.

ESA No. 39 of 2010 (O&M) 4

The respondent No.1 tendered documentary evidence

in support of his claim.

On scrutiny of the records, both the Courts found

substance in the objection petition filed by the vendee-objector

and reached the conclusion viz. neither M/s Ganesh Sales nor

any of its partners were owners of H.No.730, Sector 8-B,

Chandigarh nor Himesh Sablok was ever authorized to mortgage

the property by way of deposit of the title deeds with the bank;

there was no proper mortgage as per provisions of Section 58 of

the Transfer of Property Act, therefore, the decree was not binding

upon the objector; the mortgage actually not having taken place,

could not be subjected to sale for recovery of the loan amount and

the Civil Court had no jurisdiction to pass such a mortgage

decree. The appellant neither placed on record the original sale

deed nor power of attorneys before the Court, on the basis of

which it claims that the said property was mortgaged with it for

securing the loan, therefore, it could not be said to be equitable

mortgage. Having failed before both the Courts, the appellant has

come up in this execution second appeal.

As usual, the appellant has reiterated its threefold

arguments before this Court i.e. (i) issues were not framed by the

learned Executing Court while adjudicating the objection petition

filed by the objector, (ii) the appellant-bank is in possession of the

original title deed and the deed of attorneys, which could not be

placed on record due to inadvertence during the pendency of the

trial, in which the preliminary decree was passed, as the suit was

under Order 34 of the CPC. Now he seeks permission to produce ESA No. 39 of 2010 (O&M) 5

the said document by way of additional evidence and (iii) the

objections having been filed before the attachment of the property

being premature, were not maintainable.

It would be pertinent to mention here that as per plaint,

vide hypothecation deed dated 19.11.1984, defendant No.4-

Sudhir Mahajan had stood as guarantor and defendant No.1 had

also pledged the goods with the appellant-bank as per schedule

attached to the plaint. It would also be pertinent to mention here

that the appellant, instead of proceeding against the hypothecated

goods vide the deed of guarantee for recovery of the amount,

opted to recover the amount by putting the said house to sale.

The definite stand of the objector is that the house in question

was owned by Mahinder Kumar, Himesh Raj sons of Sukh Raj

Sablok and Kaushalya Devi and vide family settlement dated

09.02.1986, the same had fallen to the share of Mahinder

Parkash Sablok, who had sold the same to him vide sale deed

dated 11.11.1994.

Now coming to the argument with regard to framing of

the issues and to decide the objection petition after following the

procedure as that of trial, it may be observed that the appellant

being the decree holder, obviously on the strength of decree, was

enforcing the execution of the decree, whereupon the objection

petition was filed by respondent No.1. It was only respondent

No.1, who could raise objection with regard to framing of the

issues or for leading evidence, however he did not claim any such

issue and remained satisfied after tendering some documents on

the file. The parties were very clear in their claims and stands, set ESA No. 39 of 2010 (O&M) 6

up by them. In the instant case, when the appellant had

undergone long process and consumed much time in reaching the

culmination of the trial should not again be put to trial by framing

the issues when the parties were clear in the objections and the

Court, on the objections and the documents placed on record by

the parties, could decide the case without framing of the issues.

Similar view was taken by this Court in case Satish Kumar Vs.

Shanti Devi and others, 2008 (3) RCR (Civil) 278, wherein it was

observed as under:-

"4. There is no dispute that the matter had been adjudicated upto the Hon'ble Supreme Court and the decree under execution has attained finality. The Appellate Court has rightly noticed that the decree dated 27.10.2006 relied upon by the petitioner has not become final between the parties. The Appellate Court has made reference to the cases of Meenakshi Saini and another v. Giricharan Singh Bharma and others, 2002 (2) PLJ 477, Som Parkash v. Santosh Rani, 1996 (2) RCR (Rent) 270 and Bikram Singh v. Surjit Singh and others, 2004 (4) RCR (Civil) 422 : 2005 (1) Civil & Rent Judicial Reports 98 (P&H) to hold that there is no need to frame an issue and give an opportunity to lead evidence to the parties where the facts are clear. Reference is also made toRocky Tyres, Chandigarh and others v. Ajit Jain and another, 1998 (2) RCR (Civil) 17 : AIR 1998 Punjab and Haryana 202 to say that where the objections prima-facie are frivolous, vexatious and intended to delay, then these are not liable to be put to trial as otherwise it would amount to abuse of process of the Court. It has also been noticed that owner of a property would not be deemed to be a landlord under the Rent Act in absence of any relationship of landlord and sitting tenant. The owner cannot initiate any proceedings for eviction of the tenant. It has rightly been observed that mere fact that person is an owner of the premises does not make him a landlord of that premises. It is further noticeable that mere denial of relationship of landlord and tenant cannot oust the jurisdiction of the Rent Controller. In view of the ratio of law as laid down, ESA No. 39 of 2010 (O&M) 7

which is applicable to the facts and circumstances of the present case, the Court was not fully unjustified in declining the prayer of the objector by not framing the issues on the basis of material and objections filed by the petitioner. The matter had already been decided and adjudicated upon up to Hon'ble Supreme Court. The Courts cannot be used as a tool to undo the decisions of the Apex Court as has been sought to be achieved. The objections filed by the petitioner are merely to delay the inevitable and the execution of the decree, which has been justly declined.

In this case also, the appellant had filed the execution

on the strength of the decree, whereas it was the objector, who

had claimed about non-enforcement of the decree on the ground

that the said decree was palpably not correct, as there was no

proper mortgage with the appellant-bank of the property owned by

respondent No.1 and Mahinder Parkash Sablok and Kaushalya

Devi had not authorized Himesh Sablok to execute equitable

mortgage qua the said property. Therefore, the parties being alive

of the situation and aware of what has to be decided by the Court,

cannot now press, at this stage, for framing of the issues and

setting the clock back.

As regards the additional evidence to produce the

documents dated 26.10.1962 (Annexure A-1), Special Power of

Attorney dated 26.02.1985 (Annexure A-2) and General Power of

Attorney dated 08.11.1979 (Annexure A-3), though this Court vide

separate order had declined to grant permission to lead additional

evidence, but at the same time it would be essential to throw

some light about the relevancy of those documents and the

authority of Himesh Sablok to execute the equitable mortgage by

way of title deeds. The claim of the appellant is that vide Special ESA No. 39 of 2010 (O&M) 8

Power of Attorney dated 26.02.1985, Mahinder Parkash Sablok

had authorized Himesh Sablok to create equitable mortgage.

Mahinder Parkash Sablok was neither partner nor a guarantor of

the firm M/s Shree Ganesh Sales. He had nothing to do with the

loan. As per para No.8 of the plaint, the title deeds were

deposited by Himesh Sablok on 21.05.1985, but no such

document allegedly executed by Himesh Sablok has been

produced in order to prove that it was executed on that date. The

alleged special power of attorney was executed on 21.05.1985,

whereas loan had already been taken in the year 1984. The said

Special Power of Attorney is not a registered document.

Mahinder Parkash Sablok having no interest in the firm or receipt

of the loan, had no intention to mortgage the property by way of

title deeds. In the absence of any such intention, mere deposit of

title deeds alone by itself cannot create an equitable mortgage.

Similar views were taken by the Hon'ble Madras High Court in

case Sree Visalam Chit Fund Ltd. by its Manager, Tindivanam

Vs. Vasudeva Achari and another, 2003 (3) RCR (Civil) 416,

wherein it was observed as under:-

"15. Needless to say that three requisites are essential for creating a mortgage by title deeds. They are:

(i) Debt,

(ii) Deposit of title deeds; and

(iii) An intention that the title deeds shall be the security for the debt.

An equitable mortgage may cover an existing as well as a future debt. In order to accept the creation of mortgage by deposit of title deeds, the factum of delivery of the title deeds should be proved, if it is so pleaded. Apart from the above two essentials, the law would strictly require that the intention to create a security thereon should exist. In the absence of the ESA No. 39 of 2010 (O&M) 9

intention to create a security, the deposit of title deeds alone cannot by itself create an equitable mortgage. It is absolutely nothing at all unless the deposit of title deeds actually effects the transfer of an interest in the immovable property for the purpose of security on the money advanced or to be advanced. Mere possession of deeds without the necessary evidence of the contract under which the possession was obtained or of the manner in which the possession originated so that a contract may be inferred, will not create an equitable security. It is true that whether the deeds were deposited with an intention to make them as security for the debt is a question of fact, and the same has to be decided just like any other fact on oral, documentary or circumstantial evidence. When the available evidence is subjected to careful scrutiny, the Court is unable to see the presence of the three essentials as stated above."

As regards the power of attorney (Annexure P-3)

executed by Kaushalya Sabhlok, the same does not confer any

right upon Himesh Sablok to hypothecate or mortgage the

property to the appellant-bank against any loan taken by M/s

Shree Ganesh Sales Corporation. She had also nothing to do

with the said firm. The power of attorney was executed when

Himesh Raj even had to raise the bank loan.

Assuming for the sake of argument that if Himesh

Sablok was given authority to mortgage the property by way of

deposit of title deed, still there was no such evidence on record to

spell out the intention that title deed was delivered with a view to

tender it as a security of the loan advanced by the appellant-bank.

In this regard, the first Appellate Court, after examining the record

of the trial, observed that S.K. Sharma (PW-1) did not utter a

single word that defendant No.2 created an equitable mortgage

regarding the house in question by deposit of the title deeds and

simply stated that defendants executed documents Ex.P1 to ESA No. 39 of 2010 (O&M) 10

Ex.P10 and Ex.P11 to Ex.P17. The first Appellate Court further

observed as under:-

"A perusal of the file shows that conveyance deed dated 26.10.1963 which was executed by the authorities in favour of Himesh Sublok, Mohinder Parkash and Kaushalya Devi was not produced at all."

Thus, in the absence of any such evidence with regard

to the execution of the equitable mortgage and the said sale deed

having been kept by the appellant-bank with a view to provide

security for the loan, it would be difficult to hold that there was an

equitable mortgage. While discussing complete law on the issue,

the Hon'ble Bombay High Court in case Bank of Baroda Vs.

Shree Moti Industries and others, MANU/MH/1237/2008

(decided on 13.05.2008), observed as under:-

"34. Assuming for the sake of argument that an authority to tender document of title deed was in favour of defendant No.2 being a son of defendant No.5, even then there is no document on record to spell out intention that title deed was delivered with a view to provide security for the loan advanced by the bank. This was necessary in view of the assertion of defendant No.5 pleaded in para 5 (m) of the affidavit of Shri Dhanda that, according to defendant No.5, document was given to find out purchaser for the property. With this quality of evidence, this Court has to consider the question, whether the equitable mortgage has been legally created. If answer is in affirmative, then only it would be enforceable at law.

35. The relevant aspects of the law pertaining to mortgage by depositing of the title deed is to be found in the case of K.J. Nathan v. Maruthi Rao, MANU/SC/0235/1964: [1964] 6 SCR 727; wherein the Apex Court ruled as under:

Section 58(1) of the Transfer of Property Act defines a mortgage by deposit of title deeds thus:

Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay... delivers to a creditor or his agent documents of title to immovable property, with ESA No. 39 of 2010 (O&M) 11

intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds.

Under the definition the essential requisites of a mortgage by deposit of title deeds are, (i) debt, (ii) deposit of title deeds, and (iii) an intention that the deeds shall be security for the debt. Though such a mortgage is often described as an equitable mortgage, there is an essential distinction between an equitable mortgage as understood in English law and the mortgage by deposit of title deeds recognized under the Transfer of Property Act in India. In England an equitable mortgage can be created either, (1) by actual deposit of title-deeds, in which case oral evidence is admissible to show the meaning of the deposit and the extent of the security created, or (2) if there be no deposit of title deeds, then 'by a memorandum in writing, purporting to create a security for money, advanced: see White and Tudor's Leading Cases in Equity, 9th edition, Vol. 2 at P.77. In either case it does not operate as an actual conveyance though it is enforceable in equity; whereas under the Transfer of Property Act, a mortgage by deposit of title deeds is one of the modes of creating a legal mortgage whereunder there will be transfer of interest in the property mortgaged to the mortgagee. This distinction will have to be borne in mind in appreciating the scope of the English decisions cited at the Bar. This distinction is also the basis for the view that for the purpose of priority it stood on the same footing as a mortgage by deed. Indeed a proviso has been added to Section 48 of the Registration Act by Amending Act 21 of 1929, It says:

provided that a mortgage by deposit of title deeds as defined in Section 58 of the Transfer of Property Act, 1882, shall take effect against any mortgage deed subsequently, executed and registered which relates to the same property.

Therefore, under the law of India a mortgage by deposit of title deeds, though it is limited to specific cities, is on a par with any other legal mortgage.

36. Under the Transfer of Property Act, a mortgage by deposit of title-deed is one of the forms of mortgages whereunder there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. The three requisites for a valid mortgage are,(i) debt; (ii) deposit of title deed; and (iii) an intention that the deed shall operate as ESA No. 39 of 2010 (O&M) 12

security for the debt. Whether there is an intention that the deed shall be security for the debt is a question of fact to be decided in each case on its own merits. The said fact will have to be decided just like any other fact based on legal presumptions, oral, documentary and/or circumstantial evidence."

In Shree Moti Industries' case (supra), the defendant

had not delivered the document of title himself. Thus, it was

observed by the Court that he would not have delivered the

document to the bank to create a charge over his property without

any interest and there was no material on the record to show that

the document was delivered with the intention to create any

equitable mortgage, so as to secure outstanding dues of the bank.

In the instant case also, the loan was taken by Shree

Ganesh Sales Corporation, of which Himesh Sablok was the

partner. The title holders of the property namely Mahinder

Parkash as well as Kaushalya Sablok had nothing to do with the

loan and had no interest in the said company. What to talk of

intention, they even may not be knowing that the title deed was

delivered with the intention to create an equitable mortgage. Even

the attorney deeds as well as the original sale deed were not

produced on the record before the trial Court at the time of

preliminary and final decree, so as to pass the mortgage decree.

The witnesses of the appellant, before the Court passing the

decree, did not mention about the intention and actual delivery of

the documents with the bank for creation of the equitable

mortgage. No document regarding creation of equitable mortgage

has also been produced on the record. It was, thus, obligatory on ESA No. 39 of 2010 (O&M) 13

the part of the appellant-bank to act in accordance with the

provisions of law. In the absence of any proof of equitable

mortgage, the objector, having duly purchased the property after

full verifications and on payment of consideration through the

bank drafts, could certainly be said to be bonafide purchaser

without notice. Had there been any entry with regard to equitable

mortgage in the records of the Estate Office or had there been

whisper with Mahinder Sablok or the respondent about such

transaction purported to be equitable mortgage, respondent No.1-

objector may not have indulged in such a huge transaction for

dragging himself to the litigation. Actually, the alleged transaction

of equitable mortgage was not conforming to the settled principles

for completing such transaction and the appellant-bank appeared

to be non serious in mortgaging the property at that time, as from

the very perusal of the plaint itself, it appears that the bank in

order to secure the cash credit facility on 19.11.1984, got

executed the promissory note dated 19.11.1984 for a sum of

Rs.50,000/- from the partners of the firm; personal guarantee

agreement form; agreement for hypothecation and guarantee,

letter dated 19.11.1984 authorizing lease/pledge etc. of the goods

with the bank; hypothecation of the stocks as security for the

aforesaid limit of Rs.50,000/- and a guarantee deed by defendant

No.4. Had there been any intention to mortgage the said house,

then the bank would not have called for so many sureties, as

referred above, for receiving the loan i.e. hypothecation of the

goods, promissory notes and the guarantee deeds for discharging

the cash credit facility extended to the said firm. Had there been ESA No. 39 of 2010 (O&M) 14

any intention to create equitable mortgage so as to secure the

outstanding dues of the appellant-bank, then the bank authorities

must have informed the Estate Office regarding the said

encumbrance. In the absence of any such intention or record with

the Estate Office, it could not be expected from respondent No.1

to know, as to if there was any encumbrance over the aforesaid

property. The sale was got effected after taking 'no objection

certificate' from the Estate Office. As such, this Court finds favour

with the plea set up by respondent No.1 with regard to the

bonafide purchaser for consideration without notice.

It may further be observed that creation of equitable

mortgage requires a contract to be reduced into writing and its

registration. In this regard, it would be appropriate to refer to the

judgment delivered by the Hon'ble Apex Court in case United

Bank of India Ltd. Vs. Messrs Lekharam Sonaram and Co. &

others, AIR 1965 SC 1591, wherein it was observed as under:-

"When the debtor deposits with the creditor title deeds of his property with an intent to create a security the law implies a contract between the parties to create a mortgage and no registered instrument is required under S.59 as in other classes of mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. But, it the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in such a case the document which constitutes the bargain ESA No. 39 of 2010 (O&M) 15

regarding security requires registration under S. 17 of the Indian Registration Act, 1908, as a non-testamentary instrument creating an interest in immovable property, where the value of such property is one hundred rupees and upwards. If a document of this character is not registered, if cannot be used in evidence at all and the transaction itself cannot be proved by oral evidence either."

It was observed by the Hon'ble Madras High Court in

case Lakshmi Vilas Bank Ltd. Vs. M/s Shreechakra

Enterprises and others, AIR 2003 Madras 1, that in the absence

of necessary proof of the deposit of title deeds, mere production

of the said letter would not be sufficient to create an equitable

mortgage or to hold that the guarantor had equitably mortgaged it

by deposit of the title deeds in respect of the immovable property.

In this case also, the appellant-bank has pleaded that

the document regarding equitable mortgage was executed. In

that situation, equitable mortgage was required to be registered.

Furthermore, the appellant-bank relied upon a letter (Ex.P15),

which is not sufficient that there was equitable mortgage by way of

deposit of the title deed with an intention to secure the debt.

As regards the argument that the appellant-bank is in

possession of the original title deed and could not produce the

same during the pendency of the trial and it should not be taken

as an adverse to the interest of the bank, it may be observed that

the argument does not find any substance, as even in order to

succeed in a mortgage suit, the Court before creating charge over

the property, should have examined the title involved in the deed

and for that purpose, it was the bounden duty of the bank to

produce and prove the same before the Court, but the appellant- ESA No. 39 of 2010 (O&M) 16

bank failed in its obligation. As such, the decree, which is not valid

at the face of it, passed by the trial Court for recovering the

amount by sale of H.No.730, Sector 8-B, Chandigarh, was not

binding upon respondent No.1-objector, who had exercised due

diligence in searching the record in order to find out

encumbrance, if any, before purchasing the aforesaid property.

As regards the argument that objections were

premature as the attachment was not effected qua the property in

question, in this regard it may be observed that the objections

followed to the issuance of attachment over the property and it

hardly matters, if actually the property was put under attachment,

but right to object accrued to respondent No.1 as soon as he

came to know about issuance of the process of attachment of the

said property.

No other argument has been raised.

In view of the aforesaid discussion, the present appeal

being devoid of any merit, is dismissed. However, the appellant-

bank would be at liberty to recover the outstanding amount from

the property of the firm or personal property of the judgment

debtors or other property, the details of which had been given in

the suit.

(A.N.JINDAL)

06.03.2013 JUDGE ajp

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