Once it is concluded that the respondents
No. 2 to 6 have created mortgage by deposit of title
deeds for the repayment of the loan amount, naturally
the limitation in their case would be governed by the
provisions of Article 62 of the Indian Limitation Act
read with Section 96 of the Transfer of Property Act.
The provisions of section 96 of the Transfer
of Property Act runs as under :
“96. Mortgage by deposit of titledeeds.
The provisions hereinbefore contained which
apply to simple mortgage shall, so far as
may be, apply to a mortgage by deposit of
the deeds.”
Thus, all the provisions which apply to simple
mortgage are made applicable to a mortgage by
depositing of titledeeds. Article 62 of the Indian
Limitation Act in this reference runs as under :
Article 62
Period of Time from which
limitation
period begins to
run
Description of suit
To enforce payment Twelve years
of money secured by
a mortgage or
otherwise charged
upon
immovable
propertyWhen the money
sued for becomes
due
There cannot be two opinions that the suit
for enforcement of money secured by mortgage can be
filed in case of a simple mortgage. Since the same
provision would apply to a mortgage by deposit of
titledeeds, the period of limitation would be twelve
years from the date when the money becomes due.
FIRST APPEAL NO. 631 OF 1997
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
ALLAHABAD BANK,
VERSUS
M/s Shivganga Tube Well,
CORAM
: M.T. JOSHI, J.
PRONOUNCED ON : 9TH APRIL, 2014
Citation; AIR 2014 Bom 100
This first appeal is admitted on 12th March,
1998. Heard learned counsel appearing for the
respective parties.
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,
The case of the appellant/plaintiff, in
3.
this first appeal against the guarantors.
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 defendants No. 2 to 6 i.e. present
respondents No. 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
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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 titledeeds at
Himayatnagar Branch of the plaintiff/appellant Bank
on 29.04.1988. Thus, equitable mortgage by depositing
ig
the titledeed 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 titledeeds 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 titledeeds 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 titledeeds 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,
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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
4.
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to be filed on 22.07.1994.
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. Defendants No. 2 to 4 i.e.
present respondents No. 2 to 4 filed their common
written statement at Exhibit33. 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 was denied. They denied that these
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defendants had approached the plaintiff in connection
with any such loan transaction. The execution of any
document by them or deposit of titledeeds 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
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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.
5.
On the basis of these pleadings, the learned
trial Court framed the issues at Exhibit35. It held
that the appellant failed to prove execution of
guaranteedeed by the respondents No. 2 to 6. It
further came to the conclusion that the plaintiff was
able to prove that the respondents No. 2 to
4/defendants No. 2 to 4 had executed agreement of
mortgage while defendant No. 6 i.e. present
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respondent No. 6 had executed actual mortgagedeed.
However, it was found that the respondents No. 2 to 6
i.e. original defendants No. 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
ig
would not bind the present respondents No. 2 to 6.
In the circumstances, the suit as against the
respondents No. 2 to 6 came to be dismissed.
Mr. S.V. Adwant, learned counsel for the
6.
appellant/Bank submitted before me that the learned
Civil Judge, Senior Division failed to distinguish
between the “transfer of interest by executing a
mortgagedeed” 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 coextensive to that of the borrower and
hence, it was submitted that the suit was within
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On the other hand, Mr. P.V. Mandlik, learned
7.
limitation.
Senior Counsel appearing for the respondents No. 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 respondents No. 2 to 4. There is no registration
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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 into on 12.02.1988 and
10.03.1988 while the suit was filed on 22.07.1994.
In the circumstances, he submitted that the suit was
barred by limitation. He further submitted that the
learned trial Court has taken into consideration the
contradiction regarding the fact as to the execution
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of guaranteedeed at Exh103. In the circumstances,
8.
Mr. Mandlik wanted that the appeal be dismissed.
Mr. Mandlik, learned Senior Counsel further
submitted that the admission of the appellant Bank’s
Branch Manager during crossexamination would show
that once the hypothecated property i.e. the truck
was seized by the Bank, which was lateron released,
ig
it was detrimental to the guarantors’ guarantee and
therefore, on this count also, he submitted that the
appeal be dismissed.
Both the sides rely on various authorities
9.
to buttress their respective arguments.
10.
On the basis of above material, the
following points arise for my determination:
(i)
Whether the respondents No. 2 to 6 executed
guaranteedeed ?
(ii)
Whether the respondents No. 2 to 6 i.e. the
original defendants No. 2 to 6 have
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mortgaged their respective immovable
properties by deposit of titledeeds with
(iii)
the appellant Bank ?
Whether the suit against the respondents No.
2 to 6 i.e. original defendants No. 2 to 6
Whether the respondents No. 2 to 6 i.e.
ig
(iv)
was within limitation ?
defendants No. 2 to 6 stood discharged due
to any act of commission of omission by the
officials of the appellant Bank? and whether
the plea can be taken during the hearing of
the appeal ?
My findings to points No. (i) to (iii) are in the
affirmative and to point No. (iv) in the negative.
Hence, the appeal is hereby allowed against the
respondents No. 2 to 6, for the reasons to follow.
R E A S O N S
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11.
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The respondents No. 2 to 6 have denied all
the averments of the appellant Bank made in the suit.
They denied that they had any knowledge about the
loan transaction between the appellant and
respondent/defendant No. 1. They further denied that
they had, at any point of time, approached the
appellant Bank and agreed to stand as guarantors for
the loan to be advanced to the respondent No. 1. The
ig
learned trial Court has framed issue No. 2 on these
contentions. It was held by the learned trial Court
that defendants No. 2 to 4 i.e. respondents No. 2 to
4 had executed the agreement of mortgage while only
respondent No. 6 had executed actual mortgage.
Further certain contradictions between the statements
of the plaintiff’s witness as to who was present at
the time of execution of the guaranteedeed were
highlighted by the learned trial Court.
.
Out of all these respondents, only
respondent No. 3 G. Ram Reddy entered the witness
box. The learned trial Court, however, held that
though this defendant No. 3 witness has admitted the
signatures of himself in the crossexamination and
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also of defendants No. 2 to 5, their admissions would
not be binding on the other defendants. The learned
Civil Judge, Senior Division, however, did not draw
any adverse inference when this defendant/respondent
did not enter the witness box to deny the execution
of those documents. The findings of the trial Court
PW1 Massa Singh Ubhi – the Manager of the
ig
12.
in this regard unfortunately are perverse.
appellant Bank deposed that he served with the Branch
for a period between 08.08.1988 to 14.01.1992. He
proved the original loan transaction by proving these
documents at Exh38 and Exh39.
Regarding
hypothecation, he submitted that letter of
hypothecation was signed by defendant No. 1 in his
presence at Exhibit40. The acknowledgement to repay
the loan amount from the defendant No. 1 were proved
by him at Exhibit42 to Exhibit48.
13.
PW2 Sukhdeoswami, the Manager of the
Hoshiyarpur Branch of the appellant Bank during the
period from 12.04.1987 to 08.08.1988, deposed about
transaction regarding the present respondents No. 2
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to 6. He deposed that while the principal borrower –
defendant No. 1 applied for loan, present respondents
No. 2 to 6 made an application that they were
prepared to stand as guarantors for the principal
borrower and accordingly mortgaged their respective
properties. They had given separate application which
were signed in his presence. He accordingly proved
those documents at Exh58 to Exh62. By these
ig
applications, the respondents No. 2 to 6 i.e.
defendants No. 2 to 6 also gave the details of their
properties and valuation thereof. He further deposed
that as there is no branch of the appellant Bank at
Nizamabad (Andhra Pradesh), the respondents No. 2, 3
and 4 had agreed to deposit the titledeeds of their
property for creating the mortgage by deposit of
titledeeds at Nizamabad branch. Accordingly, they
gave the letters to the Branch Manager of
Himayatnagar Branch. The said application, according
to him, bears the signatures of these respondents No.
2, 3 and 4. He also signed the same in attestation.
This common letter is proved by him at Exhibit69.
He deposed that Exh69 was signed by these respective
respondents in his presence. Besides this, the
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respondent No. 2 executed an agreement – Exhibit70
in his presence. He further deposed about the
deposit of titledeeds by each of these respondents.
The title verification report of their Advocate
regarding the property were also pointed by him. The
affidavit of respondent No. 2 was pointed by him at
Exhibit74. Nonencumbrance certificate from the
Regarding defendant No. 3 also, he deposed
.
ig
SubRegistrar of Nizamabad was pointed out at Exh75.
on the similar lines and proved the documents at
Exhibit76 to Exhibit88 in this regard. As regards
defendant No. 4 i.e. respondent No. 4, he proved the
similar documents at Exh89 to Exh94. The deponent
thereafter deposed about the course of action taken
by him at Himayatnagar branch of the appellant Bank
about said transaction and proved the correspondence
from Exh93 to Exh98. Exh99 is the letter from
Himayatnagar branch to the Nanded branch stating that
the equitable mortgage of the property was created by
these respondents. Thereafter, the respondents No. 2
to 4 gave a separate letter regarding the fact of
deposit of titledeeds towards the mortgage. The
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the witness i.e. PW2 thereafter deposed
14.
same was proved by him at Exh100.
about the respondent No. 6. He deposed that the
respondent No. 6 has executed a registered mortgage
deed of her house at Nizamabad, as detailed in the
mortgagedeed. The registered mortgagedeed was
ig
The witness further deposed that after
15.
proved at Exh101.
deposit of titledeeds, these respondents No. 2 to 6
came to the Nanded branch and executed a guarantee
deed in his presence. The same was marked as Exh103.
Thereafter, he deposed about the documents exhibited
by the principal borrower.
16.
PW3 Sudhir Vishnupurikar deposed that he was
serving as ClerkcumCashier in the Nanded branch of
the appellant Bank since the year 1987. He deposed
that during the relevant period, he was working in
loan section. He deposed that on 08.06.1988, the
respondents No. 2 to 6 came to the branch and
executed the letter of mortgage at Exh103 in his
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presence. He deposed that respondent No. 6 Laxmibai
put thumb mark over the said letter. He also deposed
that he had read over the contents of the said
document to respondent No. 6 as she was illiterate
and accordingly communicated the Branch Manager that
he had explained the contents to respondents No. 2 to
6. Thereafter, the witness deposed about the course
PW4 M.G. Shrikanta deposed that he was
17.
ig
of action regarding the principal borrower.
serving as Manager in the plaintiff Bank at the time
of filing of suit. He has filed the suit for the
outstanding amount of loan on the basis of the
documents, as detailed supra.
18.
As against this evidence, all the
respondents examined respondent No. 3 Ram Reddy at
Exh117. He deposed that the principal borrower told
him that as the loan amount was huge, certain
identification is required. The principal borrower as
well as himself were acquainted with each other.
Therefore, only for the purpose of identification, he
went alongwith the principal borrower as well
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respondents No. 2 and 4 to Hyderabad branch of the
appellant Bank. There, they told the bank officers
that the principal borrower was known to them. For
the purpose of identification, he submitted certain
documents of title of the property to the officers.
He thereafter signed over certain document. He
deposed that he did not state that he stood as
guarantor for the loan transaction of the respondent
19.
ig
No. 1.
He (respondent No. 3 Ram Reddy) in cross
examination admitted that he was serving as teacher
during the relevant period in a public school at
Nizamabad. He admitted his signatures over the
concerned documents – Exh58, Exh59, Exh60 and
Exh69. He also agreed that the signatures of
defendants No. 2 to 4 i.e. present respondents No. 2
to 4 are there on the said documents. The document
styled as agreement was accepted by him as bearing
his signature at exh76. The titledeeds of his
properties which were in the custody of the bank and
produced in the suit, were accepted by him at Exh77
to Exh79. Even he admitted that he has submitted
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valuation report of his property as per Exh88. He
further admitted that he had submitted an affidavit
at Exh82 and Exh87. He also admitted that the
defendants No. 2 and 4 had deposited titledeeds of
their properties. He further admitted that the
defendants No. 2 to 4 had also deposited their title
deeds regarding their property with the plaintiff
Bank. He admitted the signatures of rest of the
ig
defendants over Exh70 and Exh89 and the affidavits.
He also further admitted that on the next day, he
himself alongwith the defendants No.2 and 4 went to
the Bank and thereat, he signed the reports at
Exh96, Exh97 and Exh98. Further, he admitted that
on 30.04.1988, he himself gave a letter at Exh110 to
the plaintiff Bank. The signatures over Exh100 of
himself and of the defendants No. 2 to 4 were
admitted by him.
.
The guaranteedeed dated 08.06.1988 at
Exh103 was shown to him. He admitted his signature
as well as the signatures of defendants No. 2, 4, 5
and 6 over the same. Further he has admitted that he
has received the notice prior to filing of the suit.
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The postal acknowledgement at Exh50 was shown to
him. He admitted that it bears his signature. He,
however, did not send any reply to the notice. The
postal acknowledgement regarding some other
defendants were shown to him and he admitted that the
service of the notice and the acknowledgement thereof
at Exh118. He also admitted that he has not replied
ig
In the teeth of this evidence, as we have
20.
the said notice.
already found that the learned trial Court not only
failed to draw adverse inference against the
defendants/respondents No. 2 to 6 but also went
further by stating that admissions of D.W. 1 would
not be binding on others. The reading of the
judgement of the trial Court shows that it has
highlighted over certain contradiction in the oral
evidence insignificance of PW1 to PW4 and concluded
that the documents were concocted by the officers of
the Bank.
21.
The evidence on record would show that
against the responsible bank officers, sweeping
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remark is made by the learned Civil Judge, Senior
Division, Nanded that they got concocted all these
documents. In the circumstances, it is proved that
guaranteedeed at Exh103 is proved.
22.
The learned Judge has made distinction
between “transaction of mortgage” and “agreement to
mortgage property”. Whatever distinction is made by
ig
the learned Judge when atleast a finding was arrived
at by the learned Judge that defendant No. 6 has
executed a registered mortgagedeed, what prompted
the learned Judge in absolving the said defendant No.
6 from making her jointly and severally liable to pay
the decretal amount, is an enigma.
23.
This takes us to find out the difference
between “the agreement to mortgage” and “mortgage by
deposit of titledeeds”. The mortgage by deposit of
titledeeds is defined by section 58 (f) of the
Transfer of Property Act, 1882. It runs as under :
“(f) Mortgage by deposit of titledeeds.
Where a person in any of the following
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towns, namely, the towns of Calcutta, Madras
and Bombay, and in any other town which the
State Government concerned may, by
notification in the Official Gazette,
specify in this behalf, delivers to a
creditor or his agent documents of title to
immovable property, with intent to create a
security thereon, the transaction is called
a mortgage by deposit of titledeeds.”
ig
(Emphasis supplied)
It is undisputed that city of Hyderabad is notified
city where the delivery of the titledeeds of
immovable property can be made with intention to
create a security thereon.
24.
There is no need to refer any authority or
caselaw to show that the mortgage by deposit of
titledeeds requires no registration. However, if
any document is executed, which would show that the
mortgagee has under the said document mortgaged the
property by deposit of titledeeds, then only the
registration of the said document is required.
However, the contemporaneous document fortifying the
“intention to create the security” executing the same
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is neither an agreement to mortgage or a mortgage.
The deposit of titledeeds itself with intention in
the mind of the person that the said titledeeds are
being deposited with intention to create a security
thereon is sufficient to culminate the transaction
into a mortgage by deposit of titledeeds. This
mortgage by deposit of titledeeds is sometimes
called as equitable mortgage, as was prevalent in
ig
England. However, the ingredients of the equitable
mortgage and the mortgage as defined under section 58
(f) of the Transfer of Property Act are not
identical.
25.
The documents on record, coupled with the
affidavits as admitted by the defendant No.3/
respondent No. 3 and positively proved by the
relevant witness of the plaintiff would show that the
titledeeds were deposited with the plaintiff Bank,
with an intention to create the security thereon. It
is to be noted that admittedly, the loan transaction
took place on 08.06.1988. The titledeeds of the
respective respondents were admittedly put in the
custody of the appellant Bank at that time. The suit
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was filed in the year 1994 in which those titledeeds
were placed by the appellantBank. None of the
relevant respondents at any time asked for return of
those titledeeds, nor complained of keeping the same
in the custody of the Bank.
26.
At Exhibit111, we have the letter from
respondent No. 4 T. Shantha Kumari, dated
ig
21.04.1993, vide which she had communicated to the
appellant Bank that she shall insist the principal
borrower to pay the loan as soon as possible so as to
save her from her guarantee.
27.
Mr. S.V. Adwant, learned counsel for the
appellant Bank, to buttress his submissions as to how
the mortgage by deposit of titledeeds is created,
relied on the ratio laid down in the following
authorities :
(i) Pranjivandas Jagjivandas Mehta V.
Chan Ma Phee
A.I.R. 1916 Privy Council
(ii) Sundarachariar and others V.
Narayana Ayyar and others
A.I.R. 1931 Privy Council
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Rachpal Mahraj V. Bhagwandas Daruka & others
A.I.R. (37) 1950 S.C. 272
(iv) State of Haryana and others V.
Narvir Singh and another
(2014) 1 S.C.C. 105
28. In the case of “Pranjivandas Jagjivandas
(iii)
Mehta” (cited supra), the mortgagor on the back of a
promissory note, has written that he was depositing
ig
the titledeeds as a security. This was held to be
sufficient to show the intention of creation of
mortgage by deposit of titledeeds.
In the case of “ Sundarachariar and others”
29.
(cited supra), it was highlighted that memorandum
containing record of particulars of deeds deposited
as security does not require registration.
30.
In the case of “ Rachpal Mahraj” (cited
supra), it was held that when the debtor deposits
with the creditor the title deeds of his property
with intent to create a security, no registered
instrument is required. However, if the parties
choose to reduce the contract to writing, the
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document will be the sole evidence of its terms and
31.
it would require registration.
In the case of “ State of Haryana and
others” (cited supra), the same principle was
underlined.
The documents on record would show that the
32.
ig
respondents No. 2 to 6 had intention to create the
security for the repayment of the loan availed by the
principal borrower. Therefore, they showed their
readiness to deposit the titledeeds by various
agreements and affidavits and also by placing all the
title verification certificate by the Advocates, etc.
and ultimately, they deposited the titledeeds with
the appellant Bank at Hyderabad branch. The learned
Judge of the trial Court, however, differentiated
between the “agreement to mortgage” and to actually
“mortgage the immovable property”.
33.
Mr. P.V. Mandlik, learned Senior Counsel
submitted that any transaction of mortgage requires
the payment of stamp fees. He relied on the
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provisions of Article 6 of the Bombay Stamp Act.
Lateron, he conceded that these provisions have come
into Statute book by way of amendment w.e.f. 1st July,
2009.
34.
The above discussion is sufficient to hold
that the respondents No. 2 to 6 stood as guarantors
and created mortgage of their property for repayment
of the loan advanced to the principal borrower by
35.
depositing their titledeeds.
Once it is concluded that the respondents
No. 2 to 6 have created mortgage by deposit of title
deeds for the repayment of the loan amount, naturally
the limitation in their case would be governed by the
provisions of Article 62 of the Indian Limitation Act
read with Section 96 of the Transfer of Property Act.
36.
The provisions of section 96 of the Transfer
of Property Act runs as under :
“96. Mortgage by deposit of titledeeds.
The provisions hereinbefore contained which
apply to simple mortgage shall, so far as
may be, apply to a mortgage by deposit of
the deeds.”
Thus, all the provisions which apply to simple
mortgage are made applicable to a mortgage by
depositing of titledeeds. Article 62 of the Indian
Limitation Act in this reference runs as under :
ig
Article 62
Period of Time from which
limitation
period begins to
run
Description of suit
To enforce payment Twelve years
of money secured by
a mortgage or
otherwise charged
upon
immovable
property
37.
When the money
sued for becomes
due
There cannot be two opinions that the suit
for enforcement of money secured by mortgage can be
filed in case of a simple mortgage. Since the same
provision would apply to a mortgage by deposit of
titledeeds, the period of limitation would be twelve
years from the date when the money becomes due.
Therefore, no issue of limitation as such would arise
Even otherwise, the extension of the
38.
in the present case.
repayment of the loan promised by the principal
borrower would bind the surety. In this regard, the
provisions of section 128 of the Indian Contract Act
Surety’s liability. The liability
“128.
would be material, which runs as under :
of the surety is coextensive with that of
the principal debtor, unless it is otherwise
provided by the contract.”
Defendants No. 2 to 6 have executed the
39.
continuing guarantee with further declaration that
any acknowledgement of debt made by the principal
borrower within the meaning of sections 18 and 19 of
the Indian Limitation Act, shall be deemed to have
been made by themselves also. In that view of the
matter, Mr. Adwant, learned counsel for the appellant
Bank, relying on the following authorities, submits
that acknowledgement of debt executed by the
principal borrower, as detailed supra, would be
binding on the respondents No. 2 to 6. The
authorities, relied upon by Mr. Adwant are as
follows :
Mrs. Margaret Lalita Samuel V.
Indo Commercial Bank Ltd.
AIR 1979 S.C. 102
(ii) Syndicate Bank V. Swaransingh Bachansingh
Lal and others
1996 (2) ALL MR 310
(iii) The Miraj State Bank Limited Vs.
M/s Poonawalla Promoters Pvt. Limited & Ors.
1996 (3) ALL MR 179
(iv) SICOM Ltd. V. Harjindersingh and others
AIR 2004 BOMBAY 337
40. In view of above, it is clear that the
(i)
respondents No. 2 to 6 had entered into a transaction
of creating mortgage by deposit of titledeeds for
the security of repayment of the loan of principal
borrower – defendant No. 1 and have also continuously
agreed to be binding for repayment of the loan in
case the principal borrower acknowledges the
liability within the meaning of the relevant
provisions of the Indian Limitation Act.
41.
This leads us to find out as to whether due
to any commission or omission on the part of the Bank
officials, the liability of the mortgagors is
42.
extinguished.
Mr. Mandlik, learned Senior Counsel has
placed reliance on section 139 of the Indian Contract
Act in this regard. Section 139 of the Contract Act
“139.
reads thus :
Discharge of surety by creditor’s
act or omission impairing surety’s eventual
remedy. If the creditor does any act
which is inconsistent with the rights of the
surety, or omits to do any act which his
duty to the surety requires him to do, and
the eventual remedy of the surety himself
against the principal debtor is thereby
43.
impaired, the surety is discharged.”
Mr. Mandlik further points towards certain
admissions given by the Bank officials which would
show that once the hypothecated property was seized.
However, upon partpayment towards the loan account,
the same was released. It should, however, be noted
that there were no pleadings at all in this regard on
behalf of the respondents No. 2 to 6. Therefore,
suddenly on the basis of certain `admissions’ given
by the witness that once the property was seized but
lateron released, we cannot come to the conclusion
that the appellantBank has done any act which is
inconsistent with the rights of the surety or omitted
In view of the facts and legal position,
44.
to do its duty to the surety.
discussed hereinabove, I pass the following order.
The first appeal is allowed with costs.
(B) The decree of the trial Court dismissing the
(A)
suit as against the respondents No. 2 to 6
is hereby set aside.
Instead, the
respondents No. 1 to 6 (original defendants
No. 1 to 6) are hereby directed to jointly
and severally pay to the appellant/Bank an
amount of Rs. 27,76,137/, with interest at
the rate of 6% per annum from the date of
the decree passed by the trial Court till
recovery of the suit amount. Besides this,
the appellant/Bank would be entitled for
sale of the mortgaged property for recovery
of the decretal amount, as detailed supra.
The decree be drawn accordingly.
[ M.T. JOSHI ]
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