THE HON’BLE SRI JUSTICE V.V.S.RAO SECOND APPEAL No.705 OF 2011 Dated:08.09.2011 Between: Kotti Subbayamma and others .. Appellants And Mallapudi Jagadamba .. Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO SECOND APPEAL No.705 OF 2011 JUDGMENT: The defendants, who were unsuccessful in the trial Court as well as in the first appellate Court, are the appellants. The respondent’s (hereinafter, the plaintiff) suit being O.S.No.492 of 2006 for recovery of a sum of Rs.4,64,168/- based on equitable mortgage was decreed on 02.06.2008. The defendants’ appeal being A.S.No.270 of 2008 was dismissed by the Court of the III Additional District Judge, Kakinada. Aggrieved by which, the present Second Appeal is filed. The plaintiff instituted O.S.No.492 of 2006 alleging that the defendants borrowed Rs.50,000/- from her son, Rs.1,25,000/- from her and Rs.1,00,000/- from her husband duly executing a promissory note on 20.04.1997. They also deposited two original registered sale deeds by way of creating an equitable mortgage as security to the debt. They paid a sum of Rs.10,000/- on 17.03.2001, but defaulted in discharging the debt. After death of her husband, plaintiff filed the suit. The first defendant filed written statement, which was adopted by defendants 2 to 9. The defendants’ case is that they never borrowed the amounts from the plaintiff or from her husband; they never created equitable mortgage; though they borrowed Rs.1,25,000/- from the plaintiff’s husband, they discharged the amount and that suit claim is false. The trial Court framed two issues, namely, whether the plaintiff is entitled for preliminary decree? and whether the plea of discharge taken by defendants is true, valid and binding on plaintiff? During trial, the plaintiff examined herself as PW.2 besides examining three other witnesses and marked Exs.A1 to A18. Defendant No.4 was the lone witness as DW.1 and no documentary evidence was let in by the defendants. The trial Court on consideration of evidence came to the conclusion that the creation of equitable mortgage is not dependent on execution of a separate Memorandum of Deposit of Title Deeds; that transaction has to be inferred from the contract between the parties to create a mortgage and that DW.1 admitted to have deposited Exs.A2 and A3 – sale deeds as a security to debt and accordingly a preliminary decree was passed for the suit claim. The appellate Court confirmed the finding of fact and dismissed the appeal filed by the defendants. The counsel for the appellants would submit that in the absence of separate Memorandum of Understanding evidencing creation of equitable mortgage, the Court cannot infer the mortgage. In the written statement filed by the first defendant, the creation of mortgage by deposit of title deeds was denied, but DW.1 admitted that they borrowed money from the husband of the plaintiff and deposited Exs.A2 and A3. It is now well settled that whether the parties intended to create mortgage by deposit of title deeds is a question of fact which has to be determined based on oral, documentary or circumstantial evidence (K.J. Nathan v. S.V.Maruthi Rao[1]). In this case, on considering the evidence and attending the circumstances at or about the time of execution of Ex.A1 -promissory note by the defendants in favour of the plaintiff and the factum of Exs.A2 and A3 - sale deeds being marked from the custody of PW.2, would certainly probablise the case of the plaintiff. The Courts below have given cogent and convincing reasons in coming to the conclusion that there is a valid mortgage. The defendants did not even insist for framing the issue to that effect. The Second Appeal is misconceived and is accordingly dismissed. There shall be no order as to costs. ________________ (V.V.S. RAO, J) 08.09.2011 KH [1] AIR 1965 SC 430