THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLESRI JUSTICE S.A.No.539 of 2010 Date of Judgment: 25-06-2010 Between: 1. Budda Venkata Rao and others. ..Appellants And 1.Union Bank of India, Yeleswaram Rep. by its Branch Manager and others ..Respondents The Court made the following Judgment: THE HONOURABLE SRI JUSTICE A.GOPAL REDDY S.A.No.539 of 2010 Oral Judgment: The defendants 4 to 11 filed this Second Appeal assailing the judgment and decree of the V Additional District Judge (Fast Track Court), East Godavari Distinct, Rajahmundry in A.S.No.5 of 2004 dated 22-12-2009 whereby and whereunder the appeal preferred by the defendants 4 to 8, 10 and 11 has been dismissed confirming the judgment and decree of the Senior Civil Judge, Peddapuram dated 28- 10-2003 in O.S.No.4 of 1995 filed for recovery of the loan amount by passing a preliminary decree. For the sake of convenience the parties are referred to as arrayed in the court below. The plaintiff is a nationalized bank governed by the statute having a branch office at Yeleswaram. The 1st defendant availed the crop loan in the month of March, 1981 creating equitable mortgage by depositing the title deeds and by executing Memorandum on 06-03- 1981 and he discharged the said loan. Later, on 26-11-1981 he availed another crop loan of Rs.15,000/- repayable on or before 30-12- 1982 and he gave a letter confirming the equitable mortgage that was created on 06-03-1981 to cover the suit loan. He further executed a demand pro- note on 26-11-1981 for Rs.15,000/-. The defendants 2 and 3 executed an indemnity and guarantee bonds on the same day for the suit loan and stood as guarantors for the loan covered by the suit mortgage. The 1st defendant acknowledged his liability by executing confirmation letters on different dates. The defendants 4 to 11 purchased the mortgaged property, which is the pliant schedule property, under various sale deeds having full knowledge of the suit debt and as such they are liable to pay the suit amount. The plaintiff—bank extending the benefit of Rs.10,000/- under Agricultural and Loan Debt Reliefs Scheme filed the above suit for recovery of the remaining amount. The defendants 4 and 5 filed written statement, traversing the pliant averments, contending that the plaintiff has to prove strictly regarding two loans availed by the 1st defendant by creating equitable mortgage and execution of various documents. The alleged mortgage is not valid and void. Even though it is assumed to be true, they are not concerned with the indemnity and guarantee bonds executed by defendants 2 and 3; the acknowledgements said to have been executed by defendant No.1 on different dates are created by the plaintiff in collusion with the 1st defendant, which are not binding on them. The defendants 4 to 11 purchased some properties from defendant No.1 and his family members and those properties are different from the pliant schedule property; they are not aware of the mortgage deed executed by the 1st defendant. They also issued reply to the plaintiff’s notice requesting for xerox copies of the documents, but the same were not supplied. The statement of account is not correct. Since the loan is a crop loan, the plaintiff is not entitled to claim interest with half yearly rests and incidental charges. The defendants 6 to 11 adopted the written statement of defendants 4 and 5 by filing a memo. On the basis of the above pleadings, necessary issues were settled for trial. To prove the suit claim, the plaintiff examined P.Ws.1 to 3 and got marked Exs.A1 to A38. On behalf of the defendants, one witness was examined as D.W.1 and Exs.B1 to B16 were got marked. The trial court answered issues 1 to 6 in favour of the plaintiff and a preliminary decree was passed with costs and interest at 15% per annum with yearly rests on the principal amount of Rs.15,000/- from the date of suit till the date of decree and thereafter at 6% per annum with simple interest till realization. Aggrieved by the same, the defendants carried the matter in appeal. The lower appellate Court after considering the oral and documentary evidence framed three points for consideration. Point No.1, whether Exs.A1 and Ex.A1 (a) are executed on the same day of the borrowal by depositing the title deeds and they require registration, was answered against the appellants; Point No.2, whether the plaintiff proved deposit of title deeds under Exs.A1 and A1 (a), also answered against the appellants and Point No.3, whether the depositing of Ex.A1 constitutes any mortgage as Ex.A7 is a partition deed, was also answered against the appellants/defendants. Sri M.S.Ramachandra Rao, learned counsel for the appellants contends that the plaintiff failed to prove when the loan was availed by the 1st defendant in March, 1981 by depositing the title deeds—Exs.A1, Ex.A1 (a). Ex.A3—letter executed by defendant No.1 in favour of the plaintiff—bank in the year 1981 and also demand pro- note on the said date under Ex.A2 cannot create any mortgage. The lower Appellate Court having recorded that the defendants are subsequent purchasers gave adverse finding that they are not the bona fide purchasers as per the recitals Exs.A23 to A28. The plaintiff failed to establish the relevant date on which the 1st defendant availed the first crop loan by creating mortgage dated 06-03-1981 under Ex.A1, which requires registration. Both the Courts have misread the pleadings and evidence adduced by the parties in coming to the conclusion that Ex.A3 letter is a valid mortgage. Admittedly, the plaintiff—bank has established memorandum of deposit of title deeds in its favour under Ex.A1 dated 06-03-1981 and receipt for the above said memorandum under Ex.A1 (a), which do not indicate borrowal on the same date and requires registration. Though Ex.A1 and A1 (a) are executed and deposited at Kakinada Branch in connection with borrowal, the further borrowal of the amount at Yeleswaram Branch extending the mortgage to the loan borrowed under Ex.A3, dated 26-11-1981 can also be done at Kakinada Branch only. For the reason, Kakinada Branch is a notified branch whereas Yeleswaram Branch is not a notified branch, cannot advance loans on deposit of title deeds. The lower Appellate Court also observed that D.W.1 in the cross-examination deposed that they submitted a letter to the plaintiff for one time settlement under Ex.A35 by paying Rs.10,000/-. He also admitted that they settled for Rs.40,000/- and paid Rs.10,000/- and for the remaining amount of Rs.30,000/- the plaintiff— bank has granted time upto June, 2001 under Ex.A36. Ex.A35 is the application of the 4th defendant to the plaintiff for one time settlement. The evidence of P.W.2 clearly shows that Ex.A1, A1 (a) documents were executed by defendant No.1 at Kakinada Branch but not at Yeleswaram branch, whereas the plaintiff pleaded that the 1st defendant availed crop loan in the month of March, 1981 but not pleaded that it is only on 06-03-1981 the crop loan was availed and it is on the same date he deposited the title deeds and executed a memorandum covered by Ex.A1 and A1 (a). Ex.A1 is the memorandum executed by the plaintiff to the effect that the 1st defendant deposited the documents as security for repayment of all the amounts advanced to him or to be advanced in future which clearly shows the 1st defendant deposited the title deeds creating equitable mortgage for the loans availed by him not only prior to 06-03-1981 but also for the loans that would be availed by him in future. Since it is established that the loan was borrowed prior to 06-03-1981 and documents are deposited subsequently, which do not require registration. The 1st defendant did not dispute his availing the loan prior to 06-03-1981 and depositing of title deeds on 06-03-1981 with an intention to create equitable mortgage. Further, it is noticed that the loan was availed at Yeleswaram Branch, which is not a notified branch and the title deeds were executed at Kakinada Branch. That itself shows amounts were borrowed not on the same date when the documents are executed. When Ex.A1 bears the signature of defendant No.1 and P.W.2 deposed that Union Bank of India, Kakinada is in the notified area and the bank has instructions to obtain the title deeds at Kakinada Branch even for the loans pertaining to Yeleswaram Branch, which has not been rebutted by the defendants that Yeleswaram Branch is also a notified Branch and the documents, if any, have to be deposited at that branch. Further, recitals in Ex.A23 to A28 show that the 1st defendant and his family members borrowed the amounts from the Union Bank of India, Yeleswaram Branch. Therefore, they are not the bona fide purchases of the property. The 4th defendant, who took active part in the transaction, has not entered into the witness box to examine P.W.1. Further, D.W.1 admitted that they submitted letter to the plaintiff—bank for one time settlement and the bank agreed on paying Rs.10,000/- accepting mortgage created by the 1st defendant. The concurrent findings recorded by the courts below are based on evidence, which do not give rise any question of law, much less substantial question of law, to admit the second appeal and it is accordingly dismissed at the admission stage. _________________ A.GOPAL REDDY, J. 25-06-2010 Murthy