IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN THURSDAY, THE 6TH APRIL 2010 / 16TH CHAITHRA 1932 AS.No. 303 of 1995(D) OS.48/1988 of SUB COURT,KOTTARAKKARA .................... APPELLANT/PLAINTIFF: THE FEDERAL BANK LIMITED, ALUVA REPRESENTED BY THE BRANCH MANAGER, KADAKKAL BY ADV. SRI.N.P.SAMUEL SRI.P.J.AYPPACHAN RESPONDENTS/DEFENDANTS: 1. P.N.SIVARAJAN, S/O NANU, PINCI HOUSE (Died) MISSION KUNNU, KADAKKAL VILLAGE KOTTARAKKARA TALUK, KOLLAM (It is recorded that the 1st respondent/defendant died and the 4th respondent/defendant (wife of deceased R1) substantially represents the estate of the deceased 1st respondent/defendant and the other legal representatives (the children of deceased R1) vide order dated 6-4-2010 in I.A.No.2268/09) 2. K.SREEDHARAN, S/O KESAVAN, SALIL NIVAS AYIRAKUZHY, CHITHARA VILLAGE KOTTARAKKARA TALUK, KOLLAM 3. SUDHAKARAN, S/O NARAYANAN, EDAYILA VEEDU AYIRAKUZHY, CHITHARA VILLAGE KOTTARAKKARA TALUK, KOLLAM 4. RADHAMONY, W/O P.N.SIVARAJAN PINCI HOUSE, MISSIONKUNNU NILAMEL, KADAKKAL VILLAGE KOTTARAKKARA TALUK, KOLLAM 5. RAVEENDRAN, KUZHIVILA THADATHIL PUTHEN VEEDU KOCHALUMOODU, CHITHARA VILLAGE KOTTARAKKARA TALUK , KOLLAM 6. BABU, S/O NARAYANAN, KUZHIVILA THADATHILPUTHEN VEEDU KOCHALUMOODU, CHITHARA VILLAGE KOTTARAKKARA TALUK, KOLLAM ADV. SRI.V.N.ACHUTHA KURUP ADV. SRI.M.K.DAMODARAN ADV. SRI.P.K.VIJAYAMOHAN THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 16/07/2009 & 06/04/2010, THE COURT ON 06/04/2010 DELIVERED THE FOLLOWING: A.K.BASHEER & P.S.GOPINATHAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A.S.No.303 OF 1995 - D - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - JUDGMENT Basheer, J: Appellant is the plaintiff in a suit for realisation of money. Appellant/bank filed the suit contending interalia that defendant No.1 was granted overdraft facility of Rs.1,45,000/- for the purpose of his business. Defendant Nos.1 to 6 had jointly executed a promissory note in favour of the plaintiffs as security for the loan apart from an agreement on the instant date. Defendant Nos.2, 3 and 4 had also created equitable mortgage in respect of 'B' schedule property in favour of the plaintiff by deposit of title deeds. On March 9, 1987 a sum of Rs.1,45,000/- was paid to the defendants as overdraft facility on their undertaking that the amount will be repaid in ten monthly instalments starting from May 9, 1987. But the amount was not repaid despite demand. It was in the above circumstances, that the suit was instituted to recover a sum of Rs.1,72,311.50/- being the balance amount due as on March 19, 1988 with a prayer for grant of a decree to realise the said amount by sale of the 'B' schedule property. 2. Defendants 1 and 4, who are husband and wife, in their joint written statement, admitted that overdraft facility had been availed of from the plaintiff bank as alleged in the plaint. It was further admitted that the A.S.No.303 OF 1995 - D :: 2 :: above facility was sought for in connection with the Abkari business of defendant No.1. It was also admitted that a sum of Rs.1,45,000/- was deposited in the bank in order to avail of the overdraft facility and draw a sum of Rs.2,90,000/- from the bank to participate in the abkari auction scheduled to be held on March 9, 1987. But defendant No.1 was not successful in the bid and therefore, the amount was not utilised. These defendants further admitted that an equitable mortgage in favour of the plaintiff bank was created by deposit of title deeds along with defendants 2 and 3. 3. Defendants 2, 3, 5 and 6 in their joint written statement admitted that they were sureties of defendants No.1 in the bank transaction referred to above. They also admitted that they had executed a promissory note in favour of the plaintiff bank. But according to these defendants, they had not availed of the loan from the plaintiff bank and it was in fact defendant No.1 who had availed of the overdraft facility. In short, these defendants disputed and denied their liability to the plaintiff bank. 4. The court below framed the following issues: 1. Is the suit maintainable? 2. Is the plaintiff entitled to realise the plaint amount from defendants? 3. Is the equitable mortgage relied on by the plaintiff true? A.S.No.303 OF 1995 - D :: 3 :: 4. Is the interest claimed excessive? 5. What if any is the correct amount due to the plaintiff? 5. An officer of the bank was examined as PW1 on the side of the plaintiff. Exts.A1 to A13 were also marked. DW1 to DW3 were examined and Ext.B1 was marked on the side of the defendants. Exts.X1 to X5 were marked in the case as Court Exhibits. 6. The court below, while dealing with the primary issue, namely, whether the plaintiff was entitled to realise the amount from the defendants held that the bank had failed to produce the best possible evidence, namely, the application for issue of demand draft to show that such a draft for Rs.2,90,000/- was in fact issued to defendant No.1. The court below further held that no document was produced by the bank to show that defendant No.1 had in fact made any request for issue of demand draft from his account. 7. As regards issue No.2, namely, whether defendants 2, 3 and 4 had created equitable mortgage in favour of the plaintiff bank by deposit of title deeds, the court below answered the question in the affirmative. It was noticed by the court below that the defendants had not denied the execution of Exts.A5, A5(a), A5(b) memoranda of deposit of title deeds executed by these defendants. It was also held by the court below that the interest A.S.No.303 OF 1995 - D :: 4 :: claimed by the plaintiffs at the rate of 17.5% was sustainable. However, the suit was dismissed, since according to the court below the plaintiff had not produced the relevant documents to show that defendant No.1 had in fact submitted an application for issue of a demand draft in his favour. 8. It is not in dispute that defendant No.1 had made a written request for grant of overdraft facility to him for his abkari business for the year 1987-88. It is also beyond controversy that the bank had sanctioned the above facility and as requested by the bank, defendant No.1 had deposited a sum of Rs.1,45,000/- in the bank in order to enable defendant No.1 to withdraw a sum of Rs.2,90,000/- from the bank. The specific case of the bank is that on March 9, 1987 the demand draft for Rs.2,90,000/- was issued to defendant No.1 so that he could participate in the abkari auction scheduled to be held on March 9, 1987. It is significant to note that the defendants did not have a case that a demand draft for Rs.2,90,000/- was not in fact issued by the bank. But from the pleadings of the parties there appears to be some conflict. While defendant Nos.1 would contend that he had not taken out a demand draft in his name from the plaintiff bank for a sum of Rs.2,90,000/-, it is the case of defendants 2, 3, 5 and 6 that they had not also drawn any money from the account of defendant No.1. Defendant No.1 alleged collusion between the plaintiff and defendant No.3. Per contra, it was contended by defendant Nos.2, 3, 5 and 6 that the plaintiff A.S.No.303 OF 1995 - D :: 5 :: bank was colluding with defendant No.1 and trying to fasten the liability on them. 9. As mentioned earlier, defendant No.1 in his written statement admitted that he deposited a sum of Rs.1,45,000/- in his account on March 9, 1987. It is also conceded by him that the bank had in fact credited a sum of Rs.1,45,000/- on the day when the said deposit was made by him. He further admitted that he had participated in the auction on March 9, 1987. But his bid was not successful and therefore there was no need for him to avail of the overdraft facility. But the statement of accounts produced by the bank clearly revealed that the demand draft for Rs.2,90,000/- was issued from the account of defendant No.1. This fact was also not disputed by the defendants. As has been noticed already, while defendant No.1 contended that the bank manager had issued the demand draft for Rs.2,90,000/- in favour of defendant No.2/defendant No.3, the case of these defendants was that they had not drawn any money from the bank and it was only defendant No.1 himself who had availed off the facility. 10. It is true that the bank did not produce the application form submitted by the account holder to issue the demand draft in question. But the statement of account (Ext.A4) clearly revealed that on March 9, 1987 a demand draft for Rs.2,90,000/- was issued from the account of defendant No.1. The fact that defendant No.1 could participate in the auction will also A.S.No.303 OF 1995 - D :: 6 :: indicate that such a demand draft was in fact issued from the bank. The evidence of DW3 who was an ex-Abkari official will show that a demand draft for Rs.2,90,000/- was in fact produced before the Excise authorities on the date of the auction. But DW3 stated before the court that he could not say who had produced the demand draft. According to him the relevant records were transmitted to the departmental officers after the auction. 11. In this context, the evidence of defendant No.1 who was examined as DW1 may have to be examined. In his deposition, he admitted that defendant no.3 was his business partner in abkari business. It was further admitted by him that during March 1987 he and defendant No.3 were in fact conducting certain toddy and arrack shops as partners. But according to him, during 1987-88 he did not do any partnership business with defendant no.1, though during the previous year, defendant no.3 was his partner in abkari business. Ext.A10 and A11 clearly revealed the defendant no.1 and 3 were partners in abkari business. Similary, Ext.A12 also clearly established that defendant no.3 was a partner of defendant no.1. The evidence of DW3, an excise official, will also clearly establish that during 1986-87 shop numbers 29, 31 and 32 were being run by defendant no.1. In short, the evidence of Dws1 to 3 clinchingly established that defendants 1 and 3 were partners in abkari business atleast during the year 1986-87 and earlier. A.S.No.303 OF 1995 - D :: 7 :: 12. As has been noticed already, in March 1987 when defendants availed of the overdraft facility defendant no.1 and 3 were doing partnership business. In his evidence defendant No.3 who was examined as DW2 candidly admitted that he was one of the sureties to the loan transaction between the plaintiff and defendant No.1. He had also admitted execution of Ext.A1 promissory note, Ext.A2 agreement etc. But according to him, his signature was obtained in blank forms and papers. In his deposition also, this defendant contended that the plaintiff had been colluding with defendant no.1. Though he was a surety, he had not drawn the sum of Rs.2,90,000/- from the bank as alleged in the plaint. 13. The materials available on record and the evidence of the defendants referred to above will undoubtedly show that plaintiff bank had extended the overdraft facility as requested by defendant no.1. It is also beyond controversy that the bank had issued demand draft for Rs.2,90,000/- on March 9, 1987. As mentioned by us earlier, while defendant no.1 would contend that he had not taken out a draft from the bank, defendant no.2,3,5 and 6 will contend that the bank had not issued the draft to them. It is true that PW1, who was examined in the court on the side of the bank, was not working in the branch concerned at the relevant time. But he had given evidence with reference to the documents maintained in the bank in connection with the above loan transaction. Ext.A4 statement of accounts A.S.No.303 OF 1995 - D :: 8 :: was maintained by the bank in the course of its business. The documents produced by the Bank were not disputed or challenged by the defendants in any manner known to law. Execution of Ext.A1 promissory note and Ext.A2 agreement was not disputed or denied by the defendants at all. As rightly found by the court below, defendants 2, 3 and 4 had created equitable mortgage in favour of the bank by deposit of title deed. In short, all the materials produced by the bank and also Exts.x1 to x3 will clearly show that demand draft was in fact issued by the bank and one of the defendants had produced the same before the Excise authorities. Of course the bank had not produced the application form submitted by the defendant no.1 for issue of the draft. But that in our view will not mean that the plaintiff had failed to substantiate its case. We do not find any reason to discard the oral and documentary evidence adduced by the plaintiff in support of its claim, especially, on the face of the wholly untenable contentions raised by the defendants as indicated above. A mere perusal of the written statement filed by the defendants will show that they were trying to hoodwink the court. In that view of the matter, the court below, in our view, was not justified in refusing to grant a decree in favour of the plaintiff. Therefore, the finding entered by the court below on issue no.2 is liable to be vacated. We do so. It is held that the plaintiff is entitled to get a decree to realise the plaint amount from the defendants. A.S.No.303 OF 1995 - D :: 9 :: 14. The finding entered by the court below at issue No.3 with regard to creation of equitable mortgage in favour of the plaintiff has not been seriously contested before us. Similarly, going by the recitals in Ext.A1 the defendants had agreed to pay interest at the rate of 17.5% per annum till the date of institution of the suit. In that view of the mater, as rightly held by the court below the defendants are liable to pay interest as agreed by them to the bank. Therefore, the finding entered by the court below on issue Nos.3 and 4 are upheld. 15. In the result, appeal is allowed. The suit is decreed as prayed for. The appellant/plaintiff is entitled to recover the plaint claim as prayed for. However, the appellant shall be entitled to get interest only at the rate of 6% from the date of decree till the date of realisation. Defendant shall pay cost through out. (A.K.BASHEER, JUDGE) (P.S.GOPINATHAN, JUDGE) 16-7-2009 jes 16. This appeal is posted before us “to be spoken to,” since it has been omitted to mention in the judgment about the death of defendant No.1 during the pendency of the appeal. A.S.No.303 OF 1995 - D :: 10 :: It may be noticed that after the death of defendant No.1, appellant filed I.A.No.2268 of 2009 stating that the other legal representatives viz., the children of defendant No.1 need not be impleaded in this appeal since defendant No.4, the wife of defendant No.1, is already on the party array . Moreover, she had mortgaged her property also by deposit of title deeds along with defendant No.1 for availing of the loan. Thus defendant No.4 substantially represents the estate of deceased defendant No.1 and the other legal representatives. The above application has been allowed since respondent No.4 did not have any objection as regards the prayer made by the appellant in this regard. (A.K.BASHEER, JUDGE) (P.S.GOPINATHAN, JUDGE) an 06-04-2010 A.S.No.303 OF 1995 - D :: 11 :: A.K.BASHEER & P.S.GOPINATHAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A.S.No.303 OF 1995 - D - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - JUDGMENT Dated this the 6th day of April, 2010