IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN FRIDAY, THE 16TH JULY 2010 / 25TH ASHADHA 1932 AS.No. 235 of 1996() -------------------- OS.77/1989 of SUB COURT,KOTTARAKKARA .................... APPELLANT(S): -------------- CENTRAL BANK OF INDIA, BRANCH KOLLAM REPRESENTED BY ITS REGIONAL MANAGER. BY ADV. SRI.M.P.R.NAIR SRI.DEVAN RAMACHANDRAN SRI.DEEPAK T.NEDUNGADAN. RESPONDENT(S): --------------- 1. MRS.V.VSANTHAKUMARI, D/O.BHARGAVI, RESIDING AT KURUMPILAZHIKATHU VEEDU, EDAKKADAM MURI, KAREEPRA VILLAGE. 2. MRS.N.SANTHAMMA, D/O.BHARGAVI, RESIDING AT KURUMPILAZHIKATHU VEEDU, EDAKKADAM MURI, KAREEPRA VILLAGE. 3. MR.V.BABURAJAN, RESIDING AT 47/1432 (SREE) DESABHIMANI PRESS ROAD, KALOOR, COCHIN -682 017. R1, R2 BY SRI.C.V.VASUDEVAN R3 BY ADV.SRI.S.CHANDRASENAN SRI.P.K.SOMARAJAN THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 16/07/2010, ALONG WITH AS NO. 245 OF 1996, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: THOTTATHIL B.RADHAKRISHNAN & S.S.SATHEESACHANDRAN, JJ. ------------------------------------------- A.S.Nos.235 & 245 OF 1996 ------------------------------------------- Dated this the 16th day of July, 2010 JUDGMENT Thottathil B.Radhakrishnan, J. 1.These appeals arise from the decree in O.S.77/89 of the Sub Court, Kottarakkara. That suit was filed by the Central Bank of India which has filed A.S.235/96. The connected appeal A.S.245/96 is filed by the third defendant, arrayed as guarantor. 2.The plaintiff contended that it advanced a loan to the first defendant for the purpose of purchasing a bus and that defendants 1 and 2 created collateral security by deposit of title deeds of an immovable property belonging to them and that the third defendant, the brother of the first defendant, was the guarantor. AS.235/96 & 245/96 2 3.Defendants 1 and 2 filed a written statement taking the stand that the first defendant wanted to buy a TATA Benz Bus and the bank represented to them they could buy a 'Ford' vehicle and that loan could be granted on personal security rather than on any other collateral security. They contended that they got a Ford vehicle which ultimately turned out to be not worth. They pleaded that the alleged security documents were not created and they had issued different signed blank papers to the officers of the bank which have been utilised for the purpose of filing the suit. 4.The third defendant, arrayed as guarantor, filed written statement stating that he went along with his sister, the first defendant as it was told to him that he has to sign certain documents as a witness and he signed the documents under that belief and he never intended to be a guarantor for the transaction. AS.235/96 & 245/96 3 5.The court below repelled the plea of the third defendant that he is not the guarantor, however, found that the security documents were not appropriately created and that there is no equitable mortgage by deposit of title deeds. Resultantly, the suit was decreed against defendants 1 to 3 and their assets without giving any charge decree or for sale of the plaint B schedule property, which, according to the bank, was the subject matter of the mortgage. 6. In its appeal A.S.235/96, the bank challenges the decree to the extent it refuses a decree for sale of the mortgage properties. The third defendant has filed A.S.245/96 to the extent the decree finds him also liable as a guarantor. 7.We may first deal with the third defendant's appeal A.S.245/96. Adverting to his written statement, it can be seen that the plea raised by him was that his sister, the first defendant, approached him and wanted him to accompany AS.235/96 & 245/96 4 her to the bank to sign as a witness in certain documents and that he signed the documents relied on by the plaintiff on the belief that he is only a witness. The third defendant pleaded that he had not offered himself as a guarantor. He, therefore, contended that he is not liable for the plaint claim. 8.The first defendant, the sister of the third defendant, gave evidence regarding the circumstance in which the third defendant along with the second defendant executed the document. DW1 had stated before the court below that she wanted to purchase a TATA Benz bus and was prepared to remit the price of the vehicle and offer immovable property as security. She says that however, the Manager of the bank told her to purchase a Ford bus. She, accordingly, says that she agreed to the suggestion of the plaintiff's Manager and defendants 2 and 3 offered themselves as guarantors and it was accordingly, that the documents were signed. AS.235/96 & 245/96 5 9.The third defendant was examined as DW2. He gave evidence that he had a conversion with the Manager regarding the loan. He admitted that the terms of Ext.A3 were feasible and he signed Ext.A3 after having understood that it is a guarantee form. Under such circumstances, the court below found that defendants 2 and 3 had executed Ext.A4 knowing that they were put as guarantors for the repayment of the loan sanctioned by the plaintiff to the first defendant. 10.We further notice that the third defendant is not an illiterate person. He was an Engineer in the Cochin Shipyard. He had stated in his cross examination that he would not sign documents without reading and understanding its contents. Though he had said before the court below that he had not understood the purpose of the document when he signed it, we are unable to appreciate that stand of the third defendant. He, as already noted, had stated that there was a discussion AS.235/96 & 245/96 6 between the parties and the Manager of the bank. We are, therefore, inclined to take the view that the court below had rightly appreciated the evidence and the decree passed against the third defendant does not warrant interference. 11.Adverting to the appeal of the bank, A.S.235/96, it has to be noted that the plea of defendants 1 and 2 in relation to the creation of the equitable mortgage as collateral security was that the first defendant was called upon to furnish personal security and the defendants were compelled to sign certain papers without revealing details of the documents. According to defendants 1 and 2, they were unaware of the fraud played by the plaintiff on them. They took the stand that they have not executed any agreement and no guarantee was furnished. The did not, however, deny the fact that they have deposited the title deeds of the property in question with the bank. Adverting to the documentary evidence, it can be seen that the bank had produced the original of the AS.235/96 & 245/96 7 documents standing in the name of defendants 1 and 2 before the court below. The fact that they had deposited the documents evidence the mortgage. There was also no specific plea for defendants 1 and 2 in their written statement that they have not created any mortgage by deposit of title deeds. Therefore, the court below erred in refusing the decree to be for sale of the suit properties to recover the plaint claim and charged on the plaint B schedule property. 12.For the aforesaid reasons, A.S.235/96 is entitled to succeed and A.S.245/96 is liable to be dismissed. In the result, (i) A.S.No.245/96 is dismissed. (ii) A.S.No.235/96 is allowed modifying the decree passed by the court below by allowing the plaintiff to AS.235/96 & 245/96 8 recover the decree amount by sale of the plaint B schedule property. The appellant will be entitled to costs of appeal A.S.No.235/96 from defendants 1 and 2. Sd/- THOTTATHIL B.RADHAKRISHNAN, Judge. Sd/- S.S.SATHEESACHANDRAN, Judge. kkb.16/07.