IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID THURSDAY, THE 23RD SEPTEMBER 2010 / 1ST ASWINA 1932 FAO.No. 138 of 2009() --------------------- AS.52/2001 of ADDITIONAL DISTRICT COURT (ADHOC), MANJERI OS.68/1998 of SUB COURT, TIRUR .................... APPELLANT/2ND RESPONDENT/2ND DEFENDANT: ------------------------------------------------------- KANNANCHATH PRABHAKARAN NAIR, S/O.MADHAVI AMMA, TIRUR TALUK, THRIKANDIYUR AMSOM DESOM. BY ADV. MR.SAJU.S.A RESPONDENTS/APPELLANT & R3 TO R5/PLAINTIFF & LRs OF DECEASED D1: ------------------------------------------------------------------------------------ 1. PERINGOTTUKARA NAMBOODIRI YOGAKSHEMA SABHA, ANTHIKKAD, BY ITS PRESENT SECRETARY, PURUSHOTHAMAN NAMBOODIRI, S/O.JANARDHANAN NAMBOODIRI. 2. SAVITHRI AMMA, W/O.LATE RAVUNNI NAIR, MOTHER OF MALAYATH MURALEEDHARAN, TIRUR AMSOM DESOM, SOUTH ANNARA, TIRUR TALUK. 3. RADHADEVI, W/O.LATE MALAYATH MURALEEDHARAN, TIRUR AMSOM, DESOM, SOUTH ANNARA, TIRUR TALUK. 4. NANDAKUMAR, S/O.LATE MALAYATH MURALEEDHARAN, (MINOR), REPRESENTED BY MOTHER GUARDIAN RADHA DEVI, W/O.LATE MALAYATH MURALEEDHARAN, TIRUR AMSOM, DESOM, SOUTH ANNARA, TIRUR TALUK. ADV. MR.N.M.MADHU FOR R1 MS.C.DEVIKA RANI KAIMAL FOR R1 THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY HEARD ON 23/09/2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: FAO.No. 138 of 2009 ORDER ON I.A.NO.2003/2009 DISMISSED. 23.9.2010 SD/- HARUN-UL-RASHID, JUDGE. // TRUE COPY // P.A TO JUDGE. HARUN-UL-RASHID, J. ------------------------ F.A.O.No.138 Of 2009 ---------------------- Dated this the 23rd day of September, 2010. J U D G M E N T The second defendant in O.S.No.68 of 1998 on the file of the Sub Court, Tirur is the appellant. The appeal is directed against the order of remand passed by the Additional District Court-I, Manjeri in A.S.No.52 of 2001. Suit was tried along with O.S.No.27 of 2000 and a common judgment was passed by the Sub Court, Tirur dismissing both suits. The appeal preferred against O.S.No.68 of 1998 namely, A.S.No.52 of 2001 was allowed and the case was remanded to the trial court for fresh consideration. Aggrieved by the same, the second defendant has come up in appeal before this Court. Parties hereinafter are referred to as the plaintiff and defendants as arrayed in the suit. 2. In both suits, parties are the same. Plaintiff is a society registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act and is doing money lending business. It is the plaintiff's case that the first defendant availed loan from the plaintiff Society and the second defendant was the guarantor for the loan amount. The first defendant F.A.O.No.138 Of 2009 ::2:: submitted Ext.A3 application requesting the plaintiff to grant a loan for Rs.1.5 Lakhs to expand his betel leaf business. It is the plaintiff's case that out of Rs.1.5 Lakhs Rs.5,000/- was disbursed to him on 6.2.1998 and the balance amount of Rs.1.45 Lakhs on 13.2.1998, that on both these occasions, necessary vouchers, stamped receipts and stamped pro-notes were executed by the defendants and entrusted with the Manager of the Branch concerned. It is the plaintiff's case that the loan application will be considered by the Director Board and in certain cases, loan amount will be given in two instalments. Ext.A5 is the original mortgage deed executed by the second defendant guarantor offering his property as security for the loan amount. According to the second defendant Ext.A5 executed in relation to availing a loan of Rs.5,000/- only. Ext.A9 is the original title deed of the second defendant, Exts.A10 and A11 are the revenue receipts and possession certificate with regard to Ext.A9 property. Plaintiff as PW1 testified that Exts.A12, A14 and A23 are the pro- note, acknowledgement, stamped receipt and voucher executed and entrusted with the Manager of the plaintiff Society by the F.A.O.No.138 Of 2009 ::3:: defendants at the time of accepting the loan amount of Rs.5,000/- on 6.2.1998. Exts.A15, A17 and A24 are the pro- note, acknowledgement, stamped receipt and voucher obtained from the defendants at the time of disbursement of loan amount of Rs.1.45 Lakhs on 13.2.1998. Exts.A18(a) & A18(b) are the relevant entries in the ledger book. The trial court found that Ext.A18 series lend assurance about the disbursement of the said amount on the respective dates. Exts.A19 to A23 are the office copies of the notices sent to the defendants calling upon them to pay the amount. 3. The appellant, who is the second defendant admitted the loan transaction claimed by the plaintiff in O.S.No.27 of 2000. In the written statement filed in the present suit namely, O.S.No.68 of 1998, the second defendant had taken the stand that he was never a guarantor for Rs.1.45 Lakhs availed by the first defendant. The appellant contended that at the time of availing of loan amount of Rs.5,000/- by the first defendant he and the first defendant signed in a number of papers, he apprehends that such papers were used for the liability cast upon F.A.O.No.138 Of 2009 ::4:: him due to the fraud committed by the first defendant and the plaintiff. 4. Plaintiff testified before the court that at the time of granting loan of Rs.1.45 Lakhs to the first defendant, second defendant had deposited his title deed. He has also produced Exts.A15 to A17 and A24 which are pro-notes, acknowledgements, stamped receipts and vouchers respectively obtained from the defendants at the time of disbursement of loan of Rs.1.45 Lakhs on 13.2.1998. 5. The trial court accepted the version of DW1. The appellant examined as DW1 testified that he never stood as guarantor for Rs.1.45 Lakhs. The trial court observed that the non-production of memorandum of deposit of title deed by the plaintiff lends assurance to the contention of the second defendant. The trial court also noticed that the column to be used for signature of the guarantor in Ext.A2 application is blank and therefore concluded that the second defendant has not put his signature as guarantor for the entire loan amount. The court further held that these circumstances including the non- F.A.O.No.138 Of 2009 ::5:: production of memorandum of deposit of title deed and the non- execution of a separate mortgage deed for Rs.1.45 Lakhs lends support to the contention of the second defendant that he has been fraudulently implicated as a guarantor for such loan. The court further held that even though the signature of the second defendant is seen in the pro-note it casts no liability on the second defendant. On the basis of the aforesaid conclusions, the trial court held that the first defendant alone is liable for the loan of Rs.1.45 Lakhs and there is no proof in support of the case that the second defendant is guarantor for the said loan amount and therefore he is not liable to pay the amount claimed by the plaintiff. The trial court decreed O.S.No.27 of 2000 and partly decreed O.S.No.68 of 1998 directing the first defendant in the suit to pay to the plaintiff an amount of Rs.1.45 Lakhs together with interest. 6. The plaintiff preferred A.S.No.52 of 2001. The lower appellate court appreciated the evidence on record. The lower appellate court observed that even though the name of the second defendant is shown in Ext.A3 as a guarantor and the F.A.O.No.138 Of 2009 ::6:: property of the second defendant is described as the security in Ext.A3, signature of the second defendant is absent in Ext.A3. The appellate court further observed that relying on Ext.A3 alone is not sufficient to discard the version of the plaintiff and to accept the version of the second defendant. The appellate court examined the question as to whether the plaintiff had adduced other evidence in support of the contention that the second defendant stood as a guarantor to the loan transaction. The lower appellate court found that the title deed of the second defendant is in the custody of the plaintiff. There is no explanation for the second defendant as to how the title deed came to the hands of the plaintiff. Plaintiff's case is that the title deed and other documents are collected from the second defendant at the time of loan transaction. The appellate court noticed that Ext.A9 title deed, A10 tax receipt and A11 possession certificate were produced by the plaintiff. By production of all these documents the appellate court observed that if it was only a simple mortgage it is not necessary to retain title deeds, basic tax receipts etc. of the mortgagor by the F.A.O.No.138 Of 2009 ::7:: mortgagee. In the light of the discussion as stated above the appellate court found that there is some justification for the plea raised by the plaintiff that an equitable mortgage was created by he second defendant by depositing the title deeds. The appellate court also observed that memorandum of deposit of title deeds has not been produced before the court by the plaintiff. The lower appellate court also noticed the fact that Ext.A5 pro-note for Rs.1.45 Lakhs, Ext.A6 acknowledgement on debt and Ext.A17 receipts contains signature of the second defendant. These documents were seen executed on 13.2.1998, the date, according to the plaintiff, on which the first defendant availed loan of Rs.1.45 Lakhs. When examined as DW1, the second defendant admitted that the signature contained in Exts.A15, A16 and A17 are his signatures. The appellate court observed that the second defendant is legally bound to explain as how his signatures happened to come in Exts.A15, A16 and A17 documents. In these circumstances, the lower appellate court held that the court cannot plainly accept the contention of the second defendant that he is not a guarantor for the loan covered F.A.O.No.138 Of 2009 ::8:: by Ext.A15 promissory note and other corresponding documents with respect to the said debt are fabricated. In these circumstances, the appellate court held that the plaintiff cannot be non-suited straight away and therefore he should be given an opportunity to substantiate the contention that the second defendant stood as a guarantor for the debt of Rs.1.45 Lakhs and executed documents in that capacity as a guarantor. The court by the impugned judgment granted both sides opportunity to adduce evidence in support of their respective contentions. The court observed that the second defendant will have to clearly establish as to how Exts.A15, A16 and A17 documents are fabricated, why he had put his signature in the admitted document and in the disputed documents with two different types of inks and two different pens. 7. In the light of the facts, circumstances and evidence which I have referred to in detail, I am of the view that the lower appellate court is justified in remanding the case. Both sides can raise all the contentions in the trial court . The trial court shall dispose of the case untrammelled by any of the observations F.A.O.No.138 Of 2009 ::9:: made in the impugned judgment and the observations made by this Court. In the result, appeal fails and accordingly, dismissed. No order as to costs. HARUN-UL-RASHID, Judge. bkn/-