IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN FRIDAY, THE 29TH OCTOBER 2010 / 7TH KARTHIKA 1932 AS.No. 337 of 1995 --------------------------- [OS.NO.143/1993 OF SUB COURT, QUILANDY] .................... APPELLANT IN A.S/PLAINTIFF IN SUIT: -------------------------------------------------------- SYNDICATE BANK, QUILANDY, REPRESENTED BY THE BRANCH MANAGER, SYNDICATE BANK, QUILANDY. BY SRI.S.V.BALAKRISHNA IYER, SENIOR ADVOCATE, ADV.SRI.K.JAYAKUMAR. RESPONDENTS IN A.S/DEFENDANTS IN SUIT: ------------------------------------------------------------------ 1. E.K. KAMALAVATHI, D/O. LATE RAMAN, RESIDING AT ELIVETTIKANDI HOUSE, KOTHAMANGALAM, QUILANDY, KOZHIKODE DISTRICT. 2. K.M. ASOKAN, S/O. APPU, GOLDSMITH, RESIDING AT KUNNATH MEETHAL HOUSE, PANTHALAYINI, P.O. KOYILANDI, KOZHIKODE DISTRICT. R1 BY ADVS. SRI.THOMAS ANTONY, SRI.JAMALUDHEEN K.M, R2 BY ADV. SRI.A.J.JOSE AEDAIODI. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 29/10/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. x M.N. KRISHNAN, J. = = = = = = = = = = = = = = = A.S. NO. 337 OF 1995 = = = = = = = = = = = = = = = Dated this the 29th day of October, 2010. J U D G M E N T This appeal is preferred against the judgment and decree passed by the Subordinate Judge, Koyilandy in O.S.143/93. The suit is one for realisation of the amount. The brief facts necessary for the disposal of the appeal are stated as follows. 2. The first defendant to start with obtained a loan from the plaintiff's Bank with gold ornaments as security. The 2nd defendant in the suit is an appraiser. It was later revealed that the gold ornaments pledged were spurious gold ornaments and therefore criminal actions were initiated against the persons for cheating the Bank. At the same time the Bank also thought for having a solution to the problem A.S. 337 OF 1995 -2- without loss of money and at the same time to see that the amount is properly secured. It is on that basis the first defendant filed an application for a fresh loan and the Bank sanctioned the same and towards the loan transaction the first defendant had deposited her title deeds thereby creating an equitable mortgage. Since the amount is not paid back the suit is filed for the realisation of the amount due. 3. On the other hand, defendants would contend that no amounts has been borrowed as alleged in the plaint, no security has been furnished and therefore they are not liable to pay any amount. The trial court on an analysis of the materials found against the plaintiff and dismissed the suit. It is against that decision the plaintiff has come up in appeal. A.S. 337 OF 1995 -3- 4. Heard. The point that arises for determination is whether the plaintiff is entitled to realisation of the amount as prayed for. I had perused the documents as well as the oral evidence tendered in this matter with the help of the learned counsel for the appellant. It has to be stated that the original transaction between the first defendant and the plaintiff to start with was on the basis of pledging of gold ornaments. It was found subsequently that the appraiser who is the 2nd defendant in the suit had colluded with the borrower and therefore on the basis of spurious gold ornaments as security amounts had been advanced. The Bank moved petitions for criminal prosecutions and at the same time thought about the way to get money back with proper security. A.S. 337 OF 1995 -4- 5. Now Exts.A1 to A5 documents would relate to the first transaction. Ext.A1 is a specimen signature card of the first defendant. Ext.A2 is a true extract of the accounts relating to the said loan transaction. Ext.A3 is a request for loan on the security of gold ornaments. Ext.A5 is a copy of the account. It can be seen from Ext.A5 that the loan account is closed on 27.8.90. I refer to these dates because it has got specific importance while considering this case. Now Ext.A6 is the document relating to the complaints filed by the Bank with the Sub Inspector of Police regarding the spurious nature of the ornaments pledged before the Bank. Ext.A7 is a loan application filed by the first defendant for advancement of a sum of Rs.15,000/- for the purpose of discharging a debt. She is introduced by the co-obligant who A.S. 337 OF 1995 -5- is none other than the 2nd defendant. Ext.A8 is articles of agreement which details the reasons etc. for the loan transaction wherein the first defendant and the 2nd defendant had affixed their signatures. Ext.A9 is a receipt signed by the first defendant regarding the receipt of Rs.15,000/-. Ext.A10 is a communication received whereby an authorisation is given to debit monthly instalment of Rs.625/-. Ext.A11 is the true extract of the account. Ext.A12 is a document relating to the deposit of title deeds and Ext.A13 is the suit notice. 6. Now the defence taken up by the defendant is that of a total denial with respect to the second transaction. It has been brought before the Court that the first defendant with the connivance of the 2nd defendant had pledged gold ornaments and taken a loan. The fraud was A.S. 337 OF 1995 -6- detected by the Bank authorities along with the other cases. Then the Bank thought it wiser to have proper security for the loan. So one of the modus operandi adopted by the Bank was to advance a further loan with the sole purpose of discharging the earlier loan and also take proper security for the second loan so that the public money is properly protected. One cannot hold that it is incorrect. 7. Now I may look into the evidence of DW1 as well. DW1's evidence would reveal that whenever inconvenient questions are put she wanted to evade answering the same. Ultimately she had admitted:............................ ............................................. ............................................ ........................................... ........................................... A.S. 337 OF 1995 -7- When the receipts signed by her was shown to her she did not answer. The answer was by weeping. She also admit that the Bank authorities have no vengeance against her. So there is admission before Court. In the cross examination for the 2nd defendant also she had admitted that while the documents were pledged she had signed. So the cumulative effect of the answers in the cross-examination would reveal that she had signed in Ext.A8 that she had not denied her signature in Ext.A9 and she had admitted her signature in the document relating to the deposit of title deeds. When these three factors are admitted, then the case projected by the Bank is totally proved. Over and above that the evidence of PW1 also is in line with the case set up by the plaintiff and therefore it has to be held that the Bank has succeeded in A.S. 337 OF 1995 -8- proving the case. It has to be stated the loan amount was advanced on 27.8.90, the consideration of the suit amount was used for the purpose of discharging the earlier liability obtained by pledging the spurious gold ornaments. So virtually after wiping of that liability a new loan transaction is entered into which is supported by proper application, proper agreement, proper receipt and also by deposit of title deeds. The finding that the transaction is not proved and everything is suspicious etc. does not appear to be correct and I feel that the learned Subordinate Judge had been carried away by seeing the weeping of the woman in the box. Therefore I hold that the plaintiff has successfully established the case and therefore it is entitled to a decree. A.S. 337 OF 1995 -9- 8. I think the rate of interest claimed is very high and considering the peculiar facts and circumstances of the case I find that an interest of 10% would suffice from 14.7.93 till realisation of the amount. In the result, a decree is passed as follows. The plaintiff is given a decree for realisation of Rs.28,640/- with 10% interest on the principle sum of Rs.15,000/- from the date of suit till realisation from the defendants by sale of the property shown in the plaint schedule and personally. If the sale proceeds are not sufficient to discharge the decree debt the plaintiff is at liberty to proceed personally for realisation of the balance amount from the defendants. The plaintiff is also entitled to get the costs incurred in the suit. Considering the facts and circumstances of the A.S. 337 OF 1995 -10- case I direct the parties to bear their respective costs in the appeal. M.N. KRISHNAN, JUDGE. ul/- A.S. 337 OF 1995 -11- M.N. KRISHNAN, J. = = = = = = = = = = A.S. No.337 OF 1995 = = = = = = = = = = = J U D G M E N T 29th October, 2010.