Mandakini Hule vs Lachman Jiwnani
2007 Latest Caselaw 1104 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The plaintiff, has filed the present suit under Order XXXIV Rule 4 of the Code of Civil Procedure, 1908 (hereinafter referred to as the said Code) praying for a preliminary decree directing the defendant to pay the plaintiff an amount of Rs. 20,45,020/- along with pendente lite and future interest thereon @ 7.5 per cent per annum and in case of default on the part of the defendant for the sale of property bearing No. 30, Mayfair Gardens, New Delhi (for short the said property) which is stated to have been mortgaged with him by the defendant who is stated to be the owner of the said property.

2. The plaintiff claims that the defendant had mortgaged the said property with him for a sum of Rs. 6,00,000/- on 15.04.1985 and subsequently for a sum of Rs. 11,00,000 on 3.06.1987. It is averred that the defendant had executed a promissory note in respect of a loan of Rs. 6,00,000 advanced to him by the plaintiff promising to repay the same with interest @ 18 per cent per annum.

3. The defendant is stated to have deposited the title deed of the said property being the original perpetual sub-lease deed with the intention to create an equitable mortgage on the said property to secure the loan amount. It is also claimed that the defendant wrote and executed a memorandum dated 15.04.1985 reciting the factum of having taken a loan of Rs. 6,00,000 on interest of 18 per cent per annum and having deposited the title deeds of the said property with the intent to create an equitable mortgage on the said property in favor of the plaintiff.

4. It has been averred in the plaint that the defendant did not pay the amount due despite reminders from the plaintiff. In the year 1987, when the plaintiff pressed for the refund of the amount due, the defendant put the plaintiff into actual physical possession of the said property after which the plaintiff started living in the said property from May, 1987.

5. It is alleged that the defendant thereafter started harassing the plaintiff who also lodged a complaint with the local police. However, the complaint is stated to be not available with the plaintiff. It is further alleged that at the instance of a common friend, Sh. Romesh Sharma the plaintiff entered into a lease agreement in respect of the said property in favor of one Mr. Rajender Sharma, stated to be the nephew of Sh. Romesh Sharma

6. The plaintiff claims that a meeting was arranged between herself and the defendant by some common friends and during the course of the said meeting, the defendant agreed to pay a sum of Rs. 11,00,000 to the plaintiff within a period of one month (by 02.07.1987) whereupon the plaintiff was to quit, vacate and hand over possession of the said property to the defendant. A settlement agreement in the aforesaid terms is stated to have been executed at Delhi whereunder the defendant acknowledged the liability of Rs. 11,00,000 as also the factum of possession of the plaintiff.

7. The plaintiff alleges that the defendant was against the plaintiff being in possession of the said property and kept pressurizing the plaintiff to vacate the said property. The defendant did not pay the amount on or before the said date.

8. The defendant is stated to have told the plaintiff that he would sell the said property to repay the amount due. It is claimed that the defendants showed the said property to a number of buyers during the period July-August, 1987 and during the beginning of August, 1987, the defendant impressed upon the plaintiff that he has found a buyer for the said property. It is averred that on the pretext that the buyer wanted to see the original title deeds, the defendant took the same back from the plaintiff assuring her that the deeds would be returned to her and would remain with her till the payment of the entire amount due. However, neither the papers were returned and nor any payment was made.

9. It is averred that on demanding the money/deeds, she faced resistance and threats from the defendant. The common friend Sh. Romesh Sharma offered to help her and when she was to visit Bombay, Sh. Sharma is stated to have assured her of ensuring the safety of the said property. However, the plaintiff alleges that Sh. Romesh Sharma entered the suit property and thereafter when the plaintiff visited the said property threatened the plaintiff and asked her to leave the same. It has been further alleged that Sh. Sharma duped the plaintiff of valuable goods, jewelry etc worth Rs. 3-3.5 lacs.

10. The plaintiff averred that despite repeated reminders from the plaintiff no amount was paid either towards the loan or towards the interest thereon. It is thus claimed that the defendant is liable to pay the principal amount of Rs. 11,00,000 along with interest @ 7.5 per cent per annum of Rs, 9,45,020 (till 15.12.1998) and also future and pendente lite interest.

11. On 16.02.1999, the defendant appeared through counsel and time was granted for the filing of the written statement and reply to the applications. On 03.05.1999, the defendant was again represented but the written statement and reply had not been filed. Last opportunity was granted for filing of the written statement and reply subject to deposit of costs of Rs. 1000. Thereafter on 24.01.2000 and 28.03.2000, none appeared on behalf of the defendant. The written statement and reply were not filed nor were the costs paid. On. 28.03.2000, the defendant was proceeded ex parte and the matter was listed for filing of ex parte evidence. On 20.11.2006, after about seven years a counsel appeared on behalf of the defendant but no proper application was filed.

12. On behalf of the plaintiff, the affidavit of evidence of the plaintiff as PW1 was filed and another witness, S.I. Sh. Rajiv Kumar, District Investigation Unit, South District, C.R. Park was examined as PW 2. The ex parte evidence was closed on 25.04.2007.

13. While the defendant has been proceeded ex parte, and the plaintiff has led ex parte evidence, the plaint has to be examined on some legal questions. Mortgagee not in possession of the title deeds

14. The plaintiff has claimed that she had advanced a loan of Rs. 6,00,000 to the defendant on interest @ 18 per cent per annum and that the defendant had deposited the title deeds of the said property with the plaintiff. A copy of the perpetual sub lease deed has been proved by the plaintiff as PW 1/1. The plaintiff has however failed to file the original title documents and has in fact claimed that the same were returned to the defendant on the pretext that the said property was to be sold to a buyer so as to satisfy the debt owed to the plaintiff.

15. Learned Counsel for the plaintiff submitted that it is not disputed that the defendant created an equitable mortgage by deposit of original title deeds and the factum of the equitable mortgage has been recorded in the memorandum dated 15.04. 1985. A copy of the said memorandum has been placed on record and it is the claim of the plaintiff that the original thereof has been custody by the CBI. The copy of the memorandum has been proved by PW 2 as Ex. PW 2/3.

16. The plaintiff also placed reliance on the settlement agreement dated 03.06.1987 whereunder the defendant agreed to pay the plaintiff Rs. 11,00,000 pursuant whereto the plaintiff was to return possession of the said property to the defendant. The original of the said settlement has again been stated to have been seized by the CBI and a copy of the settlement agreement bearing the endorsement of PW 2 has been proved as Ex. PW 2/2. The seizure memorandum has been proved by PW 2 as Ex. PW 2/1 Learned Counsel argued that the defendant could only claim discharge of the mortgage by compliance of the conditions/stipulations agreed to by the parties in the settlement agreement.

17. The plaintiff does not dispute that the original title deeds are not in her possession and has stated in the plaint itself that the same are not in her possession. Learned Counsel for the plaintiff however sought to contend that the original memorandum dated 15.04.1985 has not been handed over or cancelled by the plaintiff and consequently obtaining of the title deed by the defendant by deceitful means would not discharge the defendant of his obligations. Learned Counsel further submitted that the loss of possession of the title deeds was not towards the discharge of the mortgage, the same being the result of misrepresentation and deception on the part of the defendant and thus the defendant cannot be permitted to take advantage of his deceit.

18. Learned Counsel sought to rely upon the AIR Manual (5th Edition, Vol 44) wherein it has been noted at page 44 as under (66) A mortgagee by deposit of title deeds is not deprived of his right to recover the debt by his liability to produce either the deeds deposited or any memorandum of deposit when the court believes that there was a deposit and that the deeds have really been lost. (1863) 11 WR (Eng) 1019 (1020)

19. It was thus submitted that the defendant continues to remain liable for the mortgage as recorded in the memorandum dated 15.04.1985 and subsequently acknowledged in the settlement agreement dated 03.06.1987 and the taking back of the title deeds has no significance.

20. Insofar as the aforesaid plea is concerned, the observation referred to by learned Counsel for the plaintiff is to the effect that a mortgagee by deposit of title deeds is not deprived of his right to recovery by reason of his inability to produce the title documents where the courts believes there was a deposit and that the title documents have been lost. The observation is not of any relevance in the present case as it is not the case of the plaintiff that the title deeds deposited with her were lost. Rather, it is her own case that the title deeds of the said property were handed over by her to the defendant. The plaintiff did not file any complaint and the original title documents were not recovered from the custody of the plaintiff.

21. The plaintiff is seeking foreclosure of a mortgage stated to be created by deposit of title deeds. Admittedly, the title deeds pertaining to the said property are not in the possession of the plaintiff and were handed over to the defendant as far back as in 1987. The essence of a mortgage by deposit of title deeds is the actual deposit of title deeds with the mortgagee with the intention to create a security for repayment of the loan taken. Unless the deeds of title are available with the mortgagee he cannot really claim a charge on the property in question.

22. This view finds support from the judgment of a learned single judge of this Court in Syndicate Bank v. Sunder Lal Taneja and Sons (1997) 6 AD (Del) 228 where an application for return of title deeds on furnishing of security by the mortgagor was not allowed observing that if the title deeds are returned to the defendant no preliminary decree under Order XXXIV of the said code can be passed if the suit is ultimately decreed by the court. Limitation for filing of the suit

23. The plaintiff claims that the loan in respect of which the mortgage was entered into was advanced in the year 1985. The memorandum recording the deposit is also of the year 1985. The settlement agreement was however entered into between the parties in the year 1987 wherein the defendant has agreed to pay the plaintiff a sum of Rs. 11,00,000 and till the said payment is made the possession of the said property is to remain with the plaintiff. The present suit has been filed by the plaintiff only in December 1998.

24. In this behalf learned Counsel for the plaintiff submitted that the present suit being one for redemption of mortgage under Order XXXIV of the said code, the provision applicable in would be Article 62 of the Limitation Act, 1963 (hereinafter referred to as Limitation Act) which prescribes a period of twelve years from the date the money sued for becomes due. The relevant provision is as under:

  PART V - Suits relating to Immovable Property 62

To enforce payment of money     Twelve years      When the money sued for
secured  by  a  mortgage or                       becomes due   
otherwise   charged    upon
immovable property
 

25. Learned Counsel submitted that the equitable mortgage was created on 15.04.1985 and was subsequently admitted and acknowledged in the settlement agreement on 03.06.1987 when the defendant undertook to discharge his liability by 02.07.1987. It is thus submitted that from the provisions of Section 18 of the limitation Act, the period of twelve years has to be computed from 02.07.1987 which would expire on 02.07.1999 and thus, the present suit filed in December 1998 is within the period of limitation. The relevant provision is as under:

18. Effect of acknowledgment in writing - (1) Where before the expiration of the prescribed period for a suit or application in respect or any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derived his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

...

Explanation - For the purposes of this section, -

(a) An acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right;

(b) The word "signed" means signed either personally or by an agent duly Authorised in this behalf; and ...

26. In order to appreciate the contentions of the plaintiff, it would be useful to reproduce the paragraph in the plaint pertaining to the cause of action which is as under:

That the cause of action for filing of the present suit arose on different dates and various occasion as detailed in the preceding paragraphs of this plaint. It specifically arose when the plaintiff advanced a loan to the defendant and when the defendant gave/delivered original title deed of the property in question to the plaintiff with an intention to create an equitable mortgage on the said property. It then arose when the defendant signed, executed and delivered a memorandum dated April 15, 1985 recording the factum of the equitable mortgage having been created by him deposit of title deed in respect thereof and thereafter on June 03, 1987 when a Settlement Agreement was executed between the parties hereto whereby the defendant again admitted and acknowledged its liability towards the plaintiff in the sum of Rs. 11,00,000/- and promised to pay the same within a month's time namely, by July 02, 1987 and take back the possession of the house, in question. It then accrued when the defendant failed, neglected and avoided to re-pay the amount to the plaintiff in discharge of the said mortgage. The cause of action also accrued when the plaintiff suffered undue loss of interest on account of the failure on the part of the defendant in repaying the loan amount to the plaintiff. The cause of action, in any case, is still subsisting and is well within the period of limitation.

27. Insofar as the aspect of limitation is concerned, one of the pleas raised by learned Counsel for the plaintiff is that the cause of action arose when the defendant deposited the title deeds of the said property with the plaintiff and a memorandum recording the factum of creation of mortgage was signed and executed pursuant thereto on 15.04.1985. The plaintiff as held hereinabove has failed to produce the original title documents so as to prove the creation of an equitable mortgage in her favor. Thus, the provisions of Article 62 of the Limitation Act relied on by learned Counsel for the plaintiff would really have no application in the present case. Even otherwise, the alleged mortgage by deposit of title deeds as also the memorandum date back to the year 1985 and even if the provisions of Article 62 of the limitation Act are applied, the period of limitation of twelve years prescribed by that provision expired in the year 1997 and the present suit was filed in December 1998 which is over a year beyond the period of limitation. The settlement agreement only records that the defendant agreed to pay the plaintiff a sum of Rs. 11,00,000 after payment of which the plaintiff agreed to hand over vacant possession of the said property to the defendant. There is no mention of the fact of deposit of title deeds with the plaintiff or of it being a continuing security. The settlement agreement is as under:

SETTLEMENT AGREEMENT

This settlement between Mr. Lachmandas Jiwnani s/o Narain Das r/o 8/45 Sham Niwas, Warden Road Bombay of the first part, and Ms. Mandakini Hule d/o Ganpat Rao Hule r/o C-30 Mayfair Garden, New Delhi, party of the second part recites and records as follows:

1. Lachmandas Jiwnani agrees to pay Rs. 11 lakhs to Mandakini Hule on or before 2 July 1987.

2. After this payment Mandakini Hule agrees to hand over vacant possession of property (residential) being C-30, Mayfair Gardens, New Delhi which belongs to Lachmandas Jiwnani now in possession of Mandakini Hule. Till that time he will not dispossess her and the possession will remain with her.

3. Mandakini Hule will hand over original document dated 5 April 1985 after cancelling it. She will also hand over after cancellation any other document pertaining to the said property. She will indemnify Lachmandas Jiwnani against claims based on her acts or any documents executed by her pertaining to the said property. Lachmandas will also withdraw any proceedings if any he may have filed in this matter against her.

4. There are absolutely no other claims of either person against the other.

28. The present suit is really in the nature of a suit for recovery of an amount of Rs. 11,00,000 along with interest thereon. The period of limitation prescribed under the Limitation Act in such a case is of three years. The liability of Rs. 11,00,000 has been acknowledged by the defendant in the Settlement Agreement. The settlement agreement is dated 02.06.1987 and the amount was to be paid within a period of one month i.e. by 02.07.1987. Thus, the cause of action for recovery of the amount of Rs. 11,00,000 last arose on 02.07.1987 and the period of limitation for recovery of the same would expire on 01.07.1990. The present suit having been filed in 1998 is thus clearly barred by limitation. In fact, this is a ground for rejection of the plaint under the provisions of Order VII Rule 11 of the said code.

29. The suit, being barred by limitation is thus dismissed leaving parties to bear their own costs.