Delhi High Court
Brajesh Rai vs Gurmeet Singh on 1 October, 2018
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 829/2018
% 1st October, 2018
BRAJESH RAI ..... Appellant
Through: Mr. Deepak K. Sharma,
Advocate with Mr. Ashish
Sharma, Advocate and Mr.
Kunal Vashisht, Advocate (M.
No.9911794319).
versus
GURMEET SINGH ..... Respondent
Through:
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? YES
VALMIKI J. MEHTA, J (ORAL)
Caveat No.910/2018
1. No one appears for the caveator. Caveat stands
discharged.
C.M. No.40484/2018(exemption)
2. Exemption allowed subject to just exceptions.
C.M. stands disposed of.
RFA No.829/2018 and C.M. No.40483/2018(stay)
3. This Regular First Appeal under Section 96 of the Code
of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit
impugning the Judgment of the Trial Court dated 02.06.2018 by which
the trial court has decreed the suit for recovery of Rs.14 lakhs with
interest being the amount of loan given by the respondent/plaintiff to
the appellant/defendant.
4. The facts of the case are that the respondent/plaintiff
pleaded that the appellant/defendant approached him in January 2011
for a loan of Rs.14 lakhs. Appellant/Defendant agreed to
simultaneously handing over of the entire chain of title documents of
the appellant's/defendant's property of 111 sq yds situated at E-358,
Khasra 732, Village Jaitpur Extension-II, Badarpur, New Delhi. The
respondent/plaintiff pleaded that at the time of receiving loan of Rs.14
lakhs, the appellant/defendant signed a Mortgage-cum-Agreement
dated 12.01.2011, and also executed a separate receipt on the same
date acknowledging the receiving of the loan amount. The
respondent/plaintiff pleaded that the appellant/defendant paid interest
till October 2012, and thereafter, stopped paying the interest, and
therefore, after serving a Legal Notice dated 01.12.2012, the subject
suit was filed.
5. The appellant/defendant contested the suit and denied that
he executed the Mortgage-cum-Loan Agreement dated 12.01.2011 or
the receipt of the same date inasmuch as it was pleaded that though the
signatures of the appellant/defendant did appear on the Mortgage-
cum-Loan Agreement as also the receipt, however these documents
were taken in blank by the respondent/plaintiff from the
appellant/defendant. It is also pleaded that the respondent/plaintiff not
only did not give the loan, but did not return the title chain of the
documents and the blank documents which were signed by the
appellant/defendant. On the respondent/plaintiff being confronted for
return of the documents, the respondent/plaintiff told the
appellant/defendant that he had misplaced the papers. The
appellant/defendant also pleaded that there existed a partnership
between the parties for financing vehicles for which a Partnership
Deed dated 01.08.2009 was entered into, and this partnership was
amicably dissolved on 05.10.2012, and when the respondent/plaintiff
received a sum of Rs.72 lakhs from the appellant/defendant at the time
of final settlement of the partnership accounts. It was also pleaded
that the Mortgage-cum-Loan Agreement is void as the same is not
registered and not exempted under Section 49 of the Registration Act,
1908. There are also certain pleadings, and which are not relevant,
with respect to various blank cheques being handed over by the
appellant/defendant to the respondent/plaintiff. Suit was therefore
prayed to be dismissed.
6. After pleadings were complete, trial court framed the
following issues:-
"1. Whether the plaintiff is entitled to recover the suit amount of
Rs.14,00,000/- from the defendant? OPP
2. Whether the plaintiff is entitled to any interest on suit amount? If
so, at what rate and for which period? OPP
3. Relief"
7. The trial court has held that the Mortgage-cum-Loan
Agreement need not be registered inasmuch as the said agreement
would be operative if the suit was for recovery of moneys on the basis
of a mortgage, but the subject suit is only a simple suit for recovery of
moneys and not a suit filed under Order XXXIV CPC alleging
existence of a mortgage. In my opinion, the trial court in this regard
has committed no illegality inasmuch as the factum of loan which is
the subject matter of a mortgage deed is a collateral transaction, and
such an agreement, so far as the grant of loan is concerned, is not
required to be registered under Section 17(1)(b) of the Registration
Act. A direct judgment in this regard is the judgment of a Single
Judge of the Madras High Court in the case of Murugan v.
Sumathradevi and Durairaj, CRP(P.D.) No. 1863/2003 and this
judgment holds that if there is a mortgage-cum-loan agreement, the
said mortgage-cum-loan agreement can be looked into as an
independent transaction so far as the aspect of loan is concerned, and
in doing so, the said document can be looked into as a collateral
transaction with respect to the loan given. In the case of Murugan
(supra), the learned Single Judge has relied upon earlier judgments of
the Madras High Court starting from the year 1931, wherein it has
been held that a mortgage-cum-loan agreement, even if not registered,
can be looked into, so far as a grant of loan under the subject
agreement is concerned. In my opinion, therefore, the trial court has
committed no illegality in referring to the Mortgage-cum-Loan
Agreement with respect to the aspect of grant of loan.
8. The trial court, in my opinion, has also rightly disbelieved
the case of the appellant/defendant that blank documents were signed
by him. The same is disbelieved because why would blank documents
be signed by the appellant/defendant and more importantly, if the said
documents were not returned, as claimed by the appellant/defendant,
then why was no action taken by the appellant/defendant against the
respondent/plaintiff, including the sending of a legal notice or making
a complaint stating that the respondent/plaintiff is not returning such
signed documents. In any case, even if the appellant's/defendant's
case of documents being blank is considered, there is no reason why
the title documents of the Badarpur property of the
appellant/defendant would be with the respondent/plaintiff.
Therefore, the trial court has committed no illegality in rejecting the
defence of the appellant/defendant and decreeing the suit.
9. Counsel for the appellant/defendant argued that the
respondent/plaintiff has failed to prove the source of funds available
with him for paying the amount of Rs.14 lakhs. However, in the facts
of the present case, this defence is not relevant because the loan given
to the appellant/defendant is duly proved by means of the
appellant/defendant executing the Mortgage-cum-Loan Agreement as
well as the receipt, besides handing over the entire chain of title
documents of Badarpur property to the respondent/plaintiff.
10. Finally, the learned counsel for the appellant/defendant
argued that the suit is barred under the Punjab Registration of Money-
Lender's Act, 1938, however when a query was put as to whether such
a defence was raised, and such issue got framed and decided by the
trial court, it is conceded that no such defence was raised and no such
issue got framed. Therefore, this Court cannot look into this aspect
which is argued because what is barred by Punjab Registration of
Money-Lender's Act is not giving of casual loans but business activity
of granting finance, and whether or not there is a business of giving
finance is a disputed question of fact which requires trial, and
therefore, such a disputed question of fact must be specifically pleaded
and an issue got framed, and which admittedly has not been done by
the appellant/defendant.
11. There is no merit in the appeal. Dismissed.
OCTOBER 01, 2018/Ne VALMIKI J. MEHTA, J
