Second appeal and mortgage evidence rules: ignored material evidence, sham transaction proof, and mortgagor's title in possession.

Second appellate interference under Section 100 CPC is justified where the first appellate court ignores material evidence or relies on inadmissible material, because such error may raise a substantial question of law. A registered mortgage deed may be proved by certified copy and surrounding evidence where execution is not specifically denied and the defendant admits execution, without examining an attesting witness. Oral evidence is admissible to show that a document was a sham transaction, though the defence must fit the pleaded facts. Private extracts of account books are not admissible as books of account under Section 34 of the Evidence Act. A usufructuary mortgagee in possession cannot deny the mortgagor's title.

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Issues: (i) Whether interference under Section 100 of the Code of Civil Procedure, 1908 was justified where the first appellate court ignored vital evidence or relied on inadmissible material; (ii) whether the mortgage deed stood proved by the certified copy and the surrounding evidence; (iii) whether oral evidence was admissible to show that the mortgage deed was a sham transaction; (iv) whether extracts of account books were admissible under Section 34 of the Indian Evidence Act, 1872; and (v) whether a usufructuary mortgagee in possession could deny the title of the mortgagor and what relief followed.

Issue (i): Whether interference under Section 100 of the Code of Civil Procedure, 1908 was justified where the first appellate court ignored vital evidence or relied on inadmissible material.

Analysis: A finding of fact may be interfered with in second appeal where relevant evidence bearing directly on the issue has been ignored, or where inadmissible evidence has been relied upon, because either error may give rise to a substantial question of law. The High Court's failure to examine such defects in the lower appellate process could therefore justify interference.

Conclusion: The case involved exceptional circumstances warranting interference under Section 100 of the Code of Civil Procedure, 1908.

Issue (ii): Whether the mortgage deed stood proved by the certified copy and the surrounding evidence.

Analysis: The certified copy was tendered as secondary evidence after the original was not produced. The document was a registered mortgage deed requiring attestation, but there was no specific denial of execution, and the defendant himself admitted execution. In such circumstances, it was unnecessary to examine an attesting witness, and the certified copy was sufficient to prove the deed.

Conclusion: The mortgage deed was proved, and the finding to that effect was upheld in favour of the appellants.

Issue (iii): Whether oral evidence was admissible to show that the mortgage deed was a sham transaction.

Analysis: Oral evidence is not barred by Section 92(1) of the Indian Evidence Act, 1872 when the case is that the document was never intended to be acted upon and was merely a sham. However, the factual basis advanced for the sham theory had to fit the transaction pleaded. The explanation offered for collateral security did not accord with a mortgage executed by the owner in favour of the defendant, and the alleged basis for the sham plea was inherently implausible.

Conclusion: Oral evidence was legally admissible, but the sham-transaction defence failed on facts and was rejected against the defendant.

Issue (iv): Whether extracts of account books were admissible under Section 34 of the Indian Evidence Act, 1872.

Analysis: Section 34 applies to entries in books of account regularly kept in the course of business. Private extracts, when the original books are not produced, do not carry the same assurance of regularity, authenticity, or continuity, and cannot be treated as books of account or admitted as such without a proper foundation for secondary evidence. The courts below had wrongly treated the extracts as primary account books and relied on them to infer tenancy.

Conclusion: The extracts were inadmissible under Section 34 of the Indian Evidence Act, 1872, and the tenancy finding based on them was unsustainable.

Issue (v): Whether a usufructuary mortgagee in possession could deny the title of the mortgagor and what relief followed.

Analysis: A mortgagee who obtains possession under the mortgage holds a derivative title and is not permitted to dispute the mortgagor's title while retaining that status. The lower courts had also ignored material facts supporting redemption and possession in favour of the mortgagor's heirs.

Conclusion: The mortgagee could not deny the mortgagor's title, and the appellants were entitled to redemption and recovery of possession.

Final Conclusion: The findings of the courts below were set aside, the suit for redemption succeeded, and the appellants obtained the right to redeem the usufructuary mortgage on deposit of the mortgage amount and to recover possession of the shop.

Ratio Decidendi: A second appellate court may interfere where material evidence is ignored or inadmissible evidence is relied upon; a registered mortgage can be proved by certified copy where execution is not specifically denied; oral evidence is admissible to show a document is a sham, but private extracts of accounts are not admissible as books of account under Section 34; and a usufructuary mortgagee in possession cannot deny the mortgagor's title.

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