1974 (12) TMI 80 - HC - Indian Laws

Appellate Court Reverses Trial Decision, Grants Plaintiff Full Relief with Interest. Property Charge and Surplus Proceeds Upheld.

The South Indian Bank Ltd., by its General Manager, M.G.P. Nambiar Versus V. Krishna Chettiar and Brother by its Partner V.K. Palaniappan and Ors.

The South Indian Bank Ltd., by its General Manager, M.G.P. Nambiar Versus V. Krishna Chettiar and Brother by its Partner V.K. Palaniappan and Ors. - ... Issues Involved:1. Validity of the mortgage over the 'A' schedule properties by deposit of title deeds.2. Validity of the charge over the 'B' schedule properties.3. Entitlement of the plaintiff to club together 'A' and 'B' schedule properties for the entire suit amount.4. Plaintiff's entitlement to claim interest at 11% per annum.5. Lawfulness of the alleged mortgages and charges.6. Amount due to the 9th defendant in respect of the mortgage deed dated 17th November, 1965.7. Nature of the decree the 9th defendant is entitled to.8. Relief the plaintiff is entitled to.Detailed Analysis:1. Validity of the Mortgage Over 'A' Schedule Properties:The court found that there was a valid mortgage by deposit of title deeds over the 'A' schedule properties at Coimbatore. Coimbatore being an area notified under Section 69 of the Transfer of Property Act, the equitable mortgage by the plaintiff is sustainable. There was no cross-appeal over this finding.2. Validity of the Charge Over 'B' Schedule Properties:The trial court initially found that the hypothecation deed, Exhibit A-29, could not be enforced as the machinery should be considered as immovable property annexed to the land. Without a registered instrument, the plaintiff could not claim a charge over the 'B' schedule properties. However, the appellate court reversed this decision, holding that the machinery was intended to be treated as movable property, based on the conduct and intention of the parties. The appellate court concluded that the plaintiff is entitled to a charge-decree over the 'B' schedule properties.3. Entitlement to Club Together 'A' and 'B' Schedule Properties:The appellate court allowed the plaintiff to club together the 'A' and 'B' schedule properties for the entire suit amount, reversing the trial court's decision.4. Plaintiff's Entitlement to Claim Interest at 11% Per Annum:The trial court found the 11% interest rate with quarterly rests to be usurious. However, the appellate court reversed this decision, stating that the increase in interest rate was due to the Reserve Bank of India's directives and was agreed to by the defendants. The appellate court held that the 11% interest rate was neither excessive nor unreasonable.5. Lawfulness of the Alleged Mortgages and Charges:The appellate court found the mortgages and charges lawful. The hypothecation deed was valid, and the plaintiff was entitled to claim a charge over the 'B' schedule properties.6. Amount Due to the 9th Defendant:The trial court had directed that the 9th defendant would be entitled to a sum of Rs. 26,000 with interest from 1st March, 1968, from the surplus sale proceeds of the 'A' schedule properties. There was no appeal against this part of the judgment.7. Nature of the Decree the 9th Defendant is Entitled To:The trial court's direction regarding the 9th defendant's entitlement was upheld, with no appeal or cross-appeal on this issue.8. Relief the Plaintiff is Entitled To:The appellate court allowed the appeal, granting the plaintiff a decree as prayed for, including interest at 11% per annum with quarterly rests up to the date of the plaint and 11% per annum thereafter. The usual mortgage decree will include both 'A' and 'B' schedule properties as security for the decree amount.Conclusion:The appellate court reversed the trial court's findings on the enforceability of the hypothecation deed and the interest rate, granting the plaintiff a decree for the entire suit amount, including interest at 11% per annum. The plaintiff is entitled to a charge over both 'A' and 'B' schedule properties. The 9th defendant's entitlement to Rs. 26,000 from the surplus sale proceeds was upheld. The appeal and the civil miscellaneous petition were allowed with costs, and the plaintiff was directed to pay court fees on the additional amount claimed for insurance premia.