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1974 (12) TMI 80

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..... ered by the partners-The first one was under Exhibit A-24, dated 113th May, 1964, wherein some of the partners of the firm, who are the owners of the premises, which contained the machinery deposited the title deeds of the premises at Coimbatore, with the intention of creating an equitable mortgage thereon. The other security which they offered was under Exhibit A-29, dated 20th May, 1964, which was in connection with an express loan granted by the Bank to the tune of ₹ 80,000 on a hypothecation of the machineries and movables contained in the mill premises, but delineated in a particular schedule attached to Exhibit A-29, which was the deed of hypothecation. 2. The case of the plaintiff is that the defendants were operating on the various accounts under which financial aid was given by the Bank to the partnership firm. Originally, the rate of interest at which the amount so advanced by the Bank was repayable by the defendants, was agreed to at 9 per cent, per annum with quarterly rests. Later, admittedly, under Exhibit A-33, having regard to the increased demand in the rate of interest by the Reserve Bank of India, the rate of interest was increased from 9 per cent, to 11 .....

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..... there was no proper deposit of title deeds with the intention of creating an equitable mortgage over them, in a manner ordinarily understood in law. These are in the main, the defences to the action. 6. On these relevant pleadings, the following issues were framed: 1. Is the alleged mortgage over the plaint 'A' schedule properties by deposit of title deeds true, Valid and binding on any or all of the defendants ? 2. Is the alleged charge over the plaint 'B' schedule properties true, valid and binding on the defendants? 3. Is there any charge over items 25 to 28 of plaint 'B' schedule properties ? 4. What is the amount for which the charge if any, is available over one or more of plaint 'B' schedule properties ? 5. Is the plaintiff entitled to club together plaint 'A' and 'B' schedule properties for the entire suit amount ? 6. Is the plaintiff entitled to claim interest at 11 per cent. per annum and not at 9 per cent, per annum? 7. Are the alleged mortgages and charge unlawful and do they amount to a fraud on the statute as pleaded by the 9th defendant? 8. What is the amount, if any, due to the 9th defendant .....

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..... e a cross-appeal by the contesting defendants against the finding of the trial Court that there is a valid mortgage over the 'A' Schedule properties and that the usual mortgage decree ought to be passed for the amount due and payable by the defendant-partnership firm to the Bank. 10. The Bank's contention, however, is that the trial Court went wrong in having found that the 'B' schedule properties cannot be proceeded against by the plaintiff on the foot that a charge has been created over it for the amount lent thereon under Exhibit A-29. The submission is that under the hypothecation deed, the plaintiff has secured a right to obtain a charge as against the hypothecated articles and such deed being an independent and separate one, the Court ought not to have denied the usual charge-decree as against the 'B' schedule properties as well 11. The second contention is that the trial Court, without any material, which is acceptable by Courts of law, barely relied upon the contentions of the defendants in holding that 11 per cent, per annum with quarterly rests, would be usurious. As a matter of fact, the defendants having agreed to pay the said rate of .....

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..... le property but causing such annexation of movable property, such as machinery etc., to be made to the premises as such, which is to the effect that such annexed property is movable property, because the tenant or a person having only a leasehold interest in the immovable property is often free to remove his movable property, such as machinery, etc. But, in the ultimate analysis, if the intention of either the owner or the tenant in making such annexation of movable property to immovable property is to permanently fix it along with the earth or the said immovable property, then it becomes part and parcel of it. Cases may arise when an article or machinery may be very firmly fixed to the land, but, yet the surrounding circumstances may be such as to show that it was never intended to be a part of the land. Thus, it reduces itself to a question of fact and a matter of proof. The onus is on the person, who alleges that the particular article was always intended to retain the character of movable property. He has to establish it. It ultimately depends upon the intention of the parties. Such intention on the part of either the owner or the tenant, to treat such machinery fixed to the ea .....

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..... Ginning Factory were based on studs or platforms fixed on the earth and they were fitted by bolts and nuts. He was emphatic that almost all the parts inside the factory premises were all so fixed on studs which, in turn, of course, were imbedded to earth. 18. In fact, D.W. 2, examined on the side of the defendants, would not speak about the machineries being annexed to earth, or imbedded on earth, in chief examination, and even in cross-examination, his case is that all the machineries have been fixed on concrete platforms 19. Thus, therefore, the principle in the Calcutta decision, cited above, squarely applies to the facts of this case. The machineries are attached by bolts to special concrete bases or studs, or platforms and no one interested in saying so, would say that they are so attached to earth, so as to make it appear that such articles have been so imbedded for the permanent beneficial enjoyment of the mill premises itself. We accept the evidence of P.W. 2, in the absence of any contrary materials before us, to say that the imbedding is as urged by Mr. Venkatarama Iyer. 20. One other aspect, which also prompts us to hold that the parties intended to treat the ma .....

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..... of the parties is that whilst the deposit of title deeds was made on 15th May, 1964 under Exhibit A-24, the deed of hypothecation deed over the movables was made 5 days later, under Exhibit A-29. This conduct of the borrowers is also a pointer to the fact that the intention was to keep the mortgage over immovable property distinct, separate and different from the hypothecation over movables. This treatment of the machineries as independent goods, different from the premises which contained them makes the intention of the parties clear. That in such matters, it is the intention of the parties, which often looms large, is clear from the decision of a Division Bench of our Court in Satyanarayanamurthy v. Gangayya AIR 1939 Mad 684 Varadachariar, J., speaking for the Bench, found as a fact, that the machinery which formed part of the building was dealt with independently in an independent schedule and even then, the learned Judge was satisfied that the movables which formed part of a separate schedule cannot be treated as immovable property and dealt with, as such. The learned Judge went on to say It also appears to us that on the construction of mortgage deeds the machinery specified .....

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..... effect from the 18th of February, 1965. 25. On receipt of this communication, one partner of the first defendant firm, who is a defendant in the action, agreed to the enhancement in the rate of interest, as stated in Exhibit A-33. There was, therefore, a contract openly entered into between the borrowers on the one hand and the Bank on the other, whereunder due to certain known circumstances, the rate of interest was increased from 9 per cent. to 11 per cent. per annum with quarterly rest. 26. To find whether a particular rate of interest is usurious, excessive or unreasonable, the aggrieved party should at least let in evidence to show that such was not the rate of interest which the other Banks charged under similar circumstances. There should also be telling evidence before the Court to establish that on a prima facie examination of the facts of a particular case it would ordinarily prompt the Court of law to opine that the rate of interest is exorbitant or excessive. Each case has to be decided on its own merits. No hard and fast rule can be invoked merely on the mathematics of the rate per cent to hold that the rate of interest was excessive. In the instant case, the pa .....

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..... er cent. interest per annum with quarterly rests, even though it is secured by the property of the borrowers, can be said to be an excessive, exorbitant and an unreasonable rate of interest. 28. The trial Court's decision on this aspect is also reversed. 29. The above contract rate of interest will be applied until the date of suit. Thereafter the contesting defendants are liable to pay interest at the rate of 11 per cent, per annum without being further charged with additional interest at quarterly rests. 30. The result is that there will be a decree, as prayed for, and together with interest thereon at 11 per cent. with quarterly rests, upto the date of plaint and thereafter at the rate of 11 per cent. from the date of suit till the date of payment and the usual mortgage-decree will be passed including Schedules A and B, as the hypotheses or the security from which the plaintiff could realise the decree amount. The appeal is allowed with costs. C.M.P. No. 14045 of 1974. 31. The plaintiff has filed a petition to include a sum of ₹ 3,485.70 to the principal amount claimed on the foot that it has paid the insurance premia in connection with the fire insuranc .....

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