TMI Blog2002 (1) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... ement for sale on 17-10-1989 and also subsequently receiving moneys and endorsing the same, the defendants not wanting to sell the property, the parties agreed that the transaction was intended to be a mortgage by deposit of title deeds and the respondents agreed to repay together with interest at 30% per annum. The respondents were constructing a Kalyana Mandapam in the property. They wanted to approach the Egmore Benefit Society for ₹ 30 lakhs as loan and felt that the rate of interest with the society worked out to be lower than the plaintiff, indicated in the loan application form of the society, that the plaintiff was pressing for repayment. The defendants showed the plaintiffs name in the encumbrance column in the loan application and stated that the mortgage was created on 17-10-1989 itself that to discharge subsequent loans availed to an extent of ₹ 13 lakhs and to complete the construction of the Kalyana Mandapam they wanted a loan from the society for ₹ 30 Lakhs. Though the defendants had completed the construction and marriages are being celebrated, they have not chosen to repay the loan taken from the plaintiff. The plaintiff has been deprived of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p papers, green bond papers, etc. as a condition precedent for advancing the loan and now he had misused the same to lend colour to his false case. The plaintiff had advanced only ₹ 2,50,000/- at 24% per annum interest and he misused the blank documents and made a claim for ₹ 43,79,775/-. On 1-8-1995 the plaintiff had issued a legal notice based on the sale agreement calling upon the first defendant to specify a date for execution and registration of sale deed as per the agreement dated 17-10-1989, for which the first defendant sent a detailed reply setting out all the aforesaid facts and circumstances. Therefore, the plaintiff kept quiet for a long time and only on 8-3-1998 he issued another legal notice claiming a sum of ₹ 15,46,000/- threatening to take legal action to attach the property. He had not come forward with the case of equitable mortgage anywhere in the notice and only for the first time, with a view to maintain the suit somehow or other and to bring the suit within the period of limitation with distorted facts. He cannot be allowed to change his colours and it is a mere abuse of process of law. Since the plaintiff failed to advance more than ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the claim is barred by limitation. The suit is liable to be dismissed. 7. A counter has been filed by the plaintiff disputing the various allegations. 8. In the application for appointment of Receiver, this Court passed an order on 31-10-2001 requiring the first defendant to bring ₹ 10 lakhs and four weeks time was granted. A fixed deposit receipt was produced on the adjourned date for ₹ 5 Lakhs only. Time was sought to comply with the order and this Court directed the first defendant to bring a demand draft for ₹ 10 lakhs in favour of the plaintiff on 10-12-2001. In the meantime the present application has been taken out. Though originally there was a registered agreement of sale, the first defendant required periodical loans and wanted it to be treated as a mortgage in law, viz. deposit of title deeds and the original documents are with the plaintiff. If it were to be a simple loan or an agreement of sale, the plaintiff would have completed it within the period of limitation. Time and again, the: first defendant had the loan treated to be a. mortgage loan and even in his Advocate's reply he had stated so and this was adverted to at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt in so far as it preserves and retains control of the property to answer to the rights of the parties as they may be finally determined...... The appointment of a receiver is not an equitable right, but as equitable remedy.' That is to say, the appointment of a receiver is not a cause of action in itself, but an act of Court ancillary to the cause of action for the establishment of some rights. Law of Receivers by P. S. Atchuthen Pillai and P. M. Krishna Nauru. 11. In Sivagnanathammal v. Arunachellum Pillai 21 MLJ 821 the law is slated by a Division Bench of this Court in the following manner : A bona fide possessor should not ordinarily be displaced from any of the just rights attached to his title unless there be some equitable ground for interference. To justify the appointment of an ad interim receiver in a suit against a Hindu widow who is in bona fide possession of the property, in virtue of her legal title to At, and which possession she would be admittedly entitled to for the life even if plaintiff succeed in the suit (the suit being one for declaring an alleged Will of the last male owner a forgery) there should be some equitable ground f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the mortgagee that a receiver should be appointed. It is impossible to lay down a hard and fast rule laying down under what circumstances the Court will appoint a receiver. But ordinarily there should be some loss or detriment not foreseen by the mortgagee at the time when he chose to take a simple mortgage and allow possession to remain with the mortgagor, which loss could not be compensated except by the appointment of a receiver. The learned Judge referred to the decisions of the Calcutta and Lahore High Courts in Ghanashyam Misser v. Gobinda Moni Dasi (1903-7 CWN 452) and Parab Ram v. Puran Mal Ditta Mal (AIR 1925 Lahore 590) respectively and observed as follows : There is nothing in Order 40 Rule 1, Civil Procedure Code, which excludes mortgage suits from Its operation and a receiver can be appointed in a mortgage suit, that the Code gives the widest power to the Court to appoint a receiver when it appears to the Court to be just and convenient and that the right to recover the rents and profits is not necessary to enable the plaintiff to obtain a receiver ......A receiver can be appointed if the security was insufficient for the realisation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of this Court decided that (at page 575) : a simple mortgagee is not disentitled to obtain the appointment of a receiver if the other circumstances are such as to justify it merely on the ground that no personal remedy subsists to proceed against the other properties of the mortgagor. The appointment of a receiver is only a mode of execution to be used with caution and sound judicial discretion. In page 575 in the judgment by Ramesam, J. who presided over the Bench, it is stated as follows : But where a person in the position of defendant 3 in this case has not paid any amount, for several years towards the mortgage debt....... that would be a fit case for the appointment of a receiver. In the judgment by Anantakrishna Ayyar it is stated as follows : Where on account of circumstances created either by the conduct of the mortgagor or connected with the state of the property, the mortgagee is likely to sustain losses not foreseen by him at the time he took the simple mortgage the Court will have jurisdiction to appoint a receiver to take possession of the property for the benefit of the mortgagee. K.S. Ethirajulu Chett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as such; and the other question whether in a particular case it would make the order or not would be one dependent entirely on the particular circumstances of that case. We should not mix the two questions especially when one of them relates to the very existence of jurisdiction in such a suit in certain circumstances.......... ..........If it is proved to the Court's satisfaction that it is just and convenient to appoint a receiver, there is nothing in any provision of law to which our attention was drawn nor any decision binding on us that prevents the Court from making such an order....... ........It has been held that a Court has jurisdiction, in a suit filed by an equitable mortgagee in India to recover money due on the equitable mortgage, to appoint a receiver over the mortgage property. An equitable mortgagee in India has no right to possession of the mortgage property. If the Court has jurisdiction in the case of an equitable mortgage to appoint a receiver over the mortgage property it should surely have jurisdiction to appoint such a receiver in the suit of a simple mortgagee in India. The Court has complete jurisdiction over the subject matter of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the plaintiff had made an application for the appointment of a Receiver some time after the suit was filed and not immediately but after the prior mortgagee had obtained decree and started to proceed against the mortgaged property was indicative of bona fides and an anxiety to safeguard his own interest rather than otherwise. 26. In Rajalakshmi Ammal v. Muthusami Gounder, AIR 1958 Madras 411 a Division Bench of this Court has held as follows (at page 412) : Wide powers have been given to Courts under Order 40, Rule 1 and in very extraordinary cases the Court will have jurisdiction to appoint a receiver even in a simple money suit, before decree, and not merely in execution, under Section 51(2). The Court will, of course, even then consider whether it is just and convenient to appoint a receiver. Mere convenience will not do. It must also be just. But such extraordinary jurisdiction will not show that a Court trying a money suit has ordinary jurisdiction to appoint a receiver while the suit is pending, and before a decree is got, especially when other remedies like attachment before judgment, are open to the plaintiff and are in fact the normal remedies he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the Court can very well make such an appointment. 31. In the present case, let us have a look at the conduct of the parties. In the year 1989, there was an agreement for sale entered into between parties. But, even on his own showing, the first defendant had meant it to be only a sort of security for repayment of the amounts borrowed by him from the plaintiff. Subsequent thereto, the first defendant had been borrowing amounts and executing promissory notes and letters confirming the borrowings. It is also on record that the defendants have deposited the title deeds with the plaintiff as collateral security. There are very many documents to show that the defendants had meant to create an equitable mortgage by deposit of title deeds. 32. The learned counsel for the defendants placed considerable reliance on a notice issued in the year 1995 on behalf of the plaintiff calling upon the defendants to execute a sale deed in respect of the property. Indeed, as pointed out by the learned counsel Mr. Chidambaram, the Court cannot rely on the weakness of defence, but must go only by the pleadings in the case. May be in 1995, the plaintiff had taken a stand that it was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount now due? Or does it stand as surety for anybody? If so, give particulars of such mortgagee?, the name of the plaintiff is given and the amount due as on the date of application is given as ₹ 13 lakhs and the date of the mortgage is given as 17-10-1989. This Court cannot ignore this vital admission by the first defendant in his own application to Egmore Benefit Society. It cannot pin the plaintiff to the notice in the year 1995. The records clearly show that the defendants, the first defendant in particular had admitted to the creation of an equitable mortgage in favour of the plaintiff as early as 1989 arid that in 1993, there was a sum of ₹ 13 lakhs due and payable to the plaintiff. This apparently takes into consideration the various amounts received by the defendant from the plaintiff subsequent to 1989. In a way, the defendants have admitted to the subsequent borrowing on the security of the property from the plaintiff. In fact, in one of the letters by the defendants, it had been admitted that the plaintiff would be entitled to the payment of the principal with interest at 24%. 34. While the hearing was in progress, 1 called upon the learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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