2002 (1) TMI 1328 - HC - Indian Laws

Summary

Issues Involved:
1. Appointment of an Advocate-Receiver.
2. Dismissal of the suit on the grounds of limitation.
3. Entitlement to a decree for Rs. 43,79,775/- with interest.
4. Alleged creation of an equitable mortgage.
5. Conduct of the defendants in relation to the repayment of the loan.

Detailed Analysis:

1. Appointment of an Advocate-Receiver:
The plaintiff sought the appointment of an Advocate-Receiver to take charge of the property and administer the Kalyana Mandapam pending the suit. The court examined the provisions under Sections 51, 94, and Order 40 Rule 1 of the Code of Civil Procedure, which empower the court to appoint a receiver if it is just and convenient.

The court noted that the appointment of a receiver is an equitable remedy to preserve and retain control of the property until the rights of the parties are determined. Several precedents were cited, emphasizing that a receiver can be appointed in mortgage suits if the security is insufficient or if the conduct of the mortgagor warrants such an appointment.

In this case, the court observed that the defendants had admitted to the creation of an equitable mortgage and had borrowed amounts from the plaintiff, securing the loan with the property. The defendants' conduct, including their failure to repay the loan despite generating income from the property, justified the appointment of a receiver. The court directed the defendants to deposit Rs. 20 lakhs within six weeks to avoid the appointment of a receiver.

2. Dismissal of the Suit on the Grounds of Limitation:
The defendants argued that the suit was barred by limitation, claiming that the transaction was a loan secured by a sale agreement and not an equitable mortgage. The court, however, found that the defendants had admitted to the creation of an equitable mortgage in their communications with the Egmore Benefit Society and other documents.

The court concluded that the suit was not barred by limitation based on the defendants' own admissions and the continuous acknowledgment of the debt. The application for dismissal on the grounds of limitation was directed to be posted along with the suit.

3. Entitlement to a Decree for Rs. 43,79,775/- with Interest:
The plaintiff sought a decree for Rs. 43,79,775/- with interest at 30% per annum. The court noted that the defendants had borrowed money from the plaintiff and secured the loan with the property. The defendants' failure to repay the loan despite generating income from the property supported the plaintiff's claim.

The court's decision to appoint a receiver or require a deposit of Rs. 20 lakhs aimed to protect the plaintiff's interest and ensure the realization of the due amount.

4. Alleged Creation of an Equitable Mortgage:
The plaintiff claimed that the transaction was intended to be a mortgage by deposit of title deeds, while the defendants argued that it was a loan secured by a sale agreement. The court examined the evidence, including the defendants' admissions in their loan application to the Egmore Benefit Society, which indicated the creation of an equitable mortgage.

The court concluded that the defendants had created an equitable mortgage by depositing the title deeds with the plaintiff as collateral security for the loan.

5. Conduct of the Defendants:
The court scrutinized the defendants' conduct, noting their failure to repay the loan despite generating income from the property. The defendants' attempts to avoid repayment and their inconsistent stands in the legal proceedings were seen as attempts to defeat the plaintiff's claim.

The court emphasized that the defendants' conduct warranted the appointment of a receiver to protect the plaintiff's interest and ensure the realization of the due amount.

Conclusion:
The court directed the defendants to deposit Rs. 20 lakhs within six weeks to avoid the appointment of an Advocate-Receiver. The application for dismissal of the suit on the grounds of limitation was to be posted along with the suit, and the court found that the defendants' conduct and admissions justified the plaintiff's claims. The court's decision aimed to balance the interests of both parties and ensure justice.