Registered Mortgage Deed Carries Presumption of Validity Unless Rebutted by Evidence: Andhra Pradesh High Court

Andhra Pradesh High Court reversed a trial court judgment and decreed a suit for ₹13,95,000/- with interest based on a registered mortgage deed. Justice T. Mallikarjuna Rao, presiding over the appeal, held that the trial court had erred in dismissing the suit, as the registered mortgage deed (Ex.A.1) carried a presumption of validity, and the plaintiff had sufficiently proven its execution and consideration. The defendant’s failure to testify or challenge the evidence further led the Court to draw an adverse inference under Section 114(g) of the Indian Evidence Act, 1872.

"The execution of a registered mortgage deed carries a presumption of validity under law. The onus of disproving such a document lies squarely on the party challenging it. In the present case, the defendant not only failed to testify but also failed to present any evidence to rebut this presumption."

"Registered Mortgage Deeds Must Be Upheld Unless Proven Invalid"
The High Court observed that the plaintiff had successfully established the execution of the registered mortgage deed through oral testimony and documentary evidence. The document, Ex.A.1, recorded the defendant’s acknowledgment of a ₹10,00,000/- loan, with ₹6,00,000/- paid before execution and ₹4,00,000/- paid at the time of execution.

The Court clarified: "A registered document is prima facie valid, and unless rebutted by substantial evidence, it must be presumed to have been lawfully executed. The defendant's allegations of forgery are unsubstantiated and remain unsupported by any direct or indirect evidence."

"Non-Examination of Defendant Proves Fatal: Adverse Inference Applied"
One of the pivotal aspects of the case was the defendant's failure to testify or provide evidence to substantiate her claim of forgery. The Court relied on Section 114(g) of the Indian Evidence Act, 1872, to draw an adverse inference, stating:

"When a party to a suit refrains from appearing in the witness box to deny allegations against them or to rebut evidence, a presumption arises that the case set up by them is not true. The defendant, by choosing to avoid the witness box, deprived the Court of the opportunity to examine her allegations of forgery. This absence raises a strong adverse inference against her."

"Past Consideration Valid Under Section 25 of the Contract Act"
The High Court rejected the trial court's conclusion that the plaintiff failed to prove the passing of consideration. It noted that Ex.A.1 explicitly recorded the loan transaction and its division into ₹6,00,000/- paid prior to execution and ₹4,00,000/- paid on the date of execution. The Court affirmed that past consideration is legally valid under Section 25 of the Indian Contract Act, 1872, and observed:

"The law recognizes past consideration as valid consideration for the formation of a contract. The mortgage deed, Ex.A.1, clearly reflects the payment of ₹6,00,000/- before execution and ₹4,00,000/- at the time of execution. The trial court failed to appreciate the significance of this documentary evidence."

"Trial Court’s Errors Undermined Plaintiff’s Case"
The High Court found the trial court's dismissal of the suit to be flawed, highlighting its failure to give due weight to the plaintiff’s evidence and the registered document. The trial court had dismissed the plaintiff’s case based on minor inconsistencies in the testimonies of her witnesses, which the appellate Court deemed immaterial. Justice Mallikarjuna Rao noted:

"The trial court overemphasized trivial discrepancies in the plaintiff’s evidence and failed to consider the evidentiary weight of the registered mortgage deed. Such an approach is not only flawed but undermines the probative value of registered documents, which carry a presumption of validity under the law."

"Presumption of Validity Attached to Registered Documents"
The Court reaffirmed that registered documents, such as Ex.A.1, are presumed to be valid under the law unless rebutted by evidence. Citing Prem Singh v. Birbal (2006), the Court observed:

"There is a presumption that a registered document is validly executed. The burden to rebut this presumption lies with the party challenging the document. In this case, the defendant failed to provide any evidence to disprove the validity of the registered mortgage deed."

The Court further noted that the defendant had not raised specific allegations of forgery during the cross-examination of the plaintiff’s witnesses, which weakened her claim.

"Execution of Mortgage Proven Through Statutory Compliance"
The Court emphasized that the plaintiff had adhered to statutory requirements under Section 68 of the Indian Evidence Act, 1872, by producing an attesting witness (PW.3) to prove the execution of the mortgage deed. The document was further corroborated by the registration process, which included the defendant’s photograph, signature, and thumb impression.

"The evidence of PW.3, the attesting witness, and the registration details on Ex.A.1 unequivocally prove its execution. The defendant's failure to dispute these aspects leaves no room for doubt regarding the validity of the mortgage deed."

The High Court allowed the appeal, set aside the trial court’s dismissal of the suit, and decreed the plaintiff’s claim. The plaintiff was held entitled to recover ₹13,95,000/- with interest. The Court directed as follows:

The plaintiff is entitled to recover ₹13,95,000/- with interest at: 12% per annum on ₹10,00,000/- from the date of filing the suit until the trial court’s judgment.
6% per annum thereafter until redemption.
The defendant was granted a redemption period of three months from the date of judgment.
Justice Mallikarjuna Rao concluded: "The plaintiff has successfully proven the execution of the registered mortgage deed and the passing of consideration. The trial court’s judgment dismissing the suit is based on an incomplete and flawed evaluation of the pleadings and evidence and is hereby set aside."

Date of Decision: January 2, 2025