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Kakaraparthy Bhavanarayana Vs. Official Reciever, Krishna and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 438 of 1965
Judge
Reported inAIR1971AP359
ActsTransfer of Property Act - Sections 58; Registration Act, 1908 - Sections 17 and 49; Evidence Act, 1872 - Sections 91
AppellantKakaraparthy Bhavanarayana
RespondentOfficial Reciever, Krishna and ors.
Appellant AdvocateP. Ramachandra Reddy and ;S. Parvatha Rao, Advs.
Respondent AdvocateG. Bhaskara Rao, Adv.
Excerpt:
.....- section 58 of transfer of property act, sections 17 and 49 of registration act, 1908 and section 91 of indian evidence act, 1872 - appeal against order dismissing suit on ground that unregistered document was inadmissible in evidence - whether letter evidencing creation of mortgage compulsorily registrable under section 17 of act - letter embodied contract of mortgage - unregistered letter was inadmissible in evidence to prove mortgage - held, appeal dismissed. - - we promise not to deal with the same till your amount due to you is fully paid and satisfied. giridih, better secured, i hereby further declare that i am the sole owner of the girdh property as per schedule below and am legal joint heir with my sons dealing in the name of m/s. with you girdh branch are duly satisfied......section 58(f) of the transfer of property act recognises a mortgage by despot of title deeds as a form of mortgage. it provides that it may be effected by a person 'delivering to his creditor his agent documents of title to immovable property with intent to create a security thereon.' it means that when the debtor deposits with the creditor the title deeds of his property with a view to create security the law implies a contract between the parties to create a mortgage and no registered instrument is required under section 59 as in other forms of mortgage. the parties can also choose to reduce the contract into writing in which case the deposit and the document both form integral parts of the transaction and as a document creating security requires registration under.....
Judgment:

Ramachandra Raju, J.

1. This appeal arises out of a suit brought by the appellant against the respondents to enforce an equitable mortgage alleged to have been created by one late Sonti Venkataratnam, the father of respondents 2 to 5. The short point for determination in the appeal is whether Ex. A-7 styled as a letter signed and delivered by Sonti Venkataratanam on 7-11-1951 and relied upon by the appellant as evidencing the creation of the mortgage was compulsarily registrable under Section 17 of the Indian Registration Act and not having been registered was inadmissible in evidence to prove the mortgage. The learned Subordinate Judge who tried the sit held that the document required registration and was therefore inadmissible in evidence and accordingly dismissed the suit. Aggrieved by the said decision of the lower court the plaintiff has preferred this appeal.

2. On the pleas taken by the defendants the lower court also framed some more issues and gave findings and the correctness of those findings is not now questioned before us.

3. In order to properly appreciate the question involved a few facts may be stated. Late Sonti Venkataratnam used to borrow moneys from the plaintiff and was executing promissory notes from time to time. In the first instance he borrowed a sum of Rs. 10,000/- in the year 1948 and executed Ex. A-1 promissory note. Later he borrowed some more amount in the year 1949 and executed the promissory note. Ex. A-2. In renewal of these two promissory notes a fresh promissory note was executed in the year 1950 as per Ex. A-3. In renewal of Ex. A-3 he executed a fresh promissory note on 4th May, 1951 (Ex. A-4 for Rs. 13, 500). On 13th August, 1951 he borrowed a further sum of Rs. 1.800/- and executed Ex. A-5 promissory note. These later two promissory notes were executed not only by Sonti Venkataratnam but also by one Sumu Subbarao. According to the case of the plaintiff when Sonti Venkataratnam was pressed for repayment of the debt due under Exs. A-4 and A-5 he deposited Ex. A-6 title deed as security for payment of the debt and also executed Ex. A-7 letter evidencing the deposit. It is convenient to extract here Ex. A-7 because the entire question depends upon its proper construction having regard to the surrounding circumstances. It is as follows:

'To

Sri Kakaraparthi Bhavanarayana Sastri garu, Vijayawada. Letter executed by Sonti Venkataratnam son of Kotaiah of Bezwada.

Myself and Tumu Subba Rao borrowed Rs. 13, 500/- on 4-5-51 and Rs. 1,800/- on 13-8-51 on two promissory notes executed by us jointly in your favour at 12 per cent, compount interest.

I now deposit the title deed of Sonti Venkataratnam amount us relating to 1390 Sq Yards of site in Municipal Ward No. 22. Revenue Ward 9 Block No. 18 T. S. No. 781 A dated 5-2-1948 as a collateral security for the payment of the money due on the two promissory notes referred to above inclusive of interest. I executed this document of security in sour favour after assuring you that I never created any charge or encumbrance on the property covered by the title deed dated 5-2-48. Executed this 7th day of November 1951.

(Signed) Sonti Venkataratnam

7-11-1951.'

4. Section 58(f) of the Transfer of Property Act recognises a mortgage by despot of title deeds as a form of mortgage. It provides that it may be effected by a person 'delivering to his creditor his agent documents of title to immovable property with intent to create a security thereon.' It means that when the debtor deposits with the creditor the title deeds of his property with a view to create security the law implies a contract between the parties to create a mortgage and no registered instrument is required under Section 59 as in other forms of mortgage. The parties can also choose to reduce the contract into writing in which case the deposit and the document both form integral parts of the transaction and as a document creating security requires registration under Section 17 of the Indian Registration Act, 1908 as a non-testamentary instrument creating interest in immovable property, where the value is rupees one hundred and more. If a document of this nature is not registered as provided under Section 49 of the Indian Registration Act it cannot be used in evidence at all and the transaction cannot be proved by oral evidence either in view of what was provided under Section 91 of the Evidence Act. That is how though a mortgage by deposit of title deeds can be created by mere deposit of the title deeds without any written contract between the parties but once the contract or the bargain as it is called, between the parties is reduced to writing it cannot become effective unless the writing is registered. Therefore the question for consideration is whether the creation of the equitable mortgage by deposit of title deeds in question was made apart from the independent of the document Ex. A-7 or Ex. A-7 itself forms the contract or bargain between the parties. There are a number of decisions where this question was considered with reference to the documents concerned in those cases. Some of the decisions of the Privy Council and the Supreme Court which are more relevant for our purpose and which were cited at the Bar may be examined.

5. In the decision M. Subramanian v. M. L. R.M. Lutchman. AIR 1923 PC 50 the document which their Lordships were considering is in the following terms.

'From................................

To................................

Dear Sir,

We hand you herewith title deeds relating to fifth class lot Nos. 78 79 and 80 Block E. each measuring 25 by 50 with building thereon belonging to Saleman Ahmed Seedat, also his promissory man Ahmed Seedat, also his promissory note for rupees sixty three thousand (Rs. 63,000/-) due to us, this pleas hold as security against advances made to us; we also hand you second mortgage executed in our favour by C. Ranga Swamy Modular on 1st class Lot No. 6 in Block F1. On this we had advanced Rs. 32, 000/-. Please also hold this as further security against advances made to us. We promise not to deal with the same till your amount due to you is fully paid and satisfied.'

It was held by the Privy Council that the memorandum is of such a nature that it can be treated as the contract for the mortgage which the parties considered to be the only repository and appropriate evidence of their agreement and therefore it could be the instrument by which the equitable mortgage was created and would come within Section 17 of the Registration Act.

6. In the decision Sundarachariar v. Narayana Ayyar. AIR 1931 PC 36 a person at Madras gave a promissory note and on the same date gave memorandum which contained a list of the title deeds with the introductory words. 'As agreed upon in person. I have delivered to you the undermentioned documents as security'. It was held by the Privy Council that the memorandum was not other than a written record of the particulars of the deeds which were the subject of the deposit and did not embody the terms of the agreement between the parties and did not require registration.

7. In the decision Rachpal Mahraj v. Bhagwandas Daruka. : [1950]1SCR548 the memorandum was ins the form of a letter and is in the following terms:

'We writ to put on record that to secure the repayment of the money already due to you from us on account of the business transactions between ourselves and ourselves and the money that may hereafter become due on account of such transactions we have this day deposited with you the following title deeds in Calcutta at your place of business at No. 7 Sambhu Mullick Lane, relating to our properties at Samstipur with intent to create an equitable mortgage on the said properties to secure all moneys including interest that may be found due and payable by us to you on account of the said transactions.'

In construing this document the Supreme Court observed that

'The document purports only to record a transaction which had been concluded and under which the rights and liabilities had been orally agreed upon. No doubt it was taken by the respondents to show that the title deeds of the appellant's properties were deposited with them as security for the moneys advanced by them and to obviate a possible plea that the deeds were left with them for other purposes, as indeed was contended by the appellant in the written statement taking advantage of the non-registration of the memorandum in question. But that is far from intending to reduce the bargain to writing and make the document the basis of the rights and liabilities of the parties.'

8. In the decision United Bank of India Ltd. v. M/s. Lekharam Sonaram and Co., : AIR1965SC1591 the relevant document which is Ex. 7 (a) is as follows:

'I hereby authorise my son Mr. Babulal Ram to deposit with you on my behalf at your Calcutta Office the following Title deeds with a view to create an equitable mortgage on the said properties to make your advances in the A/C of M/s. Lakharam Sonarm and Co. Giridih, better secured, I hereby further declare that I am the sole owner of the Girdh property as per schedule below and am legal joint heir with my sons dealing in the name of M/s. Lakharam Sonaram and Co. of the Malho property as described in the schedule below. I hereby further declare that both the properties described in the schedule are free from al encumbrances and nobody else has any claim right or title to the properties. And I hereby declare that the deposit will give you a valid legal title over my said properties as mortgagee until all the obligations of the M/s. Lakharam Sonogram and Co. with you Girdh Branch are duly satisfied.

Particulars of Properties:

(1) Giridih property

(2) Malho property.'

Disagreeing with the High Court the Supreme Court held that the document was not intended to be an integral part of the transaction and did not by itself operate to create an interest in the immovable property and therefore the document does not require registration under Section 17 of the Indian Registration Act.

9. But in the case before us from Ex. A-7 it does not appear that there was any earlier agreement between the parties or even a promise by Sonti Venkataratnam to deposit the title deeds and as a consequence of which Ex. A-7 came to be written. There is nothing to show that different and apart from Ex. A-7, Added to this there are words in Ex.A-7 'I executed this document of security in your favour'. In the letter concerned in : AIR1965SC1591 it was merely stated that the debtor authorised his son to deposit with the creditor on his behalf the title deeds It is not mention the details of the title deeds deposited with the Bank. As a matter of fact it is not a document created accompanying the deposit or constituting the deposit. In : [1950]1SCR548 from that the letters not the integral part of the creation of the mortgage by deposit of little deeds, and it was only written to record what for the security was created by the deposit of the title deeds. So also in the decision AIR 1931 PC 36 there was already an earlier agreement to deposit the title deeds and in pursuance of that agreement it was stated creditor the documents listed therein. Therefore it is clear case where the document itself is not an integral part of the creation of the mortgage.

10. As already mentioned from the language used in Ex. A-7 it does not appear that the creation of the mortgage was apart and dissociated from the document. It is also significant to note that after the written statements were filed by the defendants alleging that the letter itself constituted the contract of the mortgage as it was an integral part of the transaction and not merely the evidence of past or prior transaction of an equitable mortgage and requires to be registered it is not admissible in evidence the plaintiff amended the plaint by adding a fresh paragraph as 3(a) which is as follows:

'3 (a): When the plaintiff demanded for repayment of the loans, later S. Venkata Ratnam asked fro further time and offered to deposit his title deed as a security and accordingly be brought and kept in title deed as a security with the plaintiff in the morning of 7-11-1951 with deposit with the plaintiff so as to serve as security for the repayment of the loans due under the prior promissory notes. Thus, the mortgage by deposit of title deeds was created with the delivery of the document of title dated 5-21948 in the morning of 7-11-1951 itself. When he plaintiff asked late V. Venkataratnam to get a written statement executed stating tat the title deed had been deposited with the plaintiff, late Venkata Ratnam brought the typed memorandum signed and delivered the same to the plaintiff in the evening of the same day in the presence of his son and got it attested'

It is also significant to note that in the list of documents originally attached to the paint Ex. A-7 letter which his item No.3 was described as follows:

'7-11-1951 letter executed ass mortgage by deposit of title in favour of the plaintiff.'

The stress on the above description is ours. It is obvious that the story as narrated in paragraph 3(a) of the plaint was put forward as a result of an after-though un order to meet the plea taken by the defendants in the written statement. There is nothing in Ex. A-7 to indicate that the deposit of the document took place at a different time and substance only to evidence the deposit made earlier. On the other hand the following words appear in Ex. A-7 'I now deposit the title deed'. which destroys the theory of an earlier deposit.

11. Here a deposit was made by a letter in which was mentioned why the document was deposited. There is nothing but the letter to connect the deposit with the devote. The letter does not show that it is merely evidential of something which either had already been done earlier or to be done in future. Therefore by Ex. A-7 the bargain was reduced into writing and it embodied the contract of the mortgage itself between the registration and not having been registered it cannot be used in evidence at all and the transaction cannot also be proved by oral evidence either. Therefore the plaintiff transaction. This suit on the promissory notes also having been barred by time and plaintiff cannot get any decree to recover the debt.

12. Under these circumstances the learned Subordinate Judge rightly dismissed the suit.

13. Therefore the appeal fails and is dismissed with costs.

14. Appeal dismissed.


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