1. This is a plaintiff's appeal arising out of a suit for sale on the basis of a mortgage-deed dated 8th December 1911, executed by defendant 1 in favour of the Bank of Upper India. In the original written statement which was filed by the principal contesting defendant on 17th July 1924, she raised various pleas including a denial of proper execution, receipt of consideration as well as some other pleas. But there was no plea that the plaintiff Bank had no locus standi to sue through its liquidator. On 10th November 1925, she filed an application stating that she had just come to know that the Bank of Upper India had sold all its assets and liens to the Trust of India and that accordingly the plaintiff had no right left to sue the defendant. In spite of objections the Court considered that this was a legal plea and framed an additional issue 8. All the other issues have been found in favour of the plaintiff, but the suit has failed on the ground that the assets of the Upper India Bank had been transferred to the Trust of India Limited and the plaintiff Bank cannot maintain the suit. The finding on the last mentioned issue is the only point which has been discussed before us by the learned Counsel for the parties.
2. The principal facts of this case cannot be disputed. The Bank of Upper India suspended payment sometime about October 1914. In 1915 an application was presented under Section 153, Companies Act, putting forward a compromise before the High Court for approval. On 2nd June 1915, Tudball, J., sanctioned a scheme under which the shareholders were to surrender their shares and receive in exchange debentures in the Trust of India Limited on certain conditions. Later on 28th February 1917, that scheme was slightly modified and the learned Judge accepted the modification. The true banking business of the Bank of Upper India was to be absorbed and taken over by the Alliance Bank of Simla and that portion of the Bank's business which was not true banking was to be taken over by a company called the Trust of India Limited. In lieu of their shares the shareholders were to be offered debentures in the Alliance Bank and preference shares in the Trust of India Limited on certain terms. It is not necessary to specify the scheme in any detail.
3. On 30th June 1917, the shareholders of the Upper India Bank at their meeting resolved that the company should be wound up voluntarily, and Messrs. Hunter and Stuart be appointed liquidators for its winding up with joint and several powers. It was further resolved that a draft agreement with the Trust of India Limited, should be approved, and the liquidators be authorized pursuant to Section 213, Companies Act of 1913, to enter into the said agreement with the Trust of India Limited, in terms of the said draft, and to carry the same into effect with such if any modifications as they may think expedient. Subsequently the Alliance Bank of Simla and the Trust of India Limited also went into liquidation. Presumably with a view to evade the payment of stamp duty to Government, the liquidators of the Upper India Bank and those of the Alliance Bank and the Trust arrived at some mutual and private understanding that the debentures and the preference shares should be offered to the shareholders of the Upper India Bank and that the assets of the latter Bank be taken over by the liquidators of the Alliance Bank and the Trust. As to documents which were outstanding the understanding was that the liquidators of the Upper India Bank should realize the same and pay over the amount realized to the other liquidators. The oral evidence in this case leaves no doubt that this mutual arrangement has been carried out to a very great extent, and that as between these two sets of liquidators there has been absolutely no breach of contract so far. But it is also an admitted fact that the liquidators of the Upper India Bank have not executed any proper registered document transferring their interests in the immovable properties in favour of the other liquidators. At any rate it is admitted in this case that no registered document transferring the rights under the mortgage in suit has been executed by the liquidators of the plaintiff: Bank. The learned Subordinate Judge relying principally on a judgment of the High Court in a previous proceeding has come to the conclusion that the assets of the Bank have all been legally transferred to the Trust of India. In that case the question arising in the present appeal did not directly arise. The learned Subordinate Judge has quoted expressions used by Walsh, J., as to the taking over of the assets of the Bank of Tipper India, the transactions having been carried through, the shareholders of the Bank of Upper India having surrendered their shares in exchange for debentures and preference shares and the due execution and performance of the agreement for sale. There as a further remark in his judgment to the effect that
the exchanges have been made, the matters 'have passed into history and the legal rights of the parties have been settled without the necessity of a formal document.
4. Ryves, J., however, confined his judgment exclusively to the question of estoppel and remarked:
It may be that the parties inter se are estopped from disputing the transfer although in law no valid transfer has taken place so far as immovable properties or securities on such immovable properties of over Rs. 100 in value are concerned.
5. The defendant not being a party to 'that proceeding, it is not suggested that judgment operates as res judicata. As the question at that time was principally one of estoppel, we do not think that it was at all decided in that case that a valid transfer of all the immovable properties had been legally effected.
6. If no registered document is required for the transfer of the mortgagee's interest under a simple mortgage deed, and an oral assignment is effective, then there would be no doubt that the plaintiff Bank has parted with its interest in this mortgage by virtue of the arrangement with the liquidators of the other company. On the other hand, if no valid transfer can take effect without a registered document, it is clear that although the parties to the arrangement may them selves be estopped from going behind it that arrangement cannot be used as transferring legal title to the Trust when a stranger, who is not a party to that agreement, wishes to take advantage of it.
7. Section 17, Sub-clause (b), Registration Act makes
all non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish whether present or in future, any right, title or interest, whether vested or contingent of the value of Rs. 100 and upwards, to or in immovable property
compulsorily registrable. It is obvious that if a sale deed of the mortgagee's interest had been executed it would have required registration inasmuch as it would have affected an interest in immovable property. But strictly speaking Section 17 requires registration only when a transaction has been reduced to writing. It does not in terms lay down that no transfer can take effect in the absence of such document. We have to fall back upon the provisions of the Transfer of Property Act to see whether to effect a valid transfer a registered instrument is necessary. Section 58, Clause (a) makes it quite clear that a mortgage is a transfer of an interest in immovable property. Then Section 54 provides that a transfer of tangible immovable property of the value of Rs. 100 and over or other intangible thing can be made only by a registered instrument. The question remains whether the mortgagee's interest is itself immovable property within the meaning of Section 3. That section, however, does not give a complete definition of immovable property. For that we have to refer to its definition in the General Clauses Act (Act 10 of 1897), Section 3, Clause (25), where it is laid down that immovable property shall include land, benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth. Even that definition on its own language is not exhaustive. A subtle distinction has sometimes been drawn between an interest in the immovable property and the immovable property itself. And on the basis of such a distinction the learned advocate for the respondent has urged that although a mortgagee's interest is an interest in immovable property it is not immovable property itself, and therefore a transfer of it does not require a registered deed. We are unable to accede to this contention.
8. In the first place a mortgagee's interest may come in within the meaning of the expression benefits to arise out of land' in the General Clauses Act. In the second place, the Indian legislature ap pears to have intended that all rights to immovable property should fall within the category of immovable property. Mortgages of immovable property have priority over all subsequent transfers and subsequent transferees are presumed to have notice of the previous charge. Such presumption cannot be made unless there is a registered document. It seems to be against the general policy of the Transfer of Property Act that subsequent transferees should be bound by a mortgage although that mortgage need not be made by a registered instrument. The mortgagee's interest is not a mere right to recover the debt due but to have a charge on the property and to follow it wherever it goes. His claim is excluded from the definition of actionable claim in Section 3, T.P. Act. We have therefore no hesitation in coming to the conclusion that a sale of a mortgagee's interest can only be effected by means of a registered deed of transfer.
9. Chamier, J., in the case of Mutsaddi Lal v. Muhammad Hanif  10 A.L.J. 167 expressed the opinion that the interest of a simple mortgagee was an intangible thing within the meaning of Section 54 and the transfer of it can be made only by a registered instrument. The Calcutta view also is that the mortgagee's interest is immovable property even within the meaning of the provisions of the Civil Procedure Code: Paresh Nath Singha v. Nabo Gopal Chattopadhya  29 Cal. 1. The same view has been expressed in Madras: Nataraja Iyer v. South Indian Bank of Tinnevelly  37 Mad. 51.
10. No doubt in numerous cases of this Court for instance: Abdul Majid v. Muhammad Faizulla  13 All.:89, Karim-un-nissa v. Phul Chand  15 All. 134 and Umrao Singh v. Lal Singh A.I.R. 1924 All. 796, it has been held that a simple mortgagee's interest is not immovable property within the meaning of that word as used in the Civil Procedure Code. As the latter Code does not define immovable property, the learned advocate for the respondent has urged that these cases must have proceeded on the definition of that word in the General Clauses Act, which definition applies to the case before us. But there are various provisions in the Civil Procedure Code which make it impracticable to hold that the interest of the mortgagee can be attached and sold as immovable property according to the procedure laid down for its sale. Those considerations influenced the learned Judges of this Court considerably. We do not therefore think that those cases are any guide to us in the present case. The view expressed by us as above maintains a consistency between the policies of the Registration Act and the Transfer of Property Act, and we think is the correct view.
11. No matter what the equities may be between the Bank of Upper India and the Trust of India Limited, inter se, we must hold that no valid and legal transfer of the mortgagee's interest had taken place so as to deprive the present plaintiff of all rights to maintain the suit. We accordingly allow this appeal and setting, aside the decree of the Court below, decree the plaintiff's claim with costs in both Courts. The usual six months are allowed for payment.